As filed with the Securities and Exchange Commission on August 18, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CRIIMI MAE CMBS CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
52-2050970
(I.R.S. employer identification number)
11200 Rockville Pike, 5th Floor
Rockville, Maryland 20852
(301) 816-2300
(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) 906-2276
<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. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================
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-Backed Securities $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>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the prospectus to which it relates
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 18, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus dated _________, 199__)
$
(Approximate)
CRIIMI MAE CMBS 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 CRIIMI MAE CMBS 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
PAGE
----
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
METHOD OF DISTRIBUTION......................................................S-67
LEGAL MATTERS...............................................................S-68
S-5
<PAGE>
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)
CRIIMI MAE CMBS 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 (___) -------------------------------------------------------------------
(Interest Strip off $ Class A-3 % %
Classes A-1A -------------------------------------------------------------------
through C)(3) $ Class B-1 % %
-------------------------------------------------------------------
$ 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.................................. CRIIMI MAE CMBS Corp., a
____________ corporation. See "The
Company" 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" and "Book-Entry
Securities" 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
Securities--Registration and
Denominations" herein and
"Description of the
Securities--Book-Entry Registration
and Definitive Securities" 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
- --------------------------------------------------------------------------------
S-9
<PAGE>
- --------------------------------------------------------------------------------
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 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
Mortgage Initial
State Loans 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:
Number of Percentage of
Property Mortgage Initial
Type Loans 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
- --------------------------------------------------------------------------------
S-10
<PAGE>
- --------------------------------------------------------------------------------
Mortgage Loan is first due, the
"Due Date"). [The 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
- --------------------------------------------------------------------------------
S-11
<PAGE>
out of the Mortgage Loan Seller's
representations and 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
__%]:
Initial Approximate
Class Percentage of
Principal Initial Pool
Class Balance 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
- --------------------------------------------------------------------------------
S-12
<PAGE>
- --------------------------------------------------------------------------------
Certificates outstanding from time
to time. The Class 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
- --------------------------------------------------------------------------------
S-13
<PAGE>
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. 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"
- --------------------------------------------------------------------------------
S-14
<PAGE>
herein, the Available Distribution
Amount for such date 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 Extraordinary
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 Extraordinary
Expenses, if any, previously
allocated to such Class of
Certificates and for which no
reimbursement has previously
been received;
- --------------------------------------------------------------------------------
S-15
<PAGE>
(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 Extraordinary
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 Extraordinary
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 Extraordinary
Expenses, if any, for each
such Class as more fully
- --------------------------------------------------------------------------------
S-16
<PAGE>
described under "Description
of the Certificates--
Distributions--Application
of the 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
- --------------------------------------------------------------------------------
S-17
<PAGE>
- --------------------------------------------------------------------------------
than a Balloon Payment) due,
or the principal portion of
any Assumed Scheduled Payment
deemed due, in respect of the
related Mortgage Loan on a
Due Date during or prior to
the related Collection Period
and not previously recovered;
and
(c) if such 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.
- --------------------------------------------------------------------------------
S-18
<PAGE>
- --------------------------------------------------------------------------------
Any Yield Maintenance 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 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)
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 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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S-19
<PAGE>
- --------------------------------------------------------------------------------
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 Extraordinary
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 Extraordinary 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.
- --------------------------------------------------------------------------------
S-20
<PAGE>
- --------------------------------------------------------------------------------
As more particularly described
herein, "Extraordinary 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 Extraordinary
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 it 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>
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>
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 Collection 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
Certificate 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,
or Section 401(c) of ERISA, which
may provide limited relief 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
- --------------------------------------------------------------------------------
S-25
<PAGE>
- --------------------------------------------------------------------------------
agency would assign. A security
rating is not a recommendation to
buy, sell or hold securities and may
be subject to revision or withdrawal
at any time by the assigning rating
agency.
Legal Investment .......................... [The 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 "Servicing and
Administration of the Mortgage Assets-- 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
S-27
<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 Company and the Mortgage Loan Seller, and the Company
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--Transfer 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................................. ----------- ---------------- -----------------
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
</TABLE>
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.................................. ----------- --------------- ----------------
Weighted Average
Gross Margin: ____%
</TABLE>
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 Maximum Number of Aggregate Cut-off Aggregate Cut-off
Lifetime Mortgage Rates(%) ARM Loans Date Balance Date Balance
-------------------------- --------- ------------ ------------
<S> <C> <C> <C>
Total................................. ----------- --------------- ----------------
Weighted Average Maximum Lifetime
Mortgage Rate (ARM Loans): _____% per annum (A)
</TABLE>
- -----------------
(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................................. ----------- --------------- ----------------
Weighted Average Minimum Lifetime
Mortgage Rate (ARM Loans): _____% per annum (A)
</TABLE>
- -----------------
(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...................................... ------------ ---------------- ---------------
Average Cut-off Date
Balance (All Mortgage
Loans): $____________
Average Cut-off Date
Balance (ARM Loans): $____________
Average Cut-off Date
Balance (Fixed Rate Loans): $____________
</TABLE>
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................................. ----------- -------------------- -----------------
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
</TABLE>
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.................................----------- -------------------- ----------------
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
</TABLE>
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)
<TABLE>
<CAPTION>
Range of Number of Percent by
Debt Service Mortgage Aggregate Cut-off Aggregate Cut-off
Coverage Ratios (x) Loans Date Balance Date Balance
------------------- ----- ------------ ------------
<S> <C> <C> <C>
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)
</TABLE>
- --------------------
(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............... ----------------- --------------- ---------------
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): _____%
</TABLE>
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.......................... ----------------- --------------- ----------------
Weighted Average Occupancy Rate (All
Mortgage Loans)(A): _____%
Weighted Average Occupancy Rate
(ARM Loans)(A): _____%
Weighted Average Occupancy Rate
(Fixed Rate Loans)(A): _____%
</TABLE>
- ---------------------------------
(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 Underlying Assets--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 "Servicing
and Administration of the Mortgage Assets", 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 "Servicing and Administration of the Mortgage Assets--Collection 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 Collection 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 "Servicing and Administration of the Mortgage
Assets--Collection 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 Collection
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
Collection 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 Collection 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 Collection 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 Collection 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 Collection
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 the 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 Securities--Book-Entry Registration and Definitive
Securities" 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
Securities--Book-Entry Registration and Definitive Securities" 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 Extraordinary
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 Extraordinary 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
Extraordinary 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 Collection Account (see "Description of the Pooling
Agreements--Collection Accounts" in the Prospectus) as of the close of business
on the related Determination Date, exclusive of any portion thereof that
represents one or more of the following:
(i) Monthly Payments collected but due on a Due Date subsequent to
the related Collection Period;
(ii) Prepayment Premiums 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 Extraordinary Expenses); and
(iv) amounts deposited in the Collection Account in error; plus
(b) to the extent not already included in clause (a), any P&I Advances and/or
Compensating Interest Payment made in respect of such 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 Extraordinary 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 Extraordinary 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 Extraordinary 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 Extraordinary 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 Extraordinary 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
Extraordinary 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 Extraordinary 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 Extraordinary 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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<PAGE>
(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 Extraordinary 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 Extraordinary Expenses.
The foregoing reductions in the Class Principal Balances of the Sequential Pay
Certificates will constitute an allocation of any such Realized Losses and
Extraordinary 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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<PAGE>
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.
"Extraordinary 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.
Extraordinary 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 Securities--The Trustee--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 "Servicing and
Administration of the Mortgage Assets--Certain Matters regarding the Master
Servicer, the Special Servicer, the REMIC Administrator, the Manager and the
Company" 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 Collection 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. See "--The Trustee" below.]
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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 Collection 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
Collection 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).
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
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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 "Servicing and Administration of the Mortgage
Assets--Evidence as to Compliance" in the Prospectus, (d) 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 "Servicing and
Administration of the Mortgage
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Assets--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 Extraordinary 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", except that
the distributions of principal on any Class of Sequential Pay Certificates
described thereunder will
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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 Securities--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 Extraordinary 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
Extraordinary 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 Extraordinary 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, 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, 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 excise 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 excise 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 class 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, or Section 401(c) of ERISA, which may provide limited
relief 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 or Section 401(c) of ERISA.]
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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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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INDEX OF PRINCIPAL TERMS
Accrued Certificate Interest................................................S-53
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
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-11
ERISA .............................................................S-24
Excluded Plan .............................................................S-69
Exemption .............................................................S-68
Exemption-Favored Party.....................................................S-68
Extraordinary Expenses................................................S-21, S-56
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
REO Tax .............................................................S-66
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 Advance...........................................................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
S-73
<PAGE>
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
S-74
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained in this Prospectus Supplement and
the Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the 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 Underlying Assets............................................
Yield and Maturity Considerations...............................................
The Company.....................................................................
CRIIMI MAE Inc..................................................................
Owner Trust.....................................................................
Description of the Securities...................................................
Description of the Indentures...................................................
Description of the Pooling Agreements...........................................
Servicing and Administration of the Mortgage Assets.............................
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)
CRIIMI MAE CMBS 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>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the prospectus to which it relates
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 18, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus dated _________, 199__)
$
(Approximate)
CRIIMI MAE Commercial Mortgage Trust [I]
Collateralized Mortgage Obligations
Series 199__-____
CRIIMI MAE Commercial Mortgage Trust [I] (the "Issuer"), a trust
established by CRIIMI MAE CMBS Corp. (the "Company"), is issuing approximately
$_____________ aggregate Bond Principal Amount (as defined in the accompanying
Prospectus) of its Series 199_- ____ Collateralized Mortgage Obligations (the
"Bonds"). The Bonds will consist of [seven] classes (each, a "Class") to be
designated as: [(i) the Class A-1 and Class A-2 Bonds (collectively, the "Class
A Bonds" or the "Senior Bonds"); and (ii) the Class B, Class C, Class D, Class E
and Class F Bonds (collectively, the "Subordinate Bonds"). Only the Class A,
Class B, Class C and Class D Bonds (collectively, the "Offered Bonds") are
offered hereby. The respective Classes of Offered Bonds will be issued in the
aggregate Bond Principal Amounts, and will accrue interest at the Bond Interest
Rates (as defined in the accompanying Prospectus), set forth in the table below.
(Continued on page S-2)
<TABLE>
<CAPTION>
===========================================================================================================
Initial Aggregate Assumed Final Rating
Bond Principal Bond Interest Payment ([identify Rating
Class Amount (a) Rate Stated Maturity Date(b) Agencies])(c)(d)
===========================================================================================================
<S> <C> <C> <C> <C> <C>
Class A-1 ...... $ %
Class A-2....... $ %
Class B......... $ %
Class C......... $ %
Class D......... $ %
===========================================================================================================
</TABLE>
(Footnotes to table on page S-2)
---------------------
FOR A DISCUSSION OF CERTAIN RISK FACTORS TO BE CONSIDERED IN PURCHASING
THE OFFERED BONDS, SEE "RISK FACTORS" BEGINNING ON PAGE __
HEREIN AND ON PAGE __ IN THE PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS SUPPLEMENT OR THE
PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
OR ENDORSED THE MERITS OF THIS OFFERING. ANY REPRESENTATION
TO THE CONTRARY IS UNLAWFUL.
-----------
The Offered Bonds will be purchased from the [Issuer] by ________________ (the
"Underwriter") and will be offered by the Underwriter from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. Proceeds to the [Issuer] from the sale of the Offered Bonds,
before deducting expenses payable by the [Issuer] estimated to be approximately
$_____________, will be ______% of the initial aggregate Bond Principal Amount
of the Offered Bonds [, plus accrued interest on the Offered Bonds from
____________, 199_]. The Offered Bonds are offered by the Underwriter subject to
prior sale, when, as and if delivered to and accepted by the Underwriter and
subject to certain other conditions. It is expected that the Offered Bonds will
be delivered in book-entry form through the Same-Day Funds Settlement System of
DTC on or about _____________, 199__ (the "Closing Date"), against payment
therefor in immediately available funds.
[Underwriter]
The date of this Prospectus Supplement is __________ , 199__.
<PAGE>
The footnotes to the table on the previous page are as follows:
(a) The initial aggregate Bond Principal Amount of each Class of Offered Bonds
is subject to a permitted variance of plus or minus __%.
(b) The "Assumed Final Payment Date" with respect to any Class of Bonds is the
Payment Date (as defined herein) on which the final payment would occur
for such Class of Bonds based upon the assumption that no Mortgage Loan is
prepaid prior to its stated maturity and otherwise based on the Modeling
Assumptions (as described herein). The actual performance and experience
of the Mortgage Loans will likely differ from such assumptions. See "Yield
and Maturity Considerations" herein.
(c) It is a condition to their issuance that the respective Classes of Offered
Bonds be assigned ratings by _________________ ("_____") and/or
________________________ ("________"; and together with ________, the
"Rating Agencies") no less than those set forth above. The ratings on the
Offered Bonds address the timely payment thereon of interest and the
ultimate payment thereon of principal on or before Stated Maturity. See
"Ratings" herein.
(d) The ratings on the Offered Bonds do not represent any assessment of (i)
the likelihood or frequency of principal prepayments on the Mortgage
Loans, (ii) the degree to which such prepayments might differ from those
originally anticipated or (iii) whether and to what extent Prepayment
Premiums (as defined herein) will be received. Also a security rating does
not represent any assessment of the yield to maturity that investors may
experience. See "Ratings" herein.
---------------------
(Continued from cover page)
See "Index of Principal Definitions" herein for the location of
meanings of capitalized terms used and defined herein. See "Index of Principal
Definitions" in the accompanying Prospectus for the location of meanings of
capitalized terms used but not defined herein.
There is currently no secondary market for the Offered Bonds. The
Underwriter intends to make a secondary market in the Offered Bonds, but is not
obligated to do so. There can be no assurance that a secondary market for the
Offered Bonds will develop or, if one does develop, that it will continue. See
"Risk Factors-Limited Liquidity" herein. The Offered Bonds will not be listed on
any securities exchange.
The Bonds will be secured by a pledge of collateral (the
"Collateral") which consists primarily of a segregated pool (the "Mortgage
Pool") of approximately ___ [describe general characteristics of Mortgage Loans]
mortgage loans (the "Mortgage Loans"). As of ______________, 199_ (the "Cut-off
Date"), the Mortgage Loans had an aggregate principal balance, after taking into
account all payments of principal due on or before such date, whether or not
received, of $___________ (the "Initial Pool Balance")[, subject to a permitted
variance of plus or minus __%.]
The Bonds will be issued pursuant to a Terms Indenture to be dated
as of ___________, 199_ (the "Terms Indenture"), between _______________________
as owner trustee (the "Owner Trustee"), on behalf of the Issuer, and
__________________________ as indenture trustee (the "Trustee"), on behalf of
the holders of the Bonds (the "Bondholders"), which Terms Indenture incorporates
by reference certain standard indenture provisions of the Company, dated as of
________________, 1997 and filed as part of the registration statement relating
to the Offered Bonds (the Terms Indenture, as it incorporates by reference such
standard indenture provisions, the "Indenture"). Certain duties and obligations
of the Issuer under the Indenture will be performed on behalf of the Issuer by
________________________ (the "General Administrator") in accordance with a
General Administration Agreement, to be dated as of ____________, 199_ (the
"General Administration Agreement"), between the Owner Trustee, on behalf of the
Issuer, and the General Administrator.
Payments of interest on and principal of the Bonds will be made to
holders thereof, to the extent of available funds, on the ___ day of each month
or, if any such day is not a business day, then on the next succeeding business
day, commencing in ______________ 199_ (each, a "Payment Date"). As and to the
extent described herein, payments of interest accrued on each Class of Bonds
will be made on each Payment Date based on the Bond Interest Rate applicable to
such Class and the aggregate Bond Principal Amount of such Class outstanding
immediately prior to such Payment Date. To the extent there are deficiencies in
the interest payment on a Class of Bonds on any Payment Date, such deficiencies
will be deferred to succeeding Payment Dates. Principal payments on the Bonds
will be made on each Payment Date to the extent funds are
S-2
<PAGE>
available therefor in the amounts and in accordance with the priorities
described herein. See "Description of the Bonds--Payments on the Bonds" herein.
As and to the extent set forth herein, the Issuer's Equity (as
defined herein) and the Class E and Class F Bonds (collectively, the "Private
Bonds") will be subordinate to the Offered Bonds; the Class D Bonds will be
subordinate to the Class A, Class B and Class C Bonds; the Class C Bonds will be
subordinate to the Class A and Class B Bonds; and the Class B Bonds will be
subordinate to the Class A Bonds. See "Description of the Bonds--Payments on the
Bonds" and "--Subordination" herein.
The yield to maturity of each Class of Offered Bonds will depend on,
among other things, the rate and timing of principal payments (including by
reason of prepayments, loan extensions, defaults and liquidations) and losses on
the Mortgage Loans. See "Risk Factors" and "Yield and Maturity Considerations"
herein.
No election will be made to treat the Issuer, any of its assets or
the arrangement by which the Bonds are issued as a "real estate mortgage
investment conduit" (a "REMIC") for federal income tax purposes. See "Certain
Federal Income Tax Consequences" herein.
[inside front cover]
THE OFFERED BONDS REPRESENT NON-RECOURSE OBLIGATIONS OF THE ISSUER
AND WILL BE PAID SOLELY FROM THE COLLATERAL SECURING THE OFFERED BONDS. NEITHER
THE OFFERED BONDS NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON. ACCORDINGLY, IF
THE COLLATERAL IS INSUFFICIENT TO PROVIDE PAYMENTS ON THE OFFERED BONDS, NO
OTHER ASSETS WILL BE AVAILABLE FOR PAYMENT OF THE DEFICIENCY. PROSPECTIVE
INVESTORS SHOULD MAKE AN INVESTMENT DECISION BASED UPON AN ANALYSIS OF THE
SUFFICIENCY OF THE MORTGAGE LOANS TO MAKE PAYMENTS ON THE OFFERED BONDS.
THE BONDS OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE PART OF A
SEPARATE SERIES OF SECURITIES ISSUED BY THE COMPANY OR TRUSTS ESTABLISHED
THEREBY AND ARE BEING OFFERED PURSUANT TO ITS PROSPECTUS DATED _____________,
199__ (THE "PROSPECTUS"), OF WHICH THIS PROSPECTUS SUPPLEMENT IS A PART AND
WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS IMPORTANT
INFORMATION REGARDING THIS OFFERING THAT IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL. SALES OF THE OFFERED BONDS MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
UNTIL NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL
DEALERS EFFECTING TRANSACTIONS IN THE OFFERED BONDS, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES. THIS DELIVERY REQUIREMENT IS
IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
S-3
<PAGE>
TABLE OF CONTENTS
PAGE
----
TRANSACTION OVERVIEW.......................................................... 6
SUMMARY OF PROSPECTUS SUPPLEMENT.............................................. 7
RISK FACTORS ...............................................................23
DESCRIPTION OF THE MORTGAGE POOL..............................................27
General...................................................................27
Certain Payment Characteristics...........................................27
The Index.................................................................28
[Delinquent and Nonperforming Mortgage Loans].............................28
Additional Mortgage Loan Information......................................28
The Mortgage Loan Seller..................................................36
Underwriting of the Mortgage Loans........................................36
Representations and Warranties with respect to the
Mortgage Loans; Repurchases.............................................37
Changes in Mortgage Pool Characteristics..................................37
SERVICING OF THE MORTGAGE LOANS...............................................37
General...................................................................37
The Master Servicer.......................................................39
The Special Servicer......................................................39
Sub-Servicers.............................................................40
Servicing and Other Compensation and Payment of Expenses..................40
Modifications, Waivers, Amendments and Consents...........................42
Inspections; Collection of Operating Information..........................43
[Termination of [Special Servicer] [Master Servicer] Without Cause].......44
DESCRIPTION OF THE BONDS......................................................44
General...................................................................44
Registration and Denominations............................................45
Payments on the Bonds.....................................................46
Subordination.............................................................51
P&I and Other Advances....................................................53
[Appraisal Reductions]....................................................53
Reports to Bondholders; Certain Available Information.....................54
Voting Rights.............................................................55
The Trustee...............................................................55
[Optional Redemption].....................................................56
Additional Information....................................................56
THE ISSUER ...............................................................56
THE OWNER TRUSTEE.............................................................57
THE GENERAL ADMINISTRATOR.....................................................57
YIELD AND MATURITY CONSIDERATIONS.............................................57
Yield Considerations......................................................57
Weighted Average Life.....................................................59
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.......................................60
General...................................................................60
Status as Real Property Loans.............................................61
Discount and Premium......................................................61
Backup Withholding and Information Reporting..............................62
METHOD OF DISTRIBUTION........................................................62
S-4
<PAGE>
LEGAL MATTERS.................................................................63
ERISA CONSIDERATIONS..........................................................63
LEGAL INVESTMENT..............................................................64
RATINGS.......................................................................65
S-5
<PAGE>
- --------------------------------------------------------------------------------
TRANSACTION OVERVIEW
Prospective investors in the Offered Bonds 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 Bonds or the Mortgage Loans, particularly
with respect to the risks and special considerations involved with an investment
in the Offered Bonds, 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)
CRIIMI MAE Commercial Mortgage Trust [I]
Collateralized Mortgage Obligations
Series 199_-____
-------------------------------------------------------------------
Initial
Aggregate Bond
Bond Principal Interest
Amount(1) Class(2) Rating(3) Rate
--------------------------------------------------------
$ [Class A-1] %
--------------------------------------------------------
$ [Class A-2] %
--------------------------------------------------------
$ [Class B] %
--------------------------------------------------------
$ [Class C] %
--------------------------------------------------------
$ [Class D] %
--------------------------------------------------------
$ [Class E] %
--------------------------------------------------------
$ [Class F] %
--------------------------------------------------------
$ (4) Issuer's Not Rated N/A(5)
Equity
--------------------------------------------------------
-------------------------------------------------------------------
(1) Subject to a variance of plus or minus 5%.
(2) Only the Class A-1, Class A-2, Cass B, Class C and Class D Bonds are
offered hereby. The Class E and Class F Bonds will initially be issued to
and held by one or more affiliates of the Issuer and are not offered
hereby. The Issuer's Equity is not a Class of Bonds, nor is it offered
hereby.
(3) By each of _________and __________.
(4) Reflects portion of the Initial Pool Balance that is in excess of the
initial aggregate Bond Principal Amount of all the Bonds. The Issuer's
Equity does not have a Bond Principal Amount.
(5) The Issuer's Equity does not have a Bond Interest Rate.
- --------------------------------------------------------------------------------
S-6
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and in the
accompanying Prospectus. Certain capitalized terms that are used in this Summary
may be defined elsewhere in this Prospectus Supplement or in the Prospectus. An
Index of Principal Definitions is included at the end of both this Prospectus
Supplement and the Prospectus. Terms that are used but not defined in this
Prospectus Supplement will have the meanings specified in the Prospectus.
Issuer................................ CRIIMI MAE Commercial Mortgage Trust [I]
(the "Issuer") is a trust established
under the laws of the State of _________
by CRIIMI MAE CMBS Corp. (the
"Company"), a __________ corporation,
pursuant to a Deposit Trust Agreement,
to be dated as of __________, 199_ (the
"Deposit Trust Agreement"), between the
Company and ____________________ as
owner trustee (the "Owner Trustee"). The
Company is a wholly-owned special
purpose subsidiary of CRIIMI MAE Inc.
("CRIIMI MAE"), a publicly held real
estate investment trust. The Company
initially will own 100% of the
beneficial interests in the Issuer, but
may transfer a portion of such
beneficial interests to an affiliate.
None of the Company, CRIIMI MAE, or any
affiliate of either of them has
guaranteed or insured the Offered Bonds
or the Mortgage Loans.
The Owner Trustee maintains its
principal corporate trust office
at______________________________________
_________________________, telephone
(___) ___________. See "The Issuer" and
"The Owner Trustee" herein and "The
Company", "CRIIMI MAE Inc." and "Owner
Trustee" in the Prospectus.
Bonds...................................The Issuer is issuing approximately
$__________ aggregate Bond Principal
Amount of its Series 199_-____
Collateralized Mortgage Obligations (the
"Bonds"). The Bonds will be issued on
the Closing Date in [seven] classes
(each, a "Class") to be designated as:
[(i) the Class A-1 and Class A-2 Bonds
(collectively, the "Class A Bonds" or
the "Senior Bonds"); (ii) the Class B,
Class C and Class D Bonds (collectively
with the Class A Bonds, the "Offered
Bonds"); and (iii) the Class E and Class
F Bonds (collectively, the "Private
Bonds"; and collectively with the Class
B, Class C and Class D Bonds, the
"Subordinate Bonds")]. Only the Offered
Bonds are offered hereby.
The Private Bonds have not and will not
be registered under the Securities Act
of 1933, as amended (the "Securities
Act") and are not offered hereby. The
Private Bonds will initially be issued
to and held by one or more affiliates of
the Issuer and are not offered hereby.
To the extent this Prospectus Supplement
contains information regarding the
Private Bonds, such information is
provided because of its potential
relevance to a prospective purchaser of
an Offered Bond.
The Bonds will be issued pursuant to a
Terms Indenture, to be dated as of
_________, 199_ (the "Terms Indenture"),
between the Owner Trustee, on behalf of
the Issuer, and
- --------------------------------------------------------------------------------
S-7
<PAGE>
- --------------------------------------------------------------------------------
the Trustee, on behalf of the holders of
the Bonds (the "Bondholders"), which
Terms Indenture incorporates by
reference certain standard indenture
provisions of the Company, dated as of
____________, 1997 and filed as part of
the registration statement relating to
the Offered Bonds (the Terms Indenture,
as it incorporates by reference such
standard indenture provisions, the
"Indenture").
The Bonds will be non-recourse
obligations of the Issuer. The Bonds are
not insured or guaranteed by any
governmental agency or instrumentality
or by any other person.
The respective Classes of Bonds will be
issued in the initial aggregate Bond
Principal Amount (in each case, subject
to a variance of plus or minus 5%), and
will accrue interest at the Bond
Interest Rates, set forth below:
Initial Bond
Aggregate Bond Interest
Class Principal Amount Rate
----- ---------------- --------
[ClassA-1] $ %
[ClassA-2] $ %
[ClassB] $ %
[ClassC] $ %
[ClassD] $ %
[ClassE] $ %
[ClassF] $ %
The "Issuer's Equity" represents the
right of the Issuer or its designee (i)
to receive all payments on and proceeds
of the Collateral not otherwise
allocable to pay interest, principal and
other amounts on the Bonds in accordance
with their terms or expenses of the
Trust Estate (as defined herein) and
(ii) to have the remaining Collateral
returned to it after the Indenture is
satisfied and discharged. The principal
amount of the Issuer's Equity as of any
date of determination is the amount (the
"Overcollateralization Amount"), if any,
by which the then aggregate Stated
Principal Balance (as defined herein) of
the Mortgage Pool (initially equal to
the Initial Pool Balance) exceeds the
then aggregate Bond Principal Amount of
all the Bonds. As of the Closing Date,
the Overcollateralization Amount will
equal approximately $______________.
Trustee............................... _________________________, a
______________. See "Description of the
Bonds--The Trustee" herein.
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S-8
<PAGE>
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General Administrator ................ _______________________________ (the
"General Administrator") will perform
certain functions as agent on behalf of
the Issuer pursuant to a General
Administration Agreement, to be dated as
of ____________, 199_ (the "General
Administration Agreement"), between the
Manager and the Owner Trustee, on behalf
of the Issuer.
Master Servicer....................... ____________________. See "Servicing of
the Mortgage Loans--The Master Servicer"
herein.
Special Servicer...................... ____________________. See "Servicing of
the Mortgage Loans--The Special
Servicer" 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_.
Accrual Date.......................... ____________, 199_, the date as of which
interest begins to accrue on the Bonds.
Payment 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 Payment 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 Payment Date,
commencing immediately following the
Cut-off Date) and ending on and
including the related Determination
Date.
Determination Date.................... As to any Payment Date, the _th day of
the month in which such Payment Date
occurs, or if such _th day is not a
business day, the immediately preceding
business day.
Record Date........................... As to any Payment Date, the last
business day of the month immediately
preceding the month in which such
Payment Date occurs.
Interest Accrual Period .............. As to any Payment Date, the calendar
month preceding the month in which such
Payment Date occurs.
Book-Entry Registration .............. Each Class of Offered Bonds will
initially be issued in book-entry form
through the facilities of DTC and,
accordingly, will constitute "Book-Entry
Bonds" and "Bond-Entry Securities"
within the meaning of the Prospectus. No
person acquiring an interest in a
Book-Entry Bond (any such person, a
"Bond Owner") will be entitled to
receive a fully registered physical
security (a "Definitive Bond")
evidencing such interest, except under
the limited circumstances described in
the Prospectus. See "Risk
Factors--Book-Entry Registration" in the
Prospectus and "Description of the
Bonds--Registration and
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S-9
<PAGE>
- --------------------------------------------------------------------------------
Denominations" herein and "Description
of the Securities--Book-Entry
Registration and Definitive Securities"
in the Prospectus.
Denominations......................... The Offered Bonds will each be issued in
minimum denominations of $________
initial Bond Principal Amount and in any
whole dollar in excess thereof.
Security for the Bonds ............... The Bonds will be secured by a pledge of
the Trust Estate. The "Trust Estate"
will consist of all rights, money,
instruments, securities and other
property, including all proceeds
thereof, which are subject to, or
intended to be subject to, the lien of
the Indenture for the benefit of the
Bondholders, including without
limitation the Collateral. The
"Collateral" will consist of the
Mortgage Loans, any REO Properties (as
defined herein) acquired in respect
thereof and the Collection Account (as
defined in the Prospectus), all of which
is more specifically described under
"Description of the Mortgage Pool"
herein and "Description of the
Underlying Assets" and "Servicing and
Administration of the Mortgage
Assets--Collection Account" in the
Prospectus.
A. 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 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.
- --------------------------------------------------------------------------------
S-10
<PAGE>
- --------------------------------------------------------------------------------
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
Mortgage Percentage of
State 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:
Number of
Property Mortgage Percentage of
Type 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 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.
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S-11
<PAGE>
- --------------------------------------------------------------------------------
[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.
[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 an
additional amount (a "Prepayment
Premium") the greater of a specified
percentage of the principal amount being
prepaid and a premium calculated on the
basis of a yield maintenance formula,
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.]
On or prior to the Closing Date, the
Company 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
Company and the Mortgage Loan Seller. In
the Mortgage Loan Purchase Agreement,
the Mortgage Loan Seller has made
certain representations and warranties
to the Company regarding the
characteristics and quality of the
Mortgage Loans and, as more particularly
described herein, has agreed to cure any
material breach thereof or repurchase
the affected Mortgage Loan. In
connection with the creation of, and the
assignment of its interests in the
Mortgage Loans to, the Issuer, the
Company will also assign its rights
under the Mortgage Loan Purchase
Agreement insofar as they relate to or
arise out of the Mortgage Loan Seller's
representations and warranties regarding
the Mortgage Loans. The Issuer will, in
turn, pledge such rights under the
Mortgage Loan Purchase Agreement so
assigned to it as part of the Trust
Estate to secure the Bonds. See
"Description of the Mortgage
Pool--Representations and
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S-12
<PAGE>
- --------------------------------------------------------------------------------
Warranties with respect to the Mortgage
Loans; Repurchases" herein.
The Mortgage Loans will be serviced and
administered by the Master Servicer and,
under the circumstances described
herein, the Special Servicer pursuant to
[the Servicing and Administration
Agreement dated as of ___________, 199_
(the "S&A Agreement"), among the Owner
Trustee on behalf of the Issuer, the
Trustee on behalf of the Bondholders,
the Master Servicer and the Special
Servicer.] See "Servicing of the
Mortgage Loans" herein and "Servicing
and Administration of the Mortgage
Assets" in the Prospectus.
B. The Collection Account ....... All collections on or in respect of the
Mortgage Loans will be deposited in the
Collection Account and, as and to the
extent described herein, will be
available for application to payments on
the Bonds on the related Payment Date
and for payment of certain related
servicing and administrative fees and
expenses. See "Description of the
Underlying Assets--Collection Accounts"
and "Servicing and Administration of the
Mortgage Assets--Collection Accounts" in
the Prospectus.
Payments on the Bonds-General ........ Payments will be made by or on behalf of
the Trustee on each Payment Date to the
Bondholders of record at the close of
business on the related Record Date;
except in the case of the final payment
on any Class of Bonds which will require
presentation and surrender of such
Bonds. All payments made with respect to
any Class of Bonds will be allocated pro
rata among the outstanding Bonds of such
Class based on the respective Bond
Principal Amounts thereof.
Payments of Interest and Principal
on the Bonds........................ [On each Payment Date, unless the Bonds
have been declared due and payable
following an Issuer Event of Default (as
defined in the Prospectus) and such
declaration and its consequences have
not been rescinded and annulled, the
Available Payment Amount (as defined
herein) for such date, which will not
include Prepayment Pemiums under such
circumstances, will be applied to make
payments among the respective Classes of
Bondholders for the following purposes
and in the following order of priority,
in each case to the extent of remaining
funds:
(i) to the holders of the Class A
Bonds in respect of interest, pro
rata between the two Classes of
Class A Bondholders based on
entitlement, up to an amount
equal to all Accrued Bond
Interest (as defined below) in
respect of each such Class of
Bonds for the related Interest
Accrual Period and, to the extent
not previously paid, for all
prior Interest Accrual Periods;
(ii) to the holders of the Class A
Bonds in respect of principal,
allocable as between the two
Classes of Class A Bondholders as
described herein, up to an
- --------------------------------------------------------------------------------
S-13
<PAGE>
amount equal to the lesser of (a)
the then aggregate Bond Principal
Amount of the Class A Bonds and
(b) the Principal Payment Amount
(as defined below) for such
Payment Date;
(iii) to the holders of the Class B
Bonds in respect of interest, up
to an amount equal to all Accrued
Bond Interest in respect of such
Class of Bonds for the related
Interest Accrual Period and, to
the extent not previously paid,
for all prior Interest Accrual
Periods;
(iv) after the aggregate Bond
Principal Amount of the Class A
Bonds has been reduced to zero,
to the holders of the Class B
Bonds in respect of principal, up
to an amount equal to the lesser
of (a) the then aggregate Bond
Principal Amount of the Class B
Bonds and (b) the excess, if any,
of the Principal Payment Amount
for such Payment Date over any
amounts paid on such Payment Date
in retirement of the Class A
Bonds pursuant to clause (ii)
above;
(v) to the holders of the Class C
Bonds in respect of interest, up
to an amount equal to all Accrued
Bond Interest in respect of such
Class of Bonds for the related
Interest Accrual Period and, to
the extent not previously paid,
for all prior Interest Accrual
Periods;
(vi) after the aggregate Bond
Principal Amount of the Class A
and Class B Bonds has been
reduced to zero, to the holders
of the Class C Bonds in respect
of principal, up to an amount
equal to the lesser of (a) the
then aggregate Bond Principal
Amount of the Class C Bonds and
(b) the excess, if any, of the
Principal Payment Amount for such
Payment Date over any amounts
paid on such Payment Date in
retirement of the Class A and/or
Class B Bonds pursuant to clauses
(ii) and (iv) above;
(vii) to the holders of the Class D
Bonds in respect of interest, up
to an amount equal to all Accrued
Bond Interest in respect of such
Class of Bonds for the related
Interest Accrual Period and, to
the extent not previously paid,
for all prior Interest Accrual
Periods;
(viii) after the aggregate Bond
Principal Amount of the Class A,
Class B and Class C Bonds has
been reduced to zero, to the
holders of the Class D Bonds in
respect of principal, up to an
amount equal to the lesser of (a)
the then aggregate Bond Principal
Amount of the Class D Bonds and
(b) the excess, if any, of the
Principal Payment Amount for such
Payment Date over any amounts
paid on
- --------------------------------------------------------------------------------
S-14
<PAGE>
- --------------------------------------------------------------------------------
such Payment Date in retirement
of the Class A, Class B and/or
Class C Bonds pursuant to clauses
(ii), (iv) and (vi) above;
(ix) to the holders of the Class E
Bonds in respect of interest, up
to an amount equal to all Accrued
Bond Interest in respect of such
Class of Bonds for the related
Interest Accrual Period and, to
the extent not previously paid,
for all prior Interest Accrual
Periods;
(x) after the aggregate Bond
Principal Amount of the Class A,
Class B, Class C and Class D
Bonds has been reduced to zero,
to the holders of the Class E
Bonds in respect of principal, up
to an amount equal to the lesser
of (a) the then aggregate Bond
Principal Amount of the Class E
Bonds and (b) the excess, if any,
of the Principal Payment Amount
for such Payment Date over any
amounts paid on such Payment Date
in retirement of the Class A,
Class B, Class C and/or Class D
Bonds pursuant to clauses (ii),
(iv), (vi) and (viii) above;
(xi) to the holders of the Class F
Bonds in respect of interest, up
to an amount equal to all Accrued
Bond Interest in respect of such
Class of Bonds for the related
Interest Accrual Period and, to
the extent not previously paid,
for all prior Interest Accrual
Periods;
(xii) after the aggregate Bond
Principal Amount of the Class A,
Class B, Class C, Class D and
Class E Bonds has been reduced to
zero, to the holders of the Class
F Bonds in respect of principal,
up to an amount equal to the
lesser of (a) the then aggregate
Bond Principal Amount of the
Class F Bonds and (b) the excess,
if any, of the Principal Payment
Amount for such Payment Date over
any amounts paid on such Payment
Date in retirement of the Class
A, Class B, Class C, Class D
and/or Class E Bonds pursuant to
clauses (ii), (iv), (vi), (viii)
and (x) above; and
(xiii) if, after giving effect to the
payments of principal on the
Bonds contemplated by clauses
(ii), (iv), (vi), (viii), (x) and
(xii) above, the aggregate Bond
Principal Amount of all the Bonds
still exceeds the aggregate
Stated Principal Balance of the
Mortgage Pool that will be
outstanding immediately following
such Payment Date, then to the
holders of the Class A Bonds
(allocable as between the two
Classes of Class A Bondholders as
described herein), the Class B
Bonds, the Class C Bonds, the
Class D Bonds, the Class E Bonds
and the Class F Bonds, in that
order, until (in the case of each
Class of Bonds on which payments
of principal are so made) such
excess (or the aggregate Bond
- --------------------------------------------------------------------------------
S-15
<PAGE>
- --------------------------------------------------------------------------------
Principal Amount of such Class of
Bonds) is reduced to zero
(whichever occurs first).]
[Except under the limited circumstances
described herein, payments of principal
on the Class A Bonds as described above
will be paid, first, to the holders of
the Class A-1 Bonds, until the aggregate
Bond Principal Amount of such Class of
Bonds is reduced to zero, and
thereafter, to the holders of the Class
A-2 Bonds, until the aggregate Bond
Principal Amount of such Class of Bonds
is reduced to zero.]
[Any portion of the Available Payment
Amount for any Payment Date that is not
applied to make payments of interest and
principal on the Bonds as described
above will be paid to or at the
direction of Issuer in respect of the
Issuer's Equity on such Payment Date.]
[The "Accrued Bond Interest" in respect
of any Class of Bonds for any Interest
Accrual Period will equal one month's
interest at the applicable Bond Interest
Rate accrued on the aggregate Bond
Principal Amount of such Class of Bonds
outstanding immediately prior to the
related Payment Date. Accrued Bond
Interest will be calculated on the basis
of a 360-day year consisting of twelve
30-day months.]
[The "Principal Payment Amount" for any
Payment Date will, in general, equal the
aggregate of the following:
(a) the principal portions of all
Scheduled Payments (other than
Balloon Payments) and any Assumed
Scheduled Payments due or deemed
due, as the case may be, in
respect of the Mortgage Loans for
their respective Due Dates
occurring during the related
Collection Period;
(b) all payments (including Principal
Prepayments and Balloon Payments)
and other collections (including
Liquidation Proceeds,
Condemnation Proceeds and
Insurance Proceeds (each as
defined in the Prospectus)) that
were received on or in respect of
the Mortgage Loans during the
related Collection Period and
that were identified and applied
by the Master Servicer as
recoveries of principal thereof,
in each case net of any portion
of such payment or other
collection that represents a
recovery of the principal portion
of any Scheduled Payment (other
than a Balloon Payment) due, or
the principal portion of any
Assumed Scheduled Payment deemed
due, in respect of the related
Mortgage Loan on a Due Date
during or prior to the related
Collection Period and not
previously recovered; and
(c) if such Payment Date is
subsequent to the initial Payment
Date, the excess, if any, of (i)
the Principal Payment Amount for
the immediately
- --------------------------------------------------------------------------------
S-16
<PAGE>
- --------------------------------------------------------------------------------
preceding Payment Date, over (ii)
the aggregate payments of
principal made in respect of the
Bonds on such immediately
preceding Payment Date.]
[The "Scheduled Payment" due in respect
of any Mortgage Loan on any related Due
Date will be the amount of the Monthly
Payment that is scheduled to be due in
respect thereof on such date in
accordance with the terms of such
Mortgage Loan in effect on the Closing
Date, without regard to any waiver,
modification or amendment of such
Mortgage Loan subsequent to the Closing
Date, and assuming that each prior
Scheduled Payment has been made in a
timely manner.]
[The "Assumed Scheduled Payment" is an
amount deemed due in respect of any
Balloon Loan that is delinquent in
respect of its Balloon Payment beyond
the first Determination Date that
follows its original stated maturity
date. The Assumed Scheduled Payment
deemed due on any such Mortgage Loan on
its original stated maturity date and on
each successive Due Date that it remains
or is deemed to remain outstanding shall
equal the Scheduled Payment that would
be due in respect thereof on such date
if the related Balloon Payment had not
come due but rather such Mortgage Loan
had continued to amortize in accordance
with such Mortgage Loan's amortization
schedule in effect as of the Closing
Date.]
[Payments of Yield Maintenance
Amounts on the Bonds ............. On each Payment Date, unless the Bonds
have been declared due and payable
following an Issuer Event of Default and
such declaration and its consequences
have not been rescinded and annulled,
the aggregate of all Prepayment Premiums
that were received on the Mortgage Loans
during the related Collection Period
will be applied to make payments among
the respective Classes of Bondholders in
alphabetical order of Class designation
(with the Class A-1 and Class A- 2
Bondholders having a pari passu right to
payment), in each case, (if any) for
their Bonds.
If and to the extent that the aggregate
Prepayment Premiums received on the
Mortgage Loans during any Collection
Period exceed the aggregate Yield
Maintenance Amount in respect of the
Bonds for the related Payment Date, then
such excess will be paid on such Payment
Date to or at the direction of the
Issuer in respect of the Issuer's
Equity. See "Description of the
Bonds--Payments on the Bonds" herein.]
Subordination ........................ [As and to the extent set forth herein,
the rights of the Issuer or its designee
to receive payments of amounts received
on the Mortgage Loans in respect of the
Issuer's Equity will be subordinated to
the rights of the Bondholders to receive
such amounts in respect of interest,
principal and other amounts due and
owing on their Bonds from time to time.
In addition, as and to the extent set
forth herein, for purposes of receiving
payments of interest, principal and
other amounts due and owing thereon from
time to time out of collections on the
Mortgage Loans, the Private Bonds
- --------------------------------------------------------------------------------
S-17
<PAGE>
- --------------------------------------------------------------------------------
will be subordinate to the Offered
Bonds, the Class D Bonds will be
subordinate to the Class A, Class B and
Class C Bonds, the Class C Bonds will be
subordinate to the Class A and Class B
Bonds, and the Class B Bonds will be
subordinate to the Class A Bonds. See
"Description of the Bonds--Payments on
the Bonds" and "--Subordination" herein.
Such subordination will be accomplished
by, among other things, the application
of the Available Payment Amount on each
Payment Date in the order described
above in this Summary under "Payments of
Interest and Principal on the Bonds".
Realized Losses (as defined herein), Net
Aggregate Prepayment Interest Shortfalls
(also as defined herein) and other
shortfalls in respect of the Mortgage
Loans and Extraordinary Expenses (also
as defined herein) will, in each case,
be borne by the Issuer and the holders
of the Private Bonds (to the extent of
amounts otherwise payable in respect of
the Issuer's Equity and the Private
Bonds, respectively) prior to any such
losses, shortfalls and/or expenses being
borne by the holders of the Offered
Bonds. If and to the extent that
Realized Losses, together with any Net
Aggregate Prepayment Interest Shortfalls
and Extraordinary Expenses, exceed the
sum of the initial Overcollateralization
Amount and the initial aggregate Bond
Principal Amount of the Private Bonds,
it is likely that the holders of one or
more Classes of Offered Bonds will not
receive the full Bond Principal Amount
of their Bonds. See "Description of the
Bonds--Subordination" herein.]
Treatment of REO Properties .......... Notwithstanding that a Mortgaged
Property securing any Mortgage Loan may
be acquired as part of the Trust Estate
through foreclosure, deed in lieu of
foreclosure or otherwise (upon
acquisition, an "REO Property"), such
Mortgage Loan will, for purposes of,
among other things, determining payments
of principal on the Bonds, as well as
Master Servicing Fees, Property
Servicing Fees, Special Servicing Fees,
Workout Fees and Trustee Fees (each as
defined herein), generally be treated as
having remained outstanding until such
REO Property is liquidated. In
connection therewith, operating revenues
and other proceeds derived from such REO
Property (exclusive of related operating
costs, including certain reimbursements
payable to the Master Servicer and/or
Special Servicer in connection with the
operation and disposition of such REO
Property) will be "applied" or treated
by the Master Servicer as principal,
interest and other amounts "due" on such
Mortgage Loan; and, subject to a
recoverability determination as more
fully described herein (see "Description
of the Bonds--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
it 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
- --------------------------------------------------------------------------------
S-18
<PAGE>
- --------------------------------------------------------------------------------
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 Payment 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 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 Bonds--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 Payment Date to cover
the aggregate of any Prepayment Interest
Shortfalls incurred during such
Collection Period. A "Prepayment
Interest Shortfall" is a shortfall in
the collection of a full month's
interest (net of related Master
Servicing Fees and Property Servicing
Fees (as defined herein), and without
regard to any Prepayment Premium
actually collected) on any Mortgage Loan
by reason of a full or partial voluntary
principal prepayment being made and
applied to such Mortgage Loan prior to
the related Due Date in any Collection
Period. A "Prepayment Interest Excess"
is a payment of interest (net of related
Master Servicing Fees and Property
Servicing Fees and exclusive of any
Prepayment Premium actually collected)
made in connection with any full or
partial prepayment of a Mortgage Loan
being made and applied to such Mortgage
- --------------------------------------------------------------------------------
S-19
<PAGE>
- --------------------------------------------------------------------------------
Loan after the related Due Date in any
Collection Period, which payment of
interest is intended to cover the period
from such Due Date to the date of
prepayment. The "Net Aggregate
Prepayment Interest Shortfall" for any
Payment Date will be the amount, if any,
by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred
during the related Collection Period
exceeds (b) any Compensating Interest
Payment made by the Master Servicer with
respect to such Payment Date. See
"Servicing of the Mortgage
Loans--Servicing and Other Compensation
and Payment of Expenses" herein.]
[Optional Redemption.................. The Issuer may, at its option, redeem
any Class of Offered Bonds, in whole but
not in part, on any Payment Date, if the
then aggregate Bond Principal Amount of
such Class of Offered Bonds is less than
__% of the initial aggregate Bond
Principal Amount thereof and no Issuer
Event of Default has occurred and is
continuing. Such redemption will be at a
price (calculated after taking into
account payments made on the Bonds out
of the Available Payment Amount for the
applicable Payment Date) equal to 100%
of the aggregate unpaid Bond Principal
Amount of the Bonds redeemed, plus
accrued and unpaid interest through the
end of the related Interest Accrual
Period. Notice of any such optional
redemption must be mailed by the Issuer
or the Trustee at least __ days prior to
the date set for optional redemption. No
Yield Maintenance Amount will be payable
in connection with such optional
redemption. See "Description of the
Bonds--Optional Redemption" herein.]
Certain Investment
Considerations ..................... The yield to maturity on any Offered
Bond purchased at a discount or premium
will be affected by the rate and timing
of principal payments thereon. Principal
payments on the Offered Bonds will, in
turn, be affected by payments and other
collections of principal on or in
respect of the Mortgage Loans. An
investor should consider, in the case of
any Offered Bond purchased at a
discount, the risk that a slower than
anticipated rate of principal payments
thereon could result in a lower than
anticipated yield and, in the case of
any Offered Bond purchased at a premium,
the risk that a faster than anticipated
rate of principal payments thereon could
result in a lower than anticipated
yield. See "Yield and Maturity
Considerations" herein and in the
Prospectus. The full or partial, as
applicable, allocation of Prepayment
Premiums actually collected on the
Mortgage Loans to make payments to the
holders of any particular Class of Bonds
in respect of the related Yield
Maintenance Amount may be insufficient
to offset fully any adverse effects on
the yield of such Class of Bonds that
the related prepayments may otherwise
have.
- --------------------------------------------------------------------------------
S-20
<PAGE>
- --------------------------------------------------------------------------------
Certain Federal Income Tax
Consequences ....................... In the opinion of
______________________, counsel to the
Issuer, for federal income tax purposes,
the Offered Bonds will be characterized
as indebtedness and not as representing
an ownership interest in the Trust
Estate or an equity interest in the
Issuer or the Company. For further
information regarding certain federal
income tax consequences of an investment
in the Bonds, see "Certain Federal
Income Tax Consequences" herein and in
the Prospectus.
Investors are advised to consult their
tax advisors as to the tax consequences
of an investment in the Offered Bonds in
light of investors' individual
circumstances and to review "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 Bonds or an
interest therein 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 Department of Labor ("DOL") has
granted a number of administrative
exemptions which provide relief from
certain of the prohibited transaction
provisions of ERISA and the related
excise tax provisions of the Code. There
can be no assurance that any exemption
granted by the DOL will provide relief
from the prohibited transaction
provisions of ERISA and the Code with
respect to the purchase, sale or holding
of the Offered Bonds.
Any Plan fiduciary considering whether
to purchase any Offered Bonds or an
interest therein 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. See "ERISA Considerations" herein
and in the Prospectus.
Ratings............................... It is a condition to their issuance that
the respective Classes of Offered Bonds
receive the following credit ratings
from ("________") and/or _______________
("_____"; together with _____, the
"Rating Agencies"):
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S-21
<PAGE>
- --------------------------------------------------------------------------------
[Rating [Rating
Class Agency] Agency]
----- ------- -------
Class A-1
Class A-2
Class B
Class C
Class D
The foregoing ratings of the Offered
Bonds address the timely payment thereon
of interest and the ultimate payment
thereon of principal on or before their
Stated Maturity. The foregoing ratings
of the Offered Bonds do not address the
tax attributes of the Offered Bonds, the
Issuer or the Trust Estate. The ratings
of the Offered Bonds do not address
certain other matters as described under
"Ratings" herein. There is no assurance
that any such rating will not be
lowered, qualified or withdrawn by a
Rating Agency, if, in its judgment,
circumstances so warrant. There can be
no assurance whether any other rating
agency will rate any of the Offered
Bonds, or if one does, what rating such
agency would assign. A security rating
is not a recommendation to buy, sell or
hold securities and may be subject to
revision or withdrawal at any time by
the assigning rating agency.
Legal Investment ..................... [The Offered Bonds 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 Bonds may be purchased by
such investors. See "Legal Investment"
herein and in the Prospectus.]
- --------------------------------------------------------------------------------
S-22
<PAGE>
RISK FACTORS
Prospective purchasers of Offered Bonds should consider, among other
things, the following risk factors (as well as the risk factors set forth under
"Risk Factors" in the Prospectus) in connection with an investment therein. [The
following risks are subject to modification to reflect the actual circumstances
relating to any series of Bonds.]
Limited Liquidity. There is currently no secondary market for the
Offered Bonds. The Underwriter has indicated its intention to make a secondary
market in the Offered Bonds, but it is not obligated to do so. There can be no
assurance that a secondary market for the Offered Bonds will develop or, if one
does develop, that it will provide holders of Offered Bonds with liquidity of
investment or that it will continue for the life of the Offered Bonds. The
Offered Bonds will not be listed on any securities exchange. See "Risk
Factors--Limited Liquidity of Offered Securities" in the Prospectus.
Potential Liability to the Trust Estate 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 S&A 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 Issuer or the Trust Estate will become liable for a material
adverse environmental condition at the Mortgaged Property. However, there can be
no assurance that the requirements of the S&A Agreement will effectively
insulate the Issuer and the Trust Estate from potential liability for a
materially adverse environmental condition at any Mortgaged Property.] See
"Servicing and Administration of the Mortgage Assets--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
S-23
<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.
Nonrecourse Mortgage Loans. 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.
None of the Mortgage Loans is insured or guaranteed by any governmental entity
or private mortgage insurer or by any other person. However, as more fully
described under "Description of the Mortgage Pool--Representations and
Warranties with respect to the 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 S&A 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 payable in respect of a Class of Offered
Bonds, whether such delay is due to borrower default or to modification of the
related Mortgage Loan by the Special Servicer, will likely extend the weighted
average life of such Class of Offered Bonds. See "Yield and Maturity
Considerations" herein and in the Prospectus.
Risks Particular to ______________ Properties. [Add disclosure
relating to property types with respect to which there exists a material
concentration in a particular Mortgage Asset Pool (as defined in the
Prospectus).]
Risks Relating to Lack of Bondholder Control Over Trust Estate.
Bondholders generally do not have a right to vote, except in connection with
Issuer Events of Default, S&A Events of Default (as defined in the Prospectus)
and certain amendments to the Indenture and the S&A Agreement (as defined
herein). Furthermore, Bondholders will generally not have the right to make
decisions with respect to the administration of the Mortgage Loans. Such
decisions are generally made, subject to the express terms of the Indenture and
the S&A Agreement, by the Master Servicer, the Special Servicer or the Trustee,
as applicable. Any decision made by one of those parties in respect of the
Mortgage Loans, even if made in the best interests of the Bondholders (as
determined by such party in its good faith and reasonable judgment), may be
contrary to the decision that would have been made by the holders of any
particular Class of Offered Bonds and may negatively affect the interests of
such holders.
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 Bonds in sequential order, such Classes
that have a lower sequential priority are
S-24
<PAGE>
relatively more likely to be exposed to any risks associated with changes in
concentrations of loan or property characteristics.]
Limited Assets for Payment of Offered Bonds. The Offered Bonds will
not be guaranteed or insured by the Company or any of its affiliates, by the
United States or any governmental agency or instrumentality, or by any other
person. The Offered Bondholders will have no recourse to the Issuer in the event
of a default on the Offered Bonds, and each Offered Bondholder will be deemed to
have agreed by the acceptance of its Offered Bond not to file a bankruptcy
petition or commence similar proceedings in respect of the Issuer. Accordingly,
if the Collateral is insufficient to provide payments on the Offered Bonds, no
other assets will be available for payment of the deficiency. Additionally,
certain amounts on deposit from time to time in the Collection Account may be
withdrawn under certain conditions, as described herein and the Prospectus, for
purposes other than the payment of principal of or interest on the Bonds. To the
extent that Realized Losses, Net Aggregate Prepayment Interest Shortfalls and
Extraordinary Expenses exceed the sum of the initial Overcollateralization
Amount and the aggregate Bond Principal Amount of the Private Bonds, it is
unlikely the amounts received on the remaining Mortgage Loans will be sufficient
to make full and timely payment on the Offered Bonds. [Furthermore,
notwithstanding the Mortgage Rates on the Mortgage Loans, the Bond Interest Rate
on each Class of Offered Bonds is a fixed rate set forth in the table on the
cover page hereof. In certain limited circumstances, the Mortgage Rate on one or
more of the Mortgage Loans may be less than the Bond Interest Rate on one or
more Classes of the Offered Bonds. However, holders of the Offered Bonds would
not receive the full Bond Principal Amount of their Bonds, together with Accrued
Bond Interest thereon, generally only if (i) the aggregate Stated Principal
Balance of the Mortgage Pool is less than the aggregate Bond Principal Amount of
the Offered Bonds and/or (ii) the aggregate interest collected in respect of the
Mortgage Loans (net of certain fees and expenses payable therefrom under the
Indenture and the S&A Agreement) is less than the aggregate interest payable on
the Offered Bonds.] See "Description of the Bonds--Subordination" herein and
"Servicing and Administration of the Mortgage Assets--The Collection Account" in
the Prospectus.
Limited Issuer Events of Default. With certain exceptions described
herein and in the Prospectus, the Bondholders will have no independent ability
to declare a default unless the Issuer shall fail to pay the Bonds in full by
their Stated Maturity, which with respect to each Class of Offered Bonds is the
Payment Date in ___________. Interest will be payable on the respective Classes
of Bonds on each Payment Date only to the extent that there are funds available
for such purpose in the Collection Account. The Issuer's failure to pay interest
on the Bonds on a current basis will not constitute an Issuer Event of Default.
In addition, it will not be an Issuer Event of Default if the Stated Principal
Balance of the Mortgage Pool declines below the aggregate Bond Principal Amount
of the Bonds or of any particular Class or Classes thereof. See "Description of
the Indentures--Issuer Events of Default" in the Prospectus.
Bondholders Have Limited Ability to Force Sale of Collateral
Following Non-Payment of Principal or Interest. [Following an Issuer Event of
Default, the Indenture Trustee may (and, at the direction of the holders of
Bonds representing more than 50% of the aggregate Bond Principal Amount of each
Class of Bonds, the Indenture Trustee shall) declare all the Bonds to be due and
payable. In connection with any such declaration of acceleration, the Indenture
Trustee may, as described in the Prospectus, liquidate the Mortgage Collateral
generally only with the consent or at the direction of the holders of Bonds
representing an even greater percentage of the aggregate Bond Principal Amount
of each Class of Bonds. Such declaration of acceleration and its consequences
may be rescinded and annulled under certain circumstances by the holders of
Bonds representing more than 50% of the aggregate Bond Principal Amount of each
Class of Bonds. For purposes of the foregoing, Bonds held by the Issuer, the
Company or any affiliate thereof will be deemed not to be outstanding. See
"Description of the Indentures--Issuer Events of Default" in the Prospectus.
The market value of the Mortgage Loans will fluctuate as general
interest rates fluctuate, among other things. Following an Issuer Event of
Default, there is no assurance that the market value of the Mortgage Loans will
be equal to or greater than the unpaid principal and accrued interest due on the
Bonds, together with any other expenses or liabilities payable from the sales
proceeds. Certain Classes of Bondholders may have a disincentive to authorize
the sale of Bonds following an Issuer Event of Default because the net proceeds
of such sale may be insufficient to pay in full the principal of and interest on
their Bonds.
The inability of a particular Class of Bondholders independently to
force the sale of the Mortgage Loans even though an Issuer Event of Default has
occurred, and the inability of Bondholders to generally force
S-25
<PAGE>
a sale of the Mortgage Loans regardless of a substantial decline in the
aggregate Stated Principal Balance of the Mortgage Pool and notwithstanding that
interest may not have been timely paid on a Class of Bonds, may adversely affect
the holders of one or more Classes of Offered Bonds.]
Certain Yield and Maturity Considerations. As a result of, among
other things, prepayments, defaults and losses on the Mortgage Loans, the amount
and timing of payments of principal and/or interest on the Bonds may be highly
unpredictable. Prepayments on the Mortgage Loans will result in a faster rate of
principal payments on the Bonds than if payments on such Mortgage Loans were
made as scheduled. Defaults and losses on the Mortgage Loans may delay and/or
reduce the principal payments on the Bonds. Thus, the prepayment, default and
loss experience on the Mortgage Loans may affect the aggregate payments on and
the yield to maturity and average life of one or more Classes of Bonds,
including one or more Classes of the Offered Bonds. The rate of principal
payments and defaults and severity of losses on pools of multifamily and
commercial mortgage loans varies among pools and from time to time is influenced
by a variety of economic, demographic, geographic, social, tax and legal
factors, as well as acts of God. For example, if prevailing interest rates fall
significantly below the Mortgage Rates borne by the Mortgage Loans, principal
prepayments thereon are likely to be higher than if prevailing interest rates
remain at or above the rates borne by those Mortgage Loans. Conversely, if
prevailing interest rates rise significantly above the Mortgage Rates borne by
such Mortgage Loans, principal prepayments thereon are likely to be lower than
if prevailing interest rates remain at or below the rates borne by those
Mortgage Loans. The foregoing is subject, however, to, among other things, the
particular terms of the Mortgage Loans (e.g., provisions which prohibit
voluntary prepayments during specified periods or impose penalties in connection
therewith) and the ability of Mortgagors to obtain new financing. There can be
no assurance as to the actual rate of prepayment or default or the severity of
losses on the Mortgage Loans. The extent to which prepayments on Mortgage Loans
ultimately affect the yield to maturity and average life of any Class of Offered
Bonds, will depend on the terms of such Bonds.
The extent to which the yield to maturity of any Class of Offered
Bonds may vary from the anticipated yield will depend upon the degree to which
they are purchased at a discount or premium and the amount and timing of
payments thereon. An investor should consider, in the case of any Offered Bond
purchased at a discount, the risk that a slower than anticipated rate of
principal payments thereon could result in an actual yield to such investor that
is lower than the anticipated yield and, in the case of any Offered Bond
purchased at a premium, the risk that a faster than anticipated rate of
principal payments thereon could result in an actual yield to such investor that
is lower than the anticipated yield.
When considering the effects of prepayments on the average life and
yield of a Bond, an investor should also consider provisions of the Indenture
that permit the optional redemption of the Bonds. [The Issuer may, at its
option, redeem any Class of Offered Bonds, in whole but not in part, on any
Payment Date, if the then aggregate Bond Principal Amount of such Class of Bonds
is less than __% of the initial aggregate Bond Principal Amount thereof.] See
"Yield and Maturity Considerations" herein.
Subordination of Subordinated Bonds. As and to the extent described
herein, the rights of the holders of the respective Classes of Subordinate
Bonds, including the Class B, Class C and Class D Bonds, to receive payments of
amounts collected in respect of the Mortgage Loans will be subordinated to those
of the holders of the Class A Bonds and to those of the holders of each other
Class of Bonds with an earlier alphabetical class designation. As a result of
such subordination, the impact of losses and shortfalls experienced with respect
to the Mortgage Loans may fall primarily upon those Classes of Bonds having a
later right of payment.
The amount of any applicable credit support provided by the Issuer's
Equity in the Collateral to the Bonds, by the Private Bonds to the Offered
Bonds, by the Class D Bonds to the Class A, Class B and Class C Bonds, by the
Class C Bonds to the Class A and Class B Bonds, and by the Class B Bonds to the
Class A Bonds, has been determined on the basis of criteria established by each
Rating Agency that take into account an assumed level of defaults, delinquencies
and losses on the Mortgage Loans. There can be no assurance, however, that the
loss experience on the Mortgage Loans will not exceed such assumed levels. See
"Description of the Bonds--Subordination" herein.
S-26
<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
General
The "Mortgage Pool" will be a segregated pool 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 "Cutoff
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 Issuer, the
Company 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 Company 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 Company and the Mortgage Loan Seller, and the Company
will thereupon assign its interests in the Mortgage Loans, without recourse, to
the Issuer. The Issuer will pledge the Mortgage Loans and the other assets in
the Trust Estate to secure the Bonds. See "--The Mortgage Loan Seller" herein
and "Description of the Indentures--Pledge 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 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
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<PAGE>
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 an
additional amount (a "Prepayment Premium") equal to the greater of a specified
percentage of the principal amount being prepaid or a premium calculated on the
basis of a yield maintenance formula, 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.]
[The Index]
[Describe Index.]
[Delinquent and Nonperforming Mortgage Loans]
[Describe those delinquent and nonperforming Mortgage Loans, if any,
included in the Mortgage Pool.]
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-28
<PAGE>
Mortgage Rates as of the Cut-off Date
Number of Aggregate Percent by
Range of Mortgage Cut-off Aggregate Cut-off
Mortgage Rates(%) Loans Date Balance Date Balance
----------------- ----- ------------ ------------
--------- ------------ -----------------
Total...................
--------- ------------ -----------------
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
Number of Aggregate Percent by
Range of ARM Cut-off Aggregate Cut-off
Gross Margins(%) Loans Date Balance Date Balance
---------------- ----- ------------ ------------
--------- ------------ -----------------
Total...................
--------- ------------ -----------------
Weighted Average
Gross Margin: ____%
S-29
<PAGE>
Frequency of Adjustments to Mortgage Rates and Monthly Payments for the ARM
Loans
Monthly Percent by
Mortgage Rate Payment Number of Aggregate Aggregate
Adjustment Adjustment Mortgage Cut-off Cut-off
Frequency Frequency Loans Date Balance Date Balance
--------- --------- ----- ------------ ------------
--------- ------------ ------------
Total.....
--------- ------------ ------------
Maximum Lifetime Mortgage Rates for the ARM Loans
Range of
Maximum
Lifetime Aggregate Percent by
Mortgage Number of Cut-off Aggregate Cut-off
Rates(%) ARM Loans Date Balance Date Balance
-------- --------- ------------ ------------
Total... ------------ -----------------
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
Range of
Minimum
Lifetime Aggregate Percent by
Mortgage Number of Cut-off Aggregate Cut-off
Rates(%) ARM Loans Date Balance Date Balance
-------- --------- ------------ ------------
Total... ------------ -----------------
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-30
<PAGE>
Cut-off Date Balances
Number of Aggregate Percent by
Cut-off Date Mortage Cut-off Aggregate Cut-off
Balance Range ($) Loans Date Balance Date Balance
----------------- --------- ------------ ------------
--------- ------------ -----------------
Total...
--------- ------------ -----------------
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
Number of Percent by
Mortgage Aggregate Cut-off Aggregate Cut-off
Property Type Loans Date Balance Date Balance
------------- ----- ------------ ------------
Total.........................
--------- ----------------- -----------------
--------- ----------------- -----------------
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<PAGE>
Geographic Distribution of the Mortgaged Properties
Number of Percent by
Mortgage Aggregate Cut-off Aggregate Cut-off
State Loans Date Balance Date Balance
----- ----- ------------ ------------
--------- ----------------- -----------------
Total.........................
--------- ----------------- -----------------
S-32
<PAGE>
Original Term to Stated Maturity (in Months)
Number of Aggregate Percent by
Range of Original Mortgage Cut-off Aggregate Cut-off
Terms (in Months) Loans Date Balance Date Balance
----------------- ----- ------------ ------------
--------- ------------ -----------------
Total.........................
--------- ------------ -----------------
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
Number of Aggregate Percent by
Range of Remaining Mortgage Cut-off Aggregate Cut-off
Terms (in Months) Loans Date Balance Date Balance
------------------ ----- ------------ ------------
--------- ------------ -----------------
Total.........................
--------- ------------ -----------------
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-33
<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 Company 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 neither the Issuer nor the Company has made any 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 Aggregate Percent by
Debt Service Mortgage 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-34
<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
Range of Number of Aggregate Percent by
LTV Ratios(%) Mortgage Cut-off Aggregate Cut-off
as of Cut-off Date Loans Date Balance Date Balance
------------------ ----- ------------ ------------
--------- ------------ ----------------
Total...........................
--------- ------------ ----------------
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-35
<PAGE>
Occupancy Rates
Range of Number of Aggregate Percent by
Occupancy Mortgage Cut-off Aggregate Cut-off
Rates(A) Loans Date Balance Date Balance
--------- ----- ------------ ------------
--------- ------------ ----------------
Total...........................
--------- ------------ ----------------
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 the Mortgage Loans;
Repurchases" and in the Prospectus under "Description of the Underlying
Assets--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 none of the Issuer, the Company or 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-36
<PAGE>
Representations and Warranties with respect to the 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 the Mortgage Loans,
by the Company to the Issuer and, further, will be pledged, together with the
Mortgage Loans, by the Issuer to secure the Bonds) 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 Bondholders 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 Issuer, the Company, 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 Indentures--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 Bonds are issued, as adjusted for the
scheduled principal payments due on or before the Cut-off Date. Prior to the
issuance of the Offered Bonds, a Mortgage Loan may be removed from the Mortgage
Pool if the Company deems such removal necessary or appropriate or if it is
prepaid. A limited number of other mortgage loans may be included in the
Mortgage Pool prior to the issuance of the Offered Bonds, unless including such
mortgage loans would materially alter the characteristics of the Mortgage Pool
as described herein. The Company believes that the information set forth herein
will be representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Offered Bonds are issued, although the range of
Mortgage Rates and maturities and certain other characteristics of the Mortgage
Loans in the Mortgage Pool may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Bonds on or shortly after the Closing Date and will be
filed, together with the Terms Indenture, with the Commission within fifteen
days after the initial issuance of the Offered Bonds. 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 servicing and administration of the Mortgage Pool will be
governed by the terms of the Servicing and Administration Agreement dated as of
__________________, 199__ (the "S&A Agreement"), among the Owner Trustee on
behalf of the Issuer, the Trustee on behalf of the Bondholders, the Master
Servicer and the Special Servicer. 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 Bondholders and the
Issuer, in accordance with applicable law, the terms of the S&A Agreement and
the terms of the respective Mortgage
S-37
<PAGE>
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 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 net recovery
on such Mortgage Loan 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 S&A Agreement; (ii) its ownership (or that
of an affiliate) of any Bond; (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 S&A 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 as part of the Trust Estate (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 S&A 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:
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<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 S&A Agreement relating to the servicing of the Mortgage Loans. Reference is
also made to the Prospectus, in particular to the section captioned "Servicing
and Administration of the Mortgage Assets", for additional important information
regarding the terms and conditions of the S&A 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 Issuer, the Company, the Underwriter, the Trustee, 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 Issuer, the Company, the Underwriter, the Trustee, 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-39
<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 S&A 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 S&A 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 S&A Agreement. See
"Servicing and Administration of the Mortgage Assets--Collection 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 Collection 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 "Servicing and Administration of
the Mortgage Assets--Collection 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 would have
accrued on the amount of such Principal Prepayment from the date of such
Principal Prepayment to, but not including, such Due Date, to the extent not
collected (without regard to any related Prepayment Premium), will constitute a
"Prepayment Interest Shortfall". 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 from such Due Date to, but not including,
the date of such Principal Prepayment, to the extent collected (exclusive of any
related Prepayment Premium), will constitute a "Prepayment Interest Excess". Any
Prepayment Interest Excesses collected will be paid to the Master Servicer as
additional servicing compensation. However, with respect to each Payment Date,
the Master Servicer will be required to deposit into the Collection 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
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accruals that result from any liquidation of a defaulted Mortgage Loan or an REO
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
Payment 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 Collection 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 Collection 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, 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 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 or Liquidation Fee payable to the Special Servicer with
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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 Collection 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 S&A 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 S&A 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 S&A 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 Collection 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 S&A 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 the Issuer or any Bondholder. 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
S&A 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 Bonds--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
Bondholder, 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 net recovery
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 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
(iv) 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 (iv) 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 (iv) 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 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.]
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[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 BONDS
General
The Issuer's Series 199__-__ Collateralized Mortgage Obligations
(the "Bonds") will be issued on or about ___________, 199__ (the "Closing Date")
in an aggregate Bond Principal Amount of approximately $_____________, pursuant
to a Terms Indenture, to be dated as of ____________, 199__ (the "Terms
Indenture"), between the Owner Trustee, on behalf of the Issuer, and the
Trustee, on behalf of the holders of the Bonds (the "Bondholders"), which Terms
Indenture incorporates by reference certain standard indenture provisions of the
Company, dated as of _________________, 1997 and filed as part of the
registration statement relating to the Offered Bonds (the Terms Indenture, as it
so incorporates by reference such standard indenture provisions, the
"Indenture"). The Bonds will be issued in [seven] classes (each, a "Class") to
be designated as: [(i) the Class A-1 and Class A-2 Bonds (collectively, the
"Class A Bonds" or the "Senior Bonds"); (ii) the Class B, Class C and Class D
Bonds (collectively with the Class A Bonds, the "Offered Bonds"); and (iii) the
Class E and Class F Bonds (collectively, the "Private Bonds"; and, collectively
with the Class B, Class C and Class D Bonds, the "Subordinate Bonds")]. The
Bonds will be secured by the Trust Estate. The "Trust Estate" will consist of
all rights, money, instruments, securities and other property, including all
proceeds thereof, which are subject to, or intended to be subject to, the lien
of the Indenture for the benefit of the Bondholders, including without
limitation the Collateral. The "Collateral" will consist of the Mortgage Loans,
any REO Properties and the Collection Account, all of which is more specifically
described under "Description of the Mortgage Pool" herein and "Description of
the Underlying Assets" and "Servicing and Administration of the Mortgage
Assets--Collection Account" in the Prospectus.
Only the Offered Bonds are offered hereby. The Private Bonds will
initially be issued to and held by an affiliate of the Issuer and are not
offered hereby.
The Offered Bonds will be non-recourse obligations of the Issuer.
The holders and beneficial owners of the Offered Bonds will be deemed to have
agreed that they have no rights or claims against the Issuer directly and may
only look to the Collateral to satisfy the Issuer's obligations under the
Indenture. Each holder and beneficial owner of an Offered Bond will also be
deemed, by the acceptance of its Bond or interest therein, to have agreed not to
file or cause a filing against the Issuer of an involuntary petition under any
bankruptcy or receivership law.
The Offered Bonds are not insured or guaranteed by any government
agency or instrumentality or by any other person.
The respective Classes of Bonds will be issued in the initial
aggregate Bond Principal Amounts (in each case, subject to a variance of plus or
minus 5%), and will accrue interest at the Bond Interest Rates set forth below:
Initial
Aggregate Bond Bond
Class Principal Amount Interest Rate
----- ---------------- -------------
Class A-1........................ $ %
Class A-2........................ $ %
Class B.......................... $ %
Class C.......................... $ %
Class D.......................... $ %
Class E.......................... $ %
Class F.......................... $ %
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The "Issuer's Equity" represents the right of the Issuer or its
designee (i) to receive all payments on and proceeds of the Collateral not
otherwise allocable to pay interest, principal or other amounts on the Bonds in
accordance with their terms or expenses of the Trust Estate and (ii) to have the
remaining Collateral returned to it after the Indenture is satisfied and
discharged. The principal amount of the Issuer's Equity as of any date of
determination is the amount (the "Overcollateralization Amount"), if any, by
which the then aggregate Stated Principal Balance of the Mortgage Pool
(initially equal to the Initial Pool Balance) exceeds the then aggregate Bond
Principal Amount of all the Bonds. As of the Closing Date, the
Overcollateralization Amount will equal approximately $_______________.
The "Stated Principal Balance" of each Mortgage Loan will generally
equal the Cut-off Date Balance thereof, reduced (to not less than zero) on each
Payment Date by (i) any payments or other collections (or advances in lieu
thereof) of principal of such Mortgage Loan that have been (or, if they had not
been applied to cover Extraordinary Expenses, would have been) applied to make
payments to Bondholders and/or the Issuer on such date and (ii) the principal
portion of any Realized Loss incurred in respect of such Mortgage Loan during
the related Collection Period.
The "Collection Period" with respect to any Payment Date will be the
period commencing immediately following the Determination Date in the month
immediately preceding the month in which such Payment Date occurs (or, in the
case of the initial Collection Period, commencing immediately following the
Cut-off Date) and ending on and including the Determination Date in the month in
which such Payment Date occurs.
The "Determination Date" with respect to any Payment Date will be
the __th day of the month in which such Payment Date occurs, of if such __th day
is not a business day, the immediately preceding business day.
Registration and Denominations
The Offered Bonds will be issued in denominations of not less than
$_______ initial Bond Principal Amount and in any whole dollar denomination in
excess thereof.
Each Class of Offered Bonds will initially be issued in book-entry
form through the facilities of The Depository Trust Company ("DTC") and,
accordingly, will constitute Book-Entry Bonds and Book-Entry Securities within
the meaning of the Prospectus. In connection therewith, each Class of Offered
Bonds will initially be represented by one or more fully registered physical
securities registered in the name of the nominee of DTC. The Company has been
informed by DTC that DTC's nominee will be Cede & Co. No beneficial owner of a
Book-Entry Bond (each, a "Bond Owner") will be entitled to receive a fully
registered physical security (a "Definitive Bond") representing its interest in
such Bond, except under the limited circumstances described under "Description
of the Securities--Book-Entry Registration and Definitive Securities" in the
Prospectus. Unless and until Definitive Bonds are issued in respect of the
Offered Bonds, beneficial ownership interests in each such Class of Bonds will
be maintained and transferred on the book-entry records of DTC and its
participating organizations (the "DTC Participants"), and all references to
actions by holders of each such Class of Bonds will refer to actions taken by
DTC upon instructions received from the related Bond Owners through the DTC
Participants in accordance with DTC procedures, and all references herein to
payments, notices, reports and statements to the holders of each such Class of
Bonds will refer to payments, notices, reports and statements to DTC or Cede &
Co., as the registered holder thereof, for payment to the related Bond Owners
through the DTC Participants in accordance with DTC procedures. The form of such
payments and transfers may result in certain delays in receipt of payments by an
investor and may restrict an investor's ability to pledge its securities. See
"Description of the Securities--Book-Entry Registration and Definitive
Securities" and "Risk Factors--Book-Entry Registration" in the Prospectus.
The Trustee will initially serve as registrar (in such capacity, the
"Bond Registrar") for purposes of recording and otherwise providing for the
registration of the Offered Bonds and, if and to the extent Definitive Bonds are
issued in respect thereof, of transfers and exchanges of the Offered Bonds.
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Payments on the Bonds
General. Payments on the Bonds will be made by or on behalf of the
[Trustee], to the extent of available funds, on the ___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 "Payment Date"). Except
as described below, all such payments will be made to the Bondholders of record
at the close of business on the last business day of the month preceding the
month in which the related Payment Date occurs (each, a "Record Date"). [As to
each such Bondholder, such payments will be made by wire transfer in immediately
available funds to the account specified by the Bondholder at a bank or other
entity having appropriate facilities therefor, if such Bondholder will have
provided the Trustee with wiring instructions no less than ____ business days
prior to the related Record Date and is the registered owner of Bonds with an
aggregate initial Bond Principal Amount of at least $[5,000,000], or otherwise
by check mailed to such Bondholder.] Until Definitive Bonds are issued in
respect thereof, Cede & Co. will be the registered holder of the Offered Bonds.
See "--Registration and Denominations" above. The final payment on any Bond will
be made only upon presentation and surrender of such Bond at the location that
will be specified in a notice of the pendency of such final payment. All
payments made with respect to a Class of Bonds will be allocated pro rata among
the outstanding Bonds of such Class based on the respective Bond Principal
Amounts thereof.
Funds Available for Payments on the Bonds. With respect to any
Payment Date, payments of interest and principal on the Bonds will be made from
the Available Payment Amount for such date. [The "Available Payment Amount" for
any Payment Date will, in general, equal (a) all amounts on deposit in the
Collection Account (see "Servicing and Administration of the Mortgage
Assets--Collection 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 (however, Prepayment Premiums will be
excluded from the Available Payment Amount only if the Bonds have not been
declared due and payable following an Issuer Event of Default or if any such
declaration and its consequences have been rescinded and annulled);
(iii) amounts that are payable or reimbursable to any person
other than the Bondholders in respect of their Bonds or the Issuer in respect of
the Issuer's Equity (including amounts payable to the Master Servicer, the
Special Servicer, any Sub-Servicers or the Trustee as compensation (including
Trustee Fees, 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 Extraordinary Expenses); and
(iv) amounts deposited in the Collection Account in error;
plus
(b) to the extent not already included in clause (a), any P&I Advances and/or
Compensating Interest Payment made in respect of such Payment Date.]
With respect to any Payment Date, payments of Yield Maintenance
Amounts on the Bonds will be made from Prepayment Premiums actually collected on
the Mortgage Loans during the related Collection Period.
Priority of Payments. On each Payment Date, unless the Bonds have
been declared due and payable following an Issuer Event of Default and such
declaration and its consequences have not been rescinded and annulled, the
Available Payment Amount for such date will be applied to make payments to the
respective Classes of Bondholders and the Issuer for the following purposes and
in the following order of priority, in each case to the extent of remaining
funds:
[(i) to the holders of the Class A Bonds in respect of
interest, pro rata as between the two Classes of Class A
Bondholders based on entitlement, up to an amount equal
to all Accrued Bond Interest (as defined below) in
respect of each such Class of Bonds for the related
Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
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(ii) to the holders of the Class A Bonds in respect of
principal, allocable as between the two Classes of Class
A Bondholders as described below, up to an amount equal
to the lesser of (a) the then aggregate Bond Principal
Amount of the Class A Bonds and (b) the Principal
Payment Amount (as defined below) for such Payment Date;
(iii) to the holders of the Class B Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(iv) after the aggregate Bond Principal Amount of the Class A
Bonds has been reduced to zero, to the holders of the
Class B Bonds in respect of principal, up to an amount
equal to the lesser of (a) the then aggregate Bond
Principal Amount of the Class B Bonds and (b) the
excess, if any, of the Principal Payment Amount for such
Payment Date over any amounts paid on such Payment Date
in retirement of the Class A Bonds pursuant to clause
(ii) above;
(v) to the holders of the Class C Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(vi) after the aggregate Bond Principal Amount of the Class A
and Class B Bonds has been reduced to zero, to the
holders of the Class C Bonds in respect of principal, up
to an amount equal to the lesser of (a) the then
aggregate Bond Principal Amount of the Class C Bonds and
(b) the excess, if any, of the Principal Payment Amount
for such Payment Date over any amounts paid on such
Payment Date in retirement of the Class A and/or Class B
Bonds pursuant to clauses (ii) and (iv) above;
(vii) to the holders of the Class D Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(viii) after the aggregate Bond Principal Amount of the Class
A, Class B and Class C Bonds has been reduced to zero,
to the holders of the Class D Bonds in respect of
principal, up to an amount equal to the lesser of (a)
the then aggregate Bond Principal Amount of the Class D
Bonds and (b) the excess, if any, of the Principal
Payment Amount for such Payment Date over any amounts
paid on such Payment Date in retirement of the Class A,
Class B and/or Class C Bonds pursuant to clauses (ii),
(iv) and (vi) above;
(ix) to the holders of the Class E Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(x) after the aggregate Bond Principal Amount of the Class
A, Class B, Class C and Class D Bonds has been reduced
to zero, to the holders of the Class E Bonds in respect
of principal, up to an amount equal to the lesser of (a)
the then aggregate Bond Principal Amount of the Class E
Bonds and (b) the excess, if any, of the Principal
Payment Amount for such Payment Date over any amounts
paid on such Payment Date in retirement of the Class A,
Class B, Class C and/or Class D Bonds pursuant to
clauses (ii), (iv), (vi) and (viii) above;
(xi) to the holders of the Class F Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest
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Accrual Period and, to the extent not previously paid,
for all prior Interest Accrual Periods;
(xii) after the aggregate Bond Principal Amount of the Class
A, Class B, Class C, Class D and Class E Bonds has been
reduced to zero, to the holders of the Class F Bonds in
respect of principal, up to an amount equal to the
lesser of (a) the then aggregate Bond Principal Amount
of the Class F Bonds and (b) the excess, if any, of the
Principal Payment Amount for such Payment Date over any
amounts paid on such Payment Date in retirement of the
Class A, Class B, Class C, Class D and/or Class E Bonds
pursuant to clauses (ii), (iv), (vi), (viii) and (x)
above;
(xiii) if, after giving effect to the payments of principal on
the Bonds contemplated by clauses (ii), (iv), (vi),
(viii), (x) and (xii) above, the aggregate Bond
Principal Amount of all the Bonds still exceeds the
aggregate Stated Principal Balance of the Mortgage Pool
that will be outstanding immediately following such
Payment Date, then to the holders of the Class A Bonds
(allocable as between the two Classes of Class A
Bondholders as described below), the Class B Bonds, the
Class C Bonds, the Class D Bonds, the Class E Bonds and
the Class F Bonds, in that order, in respect of
principal, until (in the case of each Class of Bonds on
which payments of principal are so made) such excess (or
the aggregate Bond Principal Amount of such Class of
Bonds) is reduced to zero (whichever occurs first); and
(xiv) to or at the direction of the Issuer in respect of the
Issuer's Equity to the extent of any remaining portion
of the Available Payment Amount for such Payment Date.]
[On each Payment Date prior to the Class A Principal Payment
Cross-Over Date, if any, all payments of principal on the Class A Bonds
described above will be paid, first, to the holders of the Class A-1 Bonds,
until the aggregate Bond Principal Amount of such Class of Bonds is reduced to
zero, and thereafter, to the holders of the Class A-2 Bonds, until the aggregate
Bond Principal Amount of such Class of Bonds is reduced to zero. On each Payment
Date on and after the Class A Principal Payment Cross-Over Date, all payments of
principal on the Class A Bonds described above will be paid to the holders of
such two Classes of Bonds, pro rata, in accordance with their respective
aggregate Bond Principal Amounts immediately prior to such Payment Date, until
the aggregate Bond Principal Amount of each such Class of Bonds is reduced to
zero. Provided that both the Class A-1 Bonds and the Class A-2 Bonds are still
outstanding, the "Class A Principal Payment Cross-Over Date" will be the first
Payment Date as of which the aggregate Bond Principal Amount of the Class A
Bonds immediately prior thereto equals or exceeds the sum of (a) the aggregate
Stated Principal Balance of the Mortgage Pool that will be outstanding
immediately following such Payment Date, plus (b) the lesser of (i) the
Principal Payment Amount for such Payment Date and (ii) the Available Payment
Amount Funds for such Payment Date that will be remaining following the payment
of all Accrued Bond Interest payable on the Class A Bonds on such Payment Date.]
[On each Payment Date, unless the bonds have been declared due and
payable following an Issuer Event of Default and such declaration has not been
rescinded or annulled, any Prepayment Premiums actually collected during the
related Collection Period will be applied to make payments to the respective
Classes of Bondholders and the Issuer for the following purposes and in the
following order of priority, in each case to the extent of remaining funds:
(i) to the holders of the Class A Bonds in respect of
additional interest, pro rata as between the two Classes of Class A
Bondholders based on entitlement, up to an amount equal to the Yield
Maintenance Amount (as defined below) for each such Class of Bonds
for such Payment Date;
(ii) to the holders of the Class B Bonds in respect of
additional interest, up to an amount equal to the Yield Maintenance
Amount for such Class of Bonds for such Payment Date;
(iii) to the holders of the Class C Bonds in respect of
additional interest, up to an amount equal to the Yield Maintenance
Amount for such Class of Bonds for such Payment Date;
(iv) to the holders of the Class D Bonds in respect of
additional interest, up to an amount equal to the Yield Maintenance
Amount for such Class of Bonds for such Payment Date;
(v) to the holders of the Class E Bonds in respect of
additional interest, up to an amount equal to the Yield Maintenance
Amount for such Class of Bonds for such Payment Date;
(vi) to the holders of the Class F Bonds in respect of
additional interest, up to an amount equal to the Yield Maintenance
Amount for such Class of Bonds for such Payment Date; and
(vii) to or at the direction of the Issuer in respect of the
Issuer's Equity to the extent of any remaining Prepayment Premiums
actually collected during the related Collection Period.]
On each Payment Date, if the Bonds have been declared due and payable
following an Issuer Event of Default and such declaration and its consequences
have not been rescinded and annulled, the Available Payment Amount (which will,
under such circumstances include Prepayment Premiums) for such date will be
applied to make payments to the respective Classes of Bondholders and the Issuer
for the following purposes and in the following order of priority, in each case
to the extent of remaining funds;
[(i) to the holders of the Class A-1 and Class A-2 Bonds in
respect of interest, pro rata based on entitlement up to an amount
equal to all Accrued Bond Interest in respect of each such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(ii) to the holders of the Class A-1 and Class A-2 Bonds in
respect of principal, pro rata based on their respective aggregate
Bond Principal Amounts, until such Bonds are retired;
(iii) to the holders of the Class B Bonds in respect of
interest, up to an amount equal to all Accrued Bond Interest in
respect of such Class of Bonds for the related Interest Accrual
Period and, to the extent not previously paid, for all prior
Interest Accrual Periods;
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(iv) after the aggregate Bond Principal Amount of the Class A
Bonds has been reduced to zero, to the holders of the Class B Bonds
in respect of principal, until such Bonds are retired;
(v) to the holders of the Class C Bonds in respect of
interest, up to an amount equal to all Accrued Bond Interest in
respect of such Class of Bonds for the related Interest Accrual
Period and, to the extent not previously paid, for all prior
Interest Accrual Periods;
(vi) after the aggregate Bond Principal Amount of the Class A
and Class B Bonds has been reduced to zero, to the holders of the
Class C Bonds in respect of principal, until such Bonds are retired;
(vii) to the holders of the Class D Bonds in respect of
interest, up to an amount equal to all Accrued Bond Interest in
respect of such Class of Bonds for the related Interest Accrual
Period and, to the extent not previously paid, for all prior
Interest Accrual Periods;
(viii) after the aggregate Bond Principal Amount of the Class
A, Class B and Class C Bonds has been reduced to zero, to the
holders of the Class D Bonds in respect of principal, until such
Bonds are retired; and
(ix) to the holders of the Class E Bonds in respect of
interest, up to an amount equal to all Accrued Bond Interest in
respect of such Class of Bonds for the related Interest Accrual
Period and, to the extent not previously paid, for all prior
Interest Accrual Periods;
(x) after the aggregate Bond Principal Amount of the Class A,
Class B, Class C and Class D Bonds has been reduced to zero, to the
holders of the Class E Bonds in respect of principal, until such
Bonds are retired;
(xi) to the holders of the Class F Bonds in respect of
interest, up to an amount equal to all Accrued Bond Interest in
respect of such Class of Bonds for the related Interest Accrual
Period and, to the extent not previously paid, for all prior
Interest Accrual Periods;
(xii) after the aggregate Bond Principal Amount of the Class
A, Class B, Class C, Class D and Class E Bonds has been reduced to
zero, to the holders of the Class F Bonds in respect of principal,
until such Bonds are retired; and
(xiii) after the aggregate Bond Principal Amount of all the
Bonds has been reduced to zero, to or at the direction of the Issuer
in respect of the Issuer's Equity to the extent of any remaining
portion of the Available Payment Amount for such Payment Date.]
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Accrued Bond Interest. [The "Accrued Bond Interest" in respect of
any Class of Bonds for any Interest Accrual Period will equal one month's
interest at the applicable Bond Interest Rate accrued on the aggregate Bond
Principal Amount of such Class of Bonds outstanding immediately prior to the
related Payment Date. Accrued Bond Interest will be calculated on the basis of a
360-day year consisting of twelve 30-day months.]
[If the portion of the Available Payment Amount payable in respect
of interest on any Class of Offered Bonds on any Payment Date is less than the
Accrued Bond Interest then payable for such Class, the shortfall will be payable
to holders of such Class of Bonds on subsequent Payment Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Bonds for so
long as it is outstanding. The failure to pay the full amount of Accrued Bond
Interest in respect of any Class of Bonds on any Payment Date will not be an
Issuer Event of Default.]
[As to each Class of Bonds for any Payment Date, the "Interest
Accrual Period" will be the calendar month preceding the month in which such
Payment Date occurs.]
Principal Payment Amount. [The "Principal Payment Amount" for
any Payment Date will, in general, equal the aggregate of the following:
(a) the principal portions of all Scheduled Payments (other
than Balloon Payments) and any Assumed Scheduled Payments due or
deemed due, as the case may be, in respect of the Mortgage Loans for
their respective Due Dates occurring during the related Collection
Period;
(b) all payments (including Principal Prepayments and Balloon
Payments) and other collections (including Liquidation Proceeds,
Condemnation Proceeds and Insurance Proceeds) that were received on
or in respect of the Mortgage Loans during the related Collection
Period and that were identified and applied by the Master Servicer
as recoveries of principal thereof, in each case net of any portion
of such payment or other collection that represents a recovery of
the principal portion of any Scheduled Payment (other than a Balloon
Payment) due, or the principal portion of any Assumed Scheduled
Payment deemed due, in respect of the related Mortgage Loan on a Due
Date during or prior to the related Collection Period and not
previously recovered; and
(c) if such Payment Date is subsequent to the initial Payment
Date, the excess, if any, of (i) the Principal Payment Amount for
the immediately preceding Payment Date, over (ii) the aggregate
payments of principal made in respect of the Bonds on such
immediately preceding Payment Date.]
[The "Scheduled Payment" due in respect of any Mortgage Loan on any
related Due Date will be the amount of the Monthly Payment that is scheduled to
be due in respect thereof on such date in accordance with the terms of such
Mortgage Loan in effect on the Closing Date, without regard to any waiver,
modification or amendment of such Mortgage Loan subsequent to the Closing Date,
and assuming that each prior Scheduled Payment has been made in a timely
manner.]
[The "Assumed Scheduled Payment" is an amount deemed due in respect
of any Balloon Loan that is delinquent in respect of its Balloon Payment beyond
the first Determination Date that follows its original stated maturity date. The
Assumed Scheduled Payment deemed due on any such Mortgage Loan on its original
stated maturity date and on each successive Due Date that it remains or is
deemed to remain outstanding shall equal the Scheduled Payment that would be due
in respect thereof on such date if the related Balloon Payment had not come due
but rather such Mortgage Loan had continued to amortize in accordance with such
Mortgage Loan's amortization schedule in effect as of the Closing Date.]
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[The failure to pay the full Principal Payment Amount on the Bonds
on any Payment Date will not be an Issuer Event of Default except to the extent
that any Bond is not retired by Stated Maturity.]
[Yield Maintenance Amount. The "Yield Maintenance Amount" will
equal: (a) with respect to any Class of Bonds, for any Payment Date on which any
portion of the Principal Prepayment Amount (as defined below), if any, is paid
thereon on such Payment Date, an amount equal to the present value of a series
of equal monthly payments deemed payable on each future Payment Date up to and
including the Assumed Final Payment Date for such Class of Bonds, each such
monthly payment to be equal to the related Interest Payment Adjustment and to be
discounted from the applicable future Payment Date to the then current Payment
Date at a per annum rate equal to the sum of (i) the yield per annum on United
States treasury securities having a maturity closest to the Assumed Final
Payment Date for such Class of Bonds, plus (ii) ___ basis points; and (b) with
respect to any Class of Bonds for any Payment Date on which no portion of a
Principal Prepayment Amount is paid thereon on such Payment Date, zero. For
purposes of the foregoing, the "related Interest Payment Adjustment" will equal
one-twelfth of the product of the Bond Interest Rate for the subject Class of
Bonds, multiplied by the portion of the Principal Prepayment Amount for such
Payment Date payable on such Class of Bonds. The "Principal Prepayment Amount"
for any Payment Date will be that portion of the Principal Payment Amount for
such Payment Date that represents voluntary principal prepayments and other
early collections of principal on or in respect of the Mortgage Loans received
in advance of their respective stated maturity dates as of the Closing Date.]
[Failure to pay the full Yield Maintenance Amount in respect of any
Class of bonds on any Payment Date will not be an Issuer Event of Default and
the shortfall will not be carried forward to any subsequent Payment Date.]
Treatment of REO Properties. Notwithstanding that any Mortgaged
Property may be acquired as part of the Trust Estate through foreclosure, deed
in lieu of foreclosure or otherwise, the related Mortgage Loan will, for
purposes of, among other things, determining payments of principal on the Bonds,
as well as the amount of Master Servicing Fees, Property Servicing Fees, Special
Servicing Fees, Workout Fees and Trustee Fees payable under the Indenture and
the S&A 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 "Principal Payment Amount" and "Principal
Prepayment Amount" are intended to include any Mortgage Loan or Mortgage Loans
as to which the related Mortgaged Property has become an REO Property.
Subordination
[As and to the extent described herein, the rights of the Issuer or
its designee to receive payments of amounts received on the Mortgage Loans in
respect of the Issuer's Equity will be subordinated to the rights of holders of
the Bonds to receive such amounts in respect of interest, principal and other
amounts due and owing on their Bonds from time to time. In addition, as and to
the extent described herein, the rights of holders of the Subordinate Bonds
(including the Class B, Class C and Class D Bonds) to receive payments of
amounts received on the Mortgage Loans in respect of interest, principal and
other amounts due and owing on their Bonds from time to time will, in the case
of each Class thereof, be subordinated to such rights of the holders of the
Class A Bonds and the holders of each other Class of Subordinate Bonds with an
earlier alphabetical Class designation. This subordination is intended to
enhance the likelihood of timely receipt by the holders of the Class A Bonds of
the full amount of Accrued Bond Interest payable in respect of such Bonds on
each Payment Date, and the ultimate receipt by the holders of such Bonds of
principal in an amount equal to the entire aggregate Bond Principal Amount
thereof. Similarly, but to decreasing degrees, this subordination is also
intended to enhance the likelihood of timely receipt by the holders of the other
Classes of Offered Bonds of the full amount of Accrued Bond Interest payable in
respect of such Bonds on each Payment Date, and the ultimate receipt by the
holders of such Bonds of principal equal to the entire aggregate Bond Principal
Amount thereof. This subordination will be accomplished by, among other things,
the application of the Available Payment Amount on each Payment Date in
accordance with the order of priority described under "--Payments
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on the Bonds--Priority of Payments" above. No other form of Credit Support will
be available for the benefit of any Class of Offered Bondholders.
Realized Losses, Net Aggregate Prepayment Interest Shortfalls and
other shortfalls in respect of the Mortgage Loans and Extraordinary Expenses
will, in each case, be borne by the Issuer and the holders of the Private Bonds
(to the extent of amounts otherwise payable in respect of the Issuer's Equity
and the Private Bonds, respectively) prior to any such losses, shortfalls and/or
expenses being borne by the Offered Bondholders. If and to the extent that
Realized Losses, together with any Net Aggregate Prepayment Interest Shortfalls
and/or Extraordinary Expenses, exceed the sum of the initial
Overcollateralization Amount and the initial aggregate Bond Principal Amount of
the Private Bonds, it is likely that the holders of one or more Classes of
Offered Bonds will not receive the full Bond Principal Amount of their Bonds.
[Furthermore, notwithstanding the Mortgage Rates on the Mortgage Loans, the Bond
Interest Rate on each Class of Bonds is fixed. In certain limited circumstances,
the Mortgage Rate on one or more of the Mortgage Loans may be less than the Bond
Interest Rate on one or more Classes of the Offered Bonds. However, holders of
the Offered Bonds would not receive the full Bond Principal Amount of their
Bonds, together with Accrued Bond Interest thereon, generally only if (i) the
aggregate Stated Principal Balance of the Mortgage Pool is less than the
aggregate Bond Principal Amount of the Offered Bonds and/or (ii) aggregate
interest collected in respect of the Mortgage Loans (net of certain fees and
expenses payable therefrom under the Indenture and the S&A Agreement) is less
than the aggregate interest payable on the Offered Bonds.]
"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 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.
"Extraordinary Expenses" are any expenses of the Trust Estate not
specifically included in the calculation of a "Realized Loss," that would result
in the Bondholders (in respect of their Bonds) and the Issuer (in respect of the
Issuer's Equity) receiving less than the full amount of principal and/or
interest to which they are entitled on any Payment Date. Extraordinary 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 Estate,
including, but not limited to, certain reimbursements and indemnification to the
Trustee and certain related persons described under "Description of the
Securities--The Trustee--Certain Matters Regarding the Trustee" in the
Prospectus, certain reimbursements and indemnification to the Master Servicer,
the Special Servicer and certain related persons described under "Servicing and
Administration of the Mortgage Assets--Certain Matters regarding the Master
Servicer, the Special Servicer, the REMIC Administrator, the Manager and the
Company" in the Prospectus, 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 Estate; and (iv) any other expense of the Trust
Estate 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 Payment 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 S&A Agreement, from funds
held in the
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Collection Account that are not required to be paid to Bondholders and/or the
Issuer on such Payment 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 Payment
Date immediately following the date of such determination and with respect to
each subsequent Payment 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 Payment 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 Payment Date is not deposited in the Collection Account, 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. 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 Collection 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
Collection Account.]
[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 payment to Bondholders and/or the Issuer 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
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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).
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 Bondholders; Certain Available Information
[Trustee Reports; Special Servicer Reports. Based on information
provided in monthly reports prepared by the Master Servicer and the Special
Servicer and delivered to the Trustee, the Trustee will prepare and forward on
each Payment Date to each Bondholder a statement (the "Trustee Report")
substantially in the form of Annex ___ hereto, detailing the payments on the
Bonds on such Payment Date and the performance, both in the aggregate and
individually to the extent available, of the Mortgage Loans and Mortgaged
Properties. [Investors and any other interested party may obtain Trustee Reports
via the Trustee's electronic bulletin board by dialing ___________ and selecting
the applicable statement. In addition, investors and other interested parties
who have obtained approval from the Company, confirmation of which approval has
been furnished to the Trustee, may obtain certain Mortgage Loan information via
the Trustee's restricted electronic bulletin board by contacting the Trustee at
____________.]
With respect to each Determination Date, the Special Servicer will
be required to prepare a report (the "Special Servicer Report") generally
containing the information described in Annex __ hereto with respect to
Specially Serviced Mortgage Loans. The Special Servicer Reports will be
delivered to the Trustee and the Master Servicer, and the Trustee will
distribute such reports to the Bondholders.
Until such time as Definitive Bonds are issued in respect of the
Offered Bonds, the foregoing information will be available to the Bond Owners
through DTC and the DTC Participants. Any Bond Owner
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of a Book-Entry Bond who does not receive information through DTC or the DTC
Participants may request that Trustee Reports, Special Servicer Reports and
accompanying documentation be mailed directly to it (at its cost) by written
request (accompanied by verification of such Bond Owner's ownership interest) to
the Trustee at the Trustee's corporate trust office primarily responsible for
administering the Trust Estate (the "Corporate Trust Office"). The manner in
which notices and other communications are conveyed by DTC to DTC Participants,
and by DTC Participants to the Bond Owners of Book-Entry Bonds, will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time. The Master Servicer, the Special
Servicer, the Trustee, the Company and the Issuer are required to recognize as
Bondholders only those persons in whose names the Bonds are registered on the
books and records of the Bond Registrar.
Other Information. [The Indenture requires that the [Trustee make
available at its Corporate Trust Office], during normal business hours, upon
reasonable advance written notice, for review by any holder or Bond Owner of an
Offered Bond or any person identified to the Trustee by any such holder or Bond
Owner as a prospective transferee of an Offered Bond or any interest therein,
subject to the discussion in the following paragraph, originals or copies of,
among other things, the following items: (a) the Indenture, the S&A Agreement
and any amendments or supplements to either of the foregoing, (b) all Trustee
Reports and Special Servicer Reports delivered to holders of the relevant Class
of Offered Bonds since the Closing Date, (c) all officer's certificates
delivered to the Trustee by the Master Servicer and/or Special Servicer since
the Closing Date as described under "Servicing and Administration of the
Mortgage Assets--Evidence as to Compliance" in the Prospectus, (d) 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 "Servicing and
Administration of the Mortgage Assets--Evidence as to Compliance" in the
Prospectus, and (e) [other available items to be specified]. Copies of any and
all of the foregoing items will be available from the [Trustee] upon request;
however, the [Trustee] will be permitted to require payment of a sum sufficient
to cover the reasonable costs and expenses of providing such services.]
[The Trustee will make available, upon reasonable advance written
notice and at the expense of the requesting party, originals or copies of the
items referred to in the prior paragraph that are maintained thereby, to
Bondholders, Bond Owners and prospective purchasers of Bonds and interests
therein; provided that the Trustee may require (a) in the case of a Bond Owner
of an Offered Bond, a written confirmation executed by the requesting person or
entity, in a form reasonably acceptable to the Trustee, generally to the effect
that such person or entity is a beneficial owner of Offered Bonds, is requesting
the information for use by it or another party in evaluating an investment in
the Offered Bonds and will otherwise keep such information confidential and (b)
in the case of a prospective purchaser of an Offered Bond, confirmation executed
by the requesting person or entity, in a form reasonably acceptable to the
Trustee, generally to the effect that such person or entity is a prospective
purchaser of Offered Bonds or an interest therein, is requesting the information
for use in evaluating a possible investment in the Offered Bonds and will
otherwise keep such information confidential. Bondholders, by the acceptance of
their Bonds, will be deemed to have agreed to keep such information
confidential.]
Voting Rights
[At all times during the term of the Indenture, ___% of the voting
rights for the series offered hereby (the "Voting Rights") will be allocated
among the holders of the respective Classes of Bonds in proportion to the
aggregate Bond Principal Amounts of such Classes. Voting Rights allocated to a
Class of Bondholders will be allocated among such Bondholders in proportion to
the respective Bond Principal Amounts of their Bonds.]
The Trustee
______________________________________________ will be the Trustee
under the Indenture. The Trustee is at all times to be, and will be required to
resign if it fails to be, [specify eligibility requirements for Trustee,
including qualification under the Trust Indenture Act of 1939, as amended].
The Company, the Master Servicer, the Special Servicer and their
respective affiliates may from time to time enter into normal banking and
trustee relationships with the Trustee and its affiliates. The Trustee and any
of its respective affiliates may hold Bonds in their own names. In addition, for
purposes of meeting the legal requirements of certain local jurisdictions, the
Trustee may appoint a co-trustee or separate trustee of all
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or any part of the Trust Estate. In the event of such appointment, all rights,
powers, duties and obligations conferred or imposed upon the Trustee and such
separate trustee or co-trustee jointly, or, in any jurisdiction in which the
Trustee shall be incompetent or unqualified to perform certain acts, singly upon
such separate trustee or co-trustee who shall exercise and perform such rights,
powers, duties and obligations solely at the direction of the Trustee.
[Pursuant to the Indenture, the Trustee will be entitled to receive
a monthly fee (the "Trustee Fee") generally equal to one month's interest in
respect of each Mortgage Loan (including each Mortgage Loan as to which the
related Mortgaged Property became an REO Property) accrued at _______% per annum
(the "Trustee Fee Rate") on the unpaid principal balance of such Mortgage Loan
from time to time.] See also "Description of the Securities--The Trustee" in the
Prospectus.
[Optional Redemption]
[Any Class of Offered Bonds may be redeemed in whole but not in
part, at the Issuer's option, on any Payment Date, if the then aggregate Bond
Principal Amount of such Class of Bonds is less than ___% of the initial
aggregate Bond Principal Amount of such Class of Bonds and no Issuer Event of
Default has occurred and is continuing. Such redemption will be at a price
(calculated after taking into account payments made on the Bonds out of the
Available Payment Amount on the applicable Payment Date) equal to 100% of the
unpaid aggregate Bond Principal Amount of the Bonds to be redeemed, plus accrued
and unpaid interest thereon to the last day of the related Interest Accrual
Period. Notice of any optional redemption must be mailed by the Issuer or the
Indenture Trustee at least ___ days prior to the date set for optional
redemption. No Yield Maintenance Amount will be payable in connection with any
such optional redemption. See "Yield and Maturity Considerations" herein.]
Additional Information
Prospective investors should carefully review the Prospectus, in
particular the sections captioned "Description of the Securities" and
"Description of the Indentures", for important additional information regarding
the Bonds and the Indenture.
THE ISSUER
CRIIMI MAE Commercial Mortgage Trust [I] (the "Issuer") is a
business trust formed under the laws of the State of ___________, pursuant to
the Deposit Trust Agreement, to be dated as of ____________, 199__ (the "Deposit
Trust Agreement"), between CRIIMI MAE CMBS Corp., (the "Company") and the Owner
Trustee, for the transactions described in this Prospectus Supplement. The
Deposit Trust Agreement constitutes the "governing instrument" under the laws of
the State of __________ relating to business trusts. [Ownership of the Issuer
will initially be evidenced by ______ classes of ownership certificates (the
"Ownership Certificates"). The Company initially will hold all of the Ownership
Certificates, but may transfer some or all such Ownership Interests to an
affiliate structured substantially similar to the Company.] The Company, a
__________ corporation, is a wholly-owned special purpose subsidiary of CRIIMI
MAE Inc., a publicly held real estate investment trust ("CRIIMI MAE"). See "The
Company" and "CRIIMI MAE Inc." in the Prospectus.
After its formation, the Issuer will generally not engage in any
activity other than (i) acquiring, holding and, pursuant to the Indenture,
pledging the Mortgage Loans and the other assets of the Issuer and proceeds
therefrom, (ii) issuing the Bonds and the Ownership Certificates, (iii) making
payments on the Bonds and the Ownership Certificates and (iv) engaging in other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
The assets of the Issuer will consist of the Mortgage Loans and
certain related assets.
The Issuer's principal offices are in _____________, in care of
_______________________, as Owner Trustee, at the address listed below.
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THE OWNER TRUSTEE
________________________ is the Owner Trustee under the Deposit
Trust Agreement. The Owner Trustee is a ____________________ and its principal
offices are located at __________________________.
As compensation for the performances of its duties, the Owner
Trustee will be paid $___________ per annum (the "Owner Trustee Fee").
___________________________ will be responsible for payment of the Owner Trustee
Fee.
Neither the Owner Trustee nor any director, officer or employee of
the Owner Trustee will be under any liability to the Issuer or the Bondholders
for any action taken or for refraining from the taking of any action in good
faith pursuant to the Deposit Trust Agreement or for errors in judgment;
provided that none of the Owner Trustee and any director, officer or employee
thereof will be protected against any liability which would otherwise be imposed
by reason of gross negligence or willful misconduct in the performance of
obligations and duties under the Deposit Trust Agreement. All persons into which
the Owner Trustee may be merged or with which it may be consolidated or any
person resulting from such merger or consolidation shall be the successor of the
Owner Trustee under the Deposit Trust Agreement.
THE GENERAL ADMINISTRATOR
______________________ (the "General Administrator") is a
__________________________, and its principal offices are located at
_____________________________________.
The Owner Trustee, on behalf of the Issuer, and the General
Administrator will enter into a General Administration Agreement, to be dated as
of ___________, 199__ (the "General Administration Agreement"), pursuant to
which the General Administrator will be required to perform (without relieving
the Issuer from liability therefor) certain duties of the Issuer set forth in
the Indenture. As compensation for the performance of its duties, the General
Administrator will be paid a monthly fee on each Payment Date equal to
one-twelfth of _____% of the aggregate Stated Principal Balance of the Mortgage
Pool immediately prior to such Payment Date (the "General Administration Fee").
_______________________________ will be responsible for payment of the General
Administration Fee.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any Offered Bond will depend on (a) the price
at which such Bond is purchased by an investor and (b) the rate, timing and
amount of payments on such Bond. The rate, timing and amount of payments on any
Offered Bond will in turn depend on, among other things, (i) the Bond Interest
Rate for such Bond, (ii) the rate and timing of principal payments (including
principal prepayments) and other principal collections on the Mortgage Loans,
and (iii) the rate, timing and severity of Realized Losses, Net Aggregate
Prepayment Interest Shortfalls and Extraordinary Expenses.
Rate and Timing of Principal Payments. The yield to holders of any
Offered Bonds purchased at a discount or premium will be affected by the rate
and timing of principal payments made in reduction of the Bond Principal Amounts
of such Bonds. As described herein, the Principal Payment Amount for each
Payment Date will be payable entirely in respect of the Class A-1 and/or Class
A-2 Bonds until the aggregate Bond Principal Amounts thereof are reduced to
zero, and will thereafter be payable entirely in respect of the Class B Bonds,
the Class C Bonds, the Class D Bonds, the Class E Bonds and the Class F Bonds,
in that order, in each case until the aggregate Bond Principal Amount of such
Class of Bonds is reduced to zero. In addition, except under the limited
circumstances described herein, holders of the Class A-2 Bonds will not receive
any payments of principal for so long as the Class A-1 Bonds are outstanding.
Consequently, the rate and timing of principal payments that are paid with
respect to each Class of Bonds will be directly related to the rate and timing
of principal payments on or in respect of the Mortgage Loans. The rate and
timing of principal
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payments of the Mortgage Loans are affected by the amortization schedules of
such Mortgage Loans, the dates on which Balloon Payments are due and the rate
and timing of principal prepayments and other unscheduled collections thereon
(including for this purpose, collections made in connection with liquidations of
Mortgage Loans due to defaults, casualties or condemnations affecting the
Mortgaged Properties, or purchases of Mortgage Loans out of the Trust Estate).
Prepayments and, assuming the respective maturity dates therefor have not
occurred, liquidations of the Mortgage Loans will result in payments on the
Bonds of amounts that would otherwise be paid over the remaining terms of the
Mortgage Loans and will tend to shorten the weighted average lives of the Bonds.
Defaults on the Mortgage Loans, particularly at or near their maturity dates,
may result in significant delays in payments of principal on the Mortgage Loans
(and, accordingly, on the Bonds) while work-outs are negotiated or foreclosures
are completed, and such delays will tend to lengthen the weighted average lives
of those Bonds. See "Servicing of the Mortgage Loans--Modifications, Waivers and
Amendments" herein.
The extent to which the yield to maturity of any Class of Offered
Bonds may vary from the anticipated yield will depend upon the degree to which
such Bonds are purchased at a discount or premium and when, and to what degree,
payments of principal are made on such Bonds. An investor should consider, in
the case of any Offered Bond purchased at a discount, the risk that a slower
than anticipated rate of principal payments on such Bond, could result in an
actual yield to such investor that is lower than the anticipated yield and, in
the case of any Offered Bond purchased at a premium, the risk that a faster than
anticipated rate of principal payments on such Bond could result in an actual
yield to such investor that is lower than the anticipated yield. In general, the
earlier a payment of principal is made on any Offered Bond purchased at a
discount or premium, the greater will be the effect on an investor's yield to
maturity. As a result, the effect on an investor's yield of principal payments
on its Offered Bonds occurring at a rate higher (or lower) than the rate
anticipated by the investor during any particular period would not be fully
offset by a subsequent like reduction (or increase) in the rate of such
principal payments. As stated above, the rate of principal payments on the
Offered Bonds are ultimately dependent on the rate of principal payments on the
Mortgage Loans. Because the rate of principal payments on the Mortgage Loans
will depend on future events and a variety of factors (as described more fully
below), no assurance can be given as to such rate or the rate of principal
prepayments in particular.
Losses and Shortfalls. The yield to holders of the Offered Bonds
will also depend on the extent to which payments on the Bonds are adversely
affected by any losses and other shortfalls on the Mortgage Loans. Realized
Losses, Net Aggregate Prepayment Interest Shortfalls and other shortfalls in
respect of the Mortgage Loans and Extraordinary Expenses will, in each case, be
borne by the Issuer and the holders of the Private Bonds (to the extent of
amounts otherwise payable on or in respect of the Issuer's Equity and the
Private Bonds, respectively) prior to any such losses, shortfalls and/or
expenses being borne by the holders of the Offered Bonds. If and to the extent
that Realized Losses, together with any Net Aggregate Prepayment Interest
Shortfalls and Extraordinary Expenses, exceed the sum of the initial
Overcollateralization Amount and the initial aggregate Bond Principal Amount of
the Private Bonds, it is likely that the holders of one or more Classes of
Offered Bonds will not receive the full Bond Principal Amount of their Bonds.
Certain Relevant Factors. The rate and timing of principal payments
and defaults and the severity of losses on the Mortgage Loans may be affected by
a number of factors, including, without limitation, prevailing interest rates,
the terms of the Mortgage Loans (for example, provisions requiring Lockout
Periods, provisions requiring the payment of Prepayment Premiums and
amortization terms that require Balloon Payments), the demographics and relative
economic vitality of the areas in which the Mortgaged Properties are located and
the general supply and demand for rental units or comparable commercial space,
as applicable, in such areas, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. See "Risk Factors" herein and in the
Prospectus and "Description of the Mortgage Pool" herein.
The rate of prepayment on the Mortgage Pool is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
Mortgage Rate, the related Mortgagor has an incentive to refinance its Mortgage
Loan. A requirement that a prepayment be accompanied by a Prepayment Premium may
not provide a sufficient economic disincentive to deter a Mortgagor from
refinancing at a more favorable interest rate.
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Depending on prevailing market interest rates, the outlook for
market interest rates and economic conditions generally, some Mortgagors may
sell or refinance Mortgaged Properties in order to realize their equity therein,
to meet cash flow needs or to make other investments. In addition, some
Mortgagors may be motivated by federal and state tax laws (which are subject to
change) to sell Mortgaged Properties prior to the exhaustion of tax depreciation
benefits.
Neither the Company nor the Issuer makes any representation as to
the particular factors that will affect the rate and timing of prepayments and
defaults on the Mortgage Loans, as to the relative importance of such factors,
as to the percentage of the principal balance of the Mortgage Loans that will be
prepaid or as to which a default will have occurred as of any date or as to the
overall rate of prepayment or default on the Mortgage Loans.
Unpaid Accrued Bond Interest. As described under "Description of the
Bonds--Payments on the Bonds" herein, if the portion of the Available Payment
Amount payable in respect of interest on any Class of Offered Bonds on any
Payment Date is less than the Accrued Bond Interest then payable for such Class,
the shortfall will be payable to holders of such Class of Bonds on subsequent
Payment Dates, to the extent of available funds. Any such shortfall will not
bear interest, however, and will therefore negatively affect the yield to
maturity of such Class of Bonds for so long as it is outstanding.
Weighted Average Life
Weighted average life refers to the average amount of time that will
elapse from the date of issuance of a security to the date of payment to the
investor of each dollar payable in reduction of principal of such security
(assuming no losses). The weighted average life of any Offered Bonds will be
influenced by, among other things, the rate at which principal of the Mortgage
Loans is paid, which may be in the form of scheduled amortization, Balloon
Payments, prepayments or liquidations and any extensions or modifications made
by the Special Servicer with respect to Specially Serviced Mortgage Loans as
described herein. The weighted average life of any Offered Bond may also be
affected to the extent that additional payments in reduction of the Bond
Principal Amount of such Bond occur as a result of the purchase of a Mortgage
Loan out of the Trust Estate or any optional redemption of such Bond as
described under "Description of the Bonds--Optional Redemption" herein.
[The table set forth below has been prepared on the basis of the
following assumptions (the "Modeling Assumptions") regarding the characteristics
of the Bonds and the Mortgage Loans and the performance thereof: (i) as of the
date of issuance of the Bonds, the Mortgage Loans have the terms as identified
in the tables titled [identify tables]; (ii) the monthly cash flow of each
Mortgage Loan (except for the Balloon Payment) is a monthly payment of principal
and interest calculated based upon [specify applicable information], and no
Mortgage Loan is voluntarily prepaid; (iii) no Mortgage Loan is repurchased as a
result of a material breach of a representation or warranty, and there is no
optional redemption of Bonds; (iv) there are no delinquencies or Realized Losses
on the Mortgage Loans, and there is no extension of the maturity date of any
Mortgage Loan; (v) all Mortgage Loans accrue interest on the basis of a 360-day
year consisting of twelve 30-day months; (vi) payments on the Bonds will be made
on the __th day of each month, commencing in ________ 199_; (vii) payments on
the Mortgage Loans earn no reinvestment return; (viii) there are no additional
ongoing expenses payable out of the Trust Estate other than the Master Servicing
Fee, the Property Servicing Fee and the Trustee Fee, and there are no
Extraordinary Expenses; (ix) the respective Classes of Offered Bonds will be
issued in the initial aggregate Bond Principal Amounts and will accrue interest
at the Bond Interest Rates set forth in the table on the cover page hereof; (x)
the Offered Bonds will be settled on __________, 199_ (the "Assumed Settlement
Date"); and (xi) no Prepayment Premiums are collected on the Mortgage Loans.]
The actual characteristics and performance of the Mortgage Loans
will differ from the Modeling Assumptions used in calculating the table set
forth below, which is hypothetical in nature and is provided only to give a
general sense of how the principal cash flows might behave under the assumed
prepayment and loss scenario. Any difference between such assumptions and the
actual characteristics and performance of the Mortgage Loans, or actual
prepayment or loss experience, will affect the percentages of initial aggregate
Bond Principal Amounts outstanding over time and the weighted average lives of
the respective Classes of Offered Bonds.
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Subject to the foregoing discussion and assumptions, the following
table indicates the weighted average life of each Class of the Offered Bonds,
and sets forth the percentages of the initial aggregate Bond Principal Amount of
each such Class that would be outstanding after each of the Payment Dates shown.
Percent of Initial Aggregate Bond Principal Amounts 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 Bond is determined by (i) multiplying the amount of each principal
payment thereon by the number of years from [the Assumed Settlement Date] to the
related Payment Date, (ii) summing the results and (iii) dividing the sum by the
aggregate amount of the reductions in the Bond Principal Amount of such Offered
Bond.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
General
Upon the issuance of the Offered Bonds, ________________________,
counsel to the Issuer, will deliver its opinion generally to the effect that,
assuming compliance with all provisions of the Indenture and certain related
documents, and based in part on the facts set forth in this Prospectus
Supplement and additional information and representations (including financial
calculations relating to the Mortgage Loans made or reviewed and verified by the
Underwriter), the Offered Bonds will be treated as indebtedness. See "Certain
Federal Income Tax Consequences--Debt Securities" in the Prospectus.
Taxable mortgage pool ("TMP") rules enacted as part of the Tax
Reform Act of 1986 treat certain arrangements in which debt obligations are
secured or backed by real estate mortgage loans as taxable corporations. An
entity (or a portion thereof) will be characterized as a TMP if (i)
substantially all of its assets are debt obligations and more than 50 percent of
such debt obligations consist of real estate mortgage loans or interests
therein, (ii) the entity is the obligor under debt obligations with two or more
maturities, and (iii) payments on the debt obligations referred to in (ii) bear
a relationship to payments on the debt obligations referred to in (i).
Furthermore, a group of assets held by an entity can be treated as a separate
TMP if the assets are expected to produce significant cash flow that will
support one or more of the entity's issues of debt obligations.
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It is anticipated that the Issuer will be characterized as a TMP for
federal income tax purposes. In general, a TMP is treated as a "separate"
corporation not includible with any other corporation in a consolidated income
tax return, and is subject to corporate income taxation. However, it is
anticipated that for federal income tax purposes one hundred percent of the
Issuer will at all times be owned by one or more "qualified REIT subsidiaries"
(as defined in Section 856(i) of the Code) of CRIIMI MAE, which is a "real
estate investment trust" (a "REIT") (as defined in Section 856(a) of the Code).
So long as the Issuer is so owned and CRIIMI MAE and such owner or owners
qualify as a REIT and as qualified REIT subsidiaries, respectively,
characterization of the Issuer as a TMP will result only in the shareholders of
CRIIMI MAE being required to include in income, as "excess inclusion" income,
some or all of their allocable share of the Issuer's net income that would be
"excess inclusion" income if the Issuer were treated as "real estate mortgage
investment conduit," or REMIC, within the meaning of Section 860D of the Code.
Characterization of the Issuer as an owner's trust or a "qualified REIT
subsidiary" would not result in entity-level, corporate income taxation with
respect to the Issuer. In the event of CRIIMI MAE's failure to continue to
qualify as a REIT or the failure of the owner or owners of the Issuer to
continue to qualify as "qualified REIT subsidiaries" for federal income tax
purposes, or for any other reason, the net income (after the deduction of
interest and original issue discount, if any, on the Bonds) of the Issuer would
be subject to corporate income tax, reducing cash flow of the Issuer available
to make payments on the Bonds, and the Issuer would not be permitted to be
included in a consolidated income tax return of another corporate entity. No
assurance can be given with regard to the prospective qualification of the
Issuer as either an owner's trust or a "qualified REIT subsidiary" or of the
Company as a "qualified REIT subsidiary" for federal income tax purposes.
Status as Real Property Loans
Offered Bonds held by a domestic building and loan association will
not constitute "loans...secured by an interest in real property" within the
meaning of Section 7701(a)(19)(C)(v) of the Code; Offered Bonds held by a real
estate investment trust will not constitute "real estate assets" within the
meaning of Section 856(c)(5)(A) of the Code and interest on Offered Bonds will
not be considered "interest on obligations secured by mortgages on real
property" within the meaning of Section 856(c)(3)(B) of the Code. In addition,
the Offered Bonds will not be "qualified mortgages" within the meaning of
Section 860G(a)(3) of the Code.
Discount and Premium
[For federal income tax reporting purposes, it is anticipated that
the Offered Bonds will not be treated as having been issued with original issue
discount. The prepayment assumption that will be used in determining the rate of
accrual of market discount and premium, if any, for federal income tax purposes
will be based on the assumption that subsequent to the date of any determination
the Mortgage Loans will not prepay (that is, a CPR of 0%), and there will be no
extensions of maturity for any Mortgage Loan. However, no representation is made
that the Mortgage Loans will not prepay or that, if they do, they will prepay at
any particular rate. See "Certain Federal Income Tax Consequences--Debt
Securities--Interest and Original Issue Discount","--Debt Securities--Market
Discount" and "--Debt Securities--Premium" in the Prospectus.]
The Internal Revenue Service (the "IRS") has issued regulations (the
"OID Regulations") under Sections 1271 to 1275 of the Code generally addressing
the treatment of debt instruments issued with original issue discount.
Purchasers of the Offered Bonds should be aware that the OID Regulations and
Section 1272(a)(6) of the Code do not adequately address certain issues relevant
to, or are not applicable to, securities such as the Offered Bonds. Prospective
purchasers of the Offered Bonds are advised to consult their tax advisors
concerning the tax treatment of such Bonds.
Certain Classes of the Offered Bonds may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a Class of Bonds will be treated as holding a Bond with amortizable bond
premium will depend on such Bondholder's purchase price and the payments
remaining to be made on such Bond at the time of its acquisition by such
Bondholder. Holders of such Classes of Bonds should consult their own tax
advisors regarding the possibility of making an election to amortize such
premium. See Certain Federal Income Tax Consequences--Debt Securities --Premium"
in the Prospectus.
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Backup Withholding and Information Reporting
Payments of interest and principal, as well as payments of proceeds
from the sale of Offered Bonds, may be subject to the "backup withholding tax"
under Section 3406 of the Code at a rate of 31% if recipients of such payments
fail to furnish to the payor certain information, including their taxpayer
identification numbers, or otherwise fail to establish an exemption from such
tax. Any amounts deducted and withheld from a payment to a recipient would be
allowed as a credit against such recipient's federal income tax. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is
required to supply information but that does not do so in the proper manner.
The Trustee or the General Administrator on behalf of the Issuer
will report to Bondholders and to the IRS for each calendar year the amount of
any "reportable payments" during such year and the amount of tax withheld, if
any, with respect to payments on the Offered Bonds.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting
Agreement dated _____________, 199_ (the "Underwriting Agreement") between the
[Owner Trustee, on behalf of the Issuer,] and the Underwriter, the Underwriter
has agreed to purchase and the [Issuer] has agreed to sell to the Underwriter
each Class of the Offered Bonds. It is expected that delivery of the Offered
Bonds will be made only in book-entry form through the Same Day Funds Settlement
System of DTC on or about _____________, 199__, against payment therefor in
immediately available funds.
The Underwriting Agreement provides that the obligation of the
Underwriter to pay for and accept delivery of the Offered Bonds is subject to,
among other things, the receipt of certain legal opinions and to the conditions,
among others, that no stop order suspending the effectiveness of the Company's
Registration Statement shall be in effect, and that no proceedings for such
purpose shall be pending before or threatened by the Commission.
The distribution of the Offered Bonds by the Underwriter may be
effected from time to time in one or more negotiated transactions, or otherwise,
at varying prices to be determined at the time of sale. Proceeds to the [Issuer]
from the sale of the Offered Bonds, before deducting expenses payable by the
[Issuer], will be approximately ____% of the aggregate Bond Principal Amount of
the Offered Bonds plus accrued interest thereon from the Accrual Date. The
Underwriter may effect such transactions by selling the Offered Bonds to or
through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter for whom
they act as agent. In connection with the sale of the Offered Bonds, the
Underwriter may be deemed to have received compensation from the [Issuer] in the
form of underwriting compensation. The Underwriter and any dealers that
participate with such Underwriter in the distribution of the Offered Bonds may
be deemed to be underwriters and any profit on the resale of the Offered Bonds
positioned by them may be deemed to be underwriting discounts and commissions
under the Securities Act.
The Underwriting Agreement provides that the [Issuer] will indemnify
the Underwriter, and that under limited circumstances the Underwriter will
indemnify the [Issuer], against certain civil liabilities under the Securities
Act or contribute to payments required to be made in respect thereof.
The [Issuer] has also been advised by the Underwriter that the
Underwriter presently intends to make a market in the Offered Bonds; however,
the Underwriter has no obligation to do so, any market making may be
discontinued at any time and there can be no assurance that an active public
market for the Offered Bonds will develop. See "Risk Factors--Limited Liquidity"
herein and "Risk Factors--Limited Liquidity of Offered Securities" in the
Prospectus.
LEGAL MATTERS
Certain legal matters relating to the Bonds will be passed upon for
the Underwriter by ________________. Certain federal income tax matters and
other legal matters will be passed upon for the Issuer by ___________________.
S-62
<PAGE>
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
Bonds 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.
Certain transactions involving the Issuer might be deemed to
constitute prohibited transactions under ERISA and the Code with respect to a
Plan that purchases an Offered Bond, if the assets of the Issuer are deemed to
be assets of the Plan. For example, if the assets of an investing Plan were
deemed to include assets of the Issuer and if any of the Mortgage Loans
constitute obligations of or are purchased from or sold to a Party in Interest
(as defined in the Prospectus) with respect to such Plan, an indirect prohibited
transaction in the nature of an extension of credit or a purchase or sale of
assets between such Plan and such Party in Interest might be deemed to occur.
Under regulations issued by the United States Department of Labor, set forth in
29 C.F.R. ss. 2510.3-101 (the "DOL Regulations"), the assets of the Issuer would
be treated as plan assets of a Plan for the purposes of ERISA and Section 4975
of the Code only if the Plan acquires an equity interest in the Issuer and none
of the exceptions contained in the DOL Regulations is applicable. An equity
interest is defined under the DOL Regulations as an interest in an entity other
than an instrument which is treated as indebtedness under applicable local law
and which has no substantial equity features. Although there is no authority
directly on point, it is anticipated that the Offered Bonds should be treated as
indebtedness under local law without any substantial equity features for
purposes of the DOL Regulations. However, there is no assurance that the Offered
Bonds will not be characterized as equity interests for purposes of the DOL
Regulations.
Nevertheless, without regard to whether the Offered Bonds are
treated as equity interests for such purposes, the acquisition or holding of an
Offered Bond by or on behalf of a Plan could be considered to give rise to a
prohibited transaction if the Issuer, the Company, the Master Servicer, the
Special Servicer, the Trustee, the Owner Trustee, the General Administrator, the
Underwriter or any of their respective affiliates is or becomes a Party in
Interest with respect to such Plan. In this event, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the fiduciary making the decision to acquire an Offered Bond.
Included among these exemptions are Prohibited Transaction Class Exemption
("PTCE") 75-1, which exempts certain transactions involving Plans and certain
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"
(collectively, the "Class Exemptions"). Even if the conditions specified in one
or more of the Class Exemptions are met, the scope of the relief provided by the
Class Exemptions might not cover all acts which might be construed as prohibited
transactions.
[In addition to the above-described Class Exemptions, the DOL issued
an individual administrative exemption, Prohibited Transaction Exemption ____
(the "Private 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 "certificates" (within the meaning of the Private Exemption) evidencing
interests in a mortgage trust, which certificates have been 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 Private
Exemption are satisfied. If the Bonds were determined to represent equity
interests in the Issuer
S-63
<PAGE>
or the Trust Estate, the Class A Bonds may, but the other Offered Bonds would
not, be eligible for the exemptive relief provided by the Private Exemption,
provided that the general and other conditions set forth in the Private
Exemption and the other requirements set forth in the Private Exemption would be
satisfied at the time of such purchase. The Private Exemption is set forth in
volume ___ of the Federal Register at page -----.]
A Plan fiduciary considering an investment in an Offered Bond should
also consider that if the Offered Bonds are determined to be equity interests
for purposes of the DOL Regulations, the underlying assets of the Issuer will be
treated for purposes of ERISA and Section 4975 of the Code to be Plan assets. As
a result, the Issuer, the Company, the Master Servicer, the Special Servicer,
the Trustee, the Owner Trustee, the General Administrator, the Underwriter or
any of their respective affiliates may be considered to be or may become Parties
in Interest with respect to investing Plans. Therefore, the acquisition and
continued holding of an Offered Bond by or on behalf of a Plan could give rise
to a prohibited transaction within the meaning of ERISA and Section 4975 of the
Code unless one or more statutory or administrative exemptions is available.
Although the Class Exemptions described above may provide an exemption for the
purchase of an Offered Bond, it is expected that only the Private Exemption may
provide an exemption for the transactions relating to the operation of the
Issuer. However, the Private Exemption is potentially available only with
respect to the Class A Bonds and only if the requirements of the Private
Exemption are satisfied.
In any event, a Plan generally should not purchase an Offered Bond
if the Issuer, the Company, the Master Servicer, the Special Servicer, the
Trustee, the Owner Trustee, the General Administrator, the Underwriter or any of
their respective affiliates either (a) has investment discretion with respect to
the investment of assets of such Plan; (b) has authority or responsibility to
give or regularly gives investment advice with respect to assets of such Plan,
for a fee, and pursuant to an agreement or understanding that such advice will
serve as a primary basis for investment decisions with respect to such assets
and that such advice will be based on the particular investment needs of such
Plan; or (c) is an employer maintaining or contributing to such Plan. A party
that is described in clause (a) or (b) of the preceding sentence is a fiduciary
under ERISA with respect to the Plan and any such purchase might result in a
"prohibited transaction" under ERISA or the Code.
Each person or entity that acquires any Offered Bond or interest
therein shall be deemed to have represented that either (i) it is not a Plan and
is not directly or indirectly purchasing such Bond or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan or (ii) its
purchase and holding of such Bond or interest therein will not give rise to a
prohibited transaction under ERISA or any excise tax under Section 4975 of the
Code.
Any Plan fiduciary considering whether to purchase an Offered Bond
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.
LEGAL INVESTMENT
[The Offered Bonds will not be "mortgage related securities" for
purposes of SMMEA. As a result, the appropriate characterization of the Offered
Bonds under various legal investment restrictions, and thus the ability of
investors subject to these restrictions to purchase the Offered Bonds, is
subject to significant interpretive uncertainties. Neither the Issuer nor the
Company makes any representation as to the ability of particular investors to
purchase the Offered Bonds 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 Bonds constitute legal
investments for them or are subject to investment, capital or other
restrictions.]
All depository institutions considering an investment in the Offered
Bonds 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.
S-64
<PAGE>
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 Bonds or to
purchase Offered Bonds 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 Bonds constitute legal
investments for such investors.
See "Legal Investment" in the Prospectus.
RATINGS
It is a condition to the issuance of the Offered Bonds that the
respective Classes thereof receive the following credit ratings from
____________________ ("______") and/or ________________ ("________"; and
together with _______, the "Rating Agencies"):
[Rating [Rating
Class Agency] Agency]
----- ------- -------
Class A-1
Class A-2
Class B
Class C
Class D
The ratings on the Offered Bonds address the likelihood of the
timely receipt by holders thereof of all payments of interest to which they are
entitled on each Payment Date and the ultimate receipt by the holders thereof of
all payments of principal to which they are entitled on or before their Stated
Maturity. The ratings take into consideration the credit quality of the Mortgage
Pool, structural and legal aspects associated with the Offered Bonds, and the
extent to which the payment stream from the Mortgage Pool is adequate to make
payments of principal and interest required under the Offered Bonds. The ratings
on the respective Classes of Offered Bonds do not represent any assessment of
(i) the likelihood or frequency of principal prepayments on the Mortgage Loans,
(ii) the degree to which such prepayments might differ from those originally
anticipated or (iii) whether and to what extent Prepayment Premiums will be
received or that Yield Maintenance Amounts will be paid. Also a security rating
does not represent any assessment of the yield to maturity that investors may
experience. In general, the ratings address credit risk and not prepayment risk.
There can be no assurance as to whether any rating agency not
requested to rate the Offered Bonds will nonetheless issue a rating to any Class
thereof and, if so, what such rating would be. A rating assigned to any Class of
Offered Bonds by a rating agency that has not been requested by the Company to
do so may be lower than the rating assigned thereto by either Rating Agency.
The ratings on the Offered Bonds should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating organization. Each security
rating should be evaluated independently of any other security rating.
S-65
<PAGE>
INDEX OF PRINCIPAL TERMS
Accrued Bond Interest ................................................S-16, S-50
Accrued Certificate Interest ...............................................S-28
Advances ...................................................................S-42
Appraisal Reduction Amount .................................................S-54
ARM Loans ..................................................................S-11
Assumed Final Distribution Date..............................................S-2
Assumed Scheduled Payment ............................................S-17, S-50
Assumed Settlement Date ....................................................S-59
Available Payment Amount ...................................................S-46
Balloon Loans ..............................................................S-12
Balloon Payment ............................................................S-12
Bond Interest Rate ....................................................S-8, S-44
Bond Owner ............................................................S-9, S-45
Bond Principal Amount .......................................................S-7
Bond Registrar .............................................................S-45
Bond-Entry Securities .......................................................S-9
Bondholders ......................................................S-2, S-8, S-44
Bonds ............................................................S-1, S-7, S-44
Book-Entry Bonds ............................................................S-9
Certificate Principal Balance...............................................S-45
Class ............................................................S-1, S-7, S-44
Class A Bonds ....................................................S-1, S-7, S-44
Class A Principal Payment Cross-Over Date...................................S-48
Class Exemptions ...........................................................S-63
Closing Date ..........................................................S-1, S-44
Collateral ......................................................S-2, S-10, S-44
Collection Period ..........................................................S-45
Company ..........................................................S-1, S-7, S-56
Compensating Interest Payment.........................................S-19, S-40
Corporate Trust Office .....................................................S-55
Corrected Mortgage Loan ....................................................S-38
CRIIMI MAE ............................................................S-7, S-56
Cut-off Date ................................................................S-2
Cut-off Date Balance .................................................S-10, S-27
Debt Service Coverage Ratio ................................................S-34
Definitive Bond .......................................................S-9, S-45
Deposit Trust Agreement ...............................................S-7, S-56
Determination Date .........................................................S-45
DOL ........................................................................S-21
DOL Regulations ............................................................S-63
DTC ........................................................................S-45
DTC Participants ...........................................................S-45
Due Date ...................................................................S-11
ERISA ......................................................................S-21
Extraordinary Expenses .....................................................S-52
Fixed Rate Loans ...........................................................S-11
Form 8-K ...................................................................S-37
General Administration Agreement..................................S-2, S-9, S-57
General Administration Fee .................................................S-57
General Administrator ............................................S-2, S-9, S-57
Gross Margin ...............................................................S-11
Indenture ........................................................S-2, S-8, S-44
Index ......................................................................S-11
Initial Pool Balance ............................................S-2, S-10, S-27
Interest Accrual Period ....................................................S-50
Interest Rate Adjustment Date...............................................S-11
IRS ........................................................................S-61
Issuer ...........................................................S-1, S-7, S-56
Issuer's Equity .......................................................S-8, S-45
Liquidation Fee ............................................................S-41
Liquidation Fee Rate .......................................................S-41
Lockout Period .......................................................S-12, S-28
LTV Ratio ..................................................................S-34
Manager ....................................................................S-57
Master Servicer ............................................................S-39
Master Servicing Fee .......................................................S-40
Master Servicing Fee Rate ..................................................S-40
Maturity Date ..............................................................S-12
Modeling Assumptions .......................................................S-59
Modified Mortgage Loan .....................................................S-54
Monthly Payments ...........................................................S-11
Mortgage .............................................................S-10, S-27
Mortgage Asset Seller ......................................................S-27
Mortgage Loan Purchase Agreement......................................S-12, S-27
Mortgage Loan Seller ........................................................S-9
Mortgage Loans ..................................................S-2, S-10, S-27
Mortgage Note ........................................................S-10, S-27
Mortgage Pool .........................................................S-2, S-27
Mortgage Rate ..............................................................S-11
Mortgaged Property ...................................................S-10, S-27
Mortgagor ............................................................S-10, S-27
Net Aggregate Prepayment
Interest Shortfall....................................................S-20, S-41
Net Operating Income .......................................................S-34
Non-Offered Bonds .....................................................S-7, S-44
Offered Bonds ....................................................S-1, S-7, S-44
OID Regulations ............................................................S-61
Open Period ..........................................................S-12, S-28
Overcollateralization Amount ..........................................S-8, S-45
Owner Trustee ..........................................................S-2, S-7
Owner Trustee Fee ..........................................................S-57
Ownership Certificates .....................................................S-56
P&I Advance ..........................................................S-19, S-52
Payment Adjustment Date ....................................................S-12
Payment Date ..........................................................S-2, S-46
Permitted Investments ......................................................S-40
Plan .................................................................S-21, S-63
Pledged Certificates .................................................S-10, S-44
Prepayment Interest Excess ...........................................S-19, S-40
Prepayment Interest Shortfall.........................................S-19, S-40
Prepayment Premium ...................................................S-12, S-28
Principal Payment Amount .............................................S-16, S-50
Principal Prepayment .................................................S-12, S-28
Principal Prepayment Amount ................................................S-51
Private Bonds ....................................................S-3, S-7, S-44
Private Exemption ..........................................................S-64
Property Servicing Fee .....................................................S-41
Property Servicing Fee Rate ................................................S-41
Prospectus ..................................................................S-3
PTCE .......................................................................S-63
Purchase Agreement .........................................................S-12
Purchase Price .............................................................S-37
Rating Agencies .................................................S-2, S-21, S-65
Realized Losses ............................................................S-52
Record Date ................................................................S-46
Reimbursement Rate ...................................................S-19, S-53
REIT .......................................................................S-61
Related Proceeds ...........................................................S-42
REMIC .......................................................................S-3
REO Property .........................................................S-18, S-38
S-66
<PAGE>
Required Appraisal Loan ...................................................S-54
S&A Agreement .......................................................S-13, S-37
Scheduled Payment ...................................................S-17, S-50
Securities Act .............................................................S-7
Senior Bonds ....................................................S-1, S-7, S-44
Servicing Advances ........................................................S-42
Servicing Standard ........................................................S-38
Servicing Transfer Event ..................................................S-38
SMMEA .....................................................................S-22
Special Servicer Report ...................................................S-54
Special Servicing Fee .....................................................S-41
Special Servicing Fee Rate ................................................S-41
Specially Serviced Mortgage Loans..........................................S-38
Stated Principal Balance ..................................................S-45
Sub-Servicer ..............................................................S-40
Sub-Servicing Agreement ...................................................S-40
Subordinate Bonds ...............................................S-1, S-7, S-44
Terms Indenture .................................................S-2, S-7, S-44
TMP .......................................................................S-61
Trust Estate ........................................................S-10, S-44
Trustee ....................................................................S-2
Trustee Fee ...............................................................S-56
Trustee Fee Rate ..........................................................S-56
Trustee Report ............................................................S-54
Underwriter ................................................................S-1
Underwriting Agreement ....................................................S-62
Voting Rights .............................................................S-55
Workout Fee ...............................................................S-41
Workout Fee Rate ..........................................................S-41
Yield Maintenance Amount ..................................................S-51
S-67
<PAGE>
No dealer, salesman or other person has been authorized to give any information
or to make any representations not contained in this Prospectus Supplement and
the Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or by the
Underwriter. This Prospectus Supplement and the Prospectus do not constitute an
offer to sell, or a solicitation of an offer to buy, the securities offered
hereby to anyone in any jurisdiction in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make any such offer or solicitation. Neither the delivery of this Prospectus
Supplement and the Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that information herein or therein is
correct as of any time since the date of this Prospectus Supplement or the
Prospectus.
TABLE OF CONTENTS
Page
Prospectus Supplement
Transaction Overview............................................................
Summary of Prospectus Supplement................................................
Risk Factors....................................................................
Description of the Mortgage Pool................................................
Servicing of the Mortgage Loans.................................................
Description of the Bonds........................................................
The Issuer......................................................................
The Owner Trustee...............................................................
The General Administrator.......................................................
Yield and Maturity Considerations...............................................
Certain Federal Income Tax Consequences.........................................
Method of Distribution..........................................................
Legal Matters...................................................................
ERISA Considerations............................................................
Legal Investment................................................................
Ratings.........................................................................
Prospectus
Prospectus Supplement...........................................................
Available Information...........................................................
Incorporation of Certain Information by Reference...............................
Table of Contents...............................................................
Summary of Prospectus...........................................................
Risk Factors .................................................................
Description of the Underlying Assets............................................
Yield and Maturity Considerations...............................................
The Company .................................................................
CRIIMI MAE Inc..................................................................
Owner Trustee...................................................................
Description of the Securities...................................................
Description of the Indentures...................................................
Description of the Pooling Agreements...........................................
Servicing and Administration of the Mortgage Assets.............................
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)
CRIIMI MAE COMMERCIAL
MORTGAGE TRUST [I]
(Issuer)
Collateralized Mortgage Obligations
Series 199_-_
Class A-1, Class A-2, Class B,
Class C, and Class D
---------------------------
PROSPECTUS SUPPLEMENT
---------------------------
[UNDERWRITER]
Dated __________, 199_
<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.
CRIIMI MAE CMBS CORP.
Mortgage-Backed Securities, Issuable in Series
The mortgage-backed securities offered hereby (the "Offered Securities")
and by the supplements hereto (each, a "Prospectus Supplement") will be offered
from time to time in series (each, a "Series"). The Offered Securities of any
Series, together with any other mortgage-backed securities of such Series, are
collectively referred to herein as the "Securities". Each Series will consist of
one or more classes (each, a "Class") of Securities. As specified in the related
Prospectus Supplement, the Securities of each Series will be either (i)
collateralized mortgage obligations ("Bonds") representing indebtedness of
CRIIMI MAE CMBS Corp. (the "Company") or an owner trust (an "Owner Trust")
established by it; or (ii) mortgage pass-through certificates ("Certificates")
evidencing beneficial ownership interests in a trust fund (a "Trust Fund")
established by the Company as depositor. Bonds that constitute Offered
Securities are also referred to as "Offered Bonds", and Certificates that
constitute Offered Securities are also referred to as "Offered Certificates".
Each Series of Securities will be secured by a pledge of collateral
("Collateral"), or will represent in the aggregate the entire beneficial
ownership interest in a Trust Fund, that in either case includes a segregated
pool (a "Mortgage Asset Pool") of: (i) various types of multifamily and
commercial mortgage loans ("Mortgage Loans"); (ii) mortgage-backed securities
("Underlying 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 Underlying MBS (collectively,
"Mortgage Assets"). The Mortgage Loans (and the mortgage loans underlying the
Underlying MBS) will be secured by first or junior liens on, or security
interests in, fee or leasehold estates in one or more of the following types of
real property (each, a "Mortgaged 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 of Certificates (a "Certificate Series") and the Collateral
for a Series of Bonds (a "Bond 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 Underlying
Assets", "Description of the Securities" and "Description of Credit Support".
(cover continued on next page)
--------
PROCEEDS OF THE ASSETS CONSTITUTING THE RELATED COLLATERAL OR TRUST FUND, AS THE
CASE MAY BE, WILL BE THE SOLE SOURCE OF PAYMENTS ON THE OFFERED SECURITIES OF
ANY SERIES. THE OFFERED BONDS OF ANY BOND SERIES WILL BE NONRECOURSE OBLIGATIONS
SOLELY OF THE ISSUER THEREOF. UNLESS OTHERWISE SPECIFIED IN THE RELATED
PROSPECTUS SUPPLEMENT, NEITHER THE OFFERED SECURITIES NOR THE MORTGAGE ASSETS
WILL BE GUARANTEED OR INSURED BY THE COMPANY OR ANY OF ITS AFFILIATES BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY THE COMPANY OR BY ANY OTHER PERSON.
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 ___
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 Security.
The Offered Securities 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 Securities of any Series
prior to the offering thereof. There can be no assurance that a secondary market
for any Offered Securities will develop or, if one does develop, that it will
continue. Unless otherwise provided in the related Prospectus Supplement, the
Offered Securities 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 Securities of any Series unless
accompanied by the Prospectus Supplement for such Series.
-----------
The date of this Prospectus is ______, 199_.
<PAGE>
(cover continued)
The yield on each Class of Offered Certificates of a Series will be
affected by, among other things, the rate and timing of payment of principal
(including prepayments) on the related Mortgage Assets, as described herein and
in the related Prospectus Supplement. See "Yield and Maturity Considerations".
The Bonds of any Bond Series may be subject to optional redemption prior to
Stated Maturity (as defined herein), and the Trust Fund for any Certificate
Series may be subject to early termination, under the circumstances described
herein and in the related Prospectus Supplement. See "Description of the
Securities--Optional Redemption" and "--Termination of a Trust Fund".
As described in the related Prospectus Supplement, the Securities of each
Series, including the Offered Securities of such Series, may consist of one or
more Classes of Securities 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 Securities of such Series in
entitlement to certain payments or distributions thereon; (iii) are entitled to
payments or distributions of principal, with disproportionate, nominal or no
payments or distributions of interest; (iv) are entitled to payments or
distributions of interest, with disproportionate, nominal or no payments or
distributions of principal; (v) provide for payments or 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 Securities of such Series; (vi) provide for payments or 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 related Mortgage Assets; or (vii)
provide for payments or distributions of principal thereof to be made, subject
to available funds, based on a specified principal payment schedule or other
methodology. Payments in respect of the Bonds or 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 Securities".
If so provided in the related Prospectus Supplement, one or more elections
may be made to treat the related Collateral or Trust Fund, as the case may be,
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 a Series of Securities will specify which Class or Classes of
such Series will be considered to be regular interests in the related REMIC and
which Class of such Securities 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.
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PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement relating
to the Offered Securities of each Series will, among other things, set forth, as
and to the extent appropriate: (i) whether such Offered Securities are Bonds or
Certificates and, in the case of Bonds, whether the Company or an Owner Trust
will be the issuer thereof; (ii) a description of the Class or Classes of such
Offered Securities, including the payment provisions and, if applicable,
maturity 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; (iii) information with respect to any other Classes of
Securities of the same Series; (iv) the respective dates on which payments or
distributions are to be made; (v) information as to the assets, including the
Mortgage Assets, constituting the related Collateral or Trust Fund, as the case
may be; (vi) the circumstances, if any, under which such Offered Securities may
be subject to call or early retirement; (vii) additional information with
respect to the method of distribution of such Offered Securities; (viii) 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; (ix) information
concerning the Trustee (as defined herein) for the holders of such Offered
Securities; (x) if the related Collateral or Trust Fund, as the case may be,
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;
(xi) information as to the nature and extent of subordination of any Class of
Securities of such Series, including a Class of Offered Securities; and (xii)
whether such Offered Securities will be initially issued in definitive or
book-entry form.
AVAILABLE INFORMATION
The Company 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 Securities. This Prospectus and the Prospectus Supplement
relating to each Series of Offered Securities 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 Company 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 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.
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The Company, the related Trustee or another specified person or entity
will cause to be provided to registered holders of the Offered Securities of
each Series periodic unaudited reports concerning such Securities and the
related Mortgage Assets. If beneficial interests in a Class or Series of Offered
Securities are being held and transferred in book-entry format through the
facilities of DTC (as defined herein), then unless otherwise provided in the
related Prospectus Supplement, such reports will be sent to a nominee of DTC as
the registered holder of such Offered Securities. 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 Securities, 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 Securities--Reports to Securityholders"
and "--Book-Entry Registration and Definitive Securities".
The Company will file or cause to be filed with the Commission such
periodic reports with respect to the Offered Securities of each Series and the
related Mortgage Assets as are required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder. The Company 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 Company or other appropriate
person or entity from certain reporting requirements under the Exchange Act with
respect to the Offered Securities of each Series and the related Mortgage Assets
or (ii) state that the staff will not recommend that the Commission take
enforcement action if the Company or other appropriate person or entity fulfills
its reporting obligations as described in its written request. If such request
is granted, the Company will file or cause to be filed with the Commission as to
each Series of Offered Securities and the related Mortgage Assets the periodic
unaudited reports to holders of the Offered Securities referenced in the
preceding paragraph; however, because of the nature of the related Collateral or
Trust Fund, as the case may be, it is unlikely that any significant additional
information will be filed. In addition, because of the limited number of holders
of Securityholders (as defined herein) expected for each Series, the Company
anticipates that a significant portion of such reporting requirements will be
permanently suspended following the first fiscal year for the related Issuer or
Trust Fund, as the case may be.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports filed
or caused to be filed by the Company with respect to the Offered Securities of
each Series and the related Mortgage Assets pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act prior to the termination of an offering of such
Offered Securities. The Company 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 Securities, 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 Securities, other than the
exhibits to such documents (unless such exhibits are specifically incorporated
by reference in such documents). Such requests to the Company should be directed
in writing to the Company at 11200 Rockville Pike, Rockville, Maryland 20852,
Attention: _________________, or by telephone at (301) 816-2300.
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TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT........................................................3
AVAILABLE INFORMATION........................................................3
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............................4
SUMMARY OF PROSPECTUS........................................................9
RISK FACTORS................................................................24
Limited Liquidity of Offered Securities...............................24
Limited Assets........................................................25
Issuer Events of Default; Bankruptcy or Insolvency of the Issuer......25
Credit Support Limitations............................................26
Effect of Prepayments on Average Life of Securities...................27
Effect of Prepayments on Yield of Securities .........................28
Limited Nature of Ratings.............................................28
Certain Factors Affecting Delinquency, Foreclosure and Loss of the
Mortgage Loans .....................................................29
Inclusion of Delinquent and Nonperforming Mortgage Loans in a
Mortgage Asset Pool ................................................34
Certain Federal Tax Considerations Regarding REMIC Residual
Securities .........................................................34
Book-Entry Registration...............................................34
Potential Conflicts of Interest.......................................35
Early Retirement of Certificates......................................35
Optional Redemption of Bonds..........................................35
Substitution, Acquisition, Release and Repurchase of Mortgage Assets..36
DESCRIPTION OF THE UNDERLYING ASSETS........................................36
General...............................................................36
Mortgage Loans........................................................36
Underlying MBS........................................................40
Substitution, Acquisition, Release and Repurchase of Mortgage Assets..41
Undelivered Mortgage Assets...........................................42
Collection Accounts...................................................42
Credit Support........................................................42
Cash Flow Arrangements................................................43
YIELD AND MATURITY CONSIDERATIONS...........................................43
General...............................................................43
Security Interest Rate................................................43
Payment Delays........................................................43
Certain Shortfalls in Collections of Interest.........................44
Yield and Prepayment Considerations...................................44
Weighted Average Life and Maturity....................................46
Other Factors Affecting Yield, Weighted Average Life and Maturity.....46
THE COMPANY.................................................................48
CRIIMI MAE INC..............................................................49
OWNER TRUST.................................................................49
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DESCRIPTION OF THE SECURITIES...............................................49
General...............................................................49
The Bonds.............................................................49
The Certificates......................................................52
Allocation of Losses and Shortfalls...................................55
Advances in Respect of Delinquencies..................................56
Reports to Securityholders............................................57
Voting Rights.........................................................57
Special Redemption of Bonds...........................................58
Optional Redemption of Bonds..........................................58
Termination of a Trust Fund...........................................58
The Trustee...........................................................59
Book-Entry Registration and Definitive ...............................60
DESCRIPTION OF THE INDENTURES...............................................62
General...............................................................62
Pledge of Mortgage Assets.............................................62
Certain Covenants.....................................................64
Modification of Indenture.............................................65
Issuer Events of Default..............................................66
Control by Bondholders................................................68
Authentication and Delivery of Bonds..................................69
Satisfaction and Discharge of the Indenture...........................69
Release of Collateral.................................................70
Compliance Certificates and Opinions..................................70
List of Bondholders...................................................70
Meetings of Bondholders...............................................70
Fiscal Year...........................................................71
Trustee's Annual Report...............................................71
DESCRIPTION OF THE POOLING AGREEMENTS.......................................71
General...............................................................71
Transfer of Mortgage Assets...........................................72
Representations and Warranties with Respect to Mortgage Assets;
Repurchases and Other Remedies......................................73
Amendment.............................................................74
Certain Matters Affecting Certificateholders..........................75
List of Certificateholders............................................75
SERVICING AND ADMINISTRATION OF THE MORTGAGE ASSETS.........................75
General...............................................................75
Collection and Other Servicing Procedures with Respect to Mortgage
Loans ..............................................................76
Sub-Servicers.........................................................78
Collection of Payments on Underlying MBS..............................78
Collection Account....................................................79
Modifications, Waivers and Amendments of Mortgage Loans...............82
Realization Upon Defaulted Mortgage Loans.............................82
Hazard Insurance Policies.............................................84
Due-on-Sale and Due-on-Encumbrance Provisions.........................85
Servicing Compensation and Payment of Expenses........................85
Evidence as to Compliance.............................................86
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Certain Matters Regarding the Master Servicer,
the Special Servicer, the REMIC Administrator, the Manager
and the Company ....................................................86
S&A Events of Default.................................................87
Rights Upon S&A Event of Default......................................88
DESCRIPTION OF CREDIT SUPPORT...............................................89
General...............................................................89
Subordinate Securities and Issuer's Equity............................89
Insurance or Guarantees with Respect to Mortgage Loans................90
Letter of Credit......................................................90
Certificate Insurance and Surety Bonds................................90
Reserve Funds.........................................................90
Credit Support with Respect to MBS....................................91
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS.....................................91
General...............................................................91
Types of Mortgage Instruments.........................................92
Leases and Rents......................................................92
Personalty............................................................92
Foreclosure...........................................................93
Bankruptcy Laws.......................................................96
Environmental Considerations..........................................97
Due-on-Sale and Due-on-Encumbrance Provisions.........................98
Junior Liens; Rights of Holders of Senior Liens.......................99
Subordinate Financing.................................................99
Default Interest and Limitations on Prepayments.......................99
Applicability of Usury Laws..........................................100
Certain Laws and Regulations.........................................100
Americans with Disabilities Act......................................100
Soldiers' and Sailors' Civil Relief Act of 1940......................100
Forfeitures in Drug and RICO Proceedings.............................101
CERTAIN FEDERAL INCOME TAX CONSEQUENCES....................................101
General..............................................................101
REMICs...............................................................102
Grantor Trusts.......................................................118
Debt Securities......................................................127
STATE AND OTHER TAX CONSEQUENCES...........................................131
ERISA CONSIDERATIONS.......................................................131
General..............................................................131
Plan Asset Regulations...............................................132
Prohibited Transaction Exemptions....................................133
Insurance Company General Accounts...................................134
Consultation With Counsel............................................134
Tax Exempt Investors.................................................134
LEGAL INVESTMENT...........................................................134
USE OF PROCEEDS............................................................136
METHOD OF DISTRIBUTION.....................................................136
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LEGAL MATTERS..............................................................138
FINANCIAL INFORMATION......................................................138
RATING.....................................................................138
INDEX OF PRINCIPAL DEFINITIONS.............................................139
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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 Securities contained in the Prospectus Supplement to be prepared and
delivered in connection with the offering of Offered Securities of such Series.
An Index of Principal Definitions is included at the end of this Prospectus.
Securities Offered................ Mortgage-backed securities consisting of
collateralized mortgage obligations and
mortgage pass-through certificates,
issuable in series.
Issuer/Depositor ................. The Company or an Owner Trust established
thereby will be the issuer (in such
capacity, the "Issuer") of each Bond
Series, and the Company as depositor (in
such capacity, the "Depositor") will
establish the Trust Fund for each
Certificate Series.
Company........................... CRIIMI MAE CMBS Corp., a Delaware
corporation. See "The Company".
Trustee........................... The trustee (the "Trustee") for each Series
of Securities will be named in the related
Prospectus Supplement. In the case of a
Bond Series, the Trustee will be
_____________ or another bank or trust
company qualified under the Trust Indenture
Act of 1939, as amended (the "TIA"). See
"Description of the Securities--The
Trustee".
Master Servicer................... If a Mortgage Asset Pool includes Mortgage
Loans, then the master servicer (the
"Master Servicer") for the corresponding
Series will be named in the related
Prospectus Supplement. The Master Servicer
for any such Series may be an affiliate of
the Company. See "Servicing and
Administration of the Mortgage Assets".
Special Servicer.................. If a Mortgage Asset Pool 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. The Special Servicer
for any such Series may be an affiliate of
the Company. See "Servicing and
Administration of the Mortgage Assets".
MBS Administrator................. If a Mortgage Asset Pool includes
Underlying MBS, then the entity responsible
for administering such Underlying MBS (the
"MBS Administrator") will be named in the
related Prospectus Supplement. The MBS
Administrator for any Series may be an
affiliate of the Company. 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". See "Servicing and
Administration of the Mortgage Assets".
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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. The REMIC
Administrator for any such Series may be an
affiliate of the Company. See "Certain
Federal Income Tax
Consequences--REMICs--Reporting and Other
Administrative Matters".
The Mortgage Assets............... The Collateral for each Bond Series and the
Trust Fund for each Certificate Series will
primarily consist of a Mortgage Asset Pool.
Each Mortgage Asset Pool will consist of
Mortgage Loans, Underlying MBS or some
combination thereof.
The Mortgage Loans included in any Mortgage
Asset Pool will be secured by first or
junior liens on, or security interests in,
fee or leasehold estates in Mortgaged
Properties consisting of 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
Company 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 Series of Securities
is issued.
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
or resets one or more times over its term,
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
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<PAGE>
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 original term to maturity
of not more than approximately 40 years.
Although no Mortgage Loan will have been
originated by the Company, certain Mortgage
Loans may have been originated by
affiliates of the Company. See "Description
of the Underlying Assets--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
Underlying Assets--Mortgage Loans--Mortgage
Loan Information in Prospectus
Supplements".
The Underlying MBS included in any Mortgage
Asset Pool will consist of mortgage
participations, mortgage pass-through
certificates, collateralized mortgage
obligations and/or other mortgage-backed
securities, 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 that may or may not be
issued, insured or guaranteed by the United
States or an agency or instrumentality
thereof. See "Description of the Underlying
Assets--Underlying MBS".
If so specified in the related Prospectus
Supplement, the Issuer or Depositor, as the
case may be, for any Series (or another
specified person or entity) may be
permitted, at its option, but subject to
the conditions specified in such Prospectus
Supplement, to replace related Mortgage
Assets with (or, in the case of a Bond
Series, to obtain a release of the related
Mortgage Assets in exchange for) other
mortgage loans or mortgage-backed
securities that conform to the description
of "Mortgage Assets" herein and satisfy the
criteria set forth in the related
Prospectus Supplement. In addition, if so
specified in the related Prospectus
Supplement, the Trustee for any Series may
be authorized or required (including at the
direction of the Issuer or Depositor, as
the case may be, for such Series) to apply
collections on the related Mortgage Assets
to acquire new mortgage loans and or
mortgage-backed securities that
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<PAGE>
conform to the description of "Mortgage
Assets" herein and satisfy the criteria set
forth in the related Prospectus Supplement.
No such substitution of Mortgage Assets or
acquisition of new Mortgage Assets will be
permitted if it would result in a
qualification, downgrade or withdrawal of
the then-current rating assigned by any
Rating Agency (as defined herein) to any
Class of Offered Securities of the related
Series.
If so specified in the related Prospectus
Supplement, the Issuer or Depositor, as the
case may be, for any Series (or another
specified person or entity) may be
permitted, at its option, but subject to
the conditions specified in such Prospectus
Supplement, to obtain the release of
Mortgage Assets constituting the Collateral
for a Bond Series or to repurchase Mortgage
Assets included in the Trust Fund for a
Certificate Series. Any such release or
repurchase of Mortgage Assets will likely
result in the pay down of the aggregate
outstanding principal balance or amount of
the related Series of Securities.
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
"Cutoff Date") will equal or exceed the
aggregate outstanding principal balance or
amount of the related Series of Securities
as of the date such Securities are issued
(the "Closing Date"). In the event that the
related Mortgage Assets do not have an
aggregate outstanding principal balance as
of the related Cut-off Date at least equal
to the aggregate outstanding principal
balance or amount of a Series of Securities
as of the related Closing Date, the Issuer
or Depositor, as the case may be, for such
Series 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
amount of the shortfall. During the 90-day
period following the related Closing Date,
the Issuer or Depositor, as the case may
be, for such Series will be entitled to
obtain a release of such cash or Permitted
Investments to the extent that it delivers
a corresponding amount of 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 Securities of such Series to the extent
set forth, and on the dates specified, in
the related Prospectus Supplement.
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The Bonds......................... Each Bond Series will be issued in one or
more Classes pursuant to a terms indenture
(a "Terms Indenture"), which shall
incorporate by reference certain applicable
standard indenture provisions of the
Company (any such Terms Indenture, as and
to the extent it incorporates such standard
indenture provisions, an "Indenture"), and
will be secured by a pledge of Collateral
that includes Mortgage Assets. The Issuer
of each Bond Series will be either the
Company or an Owner Trust established by
the Company solely for the purpose of
issuing one or more Bond Series. Each such
Owner Trust will be created by an agreement
(the "Deposit Trust Agreement") between the
Company, acting as depositor, and a bank,
trust company or other fiduciary, acting as
owner trustee (the "Owner Trustee"). The
Bonds will be nonrecourse obligations of
the Issuer. The related Terms Indenture for
a particular Bond Series may permit the
related Collateral to be transferred by the
Issuer to a trust or other limited purpose
affiliate of the Company, subject to the
obligations of the Bonds of such Series,
thereby relieving the Issuer of its
obligations with respect to such Bonds.
As described in the related Prospectus
Supplement, the Bonds of any Bond Series,
including the Offered Bonds of such Series,
may consist of one or more Classes of Bonds
that, among other things: (i) are senior
(such Bonds, "Senior Bonds" and also
"Senior Securities") or subordinate (such
Bonds, "Subordinate Bonds" and also
"Subordinate Securities") to one or more
other Classes of Bonds of such Series in
entitlement to certain payments on such
Bonds; (ii) are entitled to payments of
principal, with disproportionate, nominal
or no payments of interest (such Bonds,
"Stripped Principal Bonds" and also
"Stripped Principal Securities"); (iii) are
entitled to payments of interest, with
disproportionate, nominal or no payments of
principal (such Bonds, "Stripped Interest
Bonds" and also "Stripped Interest
Securities"); (iv) provide for payments of
interest or principal thereon that commence
only after the occurrence of certain
events, such as the retirement of one or
more other Classes of Bonds of such Series;
(v) provide for payments of principal
thereon to be made, from time to time or
for designated periods, at a rate that is
faster (and, in some cases, substantially
faster) or slower (and, in some cases,
substantially slower) than the rate at
which payments or other collections of
principal are received on the related
Mortgage Assets; (vi) provide for payments
of principal thereon to be made, subject to
available funds, based on a specified
principal payment schedule or other
methodology; or (vii) provide for payments
thereon that constitute prepayment premiums
or yield maintenance payments or that are
based on collections on the related
Mortgage Assets attributable to prepayment
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<PAGE>
premiums, yield maintenance payments or
equity participations.
Each Bond, other than certain Stripped
Interest Bonds and certain Bonds that
constitute REMIC Residual Securities (as
defined herein), will have an initial
stated principal amount (a "Bond Principal
Amount"); and each Bond, other than certain
Stripped Principal Bonds and certain Bonds
that constitute REMIC Residual Securities,
will accrue interest on its Bond Principal
Amount or, in the case of certain Stripped
Interest Bonds, on a notional amount (a
"Bond Notional Amount"), based on a fixed,
variable or adjustable interest rate (a
"Bond Interest Rate"). The related
Prospectus Supplement will specify the
aggregate Bond Principal Amount, aggregate
Bond Notional Amount and/or Bond Interest
Rate (or, in the case of a variable or
adjustable Bond Interest Rate, the method
for determining such rate), as applicable,
for each Class of Offered Bonds.
If so specified in the related Prospectus
Supplement, a Class of Bonds may have two
or more component parts, each having
characteristics that are otherwise
described herein as being attributable to
separate and distinct Classes.
The Bonds will not be guaranteed or insured
by the Company or any of its affiliates, by
any governmental agency or instrumentality
or by any other person or entity, unless
otherwise provided in the related
Prospectus Supplement. See "Risk
Factors--Limited Assets".
The Certificates.................. Each Certificate Series will be issued in
one or more Classes 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
Certificate Series, including the Offered
Certificates of such Series, may consist of
one or more Classes of Certificates that,
among other things: (i) are senior (such
Certificates, "Senior Certificates" and
also "Senior Securities") or subordinate
(such Certificates, "Subordinate
Certificates" and also "Subordinate
Securities") to one or more other Classes
of Certificates of such Series in
entitlement to certain distributions on
such Certificates; (ii) are entitled to
distributions of principal, with
disproportionate, nominal or no
distributions of interest (such
Certificates, "Stripped Principal
Certificates" and also "Stripped Principal
Securities"); (iii) are entitled to
distributions of interest, with
disproportionate, nominal or no
distributions of principal (such
Certificates, "Stripped Interest
Certificates" and also "Stripped Interest
- 14 -
<PAGE>
Securities"); (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.
Each Certificate, other than certain
Stripped Interest Certificates and certain
Certificates that constitute REMIC Residual
Securities, will have an initial stated
principal amount (a "Certificate Principal
Balance"); and each Certificate, other than
certain Stripped Principal Certificates and
certain Certificates that constitute REMIC
Residual Securities, 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 "Certificate Interest Rate"). The
related Prospectus Supplement will specify
the aggregate Certificate Principal
Balance, aggregate Certificate Notional
Amount and/or Certificate Interest Rate
(or, in the case of a variable or
adjustable Certificate Interest 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 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 Company or any of its
affiliates, by any governmental agency or
instrumentality or by any other person or
entity, unless otherwise provided in the
related Prospectus Supplement. See "Risk
Factors--Limited Assets".
Payments of Interest on the Bonds... Interest on each Class of Offered Bonds
(other than certain Classes of Stripped
Principal Bonds and certain Classes of
Bonds that constitute REMIC Residual
Securities) of each Bond Series will accrue
at the applicable Bond Interest Rate on the
Bond Principal Amount or, in the case of
certain
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<PAGE>
Classes of Stripped Interest Bonds, the
Bond Notional Amount thereof outstanding
from time to time and will be paid to
holders of the Bonds as provided in the
related Prospectus Supplement (each of the
specified dates on which payments are to be
made on the Bonds of any Bond Series, a
"Payment Date"). Payments of interest on
one or more Classes of Bonds (such Bonds,
"Accrual Bonds" and also "Accrual
Securities") may not commence until the
occurrence of certain events, such as the
retirement of one or more other Classes of
Bonds, and interest accrued with respect to
a Class of Accrual Bonds prior to the
occurrence of such an event will either be
added to the Bond Principal Amount thereof
or otherwise deferred as described in the
related Prospectus Supplement. Payments of
interest on one or more Classes of Bonds
may be reduced or deferred to the extent of
certain delinquencies, losses and other
contingencies described herein and in the
related Prospectus Supplement. However,
failure to pay interest on a current basis
may not necessarily be an Issuer Event of
Default (as defined herein) with respect to
a particular Bond Series. See "Risk
Factors--Effect of Prepayments on Average
Life of Securities" and "--Effect of
Prepayments on Yield of Securities", "Yield
and Maturity Considerations--Certain
Shortfalls in Collections of Interest" and
"Description of the Securities--The
Bonds--Payments of Interest on the Bonds".
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 Certificates that constitute
REMIC Residual Securities) of each
Certificate Series will accrue at the
applicable Certificate Interest Rate on the
Certificate Principal Balance or, in the
case of certain Classes of Stripped
Interest Certificates, the Certificate
Notional Amount thereof outstanding from
time to time and will be distributed to
holders of the Certificates 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 (such
Certificates, "Accrual Certificates" and
also "Accrual Securities") 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 or deferred to the extent of
certain delinquencies, losses and other
contingencies described herein and in the
related Prospectus Supplement. See "Risk
Factors--Effect of
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<PAGE>
Prepayments on Average Life of Securities"
and "--Effect of Prepayments on Yield of
Securities", "Yield and Maturity
Considerations--Certain Shortfalls in
Collections of Interest" and "Description
of the Securities--The
Certificates--Distributions of Interest on
the Certificates".
Payments of Principal on the Bonds Each Class of Bonds of each Bond Series
(other than certain Classes of Stripped
Interest Bonds and certain Classes of Bonds
that constitute REMIC Residual Securities)
will have an aggregate Bond Principal
Amount. The aggregate Bond Principal Amount
of a Class of Bonds outstanding from time
to time will represent the maximum amount
of payments that the holders thereof are
ultimately entitled to receive in respect
of principal from the related Issuer,
subject to the nonrecourse provisions
thereof. Unless otherwise specified in the
related Prospectus Supplement, the initial
aggregate Bond Principal Amount of all
Bonds of any particular Bond Series will
not be greater than the outstanding
principal balance of the related Mortgage
Assets as of the related Cut-off Date. As
and to the extent described in the related
Prospectus Supplement, any payments of
principal to be made with respect to the
Bonds of any Bond Series on any Payment
Date will be paid to the holders of the
Class or Classes of Bonds of such Series
then entitled thereto until the Bond
Principal Amounts of such Bonds have been
reduced to zero. The aggregate payments of
principal to be made with respect to any
Series of Bonds on any Payment Date will be
in an amount (the "Principal Payment
Amount") to be determined by a formula to
be described in the related Prospectus
Supplement. The Principal Payment Amount in
respect of any Bond Series for any Payment
Date may be zero or may include certain
interest accrued, but not then payable, on
any Accrual Bonds of such Series. Payments
of principal with respect to one or more
Classes of Bonds: (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 related
Mortgage Assets; (ii) may not commence
until the occurrence of certain events,
such as the retirement of one or more other
Classes of Bonds 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 Bonds of the same
Series and the rate at which payments and
other collections of principal on the
related Mortgage Assets are received.
Unless otherwise specified in the related
Prospectus Supplement, payments of
principal of any Class of Offered Bonds
will be made on a pro rata basis among all
of the Bonds of such Class. See
"Description of the Securities--The
Bonds--Payments of Principal on the Bonds".
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<PAGE>
Distributions of Principal of
the Certificates................ Each Class of Certificates of each
Certificate Series (other than certain
Classes of Stripped Interest Certificates
and certain Classes of Certificates that
constitute REMIC Residual Securities) 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 Certificates of any
particular Certificate Series will not be
greater than the outstanding principal
balance of the related Mortgage Assets as
of the related Cut-off Date. As and to the
extent described in the related Prospectus
Supplement, any distributions of principal
to be made with respect to the Certificates
of any Certificate Series on any
Distribution Date will be allocated among
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. The aggregate
distributions of principal to be made with
respect to any Certificate Series on any
Distribution Date will be made in an amount
(the "Principal Distribution Amount") to be
determined by a formula to be described in
the related Prospectus Supplement. The
Principal Distribution Amount in respect of
any Certificate Series for any Distribution
Date may be zero or may include certain
interest accrued, but not then payable, on
any Accrual Certificates of such Series.
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 related Mortgage Assets; (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 Certificates of the same Series
and the rate at which payments and other
collections of principal on the related
Mortgage Assets 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
Securities--The Certificates--Distributions
of Principal of the Certificates".
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<PAGE>
Allocation of Losses and
Certain Expenses................ If and to the extent specified in the
Prospectus Supplement for any Series,
losses on the related Mortgage Assets and
certain unanticipated expenses in respect
of such Series will be allocated in
reduction of the aggregate Bond Principal
Amount or the aggregate Certificate
Principal Balance, as the case may be (in
either case, the aggregate "Outstanding
Principal"), of one or more Classes of
Securities of such Series, in the order and
at the times so specified. Unless otherwise
specified in the related Prospectus
Supplement, such reductions in the
aggregate Outstanding Principal of any
Class of Securities will be allocated among
the Securities of such Class pro rata on
the basis of the outstanding principal of
each such Security. If such losses and
expenses are not allocated to reduce the
aggregate Outstanding Principal of the
Securities of the related Series and are
not otherwise covered by any fund or
agreement constituting Credit Support or,
in the case of a Bond Series, any equity of
the related Issuer in the related
Collateral, the aggregate Outstanding
Principal of the Securities of such Series
will exceed and, accordingly, not be
supported by the aggregate principal
balance of the related Mortgage Assets.
Stated Maturity of the Bonds...... The "Stated Maturity" for each Class of
Bonds is the date as of which all the Bonds
of such Class will be required to be fully
paid. However, the actual maturity of any
Bond may occur earlier, and even
significantly earlier, than its Stated
Maturity, depending, in part, on the rate
of principal payments on the related
Mortgage Assets. The rate of principal
payments (and of principal prepayments in
particular) on the Mortgage Assets pledged
as security for any Bond Series will depend
on a variety of factors, including the
characteristics of such Mortgage Assets
(and of the mortgage loans underlying any
Underlying MBS included among such Mortgage
Assets) and the prevailing level of
interest rates from time to time, as well
as on a variety of economic, demographic,
geographic, tax, legal and other factors.
No assurance can be given as to the actual
prepayment experience of such Mortgage
Assets. The Stated Maturity for each Class
of Offered Bonds will be set forth in the
related Prospectus Supplement. See "Yield
and Maturity Considerations".
Final Scheduled Distribution Dates
of the Certificates............. The "Final Scheduled Distribution Date" for
each Class of Certificates is the date
after which no Certificates of such Class
will remain outstanding, calculated on the
basis of the assumptions set forth in the
related Prospectus Supplement. The Final
Scheduled Distribution Date of a Class of
Certificates may equal the maturity date of
the Mortgage Asset in the related Trust
Fund which has the latest stated maturity
or will otherwise be determined as
described in
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<PAGE>
the related Prospectus Supplement. However,
the actual maturity of any Certificate may
occur earlier and even significantly
earlier, than its Final Scheduled
Distribution Date, depending, in part, on
the rate of principal payments on the
related Mortgage Assets. The rate of
principal payments (and of principal
prepayments in particular) on the Mortgage
Assets in the Trust Fund for any
Certificate Series will depend on a variety
of factors, including certain
characteristics of such Mortgage Assets
(and of the mortgage loans underlying any
Underlying MBS included among such Mortgage
Assets) and the prevailing level of
interest rates from time to time, as well
as on a variety of economic, demographic,
tax, legal, social and other factors. No
assurance can be given as to the actual
prepayment experience of such Mortgage
Assets. The Final Scheduled Distribution
Date for each Class of Offered Certificates
will be set forth in the related Prospectus
Supplement. See "Yield and Maturity
Considerations".
Special Redemption of Bonds....... If specified in the related Prospectus
Supplement, the Bonds of any Bond Series
will be subject to a special redemption
(any date on which a special redemption may
and does occur, a "Special Redemption
Date"), in whole or in part, if, as a
result of prepayment experience on the
related Mortgage Assets or low reinvestment
yields or both, the Trustee determines
(based on assumptions, if any, specified in
the related Indenture and after giving
effect to the amounts, if any, available to
be withdrawn from or under any reserve fund
or instrument constituting Credit Support
or a Cash Flow Arrangement (each as defined
below) for such Series) that the amount
anticipated to be available in the
Collection Account (as defined herein) for
such Series on the date specified in the
related Prospectus Supplement, will be
insufficient to meet debt service
requirements on any portion of the Bonds.
Any such redemption would be limited to
certain collections, including the
aggregate amount of all scheduled principal
payments and prepayments, received on the
related Mortgage Assets since the last
Payment Date or Special Redemption Date,
whichever is later, and may shorten the
maturity of any Bond so redeemed by no more
than the period between the date of such
special redemption and the next Payment
Date. Unless otherwise specified in the
related Prospectus Supplement, special
redemptions of Bonds of a Series will be
made in the same priority and manner as
principal payments are made on a Payment
Date. Unless otherwise specified in the
related Prospectus Supplement, Bonds
subject to special redemption shall be
redeemed on the applicable Special
Redemption Date at a price (the "Redemption
Price") equal to 100% of the principal
amount of such Bonds, or portions thereof,
so redeemed, plus accrued interest thereon
to the date
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<PAGE>
specified in the related Prospectus
Supplement. To the extent described in the
related Prospectus Supplement, the Bonds of
any Bond Series may be subject to special
redemption in whole or in part following
certain defaults under an agreement
constituting Credit Support and upon the
occurrence of certain other events, at the
Redemption Price. See "Description of the
Securities--Special Redemption of Bonds".
Optional Redemption of Bonds...... If and to the extent specified in the
related Prospectus Supplement, one or more
Classes of Bonds of any Bond Series may be
redeemed in whole or in part, at the
Issuer's option, on any Payment Date on or
after the date specified in the related
Prospectus Supplement and at the Redemption
Price equal to 100% of the principal amount
of such Bonds, or portions thereof, so
redeemed, plus accrued interest thereon to
the date specified in the related
Prospectus Supplement. See "Description of
the Securities--Optional Redemption of
Bonds".
Optional Termination of a Trust
Fund ........................... If so specified in the related Prospectus
Supplement, the Trust Fund for any
Certificate Series may be subject to
optional early termination (and,
accordingly, the Certificates of such
Series may be subject to early retirement)
as a result of the purchase of the Mortgage
Assets in such Trust Fund by the party or
parties specified in such Prospectus
Supplement, 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
specified therein may be authorized or
required to solicit bids for the purchase
of all of 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. See "Description of the
Securities--Termination of a Trust Fund".
Credit Support and
Cash Flow Arrangements.......... If so provided in the related Prospectus
Supplement, partial or full protection
against certain defaults and losses on the
related Mortgage Assets may be provided to
one or more Classes of Securities of any
Series in the form of subordination of one
or more other Classes of Securities of such
Series, which other Classes may include one
or more Classes of Offered Securities, in
the form of the subordination (in the case
of a Bond Series) of the related Issuer's
interest in and its right to receive
payments on its equity (if any) in the
related Collateral, 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
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<PAGE>
reserve fund, or a combination thereof (any
such coverage with respect to the
Securities of any Series, "Credit
Support"). If so provided in the related
Prospectus Supplement, the Collateral for a
Bond Series or the Trust Fund for a
Certificate Series may include: (i)
guaranteed investment contracts pursuant to
which moneys held in the funds and accounts
established for such 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
related Mortgage Assets or on one or more
Classes of Securities of such Series; or
(iii) letters of credit, surety bonds,
insurance policies, guarantees and/or
reserve funds intended to offset a slower
than anticipated rate of principal payments
on the related Mortgage Assets (any such
fund or agreement, in the case of clause
(i), (ii) or (iii), a "Cash Flow
Arrangement"). Certain relevant information
regarding any applicable Credit Support or
Cash Flow Arrangement relating to the
Offered Securities of any Series will be
set forth in the related Prospectus
Supplement. See "Risk Factors--Credit
Support Limitations", "Description of the
Underlying Assets--Credit Support" and
"--Cash Flow Arrangements" and "Description
of Credit Support".
Advances.......................... If and to the extent provided in the
related Prospectus Supplement, if the
Collateral for a Bond Series or the Trust
Fund for a Certificate Series 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 Securities--Advances in Respect of
Delinquencies". If and to the extent
provided in the related Prospectus
Supplement, 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 the sources specified in such
Prospectus Supplement. See "Description of
the Securities--Advances in Respect of
Delinquencies". If the Collateral for a
Bond Series or the Trust Fund for a
Certificate Series includes Underlying MBS,
any comparable advancing obligation,
including of a party to the related
Underlying MBS Agreement (as defined
herein), will be described in the related
Prospectus Supplement.
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<PAGE>
Certain Federal Income Tax
Consequences.................... For federal income tax purposes, the
Offered Securities of each Series will be
(i) "regular interests" ("REMIC Regular
Securities") and "residual interests"
("REMIC Residual Securities") in a "real
estate mortgage investment conduit" (a
"REMIC") under sections 860A through 860G
of the Internal Revenue Code of 1986 (the
"Code"), or (ii) in the case of certain
Certificate Series, interests ("Grantor
Trust Certificates") in a Trust Fund that
is treated as a grantor trust under
applicable provisions of the Code or (iii)
in the case of certain Bond Series,
indebtedness of the related Issuer.
Investors are advised to consult their tax
advisors concerning the specific tax
consequences to them of the purchase,
ownership and disposition of the Offered
Securities 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 Securities 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 Securities 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 Securities
constitute legal investments for them. See
"Legal Investment" herein and in the
related Prospectus Supplement.
Rating............................ At their respective dates of issuance, each
Class of Offered Securities 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 Securities 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 Mortgage Asset Pool, they would
similarly pertain to and be influenced by the characteristics or behavior of the
mortgage loans underlying any Underlying MBS included in such Mortgage Asset
Pool.
Limited Liquidity of Offered Securities
General. The Offered Securities 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 Securities for an indefinite period of time.
Furthermore, except to the extent described herein and in the related Prospectus
Supplement, holders of Securities will have no redemption rights, and the
Offered Securities 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 Securities--Optional Redemption of
Bonds","--Special Redemption of Bonds" and "--Termination of a Trust Fund".
Lack of a Secondary Market. There can be no assurance that a secondary
market for the Offered Securities 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 Securities remain outstanding. The Prospectus
Supplement for the Offered Securities of any Series may indicate that an
underwriter specified therein intends to establish a secondary market in such
Offered Securities; 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 are secured by or evidence interests in single-family
mortgage loans. Unless otherwise provided in the related Prospectus Supplement,
the Offered Securities will not be listed on any securities exchange.
Limited Nature of Ongoing Information. The primary source of ongoing
information regarding the Offered Securities of any Series, including
information regarding the status of the related Mortgage Assets and any Credit
Support for such Securities, will be the periodic reports to holders of such
Securities to be delivered pursuant to the related Indenture or related Pooling
Agreement, as applicable, as described herein under the heading "Description of
the Securities--Reports to Securityholders". There can be no assurance that any
additional ongoing information regarding the Offered Securities of any Series
will be available through any other source. The limited nature of such
information in respect of the Offered Securities of any Series may adversely
affect the liquidity thereof, even if a secondary market for such Securities
does develop.
Sensitivity to Fluctuations in Prevailing Interest Rates. Insofar as a
secondary market does develop with respect to the Offered Securities of any
Series or with respect to any Class thereof, the market value of such Securities
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 Security (in particular, a Class with a relatively
long average life, a Class that has features that make it more likely to be
prepaid or a Class of Stripped Interest Securities or Stripped Principal
Securities) may be extremely sensitive to small fluctuations in prevailing
interest rates; and the relative change in price for an Offered Security in
response to an upward or downward movement in prevailing interest rates may not
necessarily equal the relative change in price for such Security in response to
an equal but opposite movement in such rates. Accordingly, the sale of Offered
Securities by a holder in any secondary market that may develop may be at a
discount from the price paid by such holder. The Company is not aware of any
source through which price information about the Offered Securities will be
generally available on an ongoing basis.
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<PAGE>
Limited Assets
Unless otherwise specified in the related Prospectus Supplement, neither
the Offered Securities of any Series nor the related Mortgage Assets will be
guaranteed or insured by the Company or any of its affiliates, by any
governmental agency or instrumentality or by any other person or entity.
Furthermore, no holder of an Offered Bond will have any recourse against the
Issuer or any of its assets other than the related Collateral in the event of a
default on such Bond, and no Offered Certificate of any Certificate Series will
represent a claim against or interest in the Trust Fund for any other
Certificate Series. Accordingly, if the Underlying Assets (as defined herein)
constituting the Collateral or Trust Fund, as the case may be, for any Series
are insufficient to make payments on the Offered Securities of such Series, no
other assets will be available for payment of the deficiency, and the holders of
one or more Classes of such Offered Securities 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 the Collateral for a Bond Series
or the Trust Fund for a Certificate Series, including the Collection 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 Securities of such Series. If a Series of Securities includes
one or more Classes of Subordinate Securities, and if losses or shortfalls in
collections on the related Mortgage Assets have been incurred (in excess of the
Issuer's equity (if any) in the related Collateral, in the case of a Bond
Series), all or a portion of the amount of such losses or shortfalls will be
borne first by one or more such Classes of Subordinate Securities, and,
thereafter, by the remaining Classes of Securities, in the priority and manner
and subject to the limitations specified in such Prospectus Supplement.
Issuer Events of Default; Bankruptcy or Insolvency of the Issuer
Limited Issuer Events of Default. With certain exceptions described
herein, and unless otherwise provided in the related Prospectus Supplement, the
holders of Bonds of any Bond Series will have no independent ability to declare
a default unless the Issuer shall fail to pay such Bonds in full by their Stated
Maturity. Unless otherwise specified in the Prospectus Supplement for any Bond
Series, interest will be payable on the respective Classes of Bonds of such
Series on each Payment Date only to the extent that there are funds available
for such purpose in the related Collection Account, and the Issuer's failure to
pay interest on such Bonds on a current basis will not constitute an Issuer
Event of Default (as defined herein). In addition, unless otherwise specified in
the Prospectus Supplement for any Bond Series, it will not be an Issuer Event of
Default if the aggregate principal amount of the related Collateral declines
below the aggregate Bond Principal Amount of such Bonds or of any particular
Class or Classes thereof. See "Description of the Indentures--Issuer Events of
Default".
Bondholders Have Limited Ability to Force Sale of Collateral following
Non-Payment of Principal or Interest. Unless otherwise specified in the related
Prospectus Supplement, following an Issuer Event of Default in respect of any
Bond Series, the Trustee for such Series may (and, at the direction of the
holders of Bonds representing more than 50% of the aggregate Bond Principal
Amount (or, in the case of certain Classes of Stripped Interest Bonds and
certain Classes of Bonds that constitute REMIC Residual Securities, the
aggregate Bond Notional Amount) of each Class of Bonds of such Series, shall)
declare all the Bonds of such Series to be due and payable. In addition, unless
otherwise specified in the related Prospectus Supplement, following any such
declaration of acceleration, the Trustee for such Series may, generally with the
consent or at the direction of the holders of Bonds representing an even greater
percentage of the aggregate Bond Principal Amount (or, in the case of certain
Classes of Stripped Interest Bonds and certain Classes of Bonds that constitute
REMIC Residual Securities, the aggregate Bond Notional Amount) of each Class of
Bonds of such Series, liquidate the related Mortgage Assets. Unless otherwise
specified in the related Prospectus Supplement, any such declaration of
acceleration and its consequences may be rescinded and annulled under certain
circumstances by the holders of Bonds representing more than 50% of the
aggregate Bond Principal Amount (or, in the case of certain Classes of Stripped
Interest Bonds and certain Classes of Bonds that constitute REMIC Residual
Securities, the aggregate Bond Notional Amount) of each Class of Bonds of such
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Series. For purposes of the foregoing, Bonds held by the Issuer or any affiliate
thereof will be deemed not to be outstanding. See "Description of the
Indentures--Issuer Events of Default".
Declaration of acceleration and liquidation of Collateral pursuant to the
foregoing procedures (or any alternative procedures described in the related
Prospectus Supplement) will, in general, be the sole remedy against the Issuer
for the holders of the Offered Bonds upon an Issuer Event of Default. Each
holder of an Offered Bond will be deemed to have agreed by the acceptance of its
Bond not to file a bankruptcy petition or commence similar proceedings in
respect of the Issuer.
The market value of the Mortgage Assets pledged to secure any Bond Series
will fluctuate as general interest rates fluctuate, among other things.
Following an Issuer Event of Default, there is no assurance that the market
value of the Mortgage Assets pledged to secure the affected Bond Series will be
equal to or greater than the unpaid principal and accrued interest due on the
Bonds of such Series, together with any other expenses or liabilities payable
from the sales proceeds. The holders of certain Classes of Bonds may have a
disincentive to authorize the sale of the related Mortgage Assets following an
Issuer Event of Default because the net proceeds of such sale may be
insufficient to pay in full the principal of and interest on their Bonds.
The inability of the holders of a particular Class of Bonds independently
to force the sale of the related Mortgage Assets even though an Issuer Event of
Default has occurred that affects such Class of Bondholders (as defined herein),
and the inability of Bondholders generally to force a sale of the related
Mortgage Assets regardless of a substantial decline in the aggregate principal
amount of the related Collateral and notwithstanding that interest may not have
been timely paid on a Class of Bonds, may adversely affect the holders of one or
more Classes of Offered Bonds.
Bankruptcy or Insolvency of the Issuer. The bankruptcy or insolvency of
the Issuer of any Bond Series could adversely affect payments on the Offered
Bonds of such Series. The automatic stay imposed by title 11 of the United
States Code (the "Bankruptcy Code") could prevent enforcement of obligations of
such Issuer, including under such Bonds and the related Indenture, or actions
against any such Issuer's property, including the related Collateral, prior to
modification of the stay. In addition, the trustee in bankruptcy for such Issuer
may be able to accelerate payment of such Bonds and liquidate the related
Mortgage Assets. In the event the principal of the Bonds of such Series is
declared due and payable, the holders of any Offered Bonds of such Series issued
at a discount from par ("original issue discount") may be entitled, under
applicable provisions of the Bankruptcy Code, to receive no more than an amount
equal to the unpaid principal amount thereof less unamortized original issued
discount ("accreted value"). There is no assurance as to how such accreted value
would be determined if such event occurred. However, the Issuer of each Bond
Series will be structured to limit the likelihood of bankruptcy or insolvency.
Credit Support Limitations
Limitations Regarding Types of Losses Covered. The Prospectus Supplement
for the Offered Securities 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 Securities.
Disproportionate Benefits to Certain Classes and Series. A Series of
Securities may include one or more Classes of Subordinate Securities (which may
include Offered Securities) or, in the case of a Bond Series, may be supported
by the Issuer's equity (if any) in the related Collateral, if so provided in the
related Prospectus Supplement. Although subordination (whether of Subordinate
Securities or of an Issuer's equity in the related Collateral) is intended to
reduce the likelihood of temporary shortfalls and ultimate losses to holders of
Offered Securities senior thereto, the amount of subordination will be limited
and may decline under
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certain circumstances. In addition, if principal payments on one or more Classes
of Offered Securities 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 Securities of such Series has been repaid in full. As a
result, the impact of losses and shortfalls experienced with respect to the
related Mortgage Assets may fall primarily upon those Classes of Offered
Securities having a later right of payment. Moreover, if a form of Credit
Support covers the Offered Securities 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 Securities of one (or more) such Series will be
disproportionately benefited by such Credit Support to the detriment of the
holders of Offered Securities 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 Securities,
including the subordination of one or more other Classes of Securities of the
same Series or, in the case of a Bond Series, the subordination of the Issuer's
equity (if any) in the related Collateral, will be determined on the basis of
criteria established by each Rating Agency rating such Classes of Securities
based on an assumed level of defaults, delinquencies and losses on the related
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 Securities--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 Securities will be required to bear such additional losses.
Effect of Prepayments on Average Life of Securities
As a result of prepayments on the Mortgage Loans in any Mortgage Asset
Pool, the amount and timing of payments or distributions, as the case may be, of
principal and/or interest on the Offered Securities of the related Series may be
highly unpredictable. Prepayments on the Mortgage Loans in any Mortgage Asset
Pool will result in a faster rate of principal payments on one or more Classes
of such Securities (unless otherwise applied to acquire new Mortgage Assets)
than if payments on such Mortgage Loans were made as scheduled. Thus, the
prepayment experience on the Mortgage Loans in any Mortgage Asset Pool may
affect the average life of one or more Classes of Securities of the related
Series, including a Class of Offered Securities. 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 in any Mortgage Asset Pool,
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 in any Mortgage Asset Pool, 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 Mortgage Asset Pool 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
underlying any Series, the retirement of any Class of Securities of such 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 included in any
Mortgage Asset Pool ultimately affect the average life of any Class of
Securities of the related Series will depend on the terms and provisions of such
Class of Securities. A Class of Securities, including a Class of Offered
Securities, may provide that on any Payment Date or Distribution Date, as the
case may be, the holders of such Securities are entitled to a pro rata share of
the prepayments on the underlying Mortgage Loans that are payable or
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.
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A Class of Securities that entitles the holders thereof to a disproportionately
large share of the prepayments on the underlying Mortgage Loans increases the
likelihood of early retirement of such Class ("Call Risk") if the rate of
prepayment is relatively fast; while a Class of Securities that entitles the
holders thereof to a disproportionately small share of the prepayments on the
underlying Mortgage Loans 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 Securityholders (as defined
herein) of any Series to receive payments (and, in particular, prepayments) of
principal of the underlying Mortgage Loans may vary based on the occurrence of
certain events (e.g., the retirement of one or more Classes of Securities of
such Series) or subject to certain contingencies (e.g., prepayment and default
rates with respect to such Mortgage Loans).
Effect of Prepayments on Yield of Securities
A Series of Securities may include one or more Classes of Offered
Securities offered at a premium or discount. Yields on such Classes of
Securities will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Mortgage Asset Pool 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 Securities, 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 Securities may vary from the anticipated yield
will depend upon the degree to which such Securities are purchased at a discount
or premium and the amount and timing of payments or distributions thereon. An
investor should consider, in the case of any Offered Security purchased at a
discount, the risk that a slower than anticipated rate of principal payments on
the underlying 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
Security purchased at a premium, the risk that a faster than anticipated rate of
principal payments on the underlying Mortgage Loans 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 Securities
will reflect only its assessment of the likelihood that holders of such Offered
Securities will receive payments to which such Securityholders are entitled
under the related Indenture or Pooling Agreement, as applicable. Such rating
will not constitute an assessment of the likelihood that principal prepayments
on the underlying 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 redemption of such Bonds or early optional termination of the related
Trust Fund, as applicable. 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
Security at a significant premium might fail to recover its initial investment
under certain 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 Securities.
The amount, type and nature of Credit Support, if any, provided with
respect to a Series of Securities will be determined on the basis of criteria
established by each Rating Agency rating Classes of the Securities 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 Securities 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".
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Certain Factors Affecting Delinquency, Foreclosure and Loss of the Mortgage
Loans
General. The payment performance of the Offered Securities 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 that may be included in any
Mortgage Asset Pool. In addition, a description of certain material
considerations associated with investments in or based on the performance of
mortgage loans is included herein under "Certain Legal Aspects of Mortgage
Loans".
The Offered Securities 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 Underlying Assets--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 mortgagee or its servicing agent.
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 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 Mortgage Asset Pool (based on
the aggregate principal balance of the Mortgage Assets constituting such
Mortgage Asset Pool at the time the related Series of Securities are issued),
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 underlying a particular Series of Securities will
generally be greater than for pools of single-family loans because Mortgage
Loans underlying a Series of Securities 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.
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Limited Recourse Nature of the Mortgage Loans. It is anticipated that some
or all of the Mortgage Loans underlying any Series of Securities 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 Mortgage Asset Pools,
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 Mortgage Asset Pool will increase the risk
that the poor performance of a single property manager will have widespread
effect on such 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 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
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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.
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 payments to
holders of Bonds secured by, or distributions to holders of Certificates
evidencing interests in, such Mortgage Loans.
Limitations on Enforceability of Assignments of Leases and Rents. In
general, any Mortgage Loan that is secured by a Mortgaged Property that is
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.
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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 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 underlying a Series of Securities 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 Company
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 "Servicing and Administration of the Mortgage
Assets--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
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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 Mortgage Asset Pool includes Mortgage Loans, then the related S&A Agreement
(as defined herein) will contain provisions generally to the effect that neither
the Master Servicer nor the Special Servicer may, on behalf of the related
Securityholders and, if applicable, the related Issuer, acquire title to a
Mortgaged 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 "Servicing and Administration of the
Mortgage Assets--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 the related Prospectus Supplement, the Master Servicer
and Special Servicer for any Mortgage Asset Pool will be required to cause the
borrower on each Mortgage Loan in such Mortgage Asset Pool 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 Securities of the related Series. See "Servicing and
Administration of the Mortgage Assets--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 included
in any particular Mortgage Asset Pool 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.
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Inclusion of Delinquent and Nonperforming Mortgage Loans in a Mortgage Asset
Pool
If so provided in the related Prospectus Supplement, the Mortgage Asset
Pool 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
Mortgage Asset Pool may adversely affect the rate of defaults and prepayments in
respect of such Mortgage Asset Pool and the yield on the Offered Certificates of
such Series. See "Description of the Underlying Assets--Mortgage
Loans--General".
Certain Federal Tax Considerations Regarding REMIC Residual Securities
Holders of REMIC Residual Securities 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 Securities that constitute REMIC Residual Securities 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 Securities report their pro rata share of the taxable income and
net loss of the related REMIC will continue until the aggregate Outstanding
Principal of all Classes of Securities of the related Series have been reduced
to zero, even though holders of REMIC Residual Securities have received full
payment of their stated interest and principal. A portion (or, in certain
circumstances, all) of any such Securityholder'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 Securities may be limited
in their ability to deduct servicing fees and other expenses of the related
REMIC. In addition, REMIC Residual Securities are subject to certain
restrictions on transfer. Because of the special tax treatment of REMIC Residual
Securities, the taxable income arising in a given year on a REMIC Residual
Security 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 Securities may have "phantom
income" associated with them. That is, taxable income may be reportable with
respect to a REMIC Residual Security 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 Security may significantly exceed the
present value of the related tax benefits accruing later. Therefore, the
after-tax yield on a REMIC Residual Security may be significantly less than that
of a corporate bond or stripped instrument having similar cash flow
characteristics, and certain REMIC Residual Securities may have a negative
"value".
Book-Entry Registration
If so provided in the related Prospectus Supplement, one or more Classes
of the Offered Securities of any Series will be issued as Book-Entry Securities
(as defined herein). Each Class of Book-Entry Securities will be initially
represented by one or more Securities registered in the name of a nominee for
DTC. As a result, unless and until corresponding Definitive Securities (as
defined herein) are issued, the Security Owners (also as defined herein) with
respect to any Class of Book-Entry Securities will be able to exercise the
rights of Securityholders only indirectly through DTC and the DTC Participants
(as defined herein). In addition, the access of Security Owners to information
regarding the Book-Entry Securities 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 Security 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,
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as described herein, Security Owners may suffer delays in the receipt of
payments on the Book-Entry Securities, and the ability of any Security Owner to
pledge or otherwise take actions with respect to its interest in the Book-Entry
Securities may be limited due to the lack of physical certificate evidencing
such interest. See "Description of the Securities--Book-Entry Registration and
Definitive Securities".
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 Company, 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, an Indenture or a
separate S&A Agreement or any affiliate thereof may own Securities. Investors in
the Offered Securities should consider that any resulting conflicts of interest
could affect the performance of duties under a Pooling Agreement, an Indenture
or a separate S&A Agreement. For example, if the Master Servicer or Special
Servicer for any Mortgage Asset Pool owns a significant portion of any Class of
Securities of the related Series, then, notwithstanding the applicable servicing
standard imposed by the related S&A Agreement, such fact could influence
servicing decisions in respect of the Mortgage Loans in such Mortgage Asset
Pool. Also, if specified in the related Prospectus Supplement, an Issuer or the
holders of a specified Class or Classes of Subordinate Securities 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. An Issuer
or the investors in such specified Class or Classes of Subordinate Securities
may have interests when dealing with defaulted Mortgage Loans that are in
conflict with those of the holders of the Offered Securities of the relevant
Series.
Early Retirement of Certificates
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 Prospectus Supplement for a Certificate Series, upon the reduction of the
aggregate principal balance of some or all of the related 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
such 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 holders 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 Securities--Termination of a Trust Fund".
Optional Redemption of Bonds
The Issuer may, at its option and if so specified in the related
Prospectus Supplement, redeem in whole or in part, one or more Classes of Bonds
of any Bond Series on any Payment Date for such Series on or after the dates, if
any, specified in such Prospectus Supplement. Notice of such redemption will be
given by the Issuer or Trustee for such Series prior to the expected date
thereof. The Redemption Price for any Bond so redeemed will be equal to 100% of
the Outstanding Principal of such Bond, or portion thereof, so redeemed,
together with interest accrued thereon to the date specified in the related
Prospectus Supplement.
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Substitution, Acquisition, Release and Repurchase of Mortgage Assets
If so specified in the Prospectus Supplement for the Offered Securities of
any Series, the Issuer or Depositor, as the case may be, for such Series (or
another specified person or entity) may be permitted, at its option, but subject
to the conditions specified in such Prospectus Supplement, to replace related
Mortgage Assets with (or, in the case of a Bond Series, to obtain a release of
the related Mortgage Assets in exchange for) other mortgage loans or
mortgage-backed securities that conform to the description of "Mortgage Assets"
herein and satisfy the criteria set forth in the related Prospectus Supplement.
In addition, if so specified in the related Prospectus Supplement, the Trustee
for any Series may be authorized or required (including at the direction of the
Issuer or Depositor, as the case may be, for such Series) to apply collections
on the related Mortgage Assets to acquire new mortgage loans and or
mortgage-backed securities that conform to the description of "Mortgage Assets"
herein and satisfy the criteria set forth in the related Prospectus Supplement.
No such substitution of Mortgage Assets or acquisition of new Mortgage Assets
will be permitted if it would result in a qualification, downgrade or withdrawal
of the then-current rating assigned by any Rating Agency to any Class of Offered
Securities of the related Series.
If so specified in the Prospectus Supplement for the Offered Securities of
any Series, the Issuer or Depositor, as the case may be, for such Series (or
another specified person or entity) may be permitted, at it option, but subject
to the conditions specified in such Prospectus Supplement, to obtain the release
of Mortgage Assets constituting Collateral for a Bond Series or to repurchase
Mortgage Assets included in a Trust Fund for a Certificate Series. Any such
release or repurchase of Mortgage Assets will likely result in the pay down of
the aggregate Outstanding Principal of the related Series of Securities.
DESCRIPTION OF THE UNDERLYING ASSETS
General
The assets that constitute the Collateral for any Series of Bonds or the
Trust Fund for any Series of Certificates are herein referred to as "Underlying
Assets". The primary Underlying Assets included as part of the Collateral or
Trust Fund, as the case may be, for any Series will consist of Mortgage Loans,
Underlying MBS or some combination thereof. Each Mortgage Asset will be selected
by the Company for inclusion as part of the Collateral or Trust Fund, as the
case may be, for any Series 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 an affiliate of the Company and may or may not be the
originator of such Mortgage Loan or the issuer of such Underlying MBS. The
Mortgage Assets will not be guaranteed or insured by the Company 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 Underlying MBS included as part
of the Collateral or the Trust Fund, as the case may be.
Mortgage Loans
General. The Mortgage Loans will be evidenced by promissory notes (the
"Mortgage Notes") secured by mortgages, deeds of trust, deeds to secure debt or
similar security instruments (the "Mortgages") that create first or junior liens
on fee or leasehold estates in 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,
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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 Company, although any Originator may be an
affiliate of the Company.
If so provided in the related Prospectus Supplement, Mortgage Assets for a
Series of Securities 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 related 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 Trustee, as holder of the junior lien on
behalf of Securityholders, 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 Trustee
as the holder of the junior lien on behalf of the Securityholders, and,
accordingly, one or more Classes of such Securityholders 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 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 of Securities may include Mortgage Loans that are
delinquent or nonperforming as of the date such Securities 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 Mortgage Asset Pool 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-
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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 one tenant or 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 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
Securities 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
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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/or 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 Company 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".
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 or resets one or more times over its term, 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 Mortgage Asset Pool, 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
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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
Company that pertains to the provisions of leases and the nature of tenants of
the Mortgaged Properties. If the Company is unable to provide the specific
information described above at the time Offered Securities 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
Securities 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 (by reason or
cross-collateralization, common borrower or affiliation of borrowers),
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.
If and to the extent available and relevant to an investment decision in
the Offered Securities 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.
Underlying MBS
Underlying 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 guaranteed thereby, "FNMA
Certificates"), the Government National Mortgage Association ("GNMA"; and such
certificates issued and/or guaranteed thereby, "GNMA Certificates") or the
Federal Agricultural Mortgage Corporation ("FAMC"; and such certificates issued
and/or guaranteed thereby, "FAMC Certificates"), provided that, unless otherwise
specified in the related Prospectus Supplement, each Underlying 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 Underlying MBS included in a
Mortgage Asset Pool: (a) will either (i) have been acquired (other than from the
Company or an affiliate thereof) in bona fide secondary market transactions or
(ii) if so specified in the related Prospectus Supplement, be part of the
Company's (or an affiliate's) unsold allotments from the Company's (or an
affiliate's) previous offerings; and (b) unless it was issued by the Company 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.
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Any Underlying 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, together with the original purchaser or
purchasers of the Underlying MBS.
The Underlying 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 Underlying 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 obligation
to repurchase or substitute assets underlying the Underlying 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 Underlying 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 Underlying MBS, or by the initial purchasers of the
Underlying MBS.
The Prospectus Supplement for a Series of Securities that are secured by
or evidence interests in Underlying MBS will specify: (i) the aggregate
approximate initial and outstanding principal amount(s) and type of the
Underlying MBS to be included as part of the related Mortgage Asset Pool, (ii)
the original and remaining term(s) to stated maturity of the Underlying MBS, if
applicable, (iii) the pass-through or bond interest rate(s) of the Underlying
MBS or the formula for determining such rate(s), (iv) the payment
characteristics of the Underlying MBS, (v) the MBS Issuer, MBS Servicer and MBS
Trustee, as applicable, of each of the Underlying MBS, (vi) a description of the
related credit support, if any, (vii) the circumstances under which the related
underlying mortgage loans, or the Underlying MBS themselves, may be purchased
prior to their maturity, (viii) the terms on which mortgage loans may be
substituted for those originally underlying the Underlying MBS, (ix) the type of
mortgage loans underlying the Underlying 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
arrangements that relate to the Underlying MBS.
The Company will provide the same information regarding the Underlying MBS
that constitute part of the Mortgage Asset Pool for any Series in its reports
filed under the Exchange Act with respect to such Series as was provided by the
related MBS Issuer in its own such reports if such Underlying MBS was publicly
offered or the reports the related MBS Issuer provides the related MBS Trustee
if such Underlying MBS was privately issued.
Substitution, Acquisition, Release and Repurchase of Mortgage Assets
If so specified in the Prospectus Supplement for the Offered Securities of
any Series, the Issuer or Depositor, as the case may be, for such Series (or
another specified person or entity) may be permitted, at its option, but subject
to the conditions specified in such Prospectus Supplement, to replace related
Mortgage Assets with (or, in the case of a Bond Series, to obtain a release of
the related Mortgage Assets in exchange for) other mortgage loans or
mortgage-backed securities that conform to the description of "Mortgage Assets"
herein and satisfy the criteria set forth in the related Prospectus Supplement.
In addition, if so specified in the related Prospectus Supplement, the Trustee
for any Series may be authorized or required (including at the direction of the
Issuer or Depositor, as the case may be, for such Series) to apply collections
on the related Mortgage Assets to acquire new mortgage loans and or
mortgage-backed securities that conform to the description of "Mortgage Assets"
herein and satisfy the criteria set forth in the related Prospectus Supplement.
No such substitution of Mortgage Assets or acquisition of new Mortgage Assets
will be permitted if it would
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result in a qualification, downgrade or withdrawal of the then-current rating
assigned by any Rating Agency to any Class of Offered Securities of the related
Series.
If so specified in the Prospectus Supplement for the Offered Securities of
any Series, the Issuer or Depositor, as the case may be, for such Series (or
another specified person or entity) may be permitted, at it option, but subject
to the conditions specified in such Prospectus Supplement, to obtain the release
of Mortgage Assets constituting Collateral for a Bond Series or to repurchase
Mortgage Assets included in a Trust Fund for a Certificate Series. Any such
release or repurchase of Mortgage Assets will likely result in the pay down of
the aggregate Outstanding Principal of the related Series of Securities.
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 Outstanding Principal of
the related Series of Securities as of the Closing Date for such Securities. In
the event that the related Mortgage Assets do not have an aggregate outstanding
principal balance as of the related Cut-off Date at least equal to the aggregate
Outstanding Principal of any Series of Securities as of the related Closing
Date, the Issuer or Depositor, as the case may be, for such Series 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 the Undelivered
Mortgage Assets having 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 Issuer or Depositor, as the case may be,
for such Series will be entitled to obtain a release of such cash or Permitted
Investments to the extent that the Issuer or Depositor, as the case may be, for
such Series delivers a corresponding amount of 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 Securities of such Series to the extent set forth,
and on the dates specified, in the related Prospectus Supplement.
Collection Accounts
The Collateral or Trust Fund, as the case may be, for any Series of
Securities will include one or more accounts (collectively, the "Collection
Account") established and maintained on behalf of the Securityholders 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 extent
described herein and in the related Prospectus Supplement. See "Servicing and
Administration of the Mortgage Assets--Collection Account".
Credit Support
If so provided in the Prospectus Supplement for the Offered Securities of
any Series, partial or full protection against certain defaults and losses on
the Mortgage Assets in the related Mortgage Asset Pool may be provided to one or
more Classes of Securities of such Series in the form of subordination of one or
more other Classes of Securities of such Series, in the form of subordination
(in the case of a Bond Series) of the related Issuer's interest in and right to
receive payments on its equity (if any) in the related Collateral, 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 in respect of the Offered
Securities of any Series, the identity of the entity providing it (if
applicable) and related information with respect to each type of such Credit
Support, if any, will be set forth in the Prospectus Supplement for such Offered
Securities. See "Risk Factors--Credit Support Limitations" and "Description of
Credit Support".
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Cash Flow Arrangements
If so provided in the Prospectus Supplement for the Offered Securities of
any Series, the related Collateral or Trust Fund, as the case may be, may
include (i) guaranteed investment contracts pursuant to which moneys held in the
funds and accounts established for such Series will be invested at a specified
rate; (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 on one or more Classes of Securities of such
Series; or (iii) letters of credit, surety bonds, insurance policies, guarantees
and/or reserve funds intended to offset a slower than anticipated rate of
principal payments on the related Mortgage Assets. The principal terms of any
such Cash Flow Arrangement, 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 (if
applicable) under any agreement constituting a Cash Flow Arrangement.
YIELD AND MATURITY CONSIDERATIONS
General
The yield on any Offered Security will depend on the price paid by the
holder thereof, the Certificate Interest Rate of the Security and the amount and
timing of distributions on the Security. See "Risk Factors--Effect of
Prepayments on Average Life of Securities". The following discussion generally
contemplates a Mortgage Asset Pool that consists solely of Mortgage Loans.
Although the characteristics and behavior of mortgage loans underlying an
Underlying MBS can generally be expected to have the same effect on the yield to
maturity and/or weighted average life of a Class of Securities as will the
characteristics and behavior of comparable Mortgage Loans, the effect may differ
due to the payment characteristics of the Underlying MBS. If a Series is secured
by, or evidences interests in, Underlying MBS, the related Prospectus Supplement
will discuss the effect, if any, that the payment characteristics of such
Underlying MBS may have on the yield to maturity and weighted average lives of
the Offered Securities of such Series.
Security Interest Rate
The Securities of any Class within a Series may have a fixed, variable or
adjustable Bond Interest Rate or Certificate Interest Rate, as the case may be
(in either case, a "Security Interest Rate"), which may or may not be based upon
the interest rates borne by the underlying Mortgage Assets. The Prospectus
Supplement with respect to the Offered Securities of any Series will specify the
Security Interest Rate for each Class of such Offered Securities or, in the case
of a Class of Offered Securities with a variable or adjustable Security Interest
Rate, the method of determining such Security Interest Rate; the effect, if any,
of the prepayment of any Mortgage Asset in the related Mortgage Asset Pool on
the Security Interest Rate for each Class of such Offered Securities, and
whether the payments or distributions of interest on any Class of such Offered
Securities will be dependent, in whole or in part, on the performance of any
obligor under any instrument constituting a Cash Flow Arrangement.
Payment Delays
With respect to any Series, a period of time will elapse between the date
upon which payments on the underlying Mortgage Loans are due and the Payment
Date or Distribution Date, as the case may be, on which such payments are
applied to make payments to, or passed through to, Securityholders. That delay
will effectively reduce the yield that would otherwise be produced if payments
on such Mortgage Loans were applied to make payments to, or distributed to,
Securityholders on the date they were due.
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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 any Series of
Securities and payable thereon on any Payment Date, or 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 Payment Dates or Distribution Dates, as the case may be)
and all scheduled payments on the underlying Mortgage Loans 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 applied to make payments to, or
distributed to, the holders of the Securities of such Series on the next
succeeding Payment Date or Distribution Date, as applicable. Consequently, if a
prepayment on any Mortgage Loan is payable or distributable to Securityholders
on a particular Payment Date or Distribution Date, as applicable, 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 Securities of the related Series. If and to
the extent that any such shortfall is allocated to a Class of Offered
Securities, the yield thereon will be adversely affected. The related Prospectus
Supplement will describe the manner in which any such shortfalls will be
allocated among the Classes of Securities of the related Series. The related
Prospectus Supplement will also describe any amounts available to offset such
shortfalls.
Yield and Prepayment Considerations
The yield to maturity on any Stripped Interest Security or any other
Security purchased at a discount or a premium will be affected by the rate of
principal payments on the Mortgage Loans in the related Mortgage Asset Pool and
the extent to which such principal payments are applied to reduce, or otherwise
result in the reduction of, the Bond Principal Amount (or, in the case of a
Stripped Interest Bond, the Bond Notional Amount) or the Certificate Principal
Balance (or, in the case of a Stripped Interest Certificate, the Certificate
Notional Amount), as the case may be, of such Security. The rate of principal
payments on the Mortgage Loans in any Mortgage Asset Pool 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, releases of Mortgage Loans as Collateral, or purchases of Mortgage
Loans out of the related Trust Fund, as applicable). Because the rate of
principal prepayments on the Mortgage Loans in any Mortgage Asset Pool will
depend on future events and a variety of factors (as described below), no
assurance can be given as to such rate.
An investor should consider, in the case of any Offered Security purchased
at a discount, the risk that a slower than anticipated rate of principal
payments on the Mortgage Loans in the related Mortgage Asset Pool could result
in an actual yield to such investor that is lower than the anticipated yield
and, in the case of any Offered Security purchased at a premium, the risk that a
faster than anticipated rate of principal payments on the Mortgage Loans in the
related Mortgage Asset Pool could result in an actual yield to such investor
that is lower than the anticipated yield. In addition, if an investor purchases
an Offered Security at a discount (or premiu, and principal payments are made
in reduction of the Bond Principal Amount or Bond Notional Amount (or, in the
case of a Certificate, the Certificate Principal Balance or Certificate Notional
Amount), as applicable, of such Offered Security 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.
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In general, the aggregate Bond Notional Amount or Certificate Notional
Amount, as the case may be, of a Class of Stripped Interest Securities will
either (i) be based on the principal balances of some or all of the Mortgage
Assets in the related Mortgage Asset Pool or (ii) equal the aggregate Bond
Principal Amount or Certificate Principal Balance, as applicable, of one or more
of the other Classes of Securities of the same Series. Accordingly, the yield on
such Stripped Interest Securities will be inversely related to the rate at which
payments and other collections of principal are received on such Mortgage Assets
or payments or distributions are made in reduction of the aggregate Bond
Principal Amount or Certificate Principal Balance, as applicable, of such
Classes of Securities, as the case may be.
Consistent with the foregoing, if a Class of Securities of any Series
consists of Stripped Interest Securities or Stripped Principal Securities, a
lower than anticipated rate of principal prepayments on the Mortgage Loans in
the related Mortgage Asset Pool will negatively affect the yield to investors in
Stripped Principal Securities, and a higher than anticipated rate of principal
prepayments on such Mortgage Loans will negatively affect the yield to investors
in Stripped Interest Securities. If the Offered Securities of a Series include
any Stripped Interest Securities or Stripped Principal Securities, the related
Prospectus Supplement will include a table showing the effect of various
constant assumed levels of prepayment on yields on such Securities. 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
Mortgage Asset Pool 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 Mortgage Asset
Pool 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 disincentive (in the case of a Prepayment
Premiu 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 Company
makes no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Mortgage Asset Pool, as to the relative
importance of such
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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
underlying any Series of Securities will affect the ultimate maturity and the
weighted average life of one or more Classes of such Securities. 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 Securities 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, releases
of Mortgage Loans as part of the related Collateral and/or purchases of Mortgage
Loans out of the related Trust Fund, as applicable), 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.
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 Mortgage Asset Pool
will conform to any particular level of CPR or SPA.
The Prospectus Supplement with respect to the Offered Securities of any
Series will contain tables, if applicable, setting forth the projected weighted
average life of each Class of such Offered Securities with an aggregate Bond
Principal Amount or Certificate Principal Balance, as the case may be, and the
percentage of the initial aggregate Bond Principal Amount or Certificate
Principal Balance, as the case may be, of each such Class of such Offered
Securities that would be outstanding on specified 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 Offered Securities 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 Offered Securities.
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 Mortgage Asset Pool 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
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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 payments or distributions of principal on a Class of Offered Securities
and thereby extend the weighted average life of such Securities and, if such
Securities were purchased at a discount, reduce the yield thereon.
Negative Amortization. The weighted average life of a Class of Securities
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 Mortgage
Asset Pool may result in negative amortization on the Offered Securities 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 Mortgage Asset Pool is allocated among the respective Classes of Securities
of the related Series. The portion of any Mortgage Loan negative amortization
allocated to a Class of Securities may result in a deferral of some or all of
the interest payable thereon, which deferred interest may be added to the
aggregate Outstanding Principal 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 Securities of the related Series.
Accordingly, the weighted average lives of Mortgage Loans that permit negative
amortization (and that of the Classes of Securities to 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 Securities entitled to a portion of the
principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Security will be affected by
the inclusion in the related Mortgage Asset Pool of Mortgage Loans that permit
negative amortization, will depend upon (i) whether such Offered Security 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 Security (or, in the case of a Stripped Interest Security,
delay or accelerate the reduction of the 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 Securities 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
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an effect upon the payment patterns of particular Mortgage Loans and thus the
weighted average lives of and yields on the Securities of the related Series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders of the
Offered Securities 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 underlying Mortgage Loans 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 Securities that is required to bear the effects thereof.
The amount of any losses or shortfalls in collections on the Mortgage
Assets in any Mortgage Asset Pool (to the extent not covered or offset by draws
on any reserve fund or under any instrument of Credit Support and, in the case
of a Bond Series, to the extent in excess of the Issuer's equity (if any) in the
related Collateral) will be allocated among the respective Classes of Securities
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 Outstanding
Principal of one or more such Classes of Securities and/or (ii) establishing a
priority of payments among such Classes of Securities.
The yield to maturity on a Class of Subordinate Securities may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Mortgage Asset Pool.
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 Mortgage Asset Pool, one or more Classes of Securities of any Series,
including one or more Classes of Offered Securities of such Series, may provide
for payments or distributions of principal thereof from (i) amounts attributable
to interest accrued but not currently payable or distributable, as the case may
be, on one or more Classes of Accrual Securities, (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 payable or distributable in respect of the
Securities of any Series on any Payment Date or Distribution Date, as the case
may be, that represent (i) interest received or advanced on the Mortgage Assets
in the related Mortgage Asset Pool that is in excess of the interest currently
accrued on the Securities of such Series, or (ii) Prepayment Premiums, payments
from Equity Participations or any other amounts received on the Mortgage Assets
in the related Mortgage Asset Pool that do not constitute interest thereon or
principal thereof.
The amortization of any Class of Securities out of the sources described
in the preceding paragraph would shorten the weighted average life of such
Securities and, if such Securities were purchased at a premium, reduce the yield
thereon. The related Prospectus Supplement will discuss the relevant factors to
be considered in determining whether payments or distributions of principal of
any Class of Offered Securities out of such sources is likely to have any
material effect on the rate at which such Securities are amortized and the
consequent yield with respect thereto.
THE COMPANY
The Company will act as Depositor in connection with the formation of the
Trust Fund for each Certificate Series, and the Company or an Owner Trust
established thereby shall act as Issuer with respect to each Bond Series.
The Company was incorporated in the State of Delaware on August 13, 1997
and is a wholly-owned subsidiary of CRIIMI MAE Inc. See "CRIIMI MAE Inc." below.
The Company was organized, among other things, for the purposes of issuing debt
securities, establishing trusts and selling beneficial interests therein and/or
debt securities thereof, and acquiring and selling or otherwise transferring
mortgage assets to such
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trusts. The principal executive offices of the Company are located at 11200
Rockville Pike, Rockville, Maryland 20852. Its telephone number is (301)
816-2300. The Company does not have and is not expected to have any significant
assets other than (i) the Collateral pledged to secure its Bonds and (ii)
certain debt securities of and/or beneficial interests in trusts established by
it.
CRIIMI MAE INC.
CRIIMI MAE Inc. ("CRIIMI MAE") is a full-service commercial mortgage
company structured as a self-administered real estate investment trust. CRIIMI
MAE invests in government insured and guaranteed mortgages secured by
multifamily housing complexes located throughout the United States and in
uninsured mortgages and mortgage related investments backed by multifamily and
commercial mortgages, including subordinated securities. As of June 30, 1997,
CRIIMI MAE's total consolidated assets were equal to approximately $1.4 billion.
CRIIMI MAE's principal offices are located at 11200 Rockville Pike,
Rockville, Maryland 20852 and its telephone number is (301) 816-2300.
OWNER TRUST
Each Owner Trust established to act as Issuer of a Series of Bonds will be
created pursuant to a Deposit Trust Agreement between the Company, which will
act as depositor, and a bank, trust company or other fiduciary named in the
related Prospectus Supplement, which will act solely in its fiduciary capacity
as Owner Trustee. Under the terms of each Deposit Trust Agreement, the Company
will convey to the Owner Trust Mortgage Assets and other Underlying Assets to
secure one or more Bond Series in return for certificates or other instruments
evidencing beneficial ownership in the Owner Trust, Bonds and/or the net
proceeds from the sale of Bonds. The Company may in turn sell or assign the
certificates of beneficial interest and any Bonds so received to another entity
or entities, including affiliates of the Company.
Each Deposit Trust Agreement and/or Indenture will provide that the
related Owner Trust may not conduct any activities other than those related to
the issuance and sale of one or more Bond Series. The holders of the beneficial
interest in an Owner Trust which issues a Bond Series will not be liable for
payment of principal of or interest on such Bonds, and each holder of such Bonds
will be deemed to have released such beneficial owners from any such liability.
DESCRIPTION OF THE SECURITIES
General
The Securities consist of Bonds and Certificates, issuable in Series. Each
Series will consist of one or more Classes of Securities. The following
summaries describe certain provisions common to each Series of Securities. The
summaries do not purport to be complete and are subject to and are qualified in
their entirety by reference to, the provisions of the Indenture or Pooling
Agreement, as applicable, and the Prospectus Supplement relating to each Series.
The Bonds
General. Each Bond Series will be issued pursuant to the related
Indenture. As described in the related Prospectus Supplement, the Bonds of each
Bond Series, including the Offered Bonds of such Series, may consist of one or
more Classes of Bonds that, among other things: (i) provide for the accrual of
interest on the Bond Principal Amount or Bond Notional Amount thereof at a
fixed, variable or adjustable Bond Interest Rate; (ii) constitute Senior Bonds
or Subordinate Bonds; (iii) constitute Stripped Interest Bonds or Stripped
Principal Bonds; (iv) provide for payments of interest or principal thereon that
commence only after
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the occurrence of certain events, such as the retirement of one or more other
Classes of Bonds of such Series; (v) provide for payments of principal thereon
to be made, from time to time or for designated periods, at a rate that is
faster (and, in some cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other collections of
principal are received on the related Mortgage Assets; (vi) provide for payments
of principal thereon to be made, subject to available funds, based on a
specified principal payment schedule or other methodology; or (vii) provide for
payments thereon that constitute prepayment premiums or yield maintenance
payments in connection with certain redemptions thereof or provide for payments
thereon based on collections on the related Mortgage Assets attributable to
Prepayment Premiums and Equity Participations.
If so specified in the related Prospectus Supplement, a Class of Bonds 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 Bonds may have a Bond Principal Amount on which it accrues
interest at a fixed, variable or adjustable Bond Interest Rate. Such Class of
Bonds may also have certain characteristics attributable to Stripped Interest
Bonds insofar as it may also entitle the holders thereof to payments of interest
accrued on an aggregate Bond Notional Amount at a different fixed, variable or
adjustable Bond Interest Rate. In addition, a Class of Bonds may accrue interest
on one portion of its aggregate Bond Principal Amount or Bond Notional Amount at
one fixed, variable or adjustable Bond Interest Rate and on another portion of
its aggregate Bond Principal Amount or Bond Notional Amount at a different
fixed, variable or adjustable Bond Interest Rate.
The Offered Bonds of each Bond Series will be issued in minimum
denominations corresponding to the Bond Principal Amounts or, in case of certain
Stripped Interest Bonds or Bonds that constitute REMIC Residual Securities, the
Bond Notional Amounts, specified in the related Prospectus Supplement. As
provided in the related Prospectus Supplement, one or more Classes of Offered
Bonds of any Bond Series may be issued in fully registered, definitive form
(such Bonds, "Definitive Bonds" and also "Definitive Securities") or may be
offered in book-entry format (such Bonds, "Book-Entry Bonds" and also
"Book-Entry Securities") through the facilities of DTC. The Offered Bonds of
each Bond Series (if issued as Definitive Bonds) 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 Bonds 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.
Payments on the Bonds. Payments on the Bonds of each Bond Series will be
made on each Payment Date from the Available Payment Amount in respect of such
Series for such Payment Date. Unless otherwise provided in the related
Prospectus Supplement, the "Available Payment Amount" in respect of any Bond
Series for any Payment Date will refer to the total of all payments or other
collections (or advances in lieu thereof) on, under or in respect of the related
Mortgage Assets and any other assets included as part of the related Collateral
that are available for payments to the holders of Bonds of such Series on such
date. The particular components of the Available Payment Amount for any Bond
Series and Payment Date will be more specifically described in the related
Prospectus Supplement. The Payment Date for each Bond Series will be specified
in the related Prospectus Supplement.
Except as otherwise specified in the related Prospectus Supplement,
payments on the Bonds of each Bond Series (other than the final payment on any
such Bond) will be made to the persons in whose names such Bonds are registered
(the "Bondholders" and also "Securityholders") at the close of business on the
last business day of the month preceding the month in which the applicable
Payment Date occurs (the "Record Date"), and the amount of each payment will be
determined as of the close of business on the date (the "Determination Date")
specified in the related Prospectus Supplement. All payments with respect to
each Class of Bonds on each Payment Date will be allocated pro rata among such
Bonds in accordance with their respective Bond Principal Amounts or Bond
Notional Amounts, unless otherwise specified in the related Prospectus
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Supplement. Payments will be made either by wire transfer in immediately
available funds to the account of a Bondholder at a bank or other entity having
appropriate facilities therefor, if such Bondholder has 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
Bondholder holds Bonds in the requisite amount or denomination specified
therein), or by check mailed to the address of such Bondholder as it appears on
the Bond register; provided, however, that the final payment on of any Class of
Bonds (whether Definitive Bonds or Book-Entry Bonds) will be made only upon
presentation and surrender of such Bonds at the location specified in the notice
to the affected Bondholders of such final payment.
Payments of Interest on the Bonds. Each Class of Bonds of each Bond Series
(other than certain Classes of Stripped Principal Bonds and certain Classes of
Bonds constituting REMIC Residual Securities that have no Bond Interest Rate)
may have a different Bond Interest Rate, which in each case may be fixed,
variable or adjustable. The related Prospectus Supplement will specify the Bond
Interest Rate or, in the case of a variable or adjustable Bond Interest Rate,
the method for determining the Bond Interest Rate, for each Class of Offered
Bonds. Unless otherwise specified in the related Prospectus Supplement, interest
on the Bonds of each Bond Series will be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
Payments of interest in respect of any Class of Bonds (other than a Class
of Accrual Bonds, which will be entitled to payments of accrued interest
commencing only on the Payment Date, or under the circumstances, specified in
the related Prospectus Supplement, and other than certain Classes of Stripped
Principal Bonds and certain Classes of Bonds that constitute REMIC Residual
Securities, which are not entitled to any payments of interest) will be made on
each Payment Date based on the Accrued Bond Interest for such Class of Bonds and
such Payment Date, subject to the sufficiency of that portion, if any, of the
Available Payment Amount allocable to such Class of Bonds on such Payment Date.
Prior to the time interest is payable on each Class of Accrual Bonds, the amount
of Accrued Bond Interest otherwise payable on each such Bond will be added to
the Bond Principal Amount thereof on each Payment Date or otherwise deferred as
described in the related Prospectus Supplement. With respect to each Class of
Bonds (other than certain Classes of Stripped Interest Bonds and certain Classes
of Bonds that constitute REMIC Residual Securities), the "Accrued Bond Interest"
for each Payment Date will be equal to interest at the applicable Bond Interest
Rate accrued for a specified period (generally the most recently ended calendar
month) on the aggregate outstanding Bond Principal Amount of such Class of Bonds
immediately prior to such Payment Date. Unless otherwise provided in the related
Prospectus Supplement, the Accrued Bond Interest for each Payment Date on a
Class of Stripped Interest Bonds will be similarly calculated except that it
will accrue on an aggregate Bond Notional Amount that, in general, will either
be (i) based on the principal balances of some or all of the related Mortgage
Assets or (ii) equal to the aggregate Bond Principal Amount of one or more other
Classes of Bonds of the same Series. Reference to a Bond Notional Amount with
respect to a Stripped Interest Bond is solely for convenience in making certain
calculations and does not represent the right to receive any payments of
principal. If so specified in the related Prospectus Supplement, the amount of
Accrued Bond Interest that is otherwise payable on (or, in the case of Accrual
Bonds, that may otherwise be added to the aggregate Bond Principal Amount of)
one or more Classes of Bonds of a Bond 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 Bonds of that Series will be specified in the related
Prospectus Supplement. The related Prospectus Supplement will also describe the
extent to which the amount of Accrued Bond Interest that is otherwise payable on
(or, in the case of Accrual Bonds, that may otherwise be added to the aggregate
Bond Principal Amount of) a Class of Offered Bonds may be reduced or deferred as
a result of any other contingencies, including delinquencies, losses and
deferred interest on or in respect of the related Mortgage Assets. Unless
otherwise provided in the related Prospectus Supplement, any reduction in the
amount of Accrued Bond Interest otherwise payable on a Class of Bonds by reason
of the allocation to such Class of a portion of any deferred interest on or in
respect of the related Mortgage Assets will result in a corresponding increase
in the aggregate Bond Principal Amount
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of such Class. See "Risk Factors--Effect of Prepayments on Average Life of
Securities" and "--Effect of Prepayments on Yield of Securities " and "Yield and
Maturity Considerations--Certain Shortfalls in Collections of Interest".
Payments of Principal on the Bonds. Each Class of Bonds of each Bond
Series (other than certain Classes of Stripped Interest Bonds and certain
Classes of Bonds that constitute REMIC Residual Securities) will have an
aggregate Bond Principal Amount, which, at any time, will equal the then maximum
amount of principal payments the holders of Bonds of such Class will be entitled
to receive from the Issuer, subject to the nonrecourse provisions of such Bonds.
The aggregate outstanding Bond Principal Amount of a Class of Bonds will be
reduced by payments 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 and any unanticipated
expenses allocated thereto from time to time. In turn, the aggregate outstanding
Bond Principal Amount of a Class of Bonds 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 Bonds prior to the Payment Date on which payments of interest
thereon are required to commence, by the amount of any Accrued Bond Interest in
respect thereof (reduced as described above). Unless otherwise specified in the
related Prospectus Supplement, the initial aggregate Bond Principal Amount of
all Bonds of any particular Bond 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 Bond Principal Amount of each Class of
Offered Bonds will be specified in the related Prospectus Supplement. As and to
the extent described in the related Prospectus Supplement, payments of principal
with respect to the Bonds of any Bond Series will be made on each Payment Date
to the holders of the Class or Classes of Bonds of such Series entitled thereto
until, in the case of each such Class, the aggregate Bond Principal Amount
thereof has been reduced to zero. Payments of principal with respect to one or
more Classes of Bonds 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 related Mortgage Assets. Payments of principal
with respect to one or more Classes of Bonds may not commence until the
occurrence of certain events, such as the retirement of one or more other
Classes of Bonds 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 related Mortgage Assets.
Payments on the Bonds 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 related Mortgage Assets will be distributed on each
Payment Date to the holders of the Class or Classes of Bonds of the related Bond
Series entitled thereto in accordance with the provisions described in such
Prospectus Supplement. Alternatively, such items may be retained by the Company
or any of its affiliates or by any other specified person and/or may be excluded
as Underlying Assets. In addition, certain redemptions of Bonds may be
conditioned on the Issuer's making an additional payment in the nature of a
prepayment premium or yield maintenance payment that may or may not be based on
any such amount payable under the related Mortgage Assets.
The Certificates
General. Each Certificate 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 Certificate 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 Certificate Interest 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
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faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the related
Mortgage Assets; (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 related Mortgage Assets attributable to Prepayment Premiums and Equity
Participations.
If so specified in the related Prospectus Supplement, a Class of
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 Certificates may have an aggregate
Certificate Principal Balance on which it accrues interest at a fixed, variable
or adjustable Certificate Interest Rate. Such Class of 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 Certificate Interest 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 Certificate Interest Rate and on another portion of its aggregate
Certificate Principal Balance or Certificate Notional Amount at a different
fixed, variable or adjustable Certificate Interest Rate.
The Offered Certificates of each Certificate Series will be issued in
minimum denominations corresponding to Certificate Principal Balances or, in
case of certain Stripped Interest Certificates or Certificates that constitute
REMIC Residual Securities, the 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 Certificate Series may be issued in fully registered, definitive form (such
Certificates, "Definitive Certificates" and also "Definitive Securities") or may
be offered in book-entry format (such Certificates, "Book-Entry Certificates"
and also "Book-Entry Securities") through the facilities of DTC. The Offered
Certificates of each Certificate 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 on the Certificates. Distributions on the Certificates of
each Certificate Series will be made on each Distribution Date from the
Available Distribution Amount in respect of such Series for such Distribution
Date. Unless otherwise provided in the related Prospectus Supplement, the
"Available Distribution Amount" in respect of any Certificate Series for 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 related 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
Certificate Series and Distribution Date will be more specifically described in
the related Prospectus Supplement. The Distribution Date for each Certificate
Series will be specified in the related Prospectus Supplement.
Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each Certificate 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 (the
"Certificateholders" and also "Securityholders") 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 such Certificates in such Class in
proportion to the respective Percentage Interests evidenced thereby, unless
otherwise specified in the related Prospectus Supplement. Payments will be made
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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 the affected
Certificateholders of such final distribution. The undivided percentage interest
(the "Percentage Interest") in any Class of Offered Certificates that is
represented by any particular Certificate of such Class will be equal to the
percentage obtained by dividing the initial Certificate Principal Balance or
Certificate Notional Amount of such Certificate by the initial aggregate
Certificate Principal Balance or Certificate Notional Amount of such Class.
Distributions of Interest on the Certificates. Each Class of Certificates
of each Certificate Series (other than certain Classes of Stripped Principal
Certificates and certain Classes of Certificates constituting REMIC Residual
Securities that have no Certificate Interest Rate) may have a different
Certificate Interest Rate, which in each case may be fixed, variable or
adjustable. The related Prospectus Supplement will specify the Certificate
Interest Rate or, in the case of a variable or adjustable Certificate Interest
Rate, the method for determining the Certificate Interest Rate, for each Class
of Offered Certificates. Unless otherwise specified in the related Prospectus
Supplement, interest on the Certificates of each Certificate 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
certain Classes of Stripped Principal Certificates and certain Classes of
Certificates that constitute REMIC Residual Securities, which are not entitled
to any distributions of interest) will be made on each Distribution Date based
on the Accrued Certificate Interest for such Class of Certificates and such
Distribution Date, subject to the sufficiency of that portion, if any, of the
Available Distribution Amount allocable to such Class of Certificates 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 each such Certificate will be added to the 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 Certificates that constitute REMIC Residual Securities), the
"Accrued Certificate Interest" for each Distribution Date will be equal to
interest at the applicable Certificate Interest Rate accrued for a specified
period (generally the most recently ended calendar month) on the aggregate
outstanding Certificate Principal Balance of such Class of Certificates
immediately prior to such Distribution Date. Unless otherwise provided in the
related Prospectus Supplement, the Accrued Certificate Interest for each
Distribution Date on 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 related Mortgage Assets or (ii) equal to the aggregate
Certificate Principal Balance 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 is otherwise distributable on (or, in the case
of Accrual Certificates, that may otherwise be added to the aggregate
Certificate Principal Balance of) one or more Classes of Certificates of a
Certificate 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
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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 or deferred as a result of any other contingencies,
including delinquencies, losses and deferred interest on or in respect of the
related Mortgage Assets. 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
related Mortgage Assets 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 Securities" and "--Effect of Prepayments on Yield
of Securities" and "Yield and Maturity Considerations--Certain Shortfalls in
Collections of Interest".
Distributions of Principal of the Certificates. Each Class of Certificates
of each Certificate Series (other than certain Classes of Stripped Interest
Certificates and certain Classes of Certificates that constitute REMIC Residual
Securities) 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 and any
unanticipated expenses 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 Certificates of any particular Certificate 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 the Certificates of any Certificate
Series will be made on each Distribution Date to the holders of the Class or
Classes of Certificates of such Series entitled thereto until, in the case of
each such Class, the aggregate Certificate Principal Balance thereof has 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 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 Company or any of its affiliates or by any other
specified person and/or may be excluded as Underlying Assets.
Allocation of Losses and Shortfalls
The amount of any losses or shortfalls in collections on the Mortgage
Assets included as part of the Mortgage Asset Pool for any Series and the amount
of any unanticipated expenses for such Series (in each case, to the extent not
covered or offset by draws on any reserve fund or under any instrument of Credit
Support and, in the case of a Bond Series, to the extent in excess of the
Issuer's equity (if any) in the related
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Collateral) will be allocated among the respective Classes of Securities of such
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 Outstanding Principal of one or
more such Classes of Securities and/or (ii) establishing a priority of payments
among such Classes of Securities. If such losses and expenses are not allocated
to reduce the aggregate Outstanding Principal of the Securities of the related
Series and are not otherwise covered by any fund or agreement constituting
Credit Support or, in the case of a Bond Series, any equity of the related
Issuer in the related Collateral, the aggregate Outstanding Principal of the
Securities of such Series will exceed and, accordingly, not be supported by the
aggregate principal balance of the related Mortgage Assets. See "Description of
Credit Support".
Advances in Respect of Delinquencies
If and to the extent provided in the related Prospectus Supplement, if a
Mortgage Asset Pool 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 Payment Date or Distribution Date, as the case may be, from its or
their own funds or from excess funds held in the related Collection Account that
are not part of the Available Payment Amount or Available Distribution Amount,
as the case may be, for the related Series for such Payment Date or Distribution
Date, as the case may be, 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 Securities 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
Securities, if so identified, collections on other Mortgage Assets included in
the related Mortgage Asset Pool that would otherwise be distributable to the
holders of one or more Classes of such Subordinate Securities. 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
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 Collection Account prior to any payments or distributions being made to
the holders of the related Series of Securities.
If advances have been made by a Master Servicer, Special Servicer, Trustee
or other entity from excess funds in a Collection Account, such Master Servicer,
Special Servicer, Trustee or other entity, as the case may be, will be required
to replace such funds in such Collection Account on or prior to any future
Payment Date or Distribution Date, as applicable, to the extent that funds in
such Collection Account on such Payment Date or Distribution Date are less than
payments required to be made to the holders of the related Series of Securities
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 backed or secured by a cash advance reserve fund, a
guarantee, a letter of credit or a surety bond. If applicable, information
regarding the characteristics of, and the identity of any obligor on, any such
guarantee, letter of credit or 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
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to payment of such interest periodically from general collections on the
Mortgage Assets included as part of the related Mortgage Asset Pool prior to any
payment to the related Series of Securityholders or as otherwise described in
such Prospectus Supplement.
If the Mortgage Asset Pool for any Series includes Underlying MBS, the
related Prospectus Supplement will describe any comparable advancing obligation
of a party to the related Indenture, the related Pooling Agreement or any
separate related S&A Agreement, as the case may be, or of a party to the related
MBS Agreement.
Reports to Securityholders
On each Payment Date or Distribution Date, as applicable, for a Series,
together with the payment or distribution to the holders of each Class of the
Offered Securities of such Series, a Master Servicer, Manager, Trustee or other
specified person, as provided in the related Prospectus Supplement, will forward
to each such holder, a statement (a "Securityholder Statement") substantially in
the form, or specifying the information, set forth in the related Prospectus
Supplement. In general, the Securityholder Statement for each Payment Date or
Distribution Date, as applicable, will detail the distributions on the related
Series of Securities on such Payment Date or Distribution Date and the
performance of the related Mortgage Assets.
Within a reasonable period of time after the end of each calendar year,
the Issuer, 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 Security of such Series a statement
containing information regarding the principal, interest and other payments or
distributions on the applicable Class of Offered Securities, aggregated for such
calendar year or the applicable portion thereof during which such person was a
Securityholder. 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 Securities" below.
If the Mortgage Asset Pool for any Series includes Underlying MBS, the
ability of the related Issuer, Master Servicer, Manager or Trustee, as the case
may be, to include in any Securityholder Statement information regarding the
mortgage loans underlying such Underlying MBS will depend on the reports
received with respect to such Underlying MBS. In such cases, the related
Prospectus Supplement will describe the loan-specific information to be included
in the Securityholder Statements that will be forwarded to the holders of the
Offered Securities of that Series in connection with payments or distributions
made to them.
Voting Rights
If so provided in the related Prospectus Supplement, specific voting
rights evidenced by the Securities of each Series (collectively as to such
Series, the "Voting Rights") will be allocated among the respective Classes of
such Series in the manner described in the related Prospectus Supplement. In the
case of any particular Bond Series, the Bondholders of such Series may also vote
or otherwise take action based upon the aggregate Bond Principal Amounts or Bond
Notional Amounts of their Bonds.
Securityholders will generally not have a right to vote, except with
respect to certain amendments of related transaction documents (including the
related Indenture or Pooling Agreement, as applicable) and as otherwise
specified in the related Prospectus Supplement. See "Description of the
Indentures--Modification of the Indenture" and "Description of the Pooling
Agreements--Amendment". The holders of specified amounts of Voting Rights (or,
in the case of certain Bond Series, of specified Bond Principal Amounts and/or
Bond Notional Amounts) 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 (as defined
herein) on the part of the related Issuer, Master Servicer, Special Servicer,
Manager or REMIC Administrator. See "--The Trustee", "Description of the
Indenture--Issuer Events of Default" and "Servicing and Administration of the
Mortgage Assets--S&A Events of Default" and "--Rights Upon Event of Default".
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Special Redemption of Bonds
If specified in the related Prospectus Supplement, the Bonds of any Bond
Series may be subject to special redemption on the day of any month specified
therein if, as a result of the prepayment experience on the Mortgage Assets
securing such Bonds or the low yield available for reinvestment or both, the
Trustee determined (based on assumptions specified in the Indenture and after
giving effect to the amounts, if any, available to be withdrawn from or under
any reserve fund or instrument constituting Credit Support or a Cash Flow
Arrangement for such Series) that the amount anticipated to be available in the
Collection Account for such Series on the next Payment Date, is anticipated to
be insufficient to pay debt service on the Bonds of such Series on such Payment
Date. The principal amount of Bonds of such Series required to be so redeemed
will not exceed the Principal Payment Amount otherwise required to be paid on
the next Payment Date. Therefore, the primary result of such a special
redemption of Bonds is payment of principal prior to the next scheduled Payment
Date.
To the extent described in the related Prospectus Supplement, Bonds of any
Bond Series may be subject to special redemption in whole or in part following
certain defaults under an instrument of Credit Support and in certain other
events.
All payments of principal pursuant to any special redemption will be made
in the order of priority and in the manner specified in the related Prospectus
Supplement. Notice of any special redemption will be mailed by the Issuer or the
Trustee prior to the Special Redemption Date. Unless otherwise specified in the
related Prospectus Supplement, the Redemption Price for any Bonds so redeemed
will be equal to 100% of the principal amount of such Bonds or portions thereof
so redeemed, together with interest accrued thereon to the date specified in the
related Prospectus Supplement.
Optional Redemption of Bonds
The Issuer may, at its option and if so specified in the related
Prospectus Supplement, redeem, in whole or in part, one or more Classes of Bonds
of any Bond Series on any Payment Date on or after the dates, if any, specified
in such Prospectus Supplement. Notice of such redemption will be given by the
Issuer or Trustee prior to the anticipated date of redemption. The Redemption
Price for any Bonds so redeemed will be equal to 100% of the principal amount of
such Bonds, or the portions thereof, so redeemed, together with interest accrued
thereon to the date specified in the related Prospectus Supplement.
Termination of a Trust Fund
The Trust Fund, and the obligations created by the corresponding Pooling
Agreement, for each Certificate Series will terminate following (i) the final
payment or other liquidation of the last Mortgage Asset in such Trust Fund or
the disposition of all property acquired upon foreclosure of any Mortgage Loan
in such Trust Fund 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 Trust
Fund and the related Pooling Agreement will be given to each Certificateholder
of the related Certificate 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, a Series of
Certificates may be subject to optional early termination 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
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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. 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.
The Trustee
General. The Trustee under each Indenture and Pooling Agreement will be
named in the related Prospectus Supplement. In the case of a Bond Series, the
Trustee will be ______________________ or another bank or trust company
qualified under the TIA. The commercial bank, national banking association,
banking corporation or trust company that serves as Trustee may have typical
banking relationships with the Company and its affiliates and with any Master
Servicer, Special Servicer, Manager or REMIC Administrator and its affiliates.
Certain Matters Regarding the Trustee. If no Event of Default on the part
of any related Issuer, Master Servicer, Special Servicer, Manager or REMIC
Administrator has occurred and is continuing, the Trustee for each Series will
be required to perform only those duties specifically required under the related
Indenture or Pooling Agreement, as applicable.
As and to the extent described in the related Prospectus Supplement, the
fees and normal disbursements of any Trustee may be an expense of the related
Issuer, Master Servicer or other specified person or entity or may be payable
out of collections on the related Mortgage Assets.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each Series will be entitled to indemnification, from amounts held
in the Collection 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 Indenture or Pooling Agreement,
as applicable; 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.
The rights of the Trustee to receive out of the related Trust Fund or
Collateral, as the case may be, any compensation or reimbursement to which it is
entitled under the related Pooling Agreement or Indenture, as the case may be,
will be senior to the rights of Securityholders of the related Series to receive
payments on their Securities.
The Trustee for each Series will be entitled to execute any of its trusts
or powers under the related Indenture or Pooling Agreement, as applicable, or
perform any of its duties thereunder either directly or by or through agents or
attorneys; however, unless otherwise specified in the related Prospectus
Supplement, 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 a Series may
resign at any time, in which event the Depositor or Issuer, as the case may be,
for such Series will be obligated to appoint a successor Trustee. The Depositor
or Issuer, as the case may be, for any Series may also remove the Trustee for
such Series if such Trustee ceases to be eligible to continue as such under the
related Indenture or Pooling Agreement, as applicable, or if such Trustee
becomes insolvent. Upon becoming aware of such circumstances, the Depositor or
Issuer, as the case may be, for the affected Series will be obligated to appoint
a successor Trustee. In addition, unless otherwise specified in the related
Prospectus Supplement, the Trustee for any Series may also be removed at any
time by the holders of Securities of such Series of more than 50% of the Voting
Rights for or, in the case of most Bond Series, the aggregate Bond Principal
Amount of such
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Series; provided that if such removal was without cause, the Securityholders
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 the Trustee for any Series and appointment of a successor trustee for
such Series 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 a Series, then any
resignation or removal of such entity as the 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.
Book-Entry Registration and Definitive Securities
If so provided in the related Prospectus Supplement, one or more Classes
of the Offered Securities will be offered in book-entry format through the
facilities of The Depository Trust Company ("DTC"), and each such Class will be
represented by one or more global Securities registered in the name of DTC or
its nominee. If so provided in the related 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 its participants (the "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 Securities 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 Securities 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 Securities. The
beneficial ownership interest of the actual beneficial owner of a Book-Entry
Security (a "Security Owner") may only be transferred in compliance with the
rules, regulations and procedures of such Financial Intermediaries and DTC
Participants.
DTC has no knowledge of the actual Security Owners; DTC's records reflect
only the identity of the DTC Participants to whose accounts the related
Securities are credited, which may or may not be the Security 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 Security Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
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Payments or distributions on the Book-Entry Securities will be made to
DTC. DTC's practice is to credit DTC Participants' accounts on the related
Payment Date or Distribution Date, as applicable, 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 payments or
distributions by DTC Participants to Financial Intermediaries and Security
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of each such DTC
Participant (and not of DTC, the Company or any Owner Trust, 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, Security Owners may receive payments after the related
Payment Date or Distribution Date, as applicable.
Unless otherwise provided in the related Prospectus Supplement, the only
"Bondholder" (as such term is used in the related Indenture) of Book-Entry Bonds
and 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
Security Owners will not be recognized as Bondholders under any Indenture or as
Certificateholders under any Pooling Agreement. Security Owners will be
permitted to exercise the rights of Bondholders under the related Indenture or
Certificateholders under the related Pooling Agreement, as applicable, only
indirectly through the DTC Participants who in turn will exercise their rights
through DTC. The Company has been informed that DTC will take action permitted
to be taken by a Bondholder under an Indenture or a Certificateholder under a
Pooling Agreement, in any case, only at the direction of one or more DTC
Participants to whose account with DTC interests in the applicable Book-Entry
Securities are credited. DTC may take conflicting actions with respect to the
Book-Entry Securities of any Series to the extent that such actions are taken on
behalf of Financial Intermediaries whose holdings include such Securities.
Because DTC can act only on behalf of DTC Participants, who in turn act on
behalf of Financial Intermediaries and certain Security Owners, the ability of a
Security Owner to pledge its interest in Book-Entry Securities to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of its interest in Book-Entry Securities, may be limited due to the lack
of a physical security evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Securities of any Series initially issued in book-entry form will be issued as
Definitive Securities to the related Security Owners or their nominees, rather
than to DTC or its nominee, only if (i) the Depositor or Issuer, as the case may
be, for such Series advises the Trustee for such Series in writing that DTC is
no longer willing or able to discharge properly its responsibilities as
depository with respect to such Securities and such Depositor or Issuer, as the
case may be, is unable to locate a qualified successor or (ii) the Depositor or
Issuer, as the case may be, for such Series, at its option, elects to terminate
the book-entry system through DTC with respect to such Securities. 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 Securities. Upon surrender by DTC of the physical security or
securities representing a Class of Book-Entry Securities, together with
instructions for registration, the Trustee for the related Series or other
designated party will be required to issue to the Security Owners identified in
such instructions the Definitive Securities to which they are entitled, and
thereafter the holders of such Definitive Securities will be recognized, as
applicable, as "Bondholders" under and within the meaning of the related
Indenture or as "Certificateholders" under and within the meaning of the related
Pooling Agreement.
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DESCRIPTION OF THE INDENTURES
General
Each Bond Series will be issued pursuant to a Terms Indenture, between the
Issuer and the Trustee, which shall incorporate by reference certain applicable
standard indenture provisions of the Company. The Terms Indenture for any
particular Bond Series, as and to the extent it incorporates by reference such
standard indenture provisions, will constitute the Indenture for such Series.
The standard indenture provisions that may be used with respect to any Bond
Series shall be substantially in the form filed as an exhibit to the
Registration Statement of which this Prospectus is a part. A copy of the Terms
Indenture for any Bond Series will be filed with the Commission as an exhibit to
a Current Report on Form 8-K to be filed with the Commission within 15 days of
issuance of such Bonds.
The provisions of the Indenture for each Bond Series will vary depending
upon the nature of such Bonds and the nature of the related Collateral. The
following summaries describe certain provisions that may appear in an Indenture.
The Prospectus Supplement for the Offered Bonds of any Bond Series will describe
any provision of the related Indenture 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 Indenture for each Bond Series and
the description of such provisions in the related Prospectus Supplement. The
Company will provide a copy of the Indenture that relates to any Bond Series
without charge upon written request of a holder of a Bond of such Series
addressed to it at its principal executive offices specified herein under "The
Company".
Pledge of Mortgage Assets
General. At the time of issuance of any Bond Series, the Issuer will grant
to the designated Trustee to secure payment of the Bonds of such Series a
security interest in, among other things, the Mortgage Assets to be included as
part of the related Collateral, 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 hold such Mortgage Assets as security only for that Bond Series, and
holders of the Bonds of such Series will be entitled to the equal and
proportionate benefits of such security, subject to the express subordination of
certain Classes thereof. In addition, the Trustee will, concurrently with such
grant, deliver such Bonds to or at the direction of the Issuer. Each Mortgage
Asset to be included as part of the related Collateral will be identified in a
schedule appearing as an exhibit to the related Terms Indenture. Such schedule
generally will include detailed information that pertains to each Mortgage Asset
included as part of the related Collateral, which information will typically
include: (i) in the case of each Mortgage Loan, if any, 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 each Underlying MBS, if any, the outstanding principal balance and the
pass-through rate or coupon rate.
Delivery of Mortgage Loans. Unless otherwise specified in the related
Prospectus Supplement, the Issuer will, as to each Mortgage Loan to be included
as part of the related Collateral, 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 are set forth in
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the related Indenture. Such assignments may be blanket assignments covering
Mortgages on Mortgaged Properties located in the same county, if permitted by
law. Notwithstanding the foregoing, the Collateral for a Bond Series may include
Mortgage Loans where the original Mortgage Note is not delivered to the Trustee
if the Issuer delivers, or causes to be delivered, to the related Trustee (or
such custodian) a copy or a duplicate original of the Mortgage Note, together
with an affidavit of the Issuer or a prior holder of such Mortgage Note
certifying that the original thereof has been lost or destroyed. In addition, if
the Issuer 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 Terms Indenture because of a
delay caused by the public recording office, the Issuer 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 Issuer
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 Issuer
cannot deliver, or cause to be delivered, 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 Terms Indenture
because such Mortgage or assignment has been lost, the Issuer 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 Issuer or the originator of
such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a Bond 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 Bondholders
of such Series.
The Trustee will be authorized at any time to appoint one or more
custodians pursuant to a custodial agreement to hold legal title to the Mortgage
Loans securing any Bond Series 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 Underlying MBS. Unless otherwise specified in the Prospectus
Supplement for the Offered Bonds of any Bond Series, the related Indenture will
provide that such steps will be taken as will be necessary to cause the Trustee
for such Series to become the registered owner of each Underlying MBS which is
included as part of the Collateral for such Series and to provide for all
distributions on each such Underlying MBS to be made either directly to the
Trustee or another MBS Administrator.
Representations and Warranties with Respect to Mortgage Assets; Repurchases and
Other Remedies
Unless otherwise provided in the Prospectus Supplement for the Offered
Bonds of any Bond Series, the Issuer will, with respect to each Mortgage Asset
included as part of the related Collateral, 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 Assets appearing as an exhibit to the related Terms
Indenture; (ii) the Warranting Party's title to the Mortgage Asset and the
authority of the Warranting Party to transfer (or, in the case of the Issuer,
grant a security interest in) such Mortgage Asset; 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 to the Trustee with respect to the Mortgage Loan, as
contemplated under "--Pledge of Mortgage Assets--Delivery of Mortgage Loans". It
is expected that in most cases the Warranting Party will be the Mortgage Asset
Seller; however, the Warranting Party may also be an affiliate of the Mortgage
Asset Seller, the Issuer, the Company, an affiliate of the
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Company, the Master Servicer, the Special Servicer or another person acceptable
to the Company. The 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, 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
Bondholders of the related Bond 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 (or, in the case of the Issuer, remove such Mortgage
Asset as part of the related Collateral and pay to the Trustee a cash amount) no
less than the unpaid principal balance of such Mortgage Asset as of the date of
purchase (or removal), together with accrued interest thereon at the related
Mortgage Rate (or, in the case of an Underlying MBS, the related pass-through
rate or coupon rate) to a date on or about the date of purchase (or removal)
and, in the case a Mortgage Loan, certain related unreimbursed servicing
expenses (in any event, the "Release Price"). If so provided in the related
Prospectus Supplement, in lieu of repurchasing a Mortgage Asset as to which a
material breach has occurred (or, in the case of the Issuer, removing such
Mortgage Asset as part of the related Collateral), a Warranting Party will have
the option, exercisable upon certain conditions and/or within a specified period
after initial issuance of the related Series, to replace such Mortgage Asset
with one or more other mortgage loans or mortgage-backed securities, as
applicable, that in each case meet the criteria for a "Mortgage Asset" specified
herein, in accordance with standards that will be described in the Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
this obligation of the Warranting Party to repurchase, remove or replace a
defective Mortgage Asset will constitute the sole remedy available to holders of
the Bonds of any Bond 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 Bond Series is 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 securing any Bond
Series were made will be specified in the related Prospectus Supplement.
Certain Covenants
For so long as the Bonds of any Bond Series is outstanding, except in
connection with the consummation of one of the transactions contemplated by the
following sentence, the Issuer of such Series may not liquidate or dissolve and
must maintain its continued existence. In addition, for so long as the Bonds of
any Bond Series are outstanding, the Issuer of such Bonds also may not
consolidate or merge with or into any other person or, except as described
herein, convey or transfer its properties and assets substantially as an
entirety, without the consent of the holders of Bonds of such Series entitled to
not less than 66-2/3% of the aggregate Bond Principal Amount of such Series, and
unless, among other things, (a) the person formed or surviving such merger or
consolidation or acquiring such assets is organized under the laws of the United
States of America or any State thereof and shall have expressly assumed, by
supplemental indenture, the due and punctual payment of principal of and
interest on all Bonds of such Series and the performance of every applicable
covenant of the related Indenture to be performed by the Issuer, (b) immediately
after giving effect to such transaction, no Issuer Event of Default (nor any
event that with notice or lapse of time or both would become an Issuer Event of
Default) shall have occurred and be continuing, (c) the Trustee for such Series
shall have received written confirmation from each Rating Agency in respect of
such Series to the effect that the consummation of such transaction will not
cause such Rating Agency to qualify, downgrade or withdraw its then-current
rating of any Class of Bonds of such Series and (d) the Trustee for such Series
shall have received from the Issuer an officers' certificate and an opinion of
counsel, each to the effect that, among other things, such transaction complies
with the foregoing requirements.
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With limited exception, the Issuer may not incur, assume, have outstanding
or guarantee any indebtedness other than Bonds pursuant to an Indenture and
other than obligations incidental to the issuance of Bonds.
Modification of Indenture
Except as set forth below, and unless otherwise specified in the related
Terms Indenture, with the consent of the holders of Bonds representing more than
50% of the aggregate Bond Principal Amount of any Bond Series, the Trustee and
the Issuer for such Series may amend the related Indenture or execute a
supplemental indenture, to add provisions to or change or eliminate any
provisions of the related Indenture, or modify the rights of the holders of the
Bonds of that Series.
Without the consent of the holder of each outstanding Bond affected,
however, except as provided below, no such amendment or supplemental indenture
shall (i) change the date of payment of any installment of principal of or
interest on any Bond or reduce the principal amount thereof, the Bond Interest
Rate therefor or the Redemption Price with respect thereto, or change the
provisions of the related Indenture relating to the application of collections
on or with respect to the related Collateral to payment of principal of or
interest on any Bond, or change any place of payment where, or the coin or
currency in which, any Bond or any interest thereon is payable, or impair the
right to institute suit for the enforcement of the provisions of the related
Indenture regarding payment, (ii) reduce the percentage of Voting Rights,
aggregate Bond Principal Amount or aggregate Bond Notional Amount, as the case
may be, represented by the Bonds of any Bond Series (or Class of such Series),
the consent of the holders of which is required for the authorization of any
such amendment or supplemental indenture or for any waiver of compliance with
certain provisions of the related Indenture or certain defaults thereunder and
their consequences, (iii) modify or alter the provisions of the related
Indenture defining the term "Outstanding", (iv) permit the creation of any lien
ranking prior to or on a parity with the lien of the related Indenture with
respect to any part of the property subject to the lien of such Indenture or
terminate the lien of such Indenture on any property at any time subject thereto
or deprive the holder of any Bond of the security afforded by the lien of the
related Indenture, except as expressly provided in the related Indenture, (v)
reduce the percentage of Voting Rights, aggregate Bond Principal Amount or
aggregate Bond Notional Amount, as the case may be, represented by the Bonds of
any Bond Series (or Class of such Series), the consent of the holders of which
is required to direct the Trustee to liquidate the Mortgage Assets for such
Series, (vi) modify any of the provisions of the related Indenture regarding the
calculation of the amount of any payment of interest or principal due and
payable on any Bond on any Payment Date, or (vii) modify the provisions of the
Indenture regarding any modifications of such Indenture requiring consent of the
holders of Bonds, except to increase the percentage of Voting Rights, aggregate
Bond Principal Amount or aggregate Bond Notional Amount, as the case may be,
required to consent to such modification of such Indenture or to provide that
additional provisions of the Indenture cannot be modified or waived without the
consent of the holder of each Bond affected thereby.
The Issuer and the Trustee for any Bond Series may also amend the related
Indenture or enter into supplemental indentures, without obtaining the consent
of holders of such Series to cure an ambiguity or to correct or supplement any
provision of the related Indenture or any supplemental indenture which may be
defective or inconsistent with any other provisions, or to make or amend any
other provisions with respect to matters or questions arising under the related
Indenture or any supplemental indenture, provided that such action shall not
materially adversely affect the interests of the holders of the Bonds of such
Series. Such amendments may also be made and such supplemental indentures may
also be entered into without the consent of Bondholders, among other things, to
set forth the terms of and security for additional Bond Series, to evidence the
succession of another person to the Issuer for any Bond Series, to add to the
conditions, limitations and restrictions on certain terms of any Bond Series and
to the covenants of the Issuer or Trustee of such Series, to surrender any right
or power conferred upon the Issuer for any Bond Series, to convey, transfer,
assign, mortgage or pledge any property to the Trustee for any Bond Series, to
correct or amplify the description of any property subject to the lien of any
Indenture, to modify any Indenture to the extent necessary to effect the related
Trustee's qualifications under the TIA or comply with the requirements of the
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TIA, to make any amendment necessary or desirable to maintain the status of any
portion of the related Collateral as a REMIC, or to avoid certain taxes, to
amend the provisions of any Indenture relating to authentication and delivery of
the Bonds of any Bond Series with respect to which a Terms Indenture has not
theretofore been authorized or to evidence and provide for the acceptance of
appointment by a successor trustee.
Issuer Events of Default
Unless otherwise stated in the related Prospectus Supplement, an "Issuer
Event of Default" with respect to any Bond Series will consist of: (i) the
failure to pay all interest on and principal of any Bond of such Series by its
Stated Maturity; (ii) the impairment of the validity or effectiveness of the
related Indenture or any grant thereunder, or the subordination or, except as
permitted thereunder, the termination or discharge of the lien of the related
Indenture, or the creation of any lien, charge, security interest, mortgage or
other encumbrance (other than the lien of the related Indenture or any other
lien expressly permitted thereby) with respect to any part of the property
subject to the lien of the related Indenture or any interest in or proceeds of
such property, or the failure of the lien of the related Indenture to constitute
a valid first priority perfected security interest in such property (subject
only to those liens expressly permitted by the related Indenture to be prior to
the lien thereof), and the continuation of any such defaults for a period of 30
days after notice to the Issuer for such Series by the designated Trustee or to
the Issuer for such Series and the designated Trustee by the holders of Bonds
entitled to at least 25% of the Voting Rights for such Series; (iii) any default
in the observance or performance of any covenant or agreement of the Issuer made
in the related Indenture (other than a covenant or agreement, a default in the
observance or performance of which is elsewhere in this paragraph specifically
dealt with) with respect to such Series or any representation or warranty of the
Issuer made in the related Indenture, or in any certificate or other writing
delivered pursuant thereto or in connection therewith, with respect to such
Series proving to have been incorrect in any material respect as of the time
when the same shall have been made, provided such default or the circumstance or
condition in respect of which such representation or warranty was incorrect (A)
shall materially and adversely affect the interests of holders of Bonds of such
Series and (B) shall continue or shall not have been eliminated or otherwise
remedied, as the case may be, for a period of 60 days after there shall have
been given, by registered or certified mail, to the Issuer by the Trustee or to
the Issuer and the Trustee by the holders of Bonds representing at least 25% of
the aggregate Bond Principal Amount of such Series, a written notice specifying
such default or inaccuracy, as the case may be, requiring it to be remedied and
stating that such notice is a "Notice of Default" under the related Indenture;
and (iv) certain events of bankruptcy, insolvency, receivership or
reorganization of the Issuer for such Series. Notwithstanding the foregoing, if
a Bond Series includes a Class of Subordinate Bonds, the Terms Indenture for
such a Series may provide that certain defaults which relate only to such
Subordinate Bonds shall not constitute an Issuer Event of Default with respect
to such Series, under certain circumstances, and may limit the rights of holders
of Subordinate Bonds to direct the Trustee to pursue remedies with respect to
such defaults, or other Issuer Events of Default. Such limitations, if any, will
be specified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, if an
Issuer Event of Default with respect to any Bond Series should occur and be
continuing, the Trustee for such Series may (and, upon the written request of
the holders of Bonds representing more than 50% of the aggregate Bond Principal
Amount or Bond Notional Amount, as the case may be, of each Class of Bonds of
such Series affected thereby, shall) declare all Bonds of such Series to be due
and payable, together with accrued and unpaid interest thereon. Unless otherwise
specified in the related Prospectus Supplement, such declaration of acceleration
and its consequences may under certain circumstances (including the remediation
by the Issuer of all existing Issuer Events of Default with respect to such
Series) be rescinded and annulled by the holders of Bonds representing more than
50% of the aggregate Bond Principal Amount or Bond Notional Amount, as the case
may be, of each Class of Bonds of such Series.
The Indenture for each Bond Series will provide that the Trustee for such
Series shall, within 90 days after the occurrence of an Issuer Event of Default
with respect to such Series, mail to the holders of Bonds
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of such Series notice of all uncured or unwaived defaults known to it; provided
that, except in the case of an Issuer Event of Default in the payment of the
principal or purchase price of or interest on any Bond, the Trustee shall be
protected in withholding such notice if it determines in good faith that the
withholding of such notice is in the interest of the Bondholders of such Series.
An Issuer Event of Default with respect to one Bond Series will not
necessarily be an Issuer Event of Default with respect to any other Bond Series.
Unless otherwise provided in the related Prospectus Supplement, if
following an Issuer Event of Default with respect to any Bond Series, the Bonds
of such Series have been declared to be due and payable, the Trustee may
liquidate the related Mortgage Assets, but only if: (i) each and every
Bondholder of such Series consents thereto; (ii) the portion of the proceeds of
such sale or liquidation that is distributable to the Bondholders of such Series
is sufficient to discharge in full all amounts then due and unpaid upon the
Bonds of such Series for principal and interest; or (iii) the Trustee (A)
determines that the Mortgage Assets securing such Series will not, taking into
account any Credit Support or Cash Flow Arrangement with respect to such
Series, provide sufficient funds for the payment of all principal and interest
on the Bonds of such Series by their respective Stated Maturities, if any, and
(B) obtains the consent of the holders of Bonds representing at least 66-2/3% of
the aggregate Bond Principal Amount or aggregate Bond Notional Amount of each
Class of Bonds of such Series. In addition, if following an Issuer Event of
Default with respect to any Bond Series, the Bonds of such Series have been
declared to be due and payable, the Trustee will be required to liquidate the
related Mortgage Assets (unless otherwise provided in the related Prospectus
Supplement) if the Bondholders of such Series so direct as described under
"--Control by Bondholders" below. Unless otherwise provided in the Prospectus
Supplement for the Offered Bonds of any Bond Series, the proceeds of a sale of
Mortgage Assets will be applied to the payment of amounts due the Trustee for
such Series and other administrative and servicing expenses specified in the
related Indenture and then distributed pro rata among the Bondholders of each
Class of such Series (provided that Subordinate Bonds of such Series will be
subordinate to Senior Bonds of such Series to the extent provided in the related
Prospectus Supplement) according to the amounts due and payable on the Bonds for
principal and interest at the time such proceeds are distributed by the Trustee.
If the Bonds of any Bond Series have been declared to be due and payable
following an Issuer Event of Default with respect to such Series and such
declaration and its consequences have not been rescinded and annulled, then
(unless the related Prospectus Supplement specifies otherwise) the Trustee may,
but need not, elect to maintain possession of the Mortgage Assets securing such
Series; provided that the holders of Bonds of such Series shall not have
directed the Trustee as described under "--Control by Bondholders" below to sell
the Mortgage Assets securing such Series. It is the desire of the Issuer, the
Trustee and the Bondholders of each Series that there be at all times, taking
into account any Credit Support or Cash Flow Arrangement with respect to a
Series, sufficient funds for the payment of all principal of and interest on the
Bonds of such Series by their respective Stated Maturities, if any, and the
Trustee shall take such desire into account when determining whether or not to
maintain possession of the Mortgage Assets securing any Series declared due and
payable. In determining whether to maintain possession of the Mortgage Assets
securing any Series declared due and payable, the Trustee may, but need not,
obtain and rely upon an opinion of an independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of such Mortgage Assets for such purpose.
Unless otherwise provided in the related Prospectus Supplement, until the
Trustee has elected or has determined not to elect to retain the Mortgage Assets
securing any Series declared due and payable, and thereafter if the Trustee has
elected to retain the Mortgage Assets securing any Series declared due and
payable, the Trustee will continue to apply all payments, collections,
distributions and other amounts received on such Mortgage Assets and/or paid or
drawn under any Credit Support or Cash Flow Arrangement for such Series, solely
to the payment of principal of and interest on the Bonds of such Series, and to
the payment of administrative and other expenses, as if there had not been such
a declaration of acceleration.
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The Trustee shall not be deemed to have knowledge of any Issuer Event of
Default unless an officer in the Trustee's corporate trust department has actual
knowledge thereof. Subject to the provisions of the related Indenture regarding
the duties of the Trustee in case an Issuer Event of Default in respect of any
Bond Series shall occur and be continuing, the Trustee for such Series will be
under no obligation to exercise any of the rights or powers under the related
Indenture at the request or direction of any of the Bondholders of such Series,
unless such Bondholders shall have offered to such Trustee reasonable security
or indemnity.
Control by Bondholders
Unless otherwise provided in the related Prospectus Supplement, the
holders of Bonds of any Bond Series representing more than 50% of the aggregate
Bond Principal Amount of such Series shall have the right to direct the time,
method and place of conducting any suit in equity, action at law or other
judicial or administrative proceeding (each, a "Proceeding") for any remedy
available to the Trustee, or exercising any trust or power conferred on the
Trustee; provided, that:
(i) such direction may not be in conflict with any rule of law or
with the related Indenture;
(ii) the Trustee shall have been provided with indemnity reasonably
satisfactory to it;
(iii) any direction to the Trustee to declare all of the Bonds of
such Series to be immediately due and payable following an Issuer Event of
Default, or to rescind any such declaration, shall be by the holders of
Bonds representing more than 50% of the aggregate Bond Principal Amount or
Bond Notional Amount, as the case may be, of each Class of such Series;
(iv) any direction to the Trustee to sell or liquidate all or any
portion of the Mortgage Assets securing such Series shall be by the
holders of Bonds representing not less than 66-2/3% of the aggregate Bond
Principal Amount or Bond Notional Amount, as the case may be, of each
Class of such Series (except that, notwithstanding the foregoing, if the
condition to retention of the Mortgage Assets securing such Series set
forth under "--Issuer Events of Default" above has been satisfied and the
Trustee elects to retain such Mortgage Assets as described thereunder,
then any direction to the Trustee by the holders of less than all the
Bonds of such Series to sell or liquidate all or any portion of such
Mortgage Assets shall be of no force and effect); and
(v) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Notwithstanding the rights of Bondholders of any Series set forth above,
the Trustee need not, however, take any action which it determines might involve
it in liability or may be unjustly prejudicial to the Bondholders of such Series
not consenting.
Prior to the declaration of the acceleration of the maturity of the Bonds
of any Series as described under "--Issuer Events of Default" above, unless
otherwise specified in the related Prospectus Supplement, the holders of Bonds
representing more than 50% of the aggregate Bond Principal Amount or Bond
Notional Amount, as the case may be, of each Class of such Series may, on behalf
of the holders of all the Bonds of such Series, waive any past default on the
part of the Issuer with respect to such Series and its consequences, except a
default:
(i) in the payment of principal of or interest on any Bond, which
waiver shall require the waiver by the Holders of all of the outstanding
Bonds of such Series; or
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(ii) in respect of a covenant or provision of the related Indenture
which cannot be modified or amended without the consent of the holder of
each outstanding Bond of such Series, which waiver shall require the
waiver by each holder of an outstanding Bond of such Series.
Unless otherwise specified in the related Prospectus Supplement, no holder
of Bonds of any Bond Series will have the right to institute any Proceedings
with respect to the related Indenture, unless (i) such holder previously has
given to the Trustee for such Series written notice of a continuing Issuer Event
of Default with respect to such Series, (ii) the holders of Bonds representing
more than 50% of the aggregate Bond Principal Amount of such Series (or such
other group of Bondholders of such Series as may be required for directing the
Trustee to institute particular Proceedings as described in the first paragraph
of this "--Control of Bondholders" section and as shall hold Bonds which, in the
aggregate, represent more than 50% of the aggregate Bond Principal Amount of
such Series) shall have made written request to the Trustee to institute
Proceedings in respect of such Issuer Event of Default in its own name as
Trustee under the related Indenture; (iii) such holder or holders of Bonds have
offered to the Trustee adequate indemnity or security satisfactory to the
Indenture Trustee against the costs, expenses and liabilities to be incurred in
compliance with such request, (iv) the Trustee for such Series has, for 60 days
after receipt of such notice, request and offer of indemnity, failed to
institute any such Proceeding and (v) no direction inconsistent with such
written request has been given to the Trustee for such Series during such 60-day
period by the holders of Bonds representing more than 50% of the aggregate Bond
Principal Amount of such Series; provided, however, that in the event that the
Trustee receives conflicting requests and indemnities from two or more groups of
Bondholders of such Series, each representing less than a majority, by aggregate
Bond Principal Amount, of such Series, the Trustee may in its sole discretion
determine what action with respect to the Proceeding, if any, shall be taken.
For purposes of giving the consents, waivers and directions contemplated
in this "--Control by Bondholders" section and under "--Issuer Events of
Default" above, Bonds held by the Issuer, the Company or any affiliate thereof
will be deemed not to be outstanding.
Authentication and Delivery of Bonds
The Issuer for any Bond Series may from time to time deliver Bonds of such
Series executed by it to the Trustee for such Series and order that such Trustee
authenticate such Bonds. Upon the receipt of such Bonds and such order and
subject to the Issuer's compliance with certain conditions specified in the
related Indenture, the Trustee for such Series will authenticate and deliver
such Bonds as the Issuer may direct. Unless otherwise specified in the related
Prospectus Supplement, the Trustee for any Bond Series will be authorized to
appoint an agent for purposes of authenticating and delivering the Bonds of such
Series (the "Authenticating Agent").
Satisfaction and Discharge of the Indenture
The related Indenture will be discharged as to any Bond Series (except
with respect to certain continuing rights specified in such Indenture), (a)(1)
upon the delivery to the related Trustee or other Bond registrar for
cancellation of all the Bonds of such Series other than Bonds which have been
mutilated, lost or stolen and have been replaced or paid and Bonds for which
money has been deposited in trust for the full payment thereof (and thereafter
repaid to the Issuer for such Series or discharged from such trust) as provided
in such Indenture, or (2) at such time as all Bonds of such Series not
previously canceled by the related Trustee or other Bond registrar have become
due and payable or, within one year, will become due and payable or be called
for redemption, and the Issuer for such Series shall have deposited with the
related Trustee an amount sufficient to repay all of the Bonds of such Series,
and further, in each such case, (b) when the Issuer for such Series shall have
paid all other amounts payable under the related Indenture and certain other
conditions specified in the related Indenture have been specified.
Release of Collateral
Mortgage Assets may be released from the lien of an Indenture: (i) upon
satisfaction and discharge of such Indenture (see "--Satisfaction and Discharge
of the Indenture" above); (ii) in connection with the
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liquidation of a defaulted Mortgage Loan or REO Property (see "Servicing and
Administration of the Mortgage Assets--Realization Upon Defaulted Mortgage
Loans"); (iii) in connection with a material breach of a representation and
warranty or the failure to deliver certain required material documentation with
respect to a Mortgage Asset (see "--Pledge of Mortgage Assets" and
"--Representations and Warranties with Respect to Mortgage Assets; Repurchases
and Other Remedies" above); and (iv) as otherwise specified in the related
Prospectus Supplement.
Compliance Certificates and Opinions
In connection with the authentication and delivery of any Bond Series at
initial issuance, the release or the release and substitution of property
subject to the lien of the related Indenture, and the satisfaction and discharge
of the related Indenture, and otherwise upon any application or request by the
Issuer to the Trustee to take any action under any provision of the related
Indenture, the Issuer will be required to furnish to the Trustee (i) an
officer's certificate stating that all conditions precedent, if any, provided
for in the related Indenture relating to the proposed action have been complied
with, (ii) an opinion of counsel stating that in the opinion of such counsel all
such conditions precedent, if any, have been complied with, and (iii) (if
required by the TIA) a certificate or opinion from an accountant stating that in
the opinion of such accountant all such conditions precedent, if any, subject to
verification by accountants have been complied with. In connection with the
authentication and delivery of any Bond Series at initial issuance, the
accountant rendering the certificate or opinion referred to in clause (iii) of
the preceding sentence is to be an accountant independent of the Issuer, the
Company or any affiliate thereof that was selected or approved by the Trustee in
the exercise of reasonable care.
Every such certificate or opinion with respect to compliance with a
condition or covenant will be required to include: (i) a statement that each
signatory of such certificate or opinion has read or has caused to be read such
covenant or condition; (ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based; (iii) a statement that, in the opinion of
each such signatory, such signatory has made such examination or investigation
as is necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and (iv) a
statement as to whether, in the opinion of each such signatory, such condition
or covenant has been complied with.
In addition, the Issuer for each Bond Series will be required to file
annually with the Trustee for such Series a written statement as to fulfillment
of its obligations under the related Indenture.
List of Bondholders
Three or more Bondholders of any Bond Series which have each owned Bonds
of such Series for at least six months may, by written application to the
Trustee for such Series, request access to the list maintained by such Trustee
of all holders of the same Series for the purpose of communicating with other
Bondholders of such Series with respect to their rights under the related
Indenture; and the Trustee will be required, with limited exception, to afford
such applicants access to the most recent form of such list in the possession of
the Trustee or, at the expense of such applicants, to mail copies of the
particular communication to such other Bondholders.
Meetings of Bondholders
Meetings of Bondholders of any Bond Series or Class thereof may be called
at any time and from time to time in connection with any of the following acts:
(i) to give any notice to the Issuer or Trustee for such Series, give directions
to the Trustee for such Series, consent to the waiver of any Issuer Event of
Default under the related Indenture, or to take any other action authorized to
be taken by Bondholders in connection therewith; (ii) to remove the Trustee for
such Series or appoint a successor Trustee; (iii) to consent to the execution of
supplemental indentures with respect to such Series; or (iv) to take any other
action authorized to be taken by or on behalf of such Bondholders. Such meetings
may be called by the Trustee, the Issuer or
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the holders of Bonds representing (unless otherwise specified in the related
Prospectus Supplement) at least 10% of the aggregate Bond Principal Amount of
any Bond Series.
Fiscal Year
The fiscal year of each Issuer ends on December 31.
Trustee's Annual Report
The Trustee for each Bond Series will be required to mail each year to all
Bondholders of such Series, a brief report relating to its eligibility and
qualification to continue as the Trustee under the related Indenture, any
amounts advanced by it under the related Indenture which remain unpaid on the
date of the report, the amount, interest rate and maturity date of certain
indebtedness owing by the Issuer (or any other obligor on such Series) to such
Trustee in its individual capacity, the property and funds physically held by
such Trustee in its capacity as such, any release or release and substitution of
property subject to the lien of the related Indenture which has not been
previously reported, any additional issuance of Bonds of the same Issuer not
previously reported and any action taken by such Trustee which materially
affects the Bonds and which has not been previously reported.
General Administrator
The Issuer may contract with other persons or entities to assist it in
performing its duties under any Indenture and any performance of such duties
(other than execution of Issuer orders, Issuer requests and officer's
certificates of the Issuer) by a person or entity identified to the Trustee in
an officer's certificate of the Issuer shall be deemed action taken by the
Issuer for all purposes under such Indenture.
Unless otherwise specified in the related Prospectus Supplement, it is
expected that the Issuer for each Bond Series will enter into an administration
agreement with an administrator acceptable to the Rating Agencies rating Bonds
of such Series (the "General Administrator") pursuant to which advisory,
administrative, accounting and clerical services will be provided to such Issuer
with respect to such Series. The Trustee, Master Servicer or Manager may serve
as the General Administrator. In addition, under the related Indenture, the
Issuer for each Bond Series will be responsible for certain administrative and
accounting matters relating to the Bonds of such Series, and it is intended that
the General Administrator will perform these services on behalf of the Issuer.
DESCRIPTION OF THE POOLING AGREEMENTS
General
Each Certificate Series will be issued pursuant to a Pooling Agreement. In
general, the parties to a Pooling Agreement will include (in addition to the
Company as Depositor) the Trustee, the Master Servicer, the Special Servicer
and, if one or more REMIC elections have been made with respect to the related
Trust Fund, the REMIC Administrator. However, a Pooling Agreement that relates
to a Trust Fund that includes Underlying 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 a Certificate Series is
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 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
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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
Certificate 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 Certificate Series and the description of such
provisions in the related Prospectus Supplement. The Company will provide a copy
of the Pooling Agreement (without exhibits) that relates to any Certificate
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 Company".
Transfer of Mortgage Assets
General. At the time of issuance of any Certificate Series, the Company as
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 Company in
exchange for the Mortgage Assets and the other assets to be included in the
Trust Fund for such Series. Each Mortgage Asset to be included as part of the
related Trust Fund 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 each Mortgage
Loan, if any, 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 each Underlying MBS, if
any, the outstanding principal balance and the pass-through rate or coupon rate.
Delivery of Mortgage Loans. Unless otherwise specified in the related
Prospectus Supplement, the Company as 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 Company delivers, or causes to be delivered, to the related
Trustee (or such custodian) a copy or a duplicate original of the Mortgage Note,
together with an affidavit of the Company or a prior holder of such Mortgage
Note certifying that the original thereof has been lost or destroyed. In
addition, if the Company 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 Company 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
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recording. The Company 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 Company 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 Company 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 Company or the originator of
such Mortgage Loan.
The Trustee (or a custodian appointed by the Trustee) for a Certificate
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 Underlying MBS. Unless otherwise specified in the Prospectus
Supplement for the Offered Certificates of any Certificate Series, the related
Pooling Agreement will provide that such steps will be taken as will be
necessary to cause the Trustee for such Series to become the registered owner of
each Underlying MBS which is included in the related Trust Fund and to provide
for all distributions on each such Underlying MBS to be made either directly to
the Trustee for such Series or to another MBS Administrator.
Representations and Warranties with Respect to Mortgage Assets; Repurchases and
Other Remedies
Unless otherwise provided in the Prospectus Supplement for a Certificates
Series, the Company as 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 Loan on the schedule of
Mortgage Loans appearing as an exhibit to the related Pooling Agreement; (ii)
the Warranting Party's title to the Mortgage Asset and the authority of the
Warranting Party to sell the Mortgage Asset; 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 to the related Trustee with respect to the Mortgage
Loan, as contemplated under "--Transfer 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 an affiliate of
the Mortgage Asset Seller, the Company or an affiliate of the Company, the
Master Servicer, the Special Servicer or another person acceptable to the
Company. The 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 Certificate 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
no less than the unpaid principal balance of such Mortgage Asset as of the date
of purchase, together with accrued interest thereon at the related Mortgage Rate
(or, in
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the case of an Underlying MBS, the related pass-through rate or coupon rate) to
a date on or about the date of purchase and, in the case of a Mortgage Loan,
certain related unreimbursed servicing expenses (in any event, the "Purchase
Price"). If so provided in the related Prospectus Supplement, in lieu of
repurchasing a Mortgage Asset as to which a material breach has occurred, a
Warranty Party will have the option, exercisable upon certain conditions and/or
within a specified period after initial issuance of the related Series, to
replace such Mortgage Asset with one or more other mortgage loans or
mortgage-backed securities that in each case meet the criteria for a "Mortgage
Asset" specified herein, in accordance with standards that will be described in
the related 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
Certificate 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 Loan 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 Certificate Series is 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.
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 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 Certificates constituting
REMIC Residual Securities; or (viii) for any other purpose; provided that such
amendment of such 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
Certificate 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
Certificate 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
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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 Certificate 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 Certificate 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 Certificate 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.
Certain Matters Affecting Certificateholders
No Certificateholder will have any right under any 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 the related
Certificate Series entitled to not less than 25% of the Voting Rights for such
Series 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 60 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 any 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 of the related Certificate Series, 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.
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 Certificate
Series with respect to their rights under the related Pooling Agreement, the
related 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 such Certificate Series,
will be required to request from such registrar a current list and to afford
such requesting Certificateholders access thereto promptly upon receipt.
SERVICING AND ADMINISTRATION OF THE MORTGAGE ASSETS
General
The Mortgage Loans included in any Mortgage Asset Pool will generally be
serviced and administered by the Master Servicer and/or Special Servicer for the
related Series, and the Underlying MBS in any Mortgage Asset Pool will generally
be administered by the Trustee, Master Servicer or Manager for the related
Series. In any event, such servicing and administration will be effected
pursuant to either the related
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Indenture, the related Pooling Agreement or a separate servicing and
administration agreement or other comparable agreement. In any event, the
agreement(s) pursuant to which the Mortgage Assets included in any Mortgage
Asset Pool are to be serviced and administered, is (are collectively) herein
referred to as an "S&A Agreement".
The provisions of each S&A Agreement will vary depending upon the nature
of the related Mortgage Assets to be serviced and administered thereunder. The
following summaries describe certain provisions that may appear in any S&A
Agreement. The Prospectus Supplement for a Series will describe any provision of
the related S&A 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 S&A Agreement for each Series and the description of such
provisions in the related Prospectus Supplement. The Company will provide a copy
of the S&A Agreement (without exhibits) that relates to any Series without
charge upon written request of a holder of a Security of such Series addressed
to it at its principal executive offices specified herein under "The Company".
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 S&A Agreement
to service and administer the Mortgage Loans in such Mortgage Asset Pool for the
benefit of the related Securityholders, in accordance with applicable law and
further in accordance with the terms of such S&A Agreement, such Mortgage Loans
and any instrument of Credit Support included as part of the related Collateral
or Trust Fund, as the case may be. 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 S&A Agreement and (ii) do not impair recovery under any
instrument of Credit Support included as part of the related Collateral or Trust
Fund, as the case may be. Consistent with the foregoing, the Master Servicer and
the Special Servicer will each be permitted, in its discretion, unless otherwise
specified 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 Mortgage Asset Pool,
either separately or jointly, directly or through Sub-Servicers, will also be
required to perform as to the Mortgage Loans in such Mortgage Asset Pool various
other customary functions of a servicer of comparable loans, including
maintaining escrow or impound accounts, if required under the related S&A
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 the Securityholders of the related Series 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
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specified in the related Prospectus Supplement, the related S&A 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 S&A 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 related Trustee and/or Securityholders 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 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 Securityholders 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
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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 whatever actions are necessary to protect
the interests of the related Securityholders 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
Securityholders 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 S&A 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 S&A 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 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 the related Securityholders.
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 S&A 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 an S&A Agreement. See "--Collection Account"
and "--Servicing Compensation and Payment of Expenses".
Collection of Payments on Underlying MBS
Unless otherwise specified in the related Prospectus Supplement, the
Underlying MBS, if any, included in the Mortgage Asset Pool with respect to any
Series will be registered in the name of the related 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 S&A Agreement will provide that, if the
related Trustee or such other MBS Administrator, as applicable, has not received
a distribution with respect to any Underlying MBS by a specified day after the
date on which such distribution was due and payable pursuant to the terms of
such Underlying MBS, the Trustee or such other MBS Administrator, as applicable,
is to request the paying agent of such Underlying MBS to make such payment as
promptly as possible and legally permitted and may take such legal action in
such regard as the related 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 related 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 related Collateral or Trust Fund, as the case
may be. In the event that the related 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 for its projected legal fees and expenses
(with interest), the related Trustee or such other MBS Administrator, as
applicable, will notify
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the Securityholders 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 Securityholders.
Collection Account
General. The related Trustee and any related Master Servicer, Special
Servicer and/or Manager, as applicable, will establish and maintain, or cause to
be established and maintained, the Collection Account in respect of each Series,
which will be established so as to comply with the standards of each Rating
Agency that has rated any one or more Classes of Securities of the related
Series. A Collection 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 Securities of the related Series ("Permitted
Investments"). Unless otherwise provided in the related Prospectus Supplement,
any interest or other income earned on funds in a Collection Account will be
paid to the related Trustee, Master Servicer, Special Servicer and/or Manager,
as applicable, as additional compensation. A Collection 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 of the foregoing or of the Company, provided that it complies with
applicable Rating Agency standards. If permitted by the applicable Rating Agency
or Agencies, a Collection Account may contain funds relating to more than one
series of mortgage-backed securities 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 Indenture, the related
Pooling Agreement and/or a separate S&A Agreement and described in the related
Prospectus Supplement, the following payments and collections in respect of the
Underlying Assets included as part of the Collateral or Trust Fund, as the case
may be, for any Series, 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 related Cut-off Date (other than payments due on
or before the related Cut-off Date), are to be deposited in the Collection
Account for such Series within a certain period following receipt (in the case
of collections on or in respect of the Underlying Assets) or otherwise as
provided in the related Indenture, the related Pooling Agreement and/or a
separate S&A Agreement:
(i) if the related Mortgage Asset Pool includes Mortgage Loans, all
payments on account of principal, including principal prepayments, on such
Mortgage Loans;
(ii) if the related Mortgage Asset Pool 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 the related Mortgage Asset Pool 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 on behalf of the
related Securityholders through foreclosure or otherwise;
(iv) any amounts paid under any instrument or drawn from any fund that
constitutes Credit Support for such Series;
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(v) if the related Mortgage Asset Pool 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 instrument or drawn from any fund that
constitutes a Cash Flow Arrangement for such Series;
(vii) if the related Mortgage Asset Pool includes Mortgage Loans, all
proceeds of the purchase of any such Mortgage Loan, or property acquired in
respect thereof, by the Company, any Mortgage Asset Seller or any other
specified person as described under "Description of the
Indentures--Representations and Warranties with respect to Mortgage Assets;
Repurchases and Other Remedies" and "Description of the Pooling
Agreements--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 such Mortgage Loan purchased as described under
"Description of the Underlying Assets--Substitution, Acquisition, Release and
Repurchase of Mortgage Assets" and "Description of the Securities--Termination
of a Trust Fund";
(viii) if the related Mortgage Asset Pool 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
retained by the Company 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 the related Mortgage Asset Pool includes Mortgage Loans, all
payments required to be deposited in the Collection 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 Collection
Account;
(xi) if the related Mortgage Asset Pool includes Underlying MBS, all
payments on such Underlying MBS;
(xii) if the related Mortgage Asset Pool includes Underlying MBS, all
proceeds of the purchase of any such Underlying MBS by the Company or any other
specified person as described under "Description of the
Indentures--Representations and Warranties with respect to Mortgage Assets;
Repurchases and Other Remedies" and "Description of the Pooling
Agreements--Representations and Warranties with respect to Mortgage Assets;
Repurchases and Other Remedies" and all proceeds of any such Underlying MBS
purchased as described under "Description of the Underlying
Assets--Substitution, Acquisition, Release and Repurchase of Mortgage Assets"
and "Description of the Securities--Termination of a Trust Fund";
(xiii) any other amounts received on or in respect of the Mortgage Assets
required to be deposited in the Collection Account as provided in the related
Indenture, the related Pooling Agreement or any separate S&A Agreement and
described in the related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Indenture, the
related Pooling Agreement or any separate S&A Agreement and described in the
related Prospectus Supplement, a Trustee, Master Servicer, Special Servicer or
Manager, as applicable, in respect of any Series may make withdrawals from the
Collection Account for such Series for any of the following purposes:
(i) to make distributions to the related Securityholders on each Payment
Date or Distribution Date, as applicable;
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(ii) if the related Mortgage Asset Pool 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 the related Mortgage Asset Pool 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 Mortgage Asset Pool or, if and to the extent so provided by the related S&A
Agreement and described in the 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 Securities of such 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 outstanding advances
and servicing expenses, if any, described in clause (iii) above made or incurred
by it;
(v) to reimburse the Company, 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 Company" below and
"Description of the Securities--The Trustee--Certain Matters Regarding the
Trustee";
(vi) 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, obligor on a Cash Flow
Agreement and General Administrator;
(vii) if and to the extent, and from the sources, described in the related
Prospectus Supplement, to reimburse prior draws on any fund or instrument
constituting Credit Support in respect of the related Series;
(viii) if so specified in the related Prospectus Supplement, 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 Collection Account as additional
compensation;
(ix) if a Mortgage Asset Pool 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
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";
(x) if one or more elections have been made to treat the related
Collateral or Trust Fund, as the case may be, or designated portions thereof, as
a REMIC, to pay any federal, state or local taxes imposed on
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such REMIC 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 S&A Agreement for the benefit of Securityholders or otherwise in
connection with the servicing or administration of the related Mortgage Assets;
(xii) to make any other withdrawals permitted by the related Indenture,
the related Pooling Agreement or a separate related S&A Agreement and described
in the related Prospectus Supplement; and
(xiii) to clear and terminate the Collection Account upon the
release/termination of the related Collateral or Trust Fund, as the case may be.
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
Securityholders, or any other person associated with the related Series of
Securities, 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 (the expense of which report will constitute a reimbursable
servicing advance or be payable directly out of the related Collection Account)
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
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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".
The related S&A 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 Securities of the related Series a right of first refusal to purchase
from the Trustee (in such capacity), at a predetermined price (which, if less
than the Release Price or Purchase Price, as applicable, specified herein, will
be specified in the related Prospectus Supplement), any Mortgage Loan as to
which a specified number of scheduled payments are delinquent or foreclosure is
anticipated. 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 as part of the Collateral or a Trust Fund
as to which a REMIC election has been made, the Special Servicer, on behalf of
the related Securityholders, 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 on behalf of the related Securityholders for more than two years after
its acquisition will not result in the imposition of a tax on the related REMIC
or cause the related REMIC 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 as
part of the Collateral or 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 title to any Mortgaged
Property is acquired on behalf of the related Securityholders, the Special
Servicer 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 S&A 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 Securityholders.
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, a loss in the
amount of such shortfall will be realized. 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 payment or
distribution of such Liquidation Proceeds to Securityholders, 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 payable or distributable on the
Securities 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
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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 Securityholders 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 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
Mortgage Asset Pool includes Mortgage Loans, the related S&A 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 Collection 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 Mortgage Asset Pool.
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 Collection 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 Mortgage Asset Pool, 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 Mortgage Asset Pool, 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 Collection 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 servicing and
administration of the related Collateral or Trust Fund, as the case may be,
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 Securityholders. 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 paid (or
reimbursed to a Master Servicer or Special Servicer) out of collections on the
related Mortgage Assets.
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Evidence as to Compliance
Unless otherwise specified in the related Prospectus Supplement, if a
Mortgage Asset Pool includes Mortgage Loans, the related S&A 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 related S&A
Agreement 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 Mortgage Asset Pool includes Mortgage Loans, the related S&A
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 related 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 related S&A 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 S&A 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 Securityholders upon
written request to the Trustee.
Certain Matters Regarding the Master Servicer, the Special Servicer, the REMIC
Administrator, the Manager and the Company
Unless otherwise specified in the Prospectus Supplement for a Series, the
related S&A 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 Securities 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 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 S&A Agreement. Each Master Servicer, Special Servicer and, if
it receives distributions on Underlying MBS, Manager for a Mortgage Asset Pool
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
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funds or errors and omissions, subject to certain limitations as to amount of
coverage, deductible amounts, conditions, exclusions and exceptions permitted by
the related S&A Agreement.
Unless otherwise specified in the related Prospectus Supplement, each S&A
Agreement will further provide that none of the Company (as Depositor of the
related Trust Fund, if applicable), 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 Securityholders
for any action taken, or not taken, in good faith pursuant to such S&A 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 S&A Agreement will further provide that the Company (as
Depositor of the related Trust Fund, if applicable), 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
out of the related Collateral or Trust Fund, as the case may be, against any
loss, liability or expense incurred in connection with any legal action that
relates to such S&A 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 S&A Agreement, or by reason of
reckless disregard of such obligations or duties. In addition, each S&A
Agreement will provide that neither the Company (as Depositor of the related
Trust Fund, if applicable) 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 S&A 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 S&A Agreement and the interests of the
related Series of Securityholders 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 Securityholders, and
the Company (as Depositor of the related Trust Fund, if applicable), the Master
Servicer, the Special Servicer, the REMIC Administrator or the Manager, as the
case may be, will be entitled to charge the related Collection Account therefor.
Any person into which a Master Servicer, a Special Servicer, a REMIC
Administrator, a Manager or the Company 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 Company is a party, or
any person succeeding to the business of a Master Servicer, a Special Servicer,
a REMIC Administrator, a Manager or the Company, will be the successor of the
Master Servicer, the Special Servicer, the REMIC Administrator, the Manager or
the Company (as Depositor of the related Trust Fund, if applicable), as the case
may be, under the related S&A Agreement.
Unless otherwise specified in the related Prospectus Supplement, a REMIC
Administrator will be entitled to perform any of its duties under the related
S&A 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.
S&A Events of Default
Unless otherwise provided in the Prospectus Supplement for any Series,
"S&A Events of Default" under the related S&A Agreement will include, without
limitation, (i) any failure by a Master Servicer or a Manager to distribute or
cause to be distributed to the Securityholders of such Series, or to remit to
the related Trustee for distribution to such Securityholders, 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 S&A
Agreement, or to the Master Servicer or the Manager, as the case may be, with a
copy to each other party to the related S&A Agreement,
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by the holders of Securities representing not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for (or, in the case of most Bond Series, the aggregate Bond Principal Amount
of) 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
S&A Agreement, or to the Special Servicer, with a copy to each other party to
the related S&A Agreement, by the holders of Securities representing not less
than 25% (or such other percentage specified in the related Prospectus
Supplement) of the Voting Rights for (or, in the case of most Bond Series, the
aggregate Bond Principal Amount 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 S&A
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 S&A
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 S&A Agreement,
by the holders of Securities representing not less than 25% (or such other
percentage specified in the related Prospectus Supplement) of the Voting Rights
for (or, in the case of most Bond Series, the aggregate Bond Principal Amount
of) 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 S&A 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 S&A Agreement, or to the REMIC Administrator, with a copy
to each other party to the related S&A Agreement, by the holders of Securities
representing not less than 25% (or such other percentage specified in the
related Prospectus Supplement) of the Voting Rights for (or, in the case of most
Bond Series, the aggregate Bond Principal Amount of) 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 S&A Events of
Default (other than to add thereto or shorten cure periods or eliminate notice
requirements) will be specified in the related Prospectus Supplement. S&A Events
of Default and Issuer Events of Default are collectively referred to herein as
"Events of Default".
Rights Upon S&A Event of Default
If an S&A Event of Default occurs with respect to a Master Servicer, a
Special Servicer, a Manager or a REMIC Administrator (other than the Trustee)
under any S&A Agreement, then, in each and every such case, so long as the S&A
Event of Default remains unremedied, and unless otherwise specified in the
related Prospectus Supplement, the Issuer or Depositor, as the case may be, or
the Trustee for the related Series will be authorized, and at the direction of
the holders of Securities of the related Series representing more than 50% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for (or, in the case of most Bond Series, the aggregate Bond
Principal Amount of) 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 S&A 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 applicable, under the S&A 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 Securityholders 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
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REMIC Administrator, as the case may be, under the S&A 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 "Description of the Securities--The Trustee--Resignation and
Removal of the Trustee".
DESCRIPTION OF CREDIT SUPPORT
General
Credit Support may be provided with respect to one or more Classes of the
Securities 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 Securities of such Series or, in the case of a Bond
Series, the subordination of the Issuer's equity (if any) in the related
Collateral, 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 Offered Securityholders of all amounts to
which they are entitled under the related Indenture or Pooling Agreement, as
applicable. 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,
Offered Securityholders will bear their allocable share of deficiencies.
Moreover, if a form of Credit Support covers the Offered Securities 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 Securities of one (or
more) such Series will be disproportionately benefited by such Credit Support to
the detriment of the holders of Offered Securities of one (or more) other such
Series.
If Credit Support is provided with respect to one or more Classes of
Securities 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 Securities and Issuer's Equity
If so specified in the related Prospectus Supplement, one or more Classes
of Securities of a Series may be Subordinate Securities. To the extent specified
in the related Prospectus Supplement, the rights of the holders of Subordinate
Securities to receive payments or distributions from the Collection Account on
any Payment Date or Distribution Date, as the case may be, will be subordinated
to the corresponding rights of the holders of Senior Securities. If so provided
in the related Prospectus Supplement, the subordination of a Class of Securities
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
Securities in a Series and the circumstances under which such subordination will
be available.
If the Mortgage Assets that constitute Collateral for any Bond Series or
the Trust Fund for any Certificate Series are divided into separate groups, each
supporting a separate Class or Classes of Securities
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of the related Series, Credit Support may be provided by cross-support
provisions requiring that payments or distributions be made on Senior Securities
primarily relating to one group of such Mortgage Assets prior to distributions
on Subordinate Securities primarily relating to a different group of such
Mortgage Assets. The Prospectus Supplement for a Series that includes a
cross-support provision will describe the manner and conditions for applying
such provisions.
In the case of a Bond Series, the related Issuer's equity (if any) in the
Collateral for such Series may be subordinated in the same manner as a Class of
Subordinate Securities, and similar type information will be provided as to such
subordination.
Insurance or Guarantees with Respect to Mortgage Loans
If so provided in the Prospectus Supplement for a Series of Securities,
Mortgage Loans included as part of the related Collateral or 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 of Securities,
deficiencies in amounts otherwise payable on such Securities 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 Outstanding Principal of one or more Classes of Securities. 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
release/termination of the related Collateral or Trust Fund, as the case may be.
Certificate Insurance and Surety Bonds
If so provided in the Prospectus Supplement for a Series of Securities,
deficiencies in amounts otherwise payable on such Securities 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 Securities of the related Series, timely payments or
distributions of interest and/or payments or distributions of principal on the
basis of a schedule of principal payments or 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 of Securities,
deficiencies in amounts otherwise payable on such Securities 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 Payment Date or Distribution
Date, as applicable, for a Series, amounts in any reserve fund for such Series
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 Certificate Series will not be a part of the related
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 Underlying
MBS included as part of the related Collateral or Trust Fund and/or the related
mortgage loans underlying such Underlying MBS 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 Underlying 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 any 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 Underlying 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
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
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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 Mortgage Asset Pool 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".
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
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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 Mortgage Asset Pool 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 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
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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 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.
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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.
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
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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 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
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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".
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.
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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.
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 payable out of the related Collateral or Trust Fund and occasion a
loss to the related Securityholders.
To reduce the likelihood of such a loss, unless otherwise specified in the
related Prospectus Supplement, the related S&A 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
"Servicing and Administration of the Mortgage Assets--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 Securities. 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
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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, a Mortgage Asset Pool
may include Mortgage Loans secured by junior liens, and the loans secured by the
related 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 Trustee 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 holders of one or more Classes of Securities
of the related Series may be required to 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
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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 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.
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
(e.g., 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 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 could result in a reduction of the amounts distributable to the
holders of Securities
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of the related Series, and would not be covered by advances or, unless otherwise
specified in the related Prospectus Supplement, any fund or agreement
constituting Credit Support in respect of such Securities. 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 is a general discussion of the anticipated material federal
income tax consequences of the purchase, ownership and disposition of Offered
Securities. This discussion is directed to Securityholders that hold the Offered
Securities 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 should also 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 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 Securities. See "State and Other Tax Consequences".
The following discussion addresses Securities of three general types: (i)
Securities ("REMIC Securities") constituting "regular interests" or "residual
interests" in a "real estate mortgage investment conduit", or REMIC, as defined
in section 860D of the Code; (ii) Grantor Trust Certificates, representing
interests in a Trust Fund (a "Grantor Trust Fund"), as to which no REMIC
election is made, and (iii) Bonds, characterized as indebtedness of the related
Issuer for federal income tax purposes ("Debt Securities"), as to which no REMIC
election is made. The Prospectus Supplement for each Series will indicate
whether a REMIC election (or elections) will be made for the related Collateral
or Trust Fund under sections 860A
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through 860G (the "REMIC Provisions") of the Code and, if such an election is to
be made, will identify all "regular interests" and "residual interests" in the
REMIC or REMICs to be created. Any pool of Underlying Assets as to which a REMIC
election is made will be referred to as a "REMIC Pool" in this discussion. If no
REMIC election is made with respect to a Series, the related Prospectus
Supplement will specify whether the Securities offered thereunder are Grantor
Trust Certificates or Debt Securities. For purposes of this discussion,
references to a "Securityholder", a "Certificateholder", a "Bondholder" or a
"holder" are to the beneficial owner of a Certificate or Bond, as applicable.
The following discussion is limited in applicability to Offered
Securities. Moreover, this discussion applies only to the extent that the
related Mortgage Assets consist solely of Mortgage Loans. To the extent that
other Mortgage Assets, including Underlying MBS, are to be included as
Collateral or in a Trust Fund, the federal income tax consequences associated
with the inclusion of such assets will be described in the related Prospectus
Supplement. In addition, if Cash Flow Arrangements other than guaranteed
investment contracts are included as Collateral or in a Trust Fund, the
anticipated material federal income tax consequences associated with such Cash
Flow Arrangements also will be discussed in the related Prospectus Supplement.
See "Description of the Trust Funds--Cash Flow Arrangements".
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 Offered Securities.
REMICS
General
Classification of REMICs. With respect to each Series of REMIC Securities,
Sidley & Austin, special tax counsel to the Company, will deliver its opinion
generally to the effect that, assuming compliance with the related Indenture or
Pooling Agreement, as applicable, and other related transactional documents (and
subject to certain other assumptions set forth in such opinion), the related
REMIC Pool will qualify as a REMIC and the REMIC Securities offered with respect
thereto will be "regular interests" or "residual interests" therein within the
meaning of the REMIC Provisions.
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 Securities 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 REMIC Pool's income for the period in which the
requirements for such status are not satisfied. The Indenture or Pooling
Agreement, as applicable, with respect to each Series of REMIC Securities will
include provisions designed to maintain the status of the related REMIC Pool as
a REMIC under the REMIC Provisions. It is not anticipated that the status of any
REMIC Pool as a REMIC will be inadvertently terminated.
Characterization of Investments in REMIC Securities. In general, unless
otherwise provided in the related Prospectus Supplement, the REMIC Securities
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 Pool underlying such Securities would be
so treated. However, to the extent that the REMIC Pool's assets constitute
mortgages on property not used for residential or certain other prescribed
purposes, the REMIC Securities will not be treated as assets qualifying under
section 7701(a)(19)(C). Moreover, if 95% or more of the assets of the REMIC Pool
qualify for any of the foregoing characterizations
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at all times during a calendar year, the REMIC Securities will qualify for the
corresponding status in their entirety for that calendar year. Interest
(including original issue discount) on the REMIC Regular Securities and income
allocated to the REMIC Residual Securities will be interest described in section
856(c)(3)(B) of the Code to the extent that such Securities are treated as "real
estate assets" within the meaning of section 856(c)(5)(A) of the Code. In
addition, the REMIC Regular Securities will be "qualified mortgages" within the
meaning of section 860G(a)(3) of the Code. The determination as to the
percentage of the REMIC Pool'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 Pool during such calendar quarter. The REMIC Administrator will
report those determinations to the related Securityholders in the manner and at
the times required by applicable Treasury regulations.
The assets of a REMIC Pool will include, in addition to Mortgage Loans,
payments on Mortgage Loans held pending distribution on the related REMIC
Securities 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 from payments on Mortgage Loans held pending
distribution is considered part of the Mortgage Loans for purposes of section
856(c)(5)(A) of the Code.
Tiered REMIC Structures. For certain Series of REMIC Securities, two or
more separate elections may be made to treat designated portions of the related
Collateral or Trust Fund as separate REMICs ("Tiered REMICs") for federal income
tax purposes. As to each such Series of REMIC Securities, in the opinion of
counsel to the Company, assuming compliance with all provisions of the related
Indenture or Pooling Agreement, as the case may be, the Tiered REMICs will each
qualify as a REMIC and the REMIC Securities issued by the Tiered REMICs, will be
considered to evidence ownership of REMIC Regular Securities or REMIC Residual
Securities in the related REMIC within the meaning of the REMIC Provisions.
Solely for purposes of determining whether the REMIC Securities 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 Securities 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 Securities
General. Except as otherwise stated in this discussion, REMIC Regular
Securities will be treated for federal income tax purposes as debt instruments
issued by the related REMIC and not as ownership interests in the REMIC or its
assets. Holders of REMIC Regular Securities that generally report income using a
cash method of accounting will nevertheless be required to report income with
respect to REMIC Regular Securities under an accrual method. In the case of
certain REMIC Regular Securities, the required use of the accrual method may
cause interest income to be subject to taxation prior to receipt of the related
cash.
Original Issue Discount. Certain REMIC Regular Securities may be issued
with "original issue discount" within the meaning of section 1273(a) of the
Code. Any holders of REMIC Regular Securities 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 Securities and certain other debt instruments issued with original issue
discount. Regulations have not been issued under that section.
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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 Securities 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 yet to be 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 Security must be the same as that used in pricing the initial
offering of such REMIC Regular Security. The prepayment assumption (the
"Prepayment Assumption") used in reporting original issue discount for each
Series of REMIC Regular Securities will be consistent with this standard and
will be disclosed in the related Prospectus Supplement. However, neither the
Company 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.
The original issue discount, if any, on a REMIC Regular Security 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 Securities will be the first
cash price at which a substantial amount of REMIC Regular Securities 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 Securities
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
Security is equal to the total of all payments to be made on such Security 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 Security.
In the case of REMIC Regular Securities 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 Securities. If the original issue discount rules apply to such
Securities, the related Prospectus Supplement will describe the manner in which
such rules will be applied with respect to those Securities in preparing
information returns to the related Securityholders and the IRS.
Certain Classes of the REMIC Regular Securities may provide for the first
interest payment with respect to such Securities to be made more than one month
after the date of issuance, a period which is longer than the subsequent monthly
intervals between interest payments. Assuming the "accrual period" (as defined
below) for original issue discount is each monthly period that ends on a Payment
Date or 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 Security and accounted for as
original issue discount. Because interest on REMIC Regular Securities 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 Securities.
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 Security will reflect
such accrued interest. In such cases, information returns provided to the
Securityholders 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
Security (and not as a separate asset the cost of which is recovered entirely
out of interest received on the next Payment Date or Distribution Date) and that
portion of the interest paid on the first Payment Date or 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 Payment Date or Distribution Date should
be included in the stated redemption
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price of such REMIC Regular Security. However, the OID Regulations state that
all or some portion of such accrued interest may be treated as a separate asset
the cost of which is recovered entirely out of interest paid on the first
Payment Date or 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 Securityholder.
Notwithstanding the general definition of original issue discount,
original issue discount on a REMIC Regular Security will be considered to be de
minimis if it is less than 0.25% of the stated redemption price of the REMIC
Regular Security multiplied by its weighted average maturity. For this purpose,
the weighted average maturity of the REMIC Regular Security is computed as the
sum of the amounts determined, as to each payment included in the stated
redemption price of such REMIC Regular Security, 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 Security. 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 Security. The OID Regulations also would
permit a Securityholder 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 Securities--Market Discount" below for a description of
such election under the OID Regulations.
If original issue discount on a REMIC Regular Security is in excess of a
de minimis amount, the holder of such Security 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 Security, including
the purchase date but excluding the disposition date. In the case of an original
holder of a REMIC Regular Security, 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 Payment Date or 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 Payment Date or 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 Security, if any, in future periods
and (b) the distributions made on such REMIC Regular Security during the accrual
period of amounts included in the stated redemption price, over (ii) the
adjusted issue price of such REMIC Regular Security 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 Security 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 Security 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 Security will be calculated based on its issue price and
assuming that distributions on the Security 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 Security at the
beginning of any accrual period will equal the issue price of such Security,
increased by the aggregate amount of original issue discount that accrued with
respect to such Security in prior accrual periods, and reduced by the amount of
any distributions made on such REMIC Regular Security 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.
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A subsequent purchaser of a REMIC Regular Security that purchases such
Security 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 Security. However, each such daily portion
will be reduced, if such cost is 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 Security. The adjusted
issue price of a REMIC Regular Security 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 Security 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 Securityholder that purchases a REMIC Regular Security
at a market discount (other than a de minimis amount), that is, in the case of a
REMIC Regular Security issued without original issue discount, at a purchase
price less than its remaining stated principal amount, or in the case of a REMIC
Regular Security 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. Under section 1276 of the
Code, such a Securityholder generally will be required to report as ordinary
income the lesser of the amount of such distribution and the amount of accrued
market discount. A Securityholder 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 an election applies to all market
discount bonds acquired by the taxpayer during or after the first taxable year
to which such election applies.
The OID Regulations also permit a Securityholder 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 Security
with market discount, the Securityholder 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 Securityholder acquires
during or after the taxable year of the election, and possibly previously
acquired instruments. Similarly, a Securityholder that made this election with
respect to a Security 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 Securityholder owns or acquires. See
"--Taxation of Owners of REMIC Regular Securities--Premium" below. The elections
described in this and the preceding paragraph are irrevocable except with the
approval of the IRS.
Market discount with respect to a REMIC Regular Security 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 Security 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
Securities--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 on REMIC Regular Securities should
accrue, at the Securityholder's option: (i) on the basis of a constant yield
method, (ii) in the case of a REMIC Regular Security 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
Security as of the
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beginning of the accrual period, or (iii) in the case of a REMIC Regular
Security 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 Security at the beginning of the accrual period.
The Prepayment Assumption used in calculating the accrual of original issue
discount is also to be 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 Security purchased at a discount in the secondary
market.
To the extent that REMIC Regular Securities 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
Security generally will be required to treat a portion of any gain on the sale
or exchange of such Security 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
Security 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 Security 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 Security 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 Securities 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 Securities should consult their
tax advisors regarding the possibility of making an election to amortize such
premium. The OID Regulations also permit Securityholders to elect to include all
interest, discount and premium in income based on a constant yield method,
further treating the Securityholder as having made the election to amortize
premium generally. See "--Taxation of Owners of REMIC Regular Securities--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 Securities
without regard to whether such Securities 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 Securities and noncorporate holders of the REMIC Regular
Securities that acquire such Securities in connection with a trade or business
should be allowed to deduct, as ordinary losses, any losses sustained during a
taxable year in which their Securities 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
Security 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 Security becomes wholly
worthless and that the loss will be characterized as a short-term capital loss.
Each holder of a REMIC Regular Security will be required to accrue
interest and original issue discount with respect to such Security, based on the
assumption that no defaults or delinquencies will occur
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in any future period with respect to the Mortgage Loans and without giving
effect to any reductions in distributions attributable to defaults or
delinquencies on the Mortgage Loans that may have occurred with respect thereto
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 Security, particularly during the early years of
its term, could exceed the amount of economic income actually realized by the
holder in such period. Although the holder of a REMIC Regular Security
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. Moreover, in these
circumstances, the present value of the tax detriment associated with the
inclusion of such income early in the term of the REMIC Regular Security would
generally exceed the present value of the subsequent tax benefit associated with
such eventual loss or reduction in income, assuming no changes in prevailing tax
rates.
Taxation of Owners of REMIC Residual Securities
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 Securities. Accordingly, the REMIC Residual Securities will
be subject to tax rules that differ significantly from those that would apply if
the REMIC Residual Securities 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 Security 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 Security. 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 Securityholders 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 Securityholder 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 Securityholders without regard to the
timing or amount of cash distributions by the REMIC until the REMIC's
termination. Ordinary income derived from REMIC Residual Securities 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 Security that purchased such Security from a
prior holder of such Security 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 Security.
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 Securityholder that purchased
such REMIC Residual Security from a prior holder of such Security at a price
different from the adjusted basis (as defined below) that such REMIC Residual
Security would have had in the hands of an original holder of such Security. The
REMIC Regulations, however, do not provide for any such modifications.
Any payments received by a holder of a REMIC Residual Security from the
seller of such Certificate in connection with the acquisition of such REMIC
Residual Security 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.
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Because of the uncertainty concerning the treatment of such payments, holders of
REMIC Residual Securities should consult their tax advisors concerning the
treatment of such payments for income tax purposes.
The amount of income REMIC Residual Securityholders 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 Securityholders should have other sources of funds
sufficient to pay any federal income taxes due as a result of their ownership of
REMIC Residual Securities 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 Securityholders may exceed the cash distributions received by
such REMIC Residual Securityholders for the corresponding period may
significantly adversely affect such REMIC Residual Securityholders' 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 Securityholder 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 Securities may in some instances have negative
"value". See "Risk Factors--Certain Federal Tax Considerations Regarding REMIC
Residual Securities".
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 Securities, less the deductions allowed to the REMIC for interest
(including original issue discount and reduced by any premium on issuance) on
the REMIC Regular Securities (and any other Class of REMIC Securities
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 Securities (or, if a Class of REMIC Securities 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 Securities 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 Security 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
Securities 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.
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
Securities (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
Securities" 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
premiu 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 Securities. It is anticipated that each REMIC will
elect under section 171 of the Code to amortize any premium on the Mortgage
Loans. Premium
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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 Securities (including any other Class of REMIC
Securities constituting "regular interests" in the REMIC not offered hereby)
equal to the deductions that would be allowed if the REMIC Regular Securities
(including any other Class of REMIC Securities 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 Securities (including any other Class of REMIC Securities
constituting "regular interests" in the REMIC not offered hereby) described
therein will not apply.
If a Class of REMIC Regular Securities 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 Securities 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".
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 Securities, subject to the limitation of
section 67 of the Code. See "-- Pass-Through of Miscellaneous Itemized
Deductions". 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.
Basis Rules, Net Losses and Distributions. The adjusted basis of a REMIC
Residual Security will be equal to the amount paid for such REMIC Residual
Security, increased by amounts included in the income of the REMIC Residual
Securityholder and decreased (but not below zero) by distributions made, and by
net losses allocated, to such REMIC Residual Securityholder.
A REMIC Residual Securityholder is not allowed to take into account any
net loss for any calendar quarter to the extent such net loss exceeds such REMIC
Residual Securityholder's adjusted basis in its REMIC Residual Security 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
Security. The ability of REMIC Residual Securityholders to deduct net losses may
be subject to additional limitations under the Code, as to which REMIC Residual
Securityholders should consult their tax advisors.
Any distribution on a REMIC Residual Security 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 Security. To the extent a distribution on
a REMIC Residual Security exceeds such adjusted basis, it will be treated as
gain from the sale of such REMIC Residual Security. Holders of certain REMIC
Residual Securities may be entitled to distributions early in the term of the
related REMIC under circumstances in which their bases in such REMIC
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Residual Securities will not be sufficiently large that such distributions will
be treated as nontaxable returns of capital. Their bases in such REMIC Residual
Securities will initially equal the amount paid for such REMIC Residual
Securities 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 Securityholders. To
the extent such REMIC Residual Securityholders' initial bases are less than the
distributions to such REMIC Residual Securityholders, and increases in such
initial bases either occur after such payments or distributions or (together
with their initial bases) are less than the amount of such payments or
distributions, gain will be recognized to such REMIC Residual Securityholders on
such distributions and will be treated as gain from the sale of their REMIC
Residual Securities.
The effect of these rules is that a REMIC Residual Securityholder may not
amortize its basis in a REMIC Residual Security, but may only recover its basis
through payments or distributions, through the deduction of any net losses of
the REMIC or upon the sale of its REMIC Residual Security. See "--Sales of REMIC
Securities" below. The Committee Report suggests that future regulations may
require adjustments to the REMIC's income allocable to a holder of a REMIC
Residual Security that is not an original holder in order to reflect any
difference between the basis of such REMIC Residual Security to such REMIC
Residual Securityholder and the adjusted basis such REMIC Residual Security
would have had in the hands of an original holder see "--Taxation of Owners of
REMIC Residual Certificates--General".
Excess Inclusions. Any "excess inclusions" with respect to a REMIC
Residual Security will be subject to federal income tax in all events. In
general, the "excess inclusions" with respect to a REMIC Residual Security for
any calendar quarter will be the excess, if any, of (i) the daily portions of
REMIC taxable income allocable to such REMIC Residual Security over (ii) the sum
of the "daily accruals" (as defined below) for each day during such quarter that
such REMIC Residual Security was held by such REMIC Residual Securityholder. The
daily accruals of a REMIC Residual Securityholder 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 Security at 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 Security as of the beginning of any calendar quarter will be
equal to the issue price of the REMIC Residual Security, 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 Security before the
beginning of such quarter. The issue price of a REMIC Residual Security is the
initial offering price to the public (excluding bond houses and brokers) at
which a substantial amount of the REMIC Residual Securities 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 Security as an excess inclusion if the REMIC Residual Securities are
considered not to have "significant value". The REMIC Regulations provide that
in order to be treated as having significant value, the REMIC Residual
Securities 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 Securities 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
Securities may be considered to have "significant value" under the REMIC
Regulations; provided, however, that any disclosure that a REMIC Residual
Security will have "significant value" will be based upon certain assumptions,
and the Company will make no representation that a REMIC Residual Security will
have "significant value" for purposes of the above-described rules.
For REMIC Residual Securityholders, 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
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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 Securities".
In the case of any REMIC Residual Securities held by a real estate
investment trust, the aggregate excess inclusions with respect to such REMIC
Residual Securities, 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 Security 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, but
the REMIC Regulations currently do not address this subject.
Noneconomic REMIC Residual Securities. Under the REMIC Regulations,
transfers of "noneconomic" REMIC Residual Securities 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 Security. The REMIC Regulations provide that a REMIC Residual Security
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 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 Security, which rate is
computed and published monthly by the IRS) on the REMIC Residual Security 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 Security 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 Securities that may constitute noneconomic residual interests will be
subject to certain restrictions under the terms of the related Indenture or
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 Security,
prospective purchasers should consider the possibility that a purported transfer
of such REMIC Residual Security by such a purchaser thereafter might be
disregarded under these rules, resulting in the retention of any tax liability
associated with the REMIC Residual Security by such purchaser.
The related Prospectus Supplement will disclose whether REMIC Residual
Securities offered thereunder may be considered "noneconomic" residual interests
under the REMIC Regulations; provided, however, that any disclosure that a REMIC
Residual Security will or may not be considered "noneconomic" will be based upon
certain assumptions, and the Company will make no representation that a REMIC
Residual Security will not be considered "noneconomic" for purposes of the
above-described rules. See "--Foreign Investors in REMIC Securities" below for
additional restrictions applicable to transfers of certain REMIC Residual
Securities to foreign persons.
Mark-to-Market Rules. The IRS has 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 Security 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.
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Prospective purchasers of a REMIC Residual Security should consult their tax
advisors regarding the Mark-to- Market Regulations.
Tax and Restrictions on Transfers of REMIC Residual Securities to Certain
Organizations. If a REMIC Residual Security 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 Security) of the total anticipated
excess inclusions with respect to such REMIC Residual Security 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 Security 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 Security, 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
Security 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 Securities and certain other provisions that are
intended to meet this requirement will be included in the related Indenture or
Pooling Agreement, as the case may be, and will be discussed in any Prospectus
Supplement relating to the offering of any REMIC Residual Security.
In addition, if a "pass-through entity" (as defined below) includes in
income excess inclusions with respect to a REMIC Residual Security, 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 Security 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 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.
Pass-Through of Miscellaneous Itemized Deductions
Fees and expenses of a REMIC generally will be allocated to the holders of
the related REMIC Residual Securities. 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 Securities. Unless otherwise stated in
the related Prospectus
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Supplement, such fees and expenses will be allocated to holders of the related
REMIC Residual Securities in their entirety and not to the holders of the
related REMIC Regular Securities.
With respect to REMIC Residual Securities or REMIC Regular Securities 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 and expenses
will be treated as a miscellaneous itemized deduction allowable subject to the
limitations 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 Securityholders 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 a holder of a REMIC Security 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 Securities will
generally 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 Securities.
Sales of REMIC Securities
If a REMIC Security is sold, the selling Securityholder will recognize
gain or loss equal to the difference between the amount realized on the sale and
its adjusted basis in the REMIC Security. The adjusted basis of a REMIC Regular
Security generally will equal the cost of such REMIC Regular Security to such
Securityholder, increased by income reported by such Securityholder with respect
to such REMIC Regular Security (including original issue discount and market
discount income) and reduced (but not below zero) by distributions on such REMIC
Regular Security received by such Securityholder and by any amortized premium.
The adjusted basis of a REMIC Residual Security will be determined as described
under "--Taxation of Owners of REMIC Residual Securities--Basis Rules, Net
Losses and Distributions". Except as described below, any such gain or loss will
be capital gain or loss, provided such REMIC Security 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 generally
lower rates on capital gains of individuals other than short term capital gains.
No such rate differential exists for corporations as of the date hereof. 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 Security 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 Security 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 Security based on the
application of the Prepayment Assumption to such Security), determined as of the
date of purchase of such REMIC Regular Security, 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 Security by a seller
who purchased such REMIC Regular Security 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 Security was held by
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such holder, reduced by any market discount included in income under the rules
described above under "--Taxation of Owners of REMIC Regular Securities--Market
Discount" and "--Premium".
REMIC Securities 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 Security 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 Security that might
otherwise be capital gain may be treated as ordinary income to the extent that
such Security 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 Security reacquires such REMIC Residual Security, 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,
with certain 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 collections on the
Mortgage Loans being held in temporary investments pending distribution on the
REMIC Securities. With the exception of certain circumstances under which the
Special Servicer may incur such a tax in connection with the operation of
foreclosure property if doing so would in the reasonable judgment of the Special
Servicer be in the best interest of Securityholders, 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 Indenture, Pooling Agreement and separate S&A
Agreement for a Series of REMIC Securities 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
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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 judgment of the Special Servicer, maximize the
net after-tax proceeds to Securityholders.
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 transaction documents
(including any Indenture, Pooling Agreement and separate S&A Agreement). Any
such tax not borne by a REMIC Administrator, a Master Servicer, Special
Servicer, Manager or Trustee would be charged against the related Collateral or
Trust Fund resulting in a reduction in amounts payable to holders of the related
REMIC Securities.
Termination
A REMIC will terminate immediately after the Payment Date or Distribution
Date, as applicable, following receipt by the REMIC of the final payment or
distribution 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 payment or distribution on a REMIC Regular Security will be treated as
a payment in retirement of a debt instrument. In the case of a REMIC Residual
Security, if the last payment or distribution on such REMIC Residual Security is
less than the REMIC Residual Certificateholder's adjusted basis in such
Security, such REMIC Residual Securityholder 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 Securityholders 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 Securities, 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
Securityholders 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 Securityholders 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 Securityholder 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 Securityholder'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 Security 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 Securities is required annually, and may be required
more frequently under Treasury regulations. These
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information reports generally are required to be sent to individual holders of
REMIC Regular Interests and the IRS; holders of REMIC Regular Securities 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 Security issued with original
issue discount to disclose on its face the amount of original issue discount and
the issue date, and requiring such information to be reported to the IRS.
Reporting with respect to REMIC Residual Securities, 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 Security information reports will include
a statement of the adjusted issue price of the REMIC Regular Security 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
Securities--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 Securities
Payments of interest and principal, as well as payments of proceeds from
the sale of REMIC Securities, 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 Securities
A REMIC Regular Securityholder 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 Security 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 Security, provided that the
holder complies to the extent necessary with certain identification requirements
(including delivery of a statement, signed by the Securityholder under penalties
of perjury, certifying that such Securityholder is not a United States Person
and providing the name and address of such Securityholder). 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 Security held by a REMIC
Residual Securityholder that owns directly or indirectly a 10% or greater
interest in the REMIC Residual Securities or possibly, in a mortgagor with
respect to one or more
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of the Mortgage Loans. In addition, the foregoing rules may not apply to exempt
a controlled foreign corporation from withholding taxes on such controlled
foreign corporation's allocable portion of the interest income received by such
controlled foreign corporation through a REMIC from a mortgagor with respect to
one or more Mortgage Loans that is a "related person" to such controlled foreign
corporation. 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 withholding tax rate of 30%, subject to
reduction under any applicable tax treaty.
Further, it appears that a REMIC Regular Security would not be included in
the estate of a nonresident alien individual and would not be subject to United
States estate taxes. However, Securityholders 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 Securities to investors that are not United States Persons will
be prohibited under the related Indenture or Pooling Agreement, as applicable.
GRANTOR TRUSTS
General
Classification of Grantor Trust Funds. With respect to each Series of
Grantor Trust Certificates, Sidley & Austin, special tax counsel to the Company,
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.
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 Certificate Interest 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 or minor ownership interest in the
principal of the Mortgage Loans constituting the related Grantor Trust Fund.
Characterization of Investments in Grantor Trust Certificates. In the case
of Grantor Trust Fractional Interest Certificates, unless otherwise disclosed in
the related Prospectus Supplement, counsel to the Company 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 the meaning of section 856(c)(5)(A) of the Code. In
addition, counsel to the Company 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.
However, 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
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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 Company 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 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 Certificate Series or
(ii) the Company 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)
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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 Company, 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.
Since its enactment in 1986, section 1272(a)(6) of the Code has required
(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 REMIC
regular interests and debt instruments with payments that depend on the receipt
of payments on other debt instruments pledged to secure them. Regulations could
have been, but were not , adopted applying those provisions to securities such
as the Grantor Trust Fractional Interest Certificates. The recently enacted
Taxpayer Relief Act of 1997 (the ("1997 Act") extends those rules to "any pool
of debt instruments the yield on which may be affected by reason of prepayments
(or to the extent provided in regulations, by reason of other events)",
effective with respect to tax years beginning after the date of enactment. Until
this new statute is effective, it is unclear whether use of a reasonable
prepayment assumption may be required or permitted without reliance on these
rules. However, taxpayers that account for their income from investments in
pools of prepayable debt instruments in a manner inconsistent with section
1272(a)(6) of the Code will be required to change their existing methods of
accounting for all such investments to be consistent with section 1272(a)(6) of
the Code for taxable years beginning after the enactment of the 1997 Act,
regardless of the date such investments were acquired. Any adjustment to income
or loss due to the change in accounting method will be taken into account
ratably over the four year period beginning with such taxable year. It remains
uncertain, however, 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 (that is, in a manner similar to REMIC Regular
Securities) or, with respect to a particular holder, at the time that holder
purchase the Grantor Trust Fractional Interest Certificate. Certificateholders
are advised to consult their tax advisors concerning reporting original issue
discount in general and, in particular, the use of a prepayment assumption in
reporting original issue discount with respect to Grantor Trust Fractional
Interest Certificates for taxable years beginning both before and after the
enactment of the 1997 Act. No regulations have been issued under section
1272(a)(6) of the Code.
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
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of income. If a prepayment assumption is used, it further appears that no
separate item of income or loss should be recognized upon a prepayment of any
particular Mortgage Loan. 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 Securities. See
"--REMICs--Taxation of Owners of REMIC Regular Securities--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 administrative or further statutory 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 Company 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 Certificate Series who bought at that price.
Under Treasury Regulation ss.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 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 Securities--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
Securities--Original Issue Discount" above.
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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.
However, the 1997 Act requires the use of a prepayment assumption with respect
to any pool of debt instruments the yield on which may be affected by
prepayments. It is unclear at this time whether grantor trust information
reports or returns to the IRS and Certificateholders should be based on the use
of a prepayment assumption, particularly in transactions not subject to the
stripped bond rules. 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, particularly those not subject to the stripped bond rules.
Certificateholders should refer to the related Prospectus Supplement with
respect to each Certificate Series to determine whether and in what manner the
original issue discount rules will apply to Mortgage Loans in such Series and
the method on which information returns or reports to the IRS will be prepared.
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 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 a
Grantor Trust Fractional Interest Certificate is considered to evidence
ownership of an interest in a pool of Mortgage Loans purchased at a "market
discount", that is, in the case of Mortgage Loan issued without original issue
discount, at a purchase price less than their remaining stated redemption prices
(as defined above), or in the case of Mortgage Loans issued with original issue
discount, at a purchase price less than their 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 to payments of stated redemption price on such Mortgage Loan
that are 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
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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
Securities--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. Under
the 1997 Act, it appears that the prepayment assumption, if any, that is used in
calculating the accrual of original issue discount (or the prepayment assumption
that would have been used had there been original issue discount) is to be used
in calculating the accrual of market discount. The effect of using a prepayment
assumption would be to accelerate the reporting of such discount income. Because
the regulations referred to in this paragraph have not been issued and because
the 1997 Act does not specify what rules are to applied with respect to market
discount with respect to pools of loans held in grantor trusts, it is not
possible to predict what effect any such regulations or rules might have on the
tax treatment of a Grantor Trust Fractional Interest 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.
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
Securities--Original Issue Discount" above.
Further, under the rules described above in "--REMICs--Taxation of Owners
of REMIC Regular Securities--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 for prior
taxable years, but it appears that a prepayment assumption should be used with
respect to taxable years beginning after the enactment of the 1997 Act. 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
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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
Securities. See "--REMICs--Taxation of Owners of REMIC Regular
Securities--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.
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. No regulations have been adopted applying
those provisions to the Grantor Trust Strip Certificates. The 1997 Act extends
section 1272(a)(6) to any pool of debt instruments the yield on which may be
affected by reason of prepayments, however, for all taxable years beginning
after the enactment of the 1997 Act. It is unclear whether use of a prepayment
assumption may be required or permitted with respect to earlier taxable years in
the absence of regulations and not entirely clear that stripped coupons are
intended to be covered by section 1272(a)(6) as amended by the 1997 Act. It is
also uncertain, in using a prepayment assumption, whether the assumed prepayment
rate would be determined based on conditions at the time of the first sale of
the Grantor Trust Strip Certificate (as would be the case in the case of a REMIC
Regular Security with the same characteristics) or, with respect to any
subsequent holder, based on conditions 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 using a prepayment assumption if yield is computed assuming
no prepayments. In the absence of administrative or further statutory
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
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constant yield computed using a representative initial offering price for each
Class of Certificates, computed in the manner described herein with respect to
REMIC Regular Securities. However, neither the Company 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 Certificate 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.
If the computational method described in "Taxation of Holders of REMIC
Regular Securities -- Original Issue Discount" herein produces a negative
number, it appears under section 1272(a)(6) of the Code, as amended by the 1997
Act, that such amount may not be taken as a current loss or deduction, but may
be required to be carried over and deducted or offset only against future income
derived from the Grantor Trust Strip Certificate or realized only upon its sale.
Such deferral may cause such a loss to be a capital loss. Prospective purchasers
are advised to consult their tax advisers about this issue, particularly in
light of the amendments made by the 1997 Act.
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 payments are not
subject to the same rules as debt instruments providing for noncontingent
payments. Final regulations have been 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 or debt
instruments subject to section 1272(a)(6) of the Code. It is also uncertain what
effect the enactment of the 1997 Act, extending section 1272(a)(6) of the Code
to "any pool of debt instruments the yield on which may be affected by reason of
prepayments" may be with respect to the possible application of the contingent
payment debt instrument rules to Grantor Trust Strip Certificates.
However, 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
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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 lower rates for
individuals on capital gains than ordinary income, but not 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 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
Certificate Interest 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 Company 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 Securities" will also apply
to Grantor Trust Certificates.
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Foreign Investors. In general, the discussion with respect to REMIC
Regular Securities in "--REMICs--Foreign Investors in REMIC Securities" 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.
DEBT SECURITIES
General
Classification as Debt. With respect to each Series of Debt Securities,
Sidley & Austin, special tax counsel to the Company will delivery its opinion to
the effect that, assuming compliance with all provisions of the related
Indenture and certain other documents (and subject to certain assumptions
therein), the Offered Bonds of such Series will be characterized as indebtedness
of the related Issuer, and not as an ownership interest in the Mortgage Loans
pledged to secure the Offered Bonds or in Issuer. For purposes of the following
discussion, references to "Bond" or "Offered Bond" (or to the plural forms
thereof) are to only such Bonds as constitute Debt Securities.
TMP Considerations. Taxable mortgage pool ("TMP") rules enacted as part of
the Tax Reform Act of 1986 treat certain arrangements in which debt obligations
are secured or backed by real estate mortgage loans as taxable corporation. An
entity (or a portion thereof) will be characterized as a TMP if (i)
substantially all of its assets are debt obligations and more than 50 percent of
such debt obligations consist of real estate mortgage loans or interests
therein, (ii) the entity is the obligor under debt obligations with two or more
maturities, and (iii) payments on the debt obligations referred to in (ii) bear
a relationship to payments on the debt obligations referred to in (i).
Furthermore, a group of assets held by an entity can be treated as a separate
TMP if the assets are expected to produce significant cash flow that will
support one or more of the entity's issues of debt obligation.
It is anticipated that the Issuer, or possibly the Collateral, for certain
Bond Series will be characterized as a TMP for federal income tax purposes. In
general, a TMP is treated as a "separate" corporation not includible with any
other corporation in a consolidated income tax return, and is subject to
corporate income taxation. However, it is anticipated that for federal income
tax purposes one hundred percent of the Issuer will at all times be owned by one
or more "qualified REIT subsidiaries" (as defined in section 856(i) of the Code)
of CRIIMI MAE, which is a "real estate investment trust" (a "REIT") (as defined
in section 856(a) of the Code). So long as the Issuer is so owned and CRIIMI MAE
and such owner or owners qualify as a REIT and as qualified REIT subsidiaries,
respectively, characterization of the Issuer as a TMP will result only in the
shareholders of CRIIMI MAE being required to include in income, as "excess
inclusion" income, some or all of their allocable share of the Issuer's net
income that would be "excess inclusion" income if the Issuer were treated as
"real estate mortgage investment conduit," or REMIC, within the mean of Section
860D of the Code. Characterization of the Issuer as an owner's trust or a
"qualified REIT subsidiary" would not result in entity-level, corporate income
taxation with respect to the Issuer. In the event of CRIIMI MAE's failure to
continue to qualify as a REIT or the failure of the owner or owners of the
Issuer to continue to qualify as "qualified REIT subsidiaries" for federal
income tax purposes, or for any other reason, the net income (after the
deduction of interest and original issue discount, if any, on the Bonds) of the
Issuer would be subject to corporate income tax, reducing cash flow of the
Issuer available to make payments on the Bonds, and the Issuer would not be
permitted to be included in a consolidated income tax return of another
corporate entity. No assurance can be given with regard to the prospective
qualification of the Issuer as either an owner's trust or a "qualified REIT
subsidiary" or of the Company as a "qualified REIT subsidiary" for federal tax
purposes.
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Taxation of Bondholders
Status as Real Property Loans. Offered Bonds held by a domestic building
and loan association will not constitute "loans...secured by an interest in real
property" within the meaning of section 7701(a)(19)(C)(v) of the Code; Offered
Bonds held by a real estate investment trust will not constitute "real estate
assets" within the meaning of section 856(c)(5)(A) of the Code and interest on
Offered Bonds will not be considered "interest on obligations secured by
mortgages on real property" within the meaning of section 856(c)(3)(B) of the
Code. In addition, the Offered Bonds will not be "qualified mortgages" within
the meaning of section 860G(a)(3) of the Code.
Interest and Original Issue Discount. Certain Classes of Bonds may be
issued with original issue discount. Any holders of Bonds issued with original
issue discount generally will be required to include original issue discount in
income as it accrues, in accordance with the 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 any Class of Offered
Bonds issued with original issue discount. Regulations have not been issued
under section 1272(a)(6).
Under the OID Regulations, a holder of an Offered Bond issued with a de
minimis amount of original issue discount must include such de minimis discount
in income, on a pro rata basis, as principal payments are made on the Bond.
Stated interest on the Offered Bonds will be taxable to a Bondholder as ordinary
interest income when received or accrued in accordance with such Bondholder's
method of tax accounting.
Section 1272(a)(6) of the Code requires that a prepayment assumption (the
"Prepayment Assumption") be used with respect to the collateral underlying debt
instruments in computing the accrual of original issue discount if payments
under such debt instruments may be accelerated by reason of prepayments of other
obligations securing such debt instruments, 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
(the "Committee Report") accompanying the Tax Reform Act of 1986 indicates that
the regulations will provide that the Prepayment Assumption used with respect to
an Offered Bond must be the same as that used in pricing the initial offering of
such Bond.
Market Discount. A Bondholder that purchases an Offered Bond at a market
discount, that is, in the case of an Offered Bond issued without original issue
discount, at a purchase price less than its remaining stated principal amount,
or in the case of a Bond issued with original issue discount, at a purchase
price, less than its adjusted issue price, will recognize gain upon receipt of
each payment representing stated redemption price. In particular, under section
1276 of the Code, such a Bondholder generally will be required to allocate the
portion of each such payment representing stated redemption price first to
accrued market discount not previously included in income, and to recognize
ordinary income to that extent. The holder of an Offered Bond 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 Bondholder on or after
the first day of the first taxable year to which such election applies. In
addition, the OID Regulations permit the holder of an Offered Bond to elect to
accrue all interest, discount (including de minimis market or original issue
discount) and premium in income as interest, based on a constant yield method.
If such an election were made with respect to an Offered Bond with market
discount, the Bondholder 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 Bondholder acquires during the taxable year of
the election or thereafter, and possibly previously acquired instruments.
Similarly, a Bondholder that made this election for an Offered Bond 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 Bondholder owns or acquires. See "--Debt Securities--Premium" below.
Each of these elections to accrue
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interest, discount and premium with respect to an Offered Bond on a constant
yield method or as interest would be irrevocable.
However, market discount with respect to an Offered Bond will be
considered to be de minimis for purposes section 1276 of the Code if such market
discount is less than 0.25% of the remaining stated redemption price of such
Bond 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
"--Interest and 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 on Offered Bonds should accrue, at
the Bondholder's option: (i) on the basis of a constant yield method, (ii) in
the case of an Offered Bond 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 Offered Bonds as of the beginning of the accrual
period or (iii) in the case of an Offered Bond 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 Offered Bond at the beginning
of the accrual period. Moreover, the Prepayment Assumption that would be 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 an Offered Bond purchased at a
discount in the secondary market.
To the extent that Offered Bonds provide for monthly or other periodic
payments 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 an Offered Bond generally
will be required to treat a portion of any gain on the sale or exchange of such
Bond as ordinary income to the extent of the market discount accrued to the date
of disposition under one of the foregoing methods, less any accrued market
discount previously reported as ordinary income.
Further, under section 1277 of the Code, a holder of an Offered Bond 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 an
Offered Bond 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 elects to include market
discount in income currently as it accrues on all market discount instruments
acquired by such holder in that taxable year or thereafter, the interest
deferral rule described above will not apply.
Premium. An Offered Bond 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. The holder of such an Offered Bond may elect under section 171 of the
Code to amortize such premium under the constant yield method over the remaining
term of the Bond. If made, such an election will apply to all debt instruments
having amortizable bond premium that the holder owns or subsequently acquires.
Amortizable premium will be treated as an offset to interest income on the
related
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Offered Bond, rather than as a separate interest deduction. The OID Regulations
also permit holders of Offered Bonds to elect to include all interest, discount
and premium in income based on a constant yield method, further treating the
Bondholder as having made the election to amortize premium generally. See
"--Debt Securities--Market Discount" above. The Committee Report states that the
same rules that apply to accrual of market discount (which rules may require use
of a prepayment assumption in accruing market discount with respect to Offered
Bonds without regard to whether such Bonds have original issue discount) would
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 Offered Bonds and noncorporate holders of the Offered Bonds that acquire
such Bonds in connection with a trade or business should be allowed to deduct,
as ordinary losses, any losses sustained during a taxable year in which their
Bonds become wholly or partially worthless as the result of one or more realized
losses on the related Mortgage Assets. However, it appears that a noncorporate
holder that does not acquire an Offered Bond 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 Offered Bond becomes wholly worthless and that the loss will
be characterized as a short-term capital loss.
Each holder of an Offered Bond will be required to accrue interest and
original issue discount with respect to such Bond, without giving effect to any
reductions in distributions attributable to defaults or delinquencies on the
related Mortgage Assets 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 an Offered Bond could exceed the amount
of economic income actually realized by the holder in such period. Although the
holder of an Offered Bond 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.
Sales of Offered Bonds. If an Offered Bond is sold, the selling Bondholder
will recognize gain or loss equal to the difference between the amount realized
on the sale and its adjusted basis in the Offered Bond. The adjusted basis of an
Offered Bond generally will equal the cost of such Bond to such Bondholder,
increased by income reported by such Bondholder with respect to such Bond
(including original issue discount and market discount income) and reduced (but
not below zero) by any amortized premium and any payments on such Offered Bond
received by such Bondholder. Except as provided in the following three
paragraphs, any such gain or loss will be capital gain or loss, provided such
Offered Bond 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 generally lower tax rates on the capital gains of
individuals other than short-term capital gains. 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 recognized on the sale of an Offered Bond by a seller who purchased
such Bond 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
Bond was held by such holder, reduced by any market discount included in income
under the rules described above under "--Debt Securities--Market Discount" and
"--Debt Securities--Premium."
A portion of any gain from the sale of an Offered Bond that might
otherwise be capital gain may be treated as ordinary income to the extent that
such Bond 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" (which rate is computed and published
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.
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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.
Backup Withholding and Information Reporting. Payments of interest and
principal, as well as payments of proceeds from the sale of Offered Bonds, may
be subject to the "backup withholding tax" under section 3406 of the Code at a
rate of 31% if recipients of such payments fail to furnish to the payor certain
information, including their taxpayer identification numbers, or otherwise fail
to establish an exemption from such tax. Any amounts deducted and withheld from
a 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.
The Trustee, the General Administrator or another specified party on
behalf of the related Issuer will report to Bondholders and to the IRS for each
calendar year the amount of any "reportable payments" during such year and the
amount of tax withheld, if any, with respect to payments on the Offered Bonds.
Tax Treatment of Foreign Investors. Interest paid on an Offered Bond to a
nonresident alien individual, foreign partnership or foreign corporation that
has no connection with the United States other than holding Bonds
("Nonresidents") will normally qualify as portfolio interest (except where (i)
the recipient is a holder, directly or by attribution, of 10% or more of the
capital or profits interest in CRIIMI MAE, the Company or the Issuer or,
possibly, in a mortgagor on a Mortgage Loan or (ii) the recipient is a
controlled foreign corporation to which CRIIMI MAE, the Company or the Issuer
or, possibly, a mortgagor on a Mortgage Loan is a related person) and will be
exempt from federal income tax. Upon receipt of appropriate ownership
statements, the Issuer normally will be relieved of obligations to withhold tax
from such interest payments. These provisions supersede the generally applicable
provisions of United States law that would otherwise require the issuer to
withhold at a 30% rate (unless such rate were reduced or eliminated by an
applicable tax treaty) on, among other things, interest and other fixed or
determinable, annual or periodic income paid to Nonresidents.
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
Offered Securities. 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 Securities.
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 or 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 Section 3(32) of ERISA), and, if no election has been made
under Section 410(d) of the Code, church plans (as defined
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in Section 3(33) of ERISA) are not subject to ERISA or Section 4975 of the Code.
Accordingly, assets of such plans may be invested in Offered Securities 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 under
Sections 401(a) of the Code and whose underlying trust is exempt from taxation
under Section 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, (c) the furnishing
of goods and services, and (d) any transaction in which a Plan fiduciary deals
with assets of the Plan in his own interest or for his own account. 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 Securities 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 regulations relating to Plan assets) of
such persons). The Certificates of a Series will, and the Bonds of a Series
could, be treated as "equity" for purposes of these regulations. Equity
participation in the Trust Fund for any Certificate Series will be significant
on any date if, immediately after the most recent acquisition of any Certificate
of that Series, 25% or more of any Class of Certificates of that Series is held
by benefit plan investors (determined by not including the investments of the
Company, the Trustee, the Master Servicer, the Special Servicer, any other
parties with discretionary authority over the assets of such Trust Fund and
their respective affiliates). There can be no assurance that the Offered Bonds
of any Bond Series will not also be characterized as representing an equity
interest in the related Issuer or in the Collateral securing such Offered Bonds
(in which case the preceding sentence would likewise apply to any Class of
Offered Bonds so characterized). If a Class of Offered Bonds is characterized as
"debt" rather than "equity" for purposes of the Plan Asset Regulations, then the
underlying assets of the Trust Fund would not be treated as assets of Plans that
directly or indirectly purchase such Offered Bonds, solely on account of such
purchase.
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 Underlying Assets in respect of any Series constitute Plan assets,
then any party exercising management or discretionary control regarding those
assets, such as a Master Servicer, a Special
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Servicer, any Sub-Servicer, a Manager, 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 for any Series constitute Plan assets, the Company, the Issuer (in the
case of a Bond Series), any related REMIC Administrator, any mortgagor with
respect to a related Mortgage Loan or a mortgage loan underlying a related
Underlying 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 Underlying
Assets, including the Mortgage Assets, for any Series constitute Plan assets,
the operation of the related Collateral or Trust Fund, as the case may be, 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 Mortgage Asset Pool, the
purchase of Securities of the related Series 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 Underlying MBS (other than FAMC Certificates) included in a
Mortgage Asset Pool were deemed to be assets of Plan investors, the mortgages
underlying such Underlying 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 Underlying MBS (other than FAMC Certificates) held in a
Mortgage Asset Pool, even if such Underlying 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
Underlying Assets in respect of any Series constitute Plan assets, the
acquisition or holding of Securities by or on behalf of a Plan could give rise
to a prohibited transaction if the Company, 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 Offered Securities.
Prohibited Transaction Exemptions
In considering an investment in the Offered Securities, 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 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 Securities 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 Securities of any Series may contain additional
information regarding the availability of other individual or class exemptions
with respect to such Offered Securities.
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Insurance Company General Accounts
In addition to any exemption that may be available under PTCE 95-60 for
the purchase and holding of Offered Securities 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 or 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) of ERISA 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 Securities 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
Securities 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 Securities 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.
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 Security 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 Securities--Excess Inclusions".
LEGAL INVESTMENT
If and to the extent so specified in the related Prospectus Supplement,
the Offered Securities 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.
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Prior to December 31, 1996, only Classes of Offered Securities that were,
among other things, (i) rated in one of the two highest rating categories by one
or more Rating Agencies and (ii) part of a Series evidencing interests in a
Trust Fund, or secured by Collateral, 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
Securities 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
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 Securities 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 Securities), 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
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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 Securities, including Offered Securities,
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 Securities. 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 Securities. 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 Securities or to purchase any Class of
Offered Securities representing more than a specified percentage of the
investor's assets. The Company makes no representations as to the proper
characterization of any Class of Offered Securities for legal investment or
other purposes, or as to the ability of particular investors to purchase any
Class of Offered Securities under applicable legal investment restrictions.
These uncertainties may adversely affect the liquidity of any Class of Offered
Securities. 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 whether and to what extent the Offered Securities 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 Securities of any Series will be
applied by the Company to the purchase of Mortgage Assets or will be used by the
Company to cover expenses related thereto. The Company expects to sell, or cause
the sale of, the Securities from time to time, but the timing and amount of
offerings of Securities will depend on a number of factors, including the volume
of Mortgage Assets acquired by the Company, prevailing interest rates,
availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The Securities 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 each Series will describe the method of
offering being utilized for the Offered Securities of that Series and will state
the net proceeds to the Company (or, in the case of a Bond Series, any Owner
Trust acting as Issuer) from the sale of such Offered Securities.
The Company intends that Offered Securities 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
Securities 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;
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2. By placements by the Company (or, in the case of a Bond Series,
any Owner Trust acting as Issuer) with institutional investors through
dealers; and
3. By direct placements by the Company (or, in the case of a Bond
Series, any Owner Trust acting as Issuer) with institutional investors.
In addition, if specified in the related Prospectus Supplement, the
Offered Securities of a Series may be offered in whole or in part to the seller
of the related Mortgage Assets that would comprise the Collateral or Trust Fund
for such Securities.
The Securities, including the Offered Securities, of any Series may be
resecuritized, and Securities issued as part of such resecuritization may be
offered pursuant hereto.
If underwriters are used in a sale of any Offered Securities (other than
in connection with an underwriting on a best efforts basis), such Securities
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 Securities 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 Securities, underwriters may
receive compensation from the Company (or, in the case of a Bond Series, any
Owner Trust acting as Issuer) or from purchasers of the Offered Securities in
the form of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the Offered Securities may be deemed to be
underwriters in connection with such Securities, and any discounts or
commissions received by them from the Company and any profit on the resale of
Offered Securities 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 Securities 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 Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor or Issuer, as the case
may be, for such Series will indemnify the several underwriters and the
underwriters will indemnify the Depositor or Issuer, as the case may be, for
such Series 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 or Issuer, as the
case may be, for such Series and purchasers of Offered Securities of such
Series.
The Company anticipates that the Offered Securities will be sold primarily
to institutional investors. Purchasers of Offered Securities, 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 Securities. Holders of Offered Securities
should consult with their legal advisors in this regard prior to any such
reoffer or sale.
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As to any Series of Securities, 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 or Issuer, as the case may be,
for the related Series, and may be sold thereby 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 Securities of each Series, including
certain federal income tax consequences, will be passed upon for the Depositor
or Issuer, as the case may be, for such Series by Sidley & Austin.
FINANCIAL INFORMATION
It is generally expected that a new Trust Fund or Issuer, as applicable,
will be formed with respect to each Series of Securities; and, in any event, no
Trust Fund or Issuer will engage in any business activities or have any assets
or obligations other than in connection with the related Series. Accordingly, no
financial statements with respect to any Trust Fund or Issuer will be included
in this Prospectus or in the related Prospectus Supplement. The Company has
determined that its financial statements will not be material to the offering of
any Offered Securities.
RATING
It is a condition to the issuance of any Class of Offered Securities 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-backed securities address the likelihood of receipt by
the holders thereof of all payments, or collections on the underlying mortgage
assets, of principal and interest to which such holders are entitled. These
ratings address the structural, legal and issuer-related aspects associated with
such securities, the nature of the underlying mortgage assets and the credit
quality of the guarantor, if any. Ratings on mortgage-backed securities do not
represent any assessment of the likelihood of principal prepayments by borrowers
on the underlying mortgage loans or of the degree by which such prepayments
might differ from those originally anticipated. As a result, Securityholders
might suffer a lower than anticipated yield, and, in addition, holders of
Stripped Interest Securities might, in certain cases fail to recoup their
initial investments. Furthermore, ratings on mortgage-backed securities do not
address the price of such securities or the suitability of such securities 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
1997 Act ..................................................................120
Accrual Bonds...............................................................16
Accrual Certificates........................................................16
Accrual Securities......................................................16, 16
Accrued Bond Interest.......................................................51
Accrued Certificate Interest................................................54
ARM Loans ..................................................................39
Authenticating Agent........................................................69
Available Payment Amount....................................................50
Bankruptcy Code.............................................................26
Bond Interest Rate..........................................................14
Bond Notional Amount........................................................14
Bond Principal Amount.......................................................14
Bond Series .................................................................1
Bondholders ................................................................50
Bonds .......................................................................1
Book-Entry Bonds............................................................50
Book-Entry Certificates.....................................................53
Book-Entry Securities...................................................50, 53
Cash Flow Arrangement.......................................................22
CERCLA .....................................................................97
Certificate Interest Rate...................................................15
Certificate Notional Amount.................................................15
Certificate Principal Balance...............................................15
Certificate Series...........................................................1
Certificateholders..........................................................53
Certificates.................................................................1
Class .......................................................................1
Closing Date................................................................12
Code .......................................................................23
Collateral ..................................................................1
Collection Account..........................................................42
Commercial Properties.......................................................36
Commission ..................................................................3
Committee Report......................................................104, 128
Company .....................................................................1
Condemnation Proceeds.......................................................79
Contributions Tax..........................................................115
Cooperatives................................................................37
CPR ........................................................................46
Credit Support..............................................................22
CRIIMI MAE .................................................................49
Cut-off Date............................................................12, 55
Debt Securities............................................................101
Debt Service Coverage Ratio.................................................37
Definitive Bonds............................................................50
Definitive Certificates.....................................................53
Definitive Securities...................................................50, 53
Deposit Trust Agreement.....................................................13
Depositor....................................................................9
Determination Date..................................................44, 50, 53
Distribution Date...........................................................16
DOL........................................................................132
DTC.........................................................................60
DTC Participants............................................................60
Due Dates...................................................................39
Due Period..................................................................44
Equity Participation........................................................39
ERISA..................................................................23, 131
Events of Default...........................................................88
Excess Funds................................................................48
Exchange Act.................................................................4
FAMC........................................................................40
FAMC Certificates...........................................................40
FHLMC.......................................................................40
FHLMC Certificates..........................................................40
Final Scheduled Distribution Date...........................................19
Financial Intermediary......................................................60
FNMA........................................................................40
FNMA Certificates...........................................................40
General Administrator.......................................................71
GNMA........................................................................40
GNMA Certificates...........................................................40
Grantor Trust Certificates..................................................23
Grantor Trust Fractional Interest Certificate..............................118
Grantor Trust Fund.........................................................101
Grantor Trust Strip Certificate............................................118
Indenture...................................................................13
Insurance Proceeds..........................................................79
IRS....................................................................83, 104
Issue Premium..............................................................110
Issuer.......................................................................9
Issuer Event of Default.....................................................66
Lender Liability Act........................................................97
Letter of Credit Bank.......................................................90
Liquidation Proceeds........................................................79
Loan-to-Value Ratio.........................................................38
Lock-out Date...............................................................39
Lock-out Period.............................................................39
Manager......................................................................9
Mark-to-Market Regulations.................................................112
Master Servicer..............................................................9
MBS Administrator............................................................9
MBS Agreement...............................................................41
MBS Issuer..................................................................41
MBS Servicer................................................................41
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<PAGE>
MBS Trustee ................................................................41
Mortgage Asset Pool..........................................................1
Mortgage Asset Seller.......................................................36
Mortgage Assets..............................................................1
Mortgage Loan...............................................................91
Mortgage Loans...............................................................1
Mortgage Notes..............................................................36
Mortgage Rate...............................................................10
Mortgaged Property...........................................................1
Mortgages...................................................................36
Multifamily Properties......................................................36
Net Leases..................................................................38
Net Operating Income........................................................38
Nonrecoverable Advance......................................................56
Nonresidents...............................................................131
OCC........................................................................135
Offered Bonds................................................................1
Offered Certificates.........................................................1
Offered Securities...........................................................1
OID Regulations............................................................102
Originator ................................................................37
OTS........................................................................136
Outstanding Principal.......................................................19
Owner Trust .................................................................1
Owner Trustee...............................................................13
Parties in Interest........................................................132
Payment Date................................................................16
Percentage Interest.........................................................54
Permitted Investments.......................................................79
Plan Asset Regulations.....................................................132
Plans......................................................................131
Pooling Agreement...........................................................14
Prepayment Assumption............................................104, 121, 128
Prepayment Interest Shortfall...............................................44
Prepayment Premium..........................................................39
Principal Distribution Amount...............................................18
Principal Payment Amount....................................................17
Proceeding..................................................................68
Prohibited Transactions Tax................................................115
Prospectus Supplement........................................................1
PTCE.......................................................................133
Purchase Price..............................................................74
Rating Agency...............................................................23
Record Date ............................................................50, 53
Redemption Price............................................................20
REIT.......................................................................127
Related Proceeds............................................................56
Release Price...............................................................64
Relief Act.................................................................100
REMIC....................................................................2, 23
REMIC Administrator......................................................3, 10
REMIC Pool.................................................................102
REMIC Provisions...........................................................102
REMIC Regular Securities....................................................23
REMIC Regulations..........................................................102
REMIC Residual Securities...................................................23
REMIC Securities...........................................................101
REO Property................................................................76
S&A Agreement...............................................................76
S&A Events of Default.......................................................87
Securities ..................................................................1
Securities Act...............................................................3
Security Interest Rate......................................................43
Security Owner..............................................................60
Securityholder Statement....................................................57
Securityholders.........................................................50, 53
Senior Bonds................................................................13
Senior Certificates.........................................................14
Senior Liens................................................................37
Senior Securities.......................................................13, 14
Series.......................................................................1
SMMEA.......................................................................23
SPA.........................................................................46
Special Redemption Date.....................................................20
Special Servicer.............................................................9
Stated Maturity.............................................................19
Stripped Interest Bonds.....................................................13
Stripped Interest Certificates..............................................14
Stripped Interest Securities............................................13, 14
Stripped Principal Bonds....................................................13
Stripped Principal Certificates.............................................14
Stripped Principal Securities...........................................13, 14
Sub-Servicer................................................................78
Sub-Servicing Agreement.....................................................78
Subordinate Bonds...........................................................13
Subordinate Certificates....................................................14
Subordinate Securities..................................................13, 14
Tax Exempt Investor........................................................134
Terms Indenture.............................................................13
TIA..........................................................................9
Tiered REMICs..............................................................103
Title V....................................................................100
TMP........................................................................127
Trust Fund...................................................................1
Trustee......................................................................9
UCC.........................................................................92
Undelivered Mortgage Assets.................................................12
Underlying Assets...........................................................36
Underlying MBS...............................................................1
United States Person.......................................................117
Value.......................................................................38
Voting Rights...............................................................57
Warranting Party........................................................63, 73
- 140 -
<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 Securities 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 or as part of the Trust Fund or Collateral, as the case may be,
with respect to any Series of Securities 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
and certain controlling persons of the Registrant 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.
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 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
II-1
<PAGE>
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 said
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
4.2 -- Form I of Standard Indenture Provisions
4.3 -- Form I of Terms Indenture
4.4 -- Form II of Standard Indenture Provisions*
4.5 -- Form II of Terms Indenture*
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).
99.1 -- Form of Servicing and Administration Agreement.
- --------------------
* To be filed by amendment.
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.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) 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.
(j) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section
310 of the Trust Indenture Act of 1939 in accordance with the rules
and regulations prescribed by the Securities and Exchange Commission
under Section 305(b)(2) of the Trust Indenture Act of 1939.
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 I.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 Rockville, State of
Maryland on the 18th day of August, 1997.
CRIIMI MAE CMBS CORP.
By: /s/ H. William Willoughby
---------------------------------------
Name: H. William Willoughby
Title: President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints David B. Iannarone, 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/ H. William Willoughby President and Director August 18, 1997
- ----------------------------- (principal executive officer)
H. William Willoughby
/s/ William B. Dockser Chairman of the Board and August 18, 1997
- ----------------------------- Director
William B. Dockser
/s/ Cynthia O. Azzara Senior Vice President and August 18, 1997
- ----------------------------- Chief Financial Officer (principal
Cynthia O. Azzara 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.
4.2 -- Form I of Standard Indenture Provisions.
4.3 -- Form I of Terms Indenture.
4.4 -- Form II of Standard Indenture Provisions*
4.5 -- Form II of Terms Indenture*
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).
99.1 -- Form of Servicing and Administration Agreement.
- ----------
* To be filed by amendment.
II-5
================================================================================
CRIIMI MAE CMBS 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 OF CONTENTS
-----------------
Section Page
----
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 CERTIFICATES
2.01. Conveyance of Mortgage Loans..........................................46
2.02. Acceptance of REMIC I by Trustee......................................48
2.03. Certain Repurchases of Mortgage Loans by the Mortgage Loan Seller.....50
2.04. Representations and Warranties of the Depositor.......................51
2.05. Representations and Warranties of the Master Servicer.................52
2.06. Representations and Warranties of the Special Servicer................54
2.07. Representations, Warranties and Covenants of the Trustee and the
REMIC Administrator...................................................56
2.08. [RESERVED]............................................................57
2.09. Execution, Authentication and Delivery of Class R-I Certificates;
Creation of REMIC I Regular Interests.................................57
2.10. Conveyance of REMIC I Regular Interests; Acceptance of REMIC II by
Trustee ..............................................................58
2.11. Execution, Authentication and Delivery of Class R-II Certificates;
Creation of REMIC II Regular Interests................................58
2.12. Conveyance of REMIC II Regular Interests; Acceptance of REMIC III
by Trustee............................................................58
2.13. Execution, Authentication and Delivery of REMIC III Certificates......59
i
<PAGE>
Section Page
----
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
3.01. Administration of the Mortgage Loans..................................60
3.02. Collection of Mortgage Loan Payments..................................61
3.03. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts; Reserve Accounts..................................61
3.04. Collection Account and Distribution Account...........................63
3.05. Permitted Withdrawals From the Collection Account and the
Distribution Account..................................................66
3.06. Investment of Funds in the Collection Account and the REO Account.....70
3.07. Maintenance of Insurance Policies; Errors and Omissions and Fidelity
Coverage .............................................................72
3.08. Enforcement of Alienation Clauses.....................................74
3.09. Realization Upon Defaulted Mortgage Loans.............................74
3.10. Trustee to Cooperate; Release of Mortgage Files.......................77
3.11. Servicing Compensation; Interest on Servicing Advances; Payment of
Certain Expenses; Obligations of the Trustee regarding Back-up
Servicing Advances ...................................................79
3.12. Property Inspections; Collection of Financial Statements; Delivery of
Certain Reports.......................................................83
3.13. Annual Statement as to Compliance.....................................83
3.14. Reports by Independent Public Accountants.............................84
3.15. Access to Certain Information.........................................84
3.16. Title to REO Property; REO Account....................................85
3.17. Management of REO Property............................................86
3.18. Sale of Mortgage Loans and REO Properties.............................89
3.19. Additional Obligations of Master Servicer.............................93
3.20. Modifications, Waivers, Amendments and Consents.......................94
3.21. Transfer of Servicing Between Master Servicer and Special
Servicer; Record Keeping..............................................97
3.22. Sub-Servicing Agreements..............................................98
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
4.01. Distributions........................................................101
4.02. Statements to Certificateholders; Certain Other Reports..............111
4.03. P&I Advances.........................................................112
ii
<PAGE>
Section Page
----
4.04. Allocation of Realized Losses and Extraordinary Expenses.............115
4.05. Calculations.........................................................116
4.06. Use of Agents........................................................116
ARTICLE V
THE CERTIFICATES
5.01. The Certificates.....................................................117
5.02. Registration of Transfer and Exchange of Certificates................118
5.03. Book-Entry Certificates..............................................123
5.04. Mutilated, Destroyed, Lost or Stolen Certificates....................125
5.05. Persons Deemed Owners................................................125
5.06 Certification by Certificate Owners..................................125
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..........................................127
6.02. Merger, Consolidation or Conversion of the Depositor, the Master
Servicer, the Special Servicer or the REMIC Administrator............127
6.03. Limitation on Liability of the Depositor, the Master Servicer,
the Special Servicer and the REMIC Administrator.....................128
6.04. Master Servicer, Special Servicer and REMIC Administrator Not to
Resign ..............................................................129
6.05. Rights of the Depositor and the Trustee in Respect of the Master
Servicer, the Special Servicer and the REMIC Administrator...........129
6.06. [RESERVED]...........................................................130
6.07. Master Servicer or Special Servicer as Owner of a Certificate........130
ARTICLE VII
DEFAULT
7.01. Events of Default....................................................132
7.02. Trustee to Act; Appointment of Successor.............................136
7.03. Notification to Certificateholders...................................137
7.04. Waiver of Events of Default..........................................137
7.05. Additional Remedies of Trustee Upon Event of Default.................137
iii
<PAGE>
Section Page
----
7.06. Advance Collateral Fund for Trustee..................................138
ARTICLE VIII
CONCERNING THE TRUSTEE
8.01. Duties of Trustee....................................................140
8.02. Certain Matters Affecting Trustee....................................142
8.03. Trustee not Liable for Validity or Sufficiency of Certificates or
Mortgage Loans ......................................................143
8.04. Trustee May Own Certificates.........................................144
8.05. Fees and Expenses of Trustee; Indemnification of Trustee and the
REMIC Administrator..................................................144
8.06. Eligibility Requirements for Trustee.................................145
8.07. Resignation and Removal of Trustee...................................146
8.08. Successor Trustee....................................................147
8.09. Merger or Consolidation of Trustee...................................147
8.10. Appointment of Co-Trustee or Separate Trustee........................148
8.11. Appointment of Custodians............................................149
8.12. Access to Certain Information........................................149
ARTICLE IX
TERMINATION
9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans.....151
9.02. Additional Termination Requirements..................................153
ARTICLE X
ADDITIONAL REMIC PROVISIONS
10.01. REMIC Administration................................................154
10.02. Depositor, Master Servicer, Special Servicer and Trustee to
Cooperate with REMIC Administrator..................................158
10.03. Indemnification by Trustee, REMIC Administrator, Master Servicer
and Special Servicer................................................158
10.04. Fees of the REMIC Administrator.....................................158
10.05. Use of Agents.......................................................159
iv
<PAGE>
Section Page
----
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Amendment...........................................................160
11.02. Recordation of Agreement; Counterparts..............................161
11.03. Limitation on Rights of Certificateholders..........................162
11.04. Governing Law.......................................................163
11.05. Notices.............................................................163
11.06. Severability of Provisions..........................................163
11.07. Successors and Assigns; Beneficiaries...............................164
11.08. Article and Section Headings........................................164
11.09. Notices to Rating Agencies..........................................164
11.10. Complete Agreement..................................................165
v
<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
vi
<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
vii
<PAGE>
This Pooling and Servicing Agreement (this "Agreement"), is dated
and effective as of _________, 199__ (the "Cut-off Date"), among CRIIMI MAE CMBS
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.
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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.
Initial
Uncertificated
REMIC II Principal Latest Possible
Designation Remittance Rate Balance Maturity Date(2)(3)
----------- --------------- ------- -------------------
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) $
- ----------
(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).
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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.
Initial Class Latest Possible
Designation Pass-Through Rate Principal Balance Maturity Date(4)(5)
- ----------- ----------------- ----------------- -------------------
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 $
- ----------
(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.
"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.
"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 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
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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 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).
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"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
immediately 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 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.
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"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.
"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.
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"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.
"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.
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"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).
"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.
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"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 CRIIMI MAE CMBS 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.
"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",
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"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.
"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
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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.
"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.
"Definitive Certificate": As defined in Section 5.03(a).
"Depositor": CRIIMI MAE CMBS 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).
"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
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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 CRIIMI MAE CMBS Corp., Mortgage Pass-Through
Certificates, Series 199__-____".
"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).
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"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 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).
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"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": The Securities Exchange Act of 1934, as amended.
"Extraordinary 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 REMIC III Regular Certificateholders' receiving less than
the full amount of principal and/or interest to which they are entitled on any
Distribution Date.
"FDIC": The Federal Deposit Insurance Corporation or any successor.
"FHLMC": The 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": The 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
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hereafter enacted, and specifically including, without limitation, asbestos and
asbestos-containing materials, polychlorinated biphenyls ("PCBs"), radon gas,
petroleum and petroleum products, urea formaldehyde and any substances
classified as being "in inventory", "usable work in process" or similar
classification which would, if classified as unusable, be included in the
foregoing definition.
"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
----- -----------------
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
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during any Collection Period, whether as Insurance Proceeds, Liquidation
Proceeds, REO 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.
"Master Servicer": _____________________, its successor in interest,
or any successor servicer appointed as herein provided.
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"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 market value (as is), as determined by an
Appraisal delivered to the Special Servicer (at
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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
Section 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 CRIIMI MAE CMBS 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
CRIIMI MAE CMBS 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
CRIIMI MAE CMBS 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 CRIIMI MAE CMBS 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 Operating Income": With respect to any Mortgaged Property, the
net operating income derived from such Mortgaged Property, calculated in
accordance with Exhibit K.
"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.
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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
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the Determination Date in any calendar month, the amount of interest, to the
extent not collected 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
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during the related Collection Period, net of any portion of such
payment that represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due, or the
principal portion of any Assumed Scheduled Payment deemed due, in
respect of such 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.
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"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.
"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
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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 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
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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.
"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.
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"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 CRIIMI MAE CMBS Corp., Mortgage Pass-Through Certificates,
Series 199__-____".
"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).
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"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).
"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.
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"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.
"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,
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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).
"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).
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"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:
(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
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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
(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
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(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 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 Extraordinary 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
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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.
"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.
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"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.
"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).
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"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.
"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
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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 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.
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(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
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filed, as a precautionary filing, a Form UCC-1 substantially in the form
attached as Exhibit J hereto in all appropriate locations in the State of
_____________ 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 _________.
(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 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
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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 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
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Loan as contemplated by Section 2.03(a), the Master Servicer shall promptly
notify the Trustee 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
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reasonable good faith judgment, is likely to affect materially and
adversely either 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 ________________ duly organized,
validly existing and in good standing under the laws of the
____________________ and is, and shall remain, in compliance with
the laws of each State in which any
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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
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
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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 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 ____________________ duly
organized, validly existing and in good standing under the laws 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.
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(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.
(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.
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(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.
(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 _____________ duly organized, validly
existing and in good standing under the laws 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,
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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 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.
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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 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.
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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.
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
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Servicer, as appropriate, any limited powers of attorney and other documents
necessary or 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
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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 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
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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 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;
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(iii) all Prepayment Premiums and Yield Maintenance Premiums
received in respect of any Mortgage Loan;
(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 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 by the Master
Servicer 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
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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 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
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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.
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
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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 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
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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;
(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) and (D)
the expense of any consultant hired by the Trustee pursuant to
Section 3.18(e);
(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
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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 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
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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
(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 following 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
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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, 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
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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 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
"___" (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
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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 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 "___" (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
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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 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.
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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 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.
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(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 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,
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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 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.
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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.
(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
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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.
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 Master 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
Master Servicing Fee shall accrue at the Master 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 Master Servicing Fee may
not be transferred in whole or in part except in connection with the transfer of
all of the Master Servicer's responsibilities and obligations under this
Agreement.
(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
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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 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
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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
Mortgage 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 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 Fee,
the 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 ____ % 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
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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 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
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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 Certificate (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, any
of 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, as
evidenced by an Officer's Certificate 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, 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 Certificate (and accompanying information) of the Trustee shall also
be promptly delivered to the Master Servicer, the Special Servicer and the
Depositor.
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
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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 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
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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.
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
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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.
(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).
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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
(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
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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 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;
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(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;
(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
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(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. If 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, the excess of such costs
over such revenues 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]
(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
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(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 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
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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 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
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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).
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 from its own funds 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
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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.
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
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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 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);
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(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
(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.
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(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 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
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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.
(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.
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(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 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
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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 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
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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 Extraordinary 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 Extraordinary 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 Extraordinary 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)
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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);
(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 Extraordinary 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 Extraordinary 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
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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 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 Extraordinary 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 Extraordinary 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;
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(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 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 Extraordinary 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-
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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.
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
Extraordinary 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)
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to the extent of the balance, if any, of such Net Yield Maintenance
Premium, 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 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 Extraordinary
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
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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 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 Extraordinary 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
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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 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
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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
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 Extraordinary 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 Extraordinary
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 Extraordinary
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
Extraordinary Expenses previously deemed allocated to such REMIC I Regular
Interest and not previously reimbursed; and (iv) of additional
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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 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
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"Special Servicer Report") reflecting information as of the close of business on
the last day of the Collection Period.
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.
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(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
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
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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, 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 Extraordinary
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 Extraordinary 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
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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 Extraordinary Expenses.
(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
Extraordinary 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 Extraordinary 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
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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 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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. 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
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to transfer its Ownership Interest in such Residual
Certificate unless it 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
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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 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
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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.
(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
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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 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
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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.
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
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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 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
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reasonable request, the Master Servicer, the Special Servicer and the REMIC
Administrator shall 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
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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 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
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agreements on the part of the Master Servicer or the Special
Servicer, as the case 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
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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 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 __% 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
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instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. Each of the Master Servicer and the Special
Servicer 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 __% 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
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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 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
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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 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.
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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 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.
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(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 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
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resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond or other paper or
document, unless requested in writing to do so by Holders of
Certificates entitled to 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,
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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 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
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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 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
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both Trustee and REMIC Administrator, then any resignation or removal of such
Person as the 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
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separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of 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
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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 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
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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
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Final Distribution Date an amount in immediately available funds equal to the
above-described 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
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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 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
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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
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Person for each of REMIC I, REMIC II and REMIC III in the performance of its
duties as such. 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
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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 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
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such REMIC under the REMIC Provisions or other applicable provisions of federal,
state and local law or ordinances.
(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
165
<PAGE>
in a manner other than as described in clause (i) above without the consent of
the Holders of all 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
166
<PAGE>
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 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,
167
<PAGE>
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 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, CRIIMI MAE
CMBS Corp., __________, ______________, Attention: ________________, telecopy
number: _____________; (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
168
<PAGE>
the other provisions of this Agreement or of the Certificates or the rights of
the Holders thereof.
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.
169
<PAGE>
(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.
(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.
170
<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.
CRIIMI MAE CMBS CORP.
Depositor
By:_____________________________
Name:
Title:
[___________________________]
Master Servicer
By:_____________________________
Name:
Title:
[___________________________]
Special Servicer
By:_____________________________
Name:
Title:
[___________________________]
Trustee and REMIC Administrator
By:_____________________________
Name:
Title:
171
<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 CRIIMI MAE CMBS 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]
172
<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]
173
<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]
174
<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]
175
<PAGE>
EXHIBIT A-1
FORM OF CLASS S CERTIFICATE
CLASS S MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
<TABLE>
<S> <C>
Initial Effective Pass-Through Rate: ___% Class Notional Amount of the Class S
per annum Certificates as of the Closing Date: _________
Cut-off Date: _________, 199_ Initial Certificate Notional Amount of this Class
S Certificate as of the Closing Date:
Closing Date: _________, 199_ $____________
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.
</TABLE>
A-1-1
<PAGE>
[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 CRIIMI MAE
CMBS 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 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
CRIIMI MAE CMBS Corp. (the "Depositor", which term includes any successor entity
under the Agreement), __________________
A-1-2
<PAGE>
______________ (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 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
A-1-3
<PAGE>
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 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.
A-1-4
<PAGE>
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.
A-1-5
<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 S Certificates referred to in the
within-mentioned Agreement.
Dated:
------------------------
as Certificate Registrar
By:
------------------------
Authorized Officer
A-1-6
<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.
A-1-7
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-1A CERTIFICATE
CLASS A-1A MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
<TABLE>
<S> <C>
Pass-Through Rate: ___% per annum Class Principal Balance of the Class A-1A
Certificates as of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance of this Class
A-1A Certificate as of the Closing Date:
Closing Date: _________, 199_ $_______
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.
</TABLE>
A-2-1
<PAGE>
[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 CRIIMI
MAE CMBS 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.
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
A-2-2
<PAGE>
"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 CRIIMI MAE CMBS 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 to any possible future reimbursement of any Realized
Loss or Extraordinary 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
A-2-3
<PAGE>
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.
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.
A-2-4
<PAGE>
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.
A-2-5
<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
A-2-6
<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.
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-1B CERTIFICATE
CLASS A-1B MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
<TABLE>
<S> <C>
Pass-Through Rate: ___% per annum Class Principal Balance of the Class A-1B
Certificates as of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance of this Class
A-1B Certificate as of the Closing Date:
Closing Date: _________, 199_ $_______
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.
</TABLE>
A-3-1
<PAGE>
[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 CRIIMI
MAE CMBS 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.
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
A-3-2
<PAGE>
"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 CRIIMI MAE CMBS 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 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
A-3-3
<PAGE>
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.
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.
A-3-4
<PAGE>
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.
A-3-5
<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-1B Certificates referred to in the
within-mentioned Agreement.
Dated:
------------------------
as Certificate Registrar
By:
------------------------
Authorized Officer
A-3-6
<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.
A-3-7
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-2 CERTIFICATE
CLASS A-2 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
<TABLE>
<S> <C>
Pass-Through Rate: ___% per annum Class Principal Balance of the Class A-2
Certificates as of the Closing Date:_____
______________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance of this Class
A-2 Certificate as of the Closing Date:
Closing Date: _________, 199_ $_______
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.
</TABLE>
A-4-1
<PAGE>
[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 CRIIMI
MAE CMBS 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 NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
A-4-2
<PAGE>
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 CRIIMI MAE CMBS 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-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 Extraordinary 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
A-4-3
<PAGE>
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 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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. It is
hereby acknowledged that the forms of certification attached to the Agreement as
A-4-4
<PAGE>
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 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
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
A-4-5
<PAGE>
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.
A-4-6
<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-2 Certificates referred to in the
within-mentioned Agreement.
Dated:
------------------------
as Certificate Registrar
By:
---------------------
Authorized Officer
A-4-7
<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.
A-4-8
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-3 CERTIFICATE
CLASS A-3 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
Pass-Through Rate: ___% per annum Class Principal Balance of the Class
A-3 Certificates as of the Closing
Date:___________________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance
of this Class A-3 Certificate as of the
Closing Date:
Closing Date: _________, 199_ $_______
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>
[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 CRIIMI
MAE CMBS 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 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.]
A-5-2
<PAGE>
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 CRIIMI MAE CMBS 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-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 Extraordinary Expense previously allocated to this Certificate)
A-5-3
<PAGE>
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-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 Section 401(c) of ERISA; 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
A-5-4
<PAGE>
Exemption 95-60 or Section 401(c) of ERISA. 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 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 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
A-5-5
<PAGE>
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.
A-5-6
<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-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 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
Pass-Through Rate: ___% per annum Class Principal Balance of the Class
B-1 Certificates as of the Closing
Date:___________________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance
of this Class B-1 Certificate as of the
Closing Date:
Closing Date: _________, 199_ $_______
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>
[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 CRIIMI
MAE CMBS 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 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.]
A-6-2
<PAGE>
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 CRIIMI MAE CMBS 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 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 Extraordinary Expense previously allocated to this Certificate)
A-6-3
<PAGE>
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-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 Section 401(c) of ERISA; 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
A-6-4
<PAGE>
Exemption 95-60 or Section 401(c) of ERISA. 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 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 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
A-6-5
<PAGE>
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.
A-6-6
<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 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
Pass-Through Rate: ___% per annum Class Principal Balance of the Class
B-2 Certificates as of the Closing
Date:___________________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance
of this Class B-2 Certificate as of the
Closing Date:
Closing Date: _________, 199_ $_______
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>
[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 CRIIMI MAE
CMBS 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.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF
APPLYING THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES
A-7-2
<PAGE>
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 CRIIMI MAE CMBS 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
A-7-3
<PAGE>
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 Extraordinary 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-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
A-7-4
<PAGE>
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 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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. 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 B-2 Certificates in
authorized
A-7-5
<PAGE>
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 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.
A-7-6
<PAGE>
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.
A-7-7
<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 _____________________________ ______________________________________________.
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 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
Pass-Through Rate: ___% per annum Class Principal Balance of the Class
B-3 Certificates as of the Closing
Date:___________________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance
of this Class B-3 Certificate as of the
Closing Date:
Closing Date: _________, 199_ $_______
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>
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 CRIIMI MAE
CMBS 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 NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
A-8-2
<PAGE>
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 CRIIMI MAE CMBS 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 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 Extraordinary Expense previously allocated to this Certificate)
A-8-3
<PAGE>
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-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
A-8-4
<PAGE>
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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. 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 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
A-8-5
<PAGE>
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 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.
A-8-6
<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 _____________________________ ______________________________________________.
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 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
Pass-Through Rate: ___% per annum Class Principal Balance of the Class
B-4 Certificates as of the Closing
Date:___________________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance
of this Class B-4 Certificate as of the
Closing Date:
Closing Date: _________, 199_ $_______
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>
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 CRIIMI MAE
CMBS 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 NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
A-9-2
<PAGE>
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 __________________ 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 CRIIMI MAE CMBS 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 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 Extraordinary 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
A-9-3
<PAGE>
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 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
A-9-4
<PAGE>
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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. 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 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
A-9-5
<PAGE>
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 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.
A-9-6
<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 _____________________________ ______________________________________________.
This information is provided by ___________________________, the Assignee
named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-10
FORM OF CLASS C CERTIFICATE
CLASS C MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS CORP.
Pass-Through Rate: ___% per annum Class Principal Balance of the Class
C Certificates as of the Closing
Date:___________________
Cut-off Date: _________, 199_ Initial Certificate Principal Balance
of this Class C Certificate as of the
Closing Date:
Closing Date: _________, 199_ $_______
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>
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 CRIIMI MAE
CMBS 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 NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
A-10-2
<PAGE>
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
CRIIMI MAE CMBS 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 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 Extraordinary 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
A-10-3
<PAGE>
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
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
A-10-4
<PAGE>
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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. 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 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
A-10-5
<PAGE>
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 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.
A-10-6
<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 _____________________________ _____________________________________________.
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 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS 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>
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 CRIIMI
MAE CMBS 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 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
CRIIMI MAE CMBS
A-11-2
<PAGE>
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 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
A-11-3
<PAGE>
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 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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. 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 Subordinated
Certificates that are in Book-Entry Certificates) are acceptable for purposes of
the preceding sentence.
A-11-4
<PAGE>
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 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
A-11-5
<PAGE>
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.
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
A-11-6
<PAGE>
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 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.
A-11-7
<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 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS 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>
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 CRIIMI MAE
CMBS 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 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
CRIIMI MAE CMBS
A-12-2
<PAGE>
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 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
A-12-3
<PAGE>
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 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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. 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 Subordinated
Certificates that are Book-Entry Certificates) are acceptable for purposes of
the preceding sentence.
A-12-4
<PAGE>
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 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
A-12-5
<PAGE>
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.
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
A-12-6
<PAGE>
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 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.
A-12-7
<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 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 199_-___
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of [specify general characteristics of the
Mortgage Loans] mortgage loans (the "Mortgage Loans"), such pool being formed
and sold by
CRIIMI MAE CMBS 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>
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 CRIIMI MAE
CMBS 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 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
CRIIMI MAE CMBS
A-13-2
<PAGE>
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 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
A-13-3
<PAGE>
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 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 Section 401(c) of ERISA; 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 or Section 401(c) of ERISA. 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.
A-13-4
<PAGE>
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 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-13-5
<PAGE>
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.
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
A-13-6
<PAGE>
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 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.
A-13-7
<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: CRIIMI MAE CMBS 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 CRIIMI MAE
CMBS 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 Loan has been paid in full, in which case the Mortgage File (or such
portion thereof) will be retained by us permanently.
<PAGE>
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:
D-1-2
<PAGE>
EXHIBIT D-2
FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
[Date]
__________________________
__________________________
__________________________
Attention: _______________________________________
Re: CRIIMI MAE CMBS 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 CRIIMI
MAE CMBS 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>
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:
D-2-2
<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: CRIIMI MAE CMBS Corp. 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 CRIIMI MAE
CMBS 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 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
<PAGE>
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
___ (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;
F-1A-2
<PAGE>
(b) the aggregate value of the securities shall be the cost of
such securities, except where the entity reports its
securities holdings in its financial statements on the basis
of their market value, and no current information with respect
to the cost of those securities has been published, in which
case the securities may be valued at market;
(c) securities owned by subsidiaries of the entity that are
consolidated with the entity in its financial statements
prepared in accordance with generally accepted accounting
principles may be included if the investments of such
subsidiaries are managed under the direction of the entity,
except that, unless the entity is a reporting company under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, securities owned by such subsidiaries may not be
included if the entity itself is a majority-owned subsidiary
that would be included in the consolidated financial
statements of another enterprise.
5. The Transferor or a person acting on its behalf has taken
reasonable steps to ensure that the Transferee is aware that the
Transferor is relying on the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A.
6. The Transferor or a person acting on its behalf has furnished, or
caused to be furnished, to the Transferee all information regarding (a)
the Transferred 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:
F-1A-3
<PAGE>
EXHIBIT F-1B
FORM II OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF PRIVATE CERTIFICATES
[Date]
_______________________ as Certificate Registrar
__________________________
__________________________
Attention: _______________________________________
Re: CRIIMI MAE CMBS Corp. 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 CRIIMI MAE
CMBS 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 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,
<PAGE>
-------------------------------------
(Transferor)
By:
----------------------------------
Name:
Title:
F-1B-2
<PAGE>
EXHIBIT F-2A
FORM I OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF PRIVATE CERTIFICATES
[Date]
__________________________ as Certificate Registrar
__________________________
__________________________
Attention: _______________________________________
Re: CRIIMI MAE CMBS Corp., 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 CRIIMI MAE CMBS 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. 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:
F-2A-2
<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.
___ 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
- --------
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>
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 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
2
<PAGE>
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.
3
<PAGE>
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:
4
<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 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.
<PAGE>
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.
2
<PAGE>
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:
---------------------------------
3
<PAGE>
EXHIBIT F-2B
FORM II OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF PRIVATE CERTIFICATES
[Date]
________________________ as Certificate Registrar
________________________
________________________
Attention: _____________________________________
Re: CRIIMI MAE CMBS Corp., 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 CRIIMI
MAE CMBS 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 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.
<PAGE>
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 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
F-2B-2
<PAGE>
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:
F-2B-3
<PAGE>
EXHIBIT G-1
FORM OF TRANSFEREE CERTIFICATE
IN CONNECTION WITH ERISA (DEFINITIVE CERTIFICATES)
[Date]
____________________________ as Certificate Registrar
____________________________
____________________________
Attention: __________________________________________
Re: CRIIMI MAE CMBS Corp. 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 CRIIMI MAE CMBS
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
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: CRIIMI MAE CMBS Corp., 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 CRIIMI MAE CMBS 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 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 CRIIMI MAE CMBS Corp., 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 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.)
<PAGE>
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.
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.
H-1-2
<PAGE>
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__.
H-1-3
<PAGE>
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF RESIDUAL CERTIFICATES
[Date]
_____________________________as Certificate Registrar
_____________________________
_____________________________
Attention: _________________________________________
Re: CRIIMI MAE CMBS Corp., 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 CRIIMI MAE CMBS 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 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.
<PAGE>
Very truly yours,
-------------------------------------
(Transferor)
By:
----------------------------------
Name:
Title:
H-2-2
<PAGE>
EXHIBIT I-1
FORM OF NOTICE AND ACKNOWLEDGMENT
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 CRIIMI MAE
CMBS Corp., 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:
I-1-2
<PAGE>
EXHIBIT I-2
FORM OF ACKNOWLEDGMENT OF PROPOSED SPECIAL SERVICER
[Date]
[TRUSTEE]
[MASTER SERVICER]
[DEPOSITOR]
[REMIC ADMINISTRATOR]
Re: CRIIMI MAE CMBS CORP., Series 199_-___
Ladies and Gentlemen:
Pursuant to Section 6.06 of the Pooling and Servicing Agreement, dated as
of ___________, 199_, relating to CRIIMI MAE CMBS CORP., 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 CRIIMI MAE CMBS 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 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;
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);
<PAGE>
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 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.
2
<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 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
<PAGE>
(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).
2
<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 CRIIMI MAE CMBS Corp., 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, 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: CRIIMI MAE CMBS 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 CRIIMI MAE CMBS 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 CRIIMI MAE CMBS Corp. 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.
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>
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:
L-1-2
<PAGE>
EXHIBIT L-2
FORM OF CERTIFICATE WITH RESPECT TO INFORMATION
REQUEST BY PROSPECTIVE PURCHASER
[Date]
_____________________________ as Trustee
_____________________________
_____________________________
Attention: _____________________________
Re: CRIIMI MAE CMBS 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 CRIIMI MAE CMBS 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 CRIIMI MAE CMBS Corp.
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.
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:
L-2-2
------------------------------------------------
STANDARD INDENTURE PROVISIONS
Dated as of _________, 1997
------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS
(issuable in Series)
Issuable by separate trusts
to be organized by
CRIIMI MAE CMBS CORP.
------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. Definitions................................................1
SECTION 1.02. Incorporation by Reference of Trust
Indenture Act.............................................17
SECTION 1.03. Rules of Construction.....................................18
ARTICLE II
THE BONDS
SECTION 2.01. Forms of Bonds and Certificate of
Authentication............................................18
SECTION 2.02. Amount Unlimited; Bonds Issuable in Series;
Certain Related Provisions................................19
SECTION 2.03. Denominations.............................................22
SECTION 2.04. Execution, Authentication, Delivery
and Dating................................................22
SECTION 2.05. Registration of Transfer and Exchange
of Bonds..................................................23
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Bonds................24
SECTION 2.07. Payment of Principal and Interest.........................25
SECTION 2.08. Persons Deemed Owners.....................................29
SECTION 2.09. Cancellation..............................................29
SECTION 2.10. Authentication and Delivery of Bonds......................29
SECTION 2.11. Substitution of Collateral................................30
SECTION 2.12. Book-Entry Bonds..........................................30
ARTICLE III
COVENANTS; WARRANTIES
SECTION 3.01. Payment of Principal, Premium (if any) and
Interest..................................................32
SECTION 3.02. Maintenance of Office or Agency...........................32
SECTION 3.03. Money for Bond Payments to Be Held in Trust...............33
SECTION 3.04. Corporate Existence of Owner Trustee......................35
SECTION 3.05. Trust Existence...........................................35
SECTION 3.06. Payment of Taxes and Other Claims.........................35
SECTION 3.07. Protection of Trust Estate................................36
SECTION 3.08. Opinions as to Trust Estate...............................37
SECTION 3.09. Performance of Obligations................................37
SECTION 3.10. Payment of Certain Fees...................................38
i
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Page
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SECTION 3.11. Negative Covenants........................................38
SECTION 3.12. Annual Statement as to Compliance.........................39
SECTION 3.13. Issuer may Consolidate, Etc., only on
Certain Terms.............................................40
SECTION 3.14. Purchase of Bonds.........................................42
SECTION 3.15. Servicing and Administration Agreement....................42
SECTION 3.16. Covenants, Representations and Warranties
of the Issuer.............................................47
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture...................47
SECTION 4.02. Application of Trust Money................................49
SECTION 4.03. Repayment of Monies Held by Paying Agent..................49
ARTICLE V
ISSUER EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Issuer Events of Default..................................49
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment.................................................51
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee..........................53
SECTION 5.04. Remedies..................................................55
SECTION 5.05. Optional Preservation of Trust Estate.....................57
SECTION 5.06 Application of Money Collected............................58
SECTION 5.07. Limitation on Suits.......................................59
SECTION 5.08. Unconditional Right of Bondholders to Receive
Principal and Interest....................................60
SECTION 5.09. Restoration of Rights and Remedies........................60
SECTION 5.10. Rights and Remedies Cumulative............................60
SECTION 5.11. Delay or Omission Not Waiver..............................61
SECTION 5.12. Control by Bondholders....................................61
SECTION 5.13. Waiver of Past Issuer Defaults............................62
SECTION 5.14. Undertaking for Costs.....................................62
SECTION 5.15. Waiver of Stay or Extension Laws..........................63
SECTION 5.16. Sale of Trust Estate......................................63
SECTION 5.17. Action on Bonds...........................................64
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities.......................64
SECTION 6.02. Notice of Issuer Defaults.................................66
SECTION 6.03. Certain Rights of Indenture Trustee.......................67
ii
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Page
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SECTION 6.04. Not Responsible for Recitals or
Issuance of Bonds.........................................69
SECTION 6.05. May Hold Bonds............................................69
SECTION 6.06. Money Held in Trust.......................................69
SECTION 6.07. Compensation and Reimbursement............................70
SECTION 6.08. Eligibility; Disqualification.............................71
SECTION 6.09. Resignation and Removal; Appointment of
Successor.................................................71
SECTION 6.10. Acceptance of Appointment by Successor....................74
SECTION 6.11. Merger, Conversion, Consolidation or
Succession to Business....................................75
SECTION 6.12. Preferential Collection of Claims against the
Issuer....................................................75
SECTION 6.13. Separate Trustees and Co-Trustees.........................75
SECTION 6.14. Appointment of Custodians.................................77
ARTICLE VII
BONDHOLDER LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Indenture Trustee Names and
Addresses of Bondholders..................................78
SECTION 7.02. Preservation of Information; Communications
to Bondholders............................................78
SECTION 7.03. Reports by Indenture Trustee..............................78
SECTION 7.04. Reports by Issuer.........................................79
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money.......................................80
SECTION 8.02. Bond Account..............................................81
SECTION 8.03. Other Accounts............................................82
SECTION 8.04. Release of Trust Estate...................................82
SECTION 8.05. Opinion of Counsel........................................83
ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of
Bondholders...............................................84
SECTION 9.02. Supplemental Indentures With Consent of
Bondholders...............................................85
SECTION 9.03. Additional Conditions to Supplemental
Indentures................................................87
SECTION 9.04. Delivery of Supplements and Amendments....................87
iii
<PAGE>
Page
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SECTION 9.05. Execution of Supplemental Indentures......................88
SECTION 9.06. Effect of Supplemental Indentures.........................88
SECTION 9.07. Conformity with Trust Indenture Act.......................88
SECTION 9.08. Reference in Bonds to Supplemental Indentures.............88
ARTICLE X
OPTIONAL REDEMPTION OF BONDS BY ISSUER
AND SPECIAL REDEMPTION OF BONDS
SECTION 10.01. Optional Redemption by Issuer............................89
SECTION 10.02. Form of Optional Redemption or Special
Redemption Notice........................................90
SECTION 10.03. Bonds Payable on Redemption Date or Special
Redemption Date..........................................91
SECTION 10.04. Special Redemptions......................................91
ARTICLE XI
BONDHOLDERS' MEETING
SECTION 11.01. Purposes for Which Meetings May Be Called................92
SECTION 11.02. Manner of Calling Meetings...............................93
SECTION 11.03. Call of Meeting by Issuer or Bondholders.................93
SECTION 11.04. Who May Attend and Vote at Meetings......................94
SECTION 11.05. Regulations May Be Made by Indenture Trustee.............94
SECTION 11.06. Manner of Voting at Meetings and Records To Be
Kept.....................................................95
SECTION 11.07. Exercise of Rights of Indenture Trustee and
Bondholders Not To Be Hindered or Delayed................95
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Compliance Certificates and Opinions, etc.................96
SECTION 12.02. Form of Documents Delivered to Indenture
Trustee...................................................97
SECTION 12.03. Acts of Bondholders.......................................99
SECTION 12.04. Notice, etc., to Indenture Trustee and Issuer.............99
SECTION 12.05. Notices to Bondholders; Notification
Requirements and Waiver..................................100
SECTION 12.06. Alternate Payment and Notice Provisions..................100
SECTION 12.07. Conflict with Trust Indenture Act........................101
SECTION 12.08. Effect of Headings and Table of Contents.................101
SECTION 12.09. Successors and Assigns...................................101
SECTION 12.10. Separability Clause......................................101
SECTION 12.11. Benefits of Indenture....................................101
SECTION 12.12. Legal Holidays...........................................101
SECTION 12.13. GOVERNING LAW............................................102
iv
<PAGE>
Page
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SECTION 12.14. Execution Counterparts..................................102
SECTION 12.15. Recording of Indenture..................................102
SECTION 12.16. Trust Obligation........................................102
SECTION 12.17. No Petition.............................................103
SECTION 12.18. Inspection..............................................103
SECTION 12.19. Usury...................................................103
v
<PAGE>
STANDARD INDENTURE PROVISIONS, DATED AS OF _________, 1997
RELATING TO COLLATERALIZED MORTGAGE OBLIGATIONS,
ISSUABLE IN SERIES BY SEPARATE TRUSTS TO BE ORGANIZED BY
CRIIMI MAE CMBS CORP.
Cross-reference sheet showing the location in this Indenture of the provisions
inserted pursuant to Sections 310 through 318(a) inclusive of the Trust
Indenture Act of 1939
TIA Indenture Section
--- -----------------
Section 310 (a)(1) 6.08
(a)(2) 6.08
(a)(3) 6.13(b)
(a)(4) Not Applicable
(a)(5) 6.08
(b) 6.08, 6.09(c), 6.09(g)
Section 311 (a) 6.12
(b) 6.12
Section 312 (a) 7.01, 7.02(a)
(b) 7.02(b)
(c) 7.02(c)
Section 313 (a) 6.02, 7.03(a)
(b) 7.03(a)
(c) 7.03(a)
(d) 7.03(b)
Section 314 (a) 3.12, 7.04(a)
(b) 3.08
(c)(1) 2.10(b), 4.01, 8.04(c), 12.01(a)
(c)(2) 2.10(b), 4.01, 8.04(c), 12.01(a)
(c)(3) 2.10(b), 4.01, 8.04(c), 12.01(a)
(d)(1) 8.04(c), 12.01(a)
(d)(2) 2.10(b), 8.04(c), 12.01(a)
(d)(3) 2.10(b), 8.04(c), 12.01(a)
(e) 12.01(a)
Section 315 (a) 6.01(a)
(b) 6.02
(c) 6.01(b)
(d) 6.01(c)
(e) 5.14
Section 316 (a)(1)(A) 5.02, 5.12
(a)(1)(B) 5.02, 5.13
(a)(2) Not Applicable
(b) 5.08
Section 317 (a)(1) 5.03, 5.04
(a)(2) 5.03
(b) 3.03
Section 318 (a) 12.07
Note: This cross-reference sheet shall not, for any purpose, be deemed to
constitute a part of this Indenture.
vi
<PAGE>
RECITALS
From time to time CRIIMI MAE CMBS Corp. a Delaware corporation
(together with its successors in interest, the "Depositor") may establish one or
more trusts (individually a "Trust" and together "Trusts") for the purpose of
causing each such Trust to issue one or more series of collateralized mortgage
obligations ("Bonds"). Each such series of Bonds will be issued under a separate
Indenture consisting of a Terms Indenture which incorporates by reference these
Standard Indenture Provisions and such series of Bonds will be limited to the
amount therein prescribed. The Terms Indenture will be duly executed and
delivered by the Trust issuing the particular series of Bonds, acting through an
Owner Trustee, by the Indenture Trustee on behalf of the holders of such series
of Bonds and by such other parties, if any, as may therein be provided.
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. Definitions.
(a) Unless a different meaning shall be applicable for a Series as
provided in the related Terms Indenture, the following terms have the respective
meanings set forth below for all purposes of this Indenture.
"Account": Any account or fund, including any Pledged Fund or Account
established hereunder.
"Accountants": A person engaged in the practice of accounting who (except
when this Indenture requires an Independent Accountant) may be employed by or
affiliated with the Issuer or an Affiliate of the Issuer.
"Accrual Date": With respect to any Series or Class, the date upon which
interest begins accruing on such Series or Class, as specified in such Bonds and
in the related Terms Indenture.
"Accrual Termination Date": With respect to a Class of Compound Interest
Bonds, the first Payment Date as of which all interest accrued in respect of the
Bonds of such Class during the related Interest Accrual Period is, subject to
available funds, payable in full, as specified in the related Terms Indenture.
"Act": As defined in Section 12.03 hereof.
"Additional Expense": With respect to any Series, any costs, expenses and
liabilities (exclusive of Administrative Expenses and S&A Expenses) that are
required to be borne by the Issuer or otherwise in respect of the related Trust
Estate in
<PAGE>
accordance with applicable law or the terms of this Indenture (including any
federal, state and local taxes and the cost of various opinions of and advice
from counsel required to be obtained in connection with the Indenture Trustee's
performance of its duties under this Indenture).
"Administrative Expenses": With respect to a Series, the fees and expenses
of the Indenture Trustee pursuant to Section 6.07 and such other fees and
expenses as may be specified as such in the related Terms Indenture.
"Adverse Rating Event": With respect to any Class of Rated Bonds, as of
any date determination, the qualification, downgrade or withdrawal of the rating
then assigned thereto by any Rating Agency.
"Adverse REMIC Event": Either (i) the endangerment of the status of any
REMIC Pool as a REMIC or (ii) the imposition of a tax upon any REMIC Pool or any
of its assets or transactions (including 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 that
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the person specified. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities or
other beneficial interest, by contract or otherwise; and the terms "controlling"
and "controlled" have the meanings correlative to the foregoing.
"Agent": A person authorized by or appointed by the Issuer to perform
duties with respect to the Bonds of any Series specified in a writing signed by
such Agent and the Issuer and acknowledged by the Indenture Trustee, or by such
Agent and the Indenture Trustee and acknowledged by the Issuer, including any
Paying Agent.
"Authenticating Agent": As defined in Section 2.04(c).
"Authorized Officer": With respect to the Owner Trustee, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of authorized officers
delivered by the Owner Trustee to the Indenture Trustee on the Closing Date for
each Series (as such list may be modified or supplemented from time to time
thereafter); and, with respect to any other Person, the Chairman, President, any
Senior Vice President, any Vice President or any Assistant Vice President, and
the Treasurer, an Assistant Treasurer, the Controller, an Assistant Controller,
the
2
<PAGE>
Secretary or an Assistant Secretary (provided that, when any provision hereof
requires signatures of two Authorized Officers of any such other Person, at
least one of such Authorized Officers shall be the Chairman, President or any
Vice President).
"Bankruptcy Code": The federal Bankruptcy Code, as amended from time to
time (Title 11 of the United States Code).
"Bond Account": As defined in Section 8.02.
"Bondholder": The Person in whose name a Bond is registered on the Bond
Register for any Series.
"Bond Interest Rate": With respect to any Series or Class, the per annum
rate at which interest accrues on the Bonds of such Series or Class, which rate
shall be specified in the related Terms Indenture.
"Bond Owner": With respect to a Book-Entry Bond, the Person who is the
beneficial owner of such Bond as reflected on the books of the Depository or on
the books of a Depository Participant or on the books of an indirect
participating brokerage firm for which a Depository Participant acts as agent.
"Bond Register" and "Bond Registrar": The respective meanings specified in
Section 2.05. The principal office of the Bond Registrar, if other than the
Corporate Trust Office, shall be specified in the related Terms Indenture.
"Bonds": As defined in the Recitals to these Standard Indenture
Provisions.
"Book-Entry Bonds": Bonds of a Series for which the related Terms
Indenture provides that ownership and transfers of beneficial ownership
interests in such Bonds shall be made through book entries by the Depository, as
described in Section 2.12 hereof; provided, however, that after the occurrence
of a condition whereupon book-entry registration is no longer permitted,
Definitive Bonds shall be issued to the Bond Owners of such Bonds and such Bonds
shall no longer be "Book-Entry Bonds."
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking institutions in Rockville, Maryland, New York, New York or any other
city in which the Corporate Trust Office is then located, are authorized or
obligated by law or executive order to be closed.
"Cash Flow Agreement": With respect to any Series, (i) any guaranteed
investment contract pursuant to which monies held in any Account with respect to
such Series are invested, (ii) any interest rate exchange agreement, interest
rate cap or floor agreement, or other agreement designed to reduce the effects
of interest rate fluctuations on the related Mortgage Collateral or
3
<PAGE>
on one or more Classes of such Series and (iii) any letter of credit, surety
bond, insurance policy, guarantee or other agreement or instrument intended to
offset a slower than anticipated rate of principal payments, collections and/or
distributions on the related Mortgage Collateral, in any event as specified in
the related Terms Indenture.
"Class": All Bonds of a Series having the same alphabetical and/or
numerical class designation and otherwise having the same characteristics, as
described in the related Terms Indenture.
"Closing Date": The date specified in the related Terms Indenture as the
Closing Date for a Series.
"Code": The Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder including proposed regulations to the extent
that by reason of their effective date they could apply to a Series.
"Collateral": With respect to a Series, the Trust Estate securing such
Series. An "item" of Collateral refers to a specific item of Mortgage Collateral
or other asset, which is Granted to the Indenture Trustee under the related
Terms Indenture as part of the Trust Estate for such Series.
"Commission": The Securities and Exchange Commission or any successor.
"Compound Interest Bond": Any Bond of a Series on which interest accrues
and is periodically added (in whole or in part) to the principal of such Bond in
accordance with the terms thereof and the related Terms Indenture, but with
respect to which no principal shall be payable except during the period or
periods specified in the related Terms Indenture and with respect to which no
interest (or only a portion of the accrued interest) is payable until the
Payment Date on or following the Accrual Termination Date.
"Controlling Class": With respect to any Series, any Class or Classes of
such Series designated as such under the related Terms Indenture, as
contemplated by Section 3.15(a)(vii).
"Corporate Trust Office": The principal corporate trust office of the
Indenture Trustee at which at any particular time its corporate trust business
with respect to this Indenture shall be administered, which office at the date
of the execution of any Terms Indenture shall be located at the address
specified therein.
"Credit Support Agreement": With respect to any Series, any instrument or
agreement issued by a bank, insurance company or other financial institution,
including an instrument or agreement in the form of an irrevocable letter of
credit, a committed line
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of credit, a repurchase commitment, a surety bond, a financial guaranty
insurance policy, cash collateral account or an insurance contract which assures
payment of all or any part of the principal of or interest on Bonds of such
Series, or one or more Classes of such Series or the related Mortgage
Collateral, or a servicer's or master servicer's obligation, if any, to make
advances on the related Mortgage Collateral or any other instrument or agreement
specified in the related Terms Indenture.
"Custodian": A Person who is at any time appointed by the Indenture
Trustee pursuant to Section 6.14 as a document custodian.
"Cut-Off Date": With respect to a Series, any date designated as such in
the related Terms Indenture.
"Definitive Bond": As defined in Section 2.12(a).
"Deposit Trust Agreement": With respect to any Trust, the deposit trust
agreement, between the Depositor and the Owner Trustee, pursuant to which such
Trust was created.
"Depositor": As defined in the Recitals to these Standard Indenture
Provisions.
"Depository": The Depository Trust Company and any successor thereto
appointed by the Issuer as a Depository; provided that the Depository shall at
all times be a "clearing corporation" as defined in Section 8-102(3) of the
Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act; and
provided, further, that no entity shall be a successor Depository unless Bonds
held through such entity or its nominees are treated for U.S. Federal income tax
purposes as being in "registered form" within the meaning of Section 163(f) of
the Code.
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Designated Interest Accrual Date": As specified in the related Terms
Indenture, the date preceding a Redemption Date or Special Redemption Date
through which accrued interest is paid upon redemption or special redemption.
"Dollar" or "$": A dollar or other equivalent unit in such coin or
currency of the United States of America as at the time shall be legal tender
for the payment of public or private debts.
"Duff & Phelps": Duff & Phelps Credit Rating Co. or its successor in
interest.
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"Enhancement": With respect to any Series, any Credit Support Agreement,
Cash Flow Agreement or Reserve Fund.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Excess Cash Flow": With respect to any Series, as specified in the
related Terms Indenture, certain monies held hereunder that as of any Payment
Date are in excess of that necessary to pay in accordance herewith any
Administrative Expenses, S&A Expenses and Additional Expenses then remaining
unpaid with respect to such Series and principal, premium (if any) and interest
then due and owing on the Bonds of such Series.
"Exchange Act": The Securities Exchange Act of 1934, as amended, and the
rules, regulations and published interpretations of the Commission promulgated
thereunder from time to time.
"FAMC": The Federal Agricultural Mortgage Corporation or any successor
thereto.
"FDIC": The Federal Deposit Insurance Corporation or any successor
thereto.
"FHA": The Federal Housing Administration or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation or any successor
thereto.
"Fitch": Fitch Investors Service, L.P. or its successor in interest.
"FNMA": The Federal National Mortgage Association or any successor
thereto.
"GAAP": Generally accepted accounting principles as in effect in the
United States.
"GNMA": The Government National Mortgage Association or any successor
thereto.
"Grant": To mortgage, pledge, bargain, sell, warrant, alienate, demise,
convey, assign, transfer, create and grant a security interest in and right of
setoff against, deposit, set over and confirm. A Grant of Collateral shall
include all rights, powers and options (but none of the obligations) of the
Granting party thereunder, including the immediate and continuing right to claim
for, collect, receive and give receipt for principal and interest payments in
respect of the Collateral and all other monies and proceeds payable thereunder,
to give and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring
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Proceedings in the name of the Granting party or otherwise, and generally to do
and receive anything which the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Highest Lawful Rate": As defined in Section 12.19.
"Holder": A Bondholder.
"Indenture": With respect to any Series, the related Terms Indenture as
originally executed, together with these Standard Indenture Provisions in the
form in which they are incorporated by reference into such Terms Indenture on
the date of such execution; and, if from time to time thereafter either is, with
respect to such Series, supplemented or amended, such documents together as so
supplemented or amended.
"Indenture Trustee": With respect to any Series, _______________, a
_______ ___________ organized under the laws of ________________, or any other
Person eligible under Section 6.08 and designated as "Indenture Trustee" in the
related Terms Indenture, in its capacity as trustee under this Indenture, or its
successor in interest, or any successor trustee appointed as provided in this
Indenture.
"Independent": When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Issuer, any other obligor on the
Bonds, the Depositor and any and all Affiliates thereof, (ii) does not have any
direct financial interest in or any material indirect financial interest in any
of the Issuer, such other obligor, the Depositor or any Affiliate thereof, and
(iii) is not connected with the Issuer, such other obligor, the Depositor or any
Affiliate thereof as an officer, employee, promoter, underwriter, trustee,
partner, director or Person performing similar functions.
"Individual Bond": A Bond of an original Principal Amount or Notional
Amount equal to the minimum denomination for Bonds of a Series or Class as
specified in the related Terms Indenture; a Bond of an original Principal Amount
or Notional Amount, as the case may be, in excess of such minimum denomination
shall be deemed to be a number of Individual Bonds equal to the quotient
obtained by dividing such original Principal Amount or Notional Amount, as the
case may be, by such minimum denomination.
"Institutional Accredited Investor": An "accredited investor" as defined
in any of paragraphs (1), (2), (3) and (7) of Rule 501(a) under the Securities
Act or any entity in which all of the equity owners come within such paragraphs.
"Interest Accrual Period": With respect to any Class of a Series, the
period specified as the Interest Accrual Period in the related Terms Indenture
for such Series, during which
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interest accrues with respect to any Payment Date, Redemption Date or Special
Redemption Date.
"Interest Only Bond": A Bond entitled to receive payments only of interest
based upon the Notional Amount of the Bond and/or premium (if any) (but not
payments of principal).
"Investment Company Act": The Investment Company Act of 1940, as amended,
and the rules, regulations and published interpretations of the Commission
promulgated thereunder from time to time.
"IRS": The Internal Revenue Service or any successor thereto.
"Issuer": With respect to any Series, the Trust identified in the related
Terms Indenture unless a successor Person shall have become the Issuer pursuant
to the applicable provisions of this Indenture, and thereafter "Issuer" shall
mean such successor Person. All actions by, and rights and obligations of, the
Issuer under this Indenture and the Bonds of each Series issued thereby are
actions by, and rights and obligations of, the applicable Trust.
"Issuer Default": Any occurrence which is, or with notice or the lapse of
time or both would become, an Issuer Event of Default.
"Issuer Event of Default": As defined in Section 5.01.
"Issuer Request" or "Issuer Order": A written request or order signed in
the name of the Issuer by an Authorized Officer of the Owner Trustee and
delivered to the Indenture Trustee.
"Maturity": With respect to any Bond, the date, if any, as of which the
principal of and interest on such Bond has become due and payable as herein
provided, whether at Stated Maturity, if any, by declaration of acceleration or
otherwise.
"Moody's": Moody's Investor Service, Inc. or its successor in interest.
"Mortgage-Backed Security" or "MBS": Any mortgage participation, mortgage
pass-through certificate, collateralized mortgage obligation or other security
representing an interest in, or evidencing a debt secured by, one or more
Mortgage Loans.
"Mortgage Collateral": The Pledged Mortgage-Backed Securities, Pledged
Mortgage Loans or REO Properties which are Granted to the Indenture Trustee
under the related Terms Indenture as security for a Series. An "item" of
Mortgage Collateral refers to a specific Pledged Mortgage-Backed Security,
Pledged Mortgage Loan or REO Property which is Granted to the
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Indenture Trustee under the related Terms Indenture and is referred to as an
item of Mortgage Collateral.
"Mortgage Loan": An obligation incurred in connection with a transaction
in real property, including indebtedness evidenced by a note, bond or other
written evidence of such indebtedness and secured by a mortgage, deed of trust,
deed to secure debt or similar document or instrument creating a lien on the
related Mortgaged Property, together with all related loan documents, and
including Mortgage Loans which at the time of their Grant are subperforming or
non-performing.
"Mortgage Collateral Pool": With respect to any Series, the segregated
pool consisting of all Mortgage Collateral securing such Series.
"Mortgaged Property": The real multifamily or commercial property,
together with improvements thereto, securing any Mortgage Loan.
"Nominee": A person in whose name Collateral Granted to the Indenture
Trustee may be recorded, registered or issued as the designated nominee of the
Indenture Trustee in lieu of registration in the name of the Indenture Trustee,
provided that the following conditions shall be satisfied in connection with
such issuance or registration:
(a) the instruments governing the creation and operation of the nominee
provide that neither the nominee nor any owner of an interest in the nominee
(other than the Indenture Trustee) shall have any interest, beneficial or
otherwise, in any item of Collateral at any time held in the name of the
nominee, except for the purpose of transferring and holding legal title thereto;
(b) the nominee and the Trustee have entered into a binding agreement:
(i) establishing that any Collateral held in the name of the nominee
is held by the nominee as agent (other than commission agent or broker) or
nominee for the account of the Indenture Trustee, and
(ii) appointing the Indenture Trustee as the agent and attorney of
the nominee with full power and authority irrevocably to sell, assign,
endorse, transfer and deliver any item of Collateral standing in the name
of the nominee, and to execute and deliver all such instruments as may be
necessary and proper for such purpose; and
(c) in connection with the recordation or registration of any item of
Collateral in the name of the nominee all requirements under applicable law and
governmental regulations
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necessary to effect a valid recordation, registration, issuance or transfer of
such Collateral are complied with.
"Non-Registered Bond": Any Bond that has not been registered under the
Securities Act.
"Notional Amount": A hypothetical or notional amount on which a Bond
accrues interest from time to time, as specified in the related Terms Indenture.
"Officer's Certificate": A certificate signed by any one Authorized
Officer of the Person from whom said certificate is required or, in the case of
an Officer's Certificate of the Issuer, a certificate signed by any Authorized
Officer of the Owner Trustee, and, to the extent delivered to the Indenture
Trustee, complying with the applicable requirements of Section 12.01. Unless
otherwise specified, any reference in this Indenture to an Officer's Certificate
shall be to an Officer's Certificate of the Issuer.
"Opinion of Counsel": A written opinion of an attorney at law admitted to
practice before the highest court of any State and who may, except as otherwise
expressly provided in this Indenture, be counsel for the Issuer (including
in-house counsel employed full-time by the Issuer or any Affiliate); provided
that any Opinion of Counsel relating to federal income tax matters shall be an
opinion of Independent outside counsel.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Outstanding": With respect to any Series, as of any date of
determination, all Bonds of such Series theretofore authenticated and delivered
under this Indenture, except:
(i) Bonds of such Series theretofore cancelled by the Bond Registrar
or delivered to the Bond Registrar for cancellation;
(ii) Bonds of such Series or portions thereof for whose payment or
redemption money in the necessary amount has been theretofore deposited
with the Indenture Trustee or any other Paying Agent (other than the
Issuer) in trust for the Holders of such Bonds; provided, however, that if
such Bonds are to be redeemed, notice of such redemption has been duly
given hereunder or provision therefor, satisfactory to the Indenture
Trustee or any other Paying Agent, has been made; and
(iii) Bonds of such Series in exchange for or in lieu of which other
Bonds of such Series have been authenticated and delivered pursuant to
this Indenture, other than any such Bonds in respect of which there shall
have been presented to
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the Bond Registrar proof satisfactory to it that such Bonds are held by a
bona fide purchaser in whose hands such Bonds are valid obligations of the
Issuer;
provided, however, that in determining whether the Holders of Bonds of any
Series with the requisite aggregate Principal Amount or Notional Amount, or
representing the requisite percentage of Voting Rights, have given any request,
demand, authorization, vote, direction, notice, consent or waiver hereunder,
except as otherwise expressly provided herein, Bonds owned by the Issuer, any
other obligor on Bonds of such Series, the Depositor or any other Person
specifically identified in the related Terms Indenture (each of the foregoing
Persons, solely for purposes of this definition, an "Interested Person") or by
any Affiliate of an Interested Person shall be disregarded and deemed not to be
Outstanding (unless any such Person or Persons owns all the Bonds of such
Series), except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Bonds which the Bond Registrar knows to be so
owned shall be so disregarded, and also except that Bonds so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Bond Registrar in its sole discretion the
pledgee's right to act with respect to such Bonds and that the pledgee is not an
Interested Person or any Affiliate of an Interested Person.
"Owner Trust Certificates": The owner trust certificates issued under a
Deposit Trust Agreement and evidencing the entire beneficial ownership interest
in a Trust.
"Owner Trustee": Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as owner trustee under any Deposit
Trust Agreement, or such other Person as shall succeed, or act in lieu of,
Wilmington Trust Company as owner trustee pursuant to any Deposit Trust
Agreement.
"Ownership Interest": As to any Bond, any ownership or security interest
in such Bond as the Holder thereof and any other interest therein, whether
direct or indirect, legal or beneficial, as owner or as pledgee.
"Paying Agent": With respect to any Series, the Indenture Trustee or any
other Person that meets the eligibility standards for a Paying Agent specified
in Section 3.03 and is authorized and appointed pursuant to Section 3.03 by the
Issuer to pay the principal of, premium (if any) on or interest on any Bonds of
such Series on behalf of the Issuer. The principal office of the Paying Agent,
if other than the Corporate Trust Office, shall be specified in the related
Terms Indenture.
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"Payment Date": With respect to a Series or Class, each date specified as
a Payment Date for such Series or Class in the related Terms Indenture.
"Permitted Investment": With respect to any Series, any obligation,
security or other instrument in which monies on deposit in the Accounts for such
Series may be invested, as specified in the related Terms Indenture.
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, estate, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Plan": Any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested, including insurance company general accounts, that
is subject to ERISA or the Code.
"Pledged Fund or Account": Any fund or account, including the Bond Account
or any Reserve Fund established with respect to, and Granted as security for, a
Series.
"Pledged Mortgage Loan": With respect to any Series, any Mortgage Loan
Granted to the Indenture Trustee by the Issuer to secure such Series, as from
time to time is held as a part of the related Trust Estate, including any such
Mortgage Loan as may constitute Substitute Mortgage Collateral.
"Pledged Mortgage-Backed Security" or "Pledged MBS": With respect to any
Series, any Mortgage-Backed Security Granted to the Indenture Trustee by the
Issuer to secure such Series, as from time to time is held as a part of the
related Trust Estate, including any such Mortgage-Backed Security as may
constitute Substitute Mortgage Collateral.
"Predecessor Bond": With respect to any Bond of a Series and Class, every
previous Bond of that Series and Class evidencing all or a portion of the same
debt as that evidenced by such Bond; for the purpose of this definition, any
Bond of a Series authenticated and delivered under Section 2.06 in lieu of a
mutilated, lost, destroyed or stolen Bond of the same Series and Class shall be
deemed to evidence the same debt as the mutilated, lost, destroyed or stolen
Bond.
"Principal Amount": The unpaid principal amount of a Bond outstanding from
time to time (including, in the case of a Compound Interest Bond, any interest
added to such principal amount prior to the related Accrual Termination Date),
calculated as provided in the related Terms Indenture.
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"Principal Only Bond": Any Bond that does not bear a stated Bond Interest
Rate and entitles the Holder thereof to payments of principal (but not payments
of interest).
"Proceeding": Any suit in equity, action at law or other judicial or
administrative proceeding.
"QIB": A "qualified institutional buyer" as defined in Rule 144A under the
Securities Act.
"QRS": A qualified REIT subsidiary within the meaning of Section 856(i) of
the Code.
"Rated Bond": Any Bond of a Class to which a rating has been assigned by a
Rating Agency at the request of the Depositor or Issuer.
"Rating Agency": Any nationally recognized statistical rating organization
(including Duff & Phelps, Fitch, Moody's and Standard & Poor's) that has
assigned a rating to any Class at the request of the Depositor or the Issuer.
"Redemption Date": The Payment Date specified by the Issuer for the
redemption of Bonds of any Series or Class pursuant to Section 10.01 or the
related Terms Indenture.
"Redemption Price": With respect to any Bond of a Series or Class to be
redeemed, in whole or in part, pursuant to Section 10.01 or the related Terms
Indenture, the price to be paid in connection with such redemption.
"Registered Bond": Any Bond registered under the Securities Act.
"Registered Holder": The Person whose name appears on the Bond Register on
the applicable Regular Record Date or Special Redemption Record Date, as the
case may be.
"Regular Record Date": The record date set for purposes of making payments
on any Payment Date or Redemption Date for any Series, as specified in the
related Terms Indenture.
"REIT": A real estate investment trust within the meaning of Section
856(a) of the Code.
"REMIC": A "real estate mortgage investment conduit" as defined in Section
860D of the Code.
"REMIC Pool": With respect to any Series, the segregated pool of assets
constituting any REMIC created hereunder.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which
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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.
"REO Property": A Mortgaged Property acquired as part of the Trust Estate
securing any Series through foreclosure, deed-in-lieu of foreclosure or
otherwise in connection with a defaulted Mortgage Loan.
"Reserve Fund": With respect to any Series, any fund or funds established,
funded and maintained pursuant to the related Terms Indenture for the same
intended purposes as a Cash Flow Agreement or a Credit Support Agreement.
"Resolution": A copy of a resolution certified by an Authorized Officer of
the Owner Trustee to have been duly adopted by the Owner Trustee and to be in
full force and effect on the date of such certification.
"Responsible Officer": With respect to the Indenture Trustee, any officer
within the Corporate Trust Office of the Indenture Trustee, including any Vice
President, Assistant Vice President, Treasurer, Assistant Treasurer, Secretary,
Assistant Secretary or an other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Rule 144A": Rule 144A under the Securities Act.
"S&A Event of Default": Any "Event of Default" or "S&A Event of Default"
on the part of a servicer, a master servicer, a special servicer, an MBS
administrator or a REMIC administrator under a Terms Indenture or a Servicing
and Administration Agreement.
"S&A Expense": Any fees, expenses or advances payable or reimbursable to a
servicer, a master servicer, a special servicer, an MBS administrator or a REMIC
administrator under a Terms Indenture or a Servicing and Administration
Agreement or otherwise in connection with the servicing and administration of
the Mortgage Collateral thereunder.
"Schedule of Mortgage Collateral": The description of the Mortgage
Collateral being Granted to the Trustee on the Closing Date for a Series,
attached as a schedule to the related Terms Indenture.
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"Securities Act": The Securities Act of 1933, as amended, and the rules,
regulations and published interpretations of the Commission promulgated
thereunder from time to time.
"Senior Bondholder": A Holder of a Senior Bond.
"Seller": Any Person from whom the Depositor acquired, directly or
indirectly, any item of Mortgage Collateral, that is specified as a "Seller" in
the related Terms Indenture.
"Senior Bonds": With respect to a Series, any Bond other than a
Subordinate Bond.
"Series": A separate series of Bonds issued pursuant to this Indenture.
"Servicing and Administration Agreement": With respect to any Series, as
specified in the related Terms Indenture, any agreement separate from the
related Terms Indenture (or, if more than one, all such separate agreements
collectively), together with all attachments thereto, entered into by the Issuer
and/or the Indenture Trustee with one or more other parties, pursuant to which a
servicer, a master servicer, a special servicer, an MBS administrator or a REMIC
administrator has agreed to perform the duties specified therein incident to the
servicing and administration of one or more items of Mortgage Collateral, as
such agreement or agreements may be amended or modified from time to time.
"Special Redemption Date": With respect to a Series other than a Series
with monthly Payment Dates, the date in each month (other than any month in
which a Payment Date occurs) on which Bonds of that Series may be redeemed
pursuant to Section 10.04 hereof or the related Terms Indenture as part of a
special redemption, which date shall be the same day of the month as the day on
which Payment Dates for the Bonds of that Series occur.
"Special Redemption Price": With respect to any Bond of a Series or Class
to be redeemed, in whole or in part, pursuant to Section 10.04 or the related
Terms Indenture as part of a special redemption, the price to be paid in
connection with such special redemption.
"Special Redemption Record Date": With respect to a Series, the record
date for a special redemption, as specified in the related Terms Indenture.
"Standard Indenture Provisions": These Standard Indenture Provisions dated
as of _________, 1997, applicable to the issuance of Bonds in Series by Trusts
organized by the Depositor, as such provisions may be amended or supplemented
from time to time.
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"Standard & Poor's": Standard & Poor's Rating Services, a Division of the
McGraw-Hill Companies, Inc. or its successor in interest.
"State": Any one of the 50 states of the United States of America, or the
District of Columbia.
"Stated Maturity": If so specified in the related Terms Indenture, with
respect to the entire unpaid Principal Amount of or any installment of principal
of or interest on any Bond, the date specified in such Bond as the fixed date on
which the entire remaining unpaid Principal Amount, if any, of such Bond or the
entire amount of such installment of principal or interest is due and payable.
"Subordinate Bondholders": A Holder of a Subordinate Bond.
"Subordinate Bonds": Any Bonds of a Series that entitle the Holders
thereof to a right to receive timely payment of principal or interest that is
subordinated in whole or in part to the prior right of Holders of other Bonds of
the same Series but a different Class.
"Substitute Mortgage Collateral": Any Mortgage Collateral that is Granted
to the Indenture Trustee under the related Terms Indenture as security for a
Series, as contemplated by Section 2.11, in lieu of any Mortgage Collateral
previously so Granted to the Indenture Trustee for such Series (or in lieu of
cash deposited in any Pledged Fund or Account on the Closing Date).
"Successor Person": As defined in Section 3.13(a).
"Terms Indenture": An indenture between the Issuer and the Indenture
Trustee providing for the issuance of a Series and into which these Standard
Indenture Provisions are incorporated by reference.
"TMP": A taxable mortgage pool within the meaning of the Code.
"Treasury Regulations": Temporary, final or proposed regulations (to the
extent that by reason of their proposed effective date such proposed regulations
would apply to the Issuer or a Trust Estate) of the United States Department of
the Treasury.
"Trust": As defined in the Recitals to these Standard Indenture
Provisions.
"Trust Estate": With respect to any Series, all money, instruments,
securities and other property, including all proceeds thereof, which are subject
or intended to be subject to the lien of this Indenture for the benefit of such
Series as of
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any particular time (including all Mortgage Collateral and other property and
interests Granted to the Indenture Trustee in the Terms Indenture for such
Series).
"Trust Indenture Act" or "TIA": The Trust Indenture Act of 1939, as
amended, and the rules, regulations and published interpretations of the
Commission promulgated thereunder from time to time.
"UCC Financing Statement": A financing statement executed and in form
sufficient for filing pursuant to the Uniform Commercial Code, as in effect in
the relevant jurisdiction.
"Uniform Commercial Code" or "UCC": The Uniform Commercial Code as in
effect in any applicable jurisdiction, as amended from time to time.
"Voting Rights": If so provided in the related Terms Indenture, the voting
rights for any Series allocable among the Bonds thereof in accordance with such
related Terms Indenture.
(b) The Terms Indenture for a Series may modify the definition of any term
and such modified definition, and not the one specified or incorporated by
reference in Section 1.01(a) shall apply with respect to such Series.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Bonds;
"indenture security holder" means a Bondholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Indenture
Trustee; and
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used, but not expressly defined, in this Indenture
that are defined by the TIA, defined by TIA reference to another statute or
defined by Commission rule have the respective meanings assigned to them by such
definitions.
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SECTION 1.03. Rules of Construction.
(a) The definition of any term in these Standard Indenture Provisions or
in a Terms Indenture shall be equally applicable to the singular and plural
forms of such term and to the masculine, feminine and neuter genders of such
term. The words "herein", "hereof", "hereunder" and other words of similar
import refer to this Indenture as a whole, including, in the case of a Series or
Class, the Terms Indenture related to such Series or Class and not to any
particular Article, Section or other subdivision.
(b) References herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions of
these Standard Indenture Provisions (if the reference is contained in these
Standard Indenture Provisions) or in the particular Terms Indenture (if the
reference is contained in a Terms Indenture).
(c) A reference to a Subsection without further reference to a Section is
a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions.
(d) The word "or", as used herein, is not exclusive.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP.
(f) The words "include" and "including" shall mean without limitation by
reason of enumeration and shall be construed to be followed by the words
"without limitation".
(g) The pronouns used herein are used in the masculine and neuter genders
but shall be construed as feminine, masculine or neuter, as the context
requires.
ARTICLE II
THE BONDS
SECTION 2.01. Forms of Bonds and Certificate of Authentication.
(a) The form of each Class of Bonds of a Series and the Indenture
Trustee's certificate of authentication shall be in substantially the forms set
forth in the related Terms Indenture, with such appropriate insertions,
omissions, substitutions and other variations as are required or permitted by
this Indenture, and may have such letters, numbers or other marks of
identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange on which the Bonds
may be listed, or as may be required
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by any applicable regulation (whether proposed, temporary or final) promulgated
pursuant to the Code, including any legend required in respect of original issue
discount on any Bond or Class, as applicable, or as may, consistently herewith,
be determined to otherwise be necessary, appropriate or convenient by the
Issuer, as evidenced by its execution of the Bonds. If a REMIC election is made
in connection with any Series, the Terms Indenture relating to a Series may
provide (subject to any conditions therein specified) that one or more regular
interests in the related REMIC Pool or REMIC Pools will not be evidenced by a
certificated Bond or may provide that a certificated Bond with respect to any
regular interest in the related REMIC Pool or REMIC Pools may be surrendered and
thereafter such regular interest will not be evidenced by a Bond.
(b) The definitive Bonds shall be printed, lithographed or engraved
or produced by any combination of these methods (with or without steel engraved
borders) or may be produced in any other manner permitted by any Terms Indenture
or the rules of any securities exchange on which the Bonds of any Series may be
listed, all as determined by the Issuer, as evidenced by its execution of such
Bonds.
SECTION 2.02. Amount Unlimited; Bonds Issuable in Series; Certain Related
Provisions.
The Bonds may be issued in one or more Series, and each Series may be
issued in one or more Classes. The Bonds shall be designated generally as the
"Collateralized Mortgage Obligations" of the Issuer, or such other designation
specified in the related Terms Indenture, with such further particular
designations added or incorporated in such title for any Series or Class as the
Issuer may determine. Each Bond shall bear upon its face the designation so
selected for the Series and Class to which it belongs. All Bonds of the same
Class shall be identical in all respects except for the denominations thereof
and any particular marks of identification. A Terms Indenture may provide for
Enhancement for the related Series or for a Class or Classes within such Series.
To the extent specified in the related Terms Indenture, all Bonds of a Class
issued under this Indenture shall in all other respects be equally and ratably
entitled to the benefits hereof without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Indenture.
Each Series shall be created by a Terms Indenture, authorized by the
Issuer, that establishes the terms and provisions of such Series. A Series may
differ from another Series in respect of any of the following matters and as
otherwise specified in the related Terms Indenture and in these Standard
Indenture Provisions:
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(a) designation of the Trust issuing the Series of Bonds, and identity of
the Owner Trustee related to such Trust;
(b) designation of the Series;
(c) dating of the Bonds and Accrual Dates;
(d) the number of Classes, the maximum aggregate principal amount of Bonds
of each Class which may be issued, the priority of payment among Classes and
Bonds, the allocation (if at all) of unanticipated expenses and losses on the
related Mortgage Collateral among Classes, and the designation of a Class or
Classes as Compound Interest Bonds, Senior Bonds, Subordinate Bonds, Interest
Only Bonds, Principal Only Bonds or any other Class of Bonds specified in the
related Terms Indenture;
(e) the Bond Interest Rate for each Class and, if the Bond Interest Rate
for one or more Classes of a Series is to be a variable or an adjustable rate,
the basis or method by which the variable or adjustable rate on each such Class
is to be determined and the dates upon which such variable or adjustable rate is
to be determined to be effective and other matters with respect thereto,
including defining any terms with respect to such Class or Classes of Bonds;
(f) Stated Maturities, if any, of principal, and special or optional
redemption provisions, for each Class;
(g) the amount and timing of payments of interest, principal and other
amounts on the Bonds of a Series or among the respective Classes thereof;
(h) the basis for scheduled, optional or special principal payments on the
Bonds of a Class, pro rata or by random lot, which basis may vary between
Classes;
(i) the place or places for the payment of principal;
(j) the authorized denominations, which may vary between Classes;
(k) the Payment Dates, Interest Accrual Periods, and other dates and
periods as are relevant to payments, collections and/or distributions on the
Mortgage Collateral and the other Collateral and any Enhancement;
(l) the types and characteristics of Collateral, and in particular
Mortgage Collateral, that will be pledged to secure a Series;
(m) the documents and/or instruments to be delivered to the Indenture
Trustee or to a Custodian appointed thereby with respect to any particular item
of Mortgage Collateral and any
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further requirements regarding the recording, filing or re-registration of any
such document or any particular item of Mortgage Collateral;
(n) the servicing and administration of Mortgage Collateral and the
amendment of, monitoring of performance under and enforcement of any separate
Servicing and Administration Agreement;
(o) rights and obligations of the Issuer or other particular Persons to
purchase or substitute particular items of Mortgage Collateral;
(p) transfer restrictions with respect to the Bonds, which may vary
between Classes;
(q) the amount, if any, to be deposited on the Closing Date in the Bond
Account for a Series;
(r) the manner in which any Pledged Fund or Account, if established, is to
be funded and maintained, the amount, if any, to be deposited therein on the
Closing Date and the amount to be maintained, if any, in any Pledged Fund or
Account for a Series;
(s) the required characteristics and terms of any Cash Flow Agreement or
Credit Support Agreement;
(t) the applicability of the redemption provisions of Article X.
(u) the requirements of any Enhancement applicable to a Series or a Class
or to any Pledged Fund or Account;
(v) each Rating Agency that will, at the Closing Date, assign its bond
rating to the Series;
(w) if so provided in the related Terms Indenture, the Voting Rights
allocated to the respective Classes of a Series;
(x) tax treatment of the Bonds, which may vary by Class; and
(y) any other provisions expressing or referring to the terms and
conditions upon which the Bonds of the applicable Series are to be issued under
this Indenture, which do not prevent the Registered Bonds of such Series from
being rated in one of the four highest rating categories of each Rating Agency
rating such Bonds.
In addition, provisions with respect to terms for which the definitions
set forth in Article I require further specification in the related Terms
Indenture will be so further specified.
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SECTION 2.03. Denominations.
The Bonds of a Series shall be issuable in registered form only in the
denominations prescribed by the related Terms Indenture; provided that in
accordance with Section 2.12 beneficial ownership interests in Book-Entry Bonds
shall initially be held and transferred through the book-entry facilities of the
Depository.
SECTION 2.04. Execution, Authentication, Delivery and Dating.
(a) At any time and from time to time after the execution and delivery of
this Indenture, the Issuer may deliver Bonds executed by the Issuer to the
Indenture Trustee for authentication; and the Indenture Trustee shall
authenticate and deliver such Bonds only as provided in this Indenture.
(b) The Bonds shall be executed by manual or facsimile signature on behalf
of the Issuer by any Authorized Officer of the Owner Trustee. Bonds bearing the
manual or facsimile signatures of individuals who were at any time the
Authorized Officers of the Owner Trustee shall bind the Issuer, notwithstanding
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Bonds or did not hold such offices at
the date of such Bonds. No Bond shall be entitled to any benefit under this
Indenture, or be valid for any purpose, however, unless there appears on such
Bond a certificate of authentication substantially in the form provided for in
the related Terms Indenture executed by the Indenture Trustee by manual
signature, and such certificate of authentication upon any Bond shall be
conclusive evidence, and the only evidence, that such Bond has been duly
authenticated and delivered hereunder. All Bonds shall be dated the date of
their authentication.
(c) The Indenture Trustee may, at its option, appoint one or more agents
(each an "Authenticating Agent") with power to act on its behalf and subject to
its direction in the authentication of Bonds in connection with transfers and
exchanges under Sections 2.05 and 2.06 and under any other applicable provisions
of the related Terms Indenture, as fully to all intents and purposes as though
each such Authenticating Agent had been expressly authorized by those Sections
to authenticate the Bonds. For all purposes of this Indenture, the
authentication of Bonds by an Authenticating Agent shall be deemed to be the
authentication of Bonds "by the Indenture Trustee".
Any corporation, bank, trust company or association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation, bank, trust company or association resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party,
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or any corporation, bank, trust company or association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
such Authenticating Agent hereunder, without the execution or filing of any
further act on the part of the parties hereto or such Authenticating Agent or
such successor corporation, bank, trust company or association.
Any Authenticating Agent may at any time resign by giving written notice
of resignation to the Indenture Trustee and the Issuer. The Indenture Trustee
may at any time terminate the agency of any Authenticating Agent by giving
written notice of termination to such Authenticating Agent and the Issuer. Upon
receiving such notice of resignation or upon such a termination, the Indenture
Trustee may, or at the direction of the Issuer shall, promptly appoint a
successor Authenticating Agent, give written notice of such appointment to the
Issuer and give notice of such appointment to the Bondholders.
Each Authenticating Agent shall, with respect to acts taken or not taken
within the scope of its permitted appointment, be entitled to all limitations on
liability, rights of reimbursement and indemnities that the Indenture Trustee is
entitled to hereunder as if it were the Indenture Trustee.
Unless otherwise provided in the related Terms Indenture, the Indenture
Trustee shall be responsible for any compensation and expenses of an
Authenticating Agent appointed thereby and shall not be relieved of
responsibility for the timely performance of any of its duties and obligations
under this Indenture by reason of the appointment of an Authenticating Agent.
SECTION 2.05. Registration of Transfer and Exchange of Bonds.
(a) The Issuer shall cause to be kept a register (the "Bond Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Bonds and of transfers and exchanges of
Bonds as herein provided. Unless otherwise provided in the related Terms
Indenture, the Indenture Trustee shall serve as "Bond Registrar" for the purpose
of registering Bonds and transfers and exchanges of Bonds as herein provided.
Upon any resignation or removal of the Indenture Trustee as provided herein, the
successor trustee shall immediately succeed to its predecessor's duties as Bond
Registrar.
(b) The related Terms Indenture shall set forth any restrictions on
transfer with respect to the Bonds of a Series, which restrictions may vary by
Class.
(c) Subject to any applicable restrictions on transfer provided for in the
related Terms Indenture, upon surrender for
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registration of transfer of any Bond at the office designated by the Issuer
pursuant to Section 3.02, the Issuer shall execute and the Indenture Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Bonds of the same Series and Class in authorized
denominations representing a like aggregate Principal Amount or Notional Amount,
as applicable.
(d) At the option of any Holder, its Bonds may be exchanged for other
Bonds of the same Series and Class in different authorized denominations
representing a like aggregate Principal Amount or Notional Amount, as
applicable, upon surrender of the Bonds to be exchanged at the office designated
by the Issuer pursuant to Section 3.02. Whenever any Bonds are so surrendered
for exchange, the Issuer shall execute and the Indenture Trustee shall
authenticate and deliver the Bonds which the Bondholder making the exchange is
entitled to receive.
(e) All Bonds issued upon any registration of transfer or exchange of
Bonds shall be the valid obligations of the Issuer, evidencing the same debt and
entitled to the same benefits under this Indenture, as the Bonds surrendered
upon such registration of transfer or exchange.
(f) Every Bond presented or surrendered for registration of transfer or
exchange shall be duly endorsed, or be accompanied by (i) a written instrument
of transfer duly executed, by the Holder thereof or its attorney duly authorized
in writing, with such signature guaranteed by a commercial bank or trust company
located, or having a correspondent located, in the City of New York or the city
in which the Corporate Trust Office is located, or by a member firm of a
national securities exchange, and (ii) such other documents as may be required
pursuant to the related Terms Indenture.
(g) No service charge shall be imposed for any registration of transfer or
exchange of Bonds pursuant to this Section 2.05, but the Issuer, the Indenture
Trustee or any other Bond Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
with any such transfer or exchange of Bonds.
SECTION 2.06. Mutilated, Destroyed, Lost or Stolen Bonds.
If (i) any mutilated Bond is surrendered to the Issuer or the Indenture
Trustee, or the Issuer and the Indenture Trustee receive evidence to their
satisfaction of the destruction (including mutilation tantamount to
destruction), loss or theft of any Bond and the ownership thereof, and (ii)
there is delivered to the Issuer and the Indenture Trustee such security or
indemnity as may be reasonably required by them to hold each of them and any
agent of any of them harmless, then, in the absence of notice to the Issuer or
the Indenture Trustee that
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such Bond has been acquired by a bona fide purchaser, the Issuer shall execute
and the Indenture Trustee shall authenticate and deliver, in lieu of any such
mutilated, destroyed, lost or stolen Bond, a new Bond of like Series, Class,
tenor and denomination registered in the same manner, dated the date of its
authentication and bearing a number not contemporaneously outstanding. If, after
the delivery of such new Bond, a bona fide purchaser of the Predecessor Bond
presents for payment or transfer such Predecessor Bond, the Issuer and the
Indenture Trustee shall be entitled to recover such new Bond from the Person to
whom it was delivered or any Person taking therefrom, except a bona fide
purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expenses incurred
by the Issuer or the Indenture Trustee in connection therewith. If any such
mutilated, destroyed, lost or stolen Bond shall have become, or within seven
days shall be, due and payable, or shall have been selected or called for
redemption, instead of issuing a new Bond, the Issuer may pay such Bond when so
due or payable or upon the Redemption Date or Special Redemption Date without
surrender thereof, except that any mutilated Bond shall be surrendered.
Upon the issuance of any new Bond under this Section 2.06, the Issuer, the
Indenture Trustee or any other Bond Registrar may require payment of an amount
sufficient to pay or discharge any tax or other governmental charge that may be
imposed in relation thereto and any other reasonable expenses (including the
reasonable fees and expenses of the Authenticating Agent and the Bond Registrar)
in connection therewith.
Every new Bond issued pursuant to this Section 2.06 in lieu of any
mutilated, destroyed, lost or stolen Bond shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Bond shall be at any time enforceable by any Person,
and such new Bond shall be entitled to all the benefits of this Indenture
equally and proportionately with any and all other Bonds of the same Series and
Class duly issued hereunder.
The provisions of this Section 2.06 are exclusive and shall preclude (to
the extent permitted by applicable law) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Bonds.
SECTION 2.07. Payment of Principal and Interest.
(a) Except as otherwise provided in Section 2.07(e) below or in the
related Terms Indenture, any installment of interest or principal or any other
amount payable on any Bonds of any Series on any Payment Date, Redemption Date
or Special Redemption Date (whether such installment of interest or principal or
such other amount is being punctually paid or duly provided for by the Issuer on
such date or is overdue as of such date) shall be paid
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to the Person in whose name such Bond (or one or more Predecessor Bonds) is
registered on the Regular Record Date for such Payment Date or Redemption Date
or on the Special Redemption Record Date for such Special Redemption Date, as
the case may be. Unless otherwise provided in the related Terms Indenture, in
the case of Bonds other than Book-Entry Bonds, such payment shall be made by
check mailed to such Person's address as it appears in the Bond Register on such
Regular Record Date or Special Redemption Record Date, or upon written request
to the Paying Agent five (5) Business Days prior to the related Regular Record
Date or Special Redemption Record Date by any Holder owning Bonds with an
aggregate Principal Amount of at least $5,000,000 or an aggregate Notional
Amount of at least $10,000,000, by wire transfer in immediately available funds
to the account of such Holder specified in the request. Any permitted request
for receipt of wire transfers shall remain effective until modified or rescinded
by the Holder that requested such wire transfers. Unless otherwise provided in
the related Terms Indenture, in the case of Book-Entry Bonds, such payment shall
be made by wire transfer to the Depository in immediately available funds.
(b) Except as set forth in the related Terms Indenture, all computations
of interest due with respect to any Bond shall be made as provided in this
Section 2.07(b) and on the basis of a 360-day year consisting of 12 30-day
months. As more specifically provided in the related Terms Indenture, each Class
that bears interest shall accrue such interest at the applicable Bond Interest
Rate specified in such Terms Indenture on the aggregate Principal Amount or
Notional Amount (as specified in such Terms Indenture) outstanding from time to
time. Except as otherwise stated in the related Terms Indenture, interest due
and payable on a Payment Date for a Series, other than on Compound Interest
Bonds, will be equal to the amount of unpaid interest that will have accrued in
accordance with the related Terms Indenture through the end of the Interest
Accrual Period for such Payment Date. The Interest Accrual Periods for any Class
may, in each case, end prior to the applicable Payment Date. For each Class of
Compound Interest Bonds, except as provided in the related Terms Indenture,
interest accrued during each Interest Accrual Period ending on or prior to the
applicable Accrual Termination Date will be added to the principal of such Class
of Compound Interest Bonds on the related Payment Date, or on such more or less
frequent basis, as is provided in the related Terms Indenture. Interest on a
Class of Compound Interest Bonds will be due and payable, except as provided in
the related Terms Indenture, on each Payment Date commencing on the Payment Date
coinciding with or next following the Accrual Termination Date for the Class. In
the case of the first Payment Date, interest on a Series or Class will accrue
from the related Accrual Date. If and to the extent so provided in the
applicable Terms Indenture, any overdue payment of interest on any Bond shall
bear interest (to the extent that payment thereof shall be legally
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enforceable) at the applicable Bond Interest Rate from and to the respective
dates set forth in such Terms Indenture.
(c) Bonds of each Series shall have such Stated Maturities, if any, as
shall be specified in the related Terms Indenture. The principal of each Bond
shall be payable in installments commencing on such date or under such
circumstances as is provided in the related Terms Indenture and ending no later
than the Stated Maturity thereof, if any, unless such Bond becomes due and
payable at an earlier date by declaration of acceleration, call for redemption
or special redemption or otherwise. On each Payment Date for a Series, payments
of principal of the Bonds of such Series shall be allocated among the respective
Classes of such Series as specified in the related Terms Indenture and shall be
allocated among the Bonds of each such Class entitled to some or all of such
payments of principal on a pro rata or random lot basis as specified in the
related Terms Indenture. All reductions in the principal amount of a Bond (or
one or more Predecessor Bonds) effected by payments of installments of principal
made on any Payment Date, Redemption Date or Special Redemption Date shall be
binding upon all future Holders of the Bond and of any Bond issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such principal payment is noted on such Bond.
(d) If and to the extent so provided in the related Terms Indenture, any
Bond may entitle its Holder to payments of amounts other than principal and
interest.
(e) Unless otherwise provided in the related Terms Indenture, the
Redemption Price or Special Redemption Price for any Bond, the final installment
of principal of any Bond or, in the case of an Interest Only Bond or a Bond that
continues to accrue interest after its Principal Amount has been reduced to
zero, the final installment of interest thereon payable on any Redemption Date,
Special Redemption Date or Payment Date, respectively, shall be paid only upon
presentation and surrender of such Bond on or after the related Special
Redemption Date, Redemption Date or Payment Date, as the case may be, at the
office designated by the Issuer pursuant to Section 3.02 or at the office of any
Paying Agent for the Series of which such Bond is a part, in either case within
the continental United States.
Whenever, on the basis of payments, collections and/or distributions on
the Mortgage Collateral securing a Series received during any applicable period,
the entire remaining unpaid principal amount of or, in the case of an Interest
Only Bond or a Bond that continues to accrue interest after its Principal Amount
has been reduced to zero, the final installment of interest on any Bond of such
Series will become due and payable on the next Payment Date, Redemption Date or
Special Redemption Date, the Paying Agent shall notify the Person in whose name
such Bond is registered as of the close of business on
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the Regular Record Date prior to such Payment Date or Redemption Date or on the
Special Redemption Record Date prior to such Special Redemption Date (unless a
different time and date are specified in the related Terms Indenture) that such
final installment is expected to be paid on such Payment Date, Redemption Date
or Special Redemption Date, as the case may be, and that any and all interest in
respect of such Bond will cease to accrue as of the end of the corresponding
Interest Accrual Period for such Payment Date or Redemption Date or as of the
Designated Interest Accrual Date for such Special Redemption Date, as the case
may be. Unless otherwise specified in the related Terms Indenture, such notice
shall be mailed no later than the third day prior to such Payment Date,
Redemption Date or Special Redemption Date and shall contain the information set
forth in, and be mailed in accordance with, Section 10.02.
(f) Notwithstanding any of the foregoing provisions with respect to
payments of principal of, premium, if any, on and interest on the Bonds, if a
Series has become or been declared due and payable following an Issuer Event of
Default pursuant to Section 5.02 and such acceleration of maturity and its
consequences have not been rescinded and annulled, and distributions on the
Trust Estate for such Series are not being applied pursuant to Section 5.05,
then payments of principal of, premium, if any, on and interest on such Bonds
shall be made in accordance with Section 5.06.
(g) Unless the related Terms Indenture provides otherwise, the Bonds are
nonrecourse obligations solely of the Issuer and will not be insured or
guaranteed by any governmental instrumentality, CRIIMI MAE Inc. or any Affiliate
thereof or any other person or entity and will be payable only from the Grant of
Collateral with respect to the related Series. Each Bondholder and the holders
of any Bonds now or in the future issued by the Issuer will be deemed to have
agreed that they have no rights or claims against the Issuer directly and may
only look to the Trust Estate related to the issuance of such Bonds to satisfy
the Issuer's obligations hereunder. No judgment lien, prejudgment lien or other
attachment against the Issuer for any amount due with respect to one Series may
be enforced against the Trust Estate securing any other Series. Notwithstanding
the provisions of this Section 2.07(g), but subject to the third paragraph of
Section 8.01, the Issuer may at any time advance funds to the Indenture Trustee
for the purpose of allowing the Paying Agent to make required payments on the
Bonds. If the Issuer makes such an advance, it shall be entitled to withdraw
from the related Bond Account on any Payment Date the amount so advanced.
(h) As a condition to the payment of principal, premium (if any) and
interest on any Bond that may be beneficially owned by a non-U.S. person,
without the imposition of United States withholding tax, the Issuer shall
require certification or satisfaction of such other procedures as are acceptable
to it and
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the Bond Registrar to enable the Issuer, the Indenture Trustee, the Bond
Registrar and any Paying Agent to determine their duties and liabilities with
respect to any taxes or other charges that they may be required to deduct or
withhold from payments in respect of such Bond under any present or future law
or regulation of the United States or any present or future law or regulation of
any political subdivision thereof or taxing authority therein or to comply with
any reporting or other requirements under any such law or regulation.
SECTION 2.08. Persons Deemed Owners.
Prior to due presentation for registration of transfer of any Bond, the
Issuer, the Indenture Trustee and any Agent thereof shall treat the Person in
whose name any Bond is registered (a) on any Regular Record Date or Special
Redemption Record Date, for the purpose of receiving payments of principal of,
premium, if any, on and interest on such Bond (subject to Section 2.07) and (b)
on any other date for any other purpose, as the owner (whether or not such Bond
be overdue as to any payment thereon), and none of the Issuer, the Indenture
Trustee or any Agent thereof shall be affected by notice to the contrary.
SECTION 2.09. Cancellation.
All Bonds surrendered for payment, registration of transfer, exchange or
redemption shall, if surrendered to any person other than the Bond Registrar, be
delivered to and promptly cancelled by the Bond Registrar. The Issuer may at any
time deliver to the Bond Registrar for cancellation any Bonds previously
authenticated and delivered hereunder that the Issuer may have acquired in any
manner whatsoever, and all Bonds so delivered shall be promptly cancelled by the
Bond Registrar. No Bonds shall be authenticated in lieu of or in exchange for
any Bonds cancelled as provided in this Section 2.09, except as expressly
permitted by this Indenture. All cancelled Bonds shall be held by the Bond
Registrar in accordance with its standard retention policy unless the Issuer
shall direct by an Issuer Order that they be returned to it.
SECTION 2.10. Authentication and Delivery of Bonds.
(a) Bonds of a new Series may from time to time be executed by the Issuer
and delivered to the Indenture Trustee for authentication, and thereupon the
same shall be authenticated and delivered to or at the direction of the Issuer
by the Indenture Trustee, but only upon satisfaction of the following conditions
(provided, however, that compliance with such conditions shall only be required
in connection with the issuance of Bonds of such Series on the related Closing
Date):
(i) Issuer Order. The Issuer shall have delivered to the Indenture
Trustee an Issuer Order authorizing the
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execution, authentication and delivery of the Series, the related Terms
Indenture and any agreements to be executed by the Indenture Trustee with
respect to such Series and specifying the Series, the Classes within such
Series and their respective Stated Maturities, if any, initial aggregate
Principal Amounts and/or Notional Amounts, initial Bond Interest Rates, if
any, and ratings, if any, assigned by the designated Rating Agency or
Rating Agencies.
(ii) Terms Indenture and Servicing and Administration Agreement. The
related Terms Indenture and any Servicing and Administration Agreement
specified therein shall have been executed by all parties thereto. Such
Terms Indenture may modify or amend the terms of this Indenture solely as
applied to such new Series and otherwise shall incorporate by reference
these Standard Indenture Provisions.
(iii) Rating Agency Confirmation. The Issuer shall have delivered to
the Indenture Trustee written confirmation (which need not be addressed to
the Indenture Trustee) from each designated Rating Agency that it has
assigned to the Class or Classes rated by it the ratings specified in the
Issuer Order referred to in clause (i) above.
(iv) Additional Terms and Conditions. Such additional terms and
conditions, if any, relating to the initial issuance of any Series as may
be specified in the related Terms Indenture shall have been satisfied.
(b) In connection with the authentication and delivery of the Bonds
of each Series upon initial issuance of such Series, the Issuer shall deliver to
the Indenture Trustee an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) a certificate or opinion from an Accountant, in accordance
with TIA ss. 314(c) and meeting the applicable requirements of Section 12.01(a).
SECTION 2.11. Substitution of Collateral.
Subject to Section 12.01, and only if and to the extent, and under the
circumstances, expressly permitted in the related Terms Indenture, the Issuer or
another specified Person may, in substitution of any one or more items of
Mortgage Collateral or other Collateral securing any Series or any cash
deposited in any Pledged Fund or Account on the related Closing Date, deliver
other Mortgage Loans, other Mortgage-Backed Securities and/or other forms of
Enhancement as new Collateral.
SECTION 2.12. Book-Entry Bonds.
(a) If so provided in the related Terms Indenture, Bonds of a Series or of
any Class of such Series may initially be issued as one or more Bonds registered
in the name of the Depository or
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its nominee and, except as provided in Section 2.12(c), transfer of such Bonds
may not be registered by the Bond Registrar unless such transfer is to a
successor Depository that agrees to hold such Bonds for the respective Bond
Owners with Ownership Interests therein. Such Bond Owners shall hold and,
subject to the related Terms Indenture, transfer their respective Ownership
Interests in and to such Bonds through the book-entry facilities of the
Depository and, except as provided in Section 2.12(c), shall not be entitled to
physical, fully registered Bonds (each a "Definitive Bond") in respect of such
Ownership Interests. All transfers by Bond Owners of their respective Ownership
Interests in the Book-Entry Bonds shall be made in accordance with the
procedures established by the Depository Participant or brokerage firm
representing each such Bond Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Bonds of Bond Owners it
represents or of brokerage firms for which it acts as agent in accordance with
the Depository's normal procedures.
(b) The Issuer, the Indenture Trustee and any agent of either may for all
purposes, including the making of payments due on the Book-Entry Bonds, deal
with the Depository as the authorized representative of the Bond Owners with
respect to such Bonds for the purposes of exercising the rights of Bondholders
hereunder. The rights of Bond Owners with respect to the Book-Entry Bonds shall
be limited to those established by law and agreements between such Bond Owners
and the Depository Participants and brokerage firms representing such Bond
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Bonds with respect to any particular matter shall not
be deemed inconsistent if they are made with respect to different Bond Owners.
The Indenture Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Bondholders and shall give notice to
the Depository of such record date.
(c) If (i) the Issuer advises the Indenture Trustee and the Bond Registrar
in writing that the Depository is no longer willing or able to properly
discharge its responsibilities with respect to any Class of Book-Entry Bonds,
and the Issuer is unable to locate a qualified successor, or (ii) the Issuer at
its option advises the Indenture Trustee and the Bond Registrar in writing that
it elects to terminate the book-entry system through the Depository with respect
to any Class of Book-Entry Bonds (or any portion of any Class thereof), the Bond
Registrar shall notify all affected Bond Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Bonds to such
Bond Owners requesting the same. Upon surrender to the Bond Registrar of any
Class of Book-Entry Bonds (or any portion of any Class thereof) by the
Depository, accompanied by registration instructions from the Depository for
registration of transfer, the Issuer shall execute, and the Indenture Trustee
shall authenticate and deliver, the Definitive
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Bonds in respect of such Class (or portion thereof) to the Bond Owners
identified in such instructions. None of the Issuer, the Indenture Trustee or
any Agent thereof shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Bonds for purposes of evidencing
ownership of any Book-Entry Bonds, the registered holders of such Definitive
Bonds shall be recognized as Bondholders hereunder and, accordingly, shall be
entitled directly to all benefits associated with such Definitive Bond and to
transfer and exchange such Definitive Bonds.
ARTICLE III
COVENANTS; WARRANTIES
SECTION 3.01. Payment of Principal, Premium (if any) and Interest.
Subject to Section 2.07(g), the Issuer shall duly and punctually pay the
principal of, premium (if any) on and interest on the Bonds in accordance with
the terms of the Bonds and this Indenture. Amounts properly withheld under the
Code by any Person from a payment to any Bondholder of interest, premium (if
any) or principal shall be considered as having been paid by the Issuer to such
Bondholder for all purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency.
The Issuer shall maintain in the continental United States an office or
agency where Bonds may be presented or surrendered for payment, where Bonds my
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Issuer in respect of the Bonds and this Indenture may be
served. The Issuer will give prompt written notice to the Indenture Trustee and
the Bondholders of the location, and of any change in the location, of any such
office or agency. If at any time the Issuer shall fail to maintain any such
office or agency, such presentations, surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee at the Corporate Trust Office its agent to receive all such
presentations, surrenders, notices and demands.
The Issuer may also from time to time designate one or more other offices
or agencies outside the continental United States where the Bonds may be
presented or surrendered for any or all such purposes and may from time to time
rescind such designations; provided, however, that no such designation or
rescission shall in any manner relieve the Issuer of its obligation to maintain
an office or agency in accordance with the requirements set forth in the
preceding paragraph. The Issuer shall give prompt written notice to the
Indenture Trustee and
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Bondholders of any such designation or rescission and of any change in the
location of such office or agency.
SECTION 3.03. Money for Bond Payments to Be Held in Trust.
All payments of amounts due and payable with respect to any Bonds which
are to be made from amounts withdrawn from the related Bond Account pursuant to
Section 8.02(b) shall be made on behalf of the Issuer by the Indenture Trustee
or another Paying Agent, and, except as provided in the related Terms Indenture,
no amounts so withdrawn from a Bond Account for payments of Bonds shall be paid
over to the Issuer except as provided in this Section 3.03 or as provided in
Section 5.06 and 8.02 (and the related Terms Indenture).
Any Paying Agent other than the Indenture Trustee shall be appointed by
Issuer Order. The Issuer shall not appoint any Paying Agent that does not, at
the time of such appointment, meet the qualification and eligibility standards
for an Indenture Trustee set forth in Section 6.08. If, with respect to any
Series, either (i) no other Paying Agent shall have been so appointed and shall
have executed and delivered the instrument provided for in the second following
paragraph or (iii) any such other Paying Agent shall have resigned or been
discharged without a successor having been so appointed and having executed and
delivered the instrument provided for in the second following paragraph, then
the Indenture Trustee shall be the Paying Agent for such Series.
Whenever the Issuer shall have one or more Paying Agents, it will deliver
or contract to have delivered to such Paying Agent or Agents (subject to Section
2.07(g)), on or before the Business Day next preceding each Payment Date,
Redemption Date and Special Redemption Date for each Series, an aggregate sum
sufficient to pay the amounts then becoming due with respect to the Bonds of
such Series, such sum to be deposited in the Bond Account and held in trust for
the benefit of the Persons entitled thereto, and (unless such Paying Agent is
the Indenture Trustee) the Issuer will promptly notify the Indenture Trustee of
its action or failure so to act. Any monies deposited with a Paying Agent, other
than the Indenture Trustee, in excess of an amount sufficient to pay the amounts
then becoming due and payable on the Bonds with respect to which such deposit
was made shall be retained by such Paying Agent or Agents for application in
accordance with Article VIII.
The Issuer will cause each such Paying Agent (other than the Indenture
Trustee) to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section 3.03, that such Paying Agent will:
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(i) hold all sums received by it for the payment of Bonds in trust
for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided and will
pay such sums to such Persons as herein provided;
(ii) if such Paying Agent is not the Indenture Trustee, give the
Indenture Trustee notice of any default by the Issuer in the making of any
payment required to be made with respect to any Series for which it is
acting as Paying Agent;
(iii) at any time during the continuance of any such default, upon
the written request of the Indenture Trustee, if such Paying Agent is not
the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so
held in trust by such Paying Agent;
(iv) if such Paying Agent is not the Indenture Trustee, immediately
resign as a Paying Agent and forthwith pay to the successor Paying Agent
all sums held by it in trust for the payment of Bonds if at any time it
ceases to meet the standards required to be met by a Paying Agent at the
time of its appointment; and
(v) comply with all requirements imposed upon it under the Code with
respect to the withholding from any payments made by it on any Bonds of
any applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, by Issuer Order direct
any Paying Agent to pay to the Indenture Trustee all sums held in trust by such
Paying Agent, such sums to be held by the Indenture Trustee upon the same trust
as those upon which the sums were held by such Paying Agent; and upon such
payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Subject to the applicable requirements of abandoned property laws, any
money held by any Paying Agent in trust for the payment of any amount due with
respect to any Bond and remaining unclaimed for two years after such amount has
become due and payable shall be discharged from such trust and, unless otherwise
provided in the related Terms Indenture, shall be paid to the Issuer on Issuer
Request; and the Holder of such Bond shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment thereof (but only to the extent of
the amounts so paid to the Issuer), and all liability of the Issuer or such
Paying Agent with respect to such trust money shall thereupon cease; provided
however, that the Issuer or such Paying Agent
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shall cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in the City of New York and in the city in which the Corporate Trust Office is
then located, notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
publication, any unclaimed balance of such money then remaining will be paid to
the Issuer (the cost of such publication to be paid out of such unclaimed funds
or, if that is prohibited by law, by the Issuer).
SECTION 3.04. Corporate Existence of Owner Trustee.
(a) Subject to Sections 3.04(b) and 3.04(c), the Person acting as Owner
Trustee shall keep in full effect its existence as a legal entity under the laws
of the jurisdiction of its organization.
(b) Any successor to the Owner Trustee appointed pursuant to the terms of
the related Deposit Trust Agreement shall be the successor Owner Trustee under
and with respect to this Indenture without the execution or filing of any paper,
instrument or further act to be done on the part of the parties hereto.
SECTION 3.05. Trust Existence.
The Issuer will keep in full effect its existence, rights and franchises
as a trust under the laws of Delaware (unless it or any successor Issuer becomes
a trust under the laws of any other State or the United States of America in
which case the Issuer shall keep in full effect its existence, rights and
franchises as a trust under the laws of such other jurisdiction), and will
obtain and preserve its qualification to do business as a foreign entity in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Indenture, the Bonds issued thereby, and any
other agreement to which it is a party relating to any Series; provided,
however, that the Owner Trustee shall not be required to do business as a
foreign entity in any jurisdiction for the purposes of satisfying the
requirements of this Section 3.05.
SECTION 3.06. Payment of Taxes and Other Claims.
The Issuer shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, all taxes, assessments and governmental
charges levied or imposed upon the Issuer or upon the income, profits or
property of the Issuer, or shown to be due on the tax returns filed by the Owner
Trustee on behalf of the Issuer, except any such taxes, assessments,
governmental charges or claims which the Owner Trustee on behalf of the Issuer
is in good faith contesting in appropriate proceedings and with respect to which
reserves are established if
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required in accordance with GAAP, provided, however, that such failure to pay or
discharge will not cause a forfeiture of, or a lien to encumber, any property
included in the Trust Estate securing any Series. The Owner Trustee, in its
individual capacity, shall not be liable for any such taxes, assessments,
governmental charges or claims. The Indenture Trustee is authorized to pay out
of the related Bond Account, prior to making payments on the Bonds, any such
taxes, assessments, governmental charges or claims which, if not paid, would
cause a forfeiture of, or a lien to encumber, any property included in the Trust
Estate securing any Series.
SECTION 3.07. Protection of Trust Estate.
The Issuer and, if and as directed by the Issuer or, unless otherwise
specified in the related Terms Indenture, by the Holders of Bonds of the
affected Series representing more than 50% of the aggregate Principal Amount of
such Series, the Indenture Trustee will from time to time execute and deliver
all such amendments and supplements hereto (subject to Sections 9.01, and 9.03)
and all such financing statements, continuation statements, instruments of
further assurance and other instruments, and will from time to time take such
other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Trust Estate
securing any Series;
(ii) maintain or preserve the lien (and the priority thereof) of this
Indenture or carry out more effectively the purposes hereof;
(iii) perfect, publish notice of, or protect the validity of any Grant
made or to be made by this Indenture;
(iv) enforce any of the items of Collateral, Permitted Investments or
other instruments or agreements included in the Trust Estate
securing any Series; or
(v) preserve and defend title to the Trust Estate securing any Series
and the rights of the Indenture Trustee, and of the Holders of Bonds
of such Series, in such Trust Estate against the claims of all
Persons and parties.
The Issuer hereby designates the Indenture Trustee, its agent and
attorney-in-fact, to execute any financing statement, continuation statement or
other instrument required pursuant to this Section 3.07; provided that, subject
to and consistent with Section 4.01, the Indenture Trustee will not be obligated
to prepare or file any such statements or instruments.
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SECTION 3.08. Opinions as to Trust Estate.
(a) If any Series is to be secured by the mortgage or pledge of property,
then:
(i) Promptly (and in any event within 90 days) after the Closing Date
for such Series, the Issuer shall furnish to the Indenture Trustee
an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording
and filing of this Indenture as is necessary to make effective the
lien intended to be created by this Indenture with respect to the
Trust Estate securing such Series, and reciting the details of such
action, or stating that, in the opinion of such counsel, no such
action is necessary to make such lien effective.
(ii) On or before March 30 of each calendar year commencing more than
three months after the Closing Date for a Series, the Issuer shall
furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been
taken with respect to the recording, filing, re-recording and
refiling of this Indenture as is necessary to maintain the lien of
this Indenture with respect to the Trust Estate securing such
Series, and reciting the details of such action, or stating that, in
the opinion of such counsel, no such action is necessary to maintain
such lien.
(b) The related Terms Indenture may require that the Opinions of Counsel
referred to in Section 3.08(a) cover, or may provide for other Opinions of
Counsel to be delivered from time to time that cover, such additional matters,
if any, as may be specified in such Terms Indenture.
SECTION 3.09. Performance of Obligations.
(a) The Issuer will not take any action, and will use its best efforts not
to permit any action to be taken by others, which would release any Person from
any of such Person's covenants or obligations under any instrument included in a
Trust Estate, or which would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument, except as expressly provided in this
Indenture or such other instrument; provided, however, the Issuer may take any
such action with respect to any such instrument if such action relates solely to
rights under such instrument that are not included in a Trust Estate.
(b) The Issuer may contract with other Persons to assist it in performing
its duties hereunder and any performance of such
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duties (other than execution of Issuer Orders, Issuer Requests and Officer's
Certificates of the Issuer) by a Person identified to the Indenture Trustee in
an Officer's Certificate of the Issuer shall be deemed action taken by the
Issuer for all purposes hereunder.
SECTION 3.10. Payment of Certain Fees.
If and to the extent provided in the Terms Indenture for any Series, the
Indenture Trustee will be authorized and directed to pay out of the Bond Account
for such Series, prior to making payments on the Bonds, the fees and expenses of
the Owner Trustee in accordance with the related Deposit Trust Agreement, the
fees of any of the Persons referred to in Section 3.09(b) assisting the Issuer
with respect to such Series and the fees of any Rating Agency assigning a rating
to the Bonds of such Series. Otherwise, the Issuer or another party will be
responsible for such fees.
SECTION 3.11. Negative Covenants.
The Issuer shall not:
(i) sell, transfer, exchange or otherwise dispose of any of the
Trust Estate with respect to any Series, except as expressly permitted by
this Indenture or any separate Sale and Servicing Agreement;
(ii) claim any credit on, make any deduction from the principal,
premium, if any, or interest payable in respect of the Bonds (other than
amounts properly withheld from such payments under the Code or any
applicable state law) for or assert any claim against any present or
former Bondholder by reason of the payment of any taxes levied or assessed
upon any of the Trust Estate with respect to any Series;
(iii)(A) permit the validity or effectiveness of this Indenture or
any Grant under this Indenture to be impaired, or permit the lien of this
Indenture with respect to the Trust Estate securing any Series to be
subordinated, terminated or discharged with respect to any Series, or
permit any Person to be released from any covenants or obligations with
respect to any Series under this Indenture, except as may be expressly
permitted hereby, (B) permit any lien, charge, adverse claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture and any other lien expressly permitted hereby) to be created on
or extend to or otherwise arise upon or burden the Trust Estate securing
any Series or any part thereof or any interest therein or the proceeds
thereof, except as expressly permitted hereby, or (C) permit the lien of
this Indenture not to constitute a valid first priority perfected security
interest in the Trust Estate securing any Series
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(subject only to those liens expressly permitted hereby to be senior to
the lien of this Indenture);
(iv) dissolve or liquidate, in whole or in part, except as expressly
permitted by this Indenture or, with respect to items of Mortgage
Collateral, any separate Sale and Servicing Agreement;
(v) engage, directly or indirectly, in any business other than that
arising out of the issuance of Bonds, and the actions contemplated or
required to be performed under this Indenture or the documents
constituting part of the Trust Estate(s) securing such Bonds;
(vi) incur, create or assume any indebtedness for borrowed money
other than pursuant to this Indenture or any related Enhancement in
connection with the issuance of Bonds;
(vii) make or permit to remain outstanding, any loan or advance to,
or own or acquire any stock or securities of, any Person other than the
Mortgage Collateral and any other instruments constituting part of the
Trust Estate securing any Series;
(viii) voluntarily file a petition for bankruptcy, reorganization,
assignment for the benefit of creditors or similar Proceeding; or
(ix) with respect to any Series, take any other action that is
expressly prohibited in the related Terms Indenture.
SECTION 3.12. Annual Statement as to Compliance.
With respect to each Series, on or before March 30 in each calendar
year, commencing March 30 of the calendar year following the year in which such
Series was initially issued, the Issuer shall deliver to the Indenture Trustee,
a written statement signed by an Authorized Officer of the Owner Trustee,
stating that:
(a) a review of the activities of the Issuer during the preceding calendar
year and of performance under this Indenture has been made under his or her
supervision; and
(b) to the best of such officer's knowledge, based on such review, the
Issuer has fulfilled all its obligations under this Indenture throughout the
preceding calendar year, or, if there has been an Issuer Default in the
fulfillment of any such obligation, specifying each such Issuer Default known to
him or her and the nature and status thereof.
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SECTION 3.13. Issuer may Consolidate, Etc., only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person or convey or transfer the Trust Estate securing any Series to any Person
without the consent of the Holders of Bonds representing not less than 66-2/3%
of the aggregate Principal Amount of each affected Series, and unless:
(i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger or that acquires by conveyance or transfer
the Trust Estate securing any Series (the "Successor Person"), shall be a
Person organized and existing under the laws of the United States of
America or any State, and shall have expressly assumed, by a supplemental
indenture, executed and delivered to the Indenture Trustee, (A) the
obligation (to the same extent as the Issuer was so obligated) to make
payments of principal, interest and other amounts on all of the Bonds
issued by the Issuer, in the case of any such consolidation or merger,
and, in the case of any conveyance or transfer of a Trust Estate, the
Bonds secured by such Trust Estate and (B) the obligation to perform every
covenant of this Indenture on the part of the Issuer with respect to each
affected Series to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Issuer
Default or Issuer Event of Default with respect to any Series shall have
occurred and be continuing;
(iii) the Issuer shall have caused the Indenture Trustee to have
received written confirmation from each Rating Agency rating any of the
Bonds issued by the Issuer, in the case of any such consolidation or
merger, and, in the case of any conveyance or transfer of a Trust Estate,
any of the Bonds secured by such Trust Estate, to the effect that the
consummation of such transaction will not result in an Adverse Rating
Event with respect to any Class of such Bonds;
(iv) the Issuer shall have delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance or transfer and such supplemental
indenture comply with and satisfy all conditions precedent relating to the
transactions set forth in this Section 3.13 and in Article IX; and
(v) the Successor Person shall have delivered to the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating
that, with respect to a Successor Person that is a corporation,
partnership, limited liability
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company or trust, such Successor Person shall be duly organized, validly
existing and in good standing in the jurisdiction in which such Successor
Person is organized; that the Successor Person has sufficient power and
authority to assume the obligations set forth in clause (i) above and to
execute and deliver an indenture supplemental hereto for the purpose of
assuming such obligations; that the Successor Person has duly authorized
the execution, delivery and performance of an indenture supplemental
hereto for the purpose of assuming such obligations and that such
supplemental indenture is a valid, legal and binding obligation of the
Successor Person, enforceable in accordance with its terms, subject only
to bankruptcy, reorganization, insolvency, moratorium, and other laws
affecting the enforcement of creditor's rights generally and to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or law); and that, immediately
following the event which causes the Successor Person to become the
Successor Person, (A) the Successor Person has good and marketable title,
free and clear of any lien, security interest or charge other than the
lien and security interest of this Indenture and any other lien permitted
hereby, to the Mortgage Collateral securing, in the case of a
consolidation or merger of the Issuer, all of the Bonds issued thereby or,
in the case of any conveyance or transfer of the Trust Estate securing any
Series, all of the Bonds of such Series and (B) the Indenture Trustee
continues to have a perfected first priority security interest in the
Mortgage Collateral securing, in the case of a consolidation or merger of
the Issuer, all of the Bonds issued thereby or, in the case of any
conveyance or transfer of the Trust Estate securing any Series, all of the
Bonds of such Series.
(b) Upon any consolidation or merger, or any conveyance or transfer of the
Trust Estate securing any Series, the Successor Person shall succeed to, and be
substituted for, and may exercise every right and power of, the Issuer under
this Indenture with respect to each affected Series with the same effect as if
such Successor Person had been named as the "Issuer" in the applicable Terms
Indenture(s). In the event of any such conveyance or transfer of the Trust
Estate(s) securing all of the then Outstanding Bonds of the Issuer permitted by
this Article III, the Person named as the "Issuer" in the applicable Terms
Indenture(s), or any successor that shall theretofore have become such in the
manner prescribed in this Article III and that has thereafter effected such a
conveyance or transfer, may be dissolved, wound-up and liquidated at any time
thereafter, and such Person thereafter shall be released from its liabilities as
obligor and maker on all of the then Outstanding Bonds issued by it and from its
obligations under this Indenture; and, in the event of any such conveyance or
transfer of the Trust Estate(s) securing less than all of the then Outstanding
Bonds of the
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Issuer, such Person shall be released from its liabilities as obligor and maker
on the then Outstanding Bonds secured by such Trust Estate(s) and from its
obligations with respect thereto under this Indenture.
(c) Nothing in this Section 3.13 shall prohibit the sale or transfer of
the Owner Trust Certificates.
SECTION 3.14. Purchase of Bonds.
The Issuer may reacquire Bonds of a Series, in its discretion, by open
market purchases in privately negotiated transactions or otherwise.
SECTION 3.15. Servicing and Administration Agreement.
(a) If any item of Mortgage Collateral for a Series is subject to a
separate Servicing and Administration Agreement, then (unless the related Terms
Indenture provides otherwise):
(i) The Issuer and the Indenture Trustee shall punctually perform
and observe all of their respective obligations and agreements, if any,
contained in such Servicing and Administration Agreement.
(ii) Unless otherwise provided in the related Terms Indenture, the
Issuer may, but is not obligated to, enforce the obligations of any
servicer, master servicer, special servicer, MBS administrator or REMIC
administrator under such Servicing and Administration Agreement and may,
but is not obligated to, perform, or cause a designee to perform, any
defaulted obligation of any such party thereunder or exercise the rights
of any such party thereunder; provided, however, that no servicer, master
servicer, special servicer, MBS administrator or REMIC administrator under
such Servicing and Administration Agreement shall be relieved of any of
its obligations thereunder by virtue of such performance by the Issuer or
its designee. Unless otherwise provided in the related Terms Indenture,
the Issuer shall not have any responsibility or liability for any action
or failure to act by a servicer, a master servicer, a special servicer, an
MBS administrator or a REMIC administrator under such Servicing and
Administration Agreement and shall not be obligated to supervise the
performance of any such party thereunder.
(iii) Upon any resignation or termination of a servicer, a master
servicer, a special servicer, an MBS administrator or a REMIC
administrator pursuant to such Servicing and Administration Agreement or
any appointment of a successor to any such party pursuant to such
Servicing and Administration Agreement, the Indenture Trustee shall give
prompt written notice thereof to all Holders of Bonds of the
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related Series at their respective addresses appearing in the related Bond
Register. In the event that the Indenture Trustee is to act or is acting
as successor servicer, master servicer, special servicer, MBS
administrator or REMIC administrator under such Servicing and
Administration Agreement, the Holders of Bonds representing (unless
otherwise specified in the related Terms Indenture) more than 50% of the
aggregate Principal Amount of the related Series shall be entitled to
direct the Indenture Trustee (and, upon the receipt of such direction, the
Indenture Trustee shall be required) to appoint or to petition a court of
competent jurisdiction to appoint an alternative successor that meets the
requirements of such Servicing and Administration Agreement.
(iv) Not later than the later of (i) ninety (90) days after the
occurrence of any event which constitutes or, with notice or lapse of time
or both, would constitute an S&A Event of Default under such Servicing and
Administration Agreement and (ii) five days after a Responsible Officer of
the Indenture Trustee has notice of the occurrence of such an event, the
Indenture Trustee shall transmit by mail to the Issuer and all Holders of
Bonds of the related Series notice of such occurrence, unless such default
shall have been remedied. Unless otherwise provided in the related Terms
Indenture, at the direction of the Holders of Bonds representing more than
50% of the aggregate Principal Amount of the related Series; the Indenture
Trustee shall terminate the rights and obligations of the defaulting party
under such Servicing and Administration Agreement as and to the extent
permitted thereby and shall, subject to the last sentence of Section
3.15(d)(iii), succeed the defaulting party in whatever capacity it served
under such Servicing and Administration Agreement.
(v) The Issuer and the Indenture Trustee may, with the consent of
the Holders of Bonds representing at least 66-2/3% of the aggregate
Principal Amount (or, in the case of a Class of Interest Only Bonds, the
aggregate Notional Amount) of each Class of the related Series, waive an
S&A Event of Default under such Servicing and Administration Agreement;
provided, however, that an S&A Event of Default relating to the handling,
holding and timely remittance of payments, collections and/or
distributions on the related Mortgage Collateral or under any Enhancement
may only be waived with the consent of each and every Bondholder of the
related Series. Upon any such waiver of an S&A Event of Default, such S&A
Event of Default shall cease to exist and shall be deemed to have been
remedied for every purpose hereunder and under such Servicing and
Administration Agreement. No such waiver shall extend to any subsequent or
other S&A Event of Default under such Servicing and Administration
Agreement or impair any right consequent thereon except to the extent
expressly so waived.
(vi) During the continuance of any S&A Event of Default under such
Servicing and Administration Agreement, so long as such S&A Event of
Default under such Servicing and Administration Agreement shall not have
been remedied, the Indenture Trustee, in addition to the right to remove
the defaulting party in the manner specified under such Servicing and
Administration Agreement, shall have the
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right, in its own name and as trustee of an express trust, to take all
actions now or hereafter existing at law, in equity or by statute to
enforce its rights and remedies and to protect the interests, and enforce
the rights and remedies, of Bondholders (including the institution and
prosecution of all judicial, administrative and other proceedings and the
filings of proofs of claim and debt in connection therewith). Except as
otherwise expressly provided in the related Terms Indenture or such
Servicing and Administration Agreement, no remedy provided for by this
Indenture or such Servicing and Administration Agreement with respect to
an S&A Event of Default under such Servicing and Administration Agreement
shall be exclusive of any other remedy, and each and every remedy shall be
cumulative and in addition to any other remedy, and no delay or omission
to exercise any right or remedy shall impair any such right or remedy or
shall be deemed to be a waiver of any such S&A Event of Default.
(vii) One or more Classes of the related Series may be designated,
separately or collectively, as the "Controlling Class" under the related
Terms Indenture, with such rights, powers and liabilities in respect of
the related Mortgage Collateral as may be provided for in the related
Terms Indenture and/or such Servicing and Administration Agreement. The
related Terms Indenture and/or such Servicing and Administration Agreement
may provide that such rights and powers may be exercised directly by the
Holders of Bonds of the Controlling Class or, alternatively, indirectly
through the Indenture Trustee, a servicer, a master servicer, a special
servicer, an MBS administrator and/or another representative. If the
Issuer, the Depositor or any Affiliate of either holds Bonds of the
Controlling Class, then (unless otherwise provided in the related Terms
Indenture and so long as no Issuer Event of Default has occurred and is
continuing) such Bonds shall be deemed to be Outstanding for purposes of
exercising all rights and powers of the Controlling Class as such,
anything herein to the contrary notwithstanding.
(viii) As and to the extent, and subject to the terms and
conditions, provided in the related Terms Indenture and/or such Servicing
and Administration Agreement, the Issuer shall be entitled to exercise
certain rights and powers, and/or to direct the Indenture Trustee, a
servicer, a master servicer, a special servicer or an MBS Administrator to
take or not take certain actions, in respect of the related Mortgage
Collateral or any Enhancement.
(b) If there is no separate Servicing and Administration Agreement in
respect of the Mortgage Collateral for any Series, and the provisions governing
servicing and administration of the
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related Mortgage Collateral are part of the related Terms Indenture, the
provisions of Section 3.15(a) shall (unless the related Terms Indenture
expressly states otherwise) apply to the related Terms Indenture.
(c) If any item of Mortgage Collateral for a Series is subject to a
separate Servicing and Administration Agreement, then any successor Issuer or
Indenture Trustee in respect of such Series under this Indenture shall be the
successor to the Issuer or the Indenture Trustee, as the case may be, under such
Servicing and Administration Agreement, without the execution or filing of any
paper or any further act on the part of any of the parties hereto or to such
Servicing and Administration Agreement, anything herein or in such Servicing and
Administration Agreement to the contrary notwithstanding.
(d) If any item of Mortgage Collateral for a Series is subject to a
separate Servicing and Administration Agreement, then (unless the related Terms
Indenture provides otherwise):
(i) The Issuer and the Indenture Trustee may enter into any
amendment of such Servicing and Administration Agreement from time to
time, without the consent of any of the Bondholders, (A) to cure any
ambiguity, (B) to correct, modify or supplement any provision therein
which may be inconsistent with any other provision herein or therein, (C)
to add any other provisions with respect to matters or questions arising
thereunder which shall not be inconsistent with the provisions hereof or
thereof, (D) if such item of Mortgage Collateral is included in a REMIC
Pool, either (1) to relax or eliminate any requirement thereunder imposed
by the REMIC Provisions (if the REMIC Provisions are amended or clarified
such that any such requirement may be relaxed or eliminated), or (2) 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 related REMIC Pool at
least from the effective date of such amendment, insofar as such
compliance is necessary to preserve the status of any related REMIC Pool
as a REMIC, 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 any related REMIC Pool, or (E) for any
other purpose; provided that such amendment (other than any amendment for
any of the specific purposes described in clause (D)(2) above) shall not
adversely affect in any material respect the interests of any Holder of an
Outstanding Bond of the related Series as evidenced by either an Opinion
of Counsel to such effect or, in the case of a Class of Rated Bonds of the
related Series, written confirmation from each Rating
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Agency rating such Class that such amendment shall not result in an
Adverse Rating Event with respect thereto, in any event obtained by or
delivered to the Indenture Trustee.
(ii) The Issuer and the Indenture Trustee also may enter into any
amendment of such Servicing and Administration Agreement from time to
time, with the consent of the Holders of Bonds of the related Series
representing more than 50% of the aggregate Principal Amount (or, in the
case of a Class of Interest Only Bonds, the aggregate Notional Amount) of
each Class of the related Series, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of such
Servicing and Administration Agreement; provided, however, that no such
amendment shall (x) reduce in any manner the amount of, or delay the
timing of, payments, collections and/or distributions received or advanced
on Mortgage Collateral which are required to be paid on any Bond without
the consent of the Holder of such Bond, or (y) adversely affect in any
material respect the interests of the Holders of any Class of the related
Series in a manner other than as described in clause (x) above without the
consent of each and every Holder of Bonds of such Class. For purposes of
giving the consents contemplated by this Section 3.15(d)(ii), Bonds held
by the Issuer, the Depositor and any Affiliate thereof will be given the
same regard as Bonds held by any other Person.
(iii) Notwithstanding the foregoing, if such item of Mortgage
Collateral is included in a REMIC Pool, neither the Indenture Trustee nor
the Issuer shall consent to any amendment to such Servicing and
Administration 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 to such Servicing and
Administration Agreement in accordance with such amendment will not result
in an Adverse REMIC Event with respect to any related REMIC Pool.
(iv) Promptly after the execution and delivery of any amendment of
such Servicing and Administration Agreement by all parties thereto, the
Indenture Trustee shall send a copy thereof to each Holder of a Bond of
the related Series.
(v) It shall not be necessary for the consent of Bondholders under
this Section 3.15(d) to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization, execution and delivery thereof by Bondholders shall be
subject to such reasonable regulations as the Indenture Trustee may
prescribe.
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(vi) The Indenture Trustee may but shall not be obligated to enter
into any amendment of such Servicing and Administration Agreement pursuant
to this Section 3.15(d) that affects its rights, duties and immunities
thereunder or under this Indenture.
(vii) The cost of any Opinion of Counsel to be delivered pursuant to
Section 3.15(d)(i) or (ii) shall be borne by the Person seeking the
related amendment, except that if the Indenture Trustee requests any
amendment of such Servicing and Administration Agreement that it
reasonably believes protects or is in furtherance of the rights and
interests of Bondholders, the cost of any Opinion of Counsel required in
connection therewith pursuant to Section 3.15(d)(i) or (ii) shall be
payable by the Issuer.
SECTION 3.16. Covenants, Representations and Warranties of the Issuer.
All covenants, representations and warranties of the Issuer in this
Indenture are covenants, representations and warranties solely of the Issuer and
not covenants, representations and warranties of the Owner Trustee or of the
Person acting as Owner Trustee in its individual capacity. The Owner Trustee is
entering into this Indenture solely as Owner Trustee and not in its individual
capacity, and in no case whatsoever shall the Owner Trustee be personally liable
on, or for any loss in respect of, any of the statements, representations,
warranties or obligations of the Issuer hereunder, as to all of which the
parties hereto agree to look solely to the property of the related Trust Estate.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect with respect to any
Series except as to (i) rights of registration of transfer and exchange, (ii)
substitution of mutilated, destroyed, lost or stolen Bonds, (iii) rights of
Bondholders of such Series to receive payments of principal thereof, premium, if
any, thereon and interest thereon, (iv) the rights, obligations and immunities
of the Indenture Trustee hereunder and (v) the rights of Bondholders of such
Series as beneficiaries hereof with respect to the property so deposited with
the Indenture Trustee payable to all or any of them, and the Indenture Trustee,
on demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to such
Series, when:
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(a) either (1) all Bonds of such Series theretofore authenticated and
delivered (other than (A) Bonds which have been destroyed, lost or stolen and
which have been replaced or paid as provided in Section 2.06, and (B) Bonds of
such Series for which payment of money has theretofore been deposited in the
Bond Account by the Indenture Trustee and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section 3.03) have been delivered to
the Bond Registrar for cancellation; or (2) all such Bonds of such Series not
theretofore delivered to the Bond Registrar for cancellation (A) have become due
and payable, (B) will become due and payable at their Stated Maturity, if any,
within one year, or (C) are to be called for redemption within one year under
arrangements satisfactory to the Indenture Trustee for the giving of notice of
redemption by the Indenture Trustee in the name, and at the expense, of the
Issuer; and the Issuer has deposited or caused to be deposited with the
Indenture Trustee or another Paying Agent, in trust for such purpose, an amount
sufficient to pay and discharge the entire indebtedness on such Bonds of such
Series not theretofore delivered to the Bond Registrar for cancellation, for
principal, premium, if any, and interest which would be payable on their Stated
Maturity, if any, or Redemption Date (if Bonds shall have been called for
redemption pursuant to Section 10.01), as the case may be, including for any and
all overdue principal, premium, if any, and interest payable on such Bonds:
(b) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer;
(c) any conditions set forth in the related Terms Indenture for the
satisfaction and discharge of this Indenture and the related Terms Indenture
with respect to such Series, have been satisfied; and
(d) the Issuer has delivered to the Indenture Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA) a certificate or
opinion from an Accountant, in accordance with TIA ss.314(c) and meeting the
applicable requirements of Section 12.01(a).
Notwithstanding the satisfaction and discharge of this Indenture with
respect to any Series, the obligations of the Issuer to the Indenture Trustee
under Section 6.07 and of the Indenture Trustee to the Issuer and the
Bondholders of such Series under Section 3.03, the obligations of the Indenture
Trustee to the Bondholders of such Series under Section 4.02 and the provisions
of Article II with respect to lost, stolen, destroyed or mutilated Bonds of such
Series, registration of transfers of Bonds of such Series, and rights to receive
payments of principal of and interest on the Bonds of such Series shall survive.
The applicable Terms Indentures, as they incorporate by reference these Standard
Indenture Provisions, shall remain in
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full force and effect with respect to all Series that remain Outstanding.
SECTION 4.02. Application of Trust Money.
All monies deposited with the Indenture Trustee or another Paying Agent
pursuant to Section 4.01 shall be held in trust and applied by the Indenture
Trustee or another Paying Agent, in accordance with the provisions of the Bonds
of the applicable Series and this Indenture, to the payment, either directly or
through any Paying Agent, as the Indenture Trustee may determine, to the Persons
entitled thereto, of all sums due and to become due on or with respect to the
Bonds for whose payment such money has been deposited with the Indenture Trustee
or another Paying Agent, but such money need not be segregated from other funds
except to the extent expressly required herein or required by law.
SECTION 4.03. Repayment of Monies Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture with
respect to any Series, all monies with respect to such Series then held by any
Paying Agent other than the Indenture Trustee under this Indenture shall, upon
demand of the Issuer, be paid to the Indenture Trustee to be held and applied
according to Section 3.03 and thereupon such Paying Agent shall be released from
all further liability with respect to such monies.
ARTICLE V
ISSUER EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Issuer Events of Default.
Unless otherwise specified in the related Terms Indenture, each of the
following shall constitute an "Issuer Event of Default" with respect to any
Series (whatever the reason for such Issuer Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) any failure to pay all interest on and principal of any Bond of
such Series by its Stated Maturity; or
(ii) any default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section 5.01 specifically dealt with) with respect to
such Series or any representation or warranty of the Issuer made in this
Indenture, or in any certificate or other writing
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delivered pursuant hereto or in connection herewith, with respect to such
Series proving to have been incorrect in any material respect as of the
time when the same shall have been made, and such default or the
circumstance or condition in respect of which such representation or
warranty was incorrect (A) shall materially and adversely affect the
interests of Holders of Bonds of such Series and (B) shall continue or
shall not have been eliminated or otherwise remedied, as the case may be,
for a period of sixty (60) days after there shall have been given, by
registered or certified mail, to the Issuer by the Indenture Trustee or to
the Issuer and the Indenture Trustee by the Holders of Bonds representing
at least 25% of the aggregate Principal Amount of such Series, a written
notice specifying such default and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder; or
(iii) the entry by a court having jurisdiction over the Issuer of
(A) a decree or order for relief in respect of the Issuer in an
involuntary case or proceeding under any applicable federal or state
delinquency, bankruptcy, insolvency, reorganization or other similar law
or (B) a decree or order adjudging the Issuer as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of or for the
Issuer under any applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or other
similar official of the Issuer or of any substantial part of its property,
or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other
decree or order not stayed or dismissed and in effect for a period of more
than ninety (90) consecutive days; or
(iv) the commencement by the Owner Trustee on behalf of the Issuer
of a voluntary case or proceeding under any applicable federal or state
delinquency, bankruptcy, insolvency, reorganization or other similar law
or of any other case or proceeding to be adjudicated a bankrupt or
insolvent, or the consent by the Issuer to the entry of a decree or order
for relief in respect of the Issuer in an involuntary case or proceeding
under any applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against the Issuer, or the
filing by the Owner Trustee on behalf of the Issuer of a petition or
answer or consent seeking reorganization or relief under any applicable
federal or state law, or the consent by the Owner Trustee on behalf of the
Issuer to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of or for the
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Issuer or of any substantial part of the Issuer's property, or the making
by the Owner Trustee on behalf of the Issuer of an assignment for the
benefit of creditors, or the admission by the Owner Trustee on behalf of
the Issuer in writing of the Issuer's inability to pay its debts generally
as they become due, or the taking of corporate action by the Owner Trustee
on behalf of the Issuer in furtherance of any such action; or
(v) the impairment of the validity or effectiveness of this
Indenture or any Grant hereunder, or the subordination or, except as
permitted hereunder, the termination or discharge of the lien of this
Indenture, or the creation of any lien, charge, security interest,
mortgage or other encumbrance (other than the lien of this Indenture or
any other lien expressly permitted hereby) with respect to any part of the
related Trust Estate or any interest in or proceeds of the related Trust
Estate, or the failure of the lien of this Indenture to constitute a valid
first priority perfected security interest in the related Trust Estate
(subject only to those liens expressly permitted hereby to be prior to the
lien hereof), provided that, if such impairment, such subordination, the
creation of such lien, or the failure of the lien on the related Trust
Estate to constitute such a security interest shall be susceptible of
cure, no Issuer Event of Default shall arise until the continuation of any
such default unremedied for a period of thirty (30) days after receipt of
notice thereof; or
(vi) such other events, circumstances and conditions, if any,
identified in the related Terms Indenture as "Issuer Events of Default"
shall have occurred or exist.
SECTION 5.02. Acceleration of Maturity; Rescission and Annulment.
If an Issuer Event of Default should occur and be continuing with respect
to a Series, then and in every such case (unless the related Terms Indenture
provides otherwise) the Indenture Trustee may, or at the direction of the
Holders of Bonds representing more than 50% of the aggregate Principal Amount
(or, in the case of a Class of Interest Only Bonds, the aggregate Notional
Amount) of each Class of such Series, shall declare all of the Bonds of such
Series to be immediately due and payable, by a notice in writing to the Issuer,
and upon any such declaration the aggregate unpaid Principal Amount of such
Bonds, together with accrued and unpaid interest with respect thereto through
the end of the applicable Interest Accrual Period, shall become due and payable
on the next succeeding Payment Date and on each Payment Date thereafter, until
all such principal and interest is paid in full, and unless such declaration and
its consequences are earlier rescinded and annulled as provided in the following
paragraph.
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At any time after such declaration of acceleration has been made and
before a judgment or decree for payment of the money due in respect of the Bonds
has been obtained by the Indenture Trustee as hereinafter provided in this
Article V, unless the related Terms Indenture provides otherwise, the Holders of
Bonds representing more than 50% of the aggregate Principal Amount (or, in the
case of a Class of Interest Only Bonds, the aggregate Notional Amount) of each
Class of the Series that has been declared due and payable, by written notice to
the Issuer and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee or
another Paying Agent a sum sufficient to pay
(A) all payments of principal of, premium, if any, on and interest
on all Bonds of the Series that has been declared due and payable
and all other amounts which would then be due hereunder if the
Issuer Event of Default giving rise to such acceleration had not
occurred; and
(B) all Administrative Expenses and Additional Expenses remaining
unpaid with respect to the Series that has been declared due and
payable, together with all sums paid or advanced by the Indenture
Trustee or any other Paying Agent hereunder and the reasonable
compensation, fees, expenses, disbursement and advances of the
Indenture Trustee, any other Paying Agents, and its agents and
counsel;
(ii) all Issuer Events of Default with respect to the Series that
has been declared due and payable, other than the nonpayment of the
principal of or interest on Bonds of such Series, have been cured or
waived as provided in Section 5.13; and
(iii) any other conditions to such declaration and its consequences
being rescinded and annulled have been satisfied.
Upon such rescission and annulment, the related Issuer Event of Default
shall be deemed to have been cured; however, no such rescission and annulment
shall affect any subsequent Issuer Event of Default with respect to the affected
Series or any Issuer Event of Default with respect to any other Series or impair
any right or remedy which arises as a consequence thereof.
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SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) Unless otherwise specified in the related Terms Indenture, if an
Issuer Event of Default has occurred and is continuing with respect to any
Series and the Series has been declared due and payable pursuant to Section 5.02
and such declaration of acceleration has not been rescinded and annulled, the
Issuer shall pay to the Paying Agent upon demand, for the benefit of the
Bondholders of such Series, but only from the Trust Estate securing the Bonds of
such Series, (i) the entire aggregate unpaid Principal Amount of such Series
then due and payable, (ii) all accrued and unpaid interest with respect to such
Series through the end of the Interest Accrual Period for the next succeeding
Payment Date (including, if and to the extent so provided in the related Terms
Indenture, interest on overdue interest, but only to the extent that payment of
such interest on overdue interest shall be legally enforceable), and (iii) in
addition thereto, all Administrative Expenses or Additional Expenses with
respect to such Series then remaining unpaid, together with such further amount
as shall be sufficient to cover the costs and expenses of collection, including
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, any other Paying Agent, and its agents and counsel.
Until such demand is made by the Indenture Trustee, the Issuer may pay the
principal of, premium (if any) on and interest on the Bonds of the relevant
Series to the registered Holders thereof in accordance with Section 2.07.
(b) Unless otherwise specified in the related Terms Indenture, if the
Issuer fails to pay all amounts due upon an acceleration of the Bonds of any
Series under Section 5.02 forthwith upon demand, the Indenture Trustee, in its
capacity as Indenture Trustee and as trustee of an express trust, may institute
any Proceeding for the collection of the sums so due and unpaid, may prosecute
such Proceeding to judgment or final decree and may enforce the same against the
Issuer or any other obligor upon such Bonds and collect the monies adjudged or
decreed to be payable in the manner provided by law out of the related Trust
Estate or, subject to Section 2.07(g), out of the property, wherever situated,
of the Issuer or any such other obligor upon such Bonds.
(c) If an Issuer Event of Default occurs and is continuing, the Indenture
Trustee may, in its discretion, subject to the terms of the related Terms
Indenture, proceed to protect and enforce its rights and the rights of the
Bondholders of any Series by such appropriate Proceedings as the Indenture
Trustee shall deem most effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted
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herein to enforce any other proper remedy or legal or equitable right vested in
the Indenture Trustee by this Indenture or by law.
(d) In case (i) there shall be pending, relative to the Issuer or any
other Person having or claiming an ownership interest in the Trust Estate
securing any Series or obligated to make payments on such Series, Proceedings
under Title 11 of the United States Code or any other applicable Federal or
state bankruptcy, insolvency or other similar law, (ii) a receiver, assignee or
trustee in bankruptcy or reorganization, liquidator, sequestrator or similar
official shall have been appointed for or shall have taken possession of the
Issuer or its property or such other Person or (iii) there shall be pending a
comparable judicial Proceeding brought by creditors of the Issuer or affecting
the property of the Issuer, the Indenture Trustee, irrespective of whether the
principal of or interest on any Bonds shall then be due and payable as provided
therein or by declaration of acceleration or otherwise, and irrespective of
whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section 5.03, shall be entitled and empowered, by
intervention in such Proceedings or otherwise:
(i) to file and prove a claim or claims on behalf of the Bondholders
of any affected Series for the whole amount of principal and interest
owing and unpaid in respect of such Series and to file such other papers
or documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee (including any claim for reasonable compensation
to the Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
willful misconduct, negligence or bad faith) and of the Bondholders
allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Bondholders of any affected Series in any election of a
trustee in bankruptcy or any other Person performing similar functions in
any such Proceedings;
(iii) to collect and receive any monies or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Bondholders of any affected Series and of the
Indenture Trustee on their and its behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee or the Bondholders of
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any affected Series allowed in any judicial proceedings relative to the
Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Bondholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Bondholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of willful misconduct,
negligence or bad faith of the Indenture Trustee or predecessor Indenture
Trustee.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Bondholder any plan of reorganization, arrangement, adjustment or
composition affecting any Series or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Bondholder in any such Proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and claims under this Indenture or any of the
Bonds may be prosecuted and enforced by the Indenture Trustee without the
possession of any of the Bonds or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Indenture Trustee
shall be brought in its own name as trustee of an express trust, and any
recovery of judgment, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee, its
agents and counsel, shall be, except as otherwise stated in the related Terms
Indenture(s), for the ratable benefit of the Bondholders in respect of which
such judgment has been recovered.
(g) In any Proceedings brought by the Indenture Trustee (and also any
Proceedings involving the interpretation of any provision of this Indenture),
the Indenture Trustee shall be held to represent all the Bondholders of each
affected Series, and it shall not be necessary to make any Bondholder a party to
any such proceedings.
SECTION 5.04. Remedies.
Unless otherwise provided in the related Terms Indenture, if an Issuer
Event of Default with respect to any Series has occurred and is continuing, and
the Bonds of such Series have been declared due and payable pursuant to Section
5.02 and such declaration and its consequences have not been rescinded and
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annulled, the Indenture Trustee may do one or more of the following:
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on or under
this Indenture with respect to the Bonds of such Series, whether by
declaration of acceleration or otherwise, enforce any judgment obtained,
and collect from the Trust Estate securing such Series and, subject to
Section 2.07(g), from the Issuer or any other obligor on the Bonds of such
Series monies adjudged due;
(ii) sell or cause the sale of the Trust Estate securing such Series
or any portion thereof or rights or interest therein, at one or more
public or private sales called and conducted in any manner permitted by
law and in accordance with Section 5.16; provided, however, that the
Indenture Trustee shall give the Issuer written notice of any private sale
called by or on behalf of the Indenture Trustee pursuant to this Section
5.04(ii), at least 10 days prior to the date fixed for such private sale;
(iii) institute Proceedings from time to time for the complete or
partial foreclosure with respect to the Trust Estate securing such Series;
(iv) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and
enforce the rights and remedies of the Indenture Trustee or the Holders of
the Bonds of such Series hereunder; and
(v) make any claim against any Enhancement delivered with respect to
such Series in accordance with its terms and the terms of the related
Terms Indenture;
provided, however, that (subject to the provisions of the related Terms
Indenture) the Indenture Trustee may not, unless required by law, sell or
otherwise liquidate the Trust Estate securing such Series following any Issuer
Event of Default, other than an Issuer Event of Default described in Section
5.01(i), unless (A) each and every Bondholder of such Series consents thereto,
(B) the portion of the proceeds of such sale or liquidation that is
distributable to the Holders of Bonds of such Series is sufficient to discharge
in full all amounts then due and unpaid upon such Bonds for principal and
interest or (C) the Indenture Trustee (1) determines that the Trust Estate
securing such Series will not, taking into account any Enhancement with respect
to such Series, provide sufficient funds for the payment of all principal and
interest on the Bonds of such Series by their respective Stated Maturities, if
any, and (2) obtains the consent of the Holders of Bonds representing at least
66-2/3% of the aggregate Principal Amount (or, in the case of a Class of
Interest Only Bonds, the
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aggregate Notional Amount) of each Class of such Series. In determining such
sufficiency or insufficiency with respect to clauses (B) and (C) of the proviso
to the preceding sentence, the Indenture Trustee may, but need not, obtain and
rely upon an opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as to the
sufficiency of the related Trust Estate for such purpose.
SECTION 5.05. Optional Preservation of Trust Estate.
(a) If the Bonds of any Series have been declared to be due and payable
under Section 5.02 following an Issuer Event of Default with respect to such
Series and such declaration and its consequences have not been rescinded and
annulled, then (unless the related Terms Indenture provides otherwise) the
Indenture Trustee may, but need not, elect to maintain possession of the Trust
Estate securing such Series; provided that the Holders of Bonds of such Series
shall not have directed the Indenture Trustee in accordance with Section 5.12 to
sell the Trust Estate securing such Series. It is the desire of the Issuer, the
Indenture Trustee and the Bondholders of each Series that there be at all times,
taking into account any Enhancement with respect to such Series, sufficient
funds for the payment of all principal of and interest on the Bonds of each
Series by their respective Stated Maturities, if any, and the Indenture Trustee
shall take such desire into account when determining whether or not to maintain
possession of the Trust Estate securing any Series declared due and payable. In
determining whether to maintain possession of the Trust Estate securing any
Series declared due and payable, the Indenture Trustee may, but need not, obtain
and rely upon an opinion of an Independent investment banking or accounting firm
of national reputation as to the feasibility of such proposed action and as to
the sufficiency of such Trust Estate for such purpose.
Until the Indenture Trustee has elected or has determined not to elect, in
either case subject to the terms of the related Terms Indenture, to retain the
Trust Estate securing a Series pursuant to this Section 5.05, and thereafter if
the Indenture Trustee has elected, subject to the terms of the related Terms
Indenture, to retain the Trust Estate securing a Series pursuant to this Section
5.05, the Indenture Trustee shall continue to apply all payments, collections,
distributions and other amounts received on such Trust Estate and/or paid under
the Enhancement, if any, for such Series, solely to the payment of principal of,
premium, if any, on and interest on the Bonds of such Series, and to the payment
of Administrative Expenses and Additional Expenses, as if there had not been
such a declaration of acceleration.
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SECTION 5.06. Application of Money Collected.
If a Series has been declared due and payable pursuant to Section 5.02
following an Issuer Event of Default and such declaration and its consequences
have not been rescinded and annulled, and payments, collections, distributions
and other amounts received on the Trust Estate for such Series and/or paid under
the Enhancement, if any, for such Series, are not being applied pursuant to
Section 5.05, any monies collected by the Indenture Trustee pursuant to this
Article V or otherwise held by the Indenture Trustee or any other Paying Agent
as part of such Trust Estate with respect to such Series shall, unless otherwise
provided in the related Terms Indenture, be applied on each Payment Date to the
extent permitted by applicable law for the following purposes and in the
following order of priority, subject to available funds and, in the case of
payments on the Bonds, subject to the first paragraph of Section 2.07(e):
FIRST: To pay all amounts due the Indenture Trustee with respect to
such Series pursuant to Section 6.07;
SECOND: To pay, in accordance with the related Terms Indenture or
any related Servicing and Administration Agreement, as applicable, all
amounts due the servicer, master servicer, special servicer, MBS
administrator or REMIC administrator, as applicable, thereunder, pro rata
based on the respective amounts payable to each such Person;
THIRD: To pay all other Administrative Expenses, S&A Expenses and
Additional Expenses remaining unpaid with respect to such Series, in such
order as the Indenture Trustee deems necessary and appropriate (but, in
each case, only if and to the extent that the failure to pay such would
result in a lien on the related Trust Estate that is prior to or of equal
priority with the lien of this Indenture or would otherwise materially and
adversely affect the interests of Bondholders of such Series);
FOURTH: To make payments on the Bonds of such Series as provided in
the related Terms Indenture;
FIFTH: To pay all Administrative Expenses, S&A Expenses and
Additional Expenses still remaining unpaid after giving effect to payments
under clauses FIRST, SECOND and THIRD above; and
SIXTH: To pay any surplus to the Issuer or any other Person legally
entitled thereto, including any Person that has provided Enhancement, if
any, with respect to such Series, in such order of priority as is
specified in the related Terms Indenture.
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SECTION 5.07. Limitation on Suits.
Unless otherwise specified in the related Terms Indenture, no Holder of
any Bond of any Series shall have any right to institute any Proceedings,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the Indenture
Trustee of a continuing Issuer Event of Default with respect to such
Series;
(ii) the Holders of Bonds representing more than 50% of the
aggregate Principal Amount of such Series (or such other group of
Bondholders of such Series as may be required for directing the Indenture
Trustee to institute particular Proceedings pursuant to Section 5.12 and
as shall hold Bonds which, in the aggregate, shall represent more than 50%
of the aggregate Principal Amount of such Series) shall have made written
request to the Indenture Trustee to institute Proceedings in respect of
such Issuer Event of Default in its own name as Indenture Trustee
hereunder;
(iii) such Holder or Holders have offered to the Indenture Trustee
adequate indemnity or security reasonably satisfactory to the Indenture
Trustee against the costs, expenses and liabilities to be incurred in
compliance with such request;
(iv) the Indenture Trustee has, for sixty (60) days after its
receipt of such notice, request and offer of indemnity or security, failed
to institute any such proceeding; and
(v) no direction inconsistent with such written request has been
given to the Indenture Trustee during such 60-day period by the Holders of
Bonds representing more than 50% of the aggregate Principal Amount of such
Series.
it being understood and intended that no one or more of the Holders of Bonds of
any Series shall have any right in any manner whatever by virtue of, or by
availing itself or themselves of, any provision of this Indenture or the related
Terms Indenture to affect, disturb or prejudice the rights of any other Holders
of Bonds of such Series or to obtain or to seek to obtain priority or preference
over any other Holders of Bonds of such Series or to enforce any right under
this Indenture, except in the manner herein provided and, unless otherwise
provided in the related Terms Indenture, for the equal and ratable benefit of
all the Holders of Bonds of such Series. Subject to the foregoing restrictions,
the Bondholders may exercise their rights under this Section 5.07 independently.
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In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Bondholders of
the same series, each representing (unless otherwise specified in the related
Terms Indenture) less than a majority, by aggregate Principal Amount, of such
Series, the Indenture Trustee in its sole discretion may determine what action,
if any, shall be taken with respect to Proceedings, notwithstanding any other
provisions of this Indenture.
SECTION 5.08. Unconditional Right of Bondholders to Receive Principal and
Interest.
Notwithstanding any other provision in this Indenture (except those
specifically referenced in this Section 5.08), the Holder of any Bond shall have
the right, which is absolute and unconditional, to receive payment of the
principal of and interest on such Bond (subject to Section 2.07(g) and the
second sentence of Section 3.01) and, if the nonpayment constitutes an Issuer
Event of Default, to institute suit for the enforcement of any such payment
(subject to Section 5.07 and Section 12.17), and such rights shall not be
impaired without the consent of such Bondholder, unless a non-payment has been
cured pursuant to Section 5.02. The Issuer shall, however, be subject to only
one consolidated lawsuit by the Bondholders of any Series, or by the Indenture
Trustee on behalf of such Bondholders, for any one cause of action arising under
this Indenture or otherwise.
SECTION 5.09. Restoration of Rights and Remedies.
If the Indenture Trustee or any Bondholder of any Series has instituted
any Proceeding to enforce any right or remedy under this Indenture and such
Proceeding has been discontinued, waived, rescinded or abandoned for any reason,
or has been determined adversely to the Indenture Trustee or to such Bondholder,
then and in every such case, subject to any determination in such Proceeding,
the Issuer, the Indenture Trustee and the Bondholders of such Series shall be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Indenture Trustee and such Bondholders
shall continue as though no such Proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative.
Except as otherwise provided in the related Terms Indenture, if any Issuer
Event of Default should occur with respect to any Series, no right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Bondholders
of such Series is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder or otherwise in respect of an Issuer Event of Default
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relating to any Series, shall not prevent the concurrent assertion or employment
of any other appropriate right or remedy.
SECTION 5.11. Delay or Omission Not Waiver.
No delay or omission of the Indenture Trustee or any Bondholder to
exercise any right or remedy accruing upon any Issuer Event of Default shall
impair any such right or remedy or constitute a waiver of any such Issuer Event
of Default or an acquiescence therein. Every right and remedy given by this
Indenture or by law to the Indenture Trustee or to the Bondholders in respect of
any Issuer Event of Default may be exercised from time to time, and as often as
may be deemed expedient, to the extent permitted by applicable law, by the
Indenture Trustee or the Bondholders of the affected Series, as the case may be.
SECTION 5.12. Control by Bondholders.
Unless otherwise provided in the related Terms Indenture, the Holders of
Bonds of any Series representing more than 50% of the aggregate Principal Amount
of such Series shall have the right to direct the time, method and place of
conducting any Proceeding for any remedy available to the Indenture Trustee, or
exercising any trust or power conferred on the Indenture Trustee; provided,
that:
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) the Indenture Trustee shall have been provided with indemnity
reasonably satisfactory to it;
(iii) any direction to the Indenture Trustee to declare all of the
Bonds of such Series to be immediately due and payable following an Issuer
Event of Default, or to rescind any such declaration, shall be by the
Holders of Bonds representing more than 50% of the aggregate Principal
Amount (or, in the case of a Class of Interest Only Bonds, the aggregate
Notional Amount) of each Class of such Series;
(iv) any direction to the Indenture Trustee to sell or liquidate the
Trust Estate securing such Series or any portion thereof shall be by the
Holders of Bonds representing not less than 66-2/3% of the aggregate
Principal Amount (or, in the case of a Class of Interest Only Bonds, the
aggregate Notional Amount) of each Class of such Series (except that,
notwithstanding the foregoing, if the condition to retention of the Trust
Estate securing such Series set forth in Section 5.05 has been satisfied
and the Indenture Trustee elects to retain such Trust Estate pursuant to
such section, then any direction to the Indenture Trustee by the Holders
of less than all the Bonds
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of such Series to sell or liquidate such Trust Estate or any portion
thereof shall be of no force and effect); and
(v) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with such direction.
Notwithstanding the rights of Bondholders of any Series set forth in this
Section 5.12, subject to Section 6.01 hereof, the Indenture Trustee need not
take any action which it determines might involve it in liability or may be
unjustly prejudicial to the Bondholders of such Series not consenting.
SECTION 5.13. Waiver of Past Issuer Defaults.
Prior to the declaration of the acceleration of the maturity of the Bonds
of any Series as provided in Section 5.02, unless otherwise specified in the
related Terms Indenture, the Holders of Bonds representing more than 50% of the
aggregate Principal Amount (or, in the case of a Class of Interest Only Bonds,
the aggregate Notional Amount) of each Class of such Series may, on behalf of
the Holders of all the Bonds of such Series, waive any past Issuer Default
hereunder and its consequences, except an Issuer Default:
(i) in the payment of principal of or interest on any Bond, which
waiver shall require the waiver by the Holders of all of the Outstanding
Bonds of such Series; or
(ii) in respect of a covenant or provision hereof which under
Article IX cannot be modified or amended without the consent of the Holder
of each Outstanding Bond of such Series, which waiver shall require the
waiver by each Holder of an Outstanding Bond of such Series.
Upon any such waiver, such Issuer Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Issuer Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture. In the case of any such waiver, the Issuer,
the Indenture Trustee and the Bondholders of such Series shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other Issuer Default or impair any right
consequent thereto.
SECTION 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of a Bond by its
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Indenture Trustee for any action
taken, suffered or omitted by it as Indenture Trustee, the filing by any
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party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 5.14 shall not
apply to any suit instituted by the Indenture Trustee, or to any suit instituted
by any Bondholder, or group of Bondholders, holding Bonds of any Series that
represent, in the aggregate, more than 10% of the aggregate Principal Amount of
the Outstanding Bonds of such Series or to any suit instituted by any Bondholder
for the enforcement of the payment of the principal of or interest on, or of the
Redemption Price or Special Redemption Price for, any Bond on or after the
Payment Date, Redemption Date or Special Redemption Date, as the case may be, on
which such payment was due (provided that the failure to make such payment
constitutes an Issuer Event of Default).
SECTION 5.15. Waiver of Stay or Extension Laws.
The Issuer covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim to
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Indenture; and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the exercise of any power
herein granted to the Indenture Trustee, but will suffer and permit the exercise
of every such power as though no such law had been enacted.
SECTION 5.16. Sale of Trust Estate.
(a) The power to effect any public or private sale of any portion of the
Trust Estate for any Series pursuant to Section 5.04 shall not be exhausted by
any one or more sales as to any portion of the Trust Estate remaining unsold,
but shall continue unimpaired until either the entire Trust Estate for any
Series shall have been sold or all amounts payable on the Bonds of such Series
and under this Indenture with respect thereto shall have been paid. Subject to
the related Terms Indenture, the Indenture Trustee may from time to time
postpone any sale by public announcement made at the time and place of such
sale. Subject to the related Terms Indenture, the Indenture Trustee hereby
expressly waives its right to any amount fixed by law as compensation for any
such sale but such waiver does not apply to any amounts to which the Indenture
Trustee is otherwise entitled under Section 6.07 of this Indenture.
(b) The Indenture Trustee shall execute and deliver an appropriate
instrument(s) of conveyance (without recourse against the Indenture Trustee)
transferring its interest in any portion
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of the Trust Estate for any Series in connection with a sale thereof pursuant to
Section 5.04. In addition, the Indenture Trustee is hereby irrevocably appointed
an agent and attorney-in-fact of the Issuer to transfer and convey the Issuer's
interest in any portion of the Trust Estate for any Series in connection with a
sale thereof pursuant to Section 5.04, and to take all action necessary to
effect such sale. No purchaser or transferee at such a sale shall have any
obligation to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(c) Any sale of any portion of the Trust Estate for any Series (i) shall
be made in compliance with all applicable laws and, in the case of Pledged
Mortgage-Backed Securities, the terms of such Pledged Mortgage-Backed Securities
and the respective agreements pursuant to which they were issued and (ii) shall
be subject to such additional restrictions and conditions as may be set forth in
the related Terms Indenture.
SECTION 5.17. Action on Bonds.
The Indenture Trustee's right to seek and recover judgment on the
Bonds of any Series or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Indenture Trustee or the Bondholders of any Series shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Trust Estate
securing such Series or, subject to Section 2.07(g), upon any other of the
assets of the Issuer.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Certain Duties and Responsibilities.
(a) Except during the continuance of an Issuer Event of Default with
respect to a Series:
(1) the Indenture Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(2) in the absence of negligence or bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates
or opinions furnished
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to the Indenture Trustee and conforming to the requirements of this
Indenture; but in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Indenture Trustee, the Indenture Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements of
this Indenture.
(b) In case an Issuer Event of Default with respect to any Series has
occurred and is continuing, the Indenture Trustee shall exercise such of the
rights and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or use under
the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own wilful misconduct, except that
(i) this subsection shall not be construed to limit the effect of
Subsection (a) of this Section 6.01;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the directions of the Holders of Bonds of any Series representing more
than 50% of the aggregate Principal Amount of such Series (unless an
alternative group of Bondholders of such Series is expressly permitted or
required to authorize such action hereunder, in which case in accordance
with the directions of such alternative group) relating to the time,
method and place of conducting any Proceeding for any remedy available to
the Indenture Trustee, or exercising any trust or power conferred upon the
Indenture Trustee, under this Indenture with respect to the Bonds of such
Series.
(d) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. In determining that such repayment or indemnity is
not reasonably assured to it, the Indenture Trustee must consider not only the
likelihood of repayment or indemnity by or on behalf of the Issuer but also the
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likelihood of repayment or indemnity from amounts payable to it from the
applicable Trust Estate pursuant to Sections 5.06 and 8.02(b) and the related
Terms Indenture.
(e) The Indenture Trustee shall be under no obligation to institute any
suit, or to take any remedial Proceeding under this Indenture, or to enter any
appearance in or in any way defend any suit in which it may be made defendant,
or to take any steps in the execution of the trusts created hereby or in the
enforcement of any rights and powers hereunder until it shall be indemnified to
its reasonable satisfaction against any and all costs and expenses, outlays and
counsel fees and other reasonable disbursements and against all liability,
except liability which is adjudicated to have resulted from its negligence or
willful misconduct, in connection with any action so taken.
(f) Notwithstanding any extinguishment of all right, title and interest of
the Issuer in and to the Trust Estate for any Series following an Issuer Event
of Default and a consequent declaration of acceleration of the Maturity of the
Bonds of such Series, whether such extinguishment occurs through a foreclosure
upon and sale of such Trust Estate to another Person, the acquisition of such
Trust Estate by the Indenture Trustee or otherwise, the rights, powers and
duties of the Indenture Trustee with respect to such Trust Estate (or the
proceeds thereof) and the Bondholders of such Series, and the rights of the
Bondholders of such Series, shall continue to be governed by the terms of this
Indenture.
(g) For all purposes under this Indenture, the Indenture Trustee shall not
be deemed to have notice of any Issuer Default with respect to any Series unless
a Responsible Officer of the Indenture Trustee has actual knowledge thereof or
unless written notice of any event which is in fact such an Issuer Default is
received by the Indenture Trustee at the Corporate Trust Office, and such notice
references the related Series and this Indenture.
(h) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Indenture Trustee shall be subject to the provisions of this
Section 6.01; and, if and for so long as this Indenture is required to be
qualified under the Trust Indenture Act, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Indenture Trustee, including the provisions of this Section 6.01, shall be
subject to the provisions of the Trust Indenture Act.
SECTION 6.02. Notice of Issuer Defaults.
(a) If an Issuer Default occurs and is continuing with respect to any
Series and if it is known to a Responsible Officer of the Indenture Trustee, the
Indenture Trustee shall mail to
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each Bondholder of such Series as described in TIA ss.313(c) notice of such
Issuer Default within ninety (90) days after it occurs (or, if it becomes known
to a Responsible Officer of the Indenture Trustee after the end of such 90-day
period, as soon as practicable after it becomes so known); provided that, except
in the case of a default in the payment of the principal of or interest on any
of the Bonds, the Indenture Trustee shall be protected in withholding such
notice to the Bondholders of the affected Series for a period of no longer than
90 days if and so long as the board of directors, the executive committee or a
trust committee composed of directors and/or Responsible Officers of the
Indenture Trustee reasonably and in good faith determines that the withholding
of such notice is in the best interest of the Bondholders of such Series.
SECTION 6.03. Certain Rights of Indenture Trustee.
Subject to the provisions of Section 6.01, in connection with this
Indenture:
(a) the Indenture Trustee may request and rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Issuer mentioned herein shall be
sufficiently evidenced by an Issuer Request or Issuer Order, as the case may be;
(c) whenever in the administration of this Indenture the Indenture Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Indenture Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officer's Certificate;
(d) the Indenture Trustee may consult with counsel, and the written advice
of such counsel or any Opinion of Counsel rendered thereby shall be full and
complete authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Indenture Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Bondholders of any Series pursuant to this Indenture, unless such
Bondholders shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in compliance with such request or direction;
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(f) the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, coupon, other evidence of indebtedness or other paper or
document, but the Indenture Trustee in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit, and, if
the Indenture Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Issuer, personally or by agent or attorney; provided that, if the payment
within a reasonable time to the Indenture Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation is,
in the opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such expense or
liability or payment of such estimated expenses as a condition to proceeding;
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys of the Indenture Trustee; provided that (unless otherwise
specified in the related Terms Indenture) it shall remain liable for the acts of
all such attorneys and agents;
(h) to the extent a Person other than the Indenture Trustee is appointed
by the Issuer to act as a Paying Agent with respect to any Series, such Person
shall be the sole agent of the Issuer, and the Indenture Trustee shall not be
liable or responsible by reason of any act or omission of any such Person;
(i) the Indenture Trustee shall not be liable or responsible by reason of
any act or omission of any servicer, master servicer, special servicer, MBS
administrator or REMIC administrator under any Terms Indenture or any Servicing
and Administration Agreement, in each case that is not an Affiliate of the
Indenture Trustee, unless the Indenture Trustee itself is acting in such
capacity;
(j) the Indenture Trustee shall not be liable or responsible for releases
or releases and substitutions of any item of Collateral in compliance with any
provision of this Indenture;
(k) the Indenture Trustee shall not be required to provide any surety or
bond of any kind in connection with the execution or performance of its duties
hereunder; and
(l) the Indenture Trustee shall not at any time have any responsibility or
liability other than as may be expressly set forth in this Indenture or any
Servicing and Administration
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Agreement for or with respect to the legality, validity or enforceability of any
item of Mortgage Collateral.
SECTION 6.04. Not Responsible for Recitals or Issuance of Bonds.
The recitals contained herein and in the Bonds, except the certificates of
authentication on the Bonds and any such recitals that constitute express
representations, warranties, certifications or acknowledgments of or on the part
of the Indenture Trustee, shall be taken as the statements of the Issuer or
other appropriate party to any Terms Indenture, and the Indenture Trustee
assumes no responsibility for their correctness. Except as expressly set forth
in the related Terms Indenture, the Indenture Trustee makes no representation as
to the validity or sufficiency of this Indenture, the Bonds of any Series or any
Trust Estate. The Indenture Trustee shall not be accountable for the use or
application by the Issuer of the Bonds of any Series or of the proceeds thereof
or for the use or application of any funds paid to a servicer, a master
servicer, a special servicer or an MBS administrator, as applicable, in respect
of the Mortgage Collateral for any Series (unless it is acting in such capacity)
or deposited into an Account established hereunder that is not maintained by it.
SECTION 6.05. May Hold Bonds.
The Indenture Trustee, any Paying Agent, the Bond Registrar or any other
Agent, in its individual or any other capacity, may become the owner or pledgee
of bonds and, subject to Sections 6.08 and 6.13, may otherwise deal with the
Issuer or Owner Trustee with the same rights it would have if it were not
Indenture Trustee, Paying Agent, Bond Registrar or such other Agent.
SECTION 6.06. Money Held in Trust.
Money held by the Indenture Trustee in trust hereunder need not be
segregated from other funds except to the extent required herein or by law. The
Indenture Trustee shall be under no liability for interest on any money received
by it hereunder except as otherwise agreed with the Issuer and except to the
extent of (i) income or other gain on investments of monies held in any Account,
which investments are obligations of the Indenture Trustee, and (ii) income or
other gain actually received by the Indenture Trustee on investments of monies
held in any Account, including investments that are obligations of a third
party.
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SECTION 6.07. Compensation and Reimbursement.
(a) Subject to Section 6.07(b), the Issuer hereby agrees:
(1) to pay or cause to be paid to the Indenture Trustee from time to time
reasonable compensation (or, if so provided in the related Terms
Indenture, to pay or cause to be paid to the Indenture Trustee
compensation at such specific times and/or in such specific amounts as may
be set forth therein) for all services rendered by the Indenture Trustee
with respect to any Series hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust); and
(2) except as otherwise expressly provided in the related Terms Indenture,
to reimburse, indemnify and hold harmless the Indenture Trustee and any
director, officer, employee or agent of the Indenture Trustee for any
loss, liability or "out-of-pocket" expense (including costs and expenses
of litigation, and of investigation, counsel fees, damages, judgments and
amounts paid in settlement) incurred in connection with any act or
omission on the part of the Indenture Trustee hereunder or under any
related Servicing and Administration Agreement with respect to any Series
or the related Trust Estate (other than any expense expressly required to
be borne thereby, any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of duties,
or as may arise from a breach of any representation or warranty of the
Indenture Trustee set forth herein or in any Servicing and Administration
Agreement, and other than allocable overhead of the Indenture Trustee,
such as costs for office space, office equipment, supplies and related
expenses, employee salaries and related expenses, and similar internal
costs and expenses).
The Indenture Trustee agrees to fully perform its duties under this
Indenture notwithstanding any failure on the part of the Issuer to make any
payments, reimbursements or indemnifications to the Indenture Trustee pursuant
to this Section 6.07(a); provided, however, that (subject to Section 6.07(b))
nothing in this Section 6.07 shall be construed to limit the exercise by the
Indenture Trustee of any right or remedy permitted under this Indenture in the
event of the Issuer's failure to pay or cause the payment of any sums due the
Indenture Trustee pursuant to this Section 6.07.
(b) Unless otherwise provided in the related Terms Indenture, the
obligations of the Issuer set forth in Section 6.07(a) are nonrecourse
obligations solely of the Issuer and will
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be payable only from the Trust Estate securing the Series with respect to which
any claim of the Indenture Trustee under this Section 6.07 arose. In connection
with the foregoing, unless the related Terms Indenture expressly provides
otherwise, the Indenture Trustee may from time to time deduct (or cause to be
deducted and remitted to it) payments of all amounts due to it pursuant to
Section 6.07(a) in connection with any Series from monies on deposit in the Bond
Account for such Series and/or from any other Account established for such
purpose under the related Terms Indenture.
(c) The Indenture Trustee shall have, as security for the performance of
the Issuer under this Section 6.07, a lien ranking senior to the lien of the
Bonds of the Series with respect to which any claim of the Indenture Trustee
under this Section 6.07 arose upon all property and funds held or collected by
the Indenture Trustee in its capacity as such as part of the Trust Estate for
such Series; provided that the Indenture Trustee shall not institute any
Proceeding seeking the enforcement of such lien against such Trust Estate unless
Bonds of such Series have been declared due and payable pursuant to Section 5.02
following an Issuer Event of Default, such declaration of acceleration and its
consequences have not been rescinded and annulled, and monies collected by the
Indenture Trustee are being applied in accordance with Section 5.06.
SECTION 6.08. Eligibility; Disqualification.
There shall at all times be hereunder, with respect to each Series, an
Indenture Trustee, and such Indenture Trustee shall at all times be an
institutional trustee that satisfies the requirements of TIA ss.310(a) and such
additional requirements as may be set forth in the related Terms Indenture. If
and for so long as this Indenture is required to be qualified under the Trust
Indenture Act, the Indenture Trustee shall comply with and be subject to TIA
ss.310(b); provided that there shall be excluded from the operation of TIA
ss.310(b)(1) any indenture or indentures under which other securities of the
Issuer are outstanding if the requirements for such exclusion set forth in TIA
ss.310(b)(1) are met.
SECTION 6.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Indenture Trustee and no appointment
of a successor Indenture Trustee pursuant to this Article VI shall become
effective until the acceptance of appointment by the successor Indenture Trustee
in accordance with the applicable requirements of Section 6.10.
(b) The Indenture Trustee may resign at any time with respect to one or
more Series by giving written notice of such resignation to the Issuer and by
mailing notice of such
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resignation by first class mail, postage prepaid, to Holders of the applicable
Series, at their addresses appearing on the Bond Register.
(c) If at any time:
(1) the Indenture Trustee shall fail to comply with, or shall cease
to be eligible under, Section 6.08 with respect to any Series, and the
Indenture Trustee shall fail to resign after written request therefor has
been delivered to the Indenture Trustee by the Issuer or has been
delivered to the Indenture Trustee (with a copy to the Issuer) by any
Bondholder who has been a bona fide Holder of such Series for at least six
months, or
(2) (A) the Indenture Trustee shall become incapable of acting with
respect to any Series, (B) there shall have been entered a decree or order
for relief by a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case under the federal bankruptcy
laws, as now or hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Indenture Trustee or for any substantial part of
its property, or ordering the winding-up or liquidation of its affairs and
the continuance of any such decree or order unstayed and in effect for a
period of 60 consecutive days or (C) the Indenture Trustee commences a
voluntary case under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Indenture Trustee or of
any substantial part of its property, or the making by it of any
assignment for the benefit of creditors or the Indenture Trustee fails
generally to pay its debts as such debts become due or takes any corporate
action in furtherance of any of the foregoing,
then, in any such case, the Issuer, by an Issuer Order, may and shall remove the
Indenture Trustee with respect to the applicable Series.
(d) If the Indenture Trustee shall fail to comply with, or cease to be
eligible under, Section 6.08 with respect to any Series, any Bondholder that has
been a bona fide Holder of such Series for at least six months may, on its own
behalf and on behalf of all others similarly situated, petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
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(e) Unless otherwise provided in the related Terms Indenture, the Holders
of Bonds representing more than 50% of the aggregate Principal Amount of any
Series may at any time remove the Indenture Trustee with respect to such Series
by delivering to the Indenture Trustee to be removed and to the Issuer, copies
of the record of the Act taken by the Holders, as provided in Section 12.03
hereof.
(f) The Indenture Trustee may, with respect to any Series, otherwise be
removed under the circumstances provided in the related Terms Indenture.
(g) If, with respect to any Series, the Indenture Trustee shall resign, be
removed or become incapable of acting, or if, with respect to any Series, a
vacancy shall occur in the office of Indenture Trustee for any cause, and in any
such case no successor Indenture Trustee with respect to such Series shall
otherwise have been appointed as provided herein, then the Issuer, by an Issuer
Order, shall promptly appoint a successor Indenture Trustee with respect to such
Series in accordance with the applicable requirements of Section 6.10. If,
within 60 days after such resignation, removal or incapacity, or the occurrence
of such vacancy, a successor Indenture Trustee with respect to such Series shall
not have been appointed by the Issuer and shall not have accepted such
appointment in accordance with the applicable requirements of Section 6.10, then
a successor Indenture Trustee shall be appointed by Act of the Holders of Bonds
of such Series representing more than (unless otherwise provided in the related
Terms Indenture) 50% of the aggregate Principal Amount of such Series delivered
to the Issuer and the retiring Indenture Trustee, and the successor Indenture
Trustee so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 6.10, become the
successor Indenture Trustee with respect to such Series. If, within 120 days
after such resignation, removal or incapacity, or the occurrence of such
vacancy, no successor Indenture Trustee with respect to such Series shall have
been so appointed and accepted appointment in the manner required by Section
6.10, any Bondholder that has been a bona fide Holder of such Series for at
least six months may, on its own behalf and on behalf of all others similarly
situated, petition any court of competent jurisdiction for the appointment of a
successor Indenture Trustee for such Series.
(h) The Issuer shall give notice of any resignation or removal of the
Indenture Trustee with respect to any Series by mailing notice of such event by
first-class mail, postage prepaid, to the Holders of the applicable Series as
their names and addresses appear in the Bond Register. Each notice shall include
the name of the successor Indenture Trustee and the address of its Corporate
Trust Office.
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(i) In the event of any removal of or resignation by the Indenture Trustee
with respect to any Series, the Indenture Trustee's entitlement under Section
6.07 for compensation and reimbursement of costs and expenses accrued prior to
the time of such resignation or removal, and all rights pertaining thereto,
shall survive, provided, however, that if the Indenture Trustee is removed for
cause, the Indenture Trustee's right to such compensation and reimbursement may
be subject to offset for any damages relating to such removal.
SECTION 6.10. Acceptance of Appointment by Successor.
In case of the appointment hereunder of a successor Indenture Trustee with
respect to any Series, the successor Indenture Trustee so appointed shall
execute, acknowledge and deliver to the Issuer and to the retiring Indenture
Trustee an instrument accepting such appointment, and thereupon the resignation
or removal of the retiring Indenture Trustee with respect to such Series shall
become effective and such successor Indenture Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Indenture Trustee with respect to such Series; provided
that on the request of the Issuer or the successor Indenture Trustee, such
retiring Indenture Trustee shall, upon payment of its then unpaid fees and
charges, execute and deliver an instrument transferring to such successor
Indenture Trustee all the rights, powers and trusts of the retiring Indenture
Trustee in respect of the applicable Series, shall duly assign, transfer and
deliver to such successor Indenture Trustee all property and money held by such
retiring Indenture Trustee hereunder in respect of the applicable Series, and
shall take such action as may be requested by the Issuer to provide for the
appropriate interest in the Trust Estate securing the applicable Series to be
vested in such successor Trustee (except that it shall not be responsible for
the recording of such documents and instruments as may be necessary to give
effect to the foregoing). Upon request of any such successor Indenture Trustee,
the Issuer shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Indenture Trustee all such rights,
powers and trusts in respect of the applicable Series referred to in this
Section 6.10.
Upon acceptance of appointment by a successor Indenture Trustee with
respect to any Series as provided in this Section 6.10, the Issuer shall mail
notice thereof by first-class mail, postage prepaid, to the Holders of such
Series at the Holders' addresses appearing upon the Bond Register. If the Issuer
fails to mail such notice within 10 days after acceptance of appointment by such
successor Indenture Trustee, such successor Indenture Trustee shall cause such
notice to be mailed at the expense of the Issuer.
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Any successor Indenture Trustee with respect to any Series must, at the
time of such successor's acceptance of its appointment, meet the eligibility
requirements set forth in Section 6.08 with respect to such Series.
SECTION 6.11. Merger, Conversion, Consolidation or Succession to Business.
Any institution into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any institution resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any institution succeeding to all or substantially all the
corporate trust business of the Indenture Trustee, shall be the successor of the
Indenture Trustee hereunder, provided that such institution shall be otherwise
qualified and eligible under Section 6.08 with respect to each affected Series,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
SECTION 6.12. Preferential Collection of Claims against the Issuer.
If and for so long as this Indenture is required to be qualified under the
Trust Indenture Act, the Indenture Trustee shall be subject to TIA ss. 311(a),
excluding any creditor relationship listed in TIA ss. 311(b), and an Indenture
Trustee who has resigned or been removed shall be subject to TIA ss. 311(a) to
the extent indicated therein.
SECTION 6.13. Separate Trustees and Co-Trustees.
(a) Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting legal requirements of the Trust Indenture Act, if applicable,
or of any jurisdiction in which any part of a Trust Estate may at the time be
located, the Indenture Trustee shall have the power to, and shall execute and
deliver all instruments to, appoint one or more Persons to act as separate
trustees or co-trustees hereunder, jointly with the Indenture Trustee, of any
portion of a Trust Estate subject to this Indenture, and any such Persons shall
be such separate trustee or co-trustee, with such powers and duties consistent
with this Indenture as shall be specified in the instrument appointing such
Person but without thereby releasing the Indenture Trustee from any of its
duties hereunder. If the Indenture Trustee shall request the Issuer to do so,
the Issuer shall join with the Indenture Trustee in the execution of such
instrument, but the Indenture Trustee shall have the power to make such
appointment without making such request. A separate trustee or co-trustee
appointed pursuant to this Section 6.13 need not meet the eligibility
requirements of Section 6.08.
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(b) Every separate trustee and co-trustee shall, to the extent not
prohibited by law, be subject to the following terms and conditions:
(i) the rights, powers, duties and obligations conferred or imposed
upon such separate or co-trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee, or the Indenture Trustee
and such separate or co-trustee jointly, as shall be provided in the
appointing instrument, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed the Indenture
Trustee shall be incompetent or unqualified to perform such act, in which
event such rights, powers, duties and obligations shall be exercised and
performed by such separate trustee or co-trustee;
(ii) all powers, duties, obligations and rights conferred upon the
Indenture Trustee, in respect of the custody of all cash deposited
hereunder shall be exercised solely by the Indenture Trustee; and
(iii) the Indenture Trustee may at any time by written instrument
accept the resignation of or remove any such separate trustee or
co-trustee, and, upon the request of the Indenture Trustee, the Issuer
shall join with the Indenture Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to make
effective such resignation or removal, but the Indenture Trustee shall
have the power to accept such resignation or to make such removal without
making such request. A successor to a separate trustee or co-trustee so
resigning or removed may be appointed in the manner otherwise provided
herein.
(c) Such separate trustee or co-trustee, upon acceptance of such trust,
shall be vested with the estates or property specified in such instrument,
jointly with the Indenture Trustee, and the Indenture Trustee shall take such
action as may be necessary to provide for the appropriate interest in the
applicable Trust Estate to be vested in such separate trustee or co-trustee. Any
separate trustee or co-trustee may, at any time, by written instrument
constitute the Indenture Trustee, its agent or attorney in fact with respect to
any Series with full power and authority, to the extent permitted by law, to do
all acts and things in respect of such Series and exercise all discretion in
respect of such Series authorized or permitted by it, for and on behalf of it
and in its name. If any separate trustee or co-trustee shall be dissolved,
become incapable of acting, resign, be removed or die, all the estates,
property, rights, powers, trusts, duties and obligations of said separate
trustee or co-trustee, so far as permitted by law, shall vest in and be
exercised by the Indenture Trustee, without the appointment of a successor to
said separate trustee or co-trustee, until the
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appointment of a successor to said separate trustee or co-trustee is necessary
as provided in this Indenture. Except as otherwise provided in the related Terms
Indenture, the appointment of a separate or co-trustee shall in no way release
the Indenture Trustee from any of its duties or responsibilities hereunder.
(d) No co-trustee or separate trustee hereunder shall be liable by reason
of any act or omission of the Indenture Trustee or of any other such trustee
hereunder.
(e) Any notice, request or other writing, by or on behalf of any
Bondholder of any Series, delivered to the Indenture Trustee in respect of such
Series shall be deemed to have been delivered to all separate trustees and
co-trustees for such Series.
SECTION 6.14. Appointment of Custodians.
The Indenture Trustee may, with the consent of the Issuer, appoint at the
Trustee's own expense one or more Custodians to hold, as agent for the Indenture
Trustee, all or a portion of any documents and/or instruments relating to the
Mortgage Collateral otherwise required to be held by the Indenture Trustee
hereunder; provided that if the Custodian is an Affiliate of the Indenture
Trustee such consent of the Issuer need not be obtained and the Indenture
Trustee shall merely inform the Issuer of such appointment. Each Custodian,
unless otherwise specified in the related Terms Indenture, shall be a depository
institution supervised and regulated by a Federal or State banking authority,
shall have combined capital and surplus of at least $10,000,000, shall be
qualified to do business in the jurisdiction in which it holds any documents
relating to any item of Mortgage Collateral, shall not be the Issuer, the
Depositor, a Seller or any Affiliate of any of the foregoing Persons, and shall
have in place a fidelity bond and errors and omissions policy, 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
Indenture Trustee hereunder in connection with the retention of documents
relating to any item of Mortgage Collateral directly by the Indenture Trustee.
Unless otherwise provided in the related Terms Indenture, the appointment of one
or more Custodians shall not relieve the Indenture Trustee from any of its
obligations hereunder, and the Indenture Trustee shall remain responsible for
all acts and omissions of any Custodians.
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ARTICLE VII
BONDHOLDER LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Bondholders.
The Bond Registrar on behalf of the Issuer will, with respect to each
Series, furnish or cause to be furnished to the Indenture Trustee not more than
five days after each January 1 and June 1 (commencing with the first such date
that is not more than six months after the related Closing Date), and at such
other times as the Indenture Trustee may request in writing, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Bondholders of such Series as of a date not more than 10 days prior to
the time such list is furnished; provided, however, that so long as the
Indenture Trustee is the Bond Registrar for any particular Series, no such list
shall be required to be furnished as to such Series.
SECTION 7.02. Preservation of Information; Communications to Bondholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Indenture Trustee as provided in Section 7.01.
The Indenture Trustee may destroy any list furnished to it as provided in such
Section 7.01 upon receipt of a new list so furnished.
(b) Bondholders may communicate pursuant to TIA ss. 312(b) with other
Bondholders with respect to their rights under this Indenture or under the
Bonds, and the Indenture Trustee shall comply with the TIA ss.312(b).
(c) The Issuer, the Indenture Trustee and the Bond Reg istrar shall have
the protection of TIA ss. 312(c).
SECTION 7.03. Reports by Indenture Trustee
(a) Within 30 days after May 15 of each year (the "reporting date"),
commencing with the first year after the Closing Date for any Series, the
Indenture Trustee shall mail to all Holders of such Series as described in TIA
ss. 313(c), a brief report, dated as of such reporting date with respect to such
Series, that complies with TIA ss. 313(a). The Indenture Trustee shall also mail
to all such Bondholders any reports required by TIA ss. 313(b). For purposes of
the information required to be included in such reports pursuant to TIA ss.ss.
313(a)(3) or 313(b)(2), the principal amount of "indenture securities"
outstanding on the date as of which such information is provided
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shall be the aggregate Principal Amount of Outstanding Bonds of the Series
covered by the report.
(b) A copy of each report required under this Section 7.03 shall, at the
time of such transmission to Holders of the Series covered by such report, be
filed by the Indenture Trustee with the Commission and with each securities
exchange upon which Bonds of such Series are listed. The Issuer will notify the
Indenture Trustee when the Bonds of any Series are listed on any securities
exchange.
SECTION 7.04. Reports by Issuer.
(a) The Issuer shall:
(1) file with the Indenture Trustee, within 15 days after the Issuer is
required to file the same with the Commission, copies of the annual reports and
of the information, documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time by rules and
regulations prescribe) which the Issuer may be required to file with the
Commission pursuant to Section 13 or 15(d) of the Exchange Act; or, if the
Issuer is not required to file information, documents or reports pursuant to
either of said sections, then it shall file with the Indenture Trustee and the
Commission, in accordance with the rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations;
(2) file with the Indenture Trustee and the Commission in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by the
Issuer with the conditions and covenants of this Indenture as may be required
from time to time by such rules and regulations;
(3) transmit or deliver to the Indenture Trustee, who shall, in turn,
transmit by mail to all Bondholders described in TIA ss. 313(c), such summaries
of any information, documents and reports required to be filed by the Issuer
pursuant to clauses (1) and (2) of this Section 7.04(a) as may be required by
rules and regulations prescribed from time to time by the Commission; and
(4) furnish to the Indenture Trustee, not less often than annually, a
certificate from the principal executive officer, principal financial officer or
principal accounting officer of the Issuer as to such officer's knowledge of the
Issuer's compliance with all conditions and covenants of this Indenture
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which compliance shall be determined without regard to any period of grace or
requirement of notice provided hereunder.
(b) Unless and until changed by notice in writing from the Issuer to the
Indenture Trustee, the fiscal year of the Issuer shall end on December 31 of
each year.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
SECTION 8.01. Collection of Money.
Except as otherwise expressly provided herein, the Indenture Trustee may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance from any fiscal agent or other intermediary,
all money and other property payable to or receivable by the Indenture Trustee
pursuant to this Indenture, including all payments due and payable to the
Indenture Trustee on or in respect of the Mortgage Collateral securing a Series
in accordance with the respective terms and conditions of the document or
documents pursuant to which it is being serviced and administered, in the case
of a Pledged Mortgage Loan or REO Property, or the respective terms and
conditions of such Mortgage Collateral and the document or documents pursuant to
which it was issued, in the case of a Pledged Mortgage-Backed Security. Except
as otherwise expressly provided herein, the Indenture Trustee shall hold all
such money and property received by it as part of the Trust Estate with respect
to the Series for which it was received and shall apply it as provided in this
Indenture.
All claims on and draws under any Enhancement in respect of any Series
shall be made by the Indenture Trustee or other specified Person in accordance
with the applicable Terms Indenture and/or any applicable Servicing and
Administration Agreement.
In the event that in any month any Paying Agent shall not have received
when due a payment required to be made thereto with respect to any item or items
of Mortgage Collateral in accordance with the respective terms and conditions of
the document or documents pursuant to which such Mortgage Collateral is being
serviced and administered, in the case of a Pledged Mortgage Loan or REO
Property, or was issued, in the case of a Pledged Mortgage-Backed Security, such
Paying Agent shall promptly notify the Indenture Trustee (except in the case
where the Indenture Trustee is the Paying Agent), and in any event (subject to
the terms and conditions of the applicable Terms Indenture or any applicable
Servicing and Administration Agreement) the Indenture Trustee shall, unless
within three Business Days following the date on which such payment was
scheduled to be made, such payment shall subsequently have been received by the
Indenture Trustee or
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other Paying Agent or unless the Issuer makes provisions for such payment
satisfactory to the Indenture Trustee, as soon as practicable thereafter request
the designated paying agent for such item or items of Mortgage Collateral to
make such payment on the earliest day permitted following such request. The
Indenture Trustee may withdraw such request upon subsequent receipt of such
payment. Notwithstanding any other provision hereof, the Paying Agent shall
deliver to the Issuer or its designee any payment with respect to any item of
Mortgage Collateral received after the scheduled date of receipt to the extent
the Issuer or its designee previously made provisions for such payment
satisfactory to the Paying Agent in accordance with this Section 8.01, and such
payment shall not be deemed part of the Trust Estate for any Series.
Except as otherwise expressly provided in the related Terms Indenture, if
following any request by the Indenture Trustee for payment of a late payment in
accordance with the preceding paragraph, any default occurs in the making of
such payment, or if a default occurs in any other performance required under any
Servicing and Administration Agreement, any Pledged Mortgage-Backed Security or
the document pursuant to which it was issued, any Credit Support Agreement or
any Cash Flow Agreement, the Indenture Trustee may, and upon the request of the
Issuer or the Holders of Bonds representing more than 50% of the aggregate
Principal Amount of the related Series shall, take such action as may be
appropriate to enforce such payment or performance, including the institution
and prosecution of appropriate Proceedings. Any such action shall be without
prejudice to any rights or remedies with respect to an Issuer Event of Default
under this Indenture as provided in Article V hereof.
SECTION 8.02. Bond Account.
(a) On or prior to the Closing Date for a Series, the Indenture Trustee or
other Paying Agent shall open and shall thereafter cause to be maintained, or
the Issuer shall cause a Paying agent to open and thereafter to cause to be
maintained, one or more accounts (collectively, as to any Series, the "Bond
Account") out of which payments on the Bonds of such Series shall be made. Each
such account constituting the Bond Account for any Series shall be maintained in
such manner and/or with such depository institutions as shall be specified in
the related Terms Indenture. The Bond Account for any Series shall relate solely
to the Bonds of such Series, and funds in the Bond Account for any Series shall
not be commingled with any monies in any other Account. All payments to be made
from time to time to the Holders of any Series out of funds in the Bond Account
for such Series pursuant to this Indenture shall be made by the Indenture
Trustee or other Paying Agent. The Indenture Trustee or such other Paying Agent
shall make deposits to and disbursements from the Bond Account for a Series, and
shall invest any and all amounts held therein from time to time, as provided in
the
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related Terms Indenture and any applicable Servicing and Administration
Agreement. All monies deposited from time to time in the Bond Account for a
Series pursuant to this Indenture and all investments made with such monies,
including all income or other gain from such investments, shall be held by the
Indenture Trustee or other Paying Agent in such Bond Account as part of the
Trust Estate for the related Series as herein provided, subject to withdrawal by
the Indenture Trustee or such other Paying Agent for the purposes set forth in
the related Terms Indenture. The Indenture Trustee or other Paying Agent shall
promptly notify the Issuer, the Indenture Trustee (if it is not the Paying
Agent), each Rating Agency for the related Series and any other Person required
to make deposits to a Bond Account of the location of such Bond Account when
first established and prior to any change in such location.
(b) Unless the Bonds of a Series have been declared due and payable
pursuant to Section 5.02 and distributions from the Trust Estate for such Series
are being applied pursuant to Section 5.06, amounts on deposit in the related
Bond Account shall be applied, including in respect of payments on the Bonds of
such Series, as provided in the related Terms Indenture.
SECTION 8.03. Other Accounts.
As and when required by the related Terms Indenture or any applicable
Servicing and Administration Agreement, the Issuer, the Indenture Trustee and
the Paying Agent, as applicable, shall establish and maintain such other
Accounts (in addition to the Bond Account) in respect of a Series as are
specified by, and in such manner and amounts and with such depository
institutions as are specified in, the related Term Indenture and/or any
applicable Servicing and Administration Agreement. Deposits to and disbursements
from such other Accounts, and investments of amounts held therein from time to
time, shall be made as provided in the related Terms Indenture or any related
Servicing and Administration Agreement.
SECTION 8.04. Release of Trust Estate.
(a) Subject to the payment of the Indenture Trustee's fees and expenses in
respect of any Series pursuant to Section 6.07 and to the payment of any other
Administrative Expenses, S&A Expenses or Additional Expenses in respect of such
Series, the Indenture Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property, securities or funds
constituting part of the Trust Estate securing such Series from the lien of this
Indenture, or convey the Indenture Trustee's interest in the same, in a manner
and under circumstances which are not inconsistent with the provisions of this
Indenture. No party relying upon an instrument executed by the Indenture Trustee
as provided in this Article VIII shall be bound to ascertain the Indenture
Trustee's
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authority, inquire into the satisfaction of any conditions precedent or see to
the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Bonds of a
Series Outstanding, all sums due the Indenture Trustee in respect of such Series
pursuant to Section 6.07 have been paid and all other applicable conditions, if
any, set forth in the related Terms Indenture have been satisfied, release any
remaining portion of the Trust Estate that secured such Series from the lien of
this Indenture and release any funds then on deposit in any Account for such
Series.
(c) Without restricting any other provision hereof regarding the release
of property, securities or funds, the Indenture Trustee shall release property
from the lien of this Indenture pursuant to this Section 8.04 only upon receipt
of an Issuer Order accompanied by an Officer's Certificate, an Opinion of
Counsel and (if required by the TIA) a certificate or opinion from an
Accountant, in accordance with TIA ss. 314(c) and meeting the applicable
requirements of Section 12.01(a).
(d) Upon any release of property, securities or funds in accordance with
this Section 8.04, the Indenture Trustee shall automatically be released of any
obligations and responsibilities with respect to the property, securities and
funds so released (including being released from the claims of any Person
against such property, securities or funds released).
SECTION 8.05. Opinion of Counsel.
The Indenture Trustee shall receive at least seven (7) days' notice when
requested by the Issuer to take any action pursuant to Section 8.04(a),
accompanied by copies of any instruments involved, and the Indenture Trustee
shall also require, as a condition to such action, an Opinion of Counsel, in
form and substance satisfactory to the Indenture Trustee, stating the legal
effect of any such action, outlining the steps required to complete the same,
and concluding that all conditions precedent to the taking of such action have
been complied with and such action will not materially and adversely impair the
security for the Bonds of the affected Series or the rights of the Holders of
such Bond in contravention of the provisions of this Indenture; provided,
however, that such Opinion of Counsel shall not be required to express an
opinion as to the fair value of the Trust Estate securing such Series. Counsel
rendering any such opinion may rely, without independent investigation,, on the
accuracy and validity of any certificate or other instrument delivered to the
Indenture Trustee in connection with any such action.
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ARTICLE IX
SUPPLEMENTAL INDENTURES
SECTION 9.01. Supplemental Indentures Without Consent of Bondholders.
Without the consent of any Bondholders, the Issuer and the Indenture
Trustee, at any time and from time to time, may amend this Indenture or enter
into one or more Terms Indentures or indentures supplemental hereto, for any of
the following purposes:
(1) to correct and amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and confirm
unto the Indenture Trustee any property subject or required to be subjected to
the lien of this Indenture, or to subject to the lien of this Indenture
additional property; or
(2) to add to the conditions, limitations and restrictions on the
authorized amount, terms and purposes of the issuance, authentication and
delivery of any Series, as herein set forth, additional conditions, limitations
and restrictions thereafter to be observed; or
(3) to set forth the terms of, and security for, any Series that has not
theretofore been authorized by a Terms Indenture; or
(4) to amend Section 2.10, but only with respect to a Series that has not
theretofore been authorized by a Terms Indenture; or
(5) to evidence the succession, in compliance with the applicable
provisions herein, of another person to the Issuer, and the assumption by any
such successor of the covenants of the Issuer contained herein and in the Bonds;
or
(6) to add to the covenants of the Issuer or the Indenture Trustee, for
the benefit of the Holders, or to surrender any right or power herein conferred
upon the Issuer; or
(7) to convey, transfer, assign, mortgage or pledge any property to or
with the Indenture Trustee; or
(8) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provisions herein, or to
amend any other provisions with respect to matters or questions arising under
this Indenture, provided that such action shall not materially and adversely
affect the interests of any of the Holders of the affected Series; or
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(9) to evidence and provide for the acceptance of appointment hereunder by
a successor trustee with respect to one or more Series and to add to or change
any of the provisions of this Indenture as shall be necessary to facilitate the
administration of the trusts hereunder by more than one trustee, pursuant to the
requirements of Section 6.10 or 6.13; or
(10) to modify this Indenture to the extent necessary to effect the
Indenture Trustee's qualification under the Trust Indenture Act or to comply
with the requirements of the Trust Indenture Act; or
(11) if one or more REMIC elections have been made with respect to any
Series, either (x) 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), provided that such action
shall not materially and adversely affect the interests of any of the Holders of
the affected Series, or (y) 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 related REMIC Pool at
least from the effective date of such amendment, insofar as such compliance is
necessary to preserve the status of any related REMIC Pool as a REMIC, 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 any
related REMIC Pool.
The Indenture Trustee is hereby authorized to join in the execution of any
such amendment, Terms Indenture or supplemental indenture and to make any
further appropriate agreements and stipulations which may be therein contained
or required. In connection with any such amendment or supplemental indenture,
the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
generally to the effect that such amendment will not adversely affect the
federal income tax status of the Issuer or of the Trust Estate for any Series
affected thereby. The Indenture Trustee may, in its discretion, elect not to
join in the execution of any amendment or supplemental indenture if it
determines that any such amendment or supplemental indenture materially and
adversely affects the rights, duties, liabilities and immunities of the
Indenture Trustee.
SECTION 9.02. Supplemental Indentures With Consent of Bondholders.
With the consent of the Holders of Bonds representing more than 50% of the
aggregate Principal Amount (or, in the case of a Class of Interest Only Bonds,
the aggregate Notional Amount) of each Class of any Series, the Issuer and the
Indenture Trustee
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may amend this Indenture or enter into one or more indentures supplemental
hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture with respect to such Series
or of modifying in any manner the rights of the Bondholders of such Series under
this Indenture; provided that no such amendment or supplemental indenture shall,
without the consent of the Holder of each Outstanding Bond affected thereby:
(1) change the date of payment of any installment of principal of or
interest or premium, if any, on any Bond, or reduce the Principal Amount
thereof, the Bond Interest Rate thereon or the Redemption Price with respect
thereto, change the provisions of this Indenture relating to the application of
payments, collections and/or distributions on, or the proceeds of the sale of,
the related Trust Estate to payments of principal of or interest or premium, if
any on any Bonds or change any place of payment where, or the coin or currency
in which, any Bond or the interest or premium, if any, thereon is payable, or
impair the right to institute suit for the enforcement of the provisions of this
Indenture requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on any Bond on or after the
respective due dates thereof (or, in the case of redemption, on or after the
applicable Redemption Date);
(2) reduce the percentage of the Voting Rights for or allocated to, or the
percentage of the aggregate Principal Amount or Notional Amount of, any Class
and/or Series, the consent of the Holders of Bonds representing which is
required for any such supplemental indenture, or the consent of the Holders of
Bonds representing which is required for any waiver of compliance with certain
provisions of this Indenture or certain defaults hereunder and their
consequences provided for in this Indenture;
(3) modify or alter the provisions of the proviso to the definition of the
term "Outstanding";
(4) reduce the percentage of the Voting Rights allocated to, or the
percentage of the aggregate Principal Amount or Notional Amount of, any Class of
any Series, the consent or direction of the Holders of Bonds representing which
is required to allow or direct the Indenture Trustee to sell or liquidate the
Trust Estate pursuant to Section 5.04 or Section 5.12;
(5) modify any provision of this Section 9.02, except to increase any
percentage specified herein or to provide that certain additional provisions of
this Indenture cannot be modified or waived without the consent of the Holder of
each Outstanding Bond affected thereby;
(6) modify any of the provisions of this Indenture in such manner as to
affect the calculation of the amount of any payment
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of interest, premium (if any) or principal due on any Bond on any Payment Date
(including the calculation of any of the individual components of such
calculation) or to affect the rights of the Holders of any Series to the benefit
of any provisions for the mandatory redemption of the Bonds of such Series
contained herein; or
(7) permit the creation of any lien ranking prior to or on a parity with
the lien of this Indenture with respect to any part of the Trust Estate securing
any Series or terminate the lien of this Indenture on any property at any time
subject hereto or deprive the Holder of any Bond of the security afforded by the
lien of this Indenture, except as otherwise expressly permitted hereby.
The Indenture Trustee may in its discretion determine whether or not any
Bonds would be affected by any amendment or supplemental indenture and any such
determination shall be conclusive upon the Holders of all Bonds, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for the consent of Bondholders under this
Section 9.02 to approve the particular form of any proposed amendment or
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
For purposes of giving the consents contemplated by this Section 9.02,
Bonds held by the Issuer, the Depositor and any Affiliate thereof will be given
the same regard as Bonds held by any other Person.
SECTION 9.03. Additional Conditions to Supplemental Indentures.
Any Terms Indenture may set forth additional conditions and restrictions
regarding amendments of and supplements to this Indenture with respect to the
related Series.
SECTION 9.04. Delivery of Supplements and Amendments.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture or amendment pursuant to the provisions hereof, the
Indenture Trustee, at the expense of the Issuer payable out of the related Trust
Estate pursuant to Section 6.07, shall mail, first class postage prepaid, to
each Holder of Bonds to which such supplemental indenture or amendment relates a
notice setting forth in general terms the substance of such supplemental
indenture or amendment. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture or amendment.
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SECTION 9.05. Execution of Supplemental Indentures.
In executing, or permitting the additional trusts created by, any
amendment or supplemental indenture permitted by this Article IX or in accepting
the modifications thereby of the trusts created by this Indenture, the Indenture
Trustee shall be entitled to receive, at the Issuer's expense payable out of the
related Trust Estate pursuant to Section 6.07, and subject to Sections 6.01 and
6.03, shall be fully protected in relying upon, an Opinion of Counsel stating
that the execution of such amendment or supplemental indenture is authorized or
permitted by this Indenture. The Indenture Trustee may, but shall not be
obligated to, enter into any such amendment or supplemental indenture that
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise.
SECTION 9.06. Effect of Supplemental Indentures.
Upon the execution of any amendment, supplemental indenture or Terms
Indenture pursuant to the provisions hereof, this Indenture shall be and shall
be deemed to be modified and amended in accordance therewith with respect to
each Series affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer and the Holders of the Bonds of each Series
affected thereby shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such amendment, supplemental indenture or Terms
Indenture shall be and be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 9.07. Conformity with Trust Indenture Act.
Every amendment, supplemental indenture and Terms Indenture executed
pursuant to this Article IX shall conform to the requirements of the Trust
Indenture Act as then in effect so long as this Indenture shall then be required
to be qualified under the Trust Indenture Act.
SECTION 9.08. Reference in Bonds to Supplemental Indentures.
Bonds authenticated and delivered after the execution of any amendment or
supplemental indenture pursuant to this Article IX may, and if required by the
Indenture Trustee shall, bear a notation in form approved by the Indenture
Trustee as to any matter provided for in such amendment or supplemental
indenture that affects such Bonds. If the Issuer or the Indenture Trustee shall
so determine, new Bonds so modified as to conform, in the opinion of the
Indenture Trustee and the Issuer, to any such amendment or supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture
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Trustee in exchange for Outstanding Bonds affected by such amendment or
supplemental indenture.
ARTICLE X
OPTIONAL REDEMPTION OF BONDS BY ISSUER
AND SPECIAL REDEMPTION OF BONDS
SECTION 10.01. Optional Redemption by Issuer.
(a) To the extent and subject to the conditions specified in the related
Terms Indenture, the Issuer may, at its option, redeem Bonds of any Series and
Class, in whole or in part, at the applicable Redemption Price therefor, on a
random lot or pro rata basis, on any date that would otherwise constitute a
Payment Date, all as permitted by the related Terms Indenture. If the Issuer
shall elect to redeem Bonds pursuant to this Section 10.01, subject to the
applicable provisions and restrictions set forth in the related Terms Indenture,
it shall furnish notice of such election to the Indenture Trustee not later than
30 days prior to the Redemption Date whereupon all such Bonds shall be due and
payable and the Issuer shall furnish a notice complying with Section 10.02 to
each Holder of the Class or Classes being called for redemption pursuant to this
Section 10.01. The Issuer's option to redeem Bonds shall be evidenced by an
Issuer Order directing the Indenture Trustee to redeem Bonds in the aggregate
Principal Amount or Notional Amount (as the case may be), on the Redemption Date
and at the Redemption Price specified in such Issuer Order.
(b) Unless otherwise stated in the related Terms Indenture, the Redemption
Price for any Bond of a Series to be redeemed pursuant to this Section 10.01
will be equal to 100% of the outstanding Principal Amount of such Bond, together
with accrued and unpaid interest thereon at the applicable Bond Interest Rate
through the end of the Interest Accrual Period relating to the Payment Date that
will also constitute the Redemption Date.
(c) In the case of a redemption pursuant to this Section 10.01, unless
otherwise specified in the related Terms Indenture, on or before the Business
Day next preceding the date on which notice of redemption is to be given as
provided in Section 10.02, the Issuer shall deposit with the Paying Agent cash
or Permitted Investments, in an amount sufficient (together with any amounts
then available for such purpose in the related Bond Account and/or any other
Pledged Fund or Account for such Series) to provide for payment on the
Redemption Date of the Redemption Price for the Bonds of such Series to be
redeemed.
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SECTION 10.02. Form of Optional Redemption or Special Redemption Notice.
Notice of redemption under Section 10.01 or of any special redemption
under Section 10.04 shall be given by the Issuer (or by the Indenture Trustee at
the Issuer's expense, if the Issuer, not less than 20 days prior to the
applicable Redemption Date or Special Redemption Date, as the case may be,
requests the Indenture Trustee to give such notice of redemption and furnishes
to the Indenture Trustee the proposed form thereof, complying with this Section
10.02) by first-class mail, postage prepaid, mailed not less than 10 days
(unless otherwise specified in the applicable Terms Indenture) prior to the
applicable Redemption Date, or five days (unless otherwise specified in the
applicable Terms Indenture) prior to the applicable Special Redemption Date, as
the case may be, to each Person in whose name a Bond to be redeemed is
registered (unless otherwise specified in the applicable Terms Indenture) as of
the close of business on the Regular Record Date preceding the applicable
Redemption Date that is also a Payment Date, or on the Special Redemption Record
Date preceding the applicable Special Redemption Date, at such Holder's address
appearing in the Bond Register; provided, however, that (unless otherwise
specified in the applicable Terms Indenture) no such notice of optional
redemption shall be mailed by the Indenture Trustee unless the applicable Bond
Account contains funds sufficient to pay the Redemption Price for the Bonds to
be redeemed.
All notices of redemption shall state;
(1) the Redemption Date or Special Redemption Date, as applicable;
(2) the Redemption Price or Special Redemption Price, as applicable;
(3) if Bonds of a Class are not to be paid in full on a Special
Redemption Date, that the Special Redemption Price will become due and
payable on such Special Redemption Date with respect to the principal
amount of each Individual Bond as shall be specified in such notice, that
the amount payable in respect of the principal amount of each such Bond
shall be limited to the principal portion of the Special Redemption Price
therefor, that no interest shall accrue on such principal amount to be so
redeemed for any period after the Designated Interest Accrual Date for
such Special Redemption Date and that payment of the Special Redemption
Price will be paid by check mailed to the Persons whose names appear as
the registered Holders thereof on the Bond Register as of the Special
redemption Record Date applicable to such Special Redemption Date and
identified in such notice of redemption; and
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(4) if Bonds of a Class are to be paid in full on a Redemption Date
or a Special Redemption Date, the fact of such expectation of payment in
full, the place(s) where such Bonds may be surrendered for payment of the
Redemption Price or the Special Redemption Price, as the case may be
(which shall include the office or agency to be maintained as provided in
Section 3.02), and that no interest shall accrue on such Bonds for any
period after either the end of the Interest Accrual Period relating to
such Redemption Date or the Designated Interest Accrual Date for such
Special Redemption Date, as the case may be.
Notice of redemption or special redemption as specified herein shall be
given by the Issuer, or by the Indenture Trustee in the name of and at the
expense of the Issuer if the Issuer requests the Indenture Trustee to do so as
provided above in this Section 10.02. Failure to give notice of redemption or
special redemption, or any defect therein, to any Holder of any Bond selected
for redemption or special redemption shall not impair or affect the validity of
the redemption or special redemption of any other Bond so selected.
SECTION 10.03. Bonds Payable on Redemption Date or Special Redemption
Date.
Notice of redemption or special redemption having been given as provided
in Section 10.02, the Bonds or portions thereof to be redeemed shall, on the
applicable Redemption Date or Special Redemption Date, as the case may be,
become due and payable at the Redemption Price or Special Redemption Price, as
the case may be, and unless (a) the Issuer shall default in the payment of the
Redemption Price or Special Redemption Price, as the case may be, or (b) as
otherwise specified in the related Terms Indenture, no interest shall accrue on
the Principal Amount of such Bonds or portions thereof to be redeemed for any
period after the end of the Interest Accrual Period relating to such Redemption
Date or after the Designated Interest Accrual Date for such Special Redemption
Date, as the case may be.
SECTION 10.04. Special Redemptions.
(a) If the related Terms Indenture provides for Payment Dates in respect
of any Series to occur less frequently than every month, and if the Indenture
Trustee or other specified Person determines (based on the assumptions, if any,
and as a result of the particular circumstances, if any, specified in the
related Terms Indenture and after giving effect to the amounts, if any,
available to be withdrawn under any form of Enhancement for such Series) that
the amount anticipated to be on deposit in the related Bond Account and
available to make payments on the Bonds of such Series on the next succeeding
Payment Date or other date specified in the related Terms Indenture, shall be
insufficient to pay interest and/or principal expected or
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assumed, as the case may be, to be due and payable on the Bonds of such Series
on such date, then, to the extent and subject to the conditions specified in the
related Terms Indenture, the Bonds of any Class of such Series may be subject to
special redemption, in whole or in part, at the applicable Special Redemption
Price therefor, on a pro rata basis, on any Special Redemption Date in any
calendar month during which a Payment Date does not also occur.
(b) There shall be no limit upon the number of times the Issuer may call
Bonds for special redemption and more than one Special Redemption Date may be
fixed by the Issuer between two succeeding Payment Dates so long as (i) the
requisite determinations contemplated by Section 10.04(a) and specified in the
related Terms Indenture are made, (ii) the other requirements of this Article X
are complied with and (iii) no more than one Special Redemption Date shall be
scheduled in any calendar month.
(c) Unless otherwise stated in the related Terms Indenture, the Special
Redemption Price for any Bond of a Series to be redeemed in connection with a
special redemption pursuant to this Section 10.04 will be equal to 100% of the
outstanding Principal Amount of such Bond or portion thereof to be so redeemed,
together with accrued and unpaid interest thereon at the applicable Bond
Interest Rate from the first day following the Interest Accrual Period relating
to the Payment Date immediately preceding the Special Redemption Date (or from
the Accrual Date in the case of a special redemption prior to the first Payment
Date for such Series) through the Designated Interest Accrual Date for the
Special Redemption Date.
ARTICLE XI
BONDHOLDERS' MEETING
SECTION 11.01. Purposes for Which Meetings May Be Called.
Unless otherwise specified in the related Terms Indenture, a meeting of
Bondholders of any Series or Class may be called at any time and from time to
time pursuant to the provisions of this Article XI for any of the following
purposes:
(a) to give any notice to the Issuer or to the Indenture Trustee, to
give any direction to the Indenture Trustee, to consent to the waiver of
any default hereunder and its consequences, or to take any other action
authorized to be taken by Bondholders pursuant to any of the provisions of
Article V;
(b) to remove the Indenture Trustee with respect to any Series and
appoint a successor trustee pursuant to the provisions of Article VI;
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(c) to consent to the execution of an amendment or amendments hereof
or to an indenture or indentures supplemental hereto pursuant to the
provisions of Article IX; or
(d) to take any other action authorized to be taken by or on behalf
of the Holders of any Class and/or Series under any other provision of
this Indenture or under applicable law.
SECTION 11.02. Manner of Calling Meetings.
The Indenture Trustee may at any time call a meeting of Bondholders of any
Class and/or Series to take any action specified in Section 11.01, to be held at
such time and at such place in the continental United States as the Indenture
Trustee shall determine. Notice of every meeting of the Bondholders of any Class
and/or Series, setting forth the time and the place of such meeting, shall be
mailed not less than 20 or more than 60 days prior to the date fixed for the
meeting to each such Bondholder as provided in Section 12.05. Any failure of the
Indenture Trustee to mail notice to every Bondholder of the applicable Class
and/or Series or any defect in mailing the notice shall not impair or affect the
validity of the meeting. The Indenture Trustee may fix, in advance, a date as
the record date for determining the Bondholders of the applicable Class and/or
Series entitled to notice of or to vote at any such meeting not less than 20 nor
more than 75 days prior to the date fixed for such meeting.
SECTION 11.03. Call of Meeting by Issuer or Bondholders.
If, at any time the issuer, pursuant to an Issuer Order, shall have
requested the Indenture Trustee to call a meeting of the Bondholders of any
Class and/or Series, or the Holders of Bonds representing (unless otherwise
specified in the related Terms Indenture) at least 10% of the aggregate
Principal Amount of any Class and/or Series shall have requested the Indenture
Trustee to call a meeting of Bondholders of such Class and/or Series, to take
any action authorized in Section 11.01, by written request setting forth in
reasonable detail the action proposed to be taken at such meeting, and the
Indenture Trustee shall not have mailed notice of such meeting within 15 days
after receipt of such request, then the Issuer or the Holders of Bonds of the
applicable Class and/or Series representing (unless otherwise specified in the
related Indenture) at least 10% of the aggregate Principal Amount of such Class
and/or Series may determine the time and the place for such meeting, the record
date for determining the Bondholders entitled to notice of or to vote at such
meeting, and may call such meeting only to take any action authorized in Section
11.01, by mailing notice thereof as provided in Section 11.02.
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SECTION 11.04. Who May Attend and Vote at Meetings.
To attend and to be entitled to vote at any meeting of Bondholders a
Person shall (i) be a Holder on the applicable record date of one or more Bonds
of the Class and/or Series with respect to which such meeting was called or (ii)
be a Person appointed by an instrument in writing as proxy by a Holder described
in the immediately preceding clause (i). The only Persons who shall be entitled
to be present or to speak at any meeting of Bondholders of any Class and/or
Series shall be the Persons entitled to vote at such meeting and their counsel,
and any representatives of the Issuer and the Indenture Trustee and their
counsel.
SECTION 11.05. Regulations May Be Made by Indenture Trustee.
Notwithstanding any other provisions of this Indenture, the Indenture
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Bondholders, in regard to proof of the appointment of proxies, and in
regard to the appointment and duties of inspectors of votes, the submission and
examination of proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as it shall deem
appropriate. Except as otherwise permitted or required by any such regulations,
the holding of Bonds shall be proved in the manner specified in Section 12.03
and the appointment of any proxy shall be proved in the manner specified in such
Section 12.03; provided, however, that such regulations may provide that written
instruments appointing proxies regular on their face may be presumed valid and
genuine without the proof hereinabove or in such Section 12.03 specified.
The Indenture Trustee shall, by written instrument, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the Issuer
or by Bondholders as provided in Section 11.03, in which case the Issuer or the
Bondholders calling the meeting, as the case may be, shall in like manner
appoint a temporary chairman. A permanent chairman and permanent secretary of
the meeting shall be elected by majority vote (calculated in accordance with the
following paragraph) of the Persons present at the meeting and entitled to vote.
At any meeting of Holders, unless otherwise provided in the related Terms
Indenture, each Person entitled to vote at such meeting shall be entitled to one
vote for each Individual Bond of the applicable Class and/or Series held and/or
represented by such Person; provided, however, that no vote shall be cast or
counted at any meeting in respect of any Bond challenged as not Outstanding and
ruled by the chairman of the meeting to be not Outstanding. The chairman of the
meeting shall have no right to vote other than by virtue of Bonds held by him or
instruments in writing as aforesaid duly designating such chairperson as the
proxy to vote on behalf of other Bondholders. Any meeting of
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Bondholders duly called pursuant to the provisions of Section 11.02 or 11.03 may
be adjourned from time to time, and the meeting may be held as so adjourned
without further notice.
At any meeting of Holders, unless otherwise provided in the related Terms
Indenture, the presence of Persons holding or representing Bonds of the
applicable Class and/or Series in an aggregate Principal Amount sufficient to
take action upon the business for the transaction of which such meeting was
called, shall be necessary to constitute a quorum; but, if less than a quorum be
present, the Persons holding or representing Bonds of the applicable Class
and/or Series with an aggregate Principal Amount of more than 50% of the
aggregate Principal Amount of all the Bonds of such Class and/or Series
represented at the meeting may adjourn such meeting with the same effect, for
all intents and purposes, as though a quorum had been present.
SECTION 11.06. Manner of Voting at Meetings and Records To Be Kept.
The vote upon any matter submitted to any meeting of Bondholders shall be
by written ballots on which shall be subscribed the signatures of such Holders
or of their representatives by proxy and the serial number or numbers of the
Bonds of the applicable Class and/or Series held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports in duplicate of all votes cast at the meeting. A record in duplicate of
the proceedings of each meeting of Bondholders shall be prepared by the
secretary of the meeting and there shall be attached to said record the original
reports of the inspectors of votes on any vote by ballot taken thereat and
affidavits by one or more Persons having knowledge of the facts setting forth a
copy of the notice of the meeting and showing that said notice was mailed as
provided in Section 11.02. The record shall show the serial numbers of the Bonds
voting in favor of and against any resolutions. The record shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one of the duplicates shall be delivered to the Issuer and the other
to the Indenture Trustee to be preserved by the Indenture Trustee.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
SECTION 11.07. Exercise of Rights of Indenture Trustee and Bondholders Not
To Be Hindered or Delayed.
Nothing contained in this Article XI shall be deemed or construed to
authorize or permit, by reason of any call of a meeting of Bondholders or any
rights expressly or impliedly
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conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Indenture Trustee or to
the Bondholders under any of the provisions of this Indenture or of the Bonds.
Unless otherwise provided in the related Terms Indenture, any action specified
in Section 11.01 may be effected by Act of the appropriate Bondholders or in any
other manner permitted hereby, without any meeting being called pursuant to this
Article XI.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture Trustee
to take any action under any provision of this Indenture, and in any event under
the circumstances provided in Sections 2.10(b), 4.01 and 8.04(a), the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, and (iii) (if required by the TIA) a certificate or opinion from
an Accountant stating that in the opinion of such Accountant all such conditions
precedent, if any, subject to verification by Accountants have been complied
with, and in each such case meeting the applicable requirements of this Section
12.01(a), except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished. If
and for so long as this Indenture is required to be qualified under the Trust
Indenture Act, the Accountant rendering the certificate or opinion referred to
in clause (iii) of the preceding sentence shall, as and when required by TIA ss.
314(c)(3), be an Independent Accountant selected or approved by the Indenture
Trustee in the exercise of reasonable care.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
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(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) If this Indenture is or is to be secured by the mortgage or pledge of
property or securities, then (in addition to any obligation imposed in Section
12.01(a) or elsewhere in this Indenture):
(1) Whenever any property or securities are to be released from the lien
of this Indenture with respect to any Series, the Issuer shall furnish to the
Indenture Trustee a certificate or opinion of an engineer, appraiser or other
expert in such matters (which engineer, appraiser or other expert shall be
Independent as and when required by TIA ss. 314(d))certifying or stating the
opinion of such Person as to the fair value (within 90 days of such release) of
the property or securities proposed to be released and stating that in the
opinion of such Person the proposed release will not, in contravention of the
provisions hereof, impair the security under this Indenture with respect to such
Series.
(2) Prior to the deposit of any property or securities (other than Bonds
of the affected Series and securities secured by a lien prior to the lien of
this Indenture upon property subject to the lien of this Indenture with respect
to the affected Series) with the Indenture Trustee which deposit is to be made
the basis for (A) the authentication and delivery of any Series, (B) the
withdrawal of cash or any Enhancement constituting a part of the Trust Estate
for any Series or (C) the release of any property or securities subject to the
lien of this Indenture with respect to any Series, the Issuer shall furnish to
the Indenture Trustee a certificate or opinion of an engineer, appraiser or
other expert in such matters (which engineer, appraiser or other expert shall be
Independent as and when required by TIA ss. 314(d)) certifying or stating the
opinion of such Person as to the fair value (within 90 days of such deposit) to
the Issuer of the property or securities to be so deposited and the fair value
to the Issuer of such other property or securities as shall be required by TIA
ss. 314(d) to be covered by such certificate or opinion.
SECTION 12.02. Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person,
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it is not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or covered by
only one document, but one such Person may certify or give an opinion with
respect to some matters and one or more other such Persons as to other matters,
and any such Person may certify or give an opinion as to such matters in one or
several documents.
Any certificate or opinion of an Authorized Officer of the Owner Trustee
on behalf of the Issuer may be based, insofar as it relates to legal matters,
upon a certificate or opinion of, or representations by, counsel, unless such
officer knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers or other individual representative of the Owner Trustee, the
Indenture Trustee, the Depositor or other appropriate Person, stating that the
information with respect to such factual matters is in the possession of the
Owner Trustee, the Indenture Trustee, the Depositor or such other appropriate
Person, unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
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SECTION 12.03. Acts of Bondholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Bondholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Bondholders in person or by agents duly appointed
in writing; and except as herein otherwise expressly provided such action shall
become effective when such instrument or instruments are delivered to the
Indenture Trustee and, where it is hereby expressly required, to the Issuer.
Such instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Bondholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and (subject to Section 6.01) conclusive in favor of
the Indenture Trustee and the Issuer, if made in the manner provided in this
Section 12.03.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action of any Holder shall bind every future Holder of the same Bond
and the Holder of every Bond issued upon the transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, suffered or omitted to
be done by the Indenture Trustee or the Issuer in reliance thereon, whether or
not notation of such action is made upon such Bond.
SECTION 12.04. Notice, etc., to Indenture Trustee and Issuer.
Except as otherwise provided herein, any request, demand, authorization,
direction, notice, consent, waiver or Act of Bondholders or other communication
provided or permitted by this Indenture to be given to the Indenture Trustee or
the Issuer shall be in writing and deemed given when delivered to:
(a) the Indenture Trustee at its Corporate Trust Office, or
(b) the Issuer addressed to it in care of the Owner Trustee at the
address set forth in the Terms Indenture and/or at such other address as
may be set forth in the related Terms Indenture or otherwise furnished in
writing to the Indenture Trustee and each Holder of any affected
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Series. The Issuer shall promptly transmit any notice
received by it from any Bondholder to the Indenture Trustee.
SECTION 12.05. Notices to Bondholders; Notification Requirements and
Waiver.
Where this Indenture provides for notice to Bondholders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class, postage prepaid to each Bondholder
affected by such event, at its address as it appears on the Bond Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Bondholders is given
by mail, neither the failure to mail such notice nor any defect in any notice so
mailed to any particular Bondholder shall affect the sufficiency of such notice
with respect to other Bondholders, and any notice that is mailed in the manner
herein provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Bondholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Bondholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies that have
assigned a rating to any Class of a Series, failure to give such notice shall
not affect any other rights or obligations created hereunder, and shall not
under any circumstance constitute an Issuer Default with respect to such Series.
SECTION 12.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or of any of the Bonds to
the contrary, the Issuer, with prior written consent of the Indenture Trustee
and any Paying Agent other than the Indenture Trustee, may enter into any
agreement with any Holder providing for a method of payment, or notice by the
Indenture Trustee or Paying Agent to such Holder, which is different from the
methods provided for in this Indenture. The Issuer will furnish to the Indenture
Trustee and the Paying Agent a copy of
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each such agreement and the Indenture Trustee and the Paying Agent will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 12.07. Conflict with Trust Indenture Act.
(a) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required or deemed to be included in this Indenture by
any of the provisions of the Trust Indenture Act, such required or deemed
provision shall control if and for so long as this Indenture is required to be
qualified under the Trust Indenture Act.
(b) If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by operation of TIA ss. 318(c), the imposed duties shall
control.
SECTION 12.08. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 12.09. Successors and Assigns.
All covenants and agreements in this Indenture by the Issuer shall bind
its successors and permitted assigns, whether so expressed or not.
SECTION 12.10. Separability Clause.
In case any provision of this Indenture or of the Bonds shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 12.11. Benefits of Indenture.
Nothing in this Indenture or in the Bonds, express or implied, shall give
to any Person, other than the parties hereto and their successors hereunder, the
Bondholders and any other party secured hereunder, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 12.12. Legal Holidays.
If any date on which principal of, premium, if any, on or interest on any
Bond is proposed to be paid hereunder, or any date on which mailing of notices
by the Indenture Trustee to any Person is required pursuant to any provision of
this Indenture, shall not be a Business Day, then (notwithstanding any other
provision of the Bonds or this Indenture) payment of such amount or mailing of
such notice need not be made on such date, but may
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be made or mailed on the next succeeding Business Day with the same force and
effect, and in the case of payments, no interest shall accrue for the period
from and after the date on which such payment was due to the next succeeding
Business Day when paid.
SECTION 12.13. GOVERNING LAW.
UNLESS OTHERWISE PROVIDED IN THE RELATED TERMS INDENTURE, THIS INDENTURE,
EACH INDENTURE SUPPLEMENTAL HERETO AND EACH BOND SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.
SECTION 12.14. Execution Counterparts.
This instrument may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
SECTION 12.15. Recording of Indenture.
If this Indenture is subject to recording in any appropriate public
recording offices, such recording is to be effected by and at the expense of the
Issuer upon written request of the Indenture Trustee accompanied by an Opinion
of Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee and which shall be an expense of
the Issuer) to the effect that such recording is necessary either for the
protection of the Bondholders of any Series or any other Person secured
hereunder or for the enforcement of any right or remedy granted to the Indenture
Trustee under this Indenture.
SECTION 12.16. Trust Obligation.
No recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer on the Bonds or under this Indenture (other than with
respect to Permitted Investments as to which such Person is the issuer) or any
certificate or other writing delivered in connection herewith or therewith,
against (i) any owner of a beneficial interest in the Issuer, (ii) the Owner
Trustee or the Indenture Trustee in its individual capacity, (iii) any partner,
owner, beneficiary, agent, officer, director, employee or agent of the Owner
Trustee or the Indenture Trustee in its individual capacity, or (iv) any holder
of a beneficial interest in the Owner Trustee or the Indenture Trustee or of any
successor or assignee of the Owner Trustee or the Indenture Trustee in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that neither the Owner Trustee nor the Indenture Trustee has
any such obligations in its individual capacity).
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SECTION 12.17. No Petition.
Unless otherwise provided in the related Terms Indenture, The Indenture
Trustee, by entering into this Indenture, and each Bondholder, by accepting a
Bond, hereby covenant and agree that they will not at any time institute against
the Depositor or the Issuer, or join in any institution against the Depositor or
the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation Proceedings, or any other Proceedings under any United States
federal or state bankruptcy or similar law, in connection with any obligations
relating to the Bonds, this Indenture or any Servicing and Administration
Agreement.
SECTION 12.18. Inspection.
The Issuer agrees that, on reasonable prior notice, it will permit any
representative of the Indenture Trustee, during the Issuer's normal business
hours, to examine all the books of account, records, reports, and other papers
of the Issuer, to make copies and extracts therefrom, to cause such books to be
audited by Independent Accountants, and to discuss the Issuer's affairs,
finances and accounts with the Issuer's representatives, employees, and
Independent Accountants, all at such reasonable times and as often as may be
reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information except to the extent
disclosure may be required by law and except to the extent that the Indenture
Trustee may reasonably determine that such disclosure is consistent with its
obligations hereunder.
SECTION 12.19. Usury.
The amount of interest payable or paid on any Bond under the terms of this
Indenture shall be limited to interest thereon at the maximum nonusurious rate
of interest permitted by the applicable laws of the State of New York (or the
laws of any other jurisdiction determined to be applicable by a court of
competent jurisdiction) or any applicable laws of the United States permitting a
higher maximum nonusurious rate that preempts such applicable New York (or
other) laws, which could lawfully be contracted for, charged or received (the
"Highest Lawful Rate"). In the event any payment of interest on any Bond is in
excess of interest thereon at the Highest Lawful Rate, the Issuer stipulates
that the excess payment of interest will be deemed to have been paid as a result
of an error on the part of both the Indenture Trustee (for which the Indenture
Trustee shall have no liability of any kind), acting on behalf of the Holder
receiving such excess payment, and the Issuer, and the Holder receiving such
excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Issuer or the Indenture Trustee, refund the amount of such
excess or, at the option of the Indenture Trustee, apply the excess to the
payment of principal of such Bond, if any, remaining unpaid. In addition, all
sums
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paid or agreed to be paid for the use, forbearance or detention of money shall,
to the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of such Bonds.
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CRIIMI MAE COMMERCIAL MORTGAGE TRUST [I],
a trust acting through ____________________,
not in its individual capacity but solely as Owner-Trustee,
as Issuer,
and
________________________________________,
as Indenture Trustee
-----------------------------
TERMS INDENTURE
Dated as of _______, 199_
-----------------------------
$----------
COLLATERALIZED MORTGAGE OBLIGATIONS,
SERIES 199_-_
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
PRELIMINARY STATEMENT......................................................-1-
GRANTING CLAUSES...........................................................-1-
SECTION 1. Designation..................................................-2-
SECTION 2. Certain Defined Terms........................................-3-
SECTION 3. Date of the Bonds...........................................-12-
SECTION 4. Forms of the Bonds..........................................-12-
SECTION 5. Denominations of the Bonds..................................-13-
SECTION 6. Book-Entry Bonds............................................-13-
SECTION 7. Initial Aggregate Principal Amount; Classes; Terms..........-13-
SECTION 8. Delivery of Mortgage Collateral.............................-15-
SECTION 9. Servicing and Administration of the Pledged Mortgage Loans..-17-
SECTION 10. Releases of Pledged Mortgage Loans and REO Properties.......-17-
SECTION 11. Certain Designations of the Master Servicer and the
Special Servicer............................................-18-
SECTION 12. Restrictions on Transfer of Bonds...........................-18-
SECTION 13. Bond Account................................................-21-
SECTION 14. Payments on the Bonds.......................................-23-
SECTION 15. Reports to Bondholders and Others...........................-28-
[SECTION 16. Optional Redemption of the Bonds]...........................-29-
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SECTION 17. Additional Negative Covenant and Issuer Events of Default...-30-
SECTION 18. Incorporation of the Standard Indenture Provisions by
Reference; [Amendments to the Standard Indenture Provisions];
Ratification of Standard Indenture Provisions...............-30-
SECTION 19. Certain Matters Regarding the Indenture Trustee.............-30-
SECTION 21. Notice to the Indenture Trustee, the Issuer and
Certain Other Persons.......................................-31-
SECTION 22. Tax Treatment...............................................-32-
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TERMS INDENTURE dated as of __________, 199_ between CRIIMI MAE
COMMERCIAL MORTGAGE TRUST [I] (the "Issuer", which term includes any successor
entity hereunder), a business trust created under the laws of __________
pursuant to the Deposit Trust Agreement referred to below and acting through
__________, not in its individual capacity but solely as owner-trustee under
such Deposit Trust Agreement (the "Owner Trustee", which term includes any
successor entity hereunder and thereunder), and __________, a __________, as
trustee (the "Indenture Trustee", which term includes any successor entity
hereunder).
PRELIMINARY STATEMENT
The Issuer is a Trust organized by the Depositor pursuant to a
Deposit Trust Agreement dated as of __________, 199_ (the "Deposit Trust
Agreement"), by and between the Owner Trustee and the Depositor. The Issuer will
act at all times through the Owner Trustee. The Issuer has duly authorized the
execution and delivery of this Terms Indenture to provide for the issuance of
$__________ in aggregate Principal Amount of its Collateralized Mortgage
Obligations, Series 199_-_ (the "Bonds"). The Bonds are issuable as provided in
this Terms Indenture and in those certain Standard Indenture Provisions of the
Depositor, dated as of __________, 199_ and relating to the issuance of
collateralized mortgage obligations, in Series, by separate Trusts organized by
the Depositor (the "Standard Indenture Provisions"), which Standard Indenture
Provisions are attached hereto as Exhibit E and are incorporated herein by
reference as and to the extent provided in Section 18. The Terms Indenture
together with the Standard Indenture Provisions (as and to the extent
incorporated herein by reference) constitute one and the same instrument and are
herein, collectively and as amended or supplemented from time to time as set
forth in the Standard Indenture Provisions, referred to as the "Indenture".
All covenants and agreements made by the Issuer in this Indenture
are for the benefit and security of the Holders of the Bonds. The Issuer is
entering into this Indenture, and the Indenture Trustee is accepting the trust
created hereby, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged. All things necessary to cause the Bonds, when
the Bonds are executed by the Issuer and authenticated and delivered by the
Indenture Trustee as provided herein, to constitute the valid and legally
binding obligations of the Issuer enforceable in accordance with their terms,
and to cause this Indenture to constitute a valid and legally binding agreement
of the Issuer enforceable in accordance with its terms, have been done.
GRANTING CLAUSES
[The Issuer hereby Grants to the Indenture Trustee, for the
exclusive benefit of the Holders of the Bonds to secure the obligations of the
Issuer hereunder, a senior lien and security interest in all of the Issuer's
right, title and interest in and to any and all benefits accruing to the Issuer
from (a) the Mortgage Loans listed in the Schedule of Mortgage Collateral
annexed to this Terms Indenture as Schedule I (with respect to the Bonds, the
"Pledged Mortgage Loans"), and
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all payments thereon from and after the Cut-off Date, together with the related
Mortgage Files and Servicing Files and the Issuer's interest in any Mortgaged
Property that secured any such Mortgage Loan but which is acquired by
foreclosure or deed in lieu of foreclosure or otherwise after the Closing Date
(collectively, with respect to the Bonds, the "Mortgage Collateral"); (b) the
rights of the Issuer to enforce remedies against the Master Servicer or the
Special Servicer under the Servicing and Administration Agreement, against the
General Administrator under the General Administration Agreement (provided that
the Issuer retains the right to give instructions and directions to the General
Administrator thereunder), against the Depositor under the Deposit Trust
Agreement and, as assignee of the Depositor, against the Seller under the
Mortgage Loan Purchase Agreement; (c) the Bond Account; (d) the Collection
Account; (e) all present and future claims, demands, causes and chooses in
action in respect of the foregoing, including the rights of the Issuer under the
Pledged Mortgage Loans; and (f) all proceeds of the foregoing of every kind and
nature whatsoever, including, without limitation, all proceeds of the conversion
thereof, voluntary or involuntary, into cash or other liquid property, all cash
proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel
paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind, and other forms of obligations and
receivables, instruments and other property which at any time constitute all or
part of or are included in the proceeds of any of the foregoing (the foregoing
items (a), (b), (c), (d), (e) and (f) collectively, with respect to the Bonds,
the "Trust Estate").]
The Indenture Trustee acknowledges such Grant, accepts the trusts
hereunder in accordance with the provisions of this Indenture and agrees to
perform the duties herein required.
AND IT IS HEREBY COVENANTED AND DECLARED that the Bonds are to be
authenticated and delivered by the Indenture Trustee, that the Trust Estate is
to be held by or on behalf of the Indenture Trustee and that monies in the Trust
Estate are to be applied by the Indenture Trustee for the benefit of the
Bondholders, subject to the further covenants, conditions and trusts hereinafter
set forth, and the Issuer does hereby represent and warrant, and covenant and
agree, to and with the Indenture Trustee, for the equal and proportionate
benefit and security of each Bondholder, as follows:
SECTION 1. Designation.
The Bonds shall be designated generally as, and all references to
"Bonds" and "Series" in the Standard Indenture Provisions shall be deemed to be
to, the Issuer's Collateralized Mortgage Obligations, Series 199_-_. The Bonds
consist of [seven] Classes to be designated [Class A-1, Class A-2, Class B,
Class C, Class D, Class E and Class F]. The [Class A-1 and Class A-2 Bonds] are
Senior Bonds. The [Class B, Class C, Class D, Class E and Class F] Bonds are
Subordinate Bonds.
[No Class of Bonds constitutes Compound Interest Bonds, Interest
Only Bonds or Principal Only Bonds and, accordingly, the provisions of the
Standard Indenture Provisions that
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relate solely to Compound Interest Bonds, Interest Only Bonds and Principal Only
Bonds, or solely to any such types of bonds, shall be inapplicable with respect
to the Bonds.]
SECTION 2. Certain Defined Terms.
(a) Section 1.01 of the Standard Indenture Provisions provides that
the meaning of certain defined terms used in the Standard Indenture Provisions
shall be as defined in Section 1.01 of the Standard Indenture Provisions except
to the extent otherwise provided in, or subject to such further specification
by, this Terms Indenture. With respect to the Bonds, the following definitions
shall govern the defined terms set forth below:
"Accrual Date": __________, 199_.
"Administrative Expenses": The fees and expenses of the Indenture
Trustee payable thereto pursuant to Section 6.07[, the Owner Trustee Fee, the
General Administration Fee, and the fees of the Rating Agencies in connection
with the Bonds, to the extent such fees of the Rating Agencies are due and
payable after the Closing Date].
"Assumed Final Payment Date": With respect to any Class of Bonds,
the Payment Date specified as such in Section 7, on which the final payment
would occur with respect to such Class based on the Maturity Assumptions.
["Available Payment Amount": With respect to any Payment Date, the
amount on deposit in the Bond Account as of _________, New York City time, on
such Payment Date, exclusive of (i) any portion thereof that represents any
Prepayment Premiums actually collected during the related Collection Period and
(ii) any portion thereof that may be withdrawn from the Bond Account pursuant to
any of clauses (ii) through (iv) of Section 13(c).]
"Bond Factor": With respect to any Class of Bonds, as of any date of
determination, a fraction, expressed as a decimal carried to six places, the
numerator of which is the then aggregate Principal Amount of such Class, and the
denominator of which is the initial aggregate Principal Amount of such Class.
"Class A Bond": Any Class A-1 Bond or Class A-2 Bond.
["Class A Principal Payment Cross-Over Date": The first Payment Date
as of which the aggregate Principal Amount of the Class A Bonds outstanding
immediately prior thereto equals or exceeds the sum of (a) the aggregate Stated
Principal Balance of the Mortgage Pool that will be outstanding immediately
following such Payment Date, plus (b) the lesser of (i) the Principal Payment
Amount for such Payment Date and (ii) the portion of the Available Payment
Amount for such Payment Date that will remain after the payments of interest
payable on the Class A Bonds on such Payment Date.]
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"Class A-1 Bond": Any of the Bonds with a "Class A-1" designation on
the face thereof, executed by the Issuer and authenticated by the Indenture
Trustee substantially in the form of Exhibit A-1 attached hereto.
"Class A-2 Bond": Any of the Bonds with a "Class A-2" designation on
the face thereof, executed by the Issuer and authenticated by the Indenture
Trustee substantially in the form of Exhibit A-2 attached hereto.
"Class B Bond": Any of the Bonds with a "Class B" designation on the
face thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-3 attached hereto.
"Class C Bond": Any of the Bonds with a "Class C" designation on the
face thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-4 attached hereto.
"Class D Bond": Any of the Bonds with a "Class D" designation on the
face thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-5 attached hereto.
"Class E Bond": Any of the Bonds with a "Class E" designation on the
face thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-6 attached hereto.
"Class Exemption": A class exemption granted by the DOL, which
provides relief from some or all of the prohibited transaction provisions of
Section 406 ERISA and Section 4975 of the Code and the related excise tax
provisions of Section 4975 of the Code.
"Class F Bond": Any of the Bonds with a "Class F" designation on the
face thereof, executed by the Issuer and authenticated by the Indenture Trustee
substantially in the form of Exhibit A-7 attached hereto.
"Closing Date": _____________, 199__.
"Cut-off Date": _____________, 199__.
"Deposit Trust Agreement": The Deposit Trust Agreement, dated as of
___________, 199__, between the Depositor and the Owner Trustee, pursuant to
which the Issuer was created.
"DOL": The Department of Labor or any successor in interest.
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"DOL Regulations": The regulations promulgated at 29 C.F.R. ss.
2510.3-101.
"Eligible Account": Any of (i) an account maintained with a federal
or state chartered depository institution or trust company, the long-term
deposit or long-term unsecured debt obligations of which (or of such
institution's parent holding company) are rated at least "[___]" (or the
equivalent) by each Rating Agency (if the deposits are to be held in the account
for more than 30 days), or the short-term deposit or short-term unsecured debt
obligations of which (or of such institution's parent holding company) are rated
at least "[___]" (or the equivalent) by each Rating Agency (if the deposits are
to be held in the account for 30 days or less), in any event at any time funds
are on deposit therein, or (ii) a segregated trust account maintained with a
federal or state chartered depository institution or trust company acting in its
fiduciary capacity, which, in the case of a state chartered depository
institution or trust company is subject to regulations regarding fiduciary funds
on deposit therein substantially similar to 12 CFR ss. 9.10(b), and which, in
either case, has a combined capital and surplus of at least $50,000,000 and is
subject to supervision or examination by federal or state authority, or (iii)
any other account that is acceptable to the Rating Agencies (as evidenced by
written confirmation from each Rating Agency that the use of such account would
not, in and of itself, result in an Adverse Rating Event with respect to any
Class of Bonds).
"General Administrator": ______________________ or its successor in
interest.
"General Administration Agreement": The General Administration
Agreement, dated as of __________, 199__, between the General Administrator and
the Issuer, a copy of which agreement is attached hereto as Exhibit H.
["General Administration Fee": An amount equal to
___________________.]
"Indenture Trustee": As defined in the first paragraph of this Terms
Indenture.
"Individual Bond": A Bond with an original Principal Amount of
$________.
"Interest Accrual Period": With respect to any Payment Date, [the
calendar month preceding the month in which such Payment Date occurs].
"Interest Payment Adjustment": For purposes of determining the Yield
Maintenance Amount in respect of any Class of Bonds for any Payment Date, an
amount equal to one-twelfth of the product of the applicable Bond Interest Rate
multiplied by the portion of the Principal Prepayment Amount for such Payment
Date payable on such Class of Bonds. The portion of the Principal Prepayment
Amount, if any, for any Payment Date that is paid on any Class of Bonds shall
equal the product of (a) the entire Principal Prepayment Amount for such Payment
Date, multiplied by (b) a fraction, the numerator of which is the portion, if
any, of
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Principal Payment Amount for such Payment Date that is paid on such Class of
Bonds, and the denominator of which is the entire Principal Payment Amount for
such Payment Date.
"Issuer": As defined in the first paragraph of this Terms Indenture.
"Master Servicer": As defined in Section 9.
"Maturity Assumptions": [To come.]
"Mortgage Collateral": As defined in the Granting Clause.
"Mortgage File": With respect to any Pledged Mortgage Loan,
collectively, the following documents:
(i) the original executed Mortgage Note, endorsed "Pay to the
order of ______________, as trustee for the registered holders
of CRIIMI MAE Commercial Mortgage Trust [I], Collateralized
Mortgage Obligations, Series 199__-___, without recourse";
(ii) an original or copy of the Mortgage and of any intervening
assignments thereof that precede the assignment referred to in
clause (iv) of this definition, in each case (unless such
document has not yet been returned from the applicable
recording office) with evidence of recording indicated
thereon;
(iii) an original or copy of any related Assignment of Leases (if
such item is a document separate from the Mortgage) and of any
intervening assignments thereof that precede the assignment
referred to in clause (v) of this definition, in each case
(unless such document has not yet been returned from the
applicable recording office) with evidence of recording
indicated thereon;
(iv) an original executed assignment of the Mortgage, in favor of
_______________, as trustee for the registered holders of
CRIIMI MAE Commercial Mortgage Trust [I], Collateralized
Mortgage Obligations, 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
CRIIMI MAE Commercial Mortgage Trust [I], Collateralized
Mortgage Obligations, Series 199__-___,in recordable form;
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(vi) originals or copies of any written modification agreements in
those instances where the terms or provision of the Mortgage
or Mortgage Note have been modified;
(vii) the original or a copy of the policy or certificate of
lender's title insurance issued on the date of the origination
of such Pledged Mortgage Loan, or, if such policy has not been
issued, an irrevocable, binding commitment to issue such title
insurance policy; and
(viii) filed copies of any prior UCC Financing Statements in favor of
the originator of such Pledged Mortgage Loan or in favor of
any assignee prior to the Trustee (but only to the extent the
Seller had possession of such UCC Financing Statements prior
to the Closing Date) and, if there is an effective UCC
Financing Statement in favor of the Seller on record with the
applicable public office for UCC Financing Statements, an
original UCC-2 or UCC-3, as appropriate, in favor of
_______________, as trustee for the registered holders of
CRIIMI MAE Commercial Mortgage Trust [I], Collateralized
Mortgage Obligations, Series 199__-___;
provided that whenever the term "Mortgage File" is used to refer to documents
actually received by the Indenture Trustee or by a Custodian on its behalf, such
term shall not be deemed to include such documents required to be included
therein unless they are actually so received, and with respect to any receipt or
certification by the Indenture Trustee or the Custodian for documents described
in clause (vi) of this definition, shall be deemed to include only such
documents to the extent the Trustee or Custodian has actual knowledge of their
existence.
"Mortgage Loan Purchase Agreement": That certain Mortgage Loan
Purchase and Sale Agreement, dated as of ____________, 199__, between the
Depositor and the Seller and relating to the transfer of the Pledged Mortgage
Loans to the Depositor, a copy of which agreement is attached hereto as Exhibit
G.
"Overcollateralization Amount": As of any date of determination, the
amount, if any, by which the aggregate Stated Principal Balance of the Mortgage
Pool exceeds the then aggregate Principal Amount of all the Bonds.
"Owner Trustee": As defined in the first paragraph of this Terms
Indenture.
"Owner Trustee Fee": An annual fee of $__________.
"Permitted Investments": Any one or more of the following
obligations or securities:
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(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States
or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the
United States, have a predetermined, fixed amount of principal
due at maturity (that cannot vary or change), do not have an
"r" highlight attached to any rating, and each obligation has
a fixed interest rate or has its interest rate tied to a
single interest rate index plus a single fixed spread;
(ii) certain obligations of agencies or instrumentalities of the
United States that are not backed by the full faith and credit
of the United States, provided such obligations have a
predetermined, fixed amount of principal due at maturity (that
cannot vary or change), do not have an "r" highlight attached
to any rating, and each obligation has a fixed interest rate
or has its interest rate tied to a single interest rate index
plus a single fixed spread;
(iii) federal funds, uncertificated certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements
having maturities of not more than 365 days, of any bank or
trust company organized under the laws of the United States or
any state thereof, provided that such items are rated in the
highest short-term debt rating category of each of the Rating
Agencies or, in the case of each Rating Agency, such lower
rating as will not result in a qualification, downgrading or
withdrawal of the rating then assigned to any Class of
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
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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).
"Pledged Mortgage Loan": Any one of the Mortgage Loans transferred
to the Indenture Trustee by the Issuer pursuant to the Granting Clause, as from
time to time are held as a part of the Trust Estate and as are more fully
described on Schedule I attached hereto.]
"Principal Payment Amount": With respect to any Payment Date, the
aggregate of the following:
[(a) the aggregate of the principal portions of all Scheduled
Payments (other than Balloon Payments) and any Assumed Scheduled Payments
due or deemed due, as the case may be, in respect of the Pledged Mortgage
Loans for their respective Due Dates occurring during the related
Collection Period;
(b) the aggregate of all Principal Prepayments received on the
Pledged Mortgage Loans during the related Collection Period;
(c) with respect to any Pledged Mortgage Loan as to which the
related Stated Maturity Date occurred during or prior to the related
Collection Period, any payment of principal (exclusive of any amounts
described in clause (b) above or clause (d) below) made by or on behalf of
the related Mortgagor during the related Collection Period, net of any
portion of such payment that represents a recovery of the principal
portion of any Scheduled Payment (other than a Balloon Payment) due, or
the principal portion of any
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Assumed Scheduled Payment deemed due, in respect of such Pledged Mortgage
Loan on a Due Date during or prior to the related Collection Period and
not previously recovered;
(d) the aggregate of all Liquidation Proceeds and Insurance Proceeds
that were received on the Pledged Mortgage Loans during the related
Collection Period and that were identified and applied by the Master
Servicer as recoveries of principal of such Pledged Mortgage Loans, in
each case net of any portion of such amounts that represents a recovery of
the principal portion of any Scheduled Payment (other than a Balloon
Payment) due, or of the principal portion of any Assumed Scheduled Payment
deemed due, in respect of the related Pledged Mortgage Loan on a Due Date
during or prior to the related Collection Period and not previously
recovered;
(e) with respect to any REO Properties acquired in respect of
Pledged Mortgage Loans, the aggregate of the principal portions of all
Assumed Scheduled Payments deemed due in respect of the related REO Loans
for their respective Due Dates occurring during the related Collection
Period;
(f) with respect to any REO Properties acquired in respect of
Pledged Mortgage Loans, the aggregate of all Liquidation Proceeds,
Insurance Proceeds and REO Revenues that were received during the related
Collection Period in respect of such REO Properties and that were
identified and applied by the Master Servicer as recoveries of principal
of the related REO Loans, in each case net of any portion of such amounts
that represents a recovery of the principal portion of any Scheduled
Payment (other than a Balloon Payment) due, or of the principal portion of
any Assumed Scheduled Payment deemed due, in respect of the related REO
Loan or the predecessor Pledged Mortgage Loan on a Due Date during or
prior to the related Collection Period and not previously recovered; and
(g) if such Payment Date is subsequent to the initial Payment Date,
the excess, if any, of (i) the Principal Payment Amount for the
immediately preceding Payment Date, over (ii) the aggregate payments of
principal made in respect of the Bonds on such immediately preceding
Payment Date.]
"Principal Prepayment Amount": With respect to any Payment Date,
that portion of the Principal Payment Amount for such Payment Date that
represents voluntary Principal Prepayments and other early collections of
principal on or in respect of the Pledged Mortgage Loans received in advance of
their Stated Maturity Dates.
"PTCE": A Prohibited Transaction Class Exemption.
"Rating Agency": Each of _________________________ and _______.
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"Regular Record Date": With respect to any Payment Date, the last
Business Day of the month immediately preceding the month in which such Payment
Date occurs.
"Seller": ___________________ or its successor in interest.
"Servicing and Administration Agreement": As defined in Section 9.
"Special Servicer": As defined in Section 9.
"Stated Maturity": With respect to each Class of Bonds, the Payment
Date on which the final payment of principal and interest on the Bonds of such
Class becomes finally due and payable, as set forth in Section 7.
"Standard Indenture Provisions": As defined in the Preliminary
Statement.
"Terms Indenture": This terms indenture, as amended or supplemented
from time to time in accordance with Article IX of the Standard Indenture
Provisions.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a Bond.
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Bond.
"Transferor": Any Person who is disposing by Transfer any Ownership
Interest in a Bond.
"Trust Estate": As defined in the Granting Clause.
"Trustee Report": As defined in Section 15(a) hereof.
"Yield Maintenance Amount": With respect to any Class of Bonds, for
any Payment Date on which any portion of the Principal Prepayment Amount, if
any, is paid thereon on such Payment Date, an amount equal to the present value
of a series of equal monthly payments deemed payable on each future Payment Date
up to and including the Assumed Final Payment Date for such Class of Bonds, each
such monthly payment to be equal to the related Interest Payment Adjustment and
to be discounted from the applicable future Payment Date to the then current
Payment Date at a per annum rate equal to the sum of (i) the yield per annum on
United States treasury securities having a maturity closest to the Assumed Final
Payment Date for such Class of Bonds, plus (ii) ___ basis points; and with
respect to any Class of Bonds, for any Payment Date on which no portion of a
Principal Prepayment Amount is paid thereon on such Payment Date, the Yield
Maintenance Amount shall be zero.
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(b) 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 the Servicing and Administration
Agreement:
["Assignment of Leases"]
["Assumed Scheduled Payment"]
["Balloon Payment"]
["Collection Account"]
["Collection Period"]
["Determination Date"]
["Determination Date Report"]
["Due Date"]
["Insurance Proceeds"]
["Liquidation
Proceeds"]
["Mortgage"]
["Mortgage Note"]
["Mortgagor"]
["Operating
Statement Analysis"]
["Prepayment Premium"]
["Principal
Prepayment"]
["Property Servicing Fee"]
["Scheduled
Payment"]
["Servicing File"]
["Special Servicer Report"]
["Stated Maturity Date"]
["Stated Principal Balance"]
["REO Loan"]
["REO Revenues"]
SECTION 3. Date of the Bonds.
The Bonds that are authenticated and delivered by the Indenture
Trustee to or upon an Issuer Order on the Closing Date shall be dated the
Closing Date. All Bonds which are authenticated and delivered after the Closing
Date shall be dated the date of their authentication.
SECTION 4. Forms of the Bonds.
The Bonds shall be in the respective forms attached hereto as
Exhibits A-1 through [A-7], according to the Class designation appearing on the
first page of each such exhibit; provided that any of the Bonds 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 Indenture, as may be required to comply
with any law
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or with rules or regulations pursuant thereto, or with the rules of any
securities market in which the Bonds are admitted to trading, or to conform to
general usage.
SECTION 5. Denominations of the Bonds.
The Class A-1, Class A-2, Class B, Class C and Class D Bonds shall
be issuable only in denominations corresponding to initial Principal Amounts as
of the Closing Date of $_________ and any whole dollar denomination in excess
thereof. The Class E and Class F Bonds shall be issuable only in denominations
corresponding to initial Principal Amounts as of the Closing Date of $__________
and any whole dollar denomination in excess thereof.
[Notwithstanding the preceding paragraph, if Definitive Bonds are
issued with respect to any Class of Book-Entry Bonds, such Definitive Bonds
shall be issuable only in denominations corresponding to initial Principal
Amounts as of the Closing Date of $__________ and any whole dollar denomination
in excess thereof.]
SECTION 6. Book-Entry Bonds.
The Class A-1, Class A-2, Class B, Class C and Class D Bonds will be
Book-Entry Bonds. The Bonds of each such Class shall initially be issued as one
or more Bonds registered in the name of the Depository or its nominee and,
except as provided in Section 2.12(c) of the Standard Indenture Provisions,
transfer of such Bonds may not be registered by the Bond Registrar unless such
transfer is to a successor Depository that agrees to hold such Bonds for the
respective Bond Owners with Ownership Interests therein.
The Issuer hereby designates [The Depository Trust Company, at 55
Water Street, New York, New York 10004], as the initial Depository for the
Book-Entry Bonds and directs the Indenture Trustee to execute and deliver the
Letter of Representations (the form of which is attached hereto as Exhibit I).
The bond certificate or certificates representing each Class of the Book-Entry
Bonds shall be registered in the name of the nominee of the Depository
designated in the Letter of Representations.
SECTION 7. Initial Aggregate Principal Amount; Classes; Terms.
(a) The aggregate Principal Amount of the Bonds that may be
authenticated and delivered under this Indenture is limited to $__________,
except for Bonds authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Bonds pursuant to Sections 2.05 or 2.06
of the Standard Indenture Provisions. Such aggregate Principal Amount shall be
divided among [seven] Classes having the respective Class designations, initial
aggregate Principal Amounts, Bond Interest Rates, Stated Maturities and Assumed
Final Payment Dates as follows:
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Class Initial Aggregate Bond Stated Assumed Final
Designation Principal Amount Interest Rate(1) Maturity Payment Date
- ----------- ---------------- ---------------- -------- ------------
Class A-1 $ %
Class A-2 $ %
Class B $ %
Class C $ %
Class D $ %
Class E $ %
Class F $ %
- ----------
(1) Expressed as a percent per annum
(b) Each Class of Bonds shall bear interest, such interest to
commence accruing on the Accrual Date. In the case of each Class of Bonds, such
interest shall accrue during each Interest Accrual Period, in accordance with
Section 2.07(b) of the Standard Indenture Provisions, at the applicable Bond
Interest Rate on the aggregate Principal Amount of such Class of Bonds
outstanding immediately prior to the related Payment Date. The interest accrued
in respect of each Class of Bonds during any Interest Accrual Period will be due
and payable thereon on the related Payment Date and, to the extent not paid in
full on such Payment Date, on each succeeding Payment Date until paid in full.
No interest will accrue on overdue interest in respect of any Bond.
(c) The respective Classes of Bonds will be issued on the Closing
Date in the aggregate Principal Amounts set forth above. The aggregate Principal
Amount of any Class of Bonds, and the Principal Amount of any particular Bond of
such Class, will be reduced only by actual payments of principal made thereon on
any Payment Date.
(d) Each Bond of a particular Class shall rank pari passu with each
other Bond of such Class and be equally and ratably secured by the Trust Estate.
(e) This Indenture shall evidence a continuing lien on and security
interest in the Trust Estate to secure the full payment of the principal,
interest and other amounts due and payable on all the Bonds from time to time,
which payments, in the case of any Class of Bonds, shall in all respects be
equally and ratably secured hereby without preference, priority or distinction
on account of the actual time or times of the authentication and delivery of the
Bonds of such Class.
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(f) The Bonds shall be authenticated and delivered to or at the
direction of the Issuer by the Indenture Trustee only upon satisfaction of the
conditions set forth in Section 2.10(a) of the Standard Indenture Provisions,
and the following additional conditions:
[Specify additional conditions, if any.]
[SECTION 8. Delivery of Mortgage Collateral.
(a) In connection with the Grant of the Trust Estate by the Issuer
to secure the Bonds, the Issuer shall deliver to and deposit with, or cause to
be delivered to and deposited with, the Indenture Trustee or a Custodian
appointed thereby (with copies to the Master Servicer), on or before the Closing
Date, the Mortgage File for each Pledged Mortgage Loan and a fully executed copy
of the Mortgage Loan Purchase Agreement.
(b) The Indenture Trustee shall deliver to the Master Servicer
within ___ days after the Closing Date each assignment of Mortgage and
assignment of Assignment of Leases in favor of the Indenture Trustee referred to
in clauses (iv) and (v) of the definition of "Mortgage File" and each UCC-2 and
UCC-3 in favor of the Indenture Trustee referred to in clause (viii) of the
definition of "Mortgage File"; and, pursuant to the Servicing and Administration
Agreement, the Master Servicer shall, at the Seller's expense, as to each
Pledged Mortgage Loan, be required promptly (and in any event within ___ days
following the Closing Date) to cause each such document to be submitted for
recording or filing, as the case may be, in the appropriate public office for
real property records or UCC Financing Statements, as the Master Servicer deems
appropriate. Each such assignment shall reflect that it should be returned by
the public recording office to the Indenture Trustee following recording, and
each such UCC-2 and UCC-3 shall reflect that the file copy thereof should be
returned to the Indenture Trustee following filing; provided that in those
instances where the public recording office retains the original assignment of
Mortgage or assignment of Assignment of Leases the Master Servicer shall be
required, pursuant to the Servicing and Administration Agreement, to obtain
therefrom a certified copy of the recorded original. If any such document or
instrument is lost or returned unrecorded or unfiled, as the case may be,
because of a defect therein, the Issuer shall promptly prepare or cause to be
prepared a substitute therefor or cure such defect, as the case may be, and
thereafter the Master Servicer shall upon receipt thereof cause the same to be
duly recorded or filed, as appropriate.
(c) The Issuer shall deliver to and deposit with, or cause to be
delivered to and deposited with, the Master Servicer all documents and records
in the possession of the Issuer or the Seller that relate to the Pledged
Mortgage Loans necessary for the servicing of the Mortgage Loans and that are
not required to be a part of a Mortgage File in accordance with the definition
thereof, and the Master Servicer shall hold all such documents and records on
behalf of the Indenture Trustee in trust for the benefit of the Bondholders and,
subject to the lien of this Indenture, the Issuer.
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(d) The Indenture Trustee, by its execution and delivery of this
Agreement, acknowledges receipt by it or a Custodian on its behalf, subject to
the proviso in the definition of Mortgage File, to any exceptions noted on the
Schedule of Exceptions to Mortgage File Delivery attached hereto as Exhibit C,
to the provisions of Section 8(f) and to the further review provided for in
Section 8(e), of (i) the Mortgage File with respect to each Pledged Mortgage
Loan, (ii) a fully executed counterpart of the Mortgage Loan Purchase Agreement,
and (iii) all other assets delivered to it and included in the Trust Estate, in
good faith and without notice of any adverse claim, and declares that it or a
Custodian on its behalf holds and will hold such documents and the other
documents received by it that constitute portions of the Mortgage Files, and
that it holds and will hold such other assets included in the Trust Estate, in
trust for the exclusive use and benefit of all present and future Bondholders
and, subject to the lien of this Indenture, the Issuer. In addition, the
Indenture Trustee hereby certifies to the Issuer, the Master Servicer and the
Special Servicer and for the benefit of the Bondholders that, as to each Pledged
Mortgage Loan listed on the Schedule of Collateral, except as specifically
identified in the Schedule of Exceptions to Mortgage File Delivery attached
hereto as Exhibit C, (i) all documents specified in clauses (i), (ii), (iv),
(vii) and (viii) of the definition of "Mortgage File" are in its possession or
the possession of a Custodian on its behalf, (ii) all documents referred to in
clause (i) of this sentence received by it or any Custodian with respect to such
Pledged Mortgage Loan have been reviewed by it or by such Custodian on its
behalf and appear regular on their face (handwritten additions, changes or
corrections shall not constitute irregularities if initialed by the Mortgagor)
and purport to relate to such Pledged Mortgage Loan, and (iii) based on such
examination and only as to the foregoing documents, the information set forth in
the Schedule of Mortgage Collateral with respect to Mortgage Rate, original
principal balance and Stated Maturity Date accurately reflects the information
set forth in the Mortgage File.
The Indenture Trustee shall not (i) transfer legal title to, or
release from the lien of this Indenture, any of the Pledged Mortgage Loans or
any other asset constituting all or a portion of the Trust Estate (except as
expressly provided herein or permitted hereby) or (ii) permit any of the Pledged
Mortgage Loans or any other asset constituting all or a portion of the Trust
Estate to be subjected to any lien, claim or encumbrance arising by, through or
under the Indenture Trustee or any Person claiming by, through or under the
Indenture Trustee.
(e) On or about the ___ day following the Closing Date (and, if any
exceptions are noted, again on or about the first anniversary of the Closing
Date), the Indenture Trustee shall, subject to Section 8(f), certify in writing
to the Issuer, the Master Servicer and the Special Servicer and for the benefit
of the Bondholders that, as to each Pledged Mortgage Loan listed on the Schedule
of Collateral (other than any Pledged Mortgage Loan as to which a Liquidation
Event has occurred or any Pledged Mortgage Loan specifically identified in any
exception report annexed thereto as not being covered by such certification):
(i) all documents specified in clauses (i) through (v), (vii) and (viii) of the
definition of "Mortgage File" are in its possession, (ii) all documents received
by it or any Custodian with respect to such Pledged Mortgage Loan have been
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reviewed by it or by such Custodian on its behalf and appear regular on their
face (handwritten additions, changes or corrections shall not constitute
irregularities if initialed by the Mortgagor) and purport to relate to such
Pledged Mortgage Loan, and (iii) based on the examinations referred to in
Section 8(d) above and this Section 8(e) and only as to the foregoing documents,
the information set forth in the Schedule of Mortgage Collateral with respect to
the Mortgage Rate, original principal balance and Stated Maturity accurately
reflects the information set forth in the Mortgage File.
(f) Neither the Indenture Trustee nor any Custodian is under any
duty or obligation to inspect, review or examine any of the documents,
instruments, certificates or other papers relating to the Pledged Mortgage Loans
delivered to it to determine that the same are valid, legal, effective, genuine,
enforceable, in recordable form, sufficient or appropriate for the represented
purpose or that they are other than what they purport to be on their face.
(g) If either party hereto discovers that any document constituting
a part of a Mortgage File has not been properly executed, is missing, contains
information that does not conform in any respect with the corresponding
information set forth in the Schedule of Mortgage Collateral (and the terms of
such document have not been modified by written instrument contained in the
Mortgage File), or does not appear to be regular on its face (each, a "Document
Defect"), or if either party hereto discovers a breach of any representation or
warranty of the Seller relating to a Pledged Mortgage Loan set forth in the
Mortgage Loan Purchase Agreement (a "Breach"), such party shall give prompt
written notice thereof to the other party and to the Master Servicer and the
Special Servicer.
SECTION 9. Servicing and Administration of the Pledged Mortgage
Loans.
(a) The Pledged Mortgage Loans and any REO Properties acquired in
respect thereof shall be serviced and administered pursuant to that certain
Servicing and Administration Agreement dated as of __________________, 199__ (as
amended from time to time, the "Servicing and Administration Agreement"), among
the Issuer (acting through the Owner Trustee), the Indenture Trustee,
_____________________ as master servicer (the "Master Servicer", which term
includes any successor entity thereunder), and ______________________ as special
servicer (the "Special Servicer", which term includes any successor entity
thereunder).
(b) The Servicing and Administration Agreement, in the form attached
hereto as Exhibit F, as such agreement may be amended from time to time in
accordance with the applicable provisions thereof and of this Indenture, is in
all respects ratified and confirmed.
SECTION 10. Releases of Pledged Mortgage Loans and REO Properties.
Whenever the Mortgage Loan Purchase Agreement or the Servicing and
Administration Agreement permits or requires the purchase, sale or other
disposition of a Pledged Mortgage Loan or any
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REO Property by any Person (including the Seller, the Master Servicer or the
Special Servicer), or authorizes the release thereof to the Issuer, the transfer
of legal title to such item of Mortgage Collateral and the release thereof from
the lien of this Indenture shall be subject to Sections 8.04 and 12.01 of the
Standard Indenture Provisions in addition to the applicable terms and conditions
of the Mortgage Loan Purchase Agreement and/or the Servicing and Administration
Agreement.
SECTION 11. Certain Designations of the Master Servicer and the
Special Servicer.
(a) To facilitate the servicing and administration of the Pledged
Mortgage Loans and any related REO Properties, the Master Servicer and the
Special Servicer each shall retain in accordance with the provisions of the
Servicing and Administration Agreement and this Indenture, all collections on
the Mortgage Collateral prior to the time the collections are required to be
deposited into the Bond Account. Solely for the limited purpose expressed in
this Section 11(a), the Indenture Trustee hereby designates each of the Master
Servicer and the Special Servicer as its agent and bailee to hold such
collections of the Mortgage Collateral until the collections are deposited into
the Bond Account. By the designation pursuant to this Section 11(a) and the
acceptance of such designation by each of the Master Servicer and the Special
Servicer pursuant to the Servicing and Administration Agreement, the Indenture
Trustee, as secured party, is deemed to have possession of all collections on
the Mortgage for purposes of Section 9-305 of the Uniform Commercial Code.
Furthermore, possession by the Master Servicer or the Special Servicer of a
Permitted Investment in respect of such collections, which Permitted Investment
constitutes a "certificated security", shall constitute possession by a person
designated by the Indenture Trustee for purposes of Section 8-313 of the Uniform
Commercial Code. The Indenture Trustee shall have no liability or responsibility
by reason of any act or omission of any such Person pursuant to such
designation.
(b) To facilitate the servicing and administration of the Pledged
Mortgage Loans and any related REO Properties, the Master Servicer and the
Special Servicer shall each retain in accordance with the provisions of this
Servicing and Administration Agreement and this Indenture, any Mortgage File or
any particular document required to be part thereof or otherwise relating to the
Pledged Mortgage Loans that may come into its or their possession. Solely for
the limited purpose expressed in this Section 11(b), the Indenture Trustee
hereby designates each of the Master Servicer and the Special Servicer as its
agent and bailee to hold such Mortgage File or such particular Pledged Mortgage
Loan documents. By the designation made pursuant to this Section 11(b) and the
acceptance of such designation by each of the Master Servicer and the Special
Servicer pursuant to the Servicing and Administration Agreement, the Indenture
Trustee, as a secured party, is deemed to have possession of such Mortgage File
or such particular Pledged Mortgage Loan document for purposes of Section 9-305
of the Uniform Commercial Code. The Indenture Trustee shall have no liability or
responsibility by reason of any act or omission of any such Person pursuant to
such designation.
SECTION 12. Restrictions on Transfer of Bonds.
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(a) No transfer, sale, pledge or other disposition of any
Non-Registered Bond or interest therein shall be made unless that transfer,
sale, pledge or other disposition is exempt from the registration and/or
qualification requirements of the Securities Act and any applicable state
securities laws, or is otherwise made in accordance with the Securities Act and
such state securities laws. If a transfer of any Non-Registered Bond is to be
made without registration under the Securities Act (other than in connection
with the initial issuance thereof or a transfer thereof by the Issuer or one of
its Affiliates), then the Bond Registrar shall refuse to register such transfer
unless it receives (and upon receipt, it may conclusively rely upon) either: (i)
a certificate from the Bondholder desiring to effect such transfer substantially
in the form attached as Exhibit D-1A hereto; or (ii) a certificate from the
Bondholder desiring to effect such transfer substantially in the form attached
as Exhibit D-1B hereto and a certificate from such Bondholder's prospective
Transferee substantially in the form attached either as Exhibit D-2A hereto or
as Exhibit D-2B hereto; or (iii) an Opinion of Counsel satisfactory to the
Indenture Trustee to the effect that such transfer may be made without
registration under the Securities Act (which Opinion of Counsel shall not be an
expense of the Trust Estate or of the Issuer, the General Administrator, the
Owner Trustee, the Indenture Trustee or the Bond Registrar in their respective
capacities as such), together with the written certification(s) as to the facts
surrounding such transfer from the Bondholder desiring to effect such transfer
and/or such Bondholder's prospective Transferee on which such Opinion of Counsel
is based. None of the Issuer, the Depositor, the Indenture Trustee, the General
Administrator, the Owner Trustee or the Bond Registrar is obligated to register
or qualify any Class of Non-Registered Bonds under the Securities Act or any
other securities law or to take any action not otherwise required under this
Agreement to permit the transfer of any Non-Registered Bond or interest therein
without registration or qualification. Any Holder of a Non-Registered Bond
desiring to effect a transfer of such Non-Registered Bond or interest therein
shall, and does hereby agree to, indemnify, the Issuer, the General
Administrator, the Owner Trustee, the Indenture Trustee and the Bond Registrar
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
As of the Closing Date, the [Class A-1, Class A-2, Class B, Class C
and Class D Bonds] will constitute Registered Bonds and the [Class E and Class F
Bonds] will constitute NonRegistered Bonds.
(b) No transfer of any Bond or any interest therein shall be made to
a Plan or to any Person who is directly or indirectly purchasing such Bond or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan, unless the prospective Transferee of such Bond or interest
therein provides the Bond Registrar (in the case of a Definitive Bond) or the
Transferor (in the case of a Book-Entry Bond) with (I) a certification of facts
and an Opinion of Counsel which establish to the satisfaction of the Indenture
Trustee (in the case of a Definitive Bond) or the Transferor (in the case of a
Book-Entry Bond) that the purchase and holding of such Bond or interest therein
will not constitute or result in a non-exempt prohibited transaction under ERISA
or Section 4975 of the Code or result in the imposition of an excise tax under
Section 4975
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of the Code [and, in the case of the Class ___ and Class ___ Bonds,] will not
subject the Issuer, the Owner Trustee, the General Administrator, the Master
Servicer, the Special Servicer, the Company, the Bond Registrar or the Indenture
Trustee to any obligation in addition to those undertaken in this Indenture] or
(II) [solely in the case of the Class ___, Class ___, Class ___, Class ___ and
Class ___ Bonds,] a certification substantially to the effect that the purchase
and holding of such Bond or interest therein by or on behalf of, or with assets
of a Plan, will not constitute or result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or result in the imposition
of an excise tax under Section 4975 of the Code and further to the effect of the
statements in at least one of the following clauses (i) through [(vii)]: (i) the
Transferee is an insurance company and (A) the source of funds used to purchase
such Bond is an "insurance company general account" (as such term is defined in
PTCE 95-60), (B) the conditions set forth in PTCE 95-60 have been satisfied and
(C) there is no Plan with respect to which the amount of such general account's
reserves and liabilities for contracts held by or on behalf of such Plan and all
other Plans maintained by the same employer (or any "affiliate" thereof, as
defined in PTCE 95-60) or by the same employee organization, exceeds 10% of the
total of all reserves and liabilities of such general account (as determined
under PTCE 95-60) as of the date of the acquisition of such Bonds; (ii) the
Transferee is an insurance company and (A) the source of funds used to purchase
such Bonds is an insurance company general account, (B) the requirements of
Section 401(c) of ERISA and the DOL Regulations to be promulgated thereunder
have been satisfied and will continue to be satisfied and (C) the insurance
company represents that it understands that the operation of the general account
after December 31, 1998 may affect its ability to continue to hold such Bonds
after the date which is 18 months after the 401(c) Regulations become final and
that unless a Class Exemption or an exception under Section 401(c) of ERISA is
then available for the continued holding of such Bonds, it will dispose of such
Bonds prior to the date which is 18 months after the 401(c) Regulations become
final; (iii) the Transferee is an insurance company and (A) the source of funds
used to purchase such Bonds is an "insurance company pooled separate account"
(as such term is defined in PTCE 90-1), (B) the conditions set forth in PTCE
90-1 have been satisfied and (C) there is no Plan, together with all other Plans
maintained by the same employer (or any "affiliate" thereof, as defined in PTCE
90-1) or by the same employee organization, with assets which exceed 10% of the
total of all assets in such pooled separate account (as determined under PTCE
90-1) as of the date of the acquisition of such Bonds; (iv) the Transferee is a
bank and (A) the source of funds used to purchase such Bonds is a "collective
investment fund" (as defined in PTCE 91-38), (B) the conditions set forth in
PTCE 91-38 have been satisfied and (C) there is no Plan, the interests of which,
together with the interests of any other Plans maintained by the same employer
or employee organization, in the collective investment fund exceed 10% of the
total of all assets in the collective investment fund (as determined under PTCE
91-38) as of the date of acquisition of such Bonds; (v) the Transferee is a
"qualified professional asset manager" described in PTCE 84-14 and the
conditions set forth in PTCE 84-14 have been satisfied and will continue to be
satisfied; or (vi) the Transferee is an "in-house asset manager" described in
PTCE 96-23 and the conditions set forth in PTCE 96-23 have been satisfied and
will continue to be satisfied [or (vii) [described required statements in
connection with other applicable Class Exemptions, if any]].
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Each Person who acquires any Bond or interest therein (unless it
shall have delivered to the Bond Registrar a certification of facts and an
Opinion of Counsel as described in clause (I) of the preceding paragraph or a
certification as described in clause (II) of the preceding paragraph) shall be
deemed to have represented and warranted to and for the benefit of the Issuer,
the Owner Trustee, the General Administrator, the Master Servicer, the Special
Servicer, the Company, the Bond Registrar or the Indenture Trustee that either:
(i) it is neither a Plan nor any Person who is directly or indirectly purchasing
such Bond or interest therein on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan; or (ii) the purchase and holding of such Bond or
any interest therein by or on behalf of, or with assets of, such Person will not
result in any non-exempt prohibited transaction under ERISA or Section 4975 of
the Code or the imposition of an excise tax under Section 4975 of the Code (and,
in the case of the Class ___ and Class ___ Bonds, will not subject the Issuer,
the Owner Trustee, the General Administrator, the Master Servicer, the Special
Servicer, the Company, the Bond Registrar or the Indenture Trustee to any
obligation in addition to those undertaken in the Indenture) and, further, the
statements set forth in at least one of clauses (i) through [(vii)] of the
preceding paragraph is correct.
(c) If a Person is acquiring any Bond or interest therein as a
fiduciary or agent for one or more accounts, such Person shall be required to
deliver to the Bond Registrar (or, in the case of an interest in a Bond that
constitutes a Book-Entry Bond, to the Bond Owner that is transferring such
interest) a certification to the effect that, and such other evidence as may be
reasonably required by the Indenture Trustee (or such Bond Owner) to confirm
that, it has (i) sole investment discretion with respect to each such account
and (ii) full power to make the foregoing acknowledgments, representations,
warranties, certifications and agreements with respect to each such account as
set forth in subsections (a) and (b), as applicable, of this Section 12.
SECTION 13. Bond Account.
(a) On or prior to the date hereof, the Indenture Trustee shall
establish (and, at all times thereafter, the Indenture Trustee shall maintain)
the Bond Account for the Bonds. The Bond Account shall consist solely of one or
more Eligible Accounts established and maintained in the name of the Indenture
Trustee (in such capacity) and, in each case, bearing a designation clearly
indicating that such account and all funds deposited therein are held for the
exclusive benefit of the Bondholders and, subject to the lien of this Indenture,
the Issuer.
The Indenture Trustee shall deposit or cause to be deposited in the
Bond Account, upon receipt, (i) any and all amounts in respect of the Mortgage
Collateral remitted or advanced under the Servicing and Administration Agreement
from time to time and (ii) any amounts required to be deposited by the [General
Administrator] in connection with losses incurred with respect to investments of
funds held in the Bond Account. Except as provided in this Indenture, the
Indenture Trustee, in accordance with the terms of this Indenture, shall have
exclusive control and sole right of withdrawal with respect to the Bond Account.
Funds in the Bond Account shall
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not be commingled with any other monies. All monies deposited from time to time
in the Bond Account (including any securities or instruments in which such
monies are invested) shall be held by and under the control of the Indenture
Trustee in the Bond Account for the benefit of the Bondholders and the Issuer as
herein provided; provided, however, that all income and gain, if any, from
monies or investments on deposit in the Bond Account shall constitute additional
compensation for the [General Administrator] and shall be subject to withdrawal
at its direction from time to time. Any losses resulting from or arising in
connection with investments of funds in the Bond Account shall be for the
account of the [General Administrator] (who shall promptly deposit into the Bond
Account the amount of any such losses).
(b) All of the funds on deposit in the Bond Account may be invested
and reinvested by the Indenture Trustee at the written direction of the [General
Administrator] in one or more Permitted Investments, subject to the following
requirements:
(i) such Permitted Investments shall mature not later than one
Business Day prior to the next Payment Date;
(ii) the securities purchased with the monies in the Bond Account
shall be deemed to be funds deposited in the Bond Account;
(iii) each such Permitted Investment shall be made in the name of
the Indenture Trustee (in its capacity as such) or in the name of a
nominee of the Indenture Trustee under the Indenture Trustee's complete
and exclusive dominion and control (or, if applicable law provides for
perfection of pledges of an instrument not evidenced by a certificate or
other instrument through registration of such pledge on books maintained
by or on behalf of the issuer of such investment, a Permitted Investment
may be made in such instrument notwithstanding that such instrument is not
under the dominion and control of the Indenture Trustee, provided that
such pledge is so registered);
(iv) the Indenture Trustee shall have the sole control over such
investment, the income thereon and the proceeds thereof;
(v) other than the investments described in the second parenthetical
phrase in clause (iii) above, any certificate or other instrument
evidencing such investment shall be delivered directly to the Indenture
Trustee or its agent; and
(vi) the proceeds of each investment shall be remitted by the
purchaser thereof directly to the Indenture Trustee for deposit in the
Bond Account, subject to withdrawal by the Indenture Trustee as provided
herein.
In the absence of written direction from the [General
Administrator], funds on deposit in the Bond Account shall remain uninvested.
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(c) Unless the Bonds have been declared due and payable pursuant to
Section 5.02 of the Standard Indenture Provisions and payments and other
collections from the Trust Estate are being applied pursuant to Section 5.06 of
the Standard Indenture Provisions, the Indenture Trustee is authorized to make
withdrawals from the Bond Account (the order set forth hereafter not
constituting an order of priority for such withdrawals) (i) to make payments on
the Bonds as provided herein, (ii) to pay the [General Administrator] interest
and other income earned on funds on deposit in the Bond Account, (iii) to pay
[Administrative Expenses and Additional Expenses] in respect of the Issuer or
the Trust Estate, and (iv) to withdraw any amounts deposited in the Bond Account
in error.
SECTION 14. Payments on the Bonds.
(a) All payments of interest, principal and other amounts made with
respects to any Class of Bonds will be allocated pro rata among the Outstanding
Bonds of such Class based on the respective Principal Amounts thereof.
(b) On each Payment Date, unless the Bonds have been declared due
and payable pursuant to Section 5.02 of the Standard Indenture Provisions and
payments and other collections from the Trust Estate are being applied pursuant
to Section 5.06 of the Standard Indenture Provisions, the Indenture Trustee
shall withdraw from the Bond Account and apply the Available Payment Amount for
such Payment Date among the respective Classes of Bondholders and the Issuer for
the following purposes and in the following order of priority, in each case to
the extent of remaining funds:
[(i) to the Holders of the Class A Bonds in respect of interest, pro
rata as between the two Classes of Class A Bondholders based on
entitlement, up to an amount equal to all unpaid interest accrued in
respect of each such Class of Bonds through the end of the related
Interest Accrual Period;
(ii) to the Holders of the Class A Bonds in respect of principal,
allocable as between the two Classes of Class A Bondholders as provided
below, up to an amount equal to the lesser of (A) the then aggregate
Principal Amount of the Class A Bonds and (B) the Principal Payment Amount
for such Payment Date;
(iii) to the Holders of the Class B Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(iv) after the aggregate Principal Amount of the Class A Bonds has
been reduced to zero, to the Holders of the Class B Bonds in respect of
principal, up to an amount equal to the lesser of (A) the then aggregate
Principal Amount of the Class B Bonds and (B) the excess, if any, of the
Principal Payment Amount for such Payment Date over any amounts
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paid on such Payment Date in retirement of the Class A Bonds pursuant to
clause (ii) above;
(v) to the Holders of the Class C Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(vi) after the aggregate Principal Amount of the Class A and Class B
Bonds has been reduced to zero, to the Holders of the Class C Bonds in
respect of principal, up to an amount equal to the lesser of (A) the then
aggregate Principal Amount of the Class C Bonds and (B) the excess, if
any, of the Principal Payment Amount for such Payment Date over any
amounts paid on such Payment Date in retirement of the Class A and/or
Class B Bonds pursuant to clauses (ii) and (iv) above;
(vii) to the Holders of the Class D Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(viii) after the aggregate Principal Amount of the Class A, Class B
and Class C Bonds has been reduced to zero, to the Holders of the Class D
Bonds in respect of principal, up to an amount equal to the lesser of (A)
the then aggregate Principal Amount of the Class D Bonds and (B) the
excess, if any, of the Principal Payment Amount for such Payment Date over
any amounts paid on such Payment Date in retirement of the Class A, Class
B and/or Class C Bonds pursuant to clauses (ii), (iv) and (vi) above;
(ix) to the Holders of the Class E Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(x) after the aggregate Principal Amount of the Class A, Class B,
Class C and Class D Bonds has been reduced to zero, to the Holders of the
Class E Bonds in respect of principal, up to an amount equal to the lesser
of (A) the then aggregate Principal Amount of the Class E Bonds and (B)
the excess, if any, of the Principal Payment Amount for such Payment Date
over any amounts paid on such Payment Date in retirement of the Class A,
Class B, Class C and/or Class D Bonds pursuant to clauses (ii), (iv), (vi)
and (viii) above;
(xi) to the Holders of the Class F Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
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(xii) after the aggregate Principal Amount of the Class A, Class B,
Class C, Class D and Class E Bonds has been reduced to zero, to the
Holders of the Class F Bonds in respect of principal, up to an amount
equal to the lesser of (A) the then aggregate Principal Amount of the
Class F Bonds and (B) the excess, if any, of the Principal Payment Amount
for such Payment Date over any amounts paid on such Payment Date in
retirement of the Class A, Class B, Class C, Class D and/or Class E Bonds
pursuant to clauses (ii), (iv), (vi), (viii) and (x) above;
(xiii) if, after giving effect to the payments of principal on the
Bonds contemplated by clauses (ii), (iv), (vi), (viii), (x) and (xii)
above, the aggregate Principal Amount of all the Bonds still exceeds the
then aggregate Stated Principal Balance of the Mortgage Pool, then to the
holders of the Class A Bonds (allocable as between the two Classes of
Class A Bondholders as described below), the Class B Bonds, the Class C
Bonds, the Class D Bonds, the Class E Bonds and the Class F Bonds, in that
order, in respect of principal, until (in the case of each Class of Bonds
on which payments of principal are so made) such excess (or the aggregate
Principal Amount of such Class of Bonds) is reduced to zero (whichever
occurs first); and
(xiv) to or at the direction of the Issuer in an amount equal to the
entire remaining portion, if any, of the Available Payment Amount for such
Payment Date.]
[On each Payment Date prior to the Class A Principal Payment
Cross-Over Date, if any, all payments of principal on the Class A Bonds pursuant
to clause (i) or clause (xiii) of this Section 14(b) will be paid, first, to the
Holders of the Class A-1 Bonds, until the aggregate Principal Amount of such
Class of Bonds is reduced to zero, and thereafter, to the Holders of the Class
A-2 Bonds, until the aggregate Principal Amount of such Class of Bonds is
reduced to zero. On each Payment Date on and after the Class A Principal Payment
Cross-Over Date, all payments of principal on the Class A Bonds pursuant to
clause (i) or clause (xiii) of this Section 14(b) will be paid to the Holders of
such two Classes of Bonds, pro rata, in accordance with their respective
aggregate Principal Amounts outstanding immediately prior to such Payment Date,
until the aggregate Principal Amount of each such Class of Bonds is reduced to
zero.]
(c) On each Payment Date, unless the Bonds have been declared due
and payable pursuant to Section 5.02 of the Standard Indenture Provisions and
payments and other collections from the Trust Estate are being applied pursuant
to Section 5.06 of the Standard Indenture Provisions, the Indenture Trustee
shall withdraw from the Bond Account and apply an amount equal to the Prepayment
Premiums collected during the related Collection Period among the respective
Classes of Bondholders and the Issuer for the following purposes and in the
following order of priority, in each case to the extent of remaining funds:
[(i) to the Holders of the Class A Bonds in respect of additional
interest, pro rata as between the two Classes of Class A Bondholders based
on entitlement, up to an
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<PAGE>
amount equal to the Yield Maintenance Amount for each such Class of Bonds
for such Payment Date;
(ii) to the Holders of the Class B Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(iii) to the Holders of the Class C Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(iv) to the Holders of the Class D Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(v) to the Holders of the Class E Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(vi) to the Holders of the Class F Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date; and
(vii) to or at the direction of the Issuer in an amount equal to the
entire remaining portion, if any, of such Prepayment Premiums for such
Payment Date.]
(d) If the Bonds have been declared due and payable pursuant to
Section 5.02 of the Standard Indenture Provisions and payments and other
collections from the Trust Estate are to be applied pursuant to Section 5.06 of
the Standard Indenture Provisions, then the portion of such payments and other
collections allocable to make payments on the Bonds on each Payment Date shall
be applied among the respective Classes of Bondholders for the following
purposes and in the following order of priority, in each case to the extent of
remaining funds:
[(i) to the Holders of the Class A Bonds in respect of interest, pro
rata as between the two Classes of Class A Bondholders based on
entitlement, up to an amount equal to all unpaid interest accrued in
respect of each such Class of Bonds through the end of the related
Interest Accrual Period;
(ii) to the Holders of the Class A Bonds in respect of principal,
pro rata as between the two Classes of Class A Bondholders based on their
respective aggregate Principal Amounts, until such Bonds are retired;
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<PAGE>
(iii) to the Holders of the Class B Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(iv) after the aggregate Principal Amount of the Class A Bonds has
been reduced to zero, to the Holders of the Class B Bonds in respect of
principal, until such Bonds are retired;
(v) to the Holders of the Class C Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(vi) after the aggregate Principal Amount of the Class A and Class B
Bonds has been reduced to zero, to the Holders of the Class C Bonds in
respect of principal, until such Bonds are retired;
(vii) to the Holders of the Class D Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period;
(viii) after the aggregate Principal Amount of the Class A, Class B
and Class C Bonds has been reduced to zero, to the Holders of the Class D
Bonds in respect of principal, until such Bonds are retired;
(ix) to the Holders of the Class E Bonds in respect of interest, up
to an amount equal to unpaid interest accrued in respect of such Class of
Bonds through the end of the related Interest Accrual Period;
(x) after the aggregate Principal Amount of the Class A, Class B,
Class C and Class D Bonds has been reduced to zero, to the Holders of the
Class E Bonds in respect of principal, until such Bonds are retired;
(xi) to the Holders of the Class F Bonds in respect of interest, up
to an amount equal to all unpaid interest accrued in respect of such Class
of Bonds through the end of the related Interest Accrual Period; and
(xii) after the aggregate Principal Amount of the Class A, Class B,
Class C, Class D and Class E Bonds has been reduced to zero, to the
Holders of the Class F Bonds in respect of principal, until such Bonds are
retired.]
[(e) Until such time as the Indenture Trustee receives contrary
instructions from the Owner Trustee in writing, the Indenture Trustee is hereby
authorized and agrees to make all
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<PAGE>
payments that are to be made to or at the direction of the Issuer pursuant to
either of subsections (b) or (c) of this Section 14 or pursuant to Section 5.06
of the Standard Indenture Provisions directly to the Depositor as the sole
holder of all the Owner Trust Certificates, by wire transfer in accordance with
written wiring instructions provided by the Depositor. This Section 14(e) shall
constitute a direction made by the Owner Trustee in accordance with Section [ ]
of the Deposit Trust Agreement, and all payments made pursuant to this Section
14(e) shall constitute distributions made pursuant to Section [ ] of the Deposit
Trust Agreement. The Indenture Trustee agrees to accept and act in accordance
with such alternative payment instructions with respect to monies payable to or
at the direction of the Issuer as the Owner Trustee shall provide in writing no
less than five Business Days prior to the related Payment Date. In connection
with making any payments pursuant to this Section 14(e), the Indenture Trustee
shall promptly provide to the Owner Trustee and the General Administrator by
facsimile transmission and first-class mail, postage prepaid, a written
statement detailing the amounts so paid.]
[(f) There will be no Credit Support Agreements, Cash Flow
Agreements or Reserve Funds with respect to the Bonds and, accordingly, the
provisions of the Standard Indenture Provisions that relate to such agreements
and funds will be inapplicable solely with respect to the Bonds.]
SECTION 15. Reports to Bondholders and Others.
[(a) Based on information provided to the Indenture Trustee by the
Master Servicer and the Special Servicer from time to time pursuant to
Section 4.02 of the Servicing and Administration Agreement, the Indenture
Trustee shall prepare and, on each Payment Date, forward to each Bondholder, the
Issuer, the General Administrator, and the Rating Agencies a statement (the
"Trustee Report"), substantially in the form of Exhibit B hereto, detailing
payments on the Bonds on such Payment Date, together with the Determination Date
Report, the Special Servicer Report and any Operating Statement Analysis
received since the preceding Payment Date (or, in the case of the initial
Payment Date, since the Closing Date).]
[(b) Bond Owners who have certified to the Indenture Trustee as to
their Ownership Interest of any Book-Entry Bond may also obtain copies of any of
the statements, reports and other information delivered to Bondholders pursuant
to Article VII of the Standard Indenture Provisions and this Section 15.]
[(c) Within 60 days after the end of each calendar year, the
Indenture Trustee shall furnish to each Person who at any time during the
calendar year was a holder of a Bond a statement containing information
regarding payments of principal, interest and other amounts on such Person's
Bonds, aggregated for such calendar year or the applicable portion thereof
during which such person was a Bondholder. Such obligation shall 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.]
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<PAGE>
[(d) The Indenture Trustee shall maintain at the Corporate Trust
Office and, upon reasonable prior written request and during normal business
hours, shall make available for review by the Issuer, the Rating Agencies and,
subject to the succeeding paragraph, any Bondholder, Bond Owner or Person
identified to the Indenture Trustee as a prospective transferee of a Bond or an
interest therein, originals and/or copies of the following items: (i) this
Indenture, the Servicing and Administration Agreement and any amendments or
supplement hereto or thereto, (ii) all Trustee Reports, Determination Date
Reports, Special Servicer Reports and Operating Statement Analyses delivered to
Holders of the relevant Class of Bonds since the Closing Date, (iii) all reports
by the Indenture Trustee delivered to Bondholders or filed with the Commission
pursuant to Section 7.03 of the Standard Indenture Provisions, (iv) all reports
by the Issuer filed with the Indenture Trustee or the Commission pursuant to
Section 7.04 of the Standard Indenture Provisions, and (v) [specify other
information to be provided]. The Indenture 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
Indenture 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 Indenture Trustee shall require (a) in
the case of Bond Owners, a confirmation executed by the requesting Person, in a
form reasonably acceptable to the Trustee, generally to the effect that such
Person is a beneficial holder of Bonds, is requesting the information solely for
use in evaluating such Person's investment in the Bonds and will otherwise keep
such information confidential and (b) in the case of a prospective purchaser of
Bonds or any interest therein, confirmation executed by the requesting Person,
in a form reasonably acceptable to the Indenture Trustee, generally to the
effect that such Person is a prospective purchaser of a Bond or an interest
therein, is requesting the information solely for use in evaluating a possible
investment in Bonds and will otherwise keep such information confidential. The
Holders of the Bonds, by their acceptance thereof, will be deemed to have agreed
to keep such information confidential. The Indenture Trustee shall not be liable
for the dissemination of information in accordance with this Section 15(d).]
[SECTION 16. Optional Redemption of the Bonds.
(a) Provided that no Issuer Event of Default has occurred and is
continuing, the Issuer may, at its option, pursuant to Section 10.01 of the
Standard Indenture Provisions, redeem Bonds of any Class, in whole but not in
part, at the Redemption Price therefor, on any Payment Date as of which the
aggregate Principal Amount of such Class is less than or equal to ___% of the
initial aggregate Principal Amount thereof and in any event subject to and in
accordance with Article X of the Standard Indenture Provisions.
(b) On any Redemption Date, following the payments to be made on
such date pursuant to Section 14(b), the Indenture Trustee shall withdraw from
the Bond Account and,
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<PAGE>
subject to Section 2.07(e) of the Standard Indenture Provisions, pay to the
Holders of the Bonds to be redeemed the full Principal Amount thereof, together
with any unpaid interest thereon through the end of the related Interest Accrual
Period.]
SECTION 17. Additional Negative Covenants and Issuer Events of
Default.
[(a) In addition to the negative covenants contained in Section 3.11
of the Standard Indenture Provisions, the Issuer shall not: (i) issue any other
Series if such issuance would result in an Adverse Rating Event with respect to
any Class of Bonds; or (ii) act in a manner that would endanger its status as a
QRS.
(b) In addition to the Issuer Events of Default combined in Section
5.01 of the Standard Indenture Provisions, it shall be an Issuer Event of
Default if the issuer ceases to be a QRS for ___ consecutive days.]
SECTION 18. Incorporation of the Standard Indenture Provisions by
Reference; [Amendments to the Standard Indenture
Provisions]; Ratification of Standard Indenture
Provisions.
(a) [Subject to Section 18(b),] the Standard Indenture Provisions
are incorporated herein in their entirety by this reference to the extent that
they do not conflict with any express term or condition hereof and unless
otherwise explicitly stated herein to the contrary.
(b) [With respect to the Bonds only, the following amendments are
hereby made to the Standard Indenture Provisions:
[Set forth applicable amendments, if any, to the Standard Indenture
Provisions.]
(c)] The Standard Indenture Provisions, as incorporated into [and
amended] by this Terms Indenture, is in all respects ratified and confirmed, and
this Terms Indenture and the Standard Indenture Provisions (as so incorporated
[and amended]) together shall be read, taken and construed as one and the same
instrument.
SECTION 19. Certain Matters Regarding the Indenture Trustee.
(a) As of the Closing Date, the Corporate Trust Office is located at
___________________________________________.
(b) As compensation pursuant to Section 6.07 of the Standard
Indenture Provisions, the Indenture Trustee shall be entitled to a monthly fee
(payable out of the Bond Account) equal to one-twelfth of ___% of the aggregate
Principal Amount of the Bonds as of the commencement of each calendar month,
beginning with ________________, 199__.
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<PAGE>
(c) In addition to the eligibility requirements set forth in Section
6.08 of the Standard Indenture Provisions, the Indenture Trustee must have (i) a
combined capital and surplus of at least $_______________ and (ii) a long-term
unsecured debt rating of at least _____ (or the equivalent) from each Rating
Agency.
(d) The Indenture Trustee hereby represents and warrants to the
Issuer and for the benefit of the Bondholders that:
[Set forth representations and warranties, if any, from the
Indenture Trustee.]
SECTION 20. Representations and Warranties of the Issuer.
The Issuer hereby represents and warrants to the Indenture Trustee
and for the benefit of the Bondholders that:
(i) It is duly authorized under applicable law and the Deposit Trust
Agreement to create and issue the Bonds, to execute and deliver this
Indenture, the other documents referred to herein to which it is a party
and all instruments included in the Trust Estate which it has executed and
delivered, and that all corporate action and governmental consents,
authorizations and approvals necessary or required therefor have been duly
and effectively taken or obtained. The Bonds, when issued, will be, and
this indenture and such other documents are, valid and legally binding
obligations of the Issuer enforceable in accordance with their terms.
(ii) Immediately prior to its Grant of the Trust Estate provided for
herein, it had good title to, and was the sole owner of, each item of
Mortgage Collateral, free and clear of any pledge, lien, encumbrance or
security interest.
(iii) The Indenture Trustee has a valid and enforceable first
priority security interest in the Trust Estate, subject only to exceptions
permitted hereby.
(iv) It is a QRS.
SECTION 21. Notice to the Indenture Trustee, the Issuer and Certain
Other Persons.
Any communication provided for or permitted hereunder shall be in
writing and, unless otherwise expressly provided herein, shall be deemed to have
been duly given when delivered to: (i) in the case of the Issuer, c/o
_________________________, Attention: ______________________, facsimile number:
_________________; (ii) in the case of the Indenture Trustee,
___________________________, facsimile number: ______________________; and (iii)
in the case of the Ratings Agencies:_____________________
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<PAGE>
________________________ ; or as to each such Person such other address and/or
facsimile number as may hereafter be furnished by such Person to the parties
hereto in writing.
SECTION 22. Tax Treatment.
The Issuer has entered into this Indenture, and the Bonds will be
issued, with the intention that, for federal, state and local income, single
business and franchise tax purposes, the Bonds will qualify as indebtedness of
the Issuer secured by the Trust Estate. The Issuer, by entering into this
Indenture, and each Bondholder, by its acceptance of a Bond (and each Bond Owner
by its acceptance of an interest in the applicable Book-Entry Bond), agree to
treat the Bonds for federal, state and local income, single business and
franchise tax purposes as indebtedness of the Issuer.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
CRIIMI MAE Commercial Mortgage Trust [I],
By: , not in its individual
--------------------
capacity but solely as Owner Trustee
By:
-----------------------------------------
Name:
Title:
--------------------------------------------------
as Indenture Trustee
By:
-----------------------------------------------
Name:
Title:
<PAGE>
STATE OF )
): ss.:
COUNTY OF )
On this ___th day of _______________, 199__, before me, the undersigned
officer, personally appeared ____________________, and acknowledged himself to
me to be the ____________________________ of ________________________, and that
as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
STATE OF )
): ss.:
COUNTY OF )
On this ___th day of _____________, 199__, before me, the undersigned
officer, personally appeared ____________________, and acknowledged himself to
me to be the ____________________________ of ______________________, and that as
such officer, being duly authorized to do so pursuant to such entity's by-laws
or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
SCHEDULE 1
SCHEDULE OF COLLATERAL
<PAGE>
CLASS A-1 BOND EXHIBIT A-1
CRIIMI MAE COMMERCIAL MORTGAGE TRUST [I]
CLASS A-1 COLLATERALIZED MORTGAGE OBLIGATION
SERIES 199__-__
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class A-1 Bonds as of the Closing Date:
$___________
Date of Indenture: As of __________,
199__
Initial Principal Amount of this
Accrual Date: __________, 199__ Class A-1 Bond as of the Closing Date:
$___________
Closing Date: __________, 199__
Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
First Payment Date: __________, 199__ $___________
Stated Maturity: _______________
Issuer: CRIIMI MAE Commercial Indenture Trustee: _______________
Mortgage Trust [I]
Owner Trustee: _______________________
Bond No. A-1-__
[CUSIP No. ________]
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
TERMS INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that [Cede & Co.] is the registered owner of this
Bond which is one of a series of collateralized mortgage obligations
(collectively, the "Bonds") issued by the Issuer referred to above in multiple
classes (each, a "Class") pursuant to a Terms Indenture dated as of __________,
199__ (the "Terms Indenture"), between Owner Trustee referred to above, on
behalf of the Issuer, and the Indenture Trustee referred to above, on behalf of
the holders of the Bonds (the "Bondholders"), which Terms Indenture incorporates
by reference certain applicable standard indenture provisions (the Terms
Indenture, together with such standard indenture provisions, the "Indenture"). A
summary of certain of the pertinent provisions of the Indenture is set forth
hereafter. To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned in the Indenture. This Bond is issued under and
is subject to the terms, provisions and conditions of
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<PAGE>
the Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby
promises to pay to Cede & Co. or registered assigns, the principal sum of
$______________ no later than ___________.
Pursuant to the terms of the Indenture, payments will be made on the
Class of Bonds to which this Bond belongs, pro rata among the Bonds of such
Class based on their respective Principal Amounts, on the ____ of each month or,
if any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the related Record Date. All payments made under the Indenture on this Bond will
be made by the Indenture Trustee by wire transfer of immediately available funds
to the account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions
on the Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal
Amount hereof is binding on such Holder and all future Holders of this Bond and
any Bond issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
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<PAGE>
Initially, this Bond will be held in book-entry form (all such Bonds
held from time to time in such form, the "Book-Entry Bonds"). Under certain
circumstances described herein, this Bond may cease to be held in book-entry
form and will be held as fully registered, physical bond (all such Bonds held
from time to time in such form the "Definitive Bonds").
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond is registrable in the Bond Register
upon surrender of this Bond for registration of transfer at the offices of the
Bond Registrar, duly endorsed by, or accompanied by a written instrument of
transfer in the form satisfactory to the Bond Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer
or exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
Notwithstanding the foregoing, for so long as this Bond is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Bond shall be
made through the book-entry facilities of DTC, and accordingly, this Bond shall
constitute a Book-Entry Bond.
No transfer of this Bond or any interest herein shall be made (A) to
any employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the General Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
The Depositor the Owner Trustee, the Indenture Trustee, the Bond
Registrar and any agent thereof may treat the Person in whose name this Bond is
registered as the owner hereof for all purposes, and none of the Depositor, the
Owner Trustee, the Indenture Trustee, the Bond Registrar or any such agent shall
be affected by notice to the contrary.
-5-
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust Estate (to the extent of its rights therein)
for payments hereunder.
This Bond shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-6-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
CRIIMI MAE COMMERCIAL MORTGAGE
TRUST [I]
By: ,
------------------------
not in its individual capacity but solely
in its capacity as Owner Trustee
By:
--------------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Bonds referred to in the
within-mentioned Indenture.
Dated:
------------------------------
as Bond Registrar
By:
--------------------------------------------
Authorized 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
Collateralized Mortgage Obligation and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new
Collateralized Mortgage Obligation of a like Percentage Interest and Class to
the above named assignee and deliver such Mortgage Pass-Through Bond to the
following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
------------------------------------------
Signature by or on behalf of Assignor
------------------------------------------
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to_________________________________________________
________________________________________________________________ for the account
of_____________________________________________________________________________.
Payments made by check (such check to be made payable to_________________)
and all applicable statements and notices should be mailed to___________________
_______________________________________________________________________________.
-8-
<PAGE>
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
-9-
<PAGE>
CLASS A-2 BOND EXHIBIT A-2
CRIIMI MAE TRUST I
CLASS A-2 COLLATERALIZED MORTGAGE OBLIGATION
SERIES 199__-__
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class A-2 Bonds as of the Closing Date:
$______________________________________
Date of Indenture: As of __________,
199__
Initial Principal Amount of this
Accrual Date: __________, 199__ Class A-2 Bond as of the Closing Date:
$______________________________________
Closing Date: __________, 199__
Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
First Payment Date: __________, 199__ $______________________________________
Stated Maturity: _______________
Issuer: CRIIMI MAE Commercial Indenture Trustee: ___________________
Mortgage Trust [I]
Owner Trustee: _______________________
Bond No. A-2-__
[CUSIP No. ________]
-1-
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
TERMS INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that [Cede & Co.] is the registered owner of this
Bond which is one of a series of collateralized mortgage obligations
(collectively, the "Bonds") issued by the Issuer referred to above in multiple
classes (each, a "Class") pursuant to a Terms Indenture dated as of __________,
199__ (the "Terms Indenture"), between Owner Trustee referred to above, on
behalf of the Issuer, and the Indenture Trustee referred to above, on behalf of
the holders of the Bonds (the "Bondholders"), which Terms Indenture incorporates
by reference certain applicable standard indenture provisions (the Terms
Indenture, together with such standard indenture provisions, the "Indenture"). A
summary of certain of the pertinent provisions of the Indenture is set forth
hereafter. To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned in the Indenture. This Bond is issued under and
is subject to the terms, provisions and conditions of
-2-
<PAGE>
the Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby
promises to pay to Cede & Co. or registered assigns, the principal sum of
$_______________ no later than _______________.
Pursuant to the terms of the Indenture, payments will be made on the
Class of Bonds to which this Bond belongs, pro rata among the Bonds of such
Class based on their respective Principal Amounts, on the ____ of each month or,
if any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the related Record Date. All payments made under the Indenture on this Bond will
be made by the Indenture Trustee by wire transfer of immediately available funds
to the account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions
on the Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal
Amount hereof is binding on such Holder and all future Holders of this Bond and
any Bond issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
-3-
<PAGE>
Initially, this Bond will be held in book-entry form (all such Bonds
held from time to time in such form, the "Book-Entry Bonds"). Under certain
circumstances described herein, this Bond may cease to be held in book-entry
form and will be held as fully registered, physical bond (all such Bonds held
from time to time in such form the "Definitive Bonds").
No transfer of this Bond or any interest herein shall be made (A) to
any employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the General Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond is registrable in the Bond Register
upon surrender of this Bond for registration of transfer at the offices of the
Bond Registrar, duly endorsed by, or accompanied by a written instrument of
transfer in the form satisfactory to the Bond Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer
or exchange of this Bond, but the indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
Notwithstanding the foregoing, for so long as this Bond is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Bond shall be
made through the book-entry facilities of DTC, and accordingly, this Bond shall
constitute a Book-Entry Bond.
The Depositor, the Owner Trustee, the Indenture Trustee, the Bond
Registrar and any agent thereof may treat the Person in whose name this Bond is
registered as the owner hereof for all purposes, and none of the Depositor, the
Owner Trustee, the Indenture Trustee, the Bond Registrar or any such agent shall
be affected by notice to the contrary.
-4-
<PAGE>
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust Estate (to the extent of its rights therein)
for payments hereunder.
This Bond shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-5-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
CRIIMI MAE COMMERCIAL MORTGAGE
TRUST [I]
By: ,
------------------------
not in its individual capacity but solely
in its capacity as Owner Trustee
By:
--------------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Bonds referred to in the
within-mentioned Indenture.
Dated:
------------------------------
as Bond Registrar
By:
--------------------------------------------
Authorized 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
Collateralized Mortgage Obligation and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new
Collateralized Mortgage Obligation of a like Percentage Interest and Class to
the above named assignee and deliver such Mortgage Pass-Through Bond to the
following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
------------------------------------------
Signature by or on behalf of Assignor
------------------------------------------
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to_________________________________________________
________________________________________________________________ for the account
of_____________________________________________________________________________.
Payments made by check (such check to be made payable to_________________)
and all applicable statements and notices should be mailed to___________________
_______________________________________________________________________________.
-7-
<PAGE>
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
-8-
<PAGE>
CLASS B BOND EXHIBIT A-3
CRIIMI MAE COMMERCIAL MORTGAGE TRUST [I]
CLASS B COLLATERALIZED MORTGAGE OBLIGATION
SERIES 199__-__
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class B Bonds as of the Closing Date:
$____________________________________
Date of Indenture: As of ________, 199__
Initial Principal Amount of this
Accrual Date: __________, 199__ Class B Bond as of the Closing Date:
$____________________________________
Closing Date: __________, 199__
Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
First Payment Date: __________, 199__ $____________________________________
Stated Maturity: _______________
Issuer: CRIIMI MAE Commercial Indenture Trustee: _________________
Mortgage Trust [I]
Owner Trustee: _______________________
Bond No. B-__
[CUSIP No. ________]
-1-
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
TERMS INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that [Cede & Co.] is the registered owner of this
Bond which is one of a series of collateralized mortgage obligations
(collectively, the "Bonds") issued by the Issuer referred to above in multiple
classes (each, a "Class") pursuant to a Terms Indenture dated as of __________,
199__(the "Terms Indenture"), between Owner Trustee referred to above, on behalf
of the Issuer, and the Indenture Trustee referred to above, on behalf of the
holders of the Bonds (the "Bondholders"), which Terms Indenture incorporates by
reference certain applicable standard indenture provisions (the Terms Indenture,
together with such standard indenture provisions, the
-2-
<PAGE>
"Indenture"). A summary of certain of the pertinent provisions of the Indenture
is set forth hereafter. To the extent not defined herein, capitalized terms used
herein have the respective meanings assigned in the Indenture. This Bond is
issued under and is subject to the terms, provisions and conditions of the
Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby
promises to pay to Cede & Co. or registered assigns, the principal sum of
$_____________ no later than ___________.
Pursuant to the terms of the Indenture, payments will be made on the
Class of Bonds to which this Bond belongs, pro rata among the Bonds of such
Class based on their respective Principal Amounts, on the ____ of each month or,
if any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions
on the Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal
Amount hereof is binding on such Holder and all future Holders of this Bond and
any Bond issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds
-3-
<PAGE>
of the same Class in authorized denominations evidencing the same aggregate
Principal Amount, as requested by the Holder surrendering the same.
Initially, this Bond will be held in book-entry form (all such Bonds
held from time to time in such form, the "Book-Entry Bonds"). In addition, in
connection with its acquisition of an interest in any Book-Entry Bond, the
transferee will be deemed to have made to and for the benefit of the Issuer, the
Company and the Indenture Trustee each of the representations, warranties and
covenants contained in such certificate to be so delivered to the transferor.
Under certain circumstances described herein, this Bond may cease to be held in
book-entry form and will be held as fully registered, physical bond (all such
Bonds held from time to time in such form the "Definitive Bonds").
No transfer of this Bond or any interest herein shall be made (A) to
any employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the General Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with assets of, such Person will not result in any non-exempt prohibited
transaction under ERISA or Section 4975 of the Code or the imposition of an
excise tax under Section 4975 of the Code.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond is registrable in the Bond Register
upon surrender of this Bond for registration of transfer at the offices of the
Bond Registrar, duly endorsed by, or accompanied by a written instrument of
transfer in the form satisfactory to the Bond Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer
or exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
Notwithstanding the foregoing, for so long as this Bond is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers
-4-
<PAGE>
of interests in this Bond shall be made through the book-entry facilities of
DTC, and accordingly, this Bond shall constitute a Book-Entry Bond.
The Depositor, the Owner Trustee, the Indenture Trustee, the Bond
Registrar and any agent thereof may treat the Person in whose name this Bond is
registered as the owner hereof for all purposes, and none of the Depositor, the
Owner Trustee, the Indenture Trustee, the Bond Registrar or any such agent shall
be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust Estate (to the extent of its rights therein)
for payments hereunder.
This Bond shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-5-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
CRIIMI MAE COMMERCIAL MORTGAGE
TRUST [I]
By: ,
------------------------
not in its individual capacity but solely
in its capacity as Owner Trustee
By:
--------------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Bonds referred to in the within-mentioned
Indenture.
Dated:
------------------------------
as Bond Registrar
By:
--------------------------------------------
Authorized 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
Collateralized Mortgage Obligation and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new
Collateralized Mortgage Obligation of a like Percentage Interest and Class to
the above named assignee and deliver such Mortgage Pass-Through Bond to the
following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
------------------------------------------
Signature by or on behalf of Assignor
------------------------------------------
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to_________________________________________________
________________________________________________________________ for the account
of_____________________________________________________________________________.
Payments made by check (such check to be made payable to_________________)
and all applicable statements and notices should be mailed to___________________
_______________________________________________________________________________.
-7-
<PAGE>
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
-8-
<PAGE>
CLASS C BOND EXHIBIT A-4
CRIIMI MAE COMMERCIAL MORTGAGE TRUST [I]
CLASS C COLLATERALIZED MORTGAGE OBLIGATION
SERIES 199__-__
Bond Interest Rate: _____% per annum Aggregate Principal Amount of the
Class C Bonds as of the Closing Date:
$___________
Date of Indenture: As of __________,
199__
Initial Principal Amount of this
Accrual Date: __________, 199__ Class C Bond as of the Closing Date:
$___________
Closing Date: __________, 199__
Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
First Payment Date: __________, 199__ $___________
Stated Maturity: ____________
Issuer: CRIIMI MAE Commercial Indenture Trustee: _________________
Mortgage Trust [I]
Owner Trustee: _____________________
Bond No. C-__
[CUSIP No. _________]
-1-
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
TERMS INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS BOND. THE
ISSUE DATE OF THIS BOND IS __________, 199__. ASSUMING THAT THE MORTGAGE LOANS
ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY PREPAYMENT, THIS BOND HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT,
THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL PRINCIPAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS
-2-
<PAGE>
WILL NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR
RATE.
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE
MADE MONTHLY AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT HEREOF AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner (the
"Holder") of this Bond which is one of a series of collateralized mortgage
obligations (collectively, the "Bonds") issued by the Issuer referred to above
in multiple classes (each, a "Class") pursuant to a Terms Indenture dated as of
__________, 199__ (the "Terms Indenture"), between Owner Trustee referred to
above, on behalf of the Issuer, and the Indenture Trustee referred to above, on
behalf of the holders of the Bonds (the "Bondholders"), which Terms Indenture
incorporates by reference certain applicable standard indenture provisions (the
Terms Indenture, together with such standard indenture provisions, the
"Indenture"). A summary of certain of the pertinent provisions of the Indenture
is set forth hereafter. To the extent not defined herein, capitalized terms used
herein have the respective meanings assigned in the Indenture. This Bond is
issued under and is subject to the terms, provisions and conditions of the
Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby
promises to pay to the Holder hereof the principal sum of $_____________________
no later than __________________.
Pursuant to the terms of the Indenture, payments will be made on the
Class of Bonds to which this Bond belongs, pro rata among the Bonds of such
Class based on their respective Principal Amounts, on the ____ of each month or,
if any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect
-3-
<PAGE>
to a Bond that has previously been surrendered as contemplated by the preceding
sentence or, with limited exception, that should have been surrendered as
contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions
on the Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal
Amount hereof is binding on such Holder and all future Holders of this Bond and
any Bond issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
Initially, this Bond will be held in book-entry form (all such Bonds
held from time to time in such form, the "Book-Entry Bonds"). In addition, in
connection with its acquisition of an interest in any Book-Entry Bond, the
transferee will be deemed to have made to and for the benefit of the Issuer, the
Company and the Indenture Trustee each of the representations, warranties and
covenants contained in such certificate to be so delivered to the transferor.
Under certain circumstances described herein, this Bond may cease to be held in
book-entry form and will be held as fully registered, physical bond (all such
Bonds held from time to time in such form the "Definitive Bonds").
No transfer of this Bond or any interest herein shall be made (A) to
any employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the General Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with
-4-
<PAGE>
assets of, such Person will not result in any non-exempt prohibited transaction
under ERISA or Section 4975 of the Code or the imposition of an excise tax under
Section 4975 of the Code.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond is registerable in the Bond
Register upon surrender of this Bond for registration of transfer at the offices
of the Bond Registrar, duly endorsed by, or accompanied by a written instrument
of transfer in the form satisfactory to the Bond Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer
or exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee,
the Bond Registrar and any agent thereof may treat the Person in whose name this
Bond is registered as the owner hereof for all purposes, and none of the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust Estate (to the extent of its rights therein)
for payments hereunder.
This Bond shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-5-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
CRIIMI MAE COMMERCIAL MORTGAGE
TRUST [I]
By: ,
----------------------------
not in its individual capacity but solely
in its capacity as Owner Trustee
By:
-------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Bonds referred to in the within-mentioned
Indenture.
Dated:
------------------------
as Bond Registrar
By:
-----------------------------------
Authorized 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
Collateralized Mortgage Obligation and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new
Collateralized Mortgage Obligation of a like Percentage Interest and Class to
the above named assignee and deliver such Mortgage Pass-Through Bond to the
following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
--------------------------------------------
Signature by or on behalf of Assignor
--------------------------------------------
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
________________________________________________________________ for the account
of _________________________________________________________________________.
Payments made by check (such check to be made payable to ________________)
and all applicable statements and notices should be mailed to __________________
___________________________________________________________________.
-7-
<PAGE>
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
-8-
<PAGE>
CLASS D BOND EXHIBIT A-5
CRIIMI MAE COMMERCIAL MORTGAGE TRUST [I]
CLASS D COLLATERALIZED MORTGAGE OBLIGATION
SERIES 199__-__
Bond Interest Rate: ____% per annum Aggregate Principal Amount of the
Class D Bonds as of the Closing Date:
$_____________
Date of Indenture: As of __________,
199__
Initial Principal Amount of this
Accrual Date: __________, 199__ Class D Bond as of the Closing Date:
$_____________
Closing Date: __________, 199__
Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
First Payment Date: __________, 199__ $_____________
Stated Maturity: _______________
Issuer: CRIIMI MAE Commercial Indenture Trustee: __________________
Mortgage Trust [I]
Owner Trustee: _______________________
Bond No. D-__
[CUSIP No. ___________]
-1-
<PAGE>
[UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE INDENTURE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
TERMS INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS BOND. THE
ISSUE DATE OF THIS BOND IS __________, 199__. ASSUMING THAT THE MORTGAGE LOANS
ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY PREPAYMENT, THIS BOND HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT,
THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL PRINCIPAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS
-2-
<PAGE>
WILL NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR
RATE.]
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner (the
"Holder") of this Bond which is one of a series of collateralized mortgage
obligations (collectively, the "Bonds") issued by the Issuer referred to above
in multiple classes (each, a "Class") pursuant to a Terms Indenture dated as of
__________, 199__ (the "Terms Indenture"), between Owner Trustee referred to
above, on behalf of the Issuer, and the Indenture Trustee referred to above, on
behalf of the holders of the Bonds (the "Bondholders"), which Terms Indenture
incorporates by reference certain applicable standard indenture provisions (the
Terms Indenture, together with such standard indenture provisions, the
"Indenture"). A summary of certain of the pertinent provisions of the Indenture
is set forth hereafter. To the extent not defined herein, capitalized terms used
herein have the respective meanings assigned in the Indenture. This Bond is
issued under and is subject to the terms, provisions and conditions of the
Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby
promises to pay to the Holder hereof the principal sum of $_____________________
no later than __________________.
Pursuant to the terms of the Indenture, payments will be made on the
Class of Bonds to which this Bond belongs, pro rata among the Bonds of such
Class based on their respective Principal Amounts, on the ____ of each month or,
if any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect
-3-
<PAGE>
to a Bond that has previously been surrendered as contemplated by the preceding
sentence or, with limited exception, that should have been surrendered as
contemplated by the preceding sentence.
The Bonds are limited in right of payment to certain distributions
on the Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal
Amount hereof is binding on such Holder and all future Holders of this Bond and
any Bond issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
Initially, this Bond will be held in book-entry form (all such Bonds
held from time to time in such form, the "Book-Entry Bonds"). In addition, in
connection with its acquisition of an interest in any Book-Entry Bond, the
transferee will be deemed to have made to and for the benefit of the Issuer, the
Company and the Indenture Trustee each of the representations, warranties and
covenants contained in such certificate to be so delivered to the transferor.
Under certain circumstances described herein, this Bond may cease to be held in
book-entry form and will be held as fully registered, physical bond (all such
Bonds held from time to time in such form the "Definitive Bonds").
No transfer of this Bond or any interest herein shall be made (A) to
any employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts in which such plans, accounts or arrangements are
invested, including, without limitation, insurance company general accounts,
that is subject to ERISA or the Code (each, a "Plan"), or (B) to any Person who
is directly or indirectly purchasing such Bond or interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, except in
accordance with the Indenture. Each Person who acquires this Bond or any
interest herein shall be deemed to have represented and warranted to and for the
benefit of the Issuer, the Owner Trustee, the General Administrator, the Master
Servicer, the Special Servicer, the Depositor, the Bond Registrar or the
Indenture Trustee that either: (i) it is neither a Plan nor any Person who is
directly or indirectly purchasing such Bond or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) the
purchase and holding of such Bond or any interest therein by or on behalf of, or
with
-4-
<PAGE>
assets of, such Person will not result in any non-exempt prohibited transaction
under ERISA or Section 4975 of the Code or the imposition of an excise tax under
Section 4975 of the Code.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond is registerable in the Bond
Register upon surrender of this Bond for registration of transfer at the offices
of the Bond Registrar, duly endorsed by, or accompanied by a written instrument
of transfer in the form satisfactory to the Bond Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer
or exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee,
the Bond Registrar and any agent thereof may treat the Person in whose name this
Bond is registered as the owner hereof for all purposes, and none of the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust Estate (to the extent of its rights therein)
for payments hereunder.
This Bond shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-5-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
CRIIMI MAE COMMERCIAL MORTGAGE
TRUST [I]
By: ,
-------------------------------
not in its individual capacity but solely
in its capacity as Owner Trustee
By:
-----------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Bonds referred to in the within-mentioned
Indenture.
Dated:
-----------------------------
as Bond Registrar
By:
-----------------------------------
Authorized Officer
-6-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Obligation and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new
Collateralized Mortgage Obligation of a like Percentage Interest and Class to
the above named assignee and deliver such Mortgage Pass-Through Bond to the
following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
--------------------------------------------
Signature by or on behalf of Assignor
--------------------------------------------
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
________________________________________________________________ for the account
of _________________________________________________________________________.
Payments made by check (such check to be made payable to ________________)
and all applicable statements and notices should be mailed to __________________
_______________________________________________________________.
-7-
<PAGE>
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
-8-
<PAGE>
CLASS E BOND EXHIBIT A-6
CRIIMI MAE COMMERCIAL MORTGAGE TRUST [I]
CLASS E COLLATERALIZED MORTGAGE OBLIGATION
SERIES 199__-__
Bond Interest Rate: ____% per annum Aggregate Principal Amount of the
Class E Bonds as of the Closing Date:
$______________
Date of Indenture: As of _______, 199__
Initial Principal Amount of this
Accrual Date: __________, 199__ Class E Bond as of the Closing Date:
$______________
Closing Date: __________, 199__
Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
First Payment Date: __________, 199__ Amount: $____________
Stated Maturity: _____________
Issuer: CRIIMI MAE Commercial Indenture Trustee: __________________
Mortgage Trust [I]
Owner Trustee: ______________________
Bond No. E-__
CUSIP No. ______________
-1-
<PAGE>
THIS BOND HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS BOND OR ANY INTEREST
HEREIN WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH
IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12 OF THE TERMS INDENTURE
REFERRED TO HEREIN.
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
TERMS INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS BOND. THE
ISSUE DATE OF THIS BOND IS __________, 199__. ASSUMING THAT THE MORTGAGE LOANS
ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY PREPAYMENT, THIS BOND HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT,
THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL PRINCIPAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
-2-
<PAGE>
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that [_____________] is the registered owner (the
"Holder") of this Bond which is one of a series of collateralized mortgage
obligations (collectively, the "Bonds") issued by the Issuer referred to above
in multiple classes (each, a "Class") pursuant to a Terms Indenture dated as of
__________, 199__(the "Terms Indenture"), between Owner Trustee referred to
above, on behalf of the Issuer, and the Indenture Trustee referred to above, on
behalf of the holders of the Bonds (the "Bondholders"), which Terms Indenture
incorporates by reference certain applicable standard indenture provisions (the
Terms Indenture, together with such standard indenture provisions, the
"Indenture"). A summary of certain of the pertinent provisions of the Indenture
is set forth hereafter. To the extent not defined herein, capitalized terms used
herein have the respective meanings assigned in the Indenture. This Bond is
issued under and is subject to the terms, provisions and conditions of the
Indenture, to which Indenture the Holder of this Bond by virtue of the
acceptance hereof assents and by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby
promises to pay to the Holder hereof, the principal sum of $_________________
no later than ______________________.
Pursuant to the terms of the Indenture, payments will be made on the
Class of Bonds to which this Bond belongs, pro rata among the Bonds of such
Class based on their respective Principal Amounts, on the ____ of each month or,
if any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
-3-
<PAGE>
The Bonds are limited in right of payment to certain distributions
on the Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal
Amount hereof is binding on such Holder and all future Holders of this Bond and
any Bond issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
No transfer, sale, pledge or other disposition of this Bond or
interest herein may be made by an investor unless that transfer, sale, pledge or
other disposition is exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws, or
is otherwise made in accordance with the Securities Act and such state
securities laws. If a transfer of this Bond is to be made without registration
under the Securities Act, then the registrar for the Bonds (the "Bond
Registrar", which shall initially be the Indenture Trustee) is required to
refuse to register such transfer unless it receives: (i) a certificate from the
Bondholder desiring to effect such transfer substantially in the form attached
to the Indenture as Exhibit D-1A; or (ii) a certificate from such Bondholder
substantially in the form attached to the Indenture as Exhibit D-1B and a
certificate from such Bondholder's prospective transferee substantially in the
form attached to the Indenture either as Exhibit D-2A or as Exhibit D-2B; or
(iii) an opinion of counsel satisfactory to the Indenture Trustee to the effect
that such transfer may be made without registration under the Securities Act
(which opinion of counsel shall not be an expense of the Trust Estate (as
defined herein) or of the Issuer, the Owner Trustee, the General Administrator,
the Depositor, the Indenture Trustee or the Bond Registrar in their respective
capacities as such), together with the written certification(s) as to the facts
surrounding such transfer from the Bondholder desiring to effect such transfer
and/or such Bondholder's prospective transferee on which such opinion of counsel
is based. Any investor desiring to effect a transfer of this Bond or any
interest herein without registration under the Securities Act and registration
or qualification under applicable state securities laws will be required to, and
by acceptance of this Bond or any interest herein will be deemed to have agreed
to, indemnify the Issuer, the Owner Trustee, the General Administrator, the
Depositor, the Indenture Trustee and the Bond Registrar against any liability
that may result if the transfer is not exempt from such registration and/or
qualification or is not made in accordance with such federal and state laws.
No transfer of this Bond or any interest herein shall be made (A) to
any employee benefit plan or other retirement arrangement, including individual
retirement accounts and annuities,
-4-
<PAGE>
Keogh plans and collective investment funds and separate accounts in which such
plans, accounts or arrangements are invested, including, without limitation,
insurance company general accounts, that is subject to ERISA or the Code (each,
a "Plan"), or (B) to any Person who is directly or indirectly purchasing such
Bond or interest therein on behalf of, as named fiduciary of, as trustee of, or
with assets of a Plan, except in accordance with the Indenture. Each Person who
acquires this Bond or any interest herein shall be deemed to have represented
and warranted to and for the benefit of the Issuer, the Owner Trustee, the
General Administrator, the Master Servicer, the Special Servicer, the Depositor,
the Bond Registrar or the Indenture Trustee that either: (i) it is neither a
Plan nor any Person who is directly or indirectly purchasing such Bond or
interest therein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan; or (ii) the purchase and holding of such Bond or any interest
therein by or on behalf of, or with assets of, such Person will not result in
any non-exempt prohibited transaction under ERISA or Section 4975 of the Code or
the imposition of an excise tax under Section 4975 of the Code.
If a Person is acquiring this Bond or interest herein as a fiduciary
or agent for one or more accounts, such Person shall be required to deliver to
the Bond Registrar a certification to the effect that, and such other evidence
as may be reasonably required by the Indenture Trustee to confirm that, it has
(i) sole investment discretion with respect to each such account and (ii) full
power to make the foregoing acknowledgments, representations, warranties,
certifications and agreements with respect to each such account as set forth
above.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond is registerable in the Bond
Register upon surrender of this Bond for registration of transfer at the offices
of the Bond Registrar, duly endorsed by, or accompanied by a written instrument
of transfer in the form satisfactory to the Bond Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer
or exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee,
the Bond Registrar and any agent thereof may treat the Person in whose name this
Bond is registered as the owner hereof for all purposes, and none of the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
-5-
<PAGE>
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust Estate (to the extent of its rights therein)
for payments hereunder.
This Bond shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-6-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
CRIIMI MAE COMMERCIAL MORTGAGE
TRUST [I]
By: ,
-------------------------------
not in its individual capacity but solely
in its capacity as Owner Trustee
By:
------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class E Bonds referred to in the within-mentioned
Indenture.
Dated:
-----------------------
as Bond Registrar
By:
---------------------------------
Authorized Officer
-7-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Obligation and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new
Collateralized Mortgage Obligation of a like Percentage Interest and Class to
the above named assignee and deliver such Mortgage Pass-Through Bond to the
following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
-----------------------------------------
Signature by or on behalf of Assignor
-----------------------------------------
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to_________________________________________________
________________________________________________________________ for the account
of _______________________________________________________________________.
Payments made by check (such check to be made payable to ________________)
and all applicable statements and notices should be mailed to __________________
_________________________________________________________________.
-8-
<PAGE>
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
-9-
<PAGE>
CLASS F BOND EXHIBIT A-7
CRIIMI MAE COMMERCIAL MORTGAGE TRUST [I]
CLASS F COLLATERALIZED MORTGAGE OBLIGATION
SERIES 199__-__
Bond Interest Rate: ___% per annum Aggregate Principal Amount of the
Class F Bonds as of the Closing Date:
$_________________
Date of Indenture: As of __________,
199__
Initial Principal Amount of this
Accrual Date: __________, 199__ Class F Bond as of the Closing Date:
$_________________
Closing Date: __________, 199__
Initial Aggregate [Stated Principal
Balance of the Mortgage Pool]:
First Payment Date: __________, 199__ $_________________
Stated Maturity: ___________
Issuer: CRIIMI MAE Commercial Indenture Trustee: ___________________
Mortgage Trust [I]
Owner Trustee: _______________________
Bond No. F-__
CUSIP No. _________
-1-
<PAGE>
THIS BOND HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE. ANY
RESALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS BOND OR ANY INTEREST
HEREIN WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH
IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 9 OF THE TERMS INDENTURE
REFERRED TO HEREIN.
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY EMPLOYEE
BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS BOND OR SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED
FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE
TERMS INDENTURE REFERRED TO HEREIN.
THIS BOND REPRESENTS A NON-RECOURSE OBLIGATION OF THE ISSUER AND WILL BE PAID
SOLELY FROM THE COLLATERAL SECURING THIS BOND. NEITHER THIS BOND NOR THE
COLLATERAL THEREFOR IS INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY ANY OTHER PERSON.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS BOND. THE
ISSUE DATE OF THIS BOND IS __________, 199__. ASSUMING THAT THE MORTGAGE LOANS
ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY PREPAYMENT, THIS BOND HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL PRINCIPAL AMOUNT,
THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO
THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000 OF INITIAL PRINCIPAL
AMOUNT, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE
MORTGAGE LOANS WILL NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT
ANY PARTICULAR RATE.]
-2-
<PAGE>
THIS BOND IS SUBORDINATE TO OTHER BONDS OF THE SAME SERIES, AS AND TO THE EXTENT
PROVIDED IN THE INDENTURE REFERRED TO HEREIN.
PAYMENTS IN REDUCTION OF THE PRINCIPAL AMOUNT OF THIS BOND MAY BE MADE MONTHLY
AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that [ ] is the registered owner (the "Holder") of
this Bond which is one of a series of collateralized mortgage obligations
(collectively, the "Bonds") issued by the Issuer referred to above in multiple
classes (each, a "Class") pursuant to a Terms Indenture dated as of __________,
199__ (the "Terms Indenture"), between Owner Trustee referred to above, on
behalf of the Issuer, and the Indenture Trustee referred to above, on behalf of
the holders of the Bonds (the "Bondholders"), which Terms Indenture incorporates
by reference certain applicable standard indenture provisions (the Terms
Indenture, together with such standard indenture provisions, the "Indenture"). A
summary of certain of the pertinent provisions of the Indenture is set forth
hereafter. To the extent not defined herein, capitalized terms used herein have
the respective meanings assigned in the Indenture. This Bond is issued under and
is subject to the terms, provisions and conditions of the Indenture, to which
Indenture the Holder of this Bond by virtue of the acceptance hereof assents and
by which such Holder is bound.
The Issuer, a Delaware business trust, for value received, hereby
promises to pay to the Holder hereof, the principal sum of $____________ no
later than _______________.
Pursuant to the terms of the Indenture, payments will be made on the
Class of Bonds to which this Bond belongs, pro rata among the Bonds of such
Class based on their respective Principal Amounts, on the ____ of each month or,
if any such day is not a business day, then on the next succeeding business day
(each, a "Payment Date"), commencing on the first Payment Date specified above,
to the Person in whose name this Bond is registered at the close of business on
the Record Date. All payments made under the Indenture on this Bond will be made
by the Indenture Trustee by wire transfer of immediately available funds to the
account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Bondholder shall have provided the
Indenture Trustee with wiring instructions no less than five Business Days prior
to the related Record Date (which wiring instructions may be in the form of a
standing order applicable to all subsequent payments) and is the registered
owner of Bonds the initial aggregate Principal Amount of which is at least
$[5,000,000], or otherwise by check mailed to the address of such Bondholder as
it appears in the Bond Register. Notwithstanding the foregoing, the final
payment on this Bond will be made in like manner, but only upon presentation and
surrender of this Bond at the offices of the Indenture Trustee or such other
location specified in the notice to the Holder hereof of such final payment.
Notwithstanding anything herein to the contrary, no payments will be made with
respect to a Bond that has previously been surrendered as contemplated by the
preceding sentence or, with limited exception, that should have been surrendered
as contemplated by the preceding sentence.
-3-
<PAGE>
The Bonds are limited in right of payment to certain distributions
on the Mortgage Collateral, all as more specifically set forth herein and in the
Indenture. As provided in the Indenture, withdrawals from the Bond Account may
be made from time to time for purposes other than, and, in certain cases, prior
to, payments to Bondholders, such purposes including the reimbursement of
certain expenses incurred by the Indenture Trustee under the Indenture.
Any payment to the Holder of this Bond in reduction of the Principal
Amount hereof is binding on such Holder and all future Holders of this Bond and
any Bond issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such payment is made upon this Bond.
The Class of Bonds to which this Bond relates, are issuable in fully
registered form only without coupons in minimum denominations specified in the
Indenture. As provided in the Indenture and subject to certain limitations
therein set forth, this Bond is exchangeable for new Bonds of the same Class in
authorized denominations evidencing the same aggregate Principal Amount, as
requested by the Holder surrendering the same.
No transfer, sale, pledge or other disposition of this Bond or
interest herein may be made by an investor unless that transfer, sale, pledge or
other disposition is exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws, or
is otherwise made in accordance with the Securities Act and such state
securities laws. If a transfer of this Bond is to be made without registration
under the Securities Act, then the registrar for the Bonds (the "Bond
Registrar", which shall initially be the Indenture Trustee) is required to
refuse to register such transfer unless it receives: (i) a certificate from the
Bondholder desiring to effect such transfer substantially in the form attached
to the Indenture as Exhibit D-1A; or (ii) a certificate from such Bondholder
substantially in the form attached to the Indenture as Exhibit D-1B and a
certificate from such Bondholder's prospective transferee substantially in the
form attached to the Indenture either as Exhibit D-2A or as Exhibit D-2B; or
(iii) an opinion of counsel satisfactory to the Indenture Trustee to the effect
that such transfer may be made without registration under the Securities Act
(which opinion of counsel shall not be an expense of the Trust Estate (as
defined herein) or of the Issuer, the Owner Trustee, the General Administrator,
the Depositor, the Indenture Trustee or the Bond Registrar in their respective
capacities as such), together with the written certification(s) as to the facts
surrounding such transfer from the Bondholder desiring to effect such transfer
and/or such Bondholder's prospective transferee on which such opinion of counsel
is based. Any investor desiring to effect a transfer of this Bond or any
interest herein without registration under the Securities Act and registration
or qualification under applicable state securities laws will be required to, and
by acceptance of this Bond or any interest herein will be deemed to have agreed
to, indemnify the Issuer, the Owner Trustee, the General Administrator, the
Depositor, the Indenture Trustee and the Bond Registrar against any liability
that may result if the transfer is not exempt from such registration and/or
qualification or is not made in accordance with such federal and state laws.
No transfer of this Bond or any interest herein shall be made (A) to
any employee benefit plan or other retirement arrangement, including individual
retirement accounts and
-4-
<PAGE>
annuities, Keogh plans and collective investment funds and separate accounts in
which such plans, accounts or arrangements are invested, including, without
limitation, insurance company general accounts, that is subject to ERISA or the
Code (each, a "Plan"), or (B) to any Person who is directly or indirectly
purchasing such Bond or interest therein on behalf of, as named fiduciary of, as
trustee of, or with assets of a Plan, except in accordance with the Indenture.
Each Person who acquires this Bond or any interest herein shall be deemed to
have represented and warranted to and for the benefit of the Issuer, the Owner
Trustee, the General Administrator, the Master Servicer, the Special Servicer,
the Depositor, the Bond Registrar or the Indenture Trustee that either: (i) it
is neither a Plan nor any Person who is directly or indirectly purchasing such
Bond or interest therein on behalf of, as named fiduciary of, as trustee of, or
with assets of a Plan; or (ii) the purchase and holding of such Bond or any
interest therein by or on behalf of, or with assets of, such Person will not
result in any non-exempt prohibited transaction under ERISA or Section 4975 of
the Code or the imposition of an excise tax under Section 4975 of the Code.
If a Person is acquiring this Bond or any interest herein as a
fiduciary or agent for one or more accounts, such Person shall be required to
deliver to the Bond Registrar a certification to the effect that, and such other
evidence as may be reasonably required by the Indenture Trustee to confirm that,
it has (i) sole investment discretion with respect to each such account and (ii)
full power to make the foregoing acknowledgments, representations, warranties,
certifications and agreements with respect to each such account as set forth
above.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Bond is registerable in the Bond
Register upon surrender of this Bond for registration of transfer at the offices
of the Bond Registrar, duly endorsed by, or accompanied by a written instrument
of transfer in the form satisfactory to the Bond Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Bonds of the same Class in authorized denominations evidencing the same
aggregate Principal Amount will be issued to the designated transferee or
transferees.
No service charge will be imposed for any registration of transfer
or exchange of this Bond, but the Indenture Trustee or the Bond Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of this
Bond.
The Depositor, the Issuer, the Owner Trustee, the Indenture Trustee,
the Bond Registrar and any agent thereof may treat the Person in whose name this
Bond is registered as the owner hereof for all purposes, and none of the
Depositor, the Issuer, the Owner Trustee, the Indenture Trustee, the Bond
Registrar or any such agent shall be affected by notice to the contrary.
Unless the certificate of authentication hereon has been executed by
the Bond Registrar, by manual signature, this Bond shall not be entitled to any
benefit under the Indenture or be valid for any purpose.
-5-
<PAGE>
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust Estate (to the extent of its rights therein)
for payments hereunder.
This Bond shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-6-
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed by _______________________, not in its individual capacity but solely
as Owner Trustee.
Dated:
CRIIMI MAE COMMERCIAL MORTGAGE
TRUST [I]
By: ,
--------------------------------
not in its individual capacity but solely
in its capacity as Owner Trustee
By:
--------------------------------------
Authorized Signatory
CERTIFICATE OF AUTHENTICATION
This is one of the Class F Bonds referred to in the within-mentioned
Indenture.
Dated:
------------------------
as Bond Registrar
By:
--------------------------------
Authorized Officer
-7-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
(please print or typewrite name and address including postal zip
code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Collateralized Mortgage Obligation and hereby authorize(s) the registration of
transfer of such interest to assignee on the Bond Register of the Trust Fund.
I (we) further direct the Bond Registrar to issue a new
Collateralized Mortgage Obligation of a like Percentage Interest and Class to
the above named assignee and deliver such Mortgage Pass-Through Bond to the
following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
------------------------------------------
Signature by or on behalf of Assignor
------------------------------------------
Signature Guaranteed
PAYMENT INSTRUCTIONS
The Assignee should include the following for purposes of payment:
Payments shall, if permitted, be made by wire transfer or otherwise, in
immediately available funds, to ________________________________________________
________________________________________________________________ for the account
of _________________________________________________________________________.
Payments made by check (such check to be made payable to ________________)
and all applicable statements and notices should be mailed to __________________
___________________________________________________________________.
-8-
<PAGE>
This information is provided by ___________________________, the Assignee
named above, or ____________________________________, as its agent.
-9-
<PAGE>
EXHIBIT B
FORM OF TRUSTEE REPORT
-10-
<PAGE>
EXHIBIT C
SCHEDULE OF EXCEPTIONS TO MORTGAGE FILE DELIVERY
-11-
<PAGE>
EXHIBIT D-1A
FORM I OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF DEFINITIVE BONDS
[Date]
[BOND REGISTRAR]
Re: CRIIMI MAE Commercial Mortgage Trust [I],
Collateralized Mortgage Obligations, Series 199__-___ (the "Bonds")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Bonds having an initial aggregate Principal Amount as of
__________, 199__ (the "Closing Date") of $_____________ (the "Transferred
Bonds"). The Bonds, including the Transferred Bonds, were issued pursuant to a
Terms Indenture dated as of __________, 199__ (the "Terms Indenture"), between
CRIIMI MAE Commercial Mortgage Trust [I], as issuer (the "Issuer"), and
_______________________, as trustee (the "Indenture Trustee"), which Terms
Indenture incorporates certain applicable standard indenture provisions (the
"Terms Indenture, together with such standard indenture provisions, the
"Indenture"). All capitalized terms used but not otherwise defined herein shall
have the respective meanings set forth in the Indenture. The Transferee hereby
certifies, represents and warrants to you, as Bond Registrar, and for the
benefit of the Issuer, the Indenture Trustee and the Transferee, that:
1. The Transferor is the lawful owner of the Transferred Bonds with
the full right to transfer such Bonds free from any and all claims and
encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, transferred, pledged, sold or otherwise disposed of any Bond, any
interest in any Bond or any other similar security to any person in any
manner, (b) solicited any offer to buy or accept a transfer, pledge or
other disposition of any Bond, any interest in any Bond or any other
similar security from any person in any manner, (c) otherwise approached
or negotiated with respect to any Bond, any interest in any Bond or any
other similar security with any person in any manner, (d) made any general
solicitation by means of general advertising or in any other manner, or
(e) taken any other action, which (in the case of any of the acts
described in clauses (a) through (e) hereof) would constitute a
distribution of any Bond under the Securities Act of 1933, as amended (the
"Securities Act"), or would render the disposition of any Bond a violation
of Section 5 of the Securities Act or any state securities laws, or would
require registration or qualification of any Bond pursuant to the
Securities Act or any state securities laws.
-1-
<PAGE>
3. The Transferor and any person acting on behalf of the Transferor
in this matter reasonably believe that the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A ("Rule 144A")
under the Securities Act (a "Qualified Institutional Buyer") purchasing
for its own account or for the account of a Qualified Institutional Buyer.
In determining whether the Transferee is a Qualified Institutional Buyer,
the Transferor and any person acting on behalf of the Transferor in this
matter have relied upon the following method(s) of establishing the
Transferee's ownership and discretionary investments of securities (check
one or more):
___ (a) The Transferee's most recent publicly available financial
statements, which statements present the information as of a
date within 16 months preceding the date of sale of the
Transferred Bond in the case of a U.S. purchaser and within 18
months preceding such date of sale for a foreign purchaser; or
___ (b) The most recent publicly available information appearing
in documents filed by the Transferee with the Securities and
Exchange Commission or another United States federal, state,
or local governmental agency or self-regulatory organization,
or with a foreign governmental agency or self-regulatory
organization, which information is as of a date within 16
months preceding the date of sale of the Transferred Bond in
the case of a U.S. purchaser and within 18 months preceding
such date of sale for a foreign purchaser; or
___ (c) The most recent publicly available information appearing
in a recognized securities manual, which information is as of
a date within 16 months preceding the date of sale of the
Transferred Bond in the case of a U.S. purchaser and within 18
months preceding such date of sale for a foreign purchaser; or
___ (d) A certification by the chief financial officer, a person
fulfilling an equivalent function, or other executive officer
of the Transferee, specifying the amount of securities owned
and invested on a discretionary basis by the Transferee as of
a specific date on or since the close of the Transferee's most
recent fiscal year, or, in the case of a Transferee that is a
member of a "family of investment companies", as that term is
defined in Rule 144A, a certification by an executive officer
of the investment adviser specifying the amount of securities
owned by the "family of investment companies" as of a specific
date on or since the close of the Transferee's most recent
fiscal year.
4. The Transferor and any person acting on behalf of the Transferor
understand that in determining the aggregate amount of securities owned
and invested on a discretionary basis by an entity for purposes of
establishing whether such entity is a Qualified Institutional Buyer:
-2-
<PAGE>
(a) the following instruments and interests shall be excluded:
securities of issuers that are affiliated with the Transferee;
securities that are part of an unsold allotment to or
subscription by the Transferee, if the Transferee is a dealer;
securities of issuers that are part of the Transferee's
"family of investment companies", if the Transferee is a
registered investment company; bank deposit notes and
certificates of deposit; loan participations; repurchase
agreements; securities owned but subject to a repurchase
agreement; and currency, interest rate and commodity swaps;
(b) the aggregate value of the securities shall be the cost of
such securities, except where the entity reports its
securities holdings in its financial statements on the basis
of their market value, and no current information with respect
to the cost of those securities has been published, in which
case the securities may be valued at market;
(c) securities owned by subsidiaries of the entity that are
consolidated with the entity in its financial statements
prepared in accordance with generally accepted accounting
principles may be included if the investments of such
subsidiaries are managed under the direction of the entity,
except that, unless the entity is a reporting company under
Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended, securities owned by such subsidiaries may not be
included if the entity itself is a majority-owned subsidiary
that would be included in the consolidated financial
statements of another enterprise.
5. The Transferor or a person acting on its behalf has taken
reasonable steps to ensure that the Transferee is aware that the
Transferor is relying on the exemption from the provisions of Section 5 of
the Securities Act provided by Rule 144A.
6. The Transferor or a person acting on its behalf has furnished, or
caused to be furnished, to the Transferee all information regarding (a)
the Transferred Bonds and payments thereon, (b) the nature and performance
of the [Mortgage Collateral][Pledged Mortgage-Backed Securities], (c) the
Indenture and the Trust Estate, and (d) any credit enhancement mechanism
associated with the Transferred Bonds, that the Transferee has requested.
Very truly yours,
------------------------------
(Transferor)
By:
---------------------------
Name:
-------------------------
-3-
<PAGE>
Title:
------------------------
-4-
<PAGE>
EXHIBIT D-1B
FORM II OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF DEFINITIVE BONDS
[Date]
[BOND REGISTRAR]
Re: CRIIMI MAE Commercial Mortgage Trust [I],
Collateralized Mortgage Obligations, Series 199__-__ (the "Bonds")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Bonds having an initial aggregate Principal Amount as of
__________, 199__ (the "Closing Date") of $_____________ (the "Transferred
Bonds"). The Bonds, including the Transferred Bonds, were issued pursuant to a
Terms Indenture dated as of __________, 199__ (the "Terms Indenture"), between
CRIIMI MAE Commercial Mortgage Trust [I], as issuer (the "Issuer"), and
_______________________, as trustee (the "Indenture Trustee"), which Term
Indenture incorporates certain applicable standard indenture provisions (the
Terms Indenture, together with such standard indenture provisions, the
"Indenture"). All capitalized terms used but not otherwise defined herein shall
have the respective meanings set forth in the Indenture. The Transferee hereby
certifies, represents and warrants to you, as Bond Registrar, and for the
benefit of the Issuer, the Indenture Trustee and the Transferee, that:
1. The Transferor is the lawful owner of the Transferred Bonds with
the full right to transfer such Bonds free from any and all claims and
encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has (a)
offered, transferred, pledged, sold or otherwise disposed of any Bond, any
interest in any Bond or any other similar security to any person in any
manner, (b) solicited any offer to buy or accept a transfer, pledge or
other disposition of any Bond, any interest in any Bond or any other
similar security from any person in any manner, (c) otherwise approached
or negotiated with respect to any Bond, any interest in any Bond or any
other similar security with any person in any manner, (d) made any general
solicitation by means of general advertising or in any other manner, or
(e) taken any other action, which (in the case of any of the acts
described in clauses (a) through (e) hereof) would constitute a
distribution of any Bond under the Securities Act of 1933, as amended (the
"Securities Act"), or would render the disposition of any Bond a violation
of Section 5 of the Securities Act or any state securities laws, or would
require registration or qualification of any Bond pursuant to the
Securities Act or any state securities laws.
-1-
<PAGE>
Very truly yours,
------------------------------
(Transferor)
By:
---------------------------
Name:
-------------------------
Title:
------------------------
-2-
<PAGE>
EXHIBIT D-2A
FORM I OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF DEFINITIVE BONDS
[Date]
[BOND REGISTRAR]
Re: CRIIMI MAE Commercial Mortgage Trust [I],
Collateralized Mortgage Obligations, Series 199__-__ (the "Bonds")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ___ Bonds having an initial aggregate Principal Amount as of __________,
199__ (the "Closing Date") of $______________ (the "Transferred Bonds"). The
Bonds, including the Transferred Bonds, were issued pursuant to a Terms
Indenture dated as of __________, 199__ (the "Terms Indenture"), between CRIIMI
MAE Commercial Mortgage Trust, [I], as issuer (the "Issuer"), and
_______________________, as trustee (the "Indenture Trustee"), which Terms
Indenture incorporates certain applicable standard indenture provisions (the
Terms Indenture, together with such standard indenture provisions, the
"Indenture"). All capitalized terms used but not otherwise defined herein shall
have the respective meanings set forth in the Indenture. The Transferee hereby
certifies, represents and warrants to you, as Bond Registrar, and for the
benefit of the Issuer, the Indenture Trustee and the Transferor, that:
1. The Transferee is a "qualified institutional buyer" (a "Qualified
Institutional Buyer") as that term is defined in Rule 144A ("Rule 144A") under
the Securities Act of 1933, as amended (the "Securities Act"), and has completed
one of the forms of certification to that effect attached hereto as Annex 1 and
Annex 2. The Transferee is aware that the sale to it of the Transferred Bonds is
being made in reliance on Rule 144A. The Transferee is acquiring the Transferred
Bonds for its own account or for the account of a Qualified Institutional Buyer,
and understands that such Transferred Bonds may be resold, pledged or
transferred only (i) to a person reasonably believed to be a Qualified
Institutional Buyer that purchases for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the Securities Act.
-1-
<PAGE>
2. The Transferee has been furnished with all information regarding
(a) the Company and the Issuer, (b) the Transferred Bonds and payments thereon,
(c) the nature and performance of the Mortgage Collateral, (d) the Indenture,
and (e) all related matters, that it has requested.
Very truly yours,
-----------------------------
(Transferee)
By:
--------------------------
Name:
------------------------
Title:
-----------------------
-2-
<PAGE>
ANNEX 1 TO EXHIBIT D-2A
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[for Transferees other than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and [name of Bond Registrar], as Bond Registrar, with respect
to the Collateralized Mortgage Obligations being transferred (the "Transferred
Bonds") as described in the Transferee Certificate to which this certification
relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive officer
of the entity purchasing the Transferred Bonds (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that term
is defined in Rule 144A under the Securities Act of 1933, as amended ("Rule
144A"), because (i) the Transferee owned and/or invested on a discretionary
basis $______________________(1) in securities (other than the excluded
securities referred to below) as of the end of the Transferee's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Transferee satisfies the criteria in the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986.
___ Bank. The Transferee (a) is a national bank or a banking institution
organized under the laws of any State, U.S. territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or territorial
banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto, as of a date not
more than 16 months preceding the date of sale of the Bond in the
case of a U.S. bank, and not more than 18 months preceding such date
of sale for a foreign bank or equivalent institution.
- ------------------
1 Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that
case, Transferee must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
-1-
<PAGE>
___ Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised
and examined by a State or Federal authority having supervision over
any such institutions or is a foreign savings and loan association
or equivalent institution and (b) has an audited net worth of at
least $25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto, as of a date not
more than 16 months preceding the date of sale of the Bond in the
case of a U.S. savings and loan association, and not more than 18
months preceding such date of sale for a foreign savings and loan
association or equivalent institution.
___ Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
___ Insurance Company. The Transferee is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State, U.S.
territory or the District of Columbia.
___ State or Local Plan. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA Plan. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
___ Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940, as amended.
___ Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under subsection
(a)(1) of Rule 144A pursuant to which it qualifies. Note that
registered investment companies should complete Annex 2 rather than
this Annex 1.) _____________________________________________________
____________________________________________________________________
____________________________________________________________________
____________________________________________________________________
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to or subscription by the Transferee, if
the Transferee is a dealer, (iii) bank deposit notes and certificates of
deposit, (iv) loan participations, (v) repurchase agreements, (vi) securities
owned but subject to a repurchase agreement and (vii) currency, interest rate
and commodity swaps. For purposes of
-2-
<PAGE>
determining the aggregate amount of securities owned and/or invested on a
discretionary basis by the Transferee, the Transferee did not include any of the
securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, the Transferee
used the cost of such securities to the Transferee, unless the Transferee
reports its securities holdings in its financial statements on the basis of
their market value, and no current information with respect to the cost of those
securities has been published, in which case the securities were valued at
market. Further, in determining such aggregate amount, the Transferee may have
included securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Transferee acknowledges that it is familiar with Rule 144A
and understands that the Transferor and other parties related to the Transferred
Bonds are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Transferred Bonds
Yes No only for the Transferee's own account?
6. If the answer to the foregoing question is "no", then in each
case where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Transferred Bonds
will constitute a reaffirmation of this certification as of the date of such
purchase. In addition, if the Transferee is a bank or savings and loan as
provided above, the Transferee agrees that it will furnish to such parties any
updated annual financial statements that become available on or before the date
of such purchase, promptly after they become available.
------------------------------------
Print Name of Transferee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
-3-
<PAGE>
Date:
-------------------------------
-4-
<PAGE>
ANNEX 2 TO EXHIBIT D-2A
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[for Transferees that are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of Transferor]
(the "Transferor") and [name of Bond Registrar], as Bond Registrar, with respect
to the Collateralized Mortgage Obligations being transferred (the "Transferred
Bonds") as described in the Transferee Certificate to which this certification
relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive officer
of the entity purchasing the Transferred Certificates (the "Transferee") or, if
the Transferee is a "qualified institutional buyer" as that term is defined in
Rule 144A under the Securities Act of 1933, as amended ("Rule 144A"), because
the Transferee is part of a Family of Investment Companies (as defined below),
is an executive officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in
Rule 144A because (i) the Transferee is an investment company registered under
the Investment Company Act of 1940, as amended, and (ii) as marked below, the
Transferee alone owned and/or invested on a discretionary basis, or the
Transferee's Family of Investment Companies owned, at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used, unless the
Transferee or any member of the Transferee's Family of Investment Companies, as
the case may be, reports its securities holdings in its financial statements on
the basis of their market value, and no current information with respect to the
cost of those securities has been published, in which case the securities of
such entity were valued at market.
____ The Transferee owned and/or invested on a discretionary basis
$___________________ in securities (other than the excluded
securities referred to below) as of the end of the Transferee's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
____ The Transferee is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other than the
excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
-1-
<PAGE>
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps. For purposes of determining the aggregate
amount of securities owned and/or invested on a discretionary basis by the
Transferee, or owned by the Transferee's Family of Investment Companies, the
securities referred to in this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands that
the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A.
____ ____ Will the Transferee be purchasing the Transferred
Bonds only for the Transferee's own account?
Yes No
6. If the answer to the foregoing question is "no", then in each
case where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Transferred Bonds will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
Print Name of Transferee or Adviser
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
IF AN ADVISER:
-------------------------------------
Print Name of Transferee
Date:
--------------------------------
-2-
<PAGE>
EXHIBIT D-2B
FORM II OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF DEFINITIVE BONDS
[Date]
[BOND REGISTRAR]
Re: CRIIMI MAE Commercial Mortgage Trust [I],
Collateralized Mortgage Obligations, Series 199__-__ (the "Bonds")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ___ Bonds having an initial aggregate Principal Amount as of __________,
199__ (the "Closing Date") of $______________ (the "Transferred Bonds"). The
Bonds, including the Transferred Bonds, were issued pursuant to a Terms
Indenture dated as of __________, 199__ (the "Terms Indenture"), between CRIIMI
MAE Commercial Mortgage Trust [I], as issuer (the "Issuer") and
_______________________, as trustee (the "Indenture Trustee"), which Terms
Indenture incorporates certain applicable standard indenture provisions (the
"Terms Indenture", together with such standard indenture provisions, the
"Indenture"). All capitalized terms used but not otherwise defined herein shall
have the respective meanings set forth in the Indenture. The Transferee hereby
certifies, represents and warrants to you, as Bond Registrar, and for the
benefit of the Issuer, the Indenture Trustee and the Transferor, that:
1. The Transferee is acquiring the Transferred Bonds for its own
account for investment and not with a view to or for sale or transfer in
connection with any distribution thereof, in whole or in part, in any manner
which would violate the Securities Act of 1933, as amended (the "Securities
Act"), or any applicable state securities laws.
2. The Transferee understands that (a) the Class of Bonds to which
the Transferred Bonds belong has not been and will not be registered under the
Securities Act or registered or qualified under any applicable state securities
laws, (b) none of the Issuer, the Indenture Trustee or the Bond Registrar is
obligated so to register or qualify the Class of Bonds to which the Transferred
Bonds belong, and (c) no Transferred Bond may be resold or transferred unless it
is (i) registered pursuant to the Securities Act and registered or qualified
pursuant any applicable state securities laws or (ii) sold or transferred in
transactions which are exempt from such registration and qualification and the
Bond Registrar has received either: (A) a certificate from the Bondholder
desiring to effect such transfer substantially in the form attached as Exhibit
D-1A to the Indenture; (B) a certificate from such Bondholder substantially in
the form attached as Exhibit D-1B to the Indenture and a certificate from such
Bondholder's prospective transferee substantially in the form attached either as
Exhibit D-2A or as Exhibit D-2B to the Indenture; or (C) an opinion of counsel
-1-
<PAGE>
satisfactory to the Indenture Trustee with respect to the availability of such
exemption from registration under the Securities Act, together with copies of
the written certification(s) from the transferor and/or transferee setting forth
the facts surrounding the transfer upon which such opinion is based.
3. The Transferee understands that it may not sell or otherwise
transfer any Transferred Bond except in compliance with the provisions of
Section 9 of the Terms Indenture, which provisions it has carefully reviewed,
and that each Transferred Bond will bear the following legends:
THIS BOND HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS BOND OR ANY INTEREST HEREIN WITHOUT SUCH
REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION
WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND
WHICH IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 12 OF THE
TERMS INDENTURE REFERRED TO HEREIN.
NO TRANSFER OF THIS BOND OR ANY INTEREST HEREIN MAY BE MADE (A)
TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT
IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986
(THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY
PURCHASING THIS CERTIFICATE OR SUCH INTEREST HEREIN ON BEHALF
OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY
SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT,
EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF THE TERMS INDENTURE
REFERRED TO HEREIN.
4. Neither the Transferee nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Bond, any
interest in any Bond or any other similar security to any person in any manner,
(b) solicited any offer to buy or accept a pledge, disposition or other transfer
of any Bond, any interest in any Bond or any other similar security from any
person in any manner, (c) otherwise approached or negotiated with respect to any
Bond, any interest in any Bond or any other similar security with any person in
any manner, (d) made any general solicitation with respect to any Bond, any
interest in any Bond or any other similar security by means of general
advertising or in any other manner, or (e) taken any other action with respect
to any Bond, any interest in any Bond or any other similar security, which (in
the case of any of the acts described in
-2-
<PAGE>
clauses (a) through (e) above) would constitute a distribution of the
Transferred Bonds under the Securities Act, would render the disposition of the
Transferred Bonds a violation of Section 5 of the Securities Act or any state
securities law or would require registration or qualification of the Transferred
Bonds pursuant thereto. The Transferee will not act, nor has it authorized or
will it authorize any person to act, in any manner set forth in the foregoing
sentence with respect to any Bond, any interest in any Bond or any other similar
security.
5. The Transferee has been furnished with all information regarding
(a) the Company and the Issuer, (b) the Transferred Bonds and payments thereon,
(c) the Indenture and the Trust Estate, (d) the nature and performance of the
[Mortgage Collateral][Pledged Mortgage-Backed Securities], and (e) all related
matters, that it has requested.
6. The Transferee is an "accredited investor" as defined in any of
paragraphs (1), (2), (3) and (7) of Rule 501(a) under the Securities Act or an
entity in which all of the equity owners come within such paragraphs. The
Transferee has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment in the
Transferred Bonds; the Transferee has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision;
and the Transferee is able to bear the economic risks of such investment and can
afford a complete loss of such investment.
Very truly yours,
---------------------------------
(Transferee)
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
-3-
<PAGE>
EXHIBIT E
[STANDARD INDENTURE PROVISIONS]
-1-
<PAGE>
EXHIBIT F
[SERVICING AND ADMINISTRATION AGREEMENT]
-2-
<PAGE>
EXHIBIT G
[MORTGAGE LOAN PURCHASE AGREEMENT]
-3-
<PAGE>
EXHIBIT H
[GENERAL ADMINISTRATION AGREEMENT]
-4-
<PAGE>
EXHIBIT I
[LETTER OF REPRESENTATIONS]
-5-
================================================================================
CRIIMI MAE Commercial Mortgage Trust [I]
Issuer,
and
__________________________,
as Master Servicer,
and
__________________________,
as Special Servicer,
and
___________________________,
as Trustee
_________________________________
SERVICING AND ADMINISTRATION AGREEMENT
Dated as of ___________, 199__
---------------------------------
$_________________
Collateralized Mortgage Obligations
Series 199__-_____
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
ARTICLE I
DEFINITIONS; CERTAIN CALCULATIONS IN RESPECT
OF THE MORTGAGE POOL
1.01. Defined Terms..........................................................2
1.02. Certain Calculations in Respect of the Mortgage Pool..................25
ARTICLE II
CERTAIN MATTERS REGARDING THE
MORTGAGE LOANS; REPRESENTATIONS
AND WARRANTIES OF THE PARTIES
2.01. Delivery of Mortgage Loan Files and Related Documents.................27
2.02. Document Defects and Breaches.........................................28
2.03. Representations and Warranties of the Issuer..........................29
2.04. Representations and Warranties of the Master Servicer.................30
2.05. Representations and Warranties of the Special Servicer................32
2.06. Representations, Warranties and Covenants of the Trustee..............33
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
3.01. Administration of the Mortgage Loans; Collection of Mortgage Loan
Payments..............................................................36
3.02 Collection of Mortgage Loan Payments..................................37
3.03. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts; Reserve Accounts..................................38
3.04. Collection Account....................................................40
3.05. Permitted Withdrawals from the Collection Account.....................42
3.06. Investment of Funds in the Collection Account and the REO Account.....45
3.07. Maintenance of Insurance Policies; Errors and Omissions
and Fidelity Coverage.................................................47
3.08. Enforcement of Alienation Clauses.....................................49
3.09. Realization upon Defaulted Mortgage Loans.............................49
-i-
<PAGE>
Section Page
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3.10. Trustee to Cooperate; Release of Mortgage Files.......................52
3.11. Servicing Compensation; Interest on Servicing Advances;
Payment of Certain Expenses; Obligations of the Trustee
regarding Back-up Servicing Advances..................................54
3.12. Property Inspections; Collection of Financial Statements;
Delivery of Certain Reports...........................................58
3.13. Annual Statement as to Compliance.....................................58
3.14. Reports by Independent Public Accountants.............................59
3.15. Access to Certain Information.........................................59
3.16. Title to REO Property; REO Account....................................60
3.17. Management of REO Property............................................61
3.18. Sale of Mortgage Loans and REO Properties.............................64
3.19. Additional Obligations of Master Servicer.............................68
3.20. Modifications, Waivers, Amendments and Consents.......................69
3.21. Transfer of Servicing Between Master Servicer and Special Servicer;
Record Keeping........................................................72
3.22. Sub-Servicing Agreements..............................................73
3.23 Certain Tax Related Matters...........................................75
ARTICLE IV
MASTER SERVICER REMITTANCES;
REPORTS; P&I ADVANCES
4.01. Master Servicer Remittances...........................................77
4.02. Reports...............................................................77
4.03. P&I Advances; Advances relating to the Master Servicer Remittance
Amount................................................................78
ARTICLE V
THE MASTER SERVICER AND
THE SPECIAL SERVICER
5.01. Liability of the Master Servicer and the Special Servicer.............81
5.02. Merger, Consolidation or Conversion of the Master Servicer
or the Special Servicer...............................................81
5.03. Limitation on Liability of the Master Servicer and the Special
Servicer..............................................................81
5.04. Master Servicer and Special Servicer Not to Resign....................82
5.05. Rights of the Issuer and the Trustee in Respect of the
Master Servicer and the Special Servicer..............................83
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ARTICLE VI
DEFAULT
6.01. Events of Default.....................................................84
6.02. Trustee to Act; Appointment of Successor..............................87
6.03. Waiver of Events of Default...........................................88
6.04. Additional Remedies of Trustee upon Event of Default..................88
ARTICLE VII
TERMINATION
7.01. Termination Upon Liquidation of All Mortgage Loans....................89
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01. Amendments; Successors to the Issuer and the Trustee..................90
8.02. Successors to the Issuer and the Trustee..............................90
8.03. Recordation of Agreement; Counterparts................................90
8.04. Governing Law.........................................................91
8.05. Notices...............................................................91
8.06. Severability of Provisions............................................91
8.07. Successors and Assigns; Beneficiaries.................................91
8.08. Article and Section Headings..........................................92
8.09. Notices to Rating Agencies............................................92
8.10. Complete Agreement....................................................93
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EXHIBITS
EXHIBIT A Mortgage Loan Schedule
EXHIBIT B-1 Form of Master Servicer Request for Release
EXHIBIT B-2 Form of Special Servicer Request for Release
EXHIBIT C-1 Form of Determination Date Report
EXHIBIT C-2 Form of Special Servicer Report
EXHIBIT C-3 Form of Operating Statement Analysis
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This Servicing and Administration Agreement (this "Agreement"), is
dated and effective as of _________, 199__ (the "Cut-off Date"), among CRIIMI
MAE Commercial Mortgage Trust [I], as Issuer, _______________, as Master
Servicer, _______________, as Special Servicer, and _______________, as Trustee.
PRELIMINARY STATEMENT:
The Issuer is a trust established under the laws of the State of
___________ by CRIIMI MAE CMBS Corp. (the "Company"), pursuant to a Deposit
Trust Agreement, dated as of _________, l99___ (the "Deposit Trust Agreement"),
between the Company and ______________ as owner trustee (in such capacity, the
"Owner Trustee"). Pursuant to the Deposit Trust Agreement, the Company delivered
to, and deposited with, the Owner Trustee, as owner trustee, on behalf of the
Issuer, certain [provide general description of Mortgage Loans] mortgage loans
(the "Mortgage Loans"), which are more specifically identified on Exhibit A
hereto and which had been acquired by the Company from _______________ as seller
(in such capacity, the "Mortgage Loan Seller") pursuant to the Mortgage Loan
Purchase Agreement, dated as of ________________, 199___ (the "Mortgage Loan
Purchase Agreement"), between the Company and the Mortgage Loan Seller.
Pursuant to a Terms Indenture, dated as of __________, 199__ (the
"Terms Indenture"), between the Owner Trustee, as owner trustee, on behalf of
the Issuer, and the Trustee, as indenture trustee, on behalf of the Bondholders,
which Terms Indenture incorporates by reference the Company's Standard Indenture
Provisions, dated as of ___________, 199__ (the "Standard Indenture Provisions";
and, the Terms Indenture as it incorporates the Standard Indenture Provisions,
the "Indenture"), the Issuer issued collateralized mortgage obligations
(collectively, the "Bonds"), in multiple classes (each, a "Class"), secured by a
pledge of, among other things, the Mortgage Loans.
The parties hereto desire to provide for, among other things, the
servicing and administration of the Mortgage Loans for so long as the Bonds are
Outstanding.
In consideration of the mutual agreements herein contained, the
Issuer, the Master Servicer, the Special Servicer and the Trustee agree as
follows:
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ARTICLE I
DEFINITIONS; CERTAIN CALCULATIONS IN RESPECT OF THE MORTGAGE POOL
SECTION 1.01. Defined Terms.
(a) 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.
["Acquisition Date": With respect to any REO Property, the first day
on which such REO Property is considered to be acquired by the Trustee, on
behalf of the Issuer and the Bondholders, within the meaning of Treasury
regulation Section 1.856-6(b)(1), which is the first day on which the Trustee,
on behalf of the Issuer and the Bondholders, is treated as the owner of such REO
Property for federal income tax purposes.]
"Advance": Any P&I Advance or Servicing Advance.
"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 REMIC Pool as a REMIC or (ii) the imposition of a tax upon any REMIC Pool or
on its 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 Servicing and Administration 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 Estate, 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 Estate, 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 on such Due Date had it remained outstanding (or,
if the predecessor Mortgage Loan was a
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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).
"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
immediately 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.
"Bankruptcy Code": The federal Bankruptcy Code, as amended from time
to time (Title 11 of the United States Code).
"Bond": Any one of the Issuer's Collateralized Mortgage Obligations,
Series 199__-____, issued and Outstanding under the Indenture.
"Bond Account": The account or accounts created and maintained by
the Trustee pursuant to the Indenture in trust for the Bondholders.
"Breach": As defined in Section 2.02(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 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.
"Class": Collectively, all of the Bonds bearing the same
alphabetical and, if applicable, numerical class designation.
"Closing Date": _____________, 199__.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The segregated account or accounts created and
maintained by the Master Servicer pursuant to Section 3.04(a) on behalf of the
Trustee in trust for the Bondholders and, subject to the lien of the Indenture,
the Issuer, which shall be entitled
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"_________________, as Master Servicer, in trust for the registered holders of
CRIIMI MAE Commercial Mortgage Trust [I], Collateralized Mortgage Obligations,
Series 199__-____ and, subject to the lien of the related Indenture, for CRIIMI
MAE Commercial Mortgage Trust [I]".
"Collection Period": With respect to any Payment 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.
"Company": CRIIMI MAE CMBS Corp., or its successor in interest.
"Compensating Interest Payment": Any payment made by the Master
Servicer pursuant to Section 3.19(a) to cover Prepayment Interest Shortfalls.
"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 as
a document custodian for the Mortgage Files, which Person shall not be the Owner
Trustee or an Affiliate of the Owner Trustee.
"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.
"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.
"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,
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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.
"Deposit Trust Agreement": The Deposit Trust Agreement dated as of
_________, 199__, between the Company and the Owner Trustee.
"Determination Date": With respect to any Payment Date, the earlier
of (i) the __th day of the month in which such Payment 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 Payment Date.
"Determination Date Report": As defined in Section 4.02(a).
["Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by the REMIC Pool in which
it is included (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.]
"Document Defect": As defined in Section 2.02(a).
"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.
"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 authority, or (iii) any other account that is acceptable to the
Rating Agencies (as evidenced by
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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 Bonds).
"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
Estate.
"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
6.01(a).
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Extraordinary S&A Expense". Any expense incurred in connection with
the servicing and administration of the Mortgage Loans and any REO Properties or
otherwise incurred hereunder and not otherwise included in the calculation of a
Realized Loss that would result in the Bondholders' receiving less than the full
amount of principal and/or interest on their Bonds, or the Issuer's receiving
less than the full amount of principal and/or interest on the Mortgage Pool, to
which they or it are otherwise entitled on any Payment Date pursuant to the
Indenture.
"FDIC": The Federal Deposit Insurance Corporation or any successor.
"FHLMC": The Federal Home Loan Mortgage Corporation or any
successor.
"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 or
purchased or otherwise removed from the Trust Estate by the Issuer, the Master
Servicer or the Special Servicer pursuant to or as contemplated by Section
3.18), that there has been a recovery of all related Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries that will ultimately be
recoverable.
"FNMA": The 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.
["Indenture": The Terms Indenture as it incorporates by reference
the Standard Indenture Provisions.]
"Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Issuer, the Master Servicer,
the Special Servicer, 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 Issuer, the Master Servicer, the Special Servicer, the
Trustee or any Affiliate thereof, and (iii) is not connected with the Issuer,
the Master Servicer, the Special Servicer, 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 Issuer, the Master Servicer, the Special Servicer,
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 Issuer,
the Master Servicer, the Special Servicer, the Trustee or any Affiliate thereof,
as the case may be.
["Independent Contractor": Any Person that would be an "independent
contractor" with respect to a REMIC Pool within the meaning of Section 856(d)(3)
of the Code if such REMIC Pool 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 Bonds,
or such other interest in any Class of Bonds as is set forth in an Opinion of
Counsel, which shall be at no expense to the Trustee, the Issuer or the
Bondholders, delivered to the Trustee), so long as such REMIC Pool does not
receive or derive any income from such Person and provided that the relationship
between such Person and such REMIC Pool 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 of an Opinion of Counsel, which shall be at no expense to
the Trustee, Issuer or the Bondholders, 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.]
"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
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Property or released to the related Mortgagor, in any case, in accordance with
the Servicing Standard.
"Interested Person": The Issuer, the Master Servicer, the Special
Servicer, the Mortgage Loan Seller, any Bondholder, or any Affiliate of any such
Person.
"Investment Account": As defined in Section 3.06(a).
"Issuer": CRIIMI MAE Commercial Mortgage Trust [I], or its successor
in interest.
"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 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 or otherwise removed
from the Trust Estate by the Issuer, the Special Servicer or the Master Servicer
pursuant to or as contemplated by Section 3.18. With respect to any REO Property
(and the related REO Loan), a Final Recovery Determination is made with respect
to such REO Property.
"Liquidation Fee": With respect to each Specially Serviced Mortgage
Loan or REO Property (other than any Specially Serviced Mortgage Loan or REO
Property that is purchased or otherwise removed from the Trust Estate by the
Issuer, the Special Servicer or the Master Servicer pursuant to or as
contemplated by Section 3.18 or that is 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, ____%.
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"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 or other removal from the Trust Estate of a Defaulted Mortgage Loan by
the Issuer pursuant to or as contemplated by Section 3.18(b) or by the Master
Servicer or the Special Servicer pursuant to or as contemplated by Section
3.18(c) or any other sale thereof pursuant to Section 3.18(d); or (v) the
purchase of a Mortgage Loan by the Mortgage Loan Seller pursuant to the Mortgage
Loan Purchase Agreement.
"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 final Master Servicer Remittance Date shall be calculated without regard
to clauses (b)(i), (b)(ii) and (b)(iii) of this definition.
"Master Servicer Remittance Date": The _______ Business Day
preceding each Payment 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.
"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:
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(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), 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 Loan": Each of the mortgage loans listed on the Mortgage
Loan Schedule and from time to time held in the Trust Estate. As used herein,
the term "Mortgage Loan" includes the related Mortgage Note, Mortgage and other
security documents contained in the related Mortgage File.
"Mortgage Loan Purchase Agreement": That certain Mortgage Loan
Purchase and Sale Agreement, dated as of ____________, 199__, between the
Company and the Mortgage Loan Seller relating to the transfer of the Mortgage
Loans by the Mortgage Loan Seller to the Company.
"Mortgage Loan Schedule": The list of Mortgage Loans attached hereto
as Exhibit A. 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;
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(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.
"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 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.
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"Net Operating Income": With respect to any Mortgaged Property, the
net operating income derived from such Mortgaged Property, calculated in
accordance with Exhibit E.
"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).
"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.]
"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 Owner Trustee, the Master Servicer, the Special
Servicer and the Trustee) acceptable to and delivered to the addressee(s)
thereof and which Opinion of Counsel shall not be at the expense of the Trustee.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Owner Trustee": __________ or its successor in interest.
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"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 [or any
comparable advance made by the Trustee pursuant to the Indenture].
"P&I Advance Date": The second Business Day preceding each Payment
Date.
"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.
"Permitted Investments": Any one or more of the following
obligations or securities:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States
or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the
United States, have a predetermined, fixed amount of principal
due at maturity (that cannot vary or change), do not have an
"r" highlight attached to any rating, and each obligation has
a fixed interest rate or has its interest rate tied to a
single interest rate index plus a single fixed spread;
(ii) certain obligations of agencies or instrumentalities of the
United States that are not backed by the full faith and credit
of the United States, provided such obligations have a
predetermined, fixed amount of principal due at maturity (that
cannot vary or change), do not have an "r" highlight attached
to any rating, and each obligation has a fixed interest rate
or has its interest rate tied to a single interest rate index
plus a single fixed spread;
(iii) federal funds, uncertificated certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements
having maturities of not more than 365 days, of any bank or
trust company organized under the laws of the United States or
any state thereof, provided that such items are rated in the
highest short-term debt rating category of each of the Rating
Agencies or, in the case of each Rating Agency, such lower
rating as will not result in a qualification, downgrading or
withdrawal of the rating then assigned to any Class of Bonds
by such Rating Agency (as evidenced in writing by such Rating
Agency), do not have an "r" highlight affixed to its rating
and its terms have a predetermined fixed amount of principal
due at maturity (that cannot vary or change), and each
obligation has a fixed interest rate or has its interest rate
tied to a single interest rate index plus a single fixed
spread;
(iv) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of
the United States or any
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state thereof (or of any corporation not so incorporated,
provided that the commercial paper is United States Dollar
denominated and amounts payable thereunder are not subject to
any withholding imposed by any non-United States jurisdiction)
which is rated in the highest short-term debt rating category
of each of the Rating Agencies or, in the case of each Rating
Agency, such lower rating as will not result in a
qualification, downgrading or withdrawal of the rating then
assigned to any Class of Bonds by such Rating Agency (as
evidenced in writing by such Rating Agency), do not have an
"r" highlight affixed to its rating and its terms have a
predetermined fixed amount of principal due at maturity (that
cannot vary or change), and each obligation has a fixed
interest rate or has its interest rate tied to a single
interest rate index plus a single fixed spread;
(v) units of money market funds which maintain a constant net
asset value and which are rated in the highest applicable
rating category of each of the Rating Agencies or, in the case
of each Rating Agency, such lower rating as will not result in
a qualification, downgrading or withdrawal of the rating then
assigned to any Class of Bonds by such Rating Agency (as
evidenced in writing by such Rating Agency); or
(vi) any other obligation or security acceptable to each Rating
Agency, which will not result in a qualification, downgrading
or withdrawal of the rating then assigned to any Class of
Bonds by such Rating Agency (as evidenced in writing by such
Rating Agency);
provided that (1) no investment described hereunder shall evidence either the
right to receive (x) only interest with respect to such investment or (y) a
yield to maturity greater than 120% of the yield to maturity at par of the
underlying obligations; and (2) that no investment described hereunder may be
purchased at a price greater than par if such investment may be prepaid or
called at a price less than its purchase price prior to stated maturity (that
cannot vary or change).
"Person": Any individual, corporation, partnership, 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.
"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
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(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 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 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.
"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.
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"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
canceled 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 such principal or past due interest (other than any Default Interest)
so canceled; 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).
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"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 Pool": Any of the REMICs created pursuant to the Indenture.]
["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 Bondholders and, subject to the lien of the
Indenture, the Issuer, which shall be entitled " ____________________, as
Special Servicer, on behalf of and in trust for registered holders of CRIIMI MAE
Commercial Mortgage Trust [I], Collateralized Mortgage Obligations, Series
199__-____" and, subject to the lien of the related Indenture, for CRIIMI MAE
Commercial Mortgage Trust [I].
"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
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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 Bondholders and,
subject to the lien of the Indenture, the Issuer, 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 B-1 attached hereto or
the Special Servicer in the form of Exhibit B-2 attached hereto.
"Required Appraisal Loan": As defined in Section 3.19(c).
"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.
"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 Bond 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
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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.
"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 paid or to be paid, 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(a), 2.02(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 Issuer
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 Issuer
and the Bondholders (as a collective whole) on a present value basis (the
relevant discounting of anticipated collections that will be payable to the
Issuer and the Bondholders 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 Bond 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".
"Special Servicer": ___________________, its successor in interest,
or any successor special servicer appointed as herein provided.
"Special Servicer Report": As defined in Section 4.02(b).
"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:
(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
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(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, marshaling 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
(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
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(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.
"Standard Indenture Provisions": The Company's Standard Indenture
Provisions, dated as of ____________, 199__, applicable to collateralized
mortgage obligations issued by trusts organized by the Company.
"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 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 Payment 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
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applied to cover any Extraordinary S&A Expense, would have been) paid to
Bondholders and/or distributed to the Issuer on such Payment 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
Payment Date in the Collection Period next following the Collection Period in
which such Liquidation Event occurred.
"Sub-Servicer": Any Person with which the Master Servicer or the
Special Servicer has entered into a Sub-Servicing Agreement.
"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.
"Terms Indenture": That certain Terms Indenture, dated as of
________, 199__, between the Issuer and the Trustee, relating to the Bonds.
"Trustee": ___________________, its successor in interest, or any
successor trustee appointed as provided pursuant to the Indenture.
"Trustee's Fee Rate": _______% per annum, which is the rate at which
the Trustee's fee accrues, as specified in the Indenture.
"Trust Indenture Act": The Trust Indenture Act of 1939, as amended.
"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.
"UCC-1", "UCC-2" and "UCC-3": UCC Financing Statements on Form
UCC-1, Form UCC-2 and Form UCC-3, respectively.
"USPAP": The Uniform Standards of Professional Appraisal Practices.
"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
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Principal Prepayment on, or other early collection of principal of, a Mortgage
Loan, other than any Prepayment Premium.
(b) 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 the Indenture.
"Bond Owner"
"Bondholder"
"Bond Principal Amount"
"Bond Register"
"Bond Registrar"
"Book-Entry Bond"
"Grant"
"Mortgage Collateral"
"Mortgage File"
"Outstanding"
["REMIC Administrator"]
["Startup Day"]
"TIA"
"Trust Estate"
"Voting Rights"
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 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
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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.
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ARTICLE II
CERTAIN MATTERS REGARDING THE
MORTGAGE LOANS; REPRESENTATIONS
AND WARRANTIES OF THE PARTIES
SECTION 2.01. Delivery of Mortgage Loan Files and Related Documents.
(a) In connection with the Grant of the Trust Estate by the Issuer
to secure the Bonds, the Issuer is required to deliver to and deposit with, or
cause to be delivered to and deposited with, the Trustee, on or before the
Closing Date, the Mortgage File for each Mortgage Loan. Also in connection
therewith, the Issuer shall deliver to and deposit with, or cause to be
delivered to and deposited with, the Master Servicer, on or before the Closing
Date: (i) copies of the Indenture and the Mortgage Loan Purchase Agreement; (ii)
copies of the documents comprising the Mortgage File for each Mortgage Loan; and
(iii) all other documents and records in the possession of the Issuer or the
Mortgage Loan Seller that relate to the Mortgage Loans, are necessary for the
servicing of the Mortgage Loans and are not required to be a part of a Mortgage
File in accordance with the definition thereof. The Master Servicer shall hold
all such documents and records delivered to it on behalf of the Trustee in trust
for the benefit of the Bondholders and, subject to the lien of the Indenture,
the Issuer.
(b) The Trustee shall deliver to the Master Servicer within 15 days
after the Closing Date each assignment of Mortgage and assignment of Assignment
of Leases in favor of the Trustee delivered to it as part of a Mortgage File and
each UCC-2 and UCC-3 in favor of the Trustee delivered to it as part of a
Mortgage File, and the Master Servicer shall, at the Mortgage Loan Seller's
expense, as to each Mortgage Loan, promptly (and in any event within 45 days
following the Closing Date) cause each such document to be submitted for
recording or filing, as the case may be, in the appropriate public office for
real property records or UCC Financing Statements, as the Master Servicer deems
appropriate. Each such assignment shall reflect that it should be returned by
the public recording office to the Trustee following recording, and each such
UCC-2 and UCC-3 shall reflect that the file copy thereof should be returned to
the Trustee following filing; provided that in those instances where the public
recording office retains the original assignment of Mortgage or assignment of
Assignment of Leases the Master Servicer shall obtain therefrom a certified copy
of the recorded original. If any such document or instrument is lost or returned
unrecorded or unfilled, as the case may be, because of a defect therein, the
Issuer shall promptly prepare or cause to be prepared a substitute therefor or
cure such defect, as the case may be, and thereafter the Master Servicer shall
upon receipt thereof cause the same to be duly recorded or filed, as
appropriate.
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SECTION 2.02. Document Defects and Breaches.
(a) If any party hereto discovers that any document constituting a
part of a Mortgage File has not been properly executed, is missing, contains
information that does not conform in any respect with the corresponding
information set forth in the Mortgage Loan Schedule (and the terms of such
document have not been modified by written instrument contained in the Mortgage
File), or does not appear to be regular on its face (each, a "Document Defect"),
or if any party hereto discovers a breach of any representation or warranty of
the Mortgage Loan Seller relating to any Mortgage Loan set forth in the Mortgage
Loan Purchase Agreement (a "Breach"), such party shall give prompt written
notice thereof to the other parties hereto.
(b) Promptly upon its discovery or receipt of notice of any Document
Default or Breach that materially and adversely affects the value of any
Mortgage Loan or the interests of the Issuer and/or the Bondholders therein, the
Master Servicer shall request that the Mortgage Loan Seller, not later than [90]
days (or such other period as is provided in the Mortgage Loan Purchase
Agreement) from the receipt by the Mortgage Loan Seller of such request, cure
such Document Defect or Breach in all material respects or repurchase the
affected Mortgage Loan at the applicable Purchase Price as, if and to the extent
required by the Mortgage Loan Purchase Agreement; provided that if (i) such
Breach [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 and the Master Servicer
a certification executed on behalf of the Mortgage Loan Seller by an officer
thereof setting forth the reason that such Breach is not capable of being cured
within an initial 90-day (or other) period, specifying what actions the Mortgage
Loan Seller is pursuing in connection with the cure thereof and stating that the
Mortgage Loan Seller anticipates that such Breach will be cured within an
additional period not to exceed 90 more days, then the Mortgage Loan Seller
shall have up to an additional 90 days to complete such cure. If the affected
Mortgage Loan is to be repurchased, the Master Servicer shall designate the
Collection Account as the account to which funds in the amount of the Purchase
Price are to be wired, and the Master Servicer shall promptly notify the Trustee
(by delivery thereto of an Officer's Certificate) when such deposit is made. Any
such purchase of a Mortgage Loan shall be on a whole loan, servicing released
basis, and shall be subject to all applicable terms and conditions set forth in
the Indenture. In connection with any such purchase by the Mortgage Loan Seller,
each of the Master Servicer and the Special Servicer shall deliver any portion
of the related Servicing File that is in its possession to such purchaser or its
designee.
(c) If the Mortgage Loan Seller defaults on its obligations to
repurchase any Mortgage Loan as contemplated by this Section 2.02, the Master
Servicer shall promptly notify the Trustee, the Issuer and the Bondholders and
shall take such actions with respect to the enforcement of such repurchase
obligations, including, without limitation, the institution and prosecution of
appropriate legal proceedings, as the Master Servicer shall determine, in its
reasonable good faith judgment, are in the best interests of the Bondholders
(taken as a collective
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whole) and are not inconsistent with the Indenture. Any and all expenses
incurred by the Master Servicer with respect to the foregoing shall constitute
Servicing Advances in respect of the affected Mortgage Loan.
SECTION 2.03. Representations and Warranties of the Issuer.
(a) The Issuer hereby represents and warrants to each of the other
parties hereto and for the benefit of the Bondholders, as of the Closing Date,
that:
(i) The Issuer is a __________ duly organized, validly
existing and in good standing under the laws of the State of
__________ .
(ii) The execution and delivery of this Agreement by the
Issuer, and the performance and compliance with the terms of this
Agreement by the Issuer, will not violate the Issuer's
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 Issuer 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 Issuer, enforceable against the
Issuer in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally,
and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(v) The Issuer is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with
the terms of this Agreement will not constitute a violation of, any
law, any order or decree of any court or arbiter, or any order,
regulation or demand of any federal, state or local governmental or
regulatory authority, which violation, in the Issuer's reasonable
good faith judgment, is likely to affect materially and adversely
either the ability of the Issuer to perform its obligations under
this Agreement or the financial condition of the Issuer.
(vi) No litigation is pending or, to the best of the Issuer's
knowledge, threatened against the Issuer that, if determined
adversely to the Issuer, would
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prohibit the Issuer from entering into this Agreement or that, in
the Issuer's reasonable good faith judgment, is likely to materially
and adversely affect either the ability of the Issuer to perform its
obligations under this Agreement or the financial condition of the
Issuer.
(vii) No regulatory or governmental approval is required for
the consummation by the Issuer of the transactions contemplated
herein, other than any such approvals as have been obtained.
(b) The representations and warranties of the Issuer set forth in
Section 2.03(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 until
this Agreement is terminated in accordance with its terms. 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
thereof to the other parties hereto.
SECTION 2.04. 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 Bondholders, as of the
Closing Date, that:
(i) The Master Servicer is a _____________ 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.
(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,
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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 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 2.04(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 until this Agreement terminates in accordance with its terms. 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 thereof 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 2.04(a), subject to such appropriate modifications to the
representation and warranty set forth in Section 2.04(a)(i)
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to accurately reflect such successor's jurisdiction of organization and whether
it is a corporation, partnership, bank, association or other type of
organization.
SECTION 2.05. 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 Bondholders, as of the
Closing Date, that:
(i) The Special Servicer is a ___________________ 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.
(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
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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 2.05(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 until this Agreement terminates in accordance with its terms. 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 thereof to the other parties hereto.
(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 2.05(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, Warranties and Covenants of the
Trustee.
(a) The Trustee hereby represents and warrants to each of the other
parties hereto and for the benefit of the Bondholders, as of the Closing Date,
that:
(i) The Trustee is a _____________ 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.
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(ii) The execution and delivery of this Agreement by the
Trustee, and the performance and compliance with the terms of this
Agreement by the Trustee, will not violate the Trustee'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 Trustee 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 Trustee, enforceable against the
Trustee 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 Trustee 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 or
regulation of any federal, state or local governmental or regulatory
authority, which violation, in the Trustee's reasonable good faith
judgment, is likely to affect materially and adversely either the
ability of the Trustee to perform its obligations under this
Agreement or the financial condition of the Trustee.
(vi) No litigation is pending or, to the best of the Trustee's
knowledge, threatened against the Trustee that, if determined
adversely to the Trustee, would prohibit the Trustee from entering
into this Agreement or that, in the Trustee's reasonable good faith
judgment, is likely to materially and adversely affect either the
ability of the Trustee to perform its obligations under this
Agreement or the financial condition of the Trustee.
(vii) No regulatory or governmental approval is required for
the consummation by the Trustee of the transactions contemplated
herein, other than any such approvals as have been obtained.
(b) The representations, warranties and covenants of the Trustee 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 until this Agreement terminates in accordance with its terms. Upon
discovery by any party hereto of any breach of any of the
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foregoing representations, warranties and covenants, the party discovering such
breach shall given prompt written notice thereof to the other parties hereto.
(c) Any successor Trustee shall be deemed to have made, as of the
date of its succession, each of the representations, warranties and covenants
set forth in Section 2.06(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.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Administration of the Mortgage Loans; Collection of
Mortgage Loan Payments.
(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 Bondholders and
the Issuer, 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 Bondholders, the Issuer 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.
(a) 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.
(b) Any funds received by the Master Servicer or the Special
Servicer as payments in respect of any Mortgage Loan or which otherwise are
collected by the Master Servicer or the Special Servicer as REO Revenues in
respect of any REO Property or as Liquidation Proceeds or Insurance Proceeds in
respect of any Mortgage Loan or REO Property shall be held by the Master
Servicer or the Special Servicer, as the case may be, on behalf of, and shall be
and remain the sole and exclusive property of, the Trustee, the Bondholders and,
subject to the lien of the Indenture, the Issuer, in any event subject to the
Master Servicer's and the Special Servicer's rights as set forth in this
Agreement to retain or withdraw from the Collection Account or REO Account, as
applicable, the Master Servicing Fee, the Property Servicing Fee, the Special
Servicing Fee, the Workout Fee, the Liquidation Fee, and other amounts provided
in this Agreement.
(c) The Master Servicer and the Special Servicer each hereby
acknowledges that the Issuer, subject to the lien of the Indenture, owns and
that, following the execution of the Indenture, the Trustee on behalf of the
Bondholders shall have a first priority perfected security interest in, the
Mortgage Loans and all funds now or hereafter held by, or under the control of,
the Master Servicer, the Special Servicer or any Sub-Servicer retained thereby
in connection with the Mortgage Loans, whether as scheduled installment of
principal and interest or as full or partial prepayments of principal or
interest or as Liquidation Proceeds or Insurance Proceeds, and all proceeds of
the foregoing and proceeds of proceeds (but excluding any Master Servicing Fees,
Property Servicing Fees, Special Servicing Fees, [o reimbursement of] Advances
and all other amounts to which the Sub-Servicer is entitled under its
Sub-Servicing Agreement or each of the Master Servicer or the Special Servicer
is entitled to hereunder).
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(d) It is hereby acknowledged that possession by the Master Servicer
and the Special Servicer of collections on the Mortgage Loans is solely to
facilitate the servicing of the Mortgage Loans and, accordingly, each of the
Master Servicer and the Special Servicer does hereby agree to retain such
collections in accordance with the provisions of this Agreement prior to the
time such collections are remitted for deposit in the Bond Account and, in
connection therewith, does hereby accept its designation as agent and bailee for
the Trustee made pursuant to [Section ___ of] the Terms Indenture, but solely
for the purposes expressed in Section 3.06 and in the following sentence. By the
designation made by the Trustee pursuant to [Section ___ of] the Terms Indenture
and the acceptance of such designation by the Master Servicer and the Special
Servicer pursuant to this Section, the Trustee, as secured party, is deemed to
have possession of all collections on the Mortgage Loans for purposes of Section
9-305 and Section 8-313 of the UCC.
(e) Each of the Master Servicer and the Special Servicer also agrees
that it shall not take any action to create, incur or subject any Mortgage
Loans, or any funds that are deposited in the Collection Account, the REO
Account or any Servicing Account or Reserve Account, as applicable, or any other
funds that otherwise are or may become due or payable to the Trustee, to any
claim, lien, security interest, judgment, levy, writ of attachment or other
encumbrance, nor assert by legal action or otherwise any claim or right of
setoff against any Mortgage Loan or any funds, including without limitation
funds in the Collection Account, the REO Account or any Servicing Account or
Reserve Account, as applicable, collected on, or in connection with, a Mortgage
Loan (other than any claim, lien, security interest, judgment, levy, writ of
attachment, other encumbrance, legal action or right of setoff with respect to
any Master Servicing Fees, Property Servicing Fees, Special Servicing Fees,
Workout Fees, Liquidation Fees and any other amounts that are properly due and
payable to the Master Servicer and the Special Servicer under this Agreement).
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
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termination of this Agreement in accordance with Section 7.01. 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 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).
(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,
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replacements, capital improvements and/or environmental testing and remediation
at the related 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.
(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 Bondholders and, subject to the lien of the
Indenture, the Issuer. 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 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 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-backed securities of other series serviced by the Master Servicer
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 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
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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) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions of Section 3.06. 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.
SECTION 3.05. Permitted Withdrawals from the Collection 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 Bond 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;
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(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 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 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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(xi) 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;
(xii) to pay itself, the Special Servicer, 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 5.03;
(xiii) 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 8.02(a), (C) the cost of
recording this Agreement in accordance with Section 8.02(a), and (D)
the expense of any consultant hired by the Trustee pursuant to
Section 3.18(e).
(xiv) to pay itself, the Special Servicer, the Mortgage Loan
Seller, the Issuer or any other Person, as the case may be, with
respect to each Mortgage Loan, if any, previously purchased or
otherwise removed from the Trust Estate by such Person pursuant to
this Agreement, all amounts received thereon subsequent to the date
of purchase;
(xv) 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
(xvi) to clear and terminate the Collection Account at the
termination of this Agreement pursuant to Section 7.01.
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 (xv)
above, then the corresponding withdrawals from the Collection Account shall be
made in the following priority and subject to the following rules: (s) 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 (t) 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 Collection Account in accordance with the immediately preceding clause (s)
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.
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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 (xv) 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 recalculate 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, the Master Servicer and the Special Servicer shall
in all cases have a right prior to the Bondholders to any particular funds on
deposit in the Collection 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 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 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 following 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),
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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, 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) Notwithstanding the investment of funds held in any Investment
Account, for purposes of the calculations hereunder, including, without
limitation, the calculation of the Master Servicer Remittance Amount, the
amounts so invested shall be deemed to remain on deposit in such Investment
Account.
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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 Bonds 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 Bonds 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.
(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 Bonds outstanding, and in any
event no lower than "[A]" (or an equivalent rating), from each of the Rating
Agencies, and (ii) provides
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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, the Issuer and Bondholders, 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 Estate)
keep in force with a Qualified Insurer having a claims-paying rating no lower
than two rating categories below the highest rated Bonds 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
Bonds (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 Estate)
also keep in force with a Qualified Insurer having a claims-paying rating no
lower than two rating categories below the highest rated Bonds outstanding, and
in any event 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 Bonds (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
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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 Bonds. 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
Bondholders and the Issuer, 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 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).
(b) [Notwithstanding any other provision of this Agreement, no
Mortgaged Property shall be acquired by the Special Servicer on behalf of the
Bondholders and the Issuer in
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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 any REMIC Pool at any given time
constitutes not more than a de minimis amount of the assets of any REMIC Pool
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 Issuer or the Trust
Estate to the imposition of any federal income taxes under the Code.
In addition, the Special Servicer shall not acquire any personal
property on behalf of the Bondholders and the Issuer 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 Estate will not
cause the imposition of a tax on any REMIC Pool under the REMIC Provisions
or cause any REMIC Pool to fail to qualify as a REMIC at any time that any
Bond 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 Bondholders and the Issuer,
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 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
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it would maximize the recovery to the Bondholders and the Issuer (as
a collective whole) on a present value basis (the relevant
discounting of anticipated collections that will be paid to
Bondholders and the Issuer 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, the Master
Servicer and the Issuer, 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, the Master
Servicer and the Issuer 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 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
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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 B-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 Bond Account.
(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 B-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 B-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.
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(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 Trustee,
the Issuer, the Master Servicer, the Special Servicer or the Bondholders;
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.
(d) All Mortgage Files and other documents relating to the Mortgage
Loans now or hereafter held by, or under the control of, the Master Servicer or
the Special Servicer in respect of any Mortgage Loan, shall be held by the
Master Servicer or the Special Servicer, as the case may be, for and on behalf
of, and shall be and remain the sole and exclusive property of, the Trustee, the
Bondholders and, subject to the lien of the Indenture, the Issuer.
(e) The Master Servicer and the Special Servicer each hereby
acknowledges that the Issuer, subject to the lien of the Indenture owns and that
following the execution of the Indenture, the Trustee on behalf of the
Bondholders shall have a first priority perfected security interest in, the
Mortgage Loans, the Mortgage Files and all other documents now or hereafter held
by, or under the control of, the Master Servicer, the Special Servicer or any
Sub-Servicer retained thereby in connection with the Mortgage Loans.
(f) It is hereby acknowledged that possession by the Master Servicer
and the Special Servicer of any Mortgage File or of any particular document
required to be part thereof or otherwise relating to the Mortgage Loans is
solely to facilitate the servicing of the Mortgage Loans and, accordingly, the
Master Servicer and the Special Servicer each hereby agrees to retain any
Mortgage File or any particular document required to be part thereof or
otherwise relating to the Mortgage Loans that may come into its or their
possession in accordance with the provisions of this Agreement and, in
connection therewith, does hereby accept its designation as agent and bailee for
the Trustee, but solely for the purpose expressed in the following sentence. By
the
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designation made by the Trustee pursuant to [Section ___ of] the Terms Indenture
and the acceptance of such designation by the Master Servicer and the Special
Servicer pursuant to this Section, the Trustee, as a secured party, is deemed to
have possession of such Mortgage File or such particular Mortgage Loan document
for purposes of Section 9-305 of the UCC.
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 Master 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
Master Servicing Fee shall accrue at the Master 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 Master 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 Master Servicing Fee may
not be transferred in whole or in part except in connection with the transfer of
all of the Master Servicer's responsibilities and obligations under this
Agreement.
(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.
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(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 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 5.04, 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
Mortgage Loan ceases to be payable in accordance with the preceding sentence.
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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 or
other removal from the Trust Estate of any such Specially Serviced Mortgage Loan
or REO Property by the Issuer, the Special Servicer or the Master Servicer
pursuant to or as contemplated by Section 3.18 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 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 Fee,
the 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 ____% 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.
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(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.
(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 and the Issuer, 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 Certificate (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, any
of the Master Servicer, the Special Servicer or the Trustee, as applicable, may,
in its sole discretion, make any
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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 Bondholders, as evidenced by an Officer's Certificate delivered
promptly to the Trustee (unless it is the Person making such Advance), 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, 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 Certificate (and accompanying information) of the Trustee shall also
be promptly delivered to the Master Servicer and the Special 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 Master Servicer and the Issuer a copy
of each such written report prepared by it within ____ 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(b). The Special
Servicer shall deliver copies of all the foregoing items so collected to the
Trustee, the Master Servicer and the Issuer within ____ days of the receipt
thereof.]
SECTION 3.13. Annual Statement as to Compliance.
Each of the Master Servicer and the Special Servicer shall deliver
to the Trustee, to the Issuer and, in the case of the Special Servicer, to the
Master Servicer, on or before March 15 of each year, beginning March 15, 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
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been made under such officer's supervision[,] [and] (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 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 REMIC Pool 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 March 15 of each year, beginning March 15, 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, to the Issuer 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 Rating Agencies, the Issuer and the OTS, the FDIC and any other
banking or insurance regulatory authority that may exercise authority over any
Bondholder, 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 Bondholders.]
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 Bondholders.
In accordance with Section 3.18, and subject to all applicable terms and
conditions of the Indenture, the Special Servicer, on behalf of the Bondholders
and, subject to the lien of the Indenture, the Issuer, shall sell any REO
Property [as promptly as possible within a commercially reasonable time period]
[within two years after any REMIC Pool 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 an Opinion of Counsel, addressed to the Trustee and the Special
Servicer, to the effect that the holding by such REMIC Pool 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 REMIC Pool or cause any REMIC Pool to fail to qualify as a
REMIC at any time that any Bonds 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 Bondholders and, subject to the lien of the Indenture, the
Issuer, 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 Mortgaged 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 Trustee, on
behalf of the Bondholders and, subject to the lien of the Indenture, the
Trustee. 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
(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
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means exists to operate such property as REO Property without a REMIC Pool
incurring or possibly incurring an REO Tax on income from such property,
the Special Servicer shall deliver to the Trustee or any REMIC
Administrator appointed thereby, 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 time after the submission of such plan, the Special Servicer
shall consult with the Trustee or such REMIC Administrator with respect
to, and shall seek advice from the Trustee or such REMIC Administrator
concerning, the respective REMIC Pools' federal income tax reporting
position with respect to the various sources of income that the Trust
Estate would derive under the Proposed Plan and the estimated amount of
taxes that the respective REMIC Pools would be required to pay with
respect to each such source of income. Pursuant to its consultations with
the Trustee or such 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 Bondholders and the Issuer (as a collective whole) and, to the
extent consistent with the foregoing, in the same manner as would prudent
mortgage loan servicers and asset managers operating acquired mortgaged property
comparable to the respective REO Property under the same circumstances.
(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 Bondholders and, subject to the lien of the Indenture, the Issuer solely for
the purpose of its prompt disposition and sale [in the same manner as would
prudent mortgage loan servicers and asset managers operating acquired mortgaged
property comparable to the respective REO Property under the same circumstances]
[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 any REMIC
Pool of any "income from non-permitted assets" within the meaning of Section
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 a REMIC Pool to
receive, and (unless required to do so under any lease, contract or agreement to
which the Special Servicer or the Trustee on behalf of the Issuer and the
Bondholders 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 a REMIC Pool
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
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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;
(ii) the fees of such Independent Contractor (which shall be
expenses payable out of the Trust Estate) shall be reasonable and
customary in consideration of the nature and locality of the REO
Property;
(iii) any such contract shall require, or shall be
administered to require, that the Independent Contractor, in a
timely manner, (A) pay all costs and expenses incurred in connection
with the operation and management of such REO Property, including,
without limitation, those listed in Section 3.17(b) above, and (B)
remit all related revenues collected (net of its fees and such costs
and expenses) to the Special Servicer upon receipt;
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(iv) none of the provisions of this Section 3.17(c) relating
to any such contract or to actions taken through any such
Independent Contractor shall be deemed to relieve the Special
Servicer of any of its duties and obligations hereunder with respect
to the operation and management of any such REO Property;
(v) the Special Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all duties
and obligations in connection with the operation and management of
such REO Property; and
(vi) such Independent Contractor is acceptable to each Rating
Agency, and such appointment will not result in a qualification,
downgrading or withdrawal of any of the ratings then assigned to the
Bonds by such Rating Agency (as evidenced in writing by each such
Rating Agency).
The Special Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Special Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. To the extent the costs of any contract with any
Independent Contractor for the operation and management of any REO Property are
greater than the revenues available from such property, such excess costs shall
be covered by, and be reimbursable as, a Servicing Advance.]
SECTION 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 as expressly provided in or
contemplated by this Section 3.18 or Section 2.02 and, in either case, subject
to the applicable terms and conditions set forth in the Indenture.
(b) 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, the Master Servicer and the Issuer. The Issuer may at its
option have any such Defaulted Mortgage Loan released from the lien of the
Indenture by delivering to the Master Servicer for deposit in the Collection
Account a cash amount equal to the Purchase Price. 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 Issuer or
its designee the related Mortgage File, and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, and other
documents as shall be provided to it and are reasonably necessary to release the
Mortgage Loan from the lien of the Indenture and to vest in the Issuer ownership
thereof. In connection with any such purchase, the Special Servicer shall
deliver the related Servicing File to the Issuer.
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(c) If the Issuer has not removed from the Trust Estate any
Defaulted Mortgage Loan described in the first sentence of Section 3.18(b) above
within 30 days after receipt by the Issuer of the notice contemplated by Section
3.18(b), then the Trustee shall promptly notify the Master Servicer and Special
Servicer that the Issuer has not so removed such Mortgage Loan, and 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 Estate, 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, and other documents as
shall be provided to it and are reasonably necessary to release the Mortgage
Loan from the lien of the Indenture and to vest in the Master Servicer or the
Special Servicer, as applicable, ownership thereof. 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 Bondholders and the Issuer
(as a collective whole). 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 Estate) 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 Bondholders and the Issuer (as a collective whole), 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 a commercially reasonable time period] [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 _____ Business Days' prior written notice of its intention to sell
any Defaulted Mortgage Loan
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or REO Property pursuant to this Section 3.18(d). No Interested Person shall be
obligated to submit 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 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 Estate, 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 Bondholder with respect to the purchase price therefor
accepted by the Special Servicer or the Trustee.
(g) Any sale of a Defaulted Mortgage Loan or an REO Property shall
be for cash only.
(h) In connection with any sale or other transfer of a Defaulted
Mortgage Loan or an REO Property pursuant to this Section 3.18, the Issuer shall
deliver to the Trustee all certificates and opinions, if any, required by TIA
ss. 314(c) and 314(d) and by Sections 8.04(b) and 12.01 of the Standard
Indenture Provisions; and, notwithstanding anything herein to the contrary, no
such sale may be consummated and none of the Trustee, the Master Servicer or the
Special Servicer shall release any documents relating to such Defaulted Mortgage
Loan or REO Property to the prospective purchaser or other transferee unless and
until the Trustee receives any such certificates and opinions.
(i) 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 Bondholders and
the Issuer (taken as a collective whole), 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 Bondholders and the Issuer (taken as a
collective whole) (for example, if
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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).
SECTION 3.19. Additional Obligations of Master Servicer.
(a) The Master Servicer shall deliver to the Trustee for deposit in
the Bond 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 from its own funds 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 the Issuer or any Bondholder; 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 Bondholder, 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 Mortgage Loan that would affect the
amount or timing of any related payment of principal,
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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 the Bondholders and the Issuer (taken as
a collective whole) on a present value basis (the relevant discounting of
anticipated collections that will be payable to Bondholders and the Issuer
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, the
Trustee and the Issuer 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 REMIC Pool 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
Pool 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
[(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
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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 Bonds (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 Issuer, the
Bondholders 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 the Bondholders and the Issuer (as a collective whole) 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 payments to Bondholders, 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 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
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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(a).
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.
(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
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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 Bondholders and the
Issuer, 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, the
Issuer, any successor Master Servicer or Special Servicer, as the case may be,
or any Bondholder 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 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 Estate. In addition, each Sub-Servicing
Agreement entered into by the Master Servicer shall provide that
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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 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 Issuer 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, the Issuer and the Bondholders, shall (at no expense to the other
such party or to the Trustee, the Issuer or the Bondholders) 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 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 Bondholders and the Issuer (as a collective whole).
(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, then the
Trustee or its designee shall succeed to the rights and assume
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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, the
Issuer and the Bondholders 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 Issuer or the Bondholders.
[SECTION 3.23 Certain Tax Related Matters.
(a) To the extent reasonably requested by the Trustee or any REMIC
Administrator appointed thereby, the Master Servicer and the Special Servicer
each agrees to assist the Trustee or such REMIC Administrator, as the case may
be, in its duties and obligations under Section __ of the Terms Indenture in
causing each REMIC Pool to take such action as is necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions. Neither the
Master Servicer nor the Special Servicer shall take or fail to take any action
(whether or not authorized hereunder) as to which the Trustee or any REMIC
Administrator appointed thereby 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 action. In addition, prior to taking any action with respect to
any REMIC Pool or the assets of any of them, or causing any REMIC Pool to take
any action, which is not expressly permitted under the terms of this Agreement,
each of the Master Servicer and the Special Servicer shall consult with the
Trustee or any REMIC Administrator appointed thereby, in writing, with respect
to whether such action could cause an Adverse REMIC Event to occur, and neither
such party shall take any such action or cause any REMIC Pool to take any such
action as to which the Trustee or such REMIC Administrator has advised it in
writing that an Adverse REMIC Event could occur.
(b) In the event that any tax is imposed on any REMIC Pool,
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 any REMIC Pool 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)), such tax, together with all incidental
costs and expenses (including, without limitation,
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penalties and reasonable attorneys' fees), shall be charged to and paid by (i)
the Master Servicer, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under this Article III; or (ii) the
Special Servicer, if such tax arises out of or results from a breach by the
Special Servicer of any of its obligations under this Article III. Any tax
permitted to be incurred by the Special Servicer pursuant to Section 3.17(a)
shall be charged to and payable out of the Trust Estate.
(c) Neither the Master Servicer nor the Special Servicer shall
consent to or, to the extent it is within its control, permit: (i) the sale or
disposition of any Mortgage Loan (except in connection with (A) a Breach or
Document Defect contemplated by Section 2.02, (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
foreclosure, deed in lieu of foreclosure or otherwise or (C) the qualified
liquidation (under Section 860F of the Code) or bankruptcy of any REMIC Pool ;
(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 as part of the
Trust Estate (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) any REMIC Pool to fail to qualify as a REMIC
at any time that any Bonds are Outstanding or (y) the imposition of any tax on
any REMIC Pool under the REMIC Provisions or other applicable provisions of
federal, state and local law or ordinances.
(d) Except as otherwise permitted by Section 3.17(a), neither the
Master Servicer nor the Special Servicer shall enter into any arrangement by
which any REMIC Pool will receive a fee or other compensation for services or,
to the extent it is within the control of such Person, permit any REMIC Pool 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.]
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ARTICLE IV
MASTER SERVICER REMITTANCES; REPORTS; P&I ADVANCES
SECTION 4.01. Master Servicer Remittances.
On each Master Servicer Remittance Date, the Master Servicer shall
withdraw from the Collection Account and deliver to the Trustee, for deposit in
the Bond Account, an aggregate amount of immediately available funds equal to
the Master Servicer Remittance Amount for such Master Servicer Remittance Date.
SECTION 4.02. Reports.
(a) 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 C-1 (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 and
any REO Properties as is required by the Trustee for purposes of making the
calculations and reports required of it pursuant to the Indenture, 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.
(b) 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 C-2 (the "Special Servicer Report") reflecting information
as of the close of business on the last day of the Collection Period.
(c) 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 C-3 (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).
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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 Bond Account an
amount equal to the aggregate amount of P&I Advances, if any, to be made in
respect of the related Payment Date, (ii) apply amounts held in the Collection
Account for future distribution to Bondholders 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 prior to the next succeeding Master Servicer
Remittance 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 ____, 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 ____, 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 _____, New York
City time, on the Business Day immediately preceding the related Payment 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 Payment 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 Estate 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 Payment 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 Loans delinquent
as to their respective Balloon Payments) and any REO Loans on their respective
Due
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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 Payment 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 Payment 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 Payment 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 Payment 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 Issuer 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, 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
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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.]
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ARTICLE V
THE MASTER SERVICER AND
THE SPECIAL SERVICER
SECTION 5.01. Liability of the Master Servicer and the Special
Servicer.
The Master Servicer and the Special Servicer shall be liable in
accordance herewith only to the extent of the respective obligations
specifically imposed upon and undertaken by the Master Servicer and the Special
Servicer herein.
SECTION 5.02. Merger, Consolidation or Conversion of the Master
Servicer or the Special Servicer.
Subject to the following paragraph, the Master Servicer and the
Special Servicer 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 Bonds or any of the Mortgage Loans and to
perform its respective duties under this Agreement.
The Master Servicer or the Special Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Master Servicer or the Special Servicer shall be a
party, or any Person succeeding to the business of the Master Servicer or the
Special Servicer shall be the successor of the Master Servicer or the Special
Servicer, 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 Bonds (as confirmed in writing by each Rating Agency).
SECTION 5.03. Limitation on Liability of the Master Servicer and the
Special Servicer.
Neither the Master Servicer nor the Special Servicer shall be under
any liability to the Issuer, the Trustee or the Bondholders 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 Master
Servicer or the Special Servicer against any liability to the Issuer, the
Trustee or the Bondholders 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
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imposed by reason of misfeasance, bad faith or negligence in the performance of,
or reckless disregard of, obligations or duties hereunder. The Master Servicer,
the Special Servicer 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 Master Servicer, the Special Servicer and any director, officer,
employee or agent of any such party shall be indemnified and held harmless out
of the Trust Estate against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Bonds, 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. Neither the Master Servicer nor the Special
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action unless such action is related to its respective duties under this
Agreement and, 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 Master Servicer
or the Special Servicer 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 Bondholders hereunder. In such event, the legal expenses and
costs of such action, and any liability resulting therefrom, shall be
reimbursable to the Master Servicer or the Special Servicer, as the case may be,
out of the Collection Account as provided in Section 3.05(a).
SECTION 5.04. Master Servicer and Special Servicer Not to Resign.
Neither the Master Servicer nor the Special Servicer 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 or the Special
Servicer, as the case may be, so causing such a conflict being of a type and
nature carried on by the Master Servicer or the Special Servicer, as the case
may be, at the date of this Agreement. Any such determination permitting the
resignation of the Master Servicer or the Special Servicer, 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, neither the Master Servicer nor the
Special Servicer 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
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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 or the Special Servicer are transferred to a successor
thereto, the entire amount of compensation payable to the Master Servicer or the
Special Servicer, as the case may be, that accrues pursuant hereto from and
after the date of such transfer shall be payable to such successor.
SECTION 5.05. Rights of the Issuer and the Trustee in Respect of the
Master Servicer and the Special Servicer.
The Master Servicer and the Special Servicer shall each afford the
Issuer, 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
and the Special Servicer shall each furnish the Issuer, 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 Issuer may, but is not obligated to,
enforce the obligations of the Master Servicer, the Special Servicer hereunder
and may, but is not obligated to, perform, or cause a designee to perform, any
defaulted obligation of the Master Servicer or the Special Servicer hereunder or
exercise the rights of the Master Servicer or the Special Servicer hereunder;
provided, however, that none of the Master Servicer or the Special Servicer
shall be relieved of any of its obligations hereunder by virtue of such
performance by the Issuer or its designee. The Issuer shall not have any
responsibility or liability for any action or failure to act by the Master
Servicer or the Special Servicer and, except to the extent required by the
Indenture, is not obligated to supervise the performance of the Master Servicer
or the Special Servicer under this Agreement or otherwise.
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ARTICLE VI
DEFAULT
SECTION 6.01. 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 Bond 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 ______, New York City time, on the Business Day
immediately preceding the related Payment 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 may be, contained in
this Agreement which continues unremedied for a period of
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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 Bonds entitled to at least 25% of the
Voting Rights; or
(vii) 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 the
Issuer or any Class of Bondholders and which continues unremedied
for a period of 30 days after the date on which notice of such
breach, requiring the same to be remedied, shall have been given to
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 Bonds entitled to at least 25% of the
Voting Rights; or
(viii) 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 or the Special Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period
of 60 days; or
(ix) the Master Servicer or the Special Servicer 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
(x) the Master Servicer or the Special Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take any corporate action in furtherance of the
foregoing; or
(xi) 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 Bonds.
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When a single entity acts as Master Servicer and Special Servicer an Event of
Default in one capacity shall constitute an Event of Default in the other
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 6.01(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
Issuer and the Trustee each may, and at the written direction of the Holders of
Bonds entitled to at least 25% of the Voting Rights or if the relevant Event of
Default is one described in clause (iii) or clause (xi) of Section 6.01(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 Estate (other than as a Holder of any
Bond). 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 Bonds (other than as a Holder of any Bonds) 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 Servicer and the
Special Servicer agrees that, if it is terminated pursuant to this Section
6.01(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 Bond 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 6.01(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 5.03 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.
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SECTION 6.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer or the Special Servicer
resigns pursuant to the first paragraph of Section 5.04 or receives a notice of
termination pursuant to Section 6.01, the Trustee shall be the successor in all
respects to the Master Servicer or the Special Servicer, 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 or the Special Servicer, 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 or the Special Servicer's, as the case may be,
failure to cooperate or to provide information or monies required by Section
6.01 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, or if the Holders of Bonds entitled to at least 51% of
the Voting Rights shall request in writing to the Trustee, promptly appoint, or
petition a court of competent jurisdiction to appoint, any established and
qualified institution as the successor to the Master Servicer or the Special
Servicer, as the case may be, hereunder in the assumption of all or any part of
the responsibilities, duties or liabilities of the Master Servicer or the
Special Servicer, 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 Bonds (as evidenced by
written confirmation to such effect from each Rating Agency). No appointment of
a successor to the Master Servicer or the Special Servicer 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 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 Owner Trustee, 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.
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SECTION 6.03. Waiver of Events of Default.
Subject to the applicable terms and conditions of the Indenture, the
Trustee, acting on behalf of the Bondholders, and the Issuer may jointly waive
any Event of Default hereunder. 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.
SECTION 6.04. 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 6.01, shall have the right (exercisable subject to
the provisions of the Indenture), in its own name and as trustee of an express
trust, to take all actions now or hereafter existing at law, in equity or by
statute to enforce its rights and remedies and to protect the interests, and
enforce the rights and remedies, of the Bondholders (including the institution
and prosecution of all judicial, administrative and other proceedings and the
filings of proofs of claim and debt in connection therewith). Except as
otherwise expressly provided in this Agreement, no remedy provided for by this
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy, and no delay or
omission to exercise any right or remedy shall impair any such right or remedy
or shall be deemed to be a waiver of any Event of Default.
-88-
<PAGE>
ARTICLE VII
TERMINATION
SECTION 7.01. Termination Upon Liquidation of All Mortgage Loans.
(a) The respective obligations and responsibilities under this
Agreement of the Issuer, the Master Servicer, the Special Servicer and the
Trustee shall terminate upon the earlier of (i) payment to the Trustee of all
amounts held by or on behalf of the Master Servicer or Special Servicer and
required hereunder to be so paid on the first Master Servicer Remittance Date
following the end of the Collection Period in which occurs the final payment or
other liquidation of the last Mortgage Loan or REO Property subject hereto and
(ii) satisfaction and discharge of the Indenture and receipt by each of the
Master Servicer and the Special Servicer of all amounts then payable or
reimbursable thereto hereunder.
(b) Subject to the receipt thereby of all amounts then payable or
reimbursable thereto hereunder, each of the Master Servicer and the Special
Servicer acknowledges and agrees that, upon the satisfaction and discharge of
the Indenture as described in clause (ii) above, it shall promptly (and in any
event no later than____ Business Days) following its receipt of notice of such
satisfaction and discharge from the Trustee provide the Issuer with all
documents and records in its possession and shall cooperate with the Issuer or
its designee in effecting the termination of the Master Servicer's or Special
Servicer's, as the case may be, responsibilities and rights with respect to the
Mortgage Loans, including, without limitation, the transfer within_____ Business
Days to the Issuer of all cash amounts which shall at the time be or should have
been credited by the Master Servicer to the Collection Account or any Servicing
Account or by the Special Servicer to the REO Account, the Collection Account or
any Servicing Account or thereafter be received by or on behalf of it with
respect to any Mortgage Loan or REO Property. Any costs or expenses in
connection with any actions to be taken by the Master Servicer or Special
Servicer pursuant to this paragraph shall be borne by the Master Servicer or
Special Servicer, as the case may be.
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<PAGE>
ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01. Amendments; Successors to the Issuer and the Trustee.
(a) This Agreement may be amended from time to time by the mutual
agreement of the parties hereto, provided that the Trustee shall not be required
to enter into any amendment that (i) it is prohibited from entering into under
the Indenture or (ii) affects its rights, duties and immunities under this
Agreement.
(b) The Issuer and the Trustee each hereby agrees that it will not
knowingly consent to any amendment, supplement or other modification of the
Indenture that would have a material adverse effect on the Master Servicer and
the Special Servicer in their capacities as such hereunder. No amendment,
supplement or other modification to the Indenture shall materially and adversely
affect the rights and/or obligations of the Master Servicer or the Special
Servicer hereunder without the written consent of the Master Servicer or the
Special Servicer, as the case may be.
SECTION 8.02. Successors to the Issuer and the Trustee.
The parties hereto hereby acknowledge and agree that any successor
to the Issuer or the Trustee pursuant to the Indenture shall be the successor of
the Issuer or the Trustee, 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 or thereto, anything herein or therein to the contrary notwithstanding.
SECTION 8.03. 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 Estate on direction
by the Trustee, but only upon direction accompanied by an Opinion of Counsel
(the cost of which may be paid out of the Collection Account) to the effect that
such recordation materially and beneficially affects the interests of the
Bondholders.
(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.
-90-
<PAGE>
SECTION 8.04. Governing Law.
This Agreement 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 8.05. 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 Issuer (or the Owner
Trustee on behalf of the Issuer), c/o ________________, ________________,
Attention: ______________________, telecopy number: _________________; (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 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.
SECTION 8.06. 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.
SECTION 8.07. 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 directors, officers, employees and agents referred to in Section 5.03, and
all such provisions shall inure to the benefit of the Bondholders. No other
person, including, without limitation, any Mortgagor, shall be entitled to any
benefit or equitable right, remedy or claim under this Agreement.
-91-
<PAGE>
SECTION 8.08. 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 8.09. 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; and
(iii) the resignation or termination of the Master Servicer,
the Special Servicer and the appointment of a successor.
(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.
(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.
-92-
<PAGE>
SECTION 8.10. 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 8.01. All prior negotiations or representations of the
parties are merged into this Agreement and shall have no force or effect unless
expressly stated herein.
-93-
<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.
CRIIMI MAE Commercial Mortgage Trust [I]
by:
----------------------------------------,
not in its individual capacity but solely as
Owner Trustee
By:
-----------------------------------------
Name:
Title:
[ ]
-------------------------------------------
Master Servicer
By:
-----------------------------------------
Name:
Title:
[ ]
-------------------------------------------
Special Servicer
By:
-----------------------------------------
Name:
Title:
[ ]
-------------------------------------------
Trustee
By:
-----------------------------------------
Name:
Title:
-94-
<PAGE>
STATE OF ____________________ )
) ss.:
COUNTY OF ___________________ )
On this ______ day of _____________ 199__, before me, the
undersigned officer, personally appeared ____________________, and acknowledged
himself to me to be the _________________________ of _____________________, and
that as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------
Notary Public
NOTARIAL SEAL
-95-
<PAGE>
STATE OF ____________________ )
) ss.:
COUNTY OF ___________________ )
On this ______ day of _____________ 199__, before me, the
undersigned officer, personally appeared ____________________, and acknowledged
himself to me to be the _________________________ of _____________________, and
that as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------
Notary Public
NOTARIAL SEAL
-96-
<PAGE>
STATE OF ____________________ )
) ss.:
COUNTY OF ___________________ )
On this ______ day of _____________ 199__, before me, the
undersigned officer, personally appeared ____________________, and acknowledged
himself to me to be the _________________________ of _____________________, and
that as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------
Notary Public
NOTARIAL SEAL
-97-
<PAGE>
STATE OF ____________________ )
) ss.:
COUNTY OF ___________________ )
On this ______ day of _____________ 199__, before me, the
undersigned officer, personally appeared ____________________, and acknowledged
himself to me to be the _________________________ of _____________________, and
that as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity as Trustee by himself or herself as such officer as his or her free
and voluntary act and deed and the free and voluntary act and deed of said
entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
---------------------------------
Notary Public
NOTARIAL SEAL
-98-
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT B-1
FORM OF MASTER SERVICER REQUEST FOR RELEASE
[Date]
- --------------------------
- --------------------------
- --------------------------
Attention: _______________________________________
Re: CRIIMI MAE Commercial Mortgage Trust[I] Series 199_-___
In connection with the administration of the Mortgage Files held by or on
behalf of you as trustee under a certain Servicing and Administration Agreement,
dated as of__________, 199_ (the "Servicing and Administration Agreement"),
among CRIIMI MAE Commercial Mortgage Trust[I], as issuer, the undersigned as
master servicer, ___________________________________________ as special
servicer, and you as trustee (the "Trustee"), 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 Servicing and Administration 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 Servicing and Administration Agreement and will be
returned to you or your designee within ten (10) days of our receipt thereof,
unless the Mortgage Loan has been paid in full, in which case the Mortgage File
(or such portion thereof) will be retained by us permanently.
<PAGE>
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Servicing and Administration Agreement.
--------------------------------------
as Master Servicer
By:
-----------------------------------
Name:
Title:
B-1-2
<PAGE>
EXHIBIT B-2
FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
[Date]
- -------------------------
- -------------------------
- -------------------------
Attention: _______________________________
Re: CRIIMI MAE Commercial Mortgage Trust[I], Series 199_-___
In connection with the administration of the Mortgage Files held by or on
behalf of you as trustee under a certain Servicing and Administration Agreement,
dated as of ____________, 199_ (the "Servicing and Administration Agreement"),
among CRIIMI MAE Commercial Mortgage Trust[I], as issuer, ____________________
____________________ as master servicer, the undersigned as special servicer,
and you as trustee (the "Trustee"), 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 Servicing and Administration 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>
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Servicing and Administration Agreement.
--------------------------------------
as Special Servicer
By:
-----------------------------------
Name:
Title:
B-2-2
<PAGE>
EXHIBIT C-1
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 C-2
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 C-3
FORM OF OPERATING STATEMENT ANALYSIS
