UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report July 29, 1998
TRUST CREATED BY COMMERCIAL MORTGAGE ACCEPTANCE CORP.
(under a Pooling and Servicing Agreement dated as of July 1, 1998, which Trust
is the Issuer of Commerical Mortgage Pass-Through Certificates, Series 1998-C1)
(Exact name of registrant as specified in its charter)
Missouri 333-51817-01 Applied For
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification)
135 South LaSalle Street, Suite 1625, Chicago, Illinois, 60674-4107
Attention: Asset-Backed Securities Trust Services Group-Comercial
Mortgage Acceptance Corp. Series 1998-C1
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 312-904-2300
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Exhibit 1.1 Underwriting Agreement dated July 15, 1998, by and between
Commercial Mortgage Acceptance Corp., Midland Loan Services,
Inc., Morgan Stanley & Co., Inc. and Residential Funding
Securities Corporation.
Exhibit 4.1 Pooling and Servicing Agreement dated July 1, 1998, by and
between Commercial Mortgage Acceptance Corp., Midland Loan
Services, Inc. LaSalle National Bank and ABN AMRO Bank N.V.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
COMMERCIAL MORTGAGE ACCEPTANCE CORP., as
Depositor on behalf of the Registrant
Pursuant to Section 3.20 of the Pooling
And Servicing Agreement
By: /s/ Leon E. Bergman
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Name: Leon E. Bergman
Title: Vice President
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EXHIBIT INDEX
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Exhibit 1.1 Underwriting Agreement dated July 15, 1998, by and between
Commercial Mortgage Acceptance Corp., Midland Loan Services,
Inc., Morgan Stanley & Co., Inc. and Residential Funding
Securities Corporation.
Exhibit 4.1 Pooling and Servicing Agreement dated July 1, 1998, by and
between Commercial Mortgage Acceptance Corp., Midland Loan
Services, Inc. LaSalle National Bank and ABN AMRO Bank N.V.
COMMERCIAL MORTGAGE ACCEPTANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES,
SERIES 1998-C1
UNDERWRITING AGREEMENT
as of July 15, 1998
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Residential Funding Securities Corporation
8400 Normandale Lake Blvd., Suite 600
Minneapolis, Minnesota 55437
Ladies and Gentlemen:
Commercial Mortgage Acceptance Corp., a Missouri corporation (the
"Depositor"), proposes to sell to Morgan Stanley & Co. Incorporated and
Residential Funding Securities Corporation (together, the "Underwriters") the
Commercial Mortgage Pass-Through Certificates identified in Schedule I hereto
(the "Certificates") pursuant to this Underwriting Agreement, dated July 15,
1998 (this "Agreement"), between the Depositor and the Underwriters. The
Certificates will evidence beneficial ownership interests in a trust fund (the
"Trust Fund") to be formed by the Depositor and consisting primarily of a pool
(the "Mortgage Pool") of multifamily and commercial mortgage loans (the
"Mortgage Loans").
Certain Mortgage Loans (the "Midland Mortgage Loans") will be
acquired by the Depositor from Midland Loan Services, Inc. ("Midland") pursuant
to the mortgage loan purchase agreement, dated July 15, 1998 (the "Midland
Mortgage Loan Purchase Agreement"), between the Depositor and Midland; certain
Mortgage Loans (the "PNC Mortgage Loans") will be acquired by the Depositor from
PNC Bank, N.A. ("PNC") pursuant to the mortgage loan purchase agreement, dated
July 15, 1998 (the "PNC Mortgage Loan Purchase Agreement"), between the
Depositor and PNC; certain Mortgage Loans (the "MSMC Mortgage Loans") will be
acquired by the Depositor from Morgan Stanley Mortgage Capital Inc. ("MSMC")
pursuant to the mortgage loan purchase agreement, dated July 15, 1998 (the "MSMC
Mortgage Loan Purchase Agreement"), between the Depositor and MSMC, and certain
other Mortgage Loans (the "RFC Mortgage Loans") will be acquired by the
Depositor from MSMC (which acquired the RFC Mortgage Loans from Residential
Funding Corporation ("RFC") pursuant to a mortgage
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loan purchase agreement dated June 30, 1998 (the "RFC Mortgage Loan Purchase
Agreement")) pursuant to a separate mortgage loan purchase agreement, dated July
15, 1998 (the "MS/RFC Mortgage Loan Purchase Agreement"), between the Depositor
and MSMC. Midland, MSMC, RFC and PNC collectively constitute the "Mortgage Loan
Sellers" and the Midland Mortgage Loan Purchase Agreement, MSMC Mortgage Loan
Purchase Agreement, MS/RFC Mortgage Loan Purchase Agreement, PNC Mortgage Loan
Purchase Agreement and RFC Mortgage Loan Purchase Agreement collectively
constitute the "Mortgage Loan Purchase Agreements". Capitalized terms used
herein but not otherwise defined herein shall have the meanings set forth in the
Mortgage Loan Purchase Agreements. Although RFC is described as a Mortgage Loan
Seller in this Agreement, it sold its respective Mortgage Loans to MSMC prior to
the date hereof. MSMC intends to sell the RFC Mortgage Loans and the MSMC
Mortgage Loans to the Depositor on the Closing Date. Nevertheless, RFC (and not
MSMC) is responsible to the Trust Fund in respect of the representations and
warranties that relate to the RFC Loans to the same extent as the other Mortgage
Loan Sellers are with respect to their Mortgage Loans.
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (No. 333-51817) on Form S-3 for the
registration of the Certificates under the Securities Act of 1933, as amended
(the "1933 Act"), which registration statement has become effective and copies
of which have heretofore been delivered to each Underwriter. The Depositor
proposes to file with the Commission pursuant to Rule 4(b) under the 1933 Act
a supplement to the form of prospectus included in such registration statement
relating to the Certificates and the plan of distribution thereof. Such
registration statement, including the exhibits thereto, as amended at the date
hereof, is hereinafter called the "Registration Statement"; the prospectus
included in the Registration Statement, at the time the Registration Statement
became effective, or as subsequently filed with the Commission pursuant to Rule
424(b) under the 1933 Act, is hereinafter called the "Base Prospectus"; any
supplement to the form of prospectus relating to the Certificates, in the form
in which it shall be filed with the Commission pursuant to Rule 424 (including
the Base Prospectus as so supplemented) is hereinafter called the "Prospectus
Supplement"; and the Base Prospectus and the Prospectus Supplement, together,
are hereinafter called the "Prospectus". Any preliminary form of the Prospectus
that has heretofore been filed pursuant to Rule 424(b) is hereinafter called a
"Preliminary Prospectus."
SECTION 1. Representations and Warranties.
(a) The Depositor represents and warrants to each Underwriter as follows:
(i) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect, and no
proceedings for such purpose are pending or, to the Depositor's knowledge,
threatened by the Commission; the Registration Statement as of the effective
date thereof (the "Effective Date"), and the Prospectus, as of the date of the
Prospectus Supplement, complied in all material respects with the applicable
requirements of the 1933 Act and the rules and regulations thereunder (the "1933
Act Regulations"); and the information in the Registration Statement, as of the
Effective Date, did not contain any untrue statement of a material fact and did
not omit to state any material fact
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required to be stated therein or necessary to make the statements therein not
misleading and the information in the Prospectus, as of the date of the
Prospectus Supplement, did not, and as of the Closing Date (as hereinafter
defined) will not, contain an untrue statement of a material fact and did not
and will not omit to state a material fact necessary in order to make the
information therein, in the light of the circumstances under which they were
made, not misleading, provided, however, that the Depositor makes no
representations, warranties or agreements as to (A) the information contained in
the Prospectus or any revision or amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to the
Depositor by Morgan Stanley & Co. Incorporated on behalf of itself or the other
Underwriter specifically for use in connection with the preparation of the
Prospectus or any revision or amendment thereof or supplement thereto (the
"Underwriter Information"), or (B) any information contained in or omitted from
any Computational Materials or ABS Term Sheets (each as hereinafter defined)
required to be provided by either Underwriter to the Depositor pursuant to
Section 4.
(ii) There are no legal or governmental proceedings pending or, to
the knowledge of the Depositor, threatened to which the Depositor is a party or
to which any of the properties of the Depositor are subject that are required to
be described in the Registration Statement or the Prospectus and that are not so
described, nor are there any statutes, regulations, contracts or other documents
to which the Depositor is a party or to which the Depositor or any of the
properties of the Depositor are subject that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(iii) The Depositor has been duly incorporated and is a validly
existing corporation in good standing under the laws of the State of Missouri
with corporate power and authority to enter into and perform its obligations
under this Agreement and the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of July 1, 1998, between the Depositor, Midland
Loan Services, Inc. as master servicer and special servicer, LaSalle National
Bank, as trustee, and ABN AMRO Bank N.V., as fiscal agent.
(iv) The execution, delivery and performance of this Agreement and
the Pooling and Servicing Agreement by the Depositor and the consummation of the
transactions contemplated herein and therein by the Depositor and compliance by
the Depositor with its obligations hereunder and thereunder have been duly
authorized by all necessary corporate action and will not (A) contravene any
provision of the articles of incorporation or by-laws of the Depositor or (B)
conflict with or constitute a breach of or default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Depositor pursuant to, any provision of applicable law or
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which the Depositor is a party or by which it may be bound or to which any of
the property or assets of the Depositor is subject, which conflict, breach,
default, lien, charge or encumbrance is reasonably likely to materially and
adversely affect the Depositor's ability to perform its obligations under this
Agreement or the Pooling and Servicing Agreement.
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(v) The Certificates have been duly authorized for issuance and sale
(or will have been so authorized prior to the issuance thereof) pursuant to this
Agreement and the Pooling and Servicing Agreement. When issued, authenticated
and delivered pursuant to the provisions of this Agreement and of the Pooling
and Servicing Agreement against payment of the consideration therefor in
accordance with this Agreement, the Certificates will be duly and validly issued
and outstanding and entitled to the benefits provided by the Pooling and
Servicing Agreement, except as such enforceability may be limited by the effect
of (A) bankruptcy, insolvency, reorganization, receivership, moratorium or other
similar laws affecting the enforcement of the rights of creditors generally, and
(B) general principles of equity, whether enforcement is sought in a proceeding
in equity or at law. The Certificates and the Pooling and Servicing Agreement
conform in all material respects to all statements relating thereto contained in
the Prospectus.
(vi) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the offering,
issuance or sale of the Certificates hereunder, except such as have been, or as
of the Closing Date will have been, obtained or such as may otherwise be
required under applicable state securities laws in connection with the purchase
and offer and sale of the Certificates by the Underwriters and any recordation
of the respective assignments of the Mortgage Loans to the Trustee pursuant to
the Pooling and Servicing Agreement that have not yet been completed.
(vii) This Agreement has been, and as of the Closing Date the
Pooling and Servicing Agreement will be, duly authorized, executed and delivered
by the Depositor. This Agreement constitutes, and as of the Closing Date the
Pooling and Servicing Agreement will constitute, a legal, valid and binding
agreement enforceable against the Depositor in accordance with its terms, except
as such enforceability may be limited by the effect of (A) bankruptcy,
insolvency, reorganization, receivership, moratorium or other similar laws
affecting the enforcement of the rights of creditors generally, (B) general
principles of equity, whether enforcement is sought in a proceeding in equity or
at law, and (C) public policy considerations underlying the securities laws, to
the extent that such public policy considerations limit the enforceability of
the provisions of this Agreement that purport or are construed to provide
indemnification from securities law liabilities.
(viii) At the time of the execution and delivery of the Pooling and
Servicing Agreement, the Depositor (A) will convey to the Trustee, or cause to
be conveyed to the Trustee, all of the Depositor's right, title and interest in
and to the Mortgage Loans free and clear of any lien, mortgage, pledge, charge,
encumbrance, adverse claim or other security interest (collectively "Liens")
granted by or imposed upon the Depositor, (B) will not have assigned to any
person any of its right, title or interest in the Mortgage Loans or in the
Pooling and Servicing Agreement or the Certificates, and (C) will have the power
and authority to transfer or cause to be transferred the Mortgage Loans to the
Trustee and to sell the Certificates to the Underwriters. Upon execution and
delivery of the Pooling and Servicing Agreement by the Trustee, the Trustee will
have acquired ownership of all of the Depositor's right, title and interest in
and to the Mortgage Loans, and upon delivery to the Underwriters of the
Certificates pursuant hereto, each
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Underwriter will have good title to the Certificates purchased by such
Underwriter, in each case free of Liens granted by or imposed upon the
Depositor.
(ix) The Depositor is not, and the issuance and sale of the
Certificates in the manner contemplated by the Prospectus will not cause the
Depositor or the Trust Fund to be, subject to registration or regulation as an
"investment company" under the Investment Company Act of 1940, as amended (the
"1940 Act").
(x) Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, the Depositor will report the transfer of the
Mortgage Loans to the Trustee in exchange for the Certificates and the sale of
the Certificates to the Underwriters pursuant to this Agreement as a sale of the
interest in the Mortgage Loans evidenced by the Certificates. The consideration
received by the Depositor upon the sale of the Certificates to the Underwriters
will constitute reasonably equivalent value and fair consideration for the
Certificates. The Depositor will be solvent at all relevant times prior to, and
will not be rendered insolvent by, the sale of the Certificates to the
Underwriters. The Depositor is not selling the Certificates to the Underwriters
with any intent to hinder, delay or defraud any of the creditors of the
Depositor.
(xi) At the Closing Date, the respective classes of Certificates
shall have been assigned ratings no lower than those set forth in Schedule I
hereto by the nationally recognized statistical rating organizations identified
in Schedule I hereto (the "Rating Agencies").
(xii) Any taxes, fees and other governmental charges in connection
with the execution, delivery and issuance of this Agreement, the Pooling and
Servicing Agreement and the Certificates payable by the Depositor (other than
income taxes) have been paid or will be paid at or prior to the Closing Date.
(xiii) The Trust Fund will qualify as three separate real estate
mortgage investment conduits (each, a "REMIC") for federal income tax purposes
pursuant to Section 860D of the Internal Revenue Code of 1986, as amended (the
"Code"); the REMIC III Regular Certificates will constitute "regular interests"
in a REMIC; and the Class R-I, Class R-II and Class R-III Interests will each
constitute the sole class of "residual interests" in the related REMIC.
(b) Midland Loan Services, Inc. ("MLS") represents and warrants to
each Underwriter as follows:
(i) MLS has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to enter into and perform its obligations under
this Agreement.
(ii) The execution, delivery and performance of this Agreement by
MLS and the consummation of the transactions contemplated herein and therein by
MLS and compliance by MLS with its obligations hereunder and thereunder have
been duly authorized by all necessary corporate action and will not (A)
contravene any provision of the certificate of incorporation or
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by-laws of MLS or (B) conflict with or constitute a breach of or default under,
or result in the creation or imposition of any lien, charge or encumbrance upon
any property or assets of MLS pursuant to, any provision of applicable law or
contract, indenture, mortgage, loan agreement, note, lease or other instrument
to which MLS is a party or by which it may be bound or to which any of the
property or assets of MLS is subject, which conflict, breach, default, lien,
charge or encumbrance is reasonably likely to materially and adversely affect
MLS's ability to perform its obligations under this Agreement .
(iii) This Agreement has been duly authorized, executed and
delivered by MLS.
(c) Each Underwriter represents and warrants to the Depositor that, as of
the date hereof and as of the Closing Date, such Underwriter has complied with
all of its obligations hereunder.
SECTION 2. Purchase and Sale.
Subject to the terms and conditions herein set forth and in reliance upon
the representations and warranties herein contained, the Depositor shall sell to
the several Underwriters, and each Underwriter shall, severally and not jointly,
purchase from the Depositor, at the related purchase price set forth on Schedule
I hereto, Certificates of each class thereof having an actual or notional amount
as set forth on Schedule I hereto opposite their names. There will be added to
the purchase price of the Certificates an amount equal to interest accrued
thereon pursuant to the terms thereof from the Cut-off Date to but excluding the
Closing Date.
SECTION 3. Delivery and Payment.
Payment of the aggregate purchase price for, and delivery of, the
Certificates shall be made at 10:00 a.m. New York City time on July 29, 1998,
which date and time may be postponed by agreement between the Underwriters and
the Depositor (such time and date of payment and delivery, the "Closing Date").
Payment shall be made to the Depositor by the Underwriters of the purchase
prices of the Certificates as set forth in Schedule I in immediately available
Federal funds wired to such bank as may be designated by the Depositor, against
delivery of the Certificates. Delivery of the Certificates will be made in
book-entry form through the facilities of The Depository Trust Company ("DTC").
Each class of Certificates will be represented by one or more definitive global
Certificates to be deposited by or on behalf of the Depositor with DTC or the
Trustee. The Certificates will be made available for examination by the
Underwriters not later than 10:00 a.m. New York City time on the last business
day prior to the Closing Date. The closing of the transactions contemplated
hereby shall be made at the offices of Morrison and Hecker, 2600 Grand Avenue,
Kansas City, Missouri 64108, or at such other place as shall be agreed upon by
the Underwriters and the Depositor.
SECTION 4. Offering by Underwriter.
(a) The Underwriters shall provide written information in respect of the
plan of distribution to the Depositor expressly for use in the Preliminary
Prospectus and the Prospectus.
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(b) It is understood that the Underwriters propose to offer the
Certificates for sale as set forth in the Prospectus. It is further understood
that the Depositor, in reliance upon Policy Statement 105, has not and will not
file an offering statement pursuant to Section 352-c of the General Business Law
of the State of New York with respect to the Certificates. Each Underwriter
therefore agrees that sales of the Certificates made by such Underwriter in and
from the State of New York will be made only to institutional investors within
the meaning of Policy Statement 105.
(c) In connection with the offering of the Certificates, the Underwriters
may prepare and provide to prospective investors (x) computational materials
("Computational Materials") as defined in the No-Action Letter of May 20, 1994
issued by the Commission to Kidder, Peabody Acceptance Corporation I, Kidder,
Peabody & Co. Incorporated and Kidder Structured Asset Corporation, as made
applicable to other issuers and underwriters by the Commission in response to
the request of the Public Securities Association dated May 24, 1994, as well as
the PSA Letter referred to below and (y) ABS term sheets ("ABS Term Sheets"),
each as defined in the No-Action Letter of February 17, 1995 issued by the
Commission to the Public Securities Association (the "PSA Letter", and, together
with the No-Action Letters described in clause (x) above, collectively, the
"No-Action Letters"), subject to the following conditions (to which such
conditions each Underwriter agrees, severally and not jointly, with respect to
those Computational Materials, and ABS Term Sheets prepared by such
Underwriter):
(i) All Computational Materials and ABS Term Sheets provided to
prospective investors that are required to be filed pursuant to the No-Action
Letters shall bear a legend substantially in the form attached hereto as Exhibit
A. The Depositor shall have the right to require additional specific legends or
notations to appear on any Computational Materials or ABS Term Sheets, the right
to require changes regarding the use of terminology and the right to determine
the types of information appearing therein. Notwithstanding the foregoing, this
subsection (i) will be satisfied if all Computational Materials and ABS Term
Sheets referred to herein bear a legend in a form previously approved in writing
by the Depositor.
(ii) Each Underwriter shall provide the Depositor with
representative forms of all Computational Materials and ABS Term Sheets prior to
their first use, to the extent such forms have not previously been approved by
the Depositor for use by such Underwriter. Each Underwriter shall provide to the
Depositor, for filing on Form 8-K as provided in Section 5(k), copies (in such
format as required by the Depositor) of all Computational Materials and ABS Term
Sheets that are required to be filed with the Commission pursuant to the
No-Action Letters. Such Underwriter may provide copies of the foregoing in a
consolidated or aggregated form including all information required to be filed
if filing in such format is permitted by the No-Action Letters. All
Computational Materials and ABS Term Sheets described in this subsection (ii)
must be provided to the Depositor not later than 10:00 a.m. New York City time
one business day before filing thereof is required pursuant to the terms of this
Agreement and in accordance with the No-Action Letters. Neither Underwriter
shall provide to any investor or prospective investor in the Certificates any
Computational Materials or ABS Term Sheets on or after the day on which
Computational Materials or ABS Term Sheets are required to be provided to the
Depositor pursuant to this subsection (ii) (other than copies of Computational
Materials or ABS
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Term Sheets previously submitted to the Depositor in accordance with this
subsection (ii) for filing pursuant to Section 5(k)), unless such Computational
Materials or ABS Term Sheets are preceded or accompanied by the delivery of a
Prospectus to such investor or prospective investor.
(iii) All information included in the Computational Materials and
ABS Term Sheets shall be generated based on substantially the same methodology
and assumptions that are used to generate the information in the Prospectus
Supplement as set forth therein; provided that the Computational Materials and
ABS Term Sheets may include information based on alternative methodologies or
assumptions if specified therein. If any Computational Materials or ABS Term
Sheets that are required to be filed were based on assumptions with respect to
the mortgage pool that differ from the mortgage pool information as reflected in
the Final Offering Document Information (as defined in the Indemnification
Agreements, as amended or supplemented, between the respective Mortgage Loan
Seller and the Depositor (collectively, the "Indemnification Agreements")) in
any material respect, or on Certificate structuring terms that were revised in
any material respect prior to the printing of the Prospectus, the Underwriter
shall prepare revised Computational Materials or ABS Term Sheets, as the case
may be, based on the Final Offering Document Information, (as defined in the
Indemnification Agreements) and structuring assumptions used in the Prospectus,
circulate such revised Computational Materials and ABS Term Sheets to all
recipients of the preliminary versions thereof that indicated orally to the
Underwriter they would purchase all or any portion of the Certificates, and
include such revised Computational Materials and ABS Term Sheets (marked, "as
revised") in the materials delivered to the Depositor pursuant to subsection
(ii) above.
(iv) The Depositor shall not be obligated to file any Computational
Materials or ABS Term Sheets that have been determined to contain any material
error or omission, provided that, at the request of the related Underwriter, the
Depositor will file Computational Materials or ABS Term Sheets that contain a
material error or omission if clearly marked "superseded by materials dated
____________" and accompanied by corrected Computational Materials or ABS Term
Sheets that are marked, "material previously dated ___________ as corrected."
If, within the period during which the Prospectus relating to the Certificates
is required to be delivered under the 1933 Act, any Computational Materials or
ABS Term Sheets are determined, in the reasonable judgment of the Depositor or
the related Underwriter, to contain a material error or omission, the
Underwriter shall prepare a corrected version of such Computational Materials or
ABS Term Sheets, shall circulate such corrected Computational Materials or ABS
Term Sheets to all recipients of the prior versions thereof that either
indicated orally to the Underwriter they would purchase all or any portion of
the Certificates, or actually purchased all or any portion thereof, and shall
deliver copies of such corrected Computational Materials or ABS Term Sheets
(marked, "as corrected") to the Depositor for filing with the Commission in a
subsequent Form 8-K submission (subject to the Depositor's obtaining an
accountant's comfort letter in respect of such corrected Computational Materials
and ABS Term Sheets, which the parties acknowledge shall be at the expense of
the Mortgage Loan Sellers under each of the Mortgage Loan Purchase Agreements
between the related Mortgage Loan Seller and the Depositor, including in the
case of the RFC Mortgage Loans, under the RFC Mortgage Loan Purchase Agreement).
As of the date that either Underwriter disseminates any
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Computational Materials or ABS Term Sheets, such Underwriter shall not have any
knowledge or reason to believe that such Computational Materials or ABS Term
Sheets contained any material error or omission and each Underwriter agrees to
promptly notify the Depositor of any such material error or omission of which
such Underwriter becomes aware. Notwithstanding the foregoing, the Underwriters
make no representation or warranty as to whether any Computational Materials or
ABS Term Sheets (or any written or electronic materials furnished to prospective
investors on which the Computational Materials or ABS Term Sheets are based)
included or will include any inaccurate statement resulting directly from any
error contained in the final offering document information, preliminary offering
document information and computational information, each as defined in the
Indemnification Agreement.
(v) Each Underwriter shall be deemed to have represented, as of the
Closing Date, that, except for Computational Materials and ABS Term Sheets
provided to the Depositor pursuant to subsection (ii) above, such Underwriter
did not provide any prospective investors with any information in written or
electronic form in connection with the offering of the Certificates that is
required to be filed with the Commission in accordance with the No-Action
Letters, and each Underwriter shall provide the Depositor with a certification
to that effect on the Closing Date.
(vi) In the event of any delay in the delivery by either Underwriter
to the Depositor of Computational Materials and ABS Term Sheets required to be
delivered in accordance with subsection (ii) above, or in the delivery of the
accountant's comfort letter in respect thereof pursuant to Section 5(k), the
Depositor shall have the right to delay the release of the Prospectus to
investors or to the Underwriters, to delay the Closing Date and to take other
appropriate actions in each case as necessary in order to allow the Depositor to
comply with its agreement set forth in Section 5(k) to file the Computational
Materials and ABS Term Sheets by the time specified therein.
(d) Each Underwriter further represents and warrants that, if and to the
extent it has provided any prospective investors with any Computational
Materials or ABS Terms Sheets prior to the date hereof in connection with the
offering of the Certificates, all of the conditions set forth in subsection (c)
above have been satisfied with respect thereto.
SECTION 5. Covenants of the Depositor.
The Depositor covenants with each Underwriter as follows:
(a) The Depositor will give the Underwriters notice of its intention to
file or prepare (i) any amendment to the Registration Statement at any time
prior to the Closing Date or (ii) any amendment or supplement to the Prospectus
(including any revised prospectus that the Depositor proposes for use by the
Underwriters in connection with the offering of the Certificates and that
differs from the prospectus on file at the Commission at the time the
Registration Statement became effective, whether or not such revised prospectus
is required to be filed pursuant to Rule 424(b) of the 1933 Act Regulations) at
any time during the period when a prospectus relating to the Certificates is
required to be delivered under the 1933 Act, and the Depositor will furnish the
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Underwriters with copies of any such amendment or supplement a reasonable amount
of time prior to such proposed filing or use, as the case may be, and will not
file any such amendment or supplement or use any such prospectus to which the
Underwriters shall reasonably object.
(b) The Depositor will promptly give each Underwriter notice of (i) any
request by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information relating to the Certificates, (ii)
any written notification received by the Depositor of suspension of
qualification of the Certificates for sale in any jurisdiction or the initiation
or threatening of any proceeding for such purpose and (iii) the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the institution or, to the knowledge of the Depositor, threatening
of any proceeding for that purpose. The Depositor will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(c) The Depositor will cause the Prospectus to be transmitted to the
Commission for filing pursuant to Rule 424(b) under the 1933 Act by means
reasonably calculated to result in filing with the Commission pursuant to said
rule and, if necessary, within 15 days of the Closing Date, will transmit for
filing by means reasonably calculated to result in filing with the Commission a
report on Form 8-K for purposes of filing the Pooling and Servicing Agreement,
and will promptly advise each Underwriter when the Prospectus Supplement or Form
8-K, as applicable has been so filed.
(d) The Depositor will deliver to each Underwriter and counsel to each
Underwriter, without charge, a copy of the Registration Statement as originally
filed and of each amendment thereto prior to the date hereof (including exhibits
filed therewith or incorporated by reference therein).
(e) The Depositor will furnish to each Underwriter, from time to time
during the period when a prospectus relating to the Certificates is required to
be delivered under the 1933 Act, such number of copies of the Prospectus (as
amended or supplemented) as such Underwriter may reasonably request for the
purposes contemplated by the 1933 Act or the 1934 Act or the respective
applicable rules and regulations of the Commission thereunder.
(f) If, during the period after the first date of the public offering of
the Certificates in which a Prospectus relating to the Certificates is required
to be delivered under the 1933 Act, any event shall occur as a result of which
it is necessary to amend or supplement the Prospectus in order to make the
Prospectus not misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, the Depositor will forthwith amend or supplement
the Prospectus so that, as so amended or supplemented, the Prospectus will not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a purchaser, not
misleading, and the Depositor will furnish to each Underwriter a reasonable
number of copies of such amendment or supplement.
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(g) The Depositor will endeavor to arrange for the qualification of the
Certificates for sale under the applicable securities laws of such states and
other jurisdictions of the United States as the Underwriters may reasonably
designate and will maintain such qualification in effect so long as required for
the initial distribution of Certificates; provided, however, that the Depositor
shall not be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified or to file a general consent to service of
process in any jurisdiction.
(h) The Depositor will use the net proceeds received by it from the sale
of the Certificates in the manner specified in the Prospectus under "Use of
Proceeds".
(i) Whether or not the transactions contemplated in the Pooling and
Servicing Agreement are consummated or this Agreement is terminated, the
Depositor will pay or cause to be paid all expenses incident to the performance
of the obligations of the Depositor under this Agreement, including, without
limitation, (i) the fees, disbursements and expenses of the Depositor's counsel
in connection with the purchase of the Mortgage Loans and the issuance and sale
of the Certificates, (ii) all fees and expenses incurred in connection with the
registration and delivery of the Certificates under the 1933 Act, and all other
fees or expenses in connection with the preparation and filing of the
Registration Statement, any preliminary prospectus, the Prospectus and
amendments and supplements to any of the foregoing, including all printing costs
associated therewith, and the mailing and delivering of copies thereof to the
Underwriters and dealers, in the quantities hereinabove specified, (iii) all
costs and expenses related to the transfer and delivery of the Certificates to
the Underwriters, including any transfer or other taxes payable thereon, (iv)
the costs of printing or producing any "blue sky" memorandum in connection with
the offer and sale of the Certificates under state securities laws and all
expenses in connection with the qualification of the Certificates for the offer
and sale under state securities laws as provided in Section 6(b)(i)(I),
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection with such qualification and in connection with
the "blue sky" memorandum, (v) the cost of printing the Certificates, (vi) the
costs and charges of any transfer agent, registrar or depository, (vii) the fees
and expenses of the rating agencies incurred in connection with the issuance and
sale of the Certificates and (viii) all other costs and expenses incident to the
performance of the obligations of the Depositor hereunder for which provision is
not otherwise made in this Section.
Except as herein provided, the Underwriters shall be responsible for the
payment of all costs and expenses incurred by them, including, without
limitation, (i) the fees and disbursements of counsel of the Underwriters and
(ii) such additional costs arising out of any Computational Materials and ABS
Term Sheets prepared and/or distributed by the Underwriters, in connection with
the purchase and sale of the Certificates.
(j) So long as any Certificates are outstanding, upon request of an
Underwriter, the Depositor will, or will cause the Master Servicer or other
Special Servicer to, furnish to such Underwriter a copy of (i) the annual
statement of compliance delivered by the Master Servicer or the Special Servicer
to the Trustee under the Pooling and Servicing Agreement, (ii) the annual
independent public accountants' servicing report furnished to the Trustee
pursuant to the Pooling and Servicing Agreement, (iii) each report of the
Depositor regarding the Certificates filed with
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the Commission under the 1934 Act or mailed to the holders of the Certificates
and (iv) from time to time, such other information concerning the Certificates
which may be furnished by the Depositor, the Master Servicer or the Special
Servicer without undue expense and without violation of applicable law or the
Pooling and Servicing Agreement.
(k) The Depositor will file with the Commission within fifteen days of the
issuance of the Certificates a report on Form 8-K setting forth specific
information concerning the Certificates and the Mortgage Pool to the extent that
such information is not set forth in the Prospectus. The Depositor will also
file with the Commission a report on Form 8-K setting forth all Computational
Materials and ABS Term Sheets (as such terms are defined herein) provided to the
Depositor by either Underwriter and identified by it as such within the time
period allotted for such filing pursuant to the No-Action Letters; provided,
however, that prior to such filing of the Computational Materials and ABS Term
Sheets by the Depositor, such Underwriter must comply with its obligations
pursuant to Section 4 and the Depositor must receive a letter from KPMG Peat
Marwick, certified public accountants, satisfactory in form and substance to the
Depositor, to the effect that such accountants have performed certain specified
procedures, all of which have been agreed to by the Depositor, as a result of
which they have determined that the information included in the Computational
Materials and ABS Term Sheets (if any), provided by such Underwriter to the
Depositor for filing on Form 8-K pursuant to Section 4 and this subsection (k),
and that the accountants have examined in accordance with such agreed upon
procedures, is accurate except as to such matters that are not deemed by the
Depositor to be material. The Depositor shall file any corrected Computational
Materials or ABS Term Sheets described in Section 4(c)(iv) as soon as
practicable following receipt thereof.
SECTION 6. Conditions of Underwriters' Obligations.
Each Underwriter's obligation to purchase the Certificates allocated to it
as set forth on Schedule I hereto shall be subject to the accuracy in all
material respects of the representations and warranties on the part of the
Depositor contained herein as of the date hereof and as of the Closing Date, to
the performance by the Depositor in all material respects of its obligations
hereunder and to the following conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceedings for that purpose shall be
pending or, to the Depositor's knowledge, threatened by the Commission and the
Prospectus Supplement shall have been filed or transmitted for filing by means
reasonably calculated to result in a filing with the Commission pursuant to Rule
424(b) under the Act.
(b) On the Closing Date, such Underwriter shall have received:
(i) One or more opinions, dated the Closing Date, of counsel to the
Depositor, in form and substance satisfactory to such Underwriter, substantially
to the effect that:
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(A) The Depositor is a corporation in good standing under the
laws of the State of Missouri.
(B) The Depositor has corporate power and authority to enter
into and perform its obligations under this Agreement and the Pooling and
Servicing Agreement.
(C) Each of this Agreement and the Pooling and Servicing
Agreement has been duly authorized, executed and delivered by the
Depositor. Upon due authorization, execution and delivery by the other
parties thereto, the Pooling and Servicing Agreement will constitute a
valid, legal and binding agreement of the Depositor, enforceable against
the Depositor in accordance with its terms, except as enforceability may
be limited by (1) bankruptcy, insolvency, liquidation, receivership,
moratorium, reorganization or other similar laws affecting the enforcement
of the rights of creditors generally and (2) general principles of equity,
whether enforcement is sought in a proceeding in equity or at law.
(D) When the Certificates, together with the other
certificates issued under the Pooling and Servicing Agreement, have been
duly and validly authorized, executed, authenticated, issued and delivered
in accordance with the Pooling and Servicing Agreement and paid for in
accordance with this Agreement and the certificate purchase agreement of
even date herewith between the Depositor and the Underwriters with respect
to the sale of the privately offered certificates to the Underwriters and
the Pooling and Servicing Agreement, the Certificates will be validly
issued and outstanding and entitled to the benefits of the Pooling and
Servicing Agreement.
(E) The Registration Statement and any amendments thereto have
become effective under the 1933 Act and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act and not withdrawn, and no proceedings for
that purpose have been initiated or threatened by the Commission.
(F) At the time it became effective, the Registration
Statement and each amendment thereto (other than any financial or
statistical information included or incorporated by reference therein, as
to which no opinion need be rendered), and at the time filed with the
Commission, the Prospectus and each supplement thereto (other than any
financial or statistical information included or incorporated by reference
therein as to which no opinion need be rendered) complied as to form in
all material respects with the requirements of the 1933 Act and the 1933
Act Regulations.
(G) To such counsel's knowledge, there are no material
contracts, indentures, or other documents of the Depositor required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or
filed or incorporated by reference as exhibits thereto and other than any
documents required to be filed on Form 8-K within 15 days of the closing.
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(H) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
issuance and sale of the Certificates in the manner contemplated by the
Prospectus will not cause the Depositor or the Trust Fund to be subject to
registration or regulation as an "investment company" under the Investment
Company Act of 1940, as amended.
(I) No consent, approval, authorization, or order of any New
York, Missouri or federal court or governmental agency or body is required
for the consummation by the Depositor of the transactions contemplated
herein, except (1) such as have been obtained, (2) such as may be required
under the blue sky or real estate syndication laws of any jurisdiction in
connection with the purchase and sale of the Certificates by the
Underwriters, as to which no opinion need be expressed and (3) any
recordation of the assignments of the Mortgage Loans to the Trustee
pursuant to the Pooling and Servicing Agreement that has not yet been
completed.
(J) Neither the sale of the Certificates to the Underwriters
pursuant to this Agreement, nor the consummation by the Depositor of any
other of the transactions contemplated by, or the fulfillment by the
Depositor of the terms of, this Agreement or the Pooling and Servicing
Agreement, will conflict with or result in a breach or violation of any
term or provision of, or constitute a default (or an event which with the
passing of time or notification or both, would constitute a default)
under, (1) the articles of incorporation or by-laws of the Depositor or,
(2) to the knowledge of such counsel, any indenture or other agreement or
instrument to which the Depositor is a party or by which it is bound, or
(3) any New York, Missouri or federal statute or regulation applicable to
the Depositor or, (4) to the knowledge of such counsel, any order of any
New York, Missouri or federal court, regulatory body, administrative
agency or governmental body having jurisdiction over the Depositor except,
in the case of any of (2), (3) or (4), for any conflict, breach, violation
or default that, in the judgment of such counsel, is not reasonably likely
to materially and adversely affect the Depositor's ability to perform its
obligations under this Agreement or the Pooling and Servicing Agreement.
(K) The statements set forth in the Prospectus Supplement
under the headings "DESCRIPTION OF THE CERTIFICATES" AND "THE POOLING AND
SERVICING AGREEMENT", insofar as such statements purport to summarize
certain provisions of the Certificates and the Pooling and Servicing
Agreement, provide a fair summary of such provisions.
(ii) An opinion, dated the Closing Date, of counsel to the
Underwriters, reasonably acceptable to the Underwriters.
(iii) In giving their opinions required by the foregoing subsections
(i) and (ii) of this Section, counsel to the Depositor and the Underwriters,
respectively, shall in each case additionally state that nothing has come to
such counsel's attention that would lead it to believe that the Prospectus
(other than any financial statements and supporting schedules and statistical
and/or accounting information included therein, as to which such counsel need
not comment), as
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of the date thereof or as of the Closing Date, contained an untrue statement of
a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Such statement shall be based upon, among other things,
conferences and telephone conversations with representatives of the parties
hereto, the Mortgage Loan Sellers, the Master Servicer, the Special Servicer,
the Trustee and the Fiscal Agent and such statement may be qualified that, with
limited exception, such counsel will not have reviewed any loan documents.
(iv) Such opinion(s) may express its (their) reliance as to factual
matters on the representations and warranties made by, and on certificates or
other documents furnished by officers and/or authorized representatives of, the
parties to this Agreement and the Pooling and Servicing Agreement and on
certificates furnished by public officials. Such opinion(s) may assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the party on behalf of which such
opinion is being rendered. Such opinion(s) may be qualified as an opinion only
on the General Corporation Law of the State of Delaware (if applicable to an
Underwriter), the laws of the State of New York, the laws of the State of
Missouri (if applicable to the Depositor) and the federal law of the United
States. Such opinion(s) may contain such other assumptions and qualifications
reasonably satisfactory to the Underwriters as counsel to the Depositor or an
Underwriter, as applicable, customarily makes in similar types of opinions
relating to similar transactions.
(c) On the Closing Date, each Underwriter shall have received a favorable
opinion, dated the Closing Date, of special tax and ERISA counsel to the
Depositor (i) regarding the qualification of each of REMIC I, REMIC II and REMIC
III as a real estate mortgage investment conduit within the meaning of Sections
860A through 860G of the Internal Revenue Code of 1986 and (ii) to the effect
that the statements in the Base Prospectus and the Prospectus Supplement under
the headings "Material Federal Income Tax Consequences" and "ERISA
Considerations", to the extent that they constitute matters of state or federal
law or legal conclusions with respect thereto, while not purporting to discuss
all possible consequences of investment in the Certificates, are correct in all
material respects with respect to those consequences or matters that are
discussed therein. Such opinion(s) may express its (their) reliance as to
factual matters on the representations and warranties made by, and on
certificates or other documents furnished by officers and/or authorized
representatives of, the parties to this Agreement and the Pooling and Servicing
Agreement and on certificates furnished by public officials. Such opinion(s) may
assume the due authorization, execution and delivery of the instruments and
documents referred to therein by the parties thereto other than the party on
behalf of which such opinion is being rendered. Such opinion(s) may be qualified
as an opinion only on the federal tax and ERISA law of the United States. Such
opinion(s) may contain such other assumptions and qualifications reasonably
satisfactory to the Underwriters as such counsel customarily makes in similar
types of opinions relating to similar transactions.
(d) The Depositor shall have delivered to each Underwriter a certificate,
dated the Closing Date, of the President, an Executive Vice President or other
Vice President on behalf of the Depositor to the effect that the signer of such
certificate has examined, or has relied upon an examination conducted by
appropriate persons authorized by him or her of, this Agreement, the
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Prospectus, the Pooling and Servicing Agreement and various other closing
documents, and that, to the best of his or her knowledge after reasonable
investigation:
(i) the representations and warranties of the Depositor in this
Agreement and the Pooling and Servicing Agreement are true and correct in all
material respects;
(ii) the Depositor has, in all material respects, complied with all
the agreements and satisfied all the conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(iii) since the date of its respective Mortgage Loan Purchase
Agreement, there has been no material adverse change in the financial condition
of the Depositor;
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or threatened by the Commission; and
(v) nothing has come to the attention of such person that would lead
the signer to believe that the Prospectus (other than any Computational
Materials or ABS Term Sheets incorporated therein by reference) contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(e) Each Mortgage Loan Seller shall have delivered to each Underwriter a
certificate, dated the Closing Date, of the President, a Senior or Executive
Vice President or other Vice President on its behalf to the effect that the
signer of such certificate has examined, or has relied upon an examination
conducted by appropriate persons authorized by him or her of, the Prospectus,
the Pooling and Servicing Agreement, the respective Mortgage Loan Purchase
Agreement, and various other closing documents, and that, to the best of his or
her knowledge after reasonable investigation:
(i) the representations and warranties of Mortgage Loan Seller in
the respective Mortgage Loan Purchase Agreement are true and correct in all
material respects;
(ii) Mortgage Loan Seller has, in all material respects, complied
with all the agreements and satisfied all the conditions on their part to be
performed or satisfied under the Mortgage Loan Purchase Agreement at or prior to
the Closing Date; and
(iii) since the date of this Agreement, there has been no material
adverse change in the financial condition of Mortgage Loan Seller.
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(f) The Depositor and each Underwriter shall have received from KPMG Peat
Marwick, certified public accountants, a letter dated the Closing Date, in form
and substance satisfactory to the Depositor and each Underwriter, stating in
effect that:
(i) they have performed certain specified procedures, as a result of
which they have determined that certain information of an accounting, financial
or statistical nature set forth in the Prospectus Supplement agrees with the
data sheet or computer tape prepared by or on behalf of each Mortgage Loan
Seller, unless otherwise noted in such letter; and
(ii) they have compared the data contained in the data sheet or
computer tape of MSMC and RFC referred to in the immediately preceding clause
(i) to information contained in the Mortgage Loan files and in such other
sources as shall be specified by them, and found such data and information to be
in agreement unless otherwise noted in such letter.
(g) The Depositor and each Underwriter shall have received from Ernst and
Young, certified public accountants, a letter dated the Closing Date, in form
and substance satisfactory to the Depositor and each Underwriter, stating in
effect that:
(i) they have compared the data contained in the data sheet or
computer tape of Midland and PNC to information contained in the Mortgage Loan
files of Midland and PNC and in such other sources as shall be specified by
them, and found such data and information to be in agreement unless otherwise
noted in such letter.
(h) Each Underwriter shall have received, with respect to each of the
Master Servicer, the Special Servicer, the Fiscal Agent and the Trustee, a
favorable opinion of counsel, dated the Closing Date, addressing the valid
existence of such party under the laws of the jurisdiction of its organization,
the due authorization, execution and delivery of the Pooling and Servicing
Agreement by such party, (subject to the same limitations as set forth in
Section 6(b)(i)(c)) the enforceability of the Pooling and Servicing Agreement
against such party and such other opinions as shall be reasonably requested by
such Underwriter. Such opinion may express its reliance as to factual matters on
representations and warranties made by, and on certificates or other documents
furnished by, officers and/or authorized representatives of parties to, the
Pooling and Servicing Agreement and on certificates furnished by public
officials. Such opinion may assume the due authorization, execution and delivery
of the instruments and documents referred to therein by the parties thereto
other than the party on behalf of which such opinion is being rendered. Such
opinion may contain such other assumptions and qualifications reasonably
satisfactory to the Underwriters as counsel to such party customarily makes in
similar types of opinions relating to similar transactions.
(i) Subsequent to the date hereof, there shall not have occurred any
change, or any development involving a prospective change, in or affecting the
business or properties of the Depositor or a Seller which such Underwriter
concludes, in the reasonable judgment of such Underwriter, materially impairs
the investment quality of the Certificates so as to make it
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impractical or inadvisable to proceed with the public offering or the delivery
of the Certificates as contemplated by the Prospectus.
(j) The Sellers shall have sold the Mortgage Loans to the Depositor
pursuant to the Mortgage Loan Purchase Agreements.
(k) The Certificates shall have been assigned ratings no less than those
set forth on Schedule I and such ratings shall not have been withdrawn,
suspended or qualified.
(l) The Depositor shall have furnished to the Underwriters such further
information, certificates and documents as the Underwriters may reasonably have
requested, and all proceedings in connection with the transactions contemplated
by this Agreement and all documents incident hereto shall be in all material
respects reasonably satisfactory in form and substance to the Underwriters and
their counsel.
SECTION 7. Indemnification.
(a) MLS and the Depositor shall indemnify and hold harmless each
Underwriter, its directors and officers and each person, if any, who controls
such Underwriter within the meaning of either Section 15 of the 1933 Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
from and against any and all expenses, losses, claims, damages and other
liabilities (including without limitation the reasonable costs of investigation
and legal defense) (the "Liabilities") to the extent caused by any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, the Preliminary Prospectus or the Prospectus or any
omission or alleged omission to state therein a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, insofar as the Liabilities are caused by
any such untrue statement or omission or alleged untrue statement or omission
with respect to any information in the Prospectus as to which such Underwriter
has agreed to indemnify the Depositor pursuant to Section 7(b), MLS and the
Depositor shall have no obligation to so indemnify and hold harmless.
(b) Each Underwriter shall, severally and not jointly, indemnify and hold
harmless the Depositor and MLS, their respective directors and officers who sign
the Registration Statement and each person, if any, who controls the Depositor
within the meaning of either Section 15 of the 1933 Act or Section 20 of the
1934 Act against any and all Liabilities, but only with respect to (i) untrue
statements or alleged untrue statements, or omissions or alleged omissions to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, in the Underwriter
Information, (ii) any Liabilities arising out of or relating to claims asserted
by any person who purchased Certificates that are the subject thereof if such
person did not receive a copy of the Prospectus with the confirmation of the
sale of such Certificates to such person in any case where the untrue statement
or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact contained in the Preliminary Prospectus was
corrected in the Prospectus and the Prospectus was furnished to such
Underwriter, and (iii) untrue statements or alleged untrue statements, or
omissions or alleged omissions to state a material fact necessary to make the
statements therein, in light of the
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circumstances under which they were made, not misleading, in the Computational
Materials or ABS Term Sheets delivered to purchasers of the Certificates by such
Underwriter, to the extent that such Computational Materials and ABS Term Sheets
were prepared by such Underwriter and incorporated by reference into the
Registration Statement or the Prospectus as a result of any filing pursuant to
Section 5(k); provided, however, that such Computational Materials shall not
include any Computational Information (as defined in the Indemnification
Agreements) or any errors in the mathematical calculations reflected in such
Computational Materials to the extent such errors result from such Computational
Information; and provided, further, that any such omission or alleged omission
relating to the Computational Materials shall be determined by reading such
Computational Materials in conjunction with the Prospectus as an integral
document and in light of the circumstances under which such statements in the
Computational Materials and the Prospectus were made.
(c) Each indemnified party shall give notice in writing as promptly as
reasonably practicable to each indemnifying party of any action commenced
against it in respect of which indemnity may be sought hereunder, but failure to
so notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have otherwise than on account of this Agreement.
Upon request of the indemnified party, the indemnifying party shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding as incurred. If any action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party may participate at its own expense in the defense of any such
action. To the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from the
indemnified party, the indemnifying party may elect to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party. In any
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have agreed to the retention of such counsel, (ii) the named parties
to any such proceeding (including any impleaded parties) include both the
indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them or (iii) the indemnifying party shall have failed to
designate within a reasonable period of time counsel reasonably satisfactory to
the indemnified party (in which case the fees and expenses shall be paid as
incurred by the indemnifying party). In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in addition to any
local counsel) separate from their own counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
An indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent. However, if settled with such consent or
if there be a final judgment for the plaintiff, the indemnifying party shall
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel for which the
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indemnifying party is obligated under this subsection, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. If an
indemnifying party assumes the defense of any proceeding, it shall be entitled
to settle such proceeding with the consent of the indemnified party or, if such
settlement provides for an unconditional release of the indemnified party in
connection with all matters relating to the proceeding that have been asserted
against the indemnified party in such proceeding by the other parties to such
settlement, without the consent of the indemnified party.
(d) If the indemnification provided for in this Section 7 is due in
accordance with its terms but is for any reason held by a court to be
unavailable to an indemnified party under subsection (a) or (b) on grounds of
public policy or otherwise, then the indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits received
by the Depositor on the one hand and the Underwriters on the other from the
offer and sale of the Certificates pursuant hereto or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Depositor on the one
hand and of the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages or other liabilities,
as well as any other relevant equitable considerations. The relative benefits
received by the Depositor on the one hand, and the Underwriters on the other, in
connection with the offering of the Certificates shall be deemed to be in the
same respective proportions that the total net proceeds from the sale of the
Certificates (before deducting expenses) received by the Depositor and the total
underwriting discounts and commissions received by the Underwriters in
connection with the offering of the Certificates, bear to the aggregate offering
price of the Certificates. The relative fault of the Depositor on the one hand
and of such Underwriter on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Depositor or by such Underwriter, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
(e) The parties hereto agree that it would not be just and equitable if
contribution were determined by pro rata allocation or by any other method of
allocation that does not take account of the considerations referred to in
subsection (d) above. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or other liabilities referred to in this
Section 7 shall be deemed to include any legal fees and disbursements or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such claim. In the event that any expenses so
paid by the indemnifying party are subsequently determined to not be required to
be borne by the indemnifying party hereunder, the party which received such
payment shall promptly refund the amount so paid to the party which made such
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payment. Notwithstanding the provisions of this Section 7, such Underwriter
shall not be required to contribute any amount in excess of the amount by which
the total underwriting discounts and commissions received by such Underwriter in
connection with the offering of the Certificates exceeds the amount of damages
that such Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 7 are not exclusive and shall not limit any rights or remedies that may
otherwise be available to any indemnified party at law or in equity.
(f) The indemnity and contribution agreements contained in this Section 7
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by the Depositor,
either Underwriter, any of their respective directors or officers, or any person
controlling the Depositor or such Underwriter, and (iii) acceptance of and
payment for any of the Certificates.
(g) The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the respective amount of
Certificates they have purchased hereunder, and not joint.
(h) Each Underwriter will indemnify and hold harmless the other
Underwriter and each person, if any, who controls such Underwriter within the
meaning of either the 1933 Act or the 1934 Act (the "Non-Indemnifying
Underwriter") from and against any and all losses, claims, damages or
liabilities, joint or several, to which the Non-Indemnifying Underwriter becomes
subject under the 1933 Act, the 1934 Act or other federal or state statutory law
or regulation, common law or otherwise, insofar as such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement of material fact contained in any computational or
other written materials developed by, mailed or otherwise transmitted by such
Indemnifying Underwriter, or any member of its selling group, in connection with
the Certificates or in any revision or amendment thereof or supplement thereto
or (ii) the failure of such Indemnifying Underwriter, or any member of its
selling group, to comply with any provision of Section 9, and agrees to
reimburse such Non-Indemnifying Underwriter, as incurred for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. This agreement will
be in addition to any liability that any Underwriter may otherwise have.
SECTION 8. Representations and Warranties to Survive Delivery.
All representations and warranties of the Depositor contained in this
Agreement shall remain operative and in full force and effect, regardless of any
termination of this Agreement or any investigation made by or on behalf of
either Underwriter or any controlling person in respect of such Underwriter, and
shall survive delivery of the Certificates to the Underwriters.
21
<PAGE>
SECTION 9. Defaulting Underwriter. If, on the Closing Date, one of the
Underwriters shall fail or refuse to purchase Certificates that it has agreed to
purchase hereunder on such date, and the aggregate principal amount of
Certificates which such defaulting Underwriter agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of
Certificates to be purchased on such date, the other Underwriter shall be
obligated to purchase the Certificates which such defaulting Underwriter agreed
but failed or refused to purchase on such date; provided that in no event shall
the principal amount of Certificates that any Underwriter has agreed to purchase
pursuant to Section 3 be increased pursuant to this Section 9 by an amount in
excess of one-ninth of such principal amount of Certificates, without the
written consent of such Underwriter.
If, on the Closing Date, one of the Underwriters shall fail or refuse to
purchase Certificates that it has agreed to purchase hereunder on such date and
the aggregate principal amount of Certificates with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Certificates to be purchased on such date and arrangements satisfactory to the
non-defaulting Underwriter and the Depositor for the purchase of such
Certificates are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Underwriter
or of the Depositor. In any such case either such non-defaulting Underwriter or
the Depositor shall have the right to postpone the Closing Date, but in no event
for longer than seven days, in order that the required changes, if any, in the
Prospectus or in any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
SECTION 10. Termination of Agreement.
(a) Either Underwriter may terminate its obligations under this Agreement,
by notice to the Depositor, at any time at or prior to the Closing Date if the
sale of the Certificates provided for herein is not consummated because of any
failure or refusal on the part of the Depositor to comply with the terms or to
fulfill any of the conditions of this Agreement, or if for any reason the
Depositor shall be unable to perform its obligations under this Agreement.
(b) Either Underwriter may terminate its obligations under this Agreement
in the absolute discretion of such Underwriter, by notice given to the
Depositor, if (A) after the execution and delivery of this Agreement and prior
to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Depositor or Sellers or their respective affiliates shall have been suspended on
any exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or State of New York authorities, or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of such Underwriter, is material and
adverse and (B) in the case of any of the events specified in clauses (A)(i)
through (iv) above, such event singly or together with any other such
22
<PAGE>
event, makes it, in the judgment of such Underwriter, impracticable to market
the Certificates on the terms and in the manner contemplated in the Prospectus.
(c) If either Underwriter terminates its obligations under this Agreement
in accordance with Section 10(a), the Depositor shall reimburse such Underwriter
for all reasonable out-of pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by such Underwriter in
connection with this Agreement or the proposed purchase and sale of the
Certificates.
SECTION 11. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed duly given if sent by facsimile or delivered by courier, in
either case with appropriate confirmation of receipt. Notices to Morgan Stanley
& Co. Incorporated shall be directed to Morgan Stanley & Co. Incorporated, 1585
Broadway, New York, New York 10036, Attention: Andrew Berman; to Residential
Funding Securities Corporation shall be directed to Residential Funding
Securities Corporation, 8400 Normandale Lake Blvd., Suite 600, Minneapolis,
Minnesota 55437; to the Depositor shall be directed to Commercial Mortgage
Acceptance Corp., 210 West 10th Street, 6th Floor, Kansas City, Missouri 64105;
to MLS shall be directed to Midland Loan Services, Inc., 210 West 10th Street,
6th Floor, Kansas City, Missouri 64105; and as to any party, to such other
address as may hereafter be furnished by such party to the others in writing.
SECTION 12. Parties.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters and the Depositor and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person or entity, other than the Underwriters and the Depositor and
their respective successors and the controlling persons and officers and
directors referred to in Sections 7 and 8 and their respective successors, heirs
and legal representatives, any legal or equitable right, remedy or claim under
or in respect of this Agreement or any provision herein contained. This
Agreement and all conditions and provisions hereof are intended to be for the
sole and exclusive benefit of the Underwriters and the Depositor and their
respective successors, and said controlling persons and officers and directors
and their respective successors, heirs and legal representatives, and for the
benefit of no other person or entity. No purchaser of Certificates from the
Underwriters shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State.
23
<PAGE>
SECTION 14. Miscellaneous.
This Agreement supersedes all prior or contemporaneous agreements and
understandings relating to the subject matter hereof. Neither this Agreement nor
any term hereof may be amended, waived, discharged or terminated except by a
writing signed by the party against whom enforcement of such amendment, waiver,
discharge or termination is sought. This Agreement may be signed in any number
of duplicate originals, each of which shall be deemed an original, which taken
together shall constitute one and the same instrument.
24
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Depositor a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement between the Underwriter and the Depositor in accordance with its
terms.
Very truly yours,
COMMERCIAL MORTGAGE
ACCEPTANCE CORP.
By: /s/ Clarence A. Krantz
----------------------------------
Name: Clarence A. Krantz
Title: Executive Vice President
MIDLAND LOAN SERVICES, INC.
By: /s/ Leon E. Bergman
----------------------------------
Name: Leon E. Bergman
Title: Executive Vice President
CONFIRMED AND ACCEPTED, as of the date first above written:
MORGAN STANLEY & CO. INCORPORATED
By: /s/ Andrew Berman
------------------------------
Name: Andrew Berman
Title: Vice President
RESIDENTIAL FUNDING SECURITIES CORPORATION
By: /s/ David Soltau
------------------------------
Name: David Soltau
Title: Director
25
<PAGE>
EXHIBIT A
FORM OF LEGEND TO
COMPUTATIONAL MATERIALS AND ABS TERM SHEETS
THE SECURITIES DESCRIBED HEREIN ARE OFFERED ONLY PURSUANT TO A DEFINITIVE
PROSPECTUS SUPPLEMENT AND PROSPECTUS AND PROSPECTIVE INVESTORS WHO CONSIDER
PURCHASING ANY SUCH SECURITIES SHOULD MAKE THEIR INVESTMENT DECISION BASED ONLY
UPON THE INFORMATION PROVIDED THEREIN. CAPITALIZED TERMS USED BUT NOT DEFINED
HEREIN HAVE THE MEANINGS GIVEN TO SUCH TERMS IN THE PROSPECTUS SUPPLEMENT.
26
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1
Commercial Mortgage Acceptance Corp. Commercial Mortgage Pass-Through Certificates, Series 1998-C1,
Class A1, Class A2, Class X, Class B, Class C, Class D and Class E
- --------------------------------------------------------------------------------------------------------------
Underwriter Amount of Certificates to be Class of Certificates to be
Purchased Purchased
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Morgan Stanley & Co. Incorporated $252,000,000 Class A1
- --------------------------------------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated $506,412,000 Class A2
- --------------------------------------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated $1,192,237,749.07 Class X
- --------------------------------------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated $59,611,000 Class B
- --------------------------------------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated $59,612,000 Class C
- --------------------------------------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated $62,593,000 Class D
- --------------------------------------------------------------------------------------------------------------
Morgan Stanley & Co. Incorporated $20,862,000 Class E
- --------------------------------------------------------------------------------------------------------------
Residential Funding Securities $25,000,000 Class A1
Corporation
- --------------------------------------------------------------------------------------------------------------
Residential Funding Securities $75,000,000 Class A2
Corporation
- --------------------------------------------------------------------------------------------------------------
Total $1,061,090,000
- --------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE 1 (CONTINUED)
- --------------------------------------------------------------------------------------------------------------
Initial Aggregate
Principal (or, in the case of
Class Class X Initial
Designation Certificates, Notional Pass-Through Purchase
Amount of Class)<F1> Rate Price<F2> Rating<F3>
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
A1 $277,000,000 6.23% 100.4882% AAA/Aaa
- --------------------------------------------------------------------------------------------------------------
A2 $581,412,000 6.49% 101.4926% AAA/Aaa
- --------------------------------------------------------------------------------------------------------------
X $1,192,237,749.07 1.10227% 5.9668% AAAr/Aaa
- --------------------------------------------------------------------------------------------------------------
B $59,611,000 6.60% 101.4606% AA/Aa2
- --------------------------------------------------------------------------------------------------------------
C $59,612,000 6.76% 101.4755% A/A2
- --------------------------------------------------------------------------------------------------------------
D $62,593,000 7.15% 101.4648% BBB/Baa2
- --------------------------------------------------------------------------------------------------------------
E $20,862,000 7.49317% 100.5025% BBB-/Baa3
- --------------------------------------------------------------------------------------------------------------
<FN>
- --------
<F1> Subject to a variance of plus or minus 5.0%
<F2> Expressed as a percentage of the aggregate stated or notional amount,
as applicable, of the relevant class of Certificates to be purchased.
The purchase price for each class of the Certificates will include
accrued interest at the initial Pass-Through Rate therefor on the
aggregate stated or notional amount, as applicable, thereof to be
purchased from the Cut-Off Date to but not including the Closing Date.
<F3> By each of Standard & Poor's and Moody's.
</FN>
</TABLE>
COMMERCIAL MORTGAGE ACCEPTANCE CORP.,
DEPOSITOR
MIDLAND LOAN SERVICES, INC.,
MASTER SERVICER
MIDLAND LOAN SERVICES, INC.,
SPECIAL SERVICER
LASALLE NATIONAL BANK,
TRUSTEE
and
ABN AMRO BANK N.V.,
FISCAL AGENT
POOLING AND SERVICING AGREEMENT
Dated as of July 1, 1998
Commercial Mortgage Pass-Through Certificates
Series 1998-C1
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms ................................................5
SECTION 1.2. Certain Calculations ........................................48
SECTION 1.3. Certain Constructions .......................................48
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1. Conveyance and Assignment of Mortgage Loans .................49
SECTION 2.2. Acceptance by the Custodian and the Trustee .................53
SECTION 2.3. Seller's Repurchase of Mortgage Loans for Document
Defaults and Breaches of Representations and Warranties. ....54
SECTION 2.4. Representations and Warranties of the Depositor .............56
SECTION 2.5. Representations, Warranties and Covenants of the Master
Servicer and the Special Servicer ...........................58
SECTION 2.6. Execution and Delivery of Certificates; Issuance of REMIC
I Regular Interests and REMIC II Regular Interests ..........61
SECTION 2.7. Documents Not Delivered to Custodian. .......................62
ARTICLE III
ADMINISTRATION AND SERVICING
SECTION 3.1. Master Servicer to Act as Master Servicer; Special
Servicer to Act as Special Servicer; Administration of the
Mortgage Loans ..............................................62
SECTION 3.2 Sub-Servicing ...............................................64
SECTION 3.3. Collection of Certain Mortgage Loan Payments ................65
SECTION 3.4. Collection of Taxes, Assessments and Similar Items ..........66
SECTION 3.5. Collection Account; Distribution Account ....................67
SECTION 3.6. Permitted Withdrawals from the Collection Account ...........69
SECTION 3.7. Investment of Funds in the Collection Account, the Grantor
Trust Collection Account, the Distribution Account and the
Reserve Accounts............................................ 71
i
<PAGE>
SECTION 3.8. Maintenance of Insurance Policies and Errors and Omissions
and Fidelity Coverage .......................................73
SECTION 3.9. Enforcement of Due-On-Sale Clauses; Assumption Agreements ...76
SECTION 3.10. Realization Upon Mortgage Loans .............................78
SECTION 3.11. Trustee to Cooperate; Release of Mortgage Files .............81
SECTION 3.12. Servicing Compensation ......................................82
SECTION 3.13. Reports to the Trustee; Collection Account Statements .......84
SECTION 3.14. Annual Statement as to Compliance ...........................84
SECTION 3.15. Annual Independent Public Accountants' Servicing Report .....85
SECTION 3.16. Access to Certain Documentation .............................85
SECTION 3.17. Title and Management of REO Properties ......................86
SECTION 3.18. Sale of Specially Serviced Mortgage Loans and REO
Properties ..................................................90
SECTION 3.19. Inspections .................................................93
SECTION 3.20. Available Information and Notices ...........................93
SECTION 3.21. Reserve Accounts ............................................95
SECTION 3.22. Servicing Advances ..........................................95
SECTION 3.23. Appraisal Reductions ........................................96
SECTION 3.24. Transfer of Servicing Between Master Servicer and Special
Servicer; Record Keeping ....................................96
SECTION 3.25. Adjustment of Servicing Compensation in Respect of
Prepayment Interest Shortfalls ..............................98
SECTION 3.26. Operating Advisor; Elections ................................99
SECTION 3.27. Appointment of Special Servicer; Duties of Operating
Adviser ....................................................100
SECTION 3.28. Modifications, Waivers, Amendments, Extensions and
Consents ...................................................102
ARTICLE IV
DISTRIBUTIONS TO CERTIFICATEHOLDERS
SECTION 4.1. Distributions of REMIC I ...................................104
SECTION 4.2 Distributions of REMIC II ..................................105
SECTION 4.3. Distributions of REMIC III ................................ 106
SECTION 4.2. Statements to Rating Agencies and Certificateholders;
Available Information ......................................112
SECTION 4.5. Remittances; P&I Advances ..................................115
SECTION 4.6. Allocation of Realized Losses and Expense Losses ...........117
ii
<PAGE>
SECTION 4.7. Distributions on the Grantor Trust. ........................118
SECTION 4.8. Distributions in General ...................................118
SECTION 4.9. Compliance with Withholding Requirements ...................119
ARTICLE V
THE CERTIFICATES
SECTION 5.1 The Certificates ...........................................120
SECTION 5.2. Registration, Transfer and Exchange of Certificates ........122
SECTION 5.3. Book-Entry Certificates ....................................126
SECTION 5.4. Mutilated, Destroyed, Lost or Stolen Certificates ..........127
SECTION 5.5. Appointment of Paying Agent ................................128
SECTION 5.6. Access to Certificateholders' Names and Addresses ..........128
SECTION 5.7. Actions of Certificateholders ..............................129
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SPECIAL SERVICER
SECTION 6.1. Liability of the Depositor, the Master Servicer and the
Special Servicer........................................... 129
SECTION 6.2. Merger or Consolidation of the Master Servicer and Special
Servicer ...................................................130
SECTION 6.3. Limitation on Liability of the Depositor, the Master
Servicer and Others........................................ 130
SECTION 6.4. Limitation on Resignation of the Master Servicer and of
the Special Servicer .......................................131
SECTION 6.5. Rights of the Depositor and the Trustee in Respect of the
Master Servicer and the Special Servicer ...................132
ARTICLE VII
DEFAULT
SECTION 7.1. Events of Default ..........................................132
SECTION 7.2. Trustee to Act; Appointment of Successor ...................135
SECTION 7.3. Notification to Certificateholders .........................136
SECTION 7.4. Other Remedies of Trustee ..................................136
SECTION 7.5. Waiver of Past Events of Default; Termination ..............137
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1. Duties of Trustee ..........................................137
iii
<PAGE>
SECTION 8.2. Certain Matters Affecting the Trustee ......................139
SECTION 8.3. Trustee Not Liable for Certificates or Mortgage Loans ......140
SECTION 8.4. Trustee May Own Certificates ...............................142
SECTION 8.5. Payment of Trustee Fees and Expenses; Indemnification ......142
SECTION 8.6. Eligibility Requirements for Trustee .......................143
SECTION 8.7. Resignation and Removal of the Trustee .....................144
SECTION 8.8. Successor Trustee ..........................................145
SECTION 8.9. Merger or Consolidation of Trustee .........................146
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee ..............146
SECTION 8.11. Authenticating Agent .......................................148
SECTION 8.12. Appointment of Custodians ..................................148
SECTION 8.13. Fiscal Agent Appointed; Concerning the Fiscal Agent ........149
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust .......................................150
SECTION 9.2. Procedure Upon Termination of Trust ........................151
SECTION 9.3. Additional Trust Termination Requirements ..................152
ARTICLE X
REMIC ADMINISTRATION; GRANTOR TRUST
SECTION 10.1. REMIC Election .............................................153
SECTION 10.2 REMIC Compliance ...........................................154
SECTION 10.3. Imposition of Tax on the Trust Fund ........................156
SECTION 10.4. Prohibited Transactions and Activities. ....................157
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Counterparts ...............................................158
SECTION 11.2. Limitation on Rights of Certificateholders .................158
SECTION 11.3. Governing Law ..............................................159
SECTION 11.4. Notices ....................................................159
SECTION 11.5. Severability of Provisions .................................161
SECTION 11.6. Notice to the Depositor, the Operating Adviser and Each
Rating Agency.............................................. 161
iv
<PAGE>
SECTION 11.7. Amendment ..................................................162
SECTION 11.8. Confirmation of Intent .....................................165
v
<PAGE>
EXHIBITS
Exhibit A-1 Form of Class A-1 Certificate
Exhibit A-2 Form of Class A-2 Certificate
Exhibit A-3 Form of Class X Certificate
Exhibit A-4 Form of Class B Certificate
Exhibit A-5 Form of Class C Certificate
Exhibit A-6 Form of Class D Certificate
Exhibit A-7 Form of Class E Certificate
Exhibit A-8 Form of Class F Certificate
Exhibit A-9 Form of Class G Certificate
Exhibit A-10 Form of Class H Certificate
Exhibit A-11 Form of Class J Certificate
Exhibit A-12 Form of Class K Certificate
Exhibit A-13 Form of Class L Certificate
Exhibit A-14 Form of Class M Certificate
Exhibit A-15 Form of Class N Certificate
Exhibit A-16 Form of Class V Certificate
Exhibit A-17 Form of Class R-I Certificate
Exhibit A-18 Form of Class R-II Certificate
Exhibit A-19 Form of Class R-III Certificate
Exhibit B Mortgage Loan Schedule
Exhibit C-1 Form of Transferee Affidavit
Exhibit C-2 Form of Transferor Letter
Exhibit D-1 Form of Investment Representation Letter
Exhibit D-2 Form of ERISA Representation Letter
Exhibit E Form of Request for Release
Exhibit F Form of Custodial Agreement
Exhibit G Form of Midland Mortgage Loan Purchase Agreement
Exhibit H Form of MSMC Mortgage Loan Purchase Agreement
Exhibit I Form of PNC Mortgage Loan Purchase Agreement
Exhibit J Form of RFC Mortgage Loan Purchase Agreement
Exhibit K Privately Placed Securities Legend
Exhibit L Form of Monthly Distribution Statement
vi
<PAGE>
Pooling and Servicing Agreement, dated as of July 1, 1998 among
Commercial Mortgage Acceptance Corp., as Depositor, Midland Loan Services, Inc.,
as Master Servicer and Special Servicer, LaSalle National Bank, as Trustee, and
ABN AMRO Bank N.V. as Fiscal Agent.
PRELIMINARY STATEMENT:
(Terms used but not defined in this Preliminary Statement shall have the
meanings specified in Article I)
The Depositor intends to sell pass-through certificates to be issued
hereunder in multiple classes which in the aggregate will evidence the entire
beneficial ownership interest in the Trust Fund consisting primarily of the
Mortgage Loans. On the Closing Date, the Depositor will acquire (i) the REMIC I
Regular Interests and the Class R-I Certificates as consideration for its
transfer to the Trust Fund of the Mortgage Loans and the other property
constituting the Trust Fund (excluding the Contingent Interest, the Grantor
Trust Collection Account and the Grantor Trust Distribution Account) described
in the definition of "REMIC I"; (ii) the REMIC II Regular Interests and the
Class R-II Certificates as consideration for its transfer of the REMIC I Regular
Interests to the Trust Fund; (iii) the REMIC III Certificates as consideration
for its transfer of the REMIC II Regular Interests to the Trust Fund; and (iv)
the interest of the Class A-1, Class X and Class V Certificates in the Grantor
Trust as consideration for its transfer of the Contingent Interest to the Trust
Fund. The Depositor has duly authorized the execution and delivery of this
Agreement to provide for the foregoing and (i) the issuance of (a) the REMIC I
Regular Interests and the Class R-I Certificates representing in the aggregate
the entire beneficial ownership of REMIC I, (b) the REMIC II Regular Interests
and the Class R-II Certificates representing in the aggregate the entire
beneficial ownership of REMIC II and (c) the REMIC III Certificates representing
in the aggregate the entire beneficial ownership of REMIC III and (ii) the
creation of the Grantor Trust and the issuance of the Class V Certificates.
REMIC I
As provided herein, the Trustee will make the election described in
Section 10.1 hereof for the segregated pool of assets consisting of the Mortgage
Loans and certain related assets (excluding the Contingent Interest, the Grantor
Trust Collection Account and the Grantor Trust Distribution Account) to be
treated for federal income tax purposes as a real estate mortgage investment
conduit (a "REMIC" and, such particular segregated pool of assets, "REMIC I").
The REMIC I Regular Interests will be designated as the "regular interests" in
REMIC I and the Class R-I Certificates will be designated as the sole class of
"residual interests" in REMIC I.
A separate uncertificated REMIC I Regular Interest will be issued with respect
to each Mortgage Loan. Each REMIC I Regular Interest will represent the right to
receive principal corresponding to the initial Stated Principal Balance of a
related Mortgage Loan and interest thereon at a remittance rate (the "REMIC I
Remittance Rate") equal to the Net Mortgage Rate of the related Mortgage Loan in
effect as of the Closing Date. For purposes of Treasury Regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each REMIC I
Regular Interest shall
1
<PAGE>
be the Rated Final Distribution Date. The Class R-I Certificates will represent
the sole class of residual interests in REMIC I for purposes of the REMIC
Provisions and will have no principal balances and no remittance rate, but will
be entitled to receive on each Distribution Date any portion of the Available
Funds for such Distribution Date not otherwise deemed distributed on the REMIC I
Regular Interests.
REMIC II
As provided herein, the Trustee will make the election described in
Section 10.1 hereof for the segregated pool of assets consisting of the REMIC I
Regular Interests to be treated for federal income tax purposes as a separate
REMIC (such particular pool of assets, "REMIC II"). The REMIC II Regular
Interests will be designated as representing the "regular interests" in REMIC II
and the Class R-II Certificates will be designated as representing the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
Fifteen separate uncertificated classes of REMIC II Regular Interests
will be issued and are designated as the "regular interests" in REMIC II. The
following table irrevocably sets forth the designation and initial
Uncertificated Principal Balance for each REMIC II Regular Interest. The initial
Uncertificated Principal Balances, the Uncertificated Principal Balances as of
any date subsequent to the first Distribution Date, and the REMIC II Remittance
Rates, for each Class of REMIC II Regular Interests shall be derived from the
Certificate Balances and Pass-Through Rates on the Classes of REMIC III Regular
Certificates in the manner set forth in the following table. For purposes of
Treasury Regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" of each REMIC II Regular Interest shall be the Rated Final Distribution
Date. The Class R-II Certificates will have no principal balances and no
remittance rate, but will be entitled to receive on each Distribution Date any
portion of the REMIC II Distribution Amount for such Distribution Date not
otherwise deemed distributed on the REMIC II Regular Interests.
- --------------------------------------------------------------------------------
Initial
Uncertificated Uncertificated REMIC II
Designation Principal Balance Principal Balance(1) Remittance Rate
- --------------------------------------------------------------------------------
Class A-1-II Interest $ 277,000,000.00 0.0001% x A-1 6.23000% (3)
- --------------------------------------------------------------------------------
Class A-2-II Interest $ 581,412,000.00 0.0001% x A-2 6.49000% (3)
- --------------------------------------------------------------------------------
Class B-II Interest $ 59,611,000.00 0.0001% x B 6.60000% (3)
- --------------------------------------------------------------------------------
Class C-II Interest $ 59,612,000.00 0.0001% x C 6.76000% (3)
- --------------------------------------------------------------------------------
Class D-II Interest $ 62,593,000.00 0.0001% x D 7.15000%
- --------------------------------------------------------------------------------
Class E-II Interest $ 20,862,000.00 0.0001% x E (4)
- --------------------------------------------------------------------------------
Class F-II Interest $ 53,650,000.00 0.0001% x F 6.23000% (3)
- --------------------------------------------------------------------------------
Class G-II Interest $ 11,923,000.00 0.0001% x G 6.21000% (3)
- --------------------------------------------------------------------------------
Class H-II Interest $ 8,942,000.00 0.0001% x H 6.21000% (3)
- --------------------------------------------------------------------------------
Class J-II Interest $ 14,905,000.00 0.0001% x J 6.21000% (3)
- --------------------------------------------------------------------------------
Class K-II Interest $ 8,939,000.00 0.0001% x K 6.21000% (3)
- --------------------------------------------------------------------------------
Class L-II Interest $ 11,924,000.00 0.0001% x L 6.21000% (3)
- --------------------------------------------------------------------------------
Class M-II Interest $ 8,940,000.00 0.0001% x M 6.21000% (3)
- --------------------------------------------------------------------------------
Class N-II Interest $ 11,925,941.31 0.0001% x N 6.21000% (3)
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
Class WAC-II Interest $1,192,237,749.03 99.9999% x SPB (2) (5)
- --------------------------------------------------------------------------------
(1) The designations A-1, A-2, B, C, D, E, F, G, H, J, K, L, M and N in this
column refer to 100% of the Certificate Balance of the Class A-1, Class A-2,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J,
Class K, Class L, Class M and Class N Certificates, respectively, as of any
applicable date.
(2) The Class WAC-II Interest has an Uncertificated Principal Balance equal to
99.9999% of the aggregate Stated Principal Balance of the Mortgage Loans
immediately following the preceding Distribution Date or the Cut-off Date in
the case of the first Distribution Date.
(3) Interest will accrue on the Class A-1-II, Class A-2-II, Class B-II, Class
C-II, Class F-II, Class G-II, Class H-II, Class J-II, Class K-II, Class
L-II, Class M-II and Class N-II Interests at the lesser of the specified
fixed rate or the Weighted Average REMIC I Remittance Rate.
(4) Interest will accrue on the Class E-II Interests during each Interest
Accrual Period at the Weighted Average REMIC I Remittance Rate less 0.08%
per annum.
(5) Interest will accrue on the Class WAC-II Interest during each Interest
Accrual Period at the Weighted Average REMIC I Remittance Rate.
REMIC III
As provided herein, the Trustee will make the election described in
Section 10.1 for the segregated pool of assets hereof consisting of the REMIC II
Regular Interests to be treated for federal income tax purposes as a separate
REMIC (such particular pool of assets, "REMIC III"). The REMIC III Regular
Certificates will be designated as representing the "regular interests" in REMIC
III and the Class R-III Certificates will be designated as representing the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions.
Fifteen separate Classes of REMIC III Regular Certificates will be
issued. The following table irrevocably sets forth the designation, the
pass-through rate (the "Pass-Through Rate") and the initial aggregate principal
balance for each Class of REMIC III Regular Certificates. For purposes of
Treasury Regulation Section 1.860G-1(a)(4)(iii), the "latest possible maturity
date" of each Class of REMIC III Regular Certificates shall be the Rated Final
Distribution Date. The Class R-III Certificates will have no principal balances
and no pass-through rate, but will be entitled to receive on each Distribution
Date any portion of the REMIC III Distribution Amount for such Distribution Date
not otherwise deemed distributed on the REMIC III Regular Certificates.
3
<PAGE>
REMIC III Regular Certificates
- --------------------------------------------------------------------------------
Initial Initial Class
Designation Pass-Through Rate Principal Balance
- --------------------------------------------------------------------------------
Class A-1 6.23000% per annum<F1> $ 277,000,000.00
- --------------------------------------------------------------------------------
Class A-2 6.49000% per annum<F1> $ 581,412,000.00
- --------------------------------------------------------------------------------
Class X 1.10227% per annum<F2> $ 1,192,237,749.03<F3>
- --------------------------------------------------------------------------------
Class B 6.60000% per annum<F1> $ 59,611,000.00
- --------------------------------------------------------------------------------
Class C 6.76000% per annum<F1> $ 59,612,000.00
- --------------------------------------------------------------------------------
Class D 7.15000% per annum $ 62,593,000.00
- --------------------------------------------------------------------------------
Class E 7.49317% per annum<F2> $ 20,862,000.00
- --------------------------------------------------------------------------------
Class F 6.23000% per annum<F1> $ 53,650,000.00
- --------------------------------------------------------------------------------
Class G 6.21000% per annum<F1> $ 11,923,000.00
- --------------------------------------------------------------------------------
Class H 6.21000% per annum<F1> $ 8,942,000.00
- --------------------------------------------------------------------------------
Class J 6.21000% per annum<F1> $ 14,905,000.00
- --------------------------------------------------------------------------------
Class K 6.21000% per annum<F1> $ 8,939,000.00
- --------------------------------------------------------------------------------
Class L 6.21000% per annum<F1> $ 11,924,000.00
- --------------------------------------------------------------------------------
Class M 6.21000% per annum<F1> $ 8,940,000.00
- --------------------------------------------------------------------------------
Class N 6.21000% per annum<F1> $ 11,925,941.31
- --------------------------------------------------------------------------------
The Certificate Balance of any Class of Certificates outstanding at
any time represents the maximum amount which holders thereof are entitled to
receive as distributions allocable to principal from the cash flow on the
Mortgage Loans and the other assets in the Trust Fund.
As of the Cut-off Date, the Mortgage Loans have an aggregate Stated
Principal Balance equal to approximately $1,192,238,941.
______________________
<F1> Interest will accrue on the Class A, Class B, Class C, Class F, Class G,
Class H, Class J, Class K, Class L, Class M and Class N Certificates at the
lesser of the specified fixed rate or the Weighted Average REMIC I Remittance
Rate.
<F2> The Pass-Through Rate for the Class X Certificates and the Class E
Certificates are variable and, subsequent to the initial Distribution Date, will
be determined as described herein under the definition of "Pass-Through Rate."
<F3> The initial Notional Amount of the Class X Certificates is equal to the
Uncertificated Principal Balance of the Class WAC-II Interest, which corresponds
to 99.9999% of the aggregate Stated Principal Balance of the Mortgage Loans, as
of the Cut-off Date.
4
<PAGE>
GRANTOR TRUST
The parties intend that the Contingent Interest, the Grantor Trust
Collection Account and the Grantor Trust Distribution Account will be treated as
a grantor trust under Subpart E of Part 1 of Subchapter J of the Code (the
"Grantor Trust"), and that the Class A-1, Class X and Class V Certificates
represent undivided beneficial interests in specified portions of the Contingent
Interest, the Grantor Trust Collection Account and the Grantor Trust
Distribution Account. The assets of the Grantor Trust are excluded from the
REMICs.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article.
"Accrued Certificate Interest": With respect to any Class of REMIC
III Regular Certificates for any Distribution Date, the amount of interest for
the applicable Interest Accrual Period accrued at the applicable Pass-Through
Rate on the aggregate Certificate Balance or Notional Amount, as the case may
be, of such Class of Certificates as of the close of the preceding Distribution
Date (or, in the case of the first Distribution Date, as of the Cut-off Date).
The Accrued Certificate Interest in respect of each Class of REMIC III Regular
Certificates for each Distribution Date shall accrue on the basis of a 360-day
year consisting of twelve 30-day months.
"Additional Trust Fund Expense": Any of the following items: (a)
Special Servicing Fees, Disposition Fees and Workout Fees; (b) Advance Interest
Amounts not paid out of Default Interest or late payment charges; (c) amounts
paid by the Trust to indemnify the Depositor, the Master Servicer, the Special
Servicer, the Trustee, the Fiscal Agent or any other Person pursuant to the
terms of this Agreement; (d) the items described in Section 3.10(e); (e) to the
extent not covered by indemnification by one of the parties hereto or paid by a
source other than the Trust Fund, any federal, state or local taxes imposed on
the Trust Fund or any of its assets or transactions; (f) the cost of all
Opinions of Counsel required or permitted hereunder to be obtained in connection
with the servicing of the Mortgage Loans and the administration of the Trust
Fund and not otherwise required hereunder to be paid by a source other than the
Trust Fund; and (g) to the extent not included in the calculation of a Realized
Loss and not covered by indemnification by one of the parties hereto or
otherwise, any other unanticipated cost, liability, or expense of the Trust
which the Trust has not recovered, and in the judgment of the Master Servicer
(or, in the case of a Specially Serviced Mortgage Loan, the Special Servicer)
will not recover, from the related Mortgagor or Mortgaged Property or otherwise.
5
<PAGE>
"Advance": Any P&I Advance or Servicing Advance.
"Advance Interest Amount": The sum for all Mortgage Loans as to which
any Advance remains unreimbursed of interest at the related Advance Rate on the
amount of any P&I Advances and Servicing Advances for which the Master Servicer,
the Trustee or the Fiscal Agent, as applicable, has not been paid or reimbursed
for the number of days from the date on which such Advance was made or, if
interest has been previously paid on such Advance, from the date on which
interest was last paid, through the date of payment or reimbursement of the
related Advance (which in no event shall be later than the Determination Date
following the date on which funds are available to reimburse such Advance with
interest thereon at the Advance Rate); provided, however, that neither the
Master Servicer nor any other party shall be entitled to interest accrued on the
amount of any P&I Advance with respect to Loan Numbers 136, 195, 208 and 240,
for the period commencing on the date of such P&I Advance and ending on the day
on which the grace period applicable to the related Borrower's obligation to
make the related Monthly Payment expires pursuant to the related Mortgage Loan
Documents.
"Advance Rate": A per annum rate equal to the Prime Rate (as
published in The Wall Street Journal, or, if The Wall Street Journal is no
longer published, such other publication determined by the Trustee (with the
concurrence of the Master Servicer) in its reasonable discretion from time to
time).
"Adverse REMIC Event": As defined in Section 10.2(d).
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. The Trustee may obtain
and rely on an Officer's Certificate of the Master Servicer, the Special
Servicer or the Depositor to determine whether any Person is an Affiliate of
such party.
"Agreement": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"Applicable Monthly Payment": As defined in Section 4.5(a).
"Applicant": As defined in Section 5.6(a).
"Appraisal Reduction Event": With respect to the first Distribution
Date following the earliest of (i) the third anniversary of the date on which an
extension of the maturity date of a Mortgage Loan becomes effective as a result
of a modification of such Mortgage Loan by the Special Servicer, which extension
does not change the amount of Monthly Payments on the Mortgage Loan, (ii) 90
days after an uncured delinquency occurs in respect of a Mortgage Loan, (iii) 45
days after the date on which a reduction in the amount of Monthly Payments on a
Mortgage Loan, or a change in any other material economic term of the Mortgage
6
<PAGE>
Loan, becomes effective as a result of a modification of such Mortgage Loan by
the Special Servicer, (iv) 30 days after a receiver has been appointed or after
the commencement of an involuntary bankruptcy proceeding, (v) immediately after
a borrower declares bankruptcy, and (vi) immediately after a Mortgage Loan
becomes an REO Mortgage Loan. The Special Servicer shall notify the Master
Servicer and the Master Servicer shall notify the Special Servicer, as
applicable, promptly upon receiving notice of the occurrence of any of the
foregoing events.
"Appraisal Reduction": For any Distribution Date and for any Mortgage
Loan as to which any Appraisal Reduction Event has occurred will be an amount
equal to the excess of (a) the outstanding Stated Principal Balance of such
Mortgage Loan as of the last day of the related Collection Period over (b) the
excess of (i) 90% of the sum of the appraised values of the related Mortgaged
Properties as determined by independent MAI appraisals (the costs of which shall
be paid by the Master Servicer as an Advance) over (ii) the sum of (A) to the
extent not previously advanced by the Master Servicer or the Trustee, all unpaid
interest on such Mortgage Loan at a per annum rate equal to the Mortgage Rate,
(B) all unreimbursed Advances and interest thereon at the Advance Rate in
respect of such Mortgage Loan and (C) all currently due and unpaid real estate
taxes and assessments and insurance premiums and all other amounts, including,
if applicable, ground rents, due and unpaid under the Mortgage Loan (which
taxes, premiums and other amounts have not been escrowed or the subject of an
Advance).
"Asset Status Report": As defined in Section 3.24(e).
"Assignment of Leases, Rents and Profits": With respect to any
Mortgaged Property, any assignment of leases, rents and profits or similar
agreement executed by the Borrower, assigning to the mortgagee all of the
income, rents and profits derived from the ownership, operation, leasing or
disposition of all or a portion of such Mortgaged Property, in the form which
was duly executed, acknowledged and delivered by the Borrower, as amended,
modified, renewed or extended through the date hereof and from time to time
hereafter.
"Assignment of Mortgage": An assignment of mortgage without recourse,
notice of transfer or equivalent instrument, in recordable form, which is
sufficient under the laws of the jurisdiction in which the related Mortgaged
Property is located to reflect of record the sale of the related Mortgage, which
assignment, notice of transfer or equivalent instrument may be in the form of
one or more blanket assignments covering Mortgages encumbering Mortgaged
Properties located in the same jurisdiction, if permitted by law and acceptable
for recording; provided, however, that none of the Trustee, the Fiscal Agent,
the Custodian, the Special Servicer or the Master Servicer shall be responsible
for determining whether any assignment is legally sufficient or in recordable
form.
"Assumed Monthly Payment": (a) with respect to any Balloon Mortgage
Loan (other than a Balloon Mortgage Loan that has become a REO Mortgage Loan)
for its 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 the end of the Collection Period in which such Stated Maturity Date
occurs) and for any subsequent Due Date therefor as of which such Mortgage Loan
remains outstanding and part of the Trust Fund, if no Monthly Payment (other
than the related delinquent Balloon Payment) is otherwise due for such Due
7
<PAGE>
Date, the scheduled monthly payment of principal and/or interest deemed to be
due in respect thereof for such Due Date equal to the Monthly Payment (other
than any related delinquent Balloon Payment) that would have been due in respect
of such Mortgage Loan on such Due Date if it had been required to continue to
accrue interest in accordance with its terms, and to pay principal in accordance
with the amortization schedule (if any), in effect immediately prior to, and
without regard to the occurrence of, its most recent scheduled Maturity Date;
and (b) with respect to any REO Mortgage Loan, for any Due Date therefor as of
which the related REO Property remains part of the Trust Fund, the scheduled
monthly payment of principal and/or interest deemed to be due in respect thereof
on such Due Date equal to the Monthly Payment (or, in the case of a Balloon
Mortgage Loan described in clause (a) of this definition, the Assumed Monthly
Payment) that was due in respect of the subject Mortgage Loan for the last Due
Date prior to its becoming an REO Mortgage Loan.
"Authenticating Agent": Any authenticating agent appointed by
the Trustee pursuant to Section 8.11.
"Available Funds": (x) With respect to REMIC I and each Distribution
Date, (a) all amounts on deposit in the Collection Account as of the close of
business on the related Determination Date (including Deferred Interest),
exclusive of any portion thereof that represents one or more of the following:
(i) Monthly Payments collected, but due on a Due Date occurring in a
Collection Period subsequent to the related Collection Period;
(ii) Prepayment Premiums;
(iii)amounts that are payable or reimbursable to any Person other
than a Certificateholder (including amounts payable to the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent as compensation or in
reimbursement of outstanding Advances and amounts payable in respect of
Additional Trust Fund Expenses);
(iv) Contingent Interest; and
(v) amounts deposited in the Collection Account in error,
plus (b) to the extent not already included in clause (a), any P&I Advances and
Compensating Interest Payments made with respect to such Distribution Date;
(y) with respect to REMIC II and any Distribution Date, all amounts
distributed on the REMIC I Regular Interests; and
(z) with respect to REMIC III and any Distribution Date, all amounts
distributed on the REMIC II Regular Interests.
8
<PAGE>
"Balloon Loan": A Mortgage Loan which provides for monthly payments
of principal based on an amortization schedule longer than its remaining term,
thereby leaving substantial principal amounts due and payable on its Maturity
Date.
"Balloon Payment": With respect to each Balloon Loan, the scheduled
payment of principal and interest due on the Maturity Date of such Balloon Loan
which, pursuant to the related Note, is equal to the entire remaining principal
balance of such Balloon Loan, plus accrued interest thereon.
"Borrower": With respect to each Mortgage Loan, any obligor on any
related Note.
"Book-Entry Certificate": Any Certificate registered in the name
of the Securities Depository or its nominee.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking institutions in the States of New York, Illinois or
Missouri are authorized or obligated by law, executive order or governmental
decree to be closed.
"Cash Deposit": An amount equal to all cash payments of principal and
interest received by the applicable Seller in respect of the Mortgage Loans two
or more Business Days prior to the Closing Date which are due after the Cut-off
Date, which amount is to be deposited in the Collection Account by the Depositor
pursuant to Section 2.1.
"CEDEL": Citibank, N.A., as depositary for CEDEL Bank, S.A.,
or its successor in such capacity.
"Certificate": Any Class A-1, Class A-2, Class X, Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M,
Class N, Class V, Class R-I, Class R-II or Class R-III Certificate issued,
authenticated and delivered hereunder.
"Certificate Balance": With respect to any Class of REMIC III Regular
Certificates (other than the Class X Certificates) (a) on or prior to the first
Distribution Date, an amount equal to the aggregate initial Certificate Balance
of such Class, as specified in the Preliminary Statement hereto, and (b) as of
any date of determination after the first Distribution Date, the Certificate
Balance of such Class of Certificates on the Distribution Date immediately prior
to such date of determination, after application of the distributions and
Realized Losses and Expense Losses made thereon on such prior Distribution Date.
The Class X Certificates have no Certificate Balance.
"Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the books
of the Securities Depository or on the books of a Securities Depository
Participant or on the books of an indirect participating brokerage firm for
which a Securities Depository Participant acts as agent.
9
<PAGE>
"Certificate Register" and "Certificate Registrar": The register
maintained and the registrar appointed pursuant to Section 5.2(a).
"Certificateholder": With respect to any Certificate, the Person
whose name is registered in the Certificate Register; provided, however, that,
except to the extent provided in the next proviso, solely for the purpose of
giving any consent or taking any action pursuant to this Agreement, any
Certificate beneficially owned by the Depositor, the Master Servicer, the
Special Servicer, the Trustee, a Manager of a Mortgaged Property, a Borrower or
any Person known to a Responsible Officer of the Certificate Registrar to be an
Affiliate of the Depositor, the Trustee, the Master Servicer or the Special
Servicer shall be deemed not to be outstanding and the Voting Rights to which it
is entitled shall not be taken into account in determining whether the requisite
percentage of Voting Rights necessary to effect any such consent or take any
such action has been obtained; provided, however, that (i) for purposes of
obtaining the consent of Certificateholders to an amendment of this Agreement,
any Certificates beneficially owned by the Master Servicer or the Special
Servicer or an Affiliate thereof shall be deemed to be outstanding, provided,
that, such amendment does not relate to compensation of the Master Servicer or
the Special Servicer or benefit the Master Servicer or the Special Servicer (in
its capacity as such) or any Affiliate thereof (other than solely in its
capacity as Certificateholder) in any material respect, in which case such
Certificate shall be deemed not to be outstanding; and (ii) for purposes of
obtaining the consent of Certificateholders to any action proposed to be taken
by the Special Servicer with respect to a Specially Serviced Mortgage Loan, any
Certificates beneficially owned by the Master Servicer, the Special Servicer or
an Affiliate thereof shall be deemed to be outstanding. For purposes of
obtaining the consent of Certificateholders to any action with respect to a
particular Mortgage Loan proposed to be taken by the Master Servicer or Special
Servicer, any Certificates beneficially owned by the Affiliates of the related
Borrower, the related Manager, or Affiliates of the related Manager shall not be
deemed to be outstanding.
Notwithstanding the foregoing, solely for purposes of providing or
distributing any reports, statements or other information required or permitted
to be provided to a Certificateholder hereunder, a Certificateholder shall
include any Certificate Owner, or any Person identified by a Certificate Owner
as a prospective transferee of a Certificate beneficially owned by such
Certificate Owner but only if the Trustee or another party hereto furnishing
such report, statement or information has been provided with the name and
address of the Certificate Owner of the related Certificate or the Person
identified as a prospective transferee thereof by the Depositor or a
Certificateholder. For purposes of the foregoing, the Depositor, the Master
Servicer, the Special Servicer, the Trustee, the Paying Agent or other such
Person may rely, without limitation, on a participant listing from the
Securities Depository or statements furnished by a Person that on their face
appear to be statements from a participant in the Securities Depository to such
Person indicating that such Person beneficially owns Certificates.
All references herein to "Holders" or "Certificateholders" shall reflect
the rights of Certificate Owners as they may indirectly exercise such rights
through the Securities Depository and the Securities Depository Participants,
except as otherwise specified herein.
10
<PAGE>
"Class": With respect to Certificates or REMIC II Regular Interests,
all of the Certificates or REMIC II Regular Interests bearing the same
alphabetical and numerical class designation.
"Class A Certificates": The Class A-1 Certificates and Class A-2
Certificates, collectively.
"Class A-1 Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-1 hereto.
"Class A-1 Pass-Through Rate": A per annum rate equal to 6.23000%,
not to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class A-2 Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-2 hereto.
"Class A-2 Pass-Through Rate": A per annum rate equal to 6.49000%,
not to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class B Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-4 hereto.
"Class B Pass-Through Rate": A per annum rate equal to 6.60000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class C Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-5 hereto.
"Class C Pass-Through Rate": A per annum rate equal to 6.76000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class D Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-6 hereto.
"Class D Pass-Through Rate": With respect to any Distribution Date,
a per annum rate equal to 7.15000%.
"Class E Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-7 hereto.
11
<PAGE>
"Class E Pass-Through Rate": With respect to any Distribution Date,
a per annum rate equal to the Weighted Average REMIC I Remittance Rate minus
0.08%.
"Class F Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-8 hereto.
"Class F Pass-Through Rate": A per annum rate equal to 6.23000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class G Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-9 hereto.
"Class G Pass-Through Rate": A per annum rate equal to 6.21000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class H Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-10 hereto.
"Class H Pass-Through Rate": A per annum rate equal to 6.21000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class Interest Shortfall": With respect to any Class of Principal
Balance Certificates and any Distribution Date (except the initial Distribution
Date, with respect to which the Class Interest Shortfall for each such Class
will equal zero), the sum of (a) the excess, if any, of (i) all Distributable
Certificate Interest in respect of such Class of Certificates for the
immediately preceding Distribution Date, over (ii) all distributions of
Distributable Certificate Interest made with respect to such Class of
Certificates on the immediately preceding Distribution Date pursuant to Section
4.3 and (b), to the extent permitted by applicable law, interest for the related
Interest Accrual Period accrued at the applicable Pass-Through Rate on the
amount of any such excess described in the immediately preceding clause (a).
With respect to any Class of Principal Balance Certificates, the interest
referred to in clause (b) of the preceding sentence shall accrue on the basis of
a 360-day year consisting of twelve 30-day months.
"Class J Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-11 hereto.
"Class J Pass-Through Rate": A per annum rate equal to 6.21000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
12
<PAGE>
"Class K Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-12 hereto.
"Class K Pass-Through Rate": A per annum rate equal to 6.21000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class L Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-13 hereto.
"Class L Pass-Through Rate": A per annum rate equal to 6.21000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class M Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-14 hereto.
"Class M Pass-Through Rate": A per annum rate equal to 6.21000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class N Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-15 hereto.
"Class N Pass-Through Rate": A per annum rate equal to 6.21000%, not
to exceed the Weighted Average REMIC I Remittance Rate with respect to any
Distribution Date.
"Class Prepayment Percentage": With respect to any Prepayment Premium
paid with respect to any Mortgage Loan on any Distribution Date and any of the
Class A-1, Class A-2, Class B, Class C, Class D and Class E Certificates, the
percentage obtained by dividing the portion, if any, of the Principal
Distribution Amount distributed to the respective Class of Certificates on such
Distribution Date by the total Principal Distribution Amount distributed to all
such Classes of Certificates on such Distribution Date.
"Class R-I Certificate": Any Certificate executed and authenticated
by the Trustee or the Authenticating Agent on behalf of the Depositor in
substantially the form set forth in Exhibit A-17 hereto. The Class R-I
Certificates have no Pass-Through Rate or Certificate Balance.
"Class R-II Certificate": Any Certificate executed and authenticated
by the Trustee or the Authenticating Agent on behalf of the Depositor in
substantially the form set forth in Exhibit A-18 hereto. The Class R-II
Certificates have no Pass-Through Rate or Certificate Balance.
13
<PAGE>
"Class R-III Certificate": Any Certificate executed and authenticated
by the Trustee or the Authenticating Agent on behalf of the Depositor in
substantially the form set forth in Exhibit A-19 hereto. The Class R-III
Certificates have no Pass-Through Rate or Certificate Balance.
"Class V Certificates": Any one of the Certificates executed and
authenticated by the Trustee or Authenticating Agent on behalf of the Depositor
in substantially the form set forth in Exhibit A-16 hereto and entitled to the
distributions payable thereto pursuant to Section 4.7(b). The Class V
Certificates have no Pass-Through Rate, Certificate Balance or Notional Amount.
The Class V Certificates represent a beneficial ownership interest in the
Grantor Trust Assets entitled to the distributions set forth in Section 4.7
hereof.
"Class X Certificate": Any one of the Certificates executed and
authenticated by the Trustee or the Authenticating Agent on behalf of the
Depositor in substantially the form set forth in Exhibit A-3 hereto.
"Class X Pass-Through Rate": With respect to any Distribution Date, a
per annum rate equal to the excess of the Weighted Average REMIC I Remittance
Rate over the Weighted Average Pass-Through Rate. The Class X Pass-Through Rate
represents a "specified portion," within the meaning of Treasury Regulations
Section 1.860G-1(a)(2), of the interest payments on the Class WAC-II Interest.
"Closing Date": July 29, 1998.
"Code": The Internal Revenue Code of 1986, as amended from time to
time, any successor statute thereto, and any temporary or final regulations of
the United States Department of the Treasury promulgated pursuant thereto.
"Collection Account": The segregated account or accounts created and
maintained by the Master Servicer pursuant to Section 3.5(a), which shall be
entitled "LaSalle National Bank, as Trustee, in trust for Holders of Commercial
Mortgage Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series
1998-C1, Collection Account," and which shall be an Eligible Account.
"Collection Period": With respect to any Distribution Date and any
Mortgage Loan, the period beginning on the first day following the Determination
Date in the month preceding the month in which such Distribution Date occurs
(or, in the case of the Distribution Date occurring in August 1998, on the day
after the Cut-off Date) and ending on the Determination Date in the month in
which such Distribution Date occurs.
"Commission": The Securities and Exchange Commission of the United
States of America.
"Compensating Interest Payments": With respect to any Distribution
Date, any payments required to be made by the Master Servicer pursuant to
Section 3.25 to cover Prepayment Interest Shortfalls.
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"Contingent Interest": The Eastridge Contingent Interest, the
Edgewater Annual Contingent Interest and the Edgewater Final Contingent
Interest. Contingent Interest shall not be an asset of REMIC I, REMIC II or
REMIC III formed hereunder.
"Controlling Class": The most subordinate Class of Principal Balance
Certificates outstanding at any time of determination (or, if the then aggregate
Certificate Balance of such Class of Certificates is less than 25% of the
initial aggregate Certificate Balance thereof and there is a more senior Class
of Principal Balance Certificates then outstanding, the next most subordinate
Class of Principal Balance Certificates). For purposes of determining the
Controlling Class, the Class A Certificates will be treated as a single Class of
Certificates, the Subordinate Certificates will be subordinate to the Class A
Certificates, and each Class of Subordinate Certificates will be subordinate to
each other Class of Subordinate Certificates, if any, with an earlier
alphabetical Class designation. As of the Closing Date, the Controlling Class
will be the Class N Certificates.
"Corporate Trust Office": With respect to the presentment and
surrender of Certificates for the final distribution thereon or the presentment
and surrender of Certificates for any other purpose, the principal corporate
trust office of the Trustee or the New York Presenting Office (if any). The
principal corporate trust office of the Trustee is presently located at 135
South LaSalle Street, Suite 1625, Chicago, IL 60674-4107, Attention:
Asset-Backed Securities Trust Services Group-Commercial Mortgage Acceptance
Corp. Series 1998-C1, or at such other address as the Trustee may designate from
time to time by notice to the Certificateholders, the Depositor, the Master
Servicer and the Special Servicer.
"Corrected Mortgage Loan": Any Mortgage Loan which is no longer a
Specially Serviced Mortgage Loan pursuant to the first proviso to the definition
of the term "Specially Serviced Mortgage Loan" as a result of the curing of any
event of default under such Specially Serviced Mortgage Loan through a written
modification, restructuring or workout negotiated by the Special Servicer.
"CPR": An assumed constant rate of prepayment each month (which is
quoted on a per annum basis) relative to the then-outstanding principal balance
of a pool mortgage loans for the life of such mortgage loans.
"Cross-Collateralized Loans": Any two or more Mortgage Loans that are
cross-collateralized and cross-defaulted with each other.
"Current Principal Distribution Amount": With respect to the Mortgage
Loans for any Distribution Date, an amount equal to the aggregate of:
(a) the principal portions of all Monthly Payments (other than
Balloon Payments) and any Assumed Monthly Payments due or deemed due, as the
case may be, in respect of the Mortgage Loans, including without limitation any
REO Mortgage Loans, for their respective Due Dates occurring during the related
Collection Period; and
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(b) that portion of all payments (including without limitation
Principal Prepayments and Balloon Payments), Liquidation Proceeds, Insurance
Proceeds, any payments of Repurchase Price, payments of Substitution Shortfall
Amounts, Net REO Proceeds and other collections that were received on or in
respect of the Mortgage Loans (including without limitation any REO Mortgage
Loans) or received on or in respect of any related REO Properties, during the
related Collection Period and were identified and applied by the Master Servicer
in accordance with Section 1.2 as payments or other recoveries of principal of
such Mortgage Loans, in each case net of any portion of such amounts that
represents (i) a payment or other recovery of the principal portion of any
Monthly Payment (other than a Balloon Payment) due, or of the principal portion
of any Assumed Monthly Payment deemed due, in respect of any such Mortgage Loan
on a Due Date during or prior to the related Collection Period and not
previously paid or recovered or (ii) an early payment (other than in the form of
a Principal Prepayment) of the principal portion of any Monthly Payment due in
respect of any such Mortgage Loan on a Due Date subsequent to the end of the
related Collection Period.
"Custodial Agreement": The Custodial Agreement, if any, in effect
from time to time between the Custodian named therein, the Master Servicer and
the Trustee, substantially in the form of Exhibit F hereto, as the same may be
amended or modified from time to time in accordance with the terms thereof.
"Custodian": Any Custodian appointed pursuant to Section 8.12 and,
unless the Trustee is Custodian, named pursuant to any Custodial Agreement. The
Custodian may (but need not) be the Trustee or the Master Servicer or any
Affiliate of the Trustee or the Master Servicer, but may not be the Depositor.
"Cut-off Date": July 1, 1998.
"Default Interest": With respect to any Mortgage Loan, interest
accrued on such Mortgage Loan at the excess of the Default Rate over the
Mortgage Rate.
"Default Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan following any event of default
on such Mortgage Loan, including a default in the payment of a Monthly Payment
or a Balloon Payment, as such rate is set forth in the Mortgage Loan Schedule.
"Deferred Interest": With respect to each Mortgage Loan, interest
accrued on such Mortgage Loan at the related Excess Rate plus interest thereon
to the extent permitted by applicable law at the related Revised Interest Rate.
"Definitive Certificate": As defined in Section 5.3(a).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced
by a Qualified Substitute Mortgage Loan.
"Depositor": Commercial Mortgage Acceptance Corp., a Missouri
corporation and its successors and assigns.
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"Determination Date": With respect to each Distribution Date, (i)
with respect to Monthly Payments, the fourth Business Day prior to such
Distribution Date and (ii) with respect to all other payments received by the
Master Servicer with respect to the Mortgage Loans, the fifth Business Day prior
to such Distribution Date.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof that are not customarily
provided to tenants in connection with the rental of space for occupancy only
within the meaning of Treasury Regulations Section 1.512(h)-1(c)(5), the
management or operation of such REO Property, the holding of such REO Property
primarily for sale to customers or any use of such REO Property in a trade or
business conducted by the Trust Fund other than through an Independent
Contractor; provided, however, that the Special Servicer, on behalf of the Trust
Fund, shall not be considered to Directly Operate an REO Property solely because
the Special Servicer, on behalf of the Trust Fund, establishes rental terms,
chooses tenants, enters into or renews leases, deals with taxes and insurance,
or makes decisions as to repairs or capital expenditures with respect to such
REO Property.
"Discount Rate": The rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi-annually. The "Treasury
Rate" is the yield calculated by the linear interpolation of the yields, as
reported in Federal Reserve Statistical Release H.15--Selected Interest Rates
under the heading "U.S. government securities/Treasury constant maturities" for
the week ending prior to the date of the relevant Principal Prepayment, of U.S.
Treasury constant maturities with a maturity date (one longer and one shorter)
most nearly approximating the maturity date (or the Hyper-Amortization Date, if
applicable) of the Mortgage Loan prepaid. If Release H.15 is no longer
published, the Trustee shall select a comparable publication to determine the
Treasury Rate.
"Disposition Fee": With respect to any Specially Serviced Mortgage
Loan or REO Property which is sold or transferred or otherwise liquidated
(except in connection with a repurchase under Section 2.3), an amount equal to
the product of (I) the excess, if any of (a) the Liquidation Proceeds of such
Specially Serviced Mortgage Loan or REO Property over (b) any broker's
commission and related brokerage referral fees, and (II) 1%.
"Disqualified Non-U.S. Person": With respect to a Class R-I, Class
R-II or Class R-III Certificate, any Non-U.S. Person or agent thereof other than
(i) a Non-U.S. Person that holds the Class R-I, Class R-II or Class R-III
Certificate in connection with the conduct of a trade or business within the
United States and has furnished the transferor and the Certificate Registrar
with an effective IRS Form 4224 or (ii) a Non-U.S. Person that has delivered to
both the transferor and the Certificate Registrar an Opinion of Counsel to the
effect that the transfer of the Class R-I, Class R-II or Class R-III Certificate
to it is in accordance with the requirements of the Code and the regulations
promulgated thereunder and that such transfer of the Class R-I, Class R-II or
Class R-III Certificate will not be disregarded for federal income tax purposes.
"Disqualified Organization": Either (a) the United States, a State or
any political subdivision thereof, any possession of the United States, or any
agency or instrumentality of any
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of the foregoing (other than an instrumentality that is a corporation if all of
its activities are subject to tax and a majority of its board of directors is
not selected by any such governmental unit), (b) a foreign government,
International Organization or agency or instrumentality of either of the
foregoing, (c) an organization that is exempt from tax imposed by Chapter 1 of
the Code (including the tax imposed by Code Section 511 on unrelated business
taxable income) on any excess inclusions (as defined in Code Section 860E(c)(1))
with respect to the Class R-I, Class R-II or Class R-III Certificates (except
certain farmers' cooperatives described in Code Section 521), (d) rural electric
and telephone cooperatives described in Code Section 1381(a)(2), or (e) any
other Person so designated by the Certificate Registrar based upon an Opinion of
Counsel to the effect that any Transfer to such Person may cause REMIC I, REMIC
II or REMIC III to fail to qualify as a REMIC at any time that the Certificates
are outstanding. The terms "United States," "State" and "International
Organization" shall have the meanings set forth in Code Section 7701 or
successor provisions.
"Distributable Certificate Interest": With respect to any Class of
REMIC III Regular Certificates for each Distribution Date, the Accrued
Certificate Interest in respect of such Class of Certificates for such
Distribution Date, reduced (to not less than zero) by that portion, if any, of
the Net Aggregate Prepayment Interest Shortfall, if any, for such Distribution
Date allocated to such Class of Certificates as set forth below, and increased
by any Class Interest Shortfall in respect of such Class of Certificates for
such Distribution Date. The Net Aggregate Prepayment Interest Shortfall, if any,
for each Distribution Date shall be allocated on such Distribution Date among
the respective Classes of REMIC III Regular Certificates, pro rata, in the ratio
that the Accrued Certificate Interest with respect to any such Class of
Certificates for such Distribution Date bears to the total Accrued Certificate
Interest with respect to all Classes of REMIC III Regular Certificates.
"Distribution Account": The segregated account or accounts created
and maintained as a separate trust account or accounts by the Trustee pursuant
to Section 3.5(b), which shall be entitled "LaSalle National Bank, as Trustee,
in trust for Holders of Commercial Mortgage Acceptance Corp. Commercial Mortgage
Pass-Through Certificates, Series 1998-C1, Distribution Account" and which shall
be an Eligible Account.
"Distribution Date": The 15th day of any month, or if such 15th day
is not a Business Day, the Business Day immediately following such 15th day,
commencing in August, 1998.
"Due Date": With respect to any Collection Period and any Mortgage
Loan, the date on which scheduled payments are due on such Mortgage Loan
(without regard to grace periods), such date being for all Mortgage Loans the
first day of each month.
"Eastridge Contingent Interest": With respect to Loan Number 2, the
additional interest required to be paid by the related Borrower that is
contingent upon the occurrence of certain conditions specified in the related
Mortgage Loan Documents and which is equal to 1.25% per annum on the outstanding
principal of the Note. The Eastridge Contingent Interest shall not be an asset
of REMIC I, REMIC II or REMIC III.
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"Edgewater Annual Contingent Interest": With respect to Loan Number
41, the additional interest required to be paid annually by the related Borrower
that is contingent upon the occurrence of certain conditions specified in the
related Mortgage Loan Documents and which is equal to 35% of a portion of the
net cash flow from the related Mortgaged Property, subject to an annual interest
(fixed and contingent) cap of 11% per annum, as determined by the Master
Servicer. The Edgewater Annual Contingent Interest shall not be an asset of
REMIC I, REMIC II or REMIC III.
"Edgewater Final Contingent Interest": With respect to Loan Number
41, the additional interest required to be paid by the related Borrower upon
payment of the Mortgage Loan in full equal to the greater of: (a) 25% of the
greater of (i) the net proceeds from any sale of the Mortgaged Property to a
third party, (ii) the net proceeds from any refinancing of the Mortgaged
Property by a third party, and (iii) the net appraised value of the Mortgaged
Property; and (b) an amount sufficient to provide the mortgagee an internal rate
of return (taking into account all prior fixed and continent interest paid)
equal to 11% per annum; provided that the Edgewater Final Contingent Interest
cannot exceed an amount sufficient to provide the mortgagee an internal rate of
return (taking into account all prior fixed and contingent interest paid) equal
to 13% per annum, as determined by the Master Servicer. The Edgewater Final
Contingent Interest shall not be an asset of REMIC I, REMIC II or REMIC III.
"Eligible Account": Either (i) a segregated account or accounts
maintained with a federally or state-chartered depository institution or trust
company of which (a) the short term senior unsecured debt obligations are rated
at least "P1" by Moody's and the long term senior unsecured debt obligations are
rated at least "A2" by Moody's and (b) the short term senior unsecured debt
obligations are rated at least "A-1+" by S&P and the long term senior unsecured
debt obligations are rated at least "AA" by S&P or (ii) a segregated trust
account or accounts maintained with a federally or state-chartered depository
institution or trust company acting in its fiduciary capacity, having, in either
case, a combined capital and surplus of at least $50,000,000 and (a) subject to
supervision or examination by federal or state authority and subject to
regulations regarding fiduciary funds on deposit substantially similar to 12
C.F.R. 9.10(b), or (b) otherwise confirmed in writing by each of the Rating
Agencies that the maintenance of such account, which may be an account
maintained with the Trustee or the Master Servicer, shall not, in and of itself,
result in a downgrading, withdrawal or qualification of the rating then assigned
by such Rating Agency to any Class of Certificates. Eligible Accounts may bear
interest.
"Eligible Investor": (i) A Qualified Institutional Buyer that is
purchasing Privately Placed Certificates for its own account or for the account
of a Qualified Institutional Buyer to whom notice is given that the offer, sale
or transfer is being made in reliance on Rule 144A promulgated under the 1933
Act or (ii) with respect to Privately Placed Certificates, an Institutional
Accredited Investor.
"Environmental Report": With respect to each Mortgaged Property, the
report or reports of the environmental site assessment or assessments performed
in connection with the origination of the related Mortgage Loan.
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"ERISA": The Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
"Escrow Account": As defined in Section 3.4(b).
"Escrow Payment": Any payment made by any Borrower to the Master
Servicer for the account of such Borrower for application toward the payment of
taxes, insurance premiums, assessments and similar items in respect of the
related Mortgaged Property.
"Euroclear": Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System, or its successor in such capacity.
"Event of Default": As defined in Section 7.1.
"Excess Rate": With respect to each Mortgage Loan, the excess of the
related Revised Interest Rate over the related Mortgage Rate.
"Expense Loss": A loss realized upon payment by the Trust Fund of an
Additional Trust Fund Expense that was not otherwise subject to a Servicing
Advance or was the subject of a determination that such Servicing Advance, if
made, would be a Nonrecoverable Advance.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"FHA": The Federal Housing Administration.
"FHLMC": The Federal Home Loan Mortgage Corporation, or any successor
thereto.
"Final Recovery Determination": With respect to any REO Mortgage
Loan, Specially Serviced Mortgage Loan or Mortgage Loan subject to repurchase by
the Seller pursuant to Section 2.3, the recovery of all Insurance Proceeds,
Liquidation Proceeds, the related Repurchase Price and other payments or
recoveries (including proceeds of the final sale of any related REO Property)
which the Master Servicer, in its reasonable judgment as evidenced by a
certificate of a Servicing Officer delivered to the Trustee, the Custodian and
the Operating Adviser, expects to be finally recoverable. The Master Servicer
shall maintain records, prepared by a Servicing Officer, of each Final Recovery
Determination until the earlier of (i) its termination as Master Servicer
hereunder and the transfer of such records to a successor servicer and (ii) five
years following the termination of the Trust Fund.
"Fiscal Agent": ABN AMRO Bank N.V. in its capacity as fiscal agent of
the Trustee, or its successor in interest, or any successor fiscal agent
appointed as herein provided.
"FNMA": The Federal National Mortgage Association, or any successor
thereto.
"Grantor Trust": As defined in Preliminary Statement.
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"Grantor Trust Assets": As defined in Section 10.5.
"Grantor Trust Collection Account": The segregated account or
accounts created and maintained as a separate trust account or accounts by the
Master Servicer pursuant to Section 3.5(c), which shall be entitled "LaSalle
National Bank, as Trustee, in trust for Holders of Commercial Mortgage
Acceptance Corp. Commercial Mortgage Pass-Through Certificates, Series 1998-C1,
Grantor Trust Collection Account " and which shall be an Eligible Account. The
Grantor Trust Collection Account shall not be an asset of REMIC I, REMIC II or
REMIC III formed hereunder.
"Grantor Trust Distribution Account": The segregated account or
accounts created and maintained as a separate trust account or accounts by the
Trustee pursuant to Section 3.5(d), which shall be entitled "LaSalle National
Bank, as Trustee, in trust for Holders of Commercial Mortgage Acceptance Corp.
Commercial Mortgage Pass-Through Certificates, Series 1998-C1, Grantor Trust
Distribution Account " and which shall be an Eligible Account. The Grantor Trust
Distribution Account shall not be an asset of REMIC I, REMIC II or REMIC III
formed hereunder.
"Hazardous Materials": Any dangerous, toxic or hazardous pollutants,
chemicals, wastes, or substances, including, without limitation, those so
identified pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act, 42 U.S.C. Section 9601 et seq., or any other environmental
laws now existing, and specifically including, without limitation, asbestos and
asbestos-containing materials, polychlorinated biphenyls, radon gas, petroleum
and petroleum products, urea formaldehyde and any substances classified as being
"in inventory", "usable work in process" or similar classification which would,
if classified as unusable, be included in the foregoing definition.
"Holder": With respect to any Certificate, a Certificateholder; with
respect to any REMIC I Regular Interest or REMIC II Regular Interest, the
Trustee.
"Hyper-Amortization Date": As to any Mortgage Loan, the date prior to
the Stated Maturity Date that the Mortgage Rate and the rate of principal
amortization increases.
"Indemnified Party": As defined in Section 8.5(c).
"Independent": When used with respect to any specified Person, any
other Person who (i) does not have any direct financial interest, or any
material indirect financial interest, in any of the Manager, the Depositor, the
Master Servicer, the Special Servicer, any Borrower or any Affiliate thereof,
and (ii) is not connected with any such specified Person as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions.
"Independent Contractor": Either (i) any Person that would be an
"independent contractor" with respect to the Trust Fund within the meaning of
Section 856(d)(3) of the Code if the Trust Fund were a real estate investment
trust (except that the ownership tests set forth in that section shall be
considered to be met by any Person that owns, directly or indirectly, 35% or
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more of any Class or 35% or more of the aggregate value of all Classes of
Certificates), provided that the Trust Fund does not receive or derive any
income from such Person and the relationship between such Person and the Trust
Fund is at arm's length, all within the meaning of Treasury Regulations Section
1.856-4(b)(5) (except that the Special Servicer shall not be considered to be an
Independent Contractor under the definition in this clause (i) unless an Opinion
of Counsel (obtained at the expense of the Special Servicer) addressed to the
Special Servicer and the Trustee has been delivered to the Trustee to the effect
that the Special Servicer meets the requirements of such definition) or (ii) any
other Person (including the Special Servicer) if the Special Servicer, on behalf
of itself and the Trustee, has received an Opinion of Counsel (obtained at the
expense of the party seeking to be deemed an Independent Contractor) to the
effect that the taking of any action in respect of any REO Property by such
Person, subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code (determined without regard to the exception
applicable for purposes of Section 860D(a) of the Code) or cause any income
realized with respect of such REO Property to fail to qualify as Rents from Real
Property (provided that such income would otherwise so qualify).
"Individual Certificate": Any Certificate in definitive, fully
registered form without interest coupons.
"Institutional Accredited Investor": An entity meeting the
requirements of Rule 501(a)(1), (2), (3) or (7) of Regulation D promulgated
under the 1933 Act and which is not otherwise a Qualified Institutional Buyer.
"Insurance Proceeds": Proceeds of any fire and hazard insurance
policy, title policy or other insurance policy relating to a Mortgage Loan
and/or the Mortgaged Property securing any Mortgage Loan (including any amounts
paid by the Master Servicer or the Special Servicer pursuant to Section 3.8), to
the extent such proceeds are not to be applied to the restoration of the related
Mortgaged Property or released to the Borrower in accordance with the express
requirements of the related Mortgage or Note or other documents included in the
related Mortgage File or in accordance with the Servicing Standard.
"Interest Accrual Period": With respect to any Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs.
Interest for each Interest Accrual Period shall be calculated based on a 360-day
year consisting of twelve 30-day months.
"Interest Only Certificates": The Class X Certificates.
"Interested Person": As of any date of determination, the Depositor,
the Master Servicer, the Special Servicer, the Trustee, any Borrower, any
Manager of a Mortgaged Property, any Independent Contractor engaged by the
Special Servicer pursuant to Section 3.17, or any Person known to a Responsible
Officer of the Trustee to be an Affiliate of any of them.
"Investment Account": As defined in Section 3.7(a).
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"Investment Representation Letter": As defined in Section 5.2
(c)(i).
"IRS": The Internal Revenue Service.
"Liquidation Expenses": Expenses incurred by the Special Servicer and
the Trustee in connection with the liquidation of any Specially Serviced
Mortgage Loan or property acquired in respect thereof (including, without
limitation, legal fees and expenses, committee or referee fees, and, if
applicable, brokerage commissions, and conveyance taxes).
"Liquidation Event": With respect to any Mortgage Loan (other than an
REO Mortgage Loan), any of the following events: (i) such Mortgage Loan is paid
in full; (ii) a Final Recovery Determination is made with respect to such
Mortgage Loan; (iii) such Mortgage Loan is repurchased or replaced by a Seller
pursuant to Section 3(b) of the related Mortgage Loan Purchase Agreement; (iv)
such Mortgage Loan is sold pursuant to Section 3.18; or (v) such Mortgage Loan
is purchased by any Person entitled to effect an optional termination of the
Trust pursuant to Section 9.1. With respect to any REO Property (and the related
REO Mortgage Loan), any of the following events: (i) a Final Recovery
Determination is made with respect to such REO Property; (ii) such REO Property
is sold pursuant to Section 3.18; or (iii) such REO Property is purchased by any
Person entitled to effect an optional termination of the Trust pursuant to
Section 9.1.
"Liquidation Proceeds": The amount (other than Insurance Proceeds)
received in connection with (i) the taking of a Mortgaged Property by exercise
of the power of eminent domain or condemnation, (ii) the liquidation of a
Specially Serviced Mortgage Loan through a trustee's sale, foreclosure sale or
otherwise, (iii) the sale of a Specially Serviced Mortgage Loan or an REO
Property in accordance with Section 3.18 or (iv) the sale of all of the Mortgage
Loans in accordance with Section 9.1.
"Loan Agreement": With respect to any Mortgage Loan, the loan
agreement, if any, between the Originator and the Borrower, pursuant to which
such Mortgage Loan was made.
"Loan Number": With respect to any Mortgage Loan, the loan number by
which such Mortgage Loan was identified on the books and records of the Master
Servicer or any Sub-Servicer for the Master Servicer, as set forth in the
Mortgage Loan Schedule.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, as of any
date of determination, the fraction, expressed as a percentage, the numerator of
which is the then-unpaid principal balance of such Mortgage Loan (or, if part of
a group of Cross-Collateralized Loans, of such group), and the denominator of
which is the appraised value of the related Mortgaged Property (or, in the case
of a group of Cross-Collateralized Loans, of all the Mortgaged Properties
securing such group) as determined by an Updated Appraisal thereof.
"MAI": Member of the Appraisal Institute.
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"Majority Certificateholder": With respect to any particular Class or
Classes of Certificates, any Certificateholder entitled to a majority of the
Voting Rights allocated to such Class or Classes, as the case may be.
"Management Agreement": With respect to any Mortgage Loan, the
Management Agreement, if any, by and between the Manager and the related
Borrower, or any successor Management Agreement between such parties.
"Manager": With respect to any Mortgage Loan, any property manager
for the related Mortgaged Property.
"Master Servicer": Midland Loan Services, Inc., a Delaware
corporation, or its successor in interest, or any successor Master Servicer
appointed as herein provided.
"Master Servicer Mortgage File": With respect to any Mortgage Loan,
all documents related to such Mortgage Loan that are not required to be
delivered to the Trustee pursuant to Section 2.1 or to be maintained as part of
the Trustee Mortgage File, including, without limitation:
(i) a copy of the Management Agreement, if any, for the related
Mortgaged Property;
(ii) a copy of the related ground lease, as amended, if any, for such
Mortgaged Property;
(iii) any and all amendments, modifications and supplements to,
and waivers related to, any of the foregoing;
(iv) copies of the related appraisals, surveys, environmental reports
and other similar documents; and
(v) any other written agreements related to such Mortgage Loan;
together with copies of all documents that are required to be maintained as a
part of the Trustee Mortgage File.
"Master Servicing Fee": With respect to each Mortgage Loan and for
any Distribution Date, an amount per calendar month equal to the product of (i)
one-twelfth of the related Master Servicing Fee Rate and (ii) the Stated
Principal Balance of such Mortgage Loan as of the Due Date in the month
preceding the month in which such Distribution Date occurs.
"Master Servicing Fee Rate": With respect to each Mortgage Loan, the
per annum rate set forth in the Mortgage Loan Schedule as the "Administrative
Cost Rate" less the Trustee Fee Rate. The Master Servicing Fee Rate will be
calculated on the same basis as the related Mortgage Rate (e.g., "Actual/360" or
"30/360").
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"Maturity Date": With respect to any Mortgage Loan as of any date of
determination, the date on which the last payment of principal is due and
payable under the related Mortgage Note.
"Midland Loans": The Mortgage Loans transferred and assigned by
Midland Loan Services, Inc., to the Depositor pursuant to the Midland Mortgage
Loan Purchase Agreement.
"Midland Mortgage Loan Purchase Agreement": The Mortgage Loan
Purchase and Sale Agreement, dated as of July 15, 1998, between the Depositor
and Midland Loan Services, Inc., substantially in the form attached hereto as
Exhibit G.
"Money Term": With respect to any Mortgage Loan, the Maturity Date,
Mortgage Rate, principal balance, amortization term or payment frequency thereof
(and shall not include late fees or Default Interest provisions).
"Monthly Payment": With respect to any Mortgage Loan (other than any
REO Mortgage Loan) and any Due Date, the scheduled monthly payment of principal
and/or interest, excluding any Balloon Payment, Default Interest, Deferred
Interest and Contingent Interest on such Mortgage Loan which is payable by the
related Borrower on such Due Date under the related Note (taking into account
any waiver, modification or amendment of the terms of such Mortgage Loan,
whether agreed to by the Master Servicer or Special Servicer or in connection
with a bankruptcy or similar proceeding involving the related Borrower).
"Moody's": Moody's Investors Service, Inc.
"Mortgage": The mortgage, deed of trust or other instrument creating
a first lien on or first priority ownership interest in a Mortgaged Property
securing the related Note.
"Mortgage File": With respect to any Mortgage Loan, the mortgage
documents required to be maintained in either the Trustee Mortgage File or the
Master Servicer Mortgage File.
"Mortgage Loan": Each of the mortgage loans transferred and assigned
to the Trustee pursuant to Section 2.1 and from time to time held in the Trust
Fund, such mortgage loans originally so transferred, assigned and held being
identified on the Mortgage Loan Schedule as of the Cut-off Date. Such term shall
include any REO Mortgage Loan, any Qualified Substitute Mortgage Loan or
defeased Mortgage Loan.
"Mortgage Loan Documents": Any and all documents contained in the
Trustee Mortgage File and the Master Servicer Mortgage File.
"Mortgage Loan Purchase Agreement": With respect to the Midland
Loans, the Midland Mortgage Loan Purchase Agreement. With respect to the RFC
Loans, the RFC Mortgage Loan Purchase Agreement. With respect to the MSMC Loans,
the MSMC Mortgage Loan Purchase Agreement. With respect to the PNC Loans, the
PNC Mortgage Loan Purchase
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Agreement. The term "Mortgage Loan Purchase Agreements" shall mean all of such
agreements.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, such list as of the Closing Date being
attached hereto as Exhibit B.
"Mortgage Pool": Collectively, all of the Mortgage Loans (including
without limitation REO Mortgage Loans and Qualified Substitute Mortgage Loans,
but excluding Deleted Mortgage Loans).
"Mortgage Rate": With respect to each Mortgage Loan, the annual rate
at which interest accrues on such Mortgage Loan (in the absence of a default and
without giving effect to any Revised Interest Rate or Contingent Interest), as
set forth in the Mortgage Loan Schedule.
"Mortgaged Property": The underlying property securing a Mortgage
Loan, including any REO Property, consisting of a fee simple or leasehold estate
in a parcel of land improved by a commercial property, together with any
personal property, fixtures, leases and other property or rights pertaining
thereto.
"MSMC": Morgan Stanley Mortgage Capital Inc., a Delaware corporation.
"MSMC Loans": The Mortgage Loans transferred and assigned by MSMC to
the Depositor pursuant to the MSMC Mortgage Loan Purchase Agreement.
"MSMC Mortgage Loan Purchase Agreement": The Mortgage Loan Purchase
and Sale Agreement dated as of July 15, 1998, between the Depositor and MSMC,
substantially in the form attached hereto as Exhibit H.
"Net Aggregate Prepayment Interest Shortfall": With respect to any
Distribution Date, the amount, if any, by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred in connection with the receipt of
Principal Prepayments on the Mortgage Loans during the related Collection
Period, exceeds (b) the sum of (i) the aggregate of all Prepayment Interest
Excesses realized in connection with the receipt of Principal Prepayments on the
Mortgage Loans during the related Collection Period, and (ii) the Compensating
Interest Payment deposited by the Master Servicer in the Distribution Account
for such Distribution Date pursuant to Section 3.25 in connection with such
Prepayment Interest Shortfalls.
"Net Collections": With respect to any Corrected Mortgage Loan, an
amount equal to all payments on account of interest and principal on such
Mortgage Loan and all Prepayment Premiums.
"Net Liquidation Proceeds": The excess of Liquidation Proceeds
received with respect to any Mortgage Loan over the amount of Liquidation
Expenses incurred with respect thereto.
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"Net Mortgage Rate": With respect to any Mortgage Loan, the Mortgage
Rate for such Mortgage Loan minus the Master Servicing Fee Rate and the Trustee
Fee Rate; provided, that for purposes of calculating Pass-Through Rates, the Net
Mortgage Rate for any Mortgage Loan will be determined without regard to any
post-Closing Date modification, waiver or amendment of the terms of such
Mortgage Loan; provided further, that for purposes of calculating Pass-Through
Rates, Prepayment Interest Excesses and Prepayment Interest Shortfalls, the Net
Mortgage Rate (and related Master Servicing Fee Rate and Trustee Fee Rate) of
each Mortgage Loan will be adjusted, if necessary, to a rate providing an
equivalent yield which accrues on the basis of a 360-day year consisting of
twelve 30-day months.
"Net REO Proceeds": With respect to each REO Property, REO Proceeds
with respect to such REO Property net of any insurance premiums, taxes,
assessments and other costs and expenses permitted to be paid therefrom pursuant
to Section 3.17(b).
"New Lease": Any lease of REO Property entered into on behalf of the
Trust Fund, including any lease renewed or extended on behalf of the Trust Fund
if the Trust Fund has the right to renegotiate the terms of such lease.
"New York Presenting Office": Any office of an agent of the Trustee
or the Certificate Registrar, located in New York, New York, as the Trustee or
the Certificate Registrar, as the case may be, may designate from time to time
by written notice to the Depositor and the Certificateholders.
"1933 Act": The Securities Act of 1933, as it may be amended from
time to time.
"1934 Act": The Securities Exchange Act of 1934, as it may be amended
from time to time.
"Nonrecoverable Advance": Any portion of an Advance proposed to be
made or previously made which has not been previously reimbursed to the Master
Servicer, the Trustee or the Fiscal Agent, as applicable, and which the Master
Servicer, the Trustee or the Fiscal Agent has determined (based on, among other
things, an Updated Appraisal) in its good faith business judgment will not or,
in the case of a proposed Advance, would not, be ultimately recoverable by the
Master Servicer, the Trustee or the Fiscal Agent, as applicable, from late
payments, Insurance Proceeds, Liquidation Proceeds and other collections on or
in respect of the related Mortgage Loan. To the extent that any Borrower is not
obligated under the related Mortgage Loan Documents to pay or reimburse any
portion of any Advances that are outstanding with respect to the related
Mortgage Loan as a result of a modification of such Mortgage Loan by the Special
Servicer which forgives unpaid Monthly Payments or other amounts which the
Master Servicer, the Trustee or the Fiscal Agent had previously advanced, and
the Master Servicer, the Trustee or the Fiscal Agent determines that no other
source of payment or reimbursement for such advances is available to it, such
Advances shall be deemed to be nonrecoverable; provided, however, that in
connection with the foregoing the Master Servicer, the Trustee or the Fiscal
Agent, shall provide an Officer's Certificate as described below. The
determination by the Master Servicer, the Trustee or the Fiscal Agent, as
applicable, that it has made a Nonrecoverable Advance or that any proposed
Advance, if made, would constitute a Nonrecoverable Advance shall be evidenced
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by a certificate of a Servicing Officer, Responsible Officer or Vice President
or equivalent or senior officer of the Master Servicer, Trustee or Fiscal Agent,
as appropriate, delivered to the Master Servicer, Trustee, the Fiscal Agent, the
Special Servicer, the Operating Adviser and the Depositor setting forth such
determination and the procedures and considerations of the Master Servicer, the
Trustee or Fiscal Agent, as applicable, forming the basis of such determination,
which shall include a copy of the Updated Appraisal and any other information or
reports obtained by the Master Servicer, the Trustee or the Fiscal Agent, such
as property operating statements, rent rolls, property inspection reports and
engineering reports, which may support such determinations. Notwithstanding the
above, the Trustee and the Fiscal Agent shall be entitled to rely upon any
determination by the Master Servicer that any Advance previously made is a
Nonrecoverable Advance or that any proposed Advance, if made, would constitute a
Nonrecoverable Advance.
"Non-U.S. Person": A person that is not (i) a citizen or resident of
the United States; (ii) a corporation, partnership, or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof; (iii) an estate whose income is subject to United States federal income
tax regardless of its sources; or (iv) a trust as to which a court within the
United States is able to exercise primary jurisdiction over the administration
of the trust and one or more U.S. Persons have the authority to control all
substantial decisions of the trust.
"Note": With respect to any Mortgage Loan as of any date of
determination, the note or other evidence of indebtedness and/or agreements
evidencing the indebtedness of the related Borrower or obligor under such
Mortgage Loan, in each case, including any amendments or modifications, or any
renewal or substitution notes, as of such date.
"Notional Amount": With respect to the Class X Certificates (a) on or
prior to the Distribution Date occurring in August 1998, a notional principal
amount equal to the aggregate initial Notional Balance of such Class, as
specified in the Preliminary Statement hereto, and (b) as of any Distribution
Date after August 1998, a notional principal amount equal to the aggregate
Uncertificated Principal Balance of the Class WAC-II Interest, which corresponds
to 99.9999% of the aggregate Stated Principal Balance of the Mortgage Loans
immediately following the preceding Distribution Date.
"Officer's Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President (however
denominated), the Treasurer, the Secretary, one of the Assistant Treasurers or
Assistant Secretaries or any other officer of the Master Servicer or Special
Servicer customarily performing functions similar to those performed by any of
the above designated officers and also with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject, or an authorized
officer of the Depositor, and delivered to the Depositor, the Trustee, the
Special Servicer or the Master Servicer, as the case may be.
"Operating Advisor": As defined in Section 3.26.
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"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be counsel for the Depositor, the Special Servicer or the Master
Servicer, as the case may be, acceptable to the Trustee, except that any opinion
of counsel relating to (a) qualification of REMIC I, REMIC II or REMIC III as a
REMIC or the imposition of tax under the REMIC Provisions on any income or
property of any REMIC, (b) compliance with the REMIC Provisions (including
application of the definition of "Independent Contractor"), (c) qualification of
the Grantor Trust as a grantor trust or (d) a resignation of the Master Servicer
or the Special Servicer pursuant to Section 6.4, must be an opinion of counsel
who is Independent of the Depositor, the Special Servicer and the Master
Servicer.
"Optional Termination Notice Date": Any date as of which the
aggregate Certificate Balance of all Classes of Principal Balance Certificates
then outstanding is less than 1% of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date.
"Originator": With respect to a Mortgage Loan, the originator of such
Mortgage Loan, as identified in the Mortgage Loan Schedule.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate as the Holder thereof and any other
interest therein, whether direct or indirect, legal or beneficial, as owner or
as pledgee.
"P&I Advance": As to any Mortgage Loan, any advance made by the
Master Servicer, the Trustee, or the Fiscal Agent pursuant to Section
4.5(b)(iii) or 4.5(d).
"Pass-Through Rate": Any one of the Class A-1, Class A-2, Class X,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L, Class M or Class N Pass-Through Rates. The Class V Certificates and
Residual Certificates do not have Pass-Through Rates.
"Paying Agent": The paying agent appointed pursuant to Section 5.5.
"Percentage Interest": (i) With respect to any REMIC III Regular
Certificate, the portion of the relevant Class evidenced by such Certificate,
expressed as a percentage, the numerator of which is the Certificate Balance or
the Notional Amount, as the case may be, of such Certificate as of the Closing
Date, as specified on the face thereof, and the denominator of which is the
initial aggregate Certificate Balance or the initial aggregate Notional Amount,
as the case may be, of the relevant Class as of the Closing Date; and (ii) with
respect to the Residual Certificates and the Class V Certificates, the
percentage interest in distributions to be made with respect to the relevant
Class, as stated on the face of such Certificate.
"Permitted Investments": Any one or more of the following obligations
or securities payable on demand or having a scheduled maturity on or before the
Business Day preceding the date on which such funds are required to be drawn,
regardless of whether issued by the Depositor, the Master Servicer, the Special
Servicer, the Trustee or any of their respective Affiliates, and having at all
times the required ratings, if any, provided for in this definition (provided
that no Permitted Investment, if downgraded, shall be required to be sold at a
loss,
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except if the remaining term to maturity at the time of such downgrading is
greater than 30 days), unless each Rating Agency shall have confirmed in writing
to the Master Servicer or the Special Servicer, as applicable, that a lower
rating will not result in the withdrawal, downgrading or qualification of the
ratings then assigned to the Certificates:
(i) direct obligations of, or obligations guaranteed as to full and
timely payment of principal and interest by, the United States or any agency or
instrumentality thereof, provided that such obligations are backed by the full
faith and credit of the United States of America, including, without limitation,
U.S. Treasury Obligations, Farmers Home Administration certificates of
beneficial interest, General Services Administration participation certificates
and Small Business Administration guaranteed participation certificates or
guaranteed pool certificates;
(ii) direct obligations of FHLMC (debt obligations only), FNMA (debt
obligations only), the Federal Farm Credit System (consolidated systemwide bonds
and notes only), the Federal Home Loan Banks (consolidated debt obligations
only), the Student Loan Marketing Association (debt obligations only), the
Financing Corp. (consolidated debt obligations only), and the Resolution Funding
Corp. (debt obligations only);
(iii) Federal funds, time deposits in, or certificates of deposit of,
or bankers' acceptances, or repurchase obligations, all having maturities of not
more than 365 days, issued by, any bank or trust company, savings and loan
association or savings bank, depository institution or trust company having a
short term debt obligation rating that is in the highest short-term unsecured
rating category of each Rating Agency;
(iv) commercial paper having a maturity of 365 days or less
(including (A) both non-interest-bearing discount obligations and
interest-bearing obligations payable on demand or on a specified date not more
than one year after the date of issuance thereof and (B) demand notes that
constitute vehicles for investment in commercial paper) that is rated by each
Rating Agency in its highest short-term unsecured rating category;
(v) shares of taxable money market funds or mutual funds that seek to
maintain a constant net asset value and have been rated AAAm or AAAm-G by S&P or
Aaa by Moody's;
(vi) if each of the Rating Agencies has previously confirmed in
writing to the Trustee that the holding of such demand, money market or time
deposit, demand obligation or any other obligation, security or investment shall
not result, in and of itself, in a downgrading, withdrawal or qualification of
the rating then assigned by such Rating Agency to any Class of Certificates, any
other demand, money market or time deposit, demand obligation or any other
obligation, security or investment, as may be acceptable to each Rating Agency
as a permitted investment of funds backing securities having ratings equivalent
to its initial rating of the Class A-1 and Class A-2 Certificates; and
(vii) such other obligations confirmed in writing by each of the
Rating Agencies that such obligations are acceptable as Permitted Investments
and the holding of such
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obligations by the Master Servicer or the Special Servicer, as applicable, shall
not result, in and of itself, in a downgrading, withdrawal or qualification of
the rating then assigned by such Rating Agency to any Class of Certificates;
provided, however, that (a) none of such obligations or securities listed above
may have an "r" highlighter affixed to its rating if rated by S&P; (b) except
with respect to units of money market funds pursuant to clause (v) above, each
such obligation or security shall have a fixed dollar amount of principal due at
maturity which cannot vary or change; and (c) except with respect to units of
money market funds pursuant to clause (v) above, if any such obligation or
security provides for a variable rate of interest, interest shall be tied to a
single interest rate index plus a single fixed spread (if any) and move
proportionately with that index; and provided, further, however, that such
instrument continues to qualify as a "cash flow investment" pursuant to Code
Section 860G(a)(6) earning a passive return in the nature of interest and that
no instrument or security shall be a Permitted Investment if (i) such instrument
or security evidences a right to receive only interest payments or (ii) the
right to receive principal and interest payments derived from the underlying
investment provides a yield to maturity in excess of 120% of the yield to
maturity at par of such underlying investment as of the date of its acquisition.
"Permitted Transferee": With respect to a Class R-I, Class R-II
or Class R-III Certificate, any Person or agent thereof that is a Qualified
Institutional Buyer, Institutional Accredited Investor or any other Person
designated by the Certificate Registrar based upon an Opinion of Counsel
(provided at the expense of such Person or the Person requesting the Transfer)
to the effect that the Transfer of an Ownership Interest in any Class R-I, Class
R-II or Class R-III Certificate to such Person will not cause REMIC I, REMIC II
or REMIC III to fail to qualify as a REMIC at any time that the Certificates are
outstanding other than (a) a Disqualified Organization or (b) a Person that is a
Disqualified Non-U.S. Person.
"Person": Any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"Placement Agents": Morgan Stanley & Co. Incorporated or its
successor in interest and Residential Funding Securities Corporation or its
successor in interest.
"Plan": As defined in Section 5.2(i).
"PNC": PNC Bank, National Association.
"PNC Loans": The Mortgage Loans transferred and assigned by PNC to
the Depositor pursuant to the PNC Mortgage Loan Purchase Agreement.
"PNC Mortgage Loan Purchase Agreement": The Mortgage Loan Purchase
and Sale Agreement dated as of July 15, 1998, between the Depositor and PNC,
substantially in the form attached hereto as Exhibit I.
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"Prepayment Assumption": A CPR of 0%, applied to each Mortgage Loan
during any period that the related Borrower is permitted to make voluntary
Principal Prepayments without a Prepayment Premium, calculated on the basis of a
yield maintenance formula used for determining the accrual of original issue
discount, market discount and premium, if any, on the REMIC I Regular Interests,
the REMIC II Regular Interests or the REMIC III Regular Certificates for federal
income tax purposes.
"Prepayment Interest Excess": With respect to any Distribution Date
and any Mortgage Loan as to which a Principal Prepayment was made by the related
Borrower during the related Collection Period but following the Due Date
occurring in such Collection Period, the amount by which (i) the amount of
interest received from the related Borrower in respect of such Mortgage Loan
during such Collection Period exceeds (ii) 30 full days of interest at the
related Net Mortgage Rate on the Stated Principal Balance of such Mortgage Loan
as of the beginning of the related Interest Accrual Period.
"Prepayment Interest Shortfall": With respect to any Distribution
Date and any Mortgage Loan as to which a Principal Prepayment was made by the
related Borrower during the related Collection Period but prior to the Due Date
occurring in such Collection Period, the amount by which (i) 30 full days of
interest at the related Net Mortgage Rate on the Stated Principal Balance of
such Mortgage Loan in respect of which interest would have been due in the
absence of such Principal Prepayment on the Due Date next succeeding the date of
such Principal Prepayment exceeds (ii) the amount of interest received from the
related Borrower in respect of such Mortgage Loan during such Collection Period.
"Prepayment Premium": Payments received on a Mortgage Loan as the
result of a Principal Prepayment thereon, not otherwise due thereon in respect
of principal or interest, which are intended to be a disincentive to prepayment.
"Prepayment Premium Allocation Amount": With respect to any Principal
Prepayment on any Mortgage Loan and with respect to any Class of Publicly
Offered Certificates (other than the Class X Certificates), the product of (1) a
fraction (not greater than one and not less than zero) (A) the numerator of
which is the applicable Pass-Through Rate of the most senior Class of
Certificates then outstanding (or, in the case of two Classes of the Class A
Certificates, the one with the earlier payment priority) minus the Discount Rate
and (B) the denominator of which is the difference between the related Mortgage
Rate and the Discount Rate, (2) the applicable Class Prepayment Percentage and
(3) the amount of such Prepayment Premium collected. There is no Prepayment
Premium Allocation Amount with respect to the Privately Placed Certficiates or
the Class X Certificates.
"Principal Balance Certificates": Each Class of REMIC III Regular
Certificates, excluding the Class X Certificates.
"Principal Distribution Amount": For any Distribution Date, the
aggregate of (i) the Current Principal Distribution Amount for such Distribution
Date, and (ii) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Principal Distribution Amount for
the preceding Distribution Date, over the aggregate distributions of
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principal made on the Principal Balance Certificates in respect of such
Principal Distribution Amount on the preceding Distribution Date.
"Principal Prepayment": With respect to any Mortgage Loan, any
payment of principal made by the related Borrower which is received in advance
of its scheduled Due Date and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any date or dates in
any month or months subsequent to the month of prepayment.
"Privately Placed Certificates": The Class F Certificates, the Class
G Certificates, the Class H Certificates, the Class J Certificates, the Class K
Certificates, the Class L Certificates, the Class M Certificates, the Class N
Certificates, the Class V Certificates, the Class R-I Certificates, the Class
R-II Certificates and the Class R-III Certificates.
"Prospectus Supplement": The Prospectus Supplement dated July 15,
1998, relating to the Publicly Offered Certificates.
"Publicly Offered Certificates": The Class A-1 Certificates, the
Class A-2 Certificates, the Class X Certificates, the Class B Certificates, the
Class C Certificates, the Class D Certificates and the Class E Certificates.
"Qualified Institutional Buyer": A qualified institutional
buyer within the meaning of Rule 144A.
"Qualified Insurer": An insurance company or security or bonding
company qualified to write the related insurance policy in the relevant
jurisdiction, which (i) except as provided in clause (iii) below, shall have a
claims paying ability rating (or in the case of Moody's, an insurance financial
strength rating) of "AA" (or "Aa2", in the case of Moody's) or better by each of
the Rating Agencies, (ii) in the case of public liability insurance policies
required to be maintained with respect to REO Properties in accordance with
Section 3.8(a), shall have a claims paying ability rating (or in the case of
Moody's, an insurance financial strength rating) of "AA" (or "Aa2", in the case
of Moody's) or better by each of the Rating Agencies, or (iii) in the case of
the fidelity bond and errors and omissions insurance required to be maintained
pursuant to Section 3.8(c), shall have a claims paying ability rating (or in the
case of Moody's, an insurance financial strength rating) of "A" or better by
each of the Rating Agencies, unless in the case where such insurance company or
security or bonding company is not rated by both Rating Agencies, each of the
Rating Agencies has confirmed in writing that obtaining the related insurance or
fidelity bond from an insurance company or security or bonding company with a
lower claims paying ability shall not result, in and of itself, in a
downgrading, withdrawal or qualification of the rating then assigned by such
Rating Agency to any Class of Certificates.
"Qualified Mortgage": A Mortgage Loan that is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code (but without regard to the
rule in Treasury Regulation Section 1.860G-2(f)(2) that treats a defective
obligation as a qualified mortgage), or any substantially similar successor
provision.
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"Qualified Substitute Mortgage Loan": A mortgage loan substituted for
a Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution: (i) have an outstanding principal balance, after
application of all scheduled payments of principal and interest due during or
prior to the month of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan as of the Due Date in the calendar month
during which the substitution occurs; (ii) have a Mortgage Rate not less than
the Mortgage Rate of the Deleted Mortgage Loan; (iii) have the same Due Date as
the Deleted Mortgage Loan; (iv) accrue interest on the same basis as the Deleted
Mortgage Loan (for example, on the basis of a 360-day year consisting of twelve
30-day months); (v) have a remaining term to stated maturity not greater than,
and not more than two years less than, the remaining term to stated maturity of
the Deleted Mortgage Loan; (vi) have an original Loan-to-Value Ratio not higher
than that of the Deleted Mortgage Loan and a current Loan-to-Value Ratio not
higher than the then-current Loan-to-Value Ratio of the Deleted Mortgage Loan;
(vii) comply as of the date of substitution with all of the representations and
warranties set forth in the applicable Mortgage Loan Purchase and Sale
Agreement, (viii) have an Environmental Report with respect to the related
Mortgaged Property which will be delivered as a part of the related Mortgage
File; (ix) have an original debt service coverage ratio not lower than the
original debt service coverage ratio of the Deleted Mortgage Loan; and (x) be
determined, at the Trustee's request, by an Opinion of Counsel (at the expense
of the applicable Seller) to be a "qualified replacement mortgage" within the
meaning of Section 860G(a)(4) of the Code; provided that no such mortgage loan
may have a maturity date after the date three years prior to the Rated Final
Distribution Date; and provided, further, that no such mortgage loan shall be
substituted for a Deleted Mortgage Loan unless the Trustee has received Rating
Agency Confirmation (the cost, if any, of obtaining such confirmation to be paid
by the applicable Seller) that such substitution will not result in the
withdrawal, downgrade, or qualification of the rating assigned by such Rating
Agency to any Class of Certificates then rated by such Rating Agency; and
provided, further that no such mortgage loan shall be substituted for a Deleted
Mortgage Loan if it would result in an Adverse REMIC Event in respect of REMIC
I, REMIC II, or REMIC III; and provided, further that no such mortgage loan
shall be substituted for a Deleted Mortgage Loan unless the Operating Adviser
shall have approved of such substitution based upon an engineering report and
the Environmental Report obtained with respect to such Mortgage Loan (provided,
however, that such approval of the Operating Adviser may not be unreasonably
withheld, as determined by the Special Servicer). In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, then the
amounts described in clause (i) shall be determined on the basis of aggregate
principal balances and the rates described in clause (ii) above and the
remaining term to stated maturity referred to in clause (v) above shall be
determined on a weighted average basis. Whenever a Qualified Substitute Mortgage
Loan is substituted for a Deleted Mortgage Loan pursuant to this Agreement, the
Seller effecting such substitution shall certify that such Mortgage Loan meets
all of the requirements of this definition and shall send such certification to
the Trustee.
"Rated Final Distribution Date": The Distribution Date in July 2031.
"Rating Agency": Each of Moody's and S&P. References herein to the
highest long-term senior unsecured debt rating category of each Rating Agency
shall mean "Aaa" with respect to Moody's and "AAA" with respect to S&P.
References herein to the highest short-term
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senior unsecured debt rating category of each Rating Agency shall mean "P1" with
respect to Moody's and "A1" with respect to S&P.
"Rating Agency Confirmation": With respect to any matter, where
required under this Agreement, confirmation in writing by each Rating Agency
that a proposed action, failure to act, or other event specified herein will not
in and of itself result in the withdrawal, downgrade, or qualification of the
then-current rating assigned by such Rating Agency to any Class of Certificates
then rated by such Rating Agency.
"Real Property": Land or improvements thereon such as buildings or
other inherently permanent structures (including items that are structural
components of such buildings or structures), in each such case as such terms are
used in the REMIC Provisions.
"Realized Loss": (x) With respect to each defaulted Mortgage Loan as
to which a Final Recovery Determination has been made, or with respect to any
REO Mortgage Loan as to which a Final Recovery Determination has been made as to
the related REO Property, an amount (not less than zero) equal to (i) the unpaid
principal balance of such Mortgage Loan (or, in the case of an REO Property, the
related REO Mortgage Loan) as of the commencement of the Collection Period in
which the Final Recovery Determination was made, plus (ii) all accrued but
unpaid interest on such Mortgage Loan (or, in the case of an REO Property, the
related REO Mortgage Loan) at the related Mortgage Rate to but not including the
Due Date in the Collection Period in which the Final Recovery Determination was
made, in any event determined without taking into account the amounts described
in subclause (iv) of this sentence, plus (iii) any related 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 and all unpaid Advance Interest
Amounts, minus (iv) all related Liquidation Proceeds (net of any related
Liquidation Expenses paid therefrom); (y) with respect to any Mortgage Loan as
to which any portion of the outstanding principal or accrued interest owed
thereunder was forgiven in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or a modification, waiver or amendment of such
Mortgage Loan granted or agreed to by the Master Servicer or Special Servicer
pursuant to Section 3.28, the amount of such principal or interest so forgiven;
and (z) with respect to any Mortgage Loan as to which the Mortgage Rate thereon
has been permanently reduced for any period in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Master Servicer or
Special Servicer pursuant to Section 3.28, the amount of the consequent
reduction in the interest portion of each successive Monthly Payment due
thereon. Each such Realized Loss shall be deemed to have been incurred on the
Due Date for each affected Monthly Payment.
"Record Date": With respect to each Distribution Date, the last
Business Day of the month preceding the month in which such Distribution Date
occurs.
"Regulation D": Regulation D under the 1933 Act.
"Related Certificate" and "Related REMIC II Regular Interest": For
any Class of REMIC II Regular Interest (other than the Class WAC-II Interest),
the related class of
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Certificates set forth below and for any Class of Certificates (other than the
Class X, Class V, Class R-I, Class R-II or Class R-III Certificates), the
related Class of REMIC II Regular Interests set forth below:
Related REMIC II
Related Certificate Regular Interest
------------------- ----------------
Class A-1 Class A-1-II Interest
Class A-2 Class A-2-II Interest
Class B Class B-II Interest
Class C Class C-II Interest
Class D Class D-II Interest
Class E Class E-II Interest
Class F Class F-II Interest
Class G Class G-II Interest
Class H Class H-II Interest
Class J Class J-II Interest
Class K Class K-II Interest
Class L Class L-II Interest
Class M Class M-II Interest
Class N Class N-II Interest
"REMIC": A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets included in the Trust Fund
created hereby and to be administered hereunder, consisting of the Mortgage
Loans (exclusive of Contingent Interest), as from time to time are subject to
this Agreement, the Mortgage Files relating thereto, all proceeds of and
payments under such Mortgage Loans (exclusive of Contingent Interest) received
after the Cut-off Date, such amounts in respect thereof as shall from time to be
held in the Collection Account, the Distribution Account and the REO Account,
and any REO Properties acquired in respect of any Mortgage Loan, for which a
REMIC election is to be made pursuant to Section 10.1 hereof.
"REMIC I Interests": Collectively, the REMIC I Regular Interests and
the Class R-I Certificates.
"REMIC I Regular Interest": With respect to each Mortgage Loan
(including, without limitation, each REO Mortgage Loan, but excluding any
Contingent Interest), the separate uncertificated interest in REMIC I issued in
respect of such Mortgage Loan hereunder and designated as a "regular interest"
in REMIC I. Each REMIC I Regular Interest shall represent a right to receive
interest at the related REMIC I Remittance Rate and distributions of principal,
subject to the terms and conditions hereof, in an aggregate amount equal to its
initial Uncertificated Principal Balance (which shall equal the principal
balance of the related Mortgage Loan as of the Cut-off Date). The designation
for each REMIC I Regular Interest shall be the loan number for the related
Mortgage Loan set forth in the Mortgage Loan Schedule as of the
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Closing Date. If a Qualified Substitute Mortgage Loan or Loans are substituted
for any Deleted Mortgage Loan, the REMIC I Regular Interest that related to the
Deleted Mortgage Loan shall thereafter relate to such Qualified Substitute
Mortgage Loan(s).
"REMIC I Remittance Rate": With respect to any REMIC I Regular
Interest for any Distribution Date, a rate per annum equal to the Net Mortgage
Rate in effect for the related Mortgage Loan (including without limitation an
REO Mortgage Loan) as of the Closing Date. If any Mortgage Loan included in the
Trust Fund as of the Closing Date is replaced by a Qualified Substitute Mortgage
Loan or Loans, the REMIC I Remittance Rate for the related REMIC I Regular
Interest shall still be calculated in accordance with the preceding sentence
based on the Net Mortgage Rate for the Deleted Mortgage Loan.
"REMIC II": The segregated pool of assets consisting of the REMIC I
Regular Interests and all distributions thereon conveyed to the Trustee for the
benefit of REMIC III and for which a separate REMIC election is to be made
pursuant to Section 10.1 hereof.
"REMIC II Distribution Amount": As defined in Section 4.1(c).
"REMIC II Interests": Collectively, the REMIC II Regular Interests
and the Class R-II Certificates.
"REMIC II Regular Interest": Any of the 15 separate uncertificated
beneficial interests in REMIC II issued hereunder and designated as a "regular
interest" in REMIC II. Each REMIC II Regular Interest shall represent a right to
receive interest at the related REMIC II Remittance Rate in effect from time to
time and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto. The designations for the respective REMIC II Regular Interests are set
forth in the Preliminary Statement hereto.
"REMIC II Remittance Rate": With respect to each REMIC II Regular
Interest, the rate specified in the Preliminary Statement.
"REMIC III Certificate": Any Certificate, other than a Class V, Class
R-I or Class R-II Certificate.
"REMIC III Distribution Amount": As defined in Section 4.2(d).
"REMIC III Regular Certificate": Any REMIC III Certificate,
other than a Class R-III Certificate.
"REMIC Pool": Each of the three segregated pools of assets desig-
nated as a REMIC pursuant to Section 10.1 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter
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M of Chapter 1 of the Code, and related provisions, and regulations (including
any applicable proposed regulations) and rulings promulgated thereunder, as the
foregoing may be in effect from time to time.
"Remittance Date": The Business Day preceding each Distribution
Date.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code, which income,
subject to the terms and conditions of that Section of the Code in its present
form, does not include:
(i) except as provided in Section 856(d)(4) or (6) of the Code, any
amount received or accrued, directly or indirectly, with respect to such REO
Property, if the determination of such amount depends in whole or in part on the
income of profits derived by any Person from such property (unless such amount
is a fixed percentage or percentages of receipts or sales and otherwise
constitutes Rents from Real Property);
(ii) any amount received or accrued, directly or indirectly, from any
Person if the Trust Fund owns directly or indirectly (including by attribution)
a 10% or greater interest in such Person determined in accordance with Sections
856(d)(2)(B) and (d)(5) of the Code;
(iii)any amount received or accrued, directly or indirectly, with
respect to such REO Property if any Person Directly Operates such REO Property;
(iv) any amount charged for services that are not customarily
furnished in connection with the rental of property to tenants in buildings of a
similar class in the same geographic market as such REO Property within the
meaning of Treasury Regulation Section 1.856-4(b)(1) (whether or not such
charges are separately stated); and
(v) rent attributable to personal property unless such personal
property is leased under, or in connection with, the lease of such REO Property
and, for any taxable year of the Trust Fund, such rent is no greater than 15% of
the total rent received or accrued under, or in connection with, the lease.
"REO Account": As defined in Section 3.17(b).
"REO Extension Period": As defined in Section 3.17(a).
"REO Grace Period": As defined in Section 3.17(a).
"REO Mortgage Loan": Any Mortgage Loan as to which the related
Mortgaged Property has become an REO Property.
"REO Proceeds": With respect to any REO Property and the related REO
Mortgage Loan, all revenues received by the Master Servicer with respect to such
REO Property or REO Mortgage Loan that do not constitute Liquidation Proceeds.
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"REO Property": A Mortgaged Property title to which has been acquired
by the Master Servicer on behalf of the Trust Fund through foreclosure, deed in
lieu of foreclosure or otherwise.
"Repurchase Price": With respect to any Mortgage Loan to be
repurchased, or any Deleted Mortgage Loan to be replaced by the substitution of
one or more Qualified Substitute Mortgage Loans, pursuant to Section 2.3 or any
Specially Serviced Mortgage Loan or any REO Property to be sold or repurchased
pursuant to Section 3.18, an amount, calculated by the Master Servicer equal to:
(i) The unpaid principal balance of such Mortgage Loan (or, in the
case of any REO Property, the related REO Mortgage Loan) (after application of
all principal payments (including prepayments) collected and other principal
amounts recovered on such Mortgage Loan) as of the date of receipt of the
Repurchase Price or the date of substitution, as the case may be, hereunder;
plus
(ii) Unpaid interest accrued on such Mortgage Loan or REO Mortgage
Loan, as applicable, at the related Mortgage Rate (after application of all
interest payments collected and other amounts recovered (and applied to accrued
interest) on such Mortgage Loan) to, but not including, the date of receipt of
the Repurchase Price or the date of substitution, as the case may be, hereunder;
plus
(iii)Any unreimbursed Servicing Advances, all accrued and unpaid
interest on Advances (including P&I Advances) at the Advance Rate, any unpaid
Servicing Compensation (other than Master Servicing Fees) and any unpaid or
unreimbursed expenses of the Trust Fund allocable to such Mortgage Loan or REO
Mortgage Loan, as applicable, as of the date of receipt of the Repurchase Price
or the date of substitution, as the case may be, hereunder; plus
(iv) In the event that such Mortgage Loan or REO Mortgage Loan, as
applicable, is required to be repurchased or replaced pursuant to Section 2.3,
expenses reasonably incurred or to be incurred by the Master Servicer, the
Special Servicer or the Trustee in respect of the breach or defect giving rise
to the repurchase or replacement obligation, including any expenses arising out
of the enforcement of the repurchase or replacement obligation; plus
(v) If the Mortgage Loan is Loan Number 2 or 41, $0.01 as payment in
full for any Contingent Interest associated with such Mortgage Loan.
"Request for Release": A request for release signed by a Servicing
Officer, substantially in the form of Exhibit E hereto.
"Required Appraisal Loan": Any Mortgage Loan (including without
limitation any REO Mortgage Loan) as to which an Appraisal Event has occurred
and is continuing.
"Reserve Accounts": With respect to any Mortgage Loan, reserve or
escrow accounts, if any, established pursuant to the related Mortgage Loan
Documents and any Escrow Account. Each Reserve Account shall be an Eligible
Account except to the extent precluded by
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applicable law and the related Mortgage Loan Documents. Any Reserve Account
shall be beneficially owned for federal income tax purposes by the Person who is
entitled to receive the reinvestment income or gain thereon in accordance with
the related Mortgage Loan Documents and Section 3.7.
"Residual Certificate": A Class R-I, Class R-II or Class R-III
Certificate.
"Responsible Officer": Any officer of the Asset-Backed Securities
Trust Services Group of the Trustee (and, in the event that the Trustee is the
Certificate Registrar or the Paying Agent, an officer of the Certificate
Registrar or the Paying Agent, as applicable) assigned to the Corporate Trust
Office with direct responsibility for the administration of this Agreement and
also, with respect to a particular matter, any other officer or any employee
with responsibilities similar to those of an officer of the Asset-Backed
Securities Trust Services Group of the Trustee to whom such matter is referred
because of such officer's or employee's knowledge of and familiarity with the
particular subject, and, in the case of any certification required to be signed
by a Responsible Officer, such an officer or employee whose name and specimen
signature appears on a list of corporate trust officers and employees furnished
to the Master Servicer by the Trustee, as such list may from time to time be
amended.
"Revised Interest Rate": Any increased Mortgage Rate after a Hyper-
Amortization Date.
"RFC": Residential Funding Corporation, a Delaware corporation.
"RFC Loans": The Mortgage Loans transferred and assigned by RFC to
MSMC pursuant to the RFC Mortgage Loan Purchase Agreement; which Mortgage Loans
were subsequently transferred to the Depositor by MSMC on the Closing Date.
"RFC Mortgage Loan Purchase Agreement": The Mortgage Loan Purchase
and Sale Agreement dated as of June 30, 1998, between MSMC and RFC,
substantially in the form attached hereto as Exhibit J.
"Rule 144A": Rule 144A, under the 1933 Act.
"S&P": Standard & Poor's Rating Services, a division of The McGraw-
Hill Companies, Inc..
"Scheduled Final Distribution Date": With respect to any Class of
Certificates, the Distribution Date on which the aggregate Certificate Balance
or aggregate Notional Amount, as the case may be, of such Class of Certificates
would be reduced to zero based on the Prepayment Assumption. Such Distribution
Date shall in each case be as follows:
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Scheduled
Class Designation Final Distribution Date
Class A-1 December 2007
Class A-2 May 2008
Class X March 2023
Class B June 2008
Class C June 2008
Class D April 2010
Class E May 2011
Class F March 2013
Class G May 2013
Class H January 2014
Class J January 2016
Class K February 2017
Class L December 2017
Class M March 2018
Class N March 2023
"Securities Depository": The Depository Trust Company, or any
successor Securities Depository hereafter named. The nominee of the initial
Securities Depository, for purposes of registering those Certificates that are
to be Book-Entry Certificates, is Cede & Co. The Securities Depository shall at
all times be a "clearing corporation" as defined in Section 8-102(3) of the
Uniform Commercial Code of the State of New York and a "clearing agency"
registered pursuant to the provisions of Section 17A of the 1934 Act.
"Securities Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time the Securities
Depository effects book-entry transfers and pledges of securities deposited with
the Securities Depository.
"Securities Legend": With respect to each Residual Certificate and
any Individual Certificate (other than a Residual Certificate) that is a
Privately Placed Certificate the legend set forth in, and substantially in the
form of, Exhibit K hereto.
"Seller": With respect to the Midland Loans, Midland Loan Services,
Inc.; with respect to the RFC Loans, RFC; with respect to the MSMC Loans, MSMC;
with respect to the PNC Loans, PNC.
"Senior Certificates": The Class A-1, Class A-2 and Class X Certi-
ficates.
"Servicer Remittance Report": A report prepared by the Master
Servicer in such media as may be agreed upon by the Master Servicer and the
Trustee containing such information regarding the Mortgage Loans as will permit
the Trustee to calculate the amounts to be distributed pursuant to Section 4.3
and to furnish statements to Certificateholders pursuant to
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Section 4.4 and containing such additional information as the Master Servicer
and the Trustee may from time to time agree.
"Servicing Advance": As to any Mortgage Loan, any advance made by the
Master Servicer, the Trustee or the Fiscal Agent in respect of costs and
expenses incurred pursuant to Sections 3.9, 3.10, 3.17, 3.23 and 3.28 or any
expenses incurred to protect and preserve the security for such Mortgage Loan or
taxes and assessments or insurance premiums, pursuant to Section 3.4, 3.8 or
Section 3.22, as applicable, or any other item designated as such hereunder.
"Servicing Compensation": With respect to each Mortgage Loan, the
Master Servicing Fee and the Special Servicing Fee which shall be due to the
Master Servicer and the Special Servicer, as applicable, and such other
compensation of the Master Servicer and Special Servicer specified in Section
3.12, as adjusted pursuant to Section 3.25.
"Servicing Officer": Any officer or employee of the Master Servicer
or the Special Servicer involved in, or responsible for, the administration and
servicing of the Mortgage Loans or this Agreement and also, with respect to a
particular matter, any other officer or employee to whom such matter is referred
because of such officer's or employee's knowledge of and familiarity with the
particular subject, and, in the case of any certification required to be signed
by a Servicing Officer, such an officer or employee whose name and specimen
signature appears on a list of servicing officers furnished to the Trustee by
the Master Servicer or the Special Servicer, as applicable, as such list may
from time to time be amended, together with, in the case of a certificate or
other writing executed by an employee who constitutes a Servicing Officer
because of such employee's knowledge and familiarity with a particular subject,
a countersignature of an officer of the Master Servicer or of an officer of the
Special Servicer, as appropriate.
"Servicing Standard": The standards for the conduct of the Master
Servicer and the Special Servicer in the performance of their respective
obligations under this Agreement as set forth in Section 3.1(a).
"Similar Law": As defined in Section 5.2(i).
"Special Servicer": Midland Loan Services, Inc., a Delaware
corporation, or its successor in interest, or any successor Special Servicer
appointed as herein provided.
"Special Servicing Fee": With respect to any Specially Serviced
Mortgage Loan or REO Mortgage Loan and for any Distribution Date, an amount per
calendar month equal to the product of (i) one-twelfth of the Special Servicing
Fee Rate and (ii) the Stated Principal Balance of such Specially Serviced
Mortgage Loan or REO Mortgage Loan, as applicable, as of the Due Date in the
month preceding the month in which such Distribution Date occurs.
"Special Servicing Fee Rate": A rate equal to 0.35%.
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"Specially Serviced Mortgage Loan": Subject to Section 3.24, any
Mortgage Loan with respect to which:
(i) the related Borrower is 60 or more days delinquent (without
giving effect to any grace period permitted by the related Note) in the payment
of a Monthly Payment (regardless of whether, in respect thereof, P&I Advances
have been reimbursed);
(ii) such Borrower has expressed to the Master Servicer an inability
to pay or a hardship in paying such Mortgage Loan in accordance with its terms;
(iii)the Master Servicer has received notice that such Borrower has
become the subject of any bankruptcy, insolvency or similar proceeding, admitted
in writing the inability to pay its debts as they come due or made an assignment
for the benefit of creditors;
(iv) the Master Servicer has received notice of a foreclosure or
threatened foreclosure of any lien on the related Mortgaged Property;
(v) a default, of which the Master Servicer has notice (other than a
failure by such Borrower to pay principal or interest) and which in the judgment
of the Master Servicer materially and adversely affects the interests of the
Certificateholders, has occurred and remained unremedied for the applicable
grace period specified in such Mortgage Loan (or, if no grace period is
specified, 60 days); provided, however, that a default requiring a Servicing
Advance shall be deemed to materially and adversely affect the interests of the
Certificateholders;
(vi) such Borrower has failed to make a Balloon Payment as and when
due (except in the case where the Master Servicer and the Special Servicer agree
in writing that such Mortgage Loan is likely to be paid in full within 30 days
after such default); or
(vii)the Master Servicer proposes to commence foreclosure or
other workout arrangements;
provided, however, that a Mortgage Loan will cease to be a Specially Serviced
Mortgage Loan:
(a) with respect to the circumstances described in clause (i)
and (vi) above, when the related Borrower has brought such Mortgage Loan current
(with respect to the circumstances described in clause (vi), pursuant to any
workout implemented by the Special Servicer) and thereafter made three
consecutive full and timely Monthly Payments;
(b) with respect to the circumstances described in clauses (ii)
and (iv) above, when such circumstances cease to exist in the good faith
judgment of the Special Servicer, and with respect to the circumstances
described in clauses (iii) and (vii), when such circumstances cease to exist; or
(c) with respect to the circumstances described in clause (v)
above, when such default is cured; provided, however, that at the time no
circumstance identified in
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clauses (i) through (vii) above exists that would cause the Mortgage Loan to
continue to be characterized as a Specially Serviced Mortgage Loan.
"Startup Day": The day designated as such pursuant to Section 10.1
(c).
"Stated Maturity Date": With respect to any Mortgage Loan, the Due
Date on which the last payment of principal is due and payable under the terms
of the related Mortgage Note as in effect on the Closing Date, without regard to
any change in or modification of such terms in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Master Servicer or
Special Servicer pursuant to Section 3.28.
"Stated Principal Balance": As of any date of determination, with
respect to any Mortgage Loan (including without limitation any REO Mortgage
Loan), an amount equal to (a) the unpaid principal balance of such Mortgage Loan
as of the Cut-off Date (or, in the case of a Qualified Substitute Mortgage Loan,
as of the related date of substitution), after application of all payments due
on or before such date, whether or not received, reduced on a cumulative basis
on each subsequent Distribution Date (to not less than zero) by (b) the sum of
(i) all payments (or P&I Advances in lieu thereof) of, and all other collections
allocated as provided in Section 1.2 to, principal of or with respect to such
Mortgage Loan that are (or, if they had not been applied to cover any Additional
Trust Fund Expense, would have been) distributed to Certificateholders on such
Distribution Date, and (ii) the principal portion of any Realized Loss incurred
in respect of such Mortgage Loan during the related Collection Period, provided
that, notwithstanding the foregoing, if a Liquidation Event occurs in respect of
such Mortgage Loan (or any related REO Property), then the "Stated Principal
Balance" of such Mortgage Loan shall be zero commencing as of the Distribution
Date in the Collection Period next following the Collection Period in which such
Liquidation Event occurred.
"Subordinate Certificates": Any one or more of the Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M
and Class N Certificates.
"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 and any Sub-Servicer relating to servicing and
administration of Mortgage Loans as provided in Section 3.2.
"Substitution Shortfall Amount": In connection with the substitution
of one or more Qualified Substitute Mortgage Loans for one or more Deleted
Mortgage Loans, the amount, if any, by which the Repurchase Price or aggregate
Repurchase Price, as the case may be, for such Deleted Mortgage Loan(s) as of
the date of substitution exceeds the Stated Principal Balance or aggregate
Stated Principal Balance, as the case may be, of such Qualified Substitute
Mortgage Loan(s) as of the date of substitution.
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"Tax Returns": The federal income tax return on IRS Form 1066, U.S.
Real Estate Mortgage Investment Conduit Income Tax Return, including Schedule Q
thereto, Quarterly Notice to Residual Interest Holders of REMIC Taxable Income
or Net Loss Allocation, or any successor forms, to be filed on behalf of each of
REMIC I, REMIC II and REMIC III under the REMIC Provisions, together with any
and all other information, reports or returns that may be required to be
furnished to the Certificateholders or filed with the IRS or any other
governmental taxing authority under any applicable provisions of federal, state
or local tax laws.
"Termination Date": The Distribution Date on which the Trust Fund is
terminated pursuant to Section 9.1.
"Transfer": Any direct or indirect transfer or other form of
assignment of any Ownership Interest in a Class R-I, Class R-II or Class R-III
Certificate.
"Transferee Affidavit": As defined in Section 5.2(j)(ii).
"Transferor Letter": As defined in Section 5.2(j)(ii).
"Trust Fund": The corpus of the trust created hereby and to be
administered hereunder, consisting of: (i) such Mortgage Loans as from time to
time are subject to this Agreement, together with the Mortgage Files relating
thereto; (ii) all payments on or collections in respect of such Mortgage Loans
due after the Cut-off Date; (iii) any REO Property; (iv) all revenues received
in respect of REO Property; (v) the Master Servicer's, the Special Servicer's
and the Trustee's rights under the insurance policies with respect to such
Mortgage Loans required to be maintained pursuant to this Agreement and any
proceeds thereof; (vi) any Assignments of Leases, Rents and Profits, and any
security agreements and pledges; (vii) any indemnities or guaranties given as
additional security for such Mortgage Loans; (viii) the Trustee's right, title
and interest in and to the Reserve Accounts; (ix) the Collection Account and the
Grantor Trust Collection Account; (x) the Distribution Account and the Grantor
Trust Distribution Account and the REO Account; (xi) any environmental indemnity
agreements relating to such Mortgaged Properties; (xii) the rights and remedies
of Depositor under each Mortgage Loan Purchase Agreement; (xiii) the Cash
Deposit; and (xiv) the proceeds of any of the foregoing (other than any interest
earned on deposits in any Reserve Account, to the extent such interest belongs
to the related Borrower).
"Trust REMICs": REMIC I, REMIC II and REMIC III.
"Trustee": LaSalle National Bank, in its capacity as trustee, or its
successor in interest, or any successor trustee appointed as herein provided.
"Trustee Fee": With respect to each Mortgage Loan and for any
Distribution Date, an amount per calendar month equal to the product of (i)
one-twelfth of the Trustee Fee Rate and (ii) the Stated Principal Balance of
such Mortgage Loan as of the Due Date in the month preceding the month in which
such Distribution Date occurs. The Trustee Fee shall be paid out of the
Collection Account by the Master Servicer on or before each Remittance Date.
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"Trustee Fee Rate": A rate equal to .0034%.
"Trustee Mortgage File": With respect to any Mortgage Loan, the
documents listed in Section 2.1(i) through (xv) pertaining to such Mortgage
Loan, the documents listed in the third paragraph of Section 2.1 and any
additional documents required to be deposited with the Trustee pursuant to the
express provisions of this Agreement.
"Uncertificated Accrued Interest": With respect to any class of
uncertificated REMIC I Regular Interests or REMIC II Regular Interests for any
Distribution Date, the product of the Uncertificated Principal Balance of such
class as of the close of the preceding Distribution Date (or, in the case of the
first Distribution Date, as of the Cut-off Date) and one-twelfth of the
applicable REMIC I Remittance Rate or REMIC II Remittance Rate. The
Uncertificated Accrued Interest in respect of each class of REMIC I Regular
Interests and REMIC II Regular Interests shall accrue on the basis of a 360-day
year consisting of twelve 30-day months.
"Uncertificated Distributable Interest": With respect to any REMIC I
Regular Interest or REMIC II Regular Interest for any Distribution Date, an
amount equal to: (a) the Uncertificated Accrued Interest in respect of such
REMIC I Regular Interest or REMIC II Regular Interest, as the case may be, for
such Distribution Date; reduced (to not less than zero) by (b) the portion of
any Net Aggregate Prepayment Interest Shortfall for such Distribution Date
allocated to such REMIC I Regular Interest or REMIC II Regular Interest, as the
case may be, as set forth below; and increased by (c) any Uncertificated
Distributable Interest in respect of such REMIC I Regular Interest or REMIC II
Regular Interest, as the case may be, for the immediately preceding Distribution
Date that was not deemed paid on the immediately preceding Distribution Date
pursuant to Section 4.1 or 4.2, as applicable, together with one month's
interest (calculated on the basis of a 360-day year consisting of twelve 30-day
months) on such unpaid Uncertificated Distributable Interest at the REMIC I
Remittance Rate or the REMIC II Remittance Rate, as the case may be, applicable
to such REMIC I Regular Interest or REMIC II Regular Interest, as the case may
be, for the current Distribution Date. The Net Aggregate Prepayment Interest
Shortfall for any Distribution Date shall be allocated: (i) among the respective
REMIC I Regular Interests, pro rata in accordance with the respective amounts of
Uncertificated Accrued Interest with respect thereto for such Distribution Date;
and (ii) among the respective REMIC II Regular Interests, pro rata in accordance
with the respective amounts of Uncertificated Accrued Interest with respect
thereto for such Distribution Date.
"Uncertificated Principal Balance": The principal amount of any REMIC
I Regular Interest or REMIC II Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC I Regular Interest shall equal the principal balance of the related
Mortgage Loan as of the Cut-off Date. On each Distribution Date, the
Uncertificated Principal Balance of each REMIC I Regular Interest shall be
reduced by all distributions of principal deemed to have been made thereon on
such Distribution Date pursuant to Section 4.1 and, if and to the extent
appropriate, shall be further reduced on such Distribution Date as provided in
Section 4.6. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC II Regular Interest shall equal the amount set forth in the
Preliminary Statement hereto as its initial Uncertificated Principal Balance. On
each
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Distribution Date, the Uncertificated Principal Balance of each REMIC II Regular
Interest shall be calculated as set forth in the Preliminary Statement. For
purposes of this Agreement, the Uncertificated Principal Balances of the REMIC
II Regular Interests shall be expressed in eight decimal places.
"Unscheduled Payments": With respect to a Mortgage Loan and a
Collection Period, all Liquidation Proceeds and Insurance Proceeds payable under
such Mortgage Loan, the Repurchase Price of such Mortgage Loan if it is
repurchased or purchased pursuant to Sections 2.3 and the price specified in
Section 9.1 if such Mortgage Loan is purchased or repurchased pursuant thereto,
draws on any letters of credit issued with respect to such Mortgage Loan and any
other payments under or with respect to such Mortgage Loan not scheduled to be
made, including Principal Prepayments (but excluding Prepayment Premiums)
received during such Collection Period.
"Updated Appraisal": With respect to any Mortgage Loan, (i) a fair
market value appraisal of the related Mortgaged Property or REO Property from an
independent appraiser who is a member of the Appraisal Institute, which
appraisal shall be conducted in accordance with MAI standards by an appraiser
with at least 10 years experience in the related property type and in the
jurisdiction where the property is located or (ii) an internal property
valuation performed by the Special Servicer at its discretion in accordance with
the servicing standard set forth herein with respect to any Mortgage Loan with
an outstanding principal balance equal to or less than $1,500,000, in each case
conducted subsequent to any appraisal performed on or prior to the Cut-off Date.
"Voting Rights": The voting rights to which the Certificateholders
are entitled hereunder. At all times during the term of this Agreement, 97% of
the Voting Rights shall be allocated among the Holders of the various
outstanding Classes of Principal Balance Certificates in proportion to the
respective aggregate Certificate Balances of their Certificates, 2% of the
Voting Rights shall be allocated to the Holders of the Interest Only
Certificates, and the remaining Voting Rights shall be allocated equally among
the Holders of the respective Classes of the Residual Certificates. The Class V
Certificates shall have no Voting Rights. Voting Rights allocated to a Class of
Certificateholders shall be allocated among such Certificateholders in
proportion to the Percentage Interests in such Class evidenced by their
respective Certificates.
"Weighted Average Pass-Through Rate": With respect to any Interest
Accrual Period, a per annum rate equal to the weighted average of the
Pass-Through Rates for the Principal Balance Certificates as of the close of the
preceding Distribution Date (or, in the case of the first Distribution Date, as
of the Cut-off Date).
"Weighted Average REMIC I Remittance Rate": With respect to each
Distribution Date, the weighted average of the REMIC I Remittance Rates for the
REMIC I Regular Interests, weighted on the basis of the Uncertificated Principal
Balances of the REMIC I Regular Interest related to each Mortgage Loan as of the
close of the preceding Distribution Date (or, in the case of the first
Distribution Date, as of the Cut-off Date).
"Workout Fee": As defined in Section 3.12(b).
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SECTION 1.2. Certain Calculations
Unless otherwise specified herein, the following provisions shall
apply:
(a) All calculations of interest (excluding interest on the Mortgage
Loans, which shall be calculated pursuant to the related Mortgage Loan
Documents) provided for herein shall be made on the basis of a 360-day year
consisting of twelve 30-day months.
(b) The portion of any Insurance Proceeds, Liquidation Proceeds,
Repurchase Price, Substitution Shortfall Amounts or Net REO Proceeds in respect
of a Mortgage Loan allocable to principal and Prepayment Premiums shall equal
the total amount of such proceeds minus (a) first, any portion thereof payable
to the Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent
pursuant to the provisions of this Agreement and (b) second, any portion thereof
equal to interest on the unpaid principal balance of such Mortgage Loan at the
related Net Mortgage Rate from the Due Date as to which interest was last paid
by the related Borrower up to but not including the Due Date in the Collection
Period in which such proceeds are received. Allocation of such amount between
principal and Prepayment Premium shall be made first to principal and second to
Prepayment Premium.
(c) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Master Servicer, the Special Servicer
or the Trustee; provided, however, that for purposes of calculating
distributions on the Certificates, Principal Prepayments with respect to any
Mortgage Loan are deemed to be received on the date they are applied in
accordance with Section 3.1(b) to reduce the outstanding principal balance of
such Mortgage Loan on which interest accrues.
SECTION 1.3. Certain Constructions.
(a) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.1 shall have the respective meanings given to them under United States
generally accepted accounting principles or regulatory accounting principles, as
applicable.
(b) The words "hereof," "herein" and "hereunder," and words of
similar import when used in this Agreement, shall refer to this agreement as a
whole and not to any particular provision of this Agreement, and references to
Sections, Schedules and Exhibits contained in this Agreement are references to
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified.
(c) Whenever a term is defined herein, the definition ascribed to
such term shall be equally applicable to both the singular and plural forms of
such term and to masculine, feminine and neuter genders of such term.
(d) This Agreement is the result of arm's-length negotiations between
the parties and has been reviewed by each party hereto and its counsel. Each
party agrees that any
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ambiguity in this Agreement shall not be interpreted against the party drafting
the particular clause which is in question.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1. Conveyance and Assignment of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and otherwise convey to the Trustee
without recourse (except to the extent herein provided) all the right, title and
interest of the Depositor in and to the Mortgage Loans, including all rights to
payment in respect thereof, except as set forth below, and any security interest
thereunder (whether in real or personal property and whether tangible or
intangible) in favor of the Depositor, and all Reserve Accounts and all other
assets included or to be included in the Trust Fund for the benefit of the
Certificateholders. Such transfer and assignment includes all scheduled payments
of interest and principal due after the Cut-off Date (whether or not received)
and all payments of interest and principal received by the Depositor or the
Master Servicer on or with respect to the Mortgage Loans after the Cut-off Date,
other than any such payments of interest or principal which were due on or prior
to the Cut-off Date. In connection with such transfer and assignment of all
interest and principal due with respect to the Mortgage Loans after the Cut-off
Date, the Depositor shall make a cash deposit to the Collection Account on the
Closing Date in an amount equal to the Cash Deposit. The Depositor, concurrently
with the execution and delivery hereof, does also hereby sell, transfer, assign,
set over and otherwise convey to the Trustee without recourse (except to the
extent provided herein) all the right, title and interest of the Depositor in,
to and under the Mortgage Loan Purchase Agreements (other than the right to
recovery of certain transaction expenses, including certain estimated expenses,
as set forth in Section 1 of each such Mortgage Loan Purchase Agreement and the
right to receive certain indemnification payments under the Indemnification
Agreement required of the applicable Seller under each such Mortgage Loan
Purchase Agreement). The Depositor shall cause the Reserve Accounts to be
transferred to and held in the name of the Master Servicer on behalf of the
Trustee as successor to the applicable Seller.
In connection with the transfer and assignment of its right, title
and interest in the Mortgage Loans, the Depositor does hereby deliver to, and
deposit with, the Trustee, with a copy to the Master Servicer, the following
documents or instruments with respect to each such Mortgage Loan:
(i) the original of the related Note, endorsed by the applicable
Seller in blank in the following form: "Pay to the order of ________________,
without recourse" which the Trustee or its designee is authorized to complete
and which Note and all endorsements thereof shall show a complete chain of
endorsement from the Originator to the applicable Seller;
(ii) the related original recorded Mortgage or a copy thereof
certified by the related title insurance company, public recording office or
closing agent to be in the form
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in which executed or submitted for recording, each related original recorded
Assignment of Mortgage which, together with other such Assignments of Mortgage,
shows a complete chain of assignment of the related Mortgage from the applicable
Originator to the applicable Seller or a copy thereof certified by the related
title insurance company, public recording office or closing agent to be in the
form in which executed or submitted for recording and the related original
Assignment of Mortgage executed by the applicable Seller in blank which the
Trustee or its designee is authorized to complete (and but for the insertion of
the name of the assignee and any related recording information which is not yet
available to the applicable Seller, is in suitable form for recordation in the
jurisdiction in which the related Mortgaged Property is located);
(iii) if the related security agreement is separate from the
Mortgage, the original security agreement or a counterpart thereof, and if the
security agreement is not assigned under the Assignments of Mortgage described
in clause (ii) above, the related original assignment of such security agreement
to the applicable Seller or a counterpart thereof and the related original
assignment of such security agreement executed by the applicable Seller in blank
which the Trustee or its designee is authorized to complete;
(iv) the acknowledgement copy of each Form UCC-1 financing
statement (file stamped to show the filing or recording thereof in the
applicable public filing or recording office), if any, filed or recorded with
respect to personal property or fixtures constituting a part of the related
Mortgaged Property, or a copy thereof in the form submitted for filing or
recording, together with a copy of each Form UCC-2 or UCC-3 assignment (file
stamped to show the filing or recording thereof in the applicable public filing
or recording office), if any, filed or recorded with respect to such financing
statement which, together with other such assignments, shows a complete chain of
assignment of such financing statement from the applicable Originator to the
applicable Seller, or a copy thereof in the form submitted for filing or
recording, and a copy of each Form UCC-2 or UCC-3 assignment, if any, of such
financing statement executed by the applicable Seller in blank which the Trustee
or its designee is authorized to complete (and but for the insertion of the name
of the assignee and any related filing or recording information which is not yet
available to the applicable Seller, is in suitable form for filing or recording
in the filing or recording office in which such financing statement was filed or
recorded);
(v) the related original of the Loan Agreement, if any,
relating to such Mortgage Loan or a counterpart thereof;
(vi) the related original lender's title insurance policy
(or the original pro forma or specimen title insurance policy or the original
marked, redated and recertified commitment for lender's title insurance policy
issued with respect to the related Mortgage for the purpose of closing),
together with any endorsements or riders thereto that were issued with or
subsequent to the issuance of such policy;
(vii) if any related Assignment of Leases, Rents and Profits
is separate from the Mortgage, the original recorded Assignment of Leases, Rents
and Profits or a copy thereof certified by the related title insurance company,
public recording office or closing agent to be in the form in which executed or
submitted for recording, each related original recorded
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reassignment of such instrument, if any, which, together with other such
reassignments, shows a complete chain of assignment of such instrument from the
applicable Originator to the applicable Seller or a copy thereof certified by
the related title insurance company, public recording office or closing agent to
be in the form in which executed or submitted for recording and the related
original reassignment of such instrument, if any, executed by the applicable
Seller in blank which the Trustee or its designee is authorized to complete (and
but for the insertion of the name of the assignee and any related recording
information which is not yet available to the applicable Seller, is in suitable
form for recordation in the jurisdiction in which the related Mortgaged Property
is located) (any of which reassignments, however, may be included in a related
Assignment of Mortgage and need not be a separate instrument);
(viii) the original or a counterpart of each environmental
warranty or indemnity agreement, if any, with respect to such Mortgage Loan;
(ix) if any related assignment of contracts is separate from
the Mortgage, the original assignment of contracts or a counterpart thereof, and
if the assignment of contracts is not assigned under the Assignments of Mortgage
described in clause (ii) above, the related original reassignment of such
instrument to the applicable Seller or a counterpart thereof and the related
original reassignment of such instrument executed by the applicable Seller in
blank which the Trustee or its designee is authorized to complete;
(x) with respect to the related Reserve Accounts, if any, a
copy of the original of any separate agreement with respect thereto between the
related Borrower and the Originator (and, if the Seller is not the Originator,
together with an assignment of the agreement to the Seller);
(xi) the original of any other written agreement, instrument
or document securing such Mortgage Loan, including, without limitation,
originals of any guaranties with respect to such Mortgage Loan or the original
letter of credit, if any, with respect thereto, together with any and all
amendments thereto, including, without limitation, any amendment which entitles
the Master Servicer to draw upon such letter of credit on behalf of the Trustee
for the benefit of the Certificateholders, and the original of each instrument
or other item of personal property given as security for a Mortgage Loan
possession of which by a secured party is necessary to a secured party's valid,
perfected, first priority security interest therein, together with all
assignments or endorsements thereof necessary to entitle the Master Servicer to
enforce a valid, perfected, first priority security interest therein on behalf
of the Trustee for the benefit of the Certificateholders;
(xii) with respect to the related Reserve Accounts, if any,
the acknowledgement copy of each UCC-1 financing statement (file stamped to show
the filing thereof in the applicable public filing office), if any, filed with
respect to the security interest of the applicable Originator in such Reserve
Accounts and all funds contained therein, or a copy thereof in the form
submitted for filing, together with a copy of each Form UCC-2 or UCC-3
assignment (file stamped to show the filing thereof in the applicable public
filing office), if any, filed with respect to such financing statement, which
assignment, together with all other such assignments, shows a complete chain of
assignment of such financing statement from the
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applicable Originator to the applicable Seller, or a copy thereof in the form
submitted for filing, and a copy of each Form UCC-2 or UCC-3 assignment, if any,
of such financing statement executed by the applicable Seller in blank which the
Trustee or its designee is authorized to complete (and but for the insertion of
the name of the assignee and any related filing information which is not yet
available to the applicable Seller is in suitable form for filing in the filing
office in which such financing statement was filed);
(xiii) the original of each assumption, consolidation or
substitution agreement, if any, with evidence of recording thereon, where
appropriate (or a copy thereof certified by the related title insurance company,
public recording office or closing agent to be in the form in which executed or
submitted for recording);
(xiv) if any document or instrument described above is
signed by an attorney in fact or similar agent on behalf of the related Borrower
or another party, the original of the applicable power of attorney or a
counterpart thereof; and
(xv) originals or copies of any and all amendments,
modifications and supplements to, and waivers related to, any of the foregoing.
On or promptly following the Closing Date, the Trustee or Custodian,
as applicable, shall, to the extent possession thereof has been delivered to it,
complete any Assignment of Mortgage delivered in blank pursuant to clause (ii)
above, any assignment of security agreement delivered in blank pursuant to
clause (iii) above, any Form UCC-2 or UCC-3 assignment delivered in blank
pursuant to clause (iv) or (xii) above, any reassignment of Assignment of
Leases, Rents and Profits delivered in blank pursuant to clause (vii) above and
any reassignment of assignment of contracts delivered in blank pursuant to
clause (ix) above, in each case, by inserting the name of the Trustee as
assignee and delivering to the Master Servicer (1) for recordation, (a) each
Assignment of Mortgage referred to in clause (ii) above which has not yet been
submitted for recordation and (b) each reassignment of Assignment of Leases,
Rents and Profits referred to in clause (vii) above (if not otherwise included
in the related Assignment of Mortgage) which has not yet been submitted for
recordation; and (2) for filing or recordation, each Form UCC-1 financing
statement and Form UCC-2 or UCC-3 financing statement assignment referred to in
clause (iv) or (xii) above which has not yet been submitted for filing or
recordation. On or promptly following the Closing Date, the Trustee or
Custodian, as applicable, shall, to the extent possession thereof has been
delivered to it, complete the endorsement of the Note by inserting the name of
the Trustee as endorsee. The Master Servicer shall, upon receipt, promptly
submit (or cause a third party contractor to promptly submit) for recording or
filing, as the case may be, in the appropriate public recording or filing
office, each such document (other than the Notes) at the expense of the
applicable Seller. In the event that any such document is lost or returned
unrecorded or unfiled because of a defect therein, the Master Servicer shall use
its best efforts to promptly prepare (or cause the applicable Seller or a
qualified third party contractor to promptly prepare) a substitute document for
signature by the Depositor or the applicable Seller, as applicable, and
thereafter the Master Servicer (or such third party) shall cause each such
document to be duly recorded or filed at the expense of the applicable Seller.
The Master Servicer shall, promptly upon receipt of the original of each such
recorded or filed document, deliver such original to the Custodian.
Notwithstanding anything to the contrary
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contained in this Section 2.1, in those instances where the public recording
office retains the original Assignment of Mortgage or reassignment of Assignment
of Leases, Rents and Profits, if applicable, after any such document has been
recorded, the obligations hereunder of the Depositor shall be deemed to have
been satisfied upon delivery to the Custodian of a copy of such Assignment of
Mortgage or reassignment of Assignment of Leases, Rents and Profits certified by
the public recording office to be a true and complete copy of the recorded
original thereof. If a pro forma or specimen title insurance policy or a marked,
redated and recertified commitment for lender's title insurance policy has been
delivered to the Custodian in lieu of an original title insurance policy, the
Depositor or the Master Servicer will promptly deliver to the Custodian the
related original title insurance policy upon receipt thereof.
All original documents relating to the Mortgage Loans to the extent
delivered by the Depositor which are not delivered to the Custodian are and
shall be held by the Trustee or the Master Servicer, as the case may be, in
trust for the benefit of the Certificateholders. In the event that any such
original document is required pursuant to the terms of this Section to be a part
of a Trustee Mortgage File, such document shall be delivered promptly to the
Custodian.
If the Depositor cannot deliver any original or certified recorded or
filed document described in this Section 2.1 on the Closing Date, the Depositor
shall use its best efforts, promptly upon receipt thereof and in any case not
later than 45 days from the Closing Date, to deliver or cause to be delivered
such original or certified recorded or filed documents to the Custodian (unless
the Depositor is delayed in making such delivery by reason of the fact that such
documents shall not have been returned by the appropriate recording or filing
office, in which case the Depositor or the Master Servicer shall notify the
Custodian and the Trustee in writing of such delay and shall deliver such
documents to the Custodian promptly upon the Depositor's or the Master
Servicer's receipt thereof).
SECTION 2.2. Acceptance by the Custodian and the Trustee.
By its execution and delivery of this Agreement, the Trustee
acknowledges the assignment to it of the Mortgage Loans in good faith without
notice of adverse claims and declares that the Custodian holds and will hold
such documents and all others delivered to it constituting the Trustee Mortgage
File (to the extent the documents constituting the Trustee Mortgage File are
actually delivered to the Custodian) for any Mortgage Loan assigned to the
Trustee hereunder in trust, upon the conditions herein set forth, for the use
and benefit of all present and future Certificateholders. The Trustee agrees to
review each Trustee Mortgage File within 60 days after the later of (a) the
Trustee's receipt of such Trustee Mortgage File or (b) execution and delivery of
this Agreement, to ascertain that all documents referred to in clauses (i), (ii)
and (vi) of Section 2.1 above, any other documents referred to in the other
clauses of Section 2.1 and identified to the Trustee by the applicable Seller as
relating to a Mortgage File and any original recorded documents referred to in
the last sentence of Section 2.1 to be included in the delivery of a Trustee
Mortgage File, have been received, have been executed, have been endorsed or
assigned to the extent required, appear on their face to be what they purport to
be, purport to be recorded or filed (as applicable) and have not been torn,
mutilated or otherwise defaced, and that such documents relate to the Mortgage
Loans identified in the Mortgage Loan Schedule. In so doing, the Trustee may
rely on the purported due execution and genuineness of
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any such document and on the purported genuineness of any signature thereon. If,
at the conclusion of such review, any document or documents constituting a part
of a Trustee Mortgage File have not been executed or received, have not been
endorsed or assigned to the extent required, have not been recorded or filed (if
required), are unrelated to the Mortgage Loans identified in the Mortgage Loan
Schedule, appear on their face not to be what they purport to be or have been
torn, mutilated or otherwise defaced, the Trustee shall promptly so notify the
Depositor, the Operating Adviser and the applicable Seller (with a copy to the
Master Servicer or the Special Servicer, as applicable) by providing a written
report, setting forth, for each affected Mortgage Loan, with particularity, the
nature of the defective or missing document. Neither the Master Servicer, the
Special Servicer nor the Trustee shall be responsible for any loss, cost, damage
or expense to the Trust Fund resulting from any failure to receive any document
constituting a portion of a Trustee Mortgage File noted on such a report or for
any failure by the Depositor to use its best efforts to deliver any such
document, subject to Section 2.3(e) with respect to the Master Servicer and the
Special Servicer.
In reviewing any Trustee Mortgage File pursuant to the preceding
paragraph or Section 2.1, the Trustee will have no responsibility to determine
whether any document or opinion is legal, valid, binding or enforceable, whether
the text of any assignment or endorsement is in proper or recordable form
(except, if applicable, to determine whether the Trustee is the assignee or
endorsee), whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction, whether a blanket assignment is
permitted in any applicable jurisdiction, or whether any Person executing any
document or rendering any opinion is authorized to do so or whether any
signature thereon is genuine.
The Trustee shall hold that portion of the Trust Fund delivered to
the Trustee consisting of "instruments" (as such term is defined in Section
9-105 of the Uniform Commercial Code as in effect in Illinois on the date
hereof) in Illinois and, except as set forth in Section 3.11 or as otherwise
specifically provided in this Agreement, shall not remove such instruments from
Illinois unless it receives an Opinion of Counsel (obtained and delivered at the
expense of the Person requesting the removal of such instruments from Illinois)
that in the event the transfer of the Mortgage Loans to the Trustee is deemed
not to be a sale, after such removal, the Trustee will possess a first priority
perfected security interest in such instruments.
SECTION 2.3 Seller's Repurchase of Mortgage Loans for Document
Defaults and Breaches of Representations and Warranties.
(a) Upon discovery by the Depositor, the Custodian, the Master
Servicer, the Special Servicer or the Trustee of a breach of any representation
or warranty of Midland Loan Services, Inc. under the Midland Mortgage Loan
Purchase Agreement, RFC under the RFC Mortgage Loan Purchase Agreement, MSMC
under the MSMC Mortgage Loan Purchase Agreement or PNC under the PNC Mortgage
Loan Purchase Agreement with respect to any Mortgage Loan, or that any document
required to be included in the Trustee Mortgage File with respect to a Mortgage
Loan does not conform to the requirements of Section 2.1, such Person shall give
prompt notice thereof to the applicable Seller, the Operating Adviser and the
Rating Agencies and such Seller shall (to the extent such Seller is so obligated
under the terms of the applicable Mortgage Loan Purchase Agreement) either (i)
cure such breach or defect, (ii)
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substitute a Qualified Substitute Mortgage Loan for the related Deleted Mortgage
Loan and deposit a cash amount equal to the applicable Substitution Shortfall
Amount into the Collection Account, subject to the terms of the applicable
Mortgage Loan Purchase Agreement and this Agreement, or (iii) repurchase such
Mortgage Loan at the Repurchase Price within 90 days after the discovery of such
breach or defect (or after notice thereof is received by the Seller, if
permitted by the terms of the applicable Mortgage Loan Purchase Agreement), as
the same may be extended, all pursuant to and as more particularly described in
the applicable Mortgage Loan Purchase Agreement; it being understood and agreed
that none of the Depositor, the Custodian, the Master Servicer, the Special
Servicer and the Trustee has an obligation to conduct any investigation with
respect to such matters (except, in the case of the Trustee Mortgage Files, to
the extent provided in Sections 2.1 and 2.2).
(b) Upon receipt by the Master Servicer from the applicable Seller of
the Repurchase Price for a repurchased Mortgage Loan, the Master Servicer shall
deposit such amount in the Collection Account, and the Trustee, pursuant to
Section 3.11, shall, upon receipt of a certificate of a Servicing Officer
certifying as to the receipt by the Master Servicer of the Repurchase Price and
the deposit of the Repurchase Price into the Collection Account pursuant to this
Section 2.3(b), release or cause to be released to the applicable Seller the
related Mortgage File and shall execute and deliver such instruments of transfer
or assignment, in each case without recourse, representation or warranty, as
shall be necessary to vest in the applicable Seller the legal and beneficial
ownership of any Mortgage Loan released pursuant hereto, and the Trustee,
Special Servicer and the Master Servicer shall have no further responsibility
with regard to such Mortgage File or the related Mortgage Loan.
(c) In connection with any substitution by a Seller of one or more
Qualified Substitute Mortgage Loans for one or more Deleted Mortgage Loans
pursuant to Section 2.3(a)(ii), the Master Servicer will determine the
applicable Substitution Shortfall Amount. Upon receipt by the Master Servicer
from the applicable Seller of the Mortgage File(s) (including a Trustee Mortgage
File or Files which comply with Section 2.1) for the related Qualified
Substitute Mortgage Loan(s) and an amount equal to the applicable Substitution
Shortfall Amount, the Master Servicer shall deliver such Mortgage File(s) to the
Custodian and deposit such amount in the Collection Account, and the Trustee,
pursuant to Section 3.11, shall, upon receipt of a certificate of a Servicing
Officer certifying as to the receipt of the applicable Substitution Shortfall
Amount, the delivery of such Mortgage File(s) to the Custodian and the deposit
of the Substitution Shortfall Amount into the Collection Account pursuant to
this Section 2.3(c), release or cause to be released to the applicable Seller
the Mortgage File(s) of the Deleted Mortgage Loan(s) and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, representation or warranty, as shall be necessary to vest in the
applicable Seller the legal and beneficial ownership of each Deleted Mortgage
Loan released pursuant hereto and any rights of the Depositor in, to and under
the applicable Mortgage Loan Purchase Agreement, as such agreement related to
such Deleted Mortgage Loan(s) that were initially transferred to the Trust Fund
under Section 2.1, and the Trustee, the Special Servicer and the Master Servicer
shall have no further responsibility with regard to such Mortgage File(s) or the
related Deleted Mortgage Loan(s). No substitution may be made in any calendar
month after the Determination Date for such month. Monthly Payments due with
respect to Qualified Substitute Mortgage Loans after the related date of
substitution, shall be part of the Trust Fund.
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Monthly Payments due with respect to Qualified Substitute Mortgage Loans on or
prior to the related date of substitution shall not be part of the Trust Fund
and will be remitted by the Master Servicer to the applicable Seller promptly
following receipt.
(d) In the event that the applicable Seller incurs any expense in
connection with curing a breach of a representation or warranty pursuant to
Section 2.3(a) which also constitutes a default under the related Mortgage Loan,
the applicable Seller shall have a right, and the applicable Seller shall be
subrogated to the rights of the Trustee, as successor to the mortgagee, to
recover the amount of such expenses from the related Borrower. The Master
Servicer or Special Servicer, as applicable, shall use reasonable efforts in
recovering, or assisting the applicable Seller in recovering, from such Borrower
the amount of any such expenses.
(e) The Master Servicer or the Special Servicer, as applicable, shall
use its best efforts, in accordance with the Servicing Standard, to enforce the
obligations of each Seller to cure, substitute for or repurchase any Mortgage
Loan which is discovered to be a "Defective Mortgage Loan" (as such term is
defined in the applicable Mortgage Loan Purchase Agreement) under the terms of
the applicable Mortgage Loan Purchase Agreement.
SECTION 2.4. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants as of the Closing
Date that:
(i) The Depositor is a corporation duly organized validly
existing and in good standing under the laws of the State of Missouri;
(ii) The Depositor has taken all necessary action to authorize
the execution, delivery and performance of this Agreement by it, and has the
power and authority to execute, deliver and perform this Agreement and all the
transactions contemplated hereby, including, but not limited to, the power and
authority to sell, assign and transfer its right, title and interest in the
Mortgage Loans in accordance with this Agreement;
(iii) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor and assuming the due authorization,
execution and delivery of this Agreement by each other party hereto, this
Agreement and all of the obligations of the Depositor hereunder are the legal,
valid and binding obligations of the Depositor, enforceable in accordance with
the terms of this Agreement, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
other laws relating to or affecting creditors' rights generally, or by general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law);
(iv) The execution and delivery of this Agreement and the
performance of its obligations hereunder by the Depositor will not conflict with
any provision of its articles of incorporation or bylaws, or any law or
regulation to which the Depositor is subject, or conflict with, result in a
breach of or constitute a default under (or an event which, with notice or lapse
of time or both, would constitute a default under) any of the terms, conditions
or provisions of any agreement or instrument to which the Depositor is a party
or by which it is bound, or any order
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or decree applicable to the Depositor, or result in the creation or imposition
of any lien on any of the Depositor's assets or property which, with respect to
any of the above events, would materially and adversely affect the ability of
the Depositor to carry out its obligations under this Agreement. The Depositor
is not in default in any material respect with respect to any agreement to which
the Depositor is a party. The Depositor has obtained any consent, approval,
authorization or order of any court or governmental agency or body required for
the execution, delivery and performance by the Depositor of this Agreement;
(v) The articles of incorporation of the Depositor provides that
the Depositor is permitted to engage in only the following activities:
(A) To acquire, own, hold, sell, transfer, assign, pledge,
finance, refinance and otherwise deal with (i) loans secured by (x) first or
second mortgages, deeds of trust or similar liens on multi-family residential,
commercial or mixed commercial and multi-family residential properties, and (y)
related assets, and (ii) any participation interest in, security (in bond or
pass-through form) or funding agreement based on, backed or collateralized by,
directly or indirectly, any of the foregoing (the loans and related assets
described in clause (A)(i) and the participation interests, securities and
funding agreements described in clause (A)(ii), collectively, "Mortgage Loans");
(B) To establish and fund one or more trusts (the "Trusts")
and to authorize such Trusts to engage in one or more of the activities
described in immediately preceding clause (A) and to issue certificates (the
"Certificates") in one or more classes pursuant to pooling and servicing
agreements (each, a "Pooling and Servicing Agreement"), with each class having
the characteristics specified in the related Pooling and Servicing Agreement,
representing ownership interests in the Mortgage Loans;
(C) To acquire, own, hold, invest in, offer, sell, transfer,
assign, pledge, finance and deal in and with any Certificates issued by a Trust
established by the corporation pursuant to immediately preceding clause (B); and
(D) To engage in any other acts and activities and to
exercise any powers permitted to corporations under the laws of the State of
Missouri which are incidental to, or connected with the foregoing, and
necessary, suitable or convenient to accomplish any of the foregoing; and
(vi) There is no action, suit or proceeding pending or, to the
best knowledge of the Depositor, threatened against the Depositor in any court
or by or before any other governmental agency or instrumentality which would
materially and adversely affect the ability of the Depositor to carry out its
obligations under this Agreement.
(b) The Depositor hereby represents and warrants with respect to each
Mortgage Loan as of the Closing Date that:
(i) Immediately prior to the transfer and assignment to the
Trustee, the related Note and the related Mortgage were not subject to an
assignment or pledge created by it
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or attributable to its ownership; and the Depositor had full right to transfer
and sell its right, title and interest in such Mortgage Loan to the Trustee free
and clear of any encumbrance, lien, pledge, charge, claim or security interest
encumbering such Mortgage Loan created by it or attributable to its ownership;
(ii) Each related Assignment of Mortgage constitutes the legal,
valid and binding assignment of the related Mortgage from the Depositor to the
Trustee, and each related reassignment of Assignment of Leases, Rents and
Profits constitutes the legal, valid and binding assignment of the related
Assignment of Leases, Rents and Profits from the Depositor to the Trustee; and
(iii) No claims have been made by the Depositor under the
related lender's title insurance policy, and the Depositor has not done, by act
or omission, anything which would impair the coverage of such lender's title
insurance policy.
(c) It is understood and agreed that the representations and
warranties set forth in this Section 2.4 shall survive delivery of the
respective Trustee Mortgage Files to the Trustee until the termination of this
Agreement, and shall inure to the benefit of the Certificateholders, the Master
Servicer and the Special Servicer.
(d) In the event that any litigation is commenced which alleges facts
which, in the judgment of the Depositor, could constitute a breach of any of the
Depositor's representations and warranties relating to the Mortgage Loans, the
Depositor hereby reserves the right to conduct the defense of such litigation at
its expense, except to the extent such action would materially and adversely
affect the interests of the Certificateholders.
SECTION 2.5. Representations, Warranties and Covenants of the Master
Servicer and the Special Servicer.
(a) The Master Servicer hereby represents, warrants and covenants
that as of the Closing Date:
(i) The Master Servicer is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
all licenses necessary to carry on its business as now being conducted, and is
in compliance with the laws of each state in which any Mortgaged Property is
located, to the extent necessary to ensure the enforceability of each Mortgage
Loan in accordance with the terms of this Agreement;
(ii) The Master Servicer has the full corporate power, authority
and legal right to execute and deliver this Agreement and to perform in
accordance herewith; the execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the terms of this Agreement do
not violate the Master Servicer's certificate of incorporation or 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 contract,
agreement or other instrument to which the Master Servicer is a party or which
may be applicable to the Master Servicer or any of its assets, which default or
breach would have consequences that
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would materially and adversely affect the financial condition or operations of
the Master Servicer or its properties taken as a whole or impair the ability of
the Trust Fund to realize on the Mortgage Loans;
(iii) This Agreement has been duly and validly authorized,
executed and delivered by the Master Servicer and, assuming due authorization,
execution and delivery by the other parties hereto, constitutes a legal, valid
and binding obligation of the Master Servicer, enforceable against it in
accordance with the terms of this Agreement, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, liquidation, receivership,
moratorium or other laws relating to or affecting creditors' rights generally,
or by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) The Master Servicer is not in violation of, and the
execution and delivery of this Agreement by the Master Servicer and its
performance and compliance with the terms of this Agreement will not constitute
a violation with respect to, any order or decree of any court or any order or
regulation of any federal, state, municipal or governmental agency having
jurisdiction, or result in the creation or imposition of any lien, charge or
encumbrance which, in any such event, would have consequences that would
materially and adversely affect the financial condition or operations of the
Master Servicer or its properties taken as a whole or impair the ability of the
Trust Fund to realize on the Mortgage Loans;
(v) There are no actions, suits or proceedings pending or, to the
knowledge of the Master Servicer, threatened, against the Master Servicer which,
either in any one instance or in the aggregate, would result in any material
adverse change in the business, operations or financial condition of the Master
Servicer or would materially impair the ability of the Master Servicer to
perform under the terms of this Agreement or draw into question the validity of
this Agreement or the Mortgage Loans or of any action taken or to be taken in
connection with the obligations of the Master Servicer contemplated herein;
(vi) No consent, approval, authorization or order of, or
registration or filing with, or notice to any court or governmental agency or
body is required for the execution, delivery and performance by the Master
Servicer of, or compliance by the Master Servicer with, this Agreement or, if
required, such approval has been obtained prior to the Closing Date, except to
the extent that the failure of the Master Servicer to be qualified as a foreign
corporation or licensed in one or more states is not necessary for the
enforcement of the Mortgage Loans;
(vii) The Master Servicer has examined each Sub-Servicing
Agreement, will examine each future Sub-Servicing Agreement and will be familiar
with the terms thereof. Any Sub-Servicing Agreements will comply with the
provisions of Section 3.2; and
(viii) Each officer or employee of the Master Servicer that has
responsibilities concerning the servicing and administration of Mortgage Loans
is covered by errors and omissions insurance in the amounts and with the
coverage required by Section 3.8. Neither the Master Service nor, to the best of
the Master Servicer's knowledge, any of its officers or employees that is
involved in the servicing or administration of Mortgage Loans has been
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refused such coverage or insurance. The Master Servicer has a fidelity bond
meeting the requirements of Section 3.8.
(b) The Special Servicer hereby represents, warrants and covenants
that as of the Closing Date:
(i) The Special Servicer is a corporation, duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all licenses necessary to carry on its business as now being conducted,
and is in compliance with the laws of each state in which any Mortgaged Property
is located, to the extent necessary to ensure the enforceability of each
Specially Serviced Mortgage Loan in accordance with the terms of this Agreement;
(ii) The Special Servicer has the full corporate power, authority
and legal right to execute and deliver this Agreement and to perform in
accordance herewith; the execution and delivery of this Agreement by the Special
Servicer and its performance and compliance with the terms of this Agreement do
not violate the Special Servicer's certificate of incorporation or 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 contract,
agreement or other instrument to which the Special Servicer is a party or which
may be applicable to the Special Servicer or any of its assets, which default or
breach would have consequences that would materially and adversely affect the
financial condition or operations of the Special Servicer or its properties
taken as a whole or impair the ability of the Trust Fund to realize on the
Specially Serviced Mortgage Loans;
(iii) This Agreement has been duly and validly authorized,
executed and delivered by the Special Servicer and, assuming due authorization,
execution and delivery by the other parties hereto, constitutes a legal, valid
and binding obligation of the Special Servicer, enforceable against it in
accordance with the terms of this Agreement, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, liquidation, receivership,
moratorium or other laws relating to or affecting creditors' rights generally,
or by general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) The Special Servicer is not in violation of, and the
execution and delivery of this Agreement by the Special Servicer and its
performance and compliance with the terms of this Agreement will not constitute
a violation with respect to, any order or decree of any court or any order or
regulation of any federal, state, municipal or governmental agency having
jurisdiction, or result in the creation or imposition of any lien, charge or
encumbrance which, in any such event, would have consequences that would
materially and adversely affect the financial condition or operations of the
Special Servicer or its properties taken as a whole or impair the ability of the
Trust Fund to realize on the Specially Serviced Mortgage Loans;
(v) There are no actions, suits or proceedings pending or, to the
knowledge of the Special Servicer, threatened, against the Special Servicer
which, either in any one instance or in the aggregate, would result in any
material adverse change in the business,
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operations or financial condition of the Special Servicer or would materially
impair the ability of the Special Servicer to perform under the terms of this
Agreement or draw into question the validity of this Agreement or the Specially
Serviced Mortgage Loans or of any action taken or to be taken in connection with
the obligations of the Special Servicer contemplated herein;
(vi) No consent, approval, authorization or order of, or
registration or filing with, or notice to any court or governmental agency or
body is required for the execution, delivery and performance by the Special
Servicer of, or compliance by the Special Servicer with, this Agreement or, if
required, such approval has been obtained prior to the Closing Date, except to
the extent that the failure of the Special Servicer to be qualified as a foreign
corporation or licensed in one or more states is not necessary for the
enforcement of the Specially Serviced Mortgage Loans; and
(vii) Each officer or employee of the Special Servicer that has
or will have responsibilities concerning the servicing and administration of
Mortgage Loans is covered by errors and omissions insurance in the amounts and
with the coverage required by Section 3.8. Neither the Special Servicer nor, to
the best of the Special Servicer's knowledge, any of its officers or employees
that is or will be involved in the servicing or administration of Mortgage Loans
has been refused such coverage or insurance. The Special Servicer has a fidelity
bond meeting the requirements of Section 3.8.
(c) It is understood and agreed that the representations and
warranties set forth in this Section shall survive delivery of the Trustee
Mortgage Files to the Trustee or the Custodian on behalf of the Trustee until
the termination of this Agreement, and shall inure to the benefit of the Trustee
and the Depositor. Upon discovery by the Depositor, the Master Servicer, the
Special Servicer or a Responsible Officer of the Trustee (or upon written notice
thereof from any Certificateholder) of a breach of any of the representations
and warranties set forth in this Section which materially and adversely affects
the interests of the Certificateholders, the Master Servicer, the Special
Servicer or the Trustee with respect to any Mortgage Loan, the party discovering
such breach shall give prompt written notice to the other parties hereto and to
the Rating Agencies.
SECTION 2.6. Execution and Delivery of Certificates; Issuance of
REMIC I Regular Interests and REMIC II Regular Interests.
The Trustee acknowledges the assignment to it of the Mortgage Loans
and the delivery to it of the Trustee Mortgage Files to the Custodian (to the
extent the documents constituting the Trustee Mortgage Files are actually
delivered to the Custodian), subject to the provisions of Section 2.1 and
Section 2.2 and, concurrently with such delivery, (i) acknowledges the issuance
of and hereby declares that it holds the REMIC I Regular Interests on behalf of
REMIC II and the Holders of the Class R-II Certificates; (ii) acknowledges the
issuance of and hereby declares that it holds the REMIC II Regular Interests on
behalf of REMIC III and the Holders of the REMIC III Regular Certificates and
the Class R-III Certificates; (iii) acknowledges the issuance of the Class V
Certificates and hereby declares that it holds the Grantor Trust Assets on
behalf of the holders of the Class V, Class A-1 and Class X Certificates; and
(iv) has caused to be executed and caused to be authenticated and delivered to
or upon the
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order of the Depositor, or as directed by the terms of this Agreement, Class
A-1, Class A-2, Class X, Class B, Class C, Class D, Class E, Class F, Class G,
Class H, Class J, Class K, Class L, Class M, Class N, Class V, Class R-I, Class
R-II and Class R-III Certificates in authorized denominations, in each case
registered in the names set forth in such order of the Depositor or as so
directed in this Agreement and duly authenticated by the Authenticating Agent,
which Certificates (described in the preceding clause (iv)) evidence ownership
of the entire Trust Fund.
SECTION 2.7. Documents Not Delivered to Custodian.
All original documents relating to the Mortgage Loans which are part
of the Master Servicer Mortgage File are and shall be held by the Master
Servicer, in trust for the benefit of the Trustee on behalf of the
Certificateholders. The legal ownership of all records and documents with
respect to each Mortgage Loan prepared by or which come into the possession of
the Master Servicer shall immediately vest in the Trustee, in trust for the
benefit of the Certificateholders.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.1. Master Servicer to Act as Master Servicer; Special
Servicer to Act as Special Servicer; Administration of the Mortgage Loans.
(a) The Master Servicer and the Special Servicer, each as an
independent contractor, shall service and administer the Mortgage Loans (or in
the case of the Special Servicer, the Specially Serviced Mortgage Loans and the
REO Mortgage Loans) on behalf of the Trust Fund solely in the best interests of,
and for the benefit of, all of the Certificateholders and the Trustee (as
trustee for the Certificateholders) in accordance with the terms of this
Agreement and the respective Mortgage Loans. In furtherance of, and to the
extent consistent with, the foregoing, and except to the extent that this
Agreement provides for a contrary specific course of action, each of the Master
Servicer and the Special Servicer shall service and administer each Mortgage
Loan (x) in the same manner in which, and with the same care, skill, prudence
and diligence with which, it services and administers similar mortgage loans for
other third-party portfolios, giving due consideration to customary and usual
standards of practice of prudent institutional commercial mortgage loan
servicers used with respect to loans comparable to the Mortgage Loans, or (y) in
the same manner in which, and with the same care, skill, prudence and diligence
with which, it services and administers similar mortgage loans which it owns,
whichever standard of care is higher, and taking into account its other
obligations hereunder, but without regard to:
(i) any other relationship that the Master Servicer, the Special
Servicer, any Sub-Servicer or any Affiliate of the Master Servicer, the Special
Servicer or any Sub-Servicer may have with the related Borrower or any Affiliate
of such Borrower;
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(ii) the ownership of any Certificate by the Master Servicer, the
Special Servicer or any Affiliate of either;
(iii) the Master Servicer's, the Trustee's or the Fiscal Agent's
obligation to make P&I Advances or Servicing Advances or to incur servicing
expenses with respect to such Mortgage Loan;
(iv) the Master Servicer's, the Special Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction;
(v) the ownership or servicing or management for others by the
Master Servicer, the Special Servicer or any Sub-Servicer, of any other mortgage
loans or property; or
(vi) any obligation of the Master Servicer, the Special Servicer,
any Sub-Servicer or any affiliate of the Master Servicer, the Special Servicer
or any Sub-Servicer to repurchase or substitute a Mortgage Loan as a Seller if
required by a Mortgage Loan Purchase Agreement.
The standards set forth above with respect to the conduct of the
Master Servicer and the Special Servicer in the performance of their respective
obligations under this Agreement is herein referred to as the "Servicing
Standard."
The Master Servicer's or the Special Servicer's liability for actions
and omissions in its capacity as Master Servicer or Special Servicer, as the
case may be, hereunder is limited as provided herein (including, without
limitation, pursuant to Section 6.3). To the extent consistent with the
foregoing and subject to any express limitations set forth in this Agreement,
the Master Servicer and the Special Servicer shall use its best efforts to seek
to maximize the timely and complete recovery of principal and interest on the
Notes; provided, however, that nothing herein contained shall be construed as an
express or implied guarantee by the Master Servicer or the Special Servicer of
the collectability of the Mortgage Loans. Subject only to the above-described
Servicing Standard and the terms of this Agreement and of the respective
Mortgage Loans, the Master Servicer and the Special Servicer shall have full
power and authority, acting alone or through Sub-Servicers (subject to Section
3.2), to do or cause to be done any and all things in connection with such
servicing and administration which they may deem necessary or desirable. Without
limiting the generality of the foregoing, the Master Servicer and the Special
Servicer shall, and each is hereby authorized and empowered by the Trustee to,
with respect to each Mortgage Loan and the related Mortgaged Property, prepare,
execute and deliver, on behalf of the Certificateholders and the Trustee or any
of them, any and all financing statements, continuation statements and other
documents or instruments necessary to maintain the lien on the related Mortgaged
Property and related collateral; any modifications, waivers, consents or
amendments to or with respect to any Mortgage Loan or any documents contained in
the related Mortgage File; and any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, if, in its reasonable judgment, such action is in the
best interests of the Certificateholders and is in accordance with, or is
required by, this Agreement. The Master Servicer and the Special Servicer shall
service and administer
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the Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Borrowers any reports required to be provided to them thereby.
Subject to Section 3.11, the Trustee shall, upon the receipt of a written
request of a Servicing Officer, execute and deliver to the Master Servicer and
the Special Servicer any powers of attorney and other documents prepared by the
Master Servicer or the Special Servicer and necessary or appropriate (as
certified in such written request) to enable the Master Servicer and the Special
Servicer to carry out their servicing and administrative duties hereunder;
provided, however, that the Trustee shall not be liable for any actions of the
Master Servicer or Special Servicer under any such powers of attorney.
(b) Unless otherwise provided in the related Note, the Master
Servicer shall apply any partial Principal Prepayment received on a Mortgage
Loan on a date other than a Due Date to the principal balance of such Mortgage
Loan as of the Due Date immediately following the date of receipt of such
partial Principal Prepayment.
SECTION 3.2. Sub-Servicing.
(a) The Master Servicer or the Special Servicer may enter into
Sub-Servicing Agreements with third parties with respect to any of its
respective obligations hereunder, provided that (1) any such agreement shall be
consistent with the provisions of this Agreement and (2) no Sub-Servicer
retained by the Master Servicer or the Special Servicer shall grant any
modification, waiver or amendment to any Mortgage Loan without the approval of
the Master Servicer or the Special Servicer, as applicable. Any such
Sub-Servicing Agreement may permit the Sub-Servicer to delegate its duties to
agents or subcontractors so long as the related agreements or arrangements with
such agents or subcontractors are consistent with the provisions of this Section
3.2(a).
Any Sub-Servicing Agreement entered into by the Master Servicer or
the Special Servicer, shall provide that it may be assumed or terminated by the
Trustee or successor Master Servicer or Special Servicer if the Trustee or a
successor Master Servicer or Special Servicer has assumed the duties of the
Master Servicer or the Special Servicer, as applicable, without cost or
obligation to the assuming or terminating party or the Trust Fund, upon the
assumption by the Trustee or a successor Master Servicer or Special Servicer of
the obligations of the Master Servicer or the Special Servicer, as applicable,
pursuant to Section 7.2.
Any Sub-Servicing Agreement, and any other transactions or services
relating to the Mortgage Loans involving a Sub-Servicer, shall be deemed to be
between the Master Servicer or the Special Servicer, as applicable, and such
Sub-Servicer alone, and the Trustee and the Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer, including the Depositor acting in
such capacity, except as set forth in Section 3.2(b).
(b) If the Trustee or any successor Master Servicer or Special
Servicer assumes the obligations of the Master Servicer or the Special Servicer,
as applicable, in accordance with Section 7.2, the Trustee or such successor
Master Servicer or Special Servicer, to the extent necessary to permit the
Trustee or such successor Master Servicer or Special
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Servicer to carry out the provisions of Section 7.2, shall, without act or deed
on the part of the Trustee or such successor Master Servicer or Special
Servicer, succeed to all of the rights and obligations of the Master Servicer or
Special Servicer under any Sub-Servicing Agreement entered into by the Master
Servicer or Special Servicer pursuant to Section 3.2(a), subject to the right of
termination by the Trustee set forth in Section 3.2(a). In such event, the
Trustee or such successor Master Servicer or Special Servicer shall be deemed to
have assumed all of the Master Servicer's or Special Servicer's interest therein
(but not any liabilities or obligations in respect of acts or omissions of the
Master Servicer or Special Servicer prior to such deemed assumption) and to have
replaced the Master Servicer or the Special Servicer, as applicable, as a party
to such Sub-Servicing Agreement to the same extent as if such Sub-Servicing
Agreement had been assigned to the Trustee or such successor Master Servicer,
except that the Master Servicer or the Special Servicer shall not thereby be
relieved of any liability or obligations under such Sub-Servicing Agreement that
accrued prior to the assumption of duties hereunder by the Trustee or such
successor Master Servicer or Special Servicer.
In the event that the Trustee or any successor Master Servicer or
Special Servicer assumes the servicing obligations of the Master Servicer or the
Special Servicer, as the case may be, upon request of the Trustee or such
successor Master Servicer or Special Servicer, as the case may be, the Master
Servicer or Special Servicer shall, at its own expense, deliver to the Trustee
or such successor Master Servicer or Special Servicer (as the case may be) all
documents and records relating to any Sub-Servicing Agreement and the Mortgage
Loans then being serviced thereunder and an accounting of amounts collected and
held by it, if any, and the Master Servicer will otherwise use its best efforts
to effect the orderly and efficient transfer of any Sub-Servicing Agreement to
the Trustee or such successor Master Servicer.
(c) Notwithstanding any Sub-Servicing Agreement, any of the provi-
sions of this Agreement relating to agreements or arrangements between the
Master Servicer or Special Servicer and any Person acting as Sub-Servicer (or
its agents or subcontractors) or any reference to actions taken through any
Person acting as Sub-Servicer or otherwise, the Master Servicer or the Special
Servicer, as applicable, shall remain obligated and liable to the Trustee and
Certificateholders for the servicing and administering of the Mortgage Loans in
accordance with the provisions of this Agreement without diminution of such
obligation or liability by virtue of such Sub-Servicing Agreements or
arrangements or by virtue of indemnification from the Depositor or any Person
acting as Sub-Servicer (or its agents or subcontractors) to the same extent and
under the same terms and conditions as if the Master Servicer or Special
Servicer, as applicable, were servicing and administering the Mortgage Loans
alone. The Master Servicer or the Special Servicer, as applicable, shall be
entitled to enter into an agreement with any Sub-Servicer providing for
indemnification of the Master Servicer or the Special Servicer, as applicable,
by such Sub-Servicer, and nothing contained in this Agreement shall be deemed to
limit or modify such indemnification, but no such agreement for indemnification
shall be deemed to limit or modify this Agreement.
SECTION 3.3. Collection of Certain Mortgage Loan Payments.
The Master Servicer and the Special Servicer shall make best efforts
to collect all payments called for under the terms and provisions of the
Mortgage Loans when the same shall
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be due and payable, and shall follow such collection procedures as are
consistent with the Servicing Standard, including using its best efforts in
accordance with the Servicing Standard to collect income statements and rent
rolls from the related Borrowers as required by the related Mortgage Loan
Documents and providing (in the case of the Master Servicer only) reasonable
advance notice to such Borrowers of Balloon Payments due with respect to such
Mortgage Loans. Consistent with the foregoing, the Master Servicer or the
Special Servicer, as applicable, may in its discretion waive any late payment
charge, Default Interest or penalty fees in connection with any delinquent
Monthly Payment or Balloon Payment with respect to any Mortgage Loan.
SECTION 3.4. Collection of Taxes, Assessments and Similar Items.
(a) With respect to each Mortgage Loan (other than REO Mortgage
Loans), the Master Servicer shall maintain accurate records with respect to each
related Mortgaged Property reflecting the status of taxes, assessments and other
similar items that are or may become a lien on such related Mortgaged Property,
the status of insurance premiums payable with respect thereto and the amounts of
Escrow Payments, if any, required in respect thereof. From time to time, the
Master Servicer shall (i) obtain all bills for the payment of such items
(including renewal premiums), and (ii) effect payment of all such bills with
respect to each such Mortgaged Property prior to the applicable penalty or
termination date, in each case employing for such purpose Escrow Payments as
allowed under the terms of such Mortgage Loan. If a Borrower fails to make any
such Escrow Payment on a timely basis or collections from such Borrower are
insufficient to pay any such item before the applicable penalty or termination
date, the Master Servicer shall (in accordance with Section 3.8 with respect to
the payment of insurance premiums) advance the amount necessary to effect
payment of any such item, unless the Master Servicer, in its good faith business
judgment, determines that such Advance would be a Nonrecoverable Advance. With
respect to any Mortgage Loan as to which the related Borrower is not required to
make Escrow Payments, if such Borrower fails to effect payment of any such bill,
then, the Master Servicer shall (in accordance with Section 3.8 with respect to
the payment of insurance premiums) advance the amount necessary to effect
payment of any such bill on or before the applicable penalty or termination
date; provided, that, with respect to the payment of taxes and assessments, the
Master Servicer shall make such advance within five Business Days after the
Master Servicer has received confirmation that such item has not been paid. The
Master Servicer shall be entitled to reimbursement of Servicing Advances that it
makes pursuant to the preceding sentence, with interest thereon at the Advance
Rate, from amounts received on or in respect of the Mortgage Loan respecting
which such Servicing Advance was made or if such Servicing Advance has become a
Nonrecoverable Advance, to the extent permitted by Section 3.6 of this
Agreement. No costs incurred by the Master Servicer in effecting the payment of
taxes and assessments on the Mortgaged Properties shall, for the purpose of
calculating distributions to Certificateholders, be added to the amount owing
under the related Mortgage Loans, notwithstanding that the terms of such
Mortgage Loans so permit.
(b) The Master Servicer shall segregate and hold all funds collected
and received pursuant to any Mortgage Loan constituting Escrow Payments separate
and apart from any of its own funds and general assets and shall establish and
maintain one or more segregated custodial accounts (each, an "Escrow Account")
into which all Escrow Payments shall be
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deposited within one Business Day after receipt. The Master Servicer shall also
deposit into each Escrow Account any amounts representing losses on Permitted
Investments in which amounts on deposit in such Escrow Account have been
invested pursuant to Section 3.7(b) and any Insurance Proceeds, Condemnation
Proceeds or Liquidation Proceeds which are required to be applied to the
restoration or repair of the related Mortgaged Property pursuant to the related
Mortgage Loan. Escrow Accounts shall be entitled, "Midland Loan Services, Inc.,
as Master Servicer, in trust for LaSalle National Bank as Trustee in trust for
Holders of Commercial Mortgage Acceptance Corp. Commercial Mortgage Pass-Through
Certificates, Series 1998-C1, and Various Borrowers." Withdrawals from an Escrow
Account may be made by the Master Servicer only:
(i) to effect timely payments of items with respect to which
Escrow Payments are required pursuant to the related Mortgage;
(ii) to transfer funds to the Collection Account to reimburse the
Master Servicer, the Trustee or the Fiscal Agent, as applicable, for any Advance
relating to Escrow Payments, but only from amounts received with respect to the
related Mortgage Loan which represent late collections of Escrow Payments
thereunder;
(iii) for application to the restoration or repair of the related
Mortgaged Property in accordance with the related Mortgage Loan and the
Servicing Standard;
(iv) to clear and terminate such Escrow Account upon the
termination of this Agreement;
(v) to pay from time to time to the Master Servicer any interest
or investment income earned on funds deposited in such Escrow Account pursuant
to Section 3.7(b) to the extent (a) permitted by law and (b) not required to be
paid to the related Borrower under the terms of the related Mortgage Loan or by
law, or to pay such interest or income to the related Borrower if such income is
required to paid to the related Borrower under law or by the terms of the
related Mortgage Loan; and
(vi) to remove any funds deposited in such Escrow Account that
were not required to be deposited therein.
SECTION 3.5. Collection Account; Distribution Account; Grantor Trust
Collection Account; and Grantor Trust Distribution Account.
(a) The Master Servicer shall establish and maintain the Collection
Account in the Trustee's name, for the benefit of the Certificateholders. The
Collection Account shall be established and maintained as an Eligible Account.
The Master Servicer shall deposit or cause to be deposited in the Collection
Account within one Business Day following receipt the following payments and
collections received or made by it on or with respect to the Mortgage Loans:
(i) all payments on account of principal on the Mortgage Loans,
including the principal component of Unscheduled Payments on the Mortgage Loans;
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(ii) all payments on account of interest and Default Interest on
the Mortgage Loans and the interest portion of all Unscheduled Payments and all
Prepayment Premiums as well as all payments on account of late payment charges
on the Mortgage Loans;
(iii) any amounts required to be deposited pursuant to Section
3.7(b) in connection with losses realized on Permitted Investments with respect
to funds held in the Collection Account and pursuant to Section 3.25 in
connection with Prepayment Interest Shortfalls;
(iv) (x) all Net REO Proceeds transferred from an REO Account
pursuant to Section 3.17(b) and (y) all, Insurance Proceeds and Net Liquidation
Proceeds not required to be applied to the restoration or repair of the related
Mortgaged Property;
(v) any amounts received from Borrowers which represent
recoveries of Servicing Advances made pursuant to Section 3.4; and
(vi) any other amounts required by the provisions of this
Agreement to be deposited into the Collection Account by the Master Servicer or
the Special Servicer, including, without limitation, proceeds of any purchase or
repurchase of a Mortgage Loan pursuant to Section 2.3, Section 3.18 or Section
9.1.
In the event that the Master Servicer deposits in the Collection
Account any amount not required to be deposited therein, the Master Servicer may
at any time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding.
(b) The Trustee shall establish and maintain the Distribution Account
in the name of the Trustee, in trust for the benefit of the Certificateholders.
The Distribution Account shall be established and maintained as an Eligible
Account.
(c) Prior to the Remittance Date relating to the Collection Period,
if any, in which any Contingent Interest is received, the Master Servicer shall
establish and maintain the Grantor Trust Collection Account in the name of the
Trustee, in trust for the benefit of the Class A-1, Class X and Class V
Certificateholders as set forth in Section 10.5. The Grantor Trust Collection
Account shall be established and maintained as an Eligible Account. The Master
Servicer shall transfer to the Grantor Trust Collection Account any Contingent
Interest within two Business Days after such amounts are deposited in the
Collection Account.
(d) Prior to the Remittance Date relating to the Collection Period,
if any, in which Contingent Interest is received, the Trustee shall establish
and maintain the Grantor Trust Distribution Account in the name of the Trustee,
in trust for the benefit of the Class A-1, Class X and Class V
Certificateholders as set forth in Section 10.05. The Grantor Trust Distribution
Account shall be established and maintained as an Eligible Account. On or before
the Remittance Date related to the applicable Distribution Date, the Master
Servicer shall remit to the Trustee for deposit in the Grantor Trust
Distribution Account an amount equal to the Contingent Interest received during
the related Collection Period.
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(e) Following the distribution of Contingent Interest to
Certificateholders on the first Distribution Date after which there are no
longer any Mortgage Loans outstanding which pursuant to their terms could pay
Contingent Interest, the Master Servicer and the Trustee, respectively, shall
terminate the Grantor Trust Collection Account and the Grantor Trust
Distribution Account.
(f) Funds in the Collection Account, the Grantor Trust Collection
Account and the Distribution Account may be invested in Permitted Investments in
accordance with the provisions of Section 3.7. The Master Servicer shall give
written notice to the Trustee of the location and account number of the
Collection Account and the Grantor Trust Collection Account and shall notify the
Trustee in writing prior to any subsequent change thereof.
SECTION 3.6. Permitted Withdrawals from the Collection Account.
The Master Servicer may make withdrawals from the Collection Account
(and the Grantor Trust Collection Account, with respect to Contingent Interest)
only as described below (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 and the Grantor Trust Distribution Account, the amounts required to be
deposited in the Distribution Account and the Grantor Trust Distribution Account
pursuant to Sections 4.5 and 3.5(d), respectively;
(ii) to pay or reimburse the Master Servicer, the Trustee or the
Fiscal Agent for Advances; provided, however, the right of the Master Servicer,
the Trustee or the Fiscal Agent to reimburse itself pursuant to this clause (ii)
being limited to either (x) any collections on or in respect of the particular
Mortgage Loan or REO Property respecting which each such Advance was made, or
(y) any other amounts in the Collection Account in the event that such Advances
have been deemed to be Nonrecoverable Advances or are not recovered from
recoveries in respect of the related Mortgage Loan or REO Property after a Final
Recovery Determination;
(iii) to pay to the Master Servicer, the Trustee or the Fiscal
Agent the Advance Interest Amount first out of Default Interest and late payment
charges actually collected in respect of the related Mortgage Loan and, to the
extent such amounts are insufficient, in connection with or at any time
following the reimbursement of such Advance from any other amounts in the
Collection Account;
(iv) to pay on or before each Remittance Date to the Master
Servicer, Special Servicer and Trustee, as applicable, as compensation, the
unpaid Master Servicing Fee, Special Servicing Fee, and Trustee Fee,
respectively (in the case of the Master Servicer, reduced up to the amount of
any Prepayment Interest Shortfalls with respect to such Distribution Date, in
accordance with Section 3.25), to be paid, in the case of the Master Servicing
Fee, from interest received or advanced on the related Mortgage Loans, and to
pay to the Master Servicer or the Special Servicer, as applicable, any other
amounts constituting Servicing Compensation;
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(v) to pay on or before each Distribution Date to the Depositor,
the applicable Seller or the purchaser of any Specially Serviced Mortgage Loan
or REO Property, as the case may be, with respect to each Mortgage Loan, Deleted
Mortgage Loan or REO Property that has previously been repurchased, replaced or
purchased by it pursuant to Section 2.3, Section 3.18 or Section 9.1, all
amounts received thereon during the related Collection Period and subsequent to
the effective date of such purchase or repurchase.
(vi) to the extent not reimbursed or paid pursuant to any other
clause of this Section 3.6, to reimburse or pay the Master Servicer, the Special
Servicer, the Trustee, the Depositor and/or the Fiscal Agent for unpaid items
incurred by or on behalf of such Person pursuant to Section 3.7(c), Section
3.10, Section 3.17(a), (b) and (c), Section 3.18(a), 6.3, 7.4, 8.5(d), 9.1 or
Section 11.7, or any other provision of this Agreement pursuant to which such
Person is entitled to reimbursement or payment from the Trust Fund, in each case
only to the extent reimbursable under such Section, it being acknowledged that
this clause (vi) shall not be deemed to modify the substance of any such
Section, including the provisions of such Section that set forth the extent to
which one of the foregoing Persons is or is not entitled to payment or
reimbursement;
(vii) to deposit in one or more separate, non-interest bearing
accounts any amount reasonably determined by the Trustee to be necessary to pay
any applicable federal, state or local taxes imposed on REMIC I, REMIC II and
REMIC III under the circumstances and to the extent described in Section 10.3;
(viii) to withdraw any amount deposited into the Collection
Account and the Grantor Trust Collection Account that was not required to be
deposited therein; and
(ix) to clear and terminate the Collection Account pursuant to
Section 9.1.
The Master Servicer shall keep and maintain separate accounting, on a
Mortgage Loan-by-Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account pursuant to subclauses (ii) - (viii)
above.
The Master Servicer shall pay to the Trustee, the Fiscal Agent or the
Special Servicer from the Collection Account (to the extent permitted by clauses
(i)-(viii) above) amounts permitted to be paid to the Trustee, the Fiscal Agent
or the Special Servicer therefrom, promptly upon receipt of a certificate of a
Responsible Officer of the Trustee, an officer of the Fiscal Agent or a
Servicing Officer of the Special Servicer, as applicable, describing the item
and amount to which the Trustee, the Fiscal Agent or the Special Servicer is
entitled. The Master Servicer may rely conclusively on any such certificate and
shall have no duty to recalculate the amounts stated therein.
The Trustee, the Fiscal Agent, the Special Servicer and the Master
Servicer shall in all cases have a right prior to the Certificateholders to any
funds on deposit in the Collection Account from time to time for the
reimbursement or payment of Servicing Compensation,
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Advances (subject to the limitation set forth in Section 3.6(ii)) and their
respective expenses (including Advance Interest Amounts) hereunder to the extent
such expenses are to be reimbursed or paid from amounts on deposit in the
Collection Account pursuant to this Agreement.
The Trustee shall, upon receipt, deposit in the Distribution Account
or the Grantor Trust Distribution Account, as applicable, any and all amounts
received by the Trustee in accordance with Section 3.6(i). If, as of 3:00 p.m.,
New York City time, on any Remittance Date or on such other date as any amount
referred to in Section 3.6(i) is required to be delivered hereunder, the Master
Servicer shall not have delivered to the Trustee for deposit in the Distribution
Account or the Grantor Trust Distribution Account the amounts required to be
deposited therein pursuant to Section 3.6(i), then the Trustee shall, to the
extent that a Responsible Officer of the Trustee has such knowledge, provide
notice of such failure to the Master Servicer by facsimile transmission sent to
telecopy no. (816) 435-2326 (or such alternative number provided by the Master
Servicer to the Trustee in writing) and by telephone at telephone no. (816)
435-5000 (or such alternative number provided by the Master Servicer to the
Trustee in writing) as soon as possible, but in any event before 5:00 p.m., New
York City time, on such day.
SECTION 3.7. Investment of Funds in the Collection Account, the
Grantor Trust Collection Account, the Distribution Account and the Reserve
Accounts.
(a) The Master Servicer (or with respect to any REO Account, the
Special Servicer) may direct (or, with respect to the Distribution Account,
cause the Trustee to direct) any depository institution maintaining the
Collection Account, the Grantor Trust Collection Account, the Distribution
Account, any REO Account or (subject to applicable laws and the related Mortgage
Loan Documents) any Reserve Accounts (each, for purposes of this Section 3.7, an
"Investment Account") to invest the funds in such Investment Account in one or
more Permitted Investments that bear interest or are sold at a discount, and
that mature, unless payable on demand, no later than the Business Day preceding
the date on which such funds are required to be withdrawn from such Investment
Account pursuant to this Agreement; provided, however, that all investments in
the Distribution Account, including those payable on demand, shall mature no
later than the Business Day prior to the next Distribution Date. Any direction
by the Master Servicer (or with respect to an REO Account, the Special Servicer)
to invest funds on deposit in an Investment Account shall be in writing and
shall certify that the requested investment is a Permitted Investment which
matures at or prior to the time required hereby or is payable on demand. In the
case of any Reserve Account, the Master Servicer shall act upon the written
request of the related Borrower or Manager to the extent the Master Servicer is
required to do so under the terms of the related Mortgage Loan, provided that in
the absence of appropriate written instructions from such Borrower or Manager
meeting the requirements of this Section 3.7, the Master Servicer shall have no
obligation to, but will be entitled to, direct the investment of funds in such
Reserve Accounts. All such Permitted Investments shall be held to maturity,
unless payable on demand. Any investment of funds in an Investment Account shall
be made in the name of the Trustee (in its capacity as such) or in the name of a
nominee of the Trustee. The Trustee shall have sole control (except with respect
to investment direction which shall be in the sole control of the Master
Servicer or the Special Servicer, as applicable, (subject,
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in the case of Reserve Accounts, to the rights of the related Borrower or
Manager under the related Mortgage Loan Documents) as an independent contractor
to the Trust Fund) over each such investment and any certificate or other
instrument evidencing any such investment shall be delivered directly to the
Trustee or its nominee (which shall initially be the Master Servicer), together
with any document of transfer, if any, necessary to transfer title to such
investment to the Trustee or its nominee. The Trustee shall have no
responsibility or liability with respect to the investment directions of the
Master Servicer or the Special Servicer or any losses resulting therefrom,
whether from Permitted Investments or otherwise. In the event amounts on deposit
in an Investment Account are at any time invested in a Permitted Investment
payable on demand, the Master Servicer or the Special Servicer, as applicable,
shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted Investment
may otherwise mature hereunder in an amount equal to the lesser of (1) all
amounts then payable thereunder and (2) the amount required to be withdrawn on
such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by the Master Servicer or the Special Servicer, as applicable,
that such Permitted Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the related Investment Account.
(b) All income and gain realized from investment of funds deposited
in the Collection Account, the Grantor Trust Collection Account, the
Distribution Account and any Reserve Account as to which the related Borrower is
not entitled to interest thereon shall be for the benefit of the Master Servicer
(other than income or gain realized from investment of funds on deposit in the
Distribution Account made by the Trustee on the Business Day prior to any
Distribution Date that matures on such Distribution Date) and all income and
gain realized from investment of funds deposited in any REO Account shall be for
the benefit of the Special Servicer and, other than with respect to the
Distribution Account, may be withdrawn by the Master Servicer or the Special
Servicer, as applicable, from time to time in accordance with Section 3.6 and
Section 3.17(b), as applicable. The Master Servicer may request that the Trustee
withdraw and remit to the Master Servicer all amounts due to it with respect to
the Distribution Account pursuant to the preceding sentence. The Master Servicer
shall deposit from its own funds into the Collection Account, the Grantor Trust
Collection Account and the Distribution Account, as the case may be, the amount
of any loss incurred in respect of any such Permitted Investment immediately
upon realization of such loss and the Special Servicer shall deposit from its
own funds into any REO Account the amount of any loss incurred in respect of any
such Permitted Investment immediately upon realization of such loss. The Master
Servicer shall also deposit into each Reserve Account any amounts representing
losses on Permitted Investments in which such Reserve Accounts have been
invested, except to the extent that amounts are invested for the benefit of the
Borrower under applicable law or the terms of the related Mortgage Loan. The
income and gain realized from investment of funds deposited in any Reserve
Account shall be paid from time to time to the related Borrower to the extent
required under the Mortgage Loan or applicable law.
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(c) All amounts on deposit in the Grantor Trust Distribution Account
shall be held uninvested.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may, and upon the request of Holders of Certificates
representing a majority of the aggregate Voting Rights of any Class shall, take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate proceedings. In the
event the Trustee takes any such action, the Trust Fund shall pay or reimburse
the Trustee for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by the Trustee in connection therewith. In the event
that the Trustee does not take any such action, the Master Servicer may take
such action at its own cost and expense.
SECTION 3.8. Maintenance of Insurance Policies and Errors and
Omissions and Fidelity Coverage.
(a) The Master Servicer on behalf of the Trustee, as mortgagee, shall
use its best efforts in accordance with the Servicing Standard to cause the
related Borrower to maintain, to the extent required or permitted to be required
by each Mortgage Loan (other than REO Mortgage Loans), and if the Borrower does
not so maintain, shall itself maintain (subject to the provisions of this
Agreement concerning Nonrecoverable Advances) to the extent the Trustee as
mortgagee has an insurable interest and to the extent available at commercially
reasonable rates, (A) fire and hazard insurance from a Qualified Insurer with
extended coverage on the related Mortgaged Property in an amount which is at
least equal to the lesser of (i) 100% of the then "full replacement cost" of the
improvements and equipment (excluding foundations, footings and excavation
costs), without deduction for physical depreciation, and (ii) the outstanding
principal balance of the related Mortgage Loan or such other amount as is
necessary to prevent any reduction in such policy by reason of the application
of co-insurance and to prevent the Trustee thereunder from being deemed to be a
co-insurer, in each case with a replacement cost rider, (B) insurance providing
coverage against 18 months of rent interruptions and (C) such other insurance
(including public liability insurance). The Special Servicer shall maintain, to
the extent available at commercially reasonable rates, fire and hazard insurance
from a Qualified Insurer with extended coverage on each REO Property in an
amount which is at least equal to 100% of the then "full replacement cost" of
the improvements and equipment (excluding foundations, footings and excavation
costs), without deduction for physical depreciation. The Special Servicer shall
maintain, to the extent available at commercially reasonable rates, from a
Qualified Insurer, with respect to each REO Property (A) public liability
insurance providing such coverage against such risks as the Special Servicer
determines, consistent with the related Mortgage and the Servicing Standard, to
be in the best interests of the Trust Fund, and shall cause to be maintained
with respect to each REO Property (B) insurance providing coverage against 18
months of rent interruptions, and (C) such other insurance, in each case as
required in the related Mortgage Loan Documents. In the case of any insurance
otherwise required to be maintained pursuant to this section that is not being
so maintained because the Master Servicer or the Special Servicer, as
applicable, has deemed that it is not available at commercially reasonable
rates, the Master Servicer or the Special Servicer, as applicable, shall deliver
an
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Officer's Certificate to the Trustee detailing the steps that the Master
Servicer or the Special Servicer, as applicable, took in seeking such insurance
and the factors which led to its determination that such insurance is not so
available. Any amounts collected by the Master Servicer or the Special Servicer,
as applicable, under any such policies (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property or amounts to be
released to the Borrower in accordance with the terms of the related Mortgage)
shall be deposited into the Collection Account pursuant to Section 3.5, subject
to withdrawal pursuant to Section 3.6. Any cost incurred by the Master Servicer
in maintaining any such insurance shall not, for the purpose of calculating
distributions to Certificateholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
so permit. It is understood and agreed that no earthquake or other additional
insurance other than flood insurance is to be required of any Borrower or to be
maintained by the Master Servicer or the Special Servicer other than pursuant to
the terms of the related Mortgage Loan Documents and pursuant to such applicable
laws and regulations as shall at any time be in force and as shall require such
additional insurance. If the Mortgaged Property is located in a federally
designated special flood hazard area, the Master Servicer will use its best
efforts in accordance with the Servicing Standard to cause the related Borrower
to maintain, or will itself obtain (subject to the provisions of this Agreement
concerning Nonrecoverable Advances), flood insurance in respect thereof to the
extent available at commercially reasonable rates, to the extent required under
the related Mortgage Loan Documents. Such flood insurance shall be in an amount
equal to the lesser of (i) the unpaid principal balance of the related Mortgage
Loan and (ii) the maximum amount of such insurance required by the terms of the
related Mortgage and as is available for the related property under the national
flood insurance program (assuming that the area in which such property is
located is participating in such program). If an REO Property is located in a
federally designated special flood hazard area, the Special Servicer will obtain
flood insurance in respect thereof providing substantially the same coverage as
described in the preceding sentences. If at any time during the term of this
Agreement a recovery under a flood or fire and hazard insurance policy in
respect of an REO Property is not available but would have been available if
such insurance were maintained thereon in accordance with the standards applied
to Mortgaged Properties described herein, the Special Servicer shall either (i)
immediately deposit into the Collection Account from its own funds the amount
that would have been recovered or (ii) apply to the restoration and repair of
the property from its own funds the amount that would have been recovered, if
such application would be consistent with the servicing standard set forth in
Section 3.1(a); provided, however, that the Special Servicer shall not be
responsible for any shortfall in insurance proceeds resulting from an insurer's
refusal or inability to pay a claim. Costs to the Master Servicer of maintaining
insurance policies pursuant to this Section 3.8 shall be paid by the Master
Servicer as a Servicing Advance and shall be reimbursable to the Master Servicer
with interest at the Advance Rate, and costs to the Special Servicer of
maintaining insurance policies pursuant to this Section 3.8 shall be paid and
reimbursed in accordance with Section 3.17(b).
The Master Servicer and the Special Servicer agree to prepare and
present, on behalf of itself, the Trustee and the Certificateholders, claims
under each related insurance policy maintained pursuant to this Section 3.8(a)
in a timely fashion in accordance with the terms of such policy and to take such
reasonable steps as are necessary to receive payment or to permit recovery
thereunder.
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The Master Servicer (or with respect to any REO Property, the Special
Servicer) shall require that all insurance policies required hereunder shall
name the Trustee or the Master Servicer (or with respect to any REO Property,
the Special Servicer), on behalf of the Trustee as the mortgagee, as loss payee
and that all such insurance policies require that 30 days' notice be given to
the Master Servicer before termination to the extent required by the related
Mortgage Loan Documents.
(b) (I) If the Master Servicer or Special Servicer, as applicable,
obtains and maintains a blanket insurance policy with a Qualified Insurer at its
own expense insuring against fire and hazard losses, 18-month rent interruptions
or other required insurance on all of the Mortgage Loans, it shall conclusively
be deemed to have satisfied its obligations concerning the maintenance of such
insurance coverage set forth in Section 3.8(a), it being understood and agreed
that such policy may contain a deductible clause, in which case the Master
Servicer or Special Servicer, as applicable, shall, in the event that (i) there
shall not have been maintained on one or more of the related Mortgaged
Properties a policy otherwise complying with the provisions of Section 3.8(a),
and (ii) there shall have been one or more losses which would have been covered
by such a policy had it been maintained, immediately deposit into the Collection
Account from its own funds the amount not otherwise payable under the blanket
policy because of such deductible clause to the extent that any such deductible
exceeds the deductible limitation that pertained to the related Mortgage Loan,
or, in the absence of such deductible limitation, the deductible limitation
which is consistent with the Servicing Standard. In connection with its
activities as Master Servicer or Special Servicer hereunder, as applicable, the
Master Servicer and the Special Servicer each agrees to prepare and present, on
behalf of itself, the Trustee and Certificateholders, claims under any such
blanket policy which it maintains in a timely fashion in accordance with the
terms of such policy and to take such reasonable steps as are necessary to
receive payment or permit recovery thereunder.
(II) If the Master Servicer or the Special Servicer, as
applicable, causes any Mortgaged Property or REO Property to be covered by a
master force placed insurance policy, which policy is issued by a Qualified
Insurer and provides no less coverage in scope and amount for such Mortgaged
Property or REO Property than the insurance required to be maintained pursuant
to Section 3.8(a), the Master Servicer or Special Servicer shall conclusively be
deemed to have satisfied its obligations to maintain insurance pursuant to
Section 3.8(a). Such policy may contain a deductible clause, in which case the
Master Servicer or Special Servicer, as applicable, shall, in the event that (i)
there shall not have been maintained on the related Mortgaged Property or REO
Property a policy otherwise complying with the provisions of Section 3.8(a), and
(ii) there shall have been one or more losses which would have been covered by
such a policy had it been maintained, immediately deposit into the Collection
Account from its own funds the amount not otherwise payable under such policy
because of such deductible to the extent that any such deductible exceeds the
deductible limitation that pertained to the related Mortgage Loan, or, in the
absence of any such deductible limitation, the deductible limitation which is
consistent with the Servicing Standard.
(c) Each of the Master Servicer and the Special Servicer shall
maintain a fidelity bond in the form and amount that would meet the servicing
requirements of prudent
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institutional commercial mortgage loan servicers. The Master Servicer or the
Special Servicer, as applicable, shall be deemed to have complied with this
provision if one of its respective Affiliates has such fidelity bond coverage
and, by the terms of such fidelity bond, the coverage afforded thereunder
extends to the Master Servicer or the Special Servicer, as applicable. In
addition, each of the Master Servicer and the Special Servicer shall keep in
force during the term of this Agreement a policy or policies of insurance
covering loss occasioned by the errors and omissions of its officers and
employees in connection with its obligations to service the Mortgage Loans
hereunder in the form and amount that would meet the servicing requirements of
prudent institutional commercial mortgage loan servicers. All fidelity bonds and
policies of errors and omissions insurance obtained under this Section 3.8(c)
shall be issued by a Qualified Insurer. Notwithstanding the foregoing, so long
as the long-term unsecured debt obligations of the Master Servicer or Special
Servicer, as applicable, or its respective corporate parent have been rated "A"
or better by S&P or "A2" or better by Moody's (or such lower rating as will not
result in qualification, downgrading or withdrawal of the ratings then assigned
to the Certificates, as evidenced in writing by the Rating Agencies), the Master
Servicer or Special Servicer, as applicable, shall be entitled to provide
self-insurance or obtain from its respective corporate parent adequate
insurance, as applicable, with respect to its obligation hereunder to maintain a
fidelity bond or an errors and omissions insurance policy.
SECTION 3.9. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) If any Mortgage Loan contains a provision in the nature of a
"due-on-sale" clause, which, by its terms:
(i) provides that such Mortgage Loan shall (or may at the related
mortgagee's option) become due and payable upon the sale or other transfer of an
interest in the related Mortgaged Property, or
(ii) provides that such Mortgage Loan may not be assumed without
the consent of the related mortgagee in connection with any such sale or other
transfer,
then, for so long as such Mortgage Loan is included in the Trust Fund, the
Master Servicer or the Special Servicer, as applicable, on behalf of the Trust
Fund, shall exercise or waive (subject to Sections 3.27 and 3.28) such provision
in accordance with the Servicing Standard; provided, that if the
then-outstanding principal balance of such Mortgage Loan is more than 5% of the
then-outstanding aggregate principal balance of all Mortgage Loans in the
Mortgage Pool, the Master Servicer or Special Servicer, as applicable, shall
have first obtained written confirmation from each Rating Agency that such
action shall not result in a qualification, downgrade or withdrawal of the
rating then assigned by such Rating Agency to any Class of Certificates (the
Master Servicer or the Special Servicer, as applicable, shall use its reasonable
efforts to have the cost, if any, of obtaining such confirmation paid by the
Borrower; if such cost is not paid by the Borrower, the Master Servicer shall
advance such amount as a Servicing Advance, unless such Advance would be a
Nonrecoverable Advance). Subject to the foregoing, the Master Servicer or the
Special Servicer, as applicable, is authorized to take or enter into an
assumption agreement from or with the Person to whom such Mortgaged Property has
been or is about to be conveyed,
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or to release the original related Borrower from liability upon such Mortgage
Loan and substitute the new Borrower as obligor thereon. To the extent permitted
by law, the Master Servicer or the Special Servicer, as applicable, shall enter
into an assumption or substitution agreement only if the credit status of the
prospective new Borrower is in compliance with (x) the Master Servicer's or the
Special Servicer's, as applicable, regular commercial mortgage origination or
servicing standards and criteria, (y) the terms of the related Mortgage Loan and
(z) the Servicing Standard. The Master Servicer or the Special Servicer, as
applicable, shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee the original of such
agreement, which document shall be added to the related Mortgage File and shall,
for all purposes, be considered a part of such Mortgage File to the same extent
as all other documents and instruments constituting a part thereof. In
connection with any such assumption or substitution agreement, the Mortgage
Rate, principal amount and other material payment terms (including any
cross-collateralization and cross-default provisions) of such Mortgage Loan
pursuant to the related Note and Mortgage shall not be changed, other than in
connection with a default or reasonably foreseeable default with respect to the
Mortgage Loan. Assumption fees collected by the Master Servicer or the Special
Servicer, as applicable, for entering into an assumption or substitution
agreement will be retained by the Master Servicer or the Special Servicer, as
applicable, as additional servicing compensation. Notwithstanding the foregoing,
the Master Servicer or Special Servicer may consent to the assumption of a
Mortgage Loan by a prospective new Borrower in a bankruptcy proceeding involving
the related Mortgaged Property.
(b) If any Mortgage Loan contains a provision in the nature of a
"due-on-encumbrance" clause, which, by its terms:
(i) provides that such Mortgage Loan shall (or may at the related
mortgagee's option) become due and payable upon the creation of any lien or
other encumbrance on such Mortgaged Property, or
(ii) requires the consent of the related mortgagee to the
creation of any such lien or other encumbrance on such Mortgaged Property,
then, for so long as such Mortgage Loan is included in the Trust Fund, the
Master Servicer or the Special Servicer, as applicable, on behalf of the Trust
Fund, shall exercise or waive (subject to Sections 3.27 and 3.28) the Trustee's
rights under such provision to (x) accelerate the payments due on such Mortgage
Loan, or (y) withhold its consent to the creation of any such lien or other
encumbrance, as applicable, except, in each case, to the extent that the Master
Servicer or the Special Servicer, as applicable, acting in accordance with the
Servicing Standard, determines that such enforcement would not be in the best
interests of the Trust Fund; provided, that the Master Servicer or Special
Servicer, as applicable, will not consent to the creation of any such lien or
encumbrance unless it shall have first obtained written confirmation from S&P
(if the then-outstanding principal balance of such Mortgage Loan is greater than
$2,500,000) and Moody's (if the then-outstanding principal balance of such
Mortgage Loan is greater than $5,000,000) that such consent shall not result in
a qualification, downgrade or withdrawal of the rating then assigned by such
Rating Agency to any Class of Certificates (the Master Servicer or the Special
Servicer, as applicable, shall use its reasonable efforts to have the cost, if
any, of obtaining such confirmation paid by the Borrower; if such cost is not
paid by the Borrower, the Master Servicer
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shall advance such amount as a Servicing Advance, unless such Advance would be a
Nonrecoverable Advance). Notwithstanding the foregoing, the Master Servicer or
the Special Servicer, as applicable, may forbear from enforcing any
due-on-encumbrance provision in connection with any junior or senior lien on the
Mortgaged Property imposed in connection with any bankruptcy proceeding
involving the Mortgaged Property.
(c) Nothing in this Section 3.9 shall constitute a waiver of the
Trustee's right, as the mortgagee of record, to receive notice of any assumption
of a Mortgage Loan, any sale or other transfer of the related Mortgaged Property
or the creation of any lien or other encumbrance with respect to such Mortgaged
Property.
(d) In connection with the taking of, or the failure to take, any
action pursuant to this Section 3.9, the Master Servicer or the Special
Servicer, as applicable, shall not agree to modify, waive or amend, and no
assumption or substitution agreement entered into pursuant to Section 3.9(a)
shall contain any terms that are different from, any term of any Mortgage Loan
or the related Note or Mortgage.
SECTION 3.1. Realization Upon Mortgage Loans.
(a) With respect to any Specially Serviced Mortgage Loan, the Special
Servicer shall determine, in accordance with the Servicing Standard, whether to
grant a modification, waiver or amendment of the terms of such Specially
Serviced Mortgage Loan, (subject to the limitations contained in Section 3.28)
commence foreclosure proceedings or attempt to sell such Specially Serviced
Mortgage Loan with reference to which course of action is reasonably likely to
produce a greater recovery on a present value basis with respect to such
Specially Serviced Mortgage Loan.
(b) In connection with any foreclosure or other acquisition, the
Master Servicer shall, at the direction of the Special Servicer, pay the costs
and expenses in any such proceedings as an Advance.
If the Special Servicer elects to proceed with a non-judicial
foreclosure in accordance with the laws of the state where the related Mortgaged
Property is located, the Special Servicer shall not be required to pursue a
deficiency judgment against the related Borrower or any other liable party if
the laws of such state do not permit such a deficiency judgment after a
non-judicial foreclosure or if the Special Servicer determines, in its best
judgment, that the likely recovery if a deficiency judgment is obtained will not
be sufficient to warrant the cost, time, expense and/or exposure of pursuing
such a deficiency judgment and such determination is evidenced by an Officer's
Certificate delivered to the Trustee.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee (which shall not include the
Master Servicer or the Special Servicer) or a separate trustee or co-trustee on
behalf of the Trustee, as the holder of the REMIC I Regular Interests and as
Trustee for the Certificateholders. Notwithstanding any such acquisition of
title and cancellation of the related Mortgage Loan, such Mortgage Loan shall
(except for purposes of
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Section 9.1) be considered to be a Mortgage Loan held in the Trust Fund until
such time as the related REO Property shall be sold by the Trust Fund and the
Stated Principal Balance of each REO Mortgage Loan shall be reduced by any Net
REO Proceeds allocated to principal. Consistent with the foregoing, for purposes
of all calculations hereunder, so long as such Mortgage Loan shall be considered
to be an outstanding Mortgage Loan:
(i) it shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Note shall have been discharged, such Note
and, for purposes of determining the Stated Principal Balance thereof, the
related amortization schedule in effect at the time of any such acquisition of
title, remain in effect; and
(ii) Net REO Proceeds received in any month shall be applied to
amounts that would have been payable under the related Note in accordance with
the terms of such Note. In the absence of such terms, Net REO Proceeds shall be
deemed to have been received first in payment of the accrued interest that
remained unpaid on the date that the related REO Property was acquired by the
Trust Fund; second in respect of the delinquent principal installments that
remained unpaid on such date; and thereafter, Net REO Proceeds received in any
month shall be applied to the payment of installments of principal and accrued
interest on such Mortgage Loan deemed to be due and payable in accordance with
the terms of such Note and such amortization schedule. If such Net REO Proceeds
exceed the Assumed Monthly Payment then payable, the excess shall be treated as
a Principal Prepayment received in respect of such Mortgage Loan.
(c) Notwithstanding any provision to the contrary, the Special
Servicer shall not acquire for the benefit of the Trust Fund any personal
property pursuant to this Section 3.10 unless either:
(i) such personal property is incident to real property (within
the meaning of Section 856(e)(1) of the Code) so acquired by the Special
Servicer for the benefit of the Trust Fund; or
(ii) the Special Servicer shall have requested and received an
Opinion of Counsel (the cost of such opinion shall be advanced as a Servicing
Advance, unless such Advance would be a Nonrecoverable Advance) to the effect
that the holding of such personal property by REMIC I will not cause the
imposition of a tax on REMIC I, REMIC II or REMIC III under the REMIC Provisions
or cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any
time that any Certificate is outstanding.
(d) Notwithstanding any provision to the contrary in this Agreement,
the Special Servicer shall not, on behalf of the Trust Fund, obtain title to any
direct or indirect partnership interest or other equity interest in any Borrower
pledged pursuant to any pledge agreement unless the Special Servicer shall have
requested and received an Opinion of Counsel (the cost of such opinion shall be
advanced as a Servicing Advance, unless such Advance would be a Nonrecoverable
Advance) to the effect that the holding of such partnership or other equity
interest by the Trust Fund will not cause the imposition of a tax on REMIC I,
REMIC II or
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REMIC III under the REMIC Provisions or cause REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC at any time that any Certificate is outstanding.
(e) Notwithstanding any provision to the contrary contained in
this Agreement, the Special Servicer shall not, on behalf of the Trust Fund,
obtain title to a Mortgaged Property as a result of or in lieu of foreclosure or
otherwise obtain title to any direct or indirect partnership interest or other
equity interest in any Borrower pledged pursuant to a pledge agreement and
thereby be the beneficial owner of a Mortgaged Property, and shall not otherwise
acquire possession of, or take any other action with respect to, any Mortgaged
Property if, as a result of any such action, the Trustee, for the Trust Fund or
the Certificateholders, would be considered to hold title to, to be a
"mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended from time to time,
or any comparable law, unless the Special Servicer has previously determined in
accordance with the Servicing Standard, based on an updated environmental
assessment report prepared by an Independent Person who regularly conducts
environmental audits, that:
(A) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, after consultation with an environmental
consultant, that it would be in the best economic interest of the Trust Fund to
take such actions as are necessary to bring such Mortgaged Property in
compliance therewith, and
(B) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any Hazardous Materials
for which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any currently effective federal, state or
local law or regulation, or that, if any such Hazardous Materials are present
for which such action could be required, after consultation with an
environmental consultant, it would be in the best economic interest of the Trust
Fund to take such actions with respect to such Mortgaged Property.
In the event that the environmental assessment first obtained or
updated by the Special Servicer with respect to a Mortgaged Property indicates
that such Mortgaged Property may not be in compliance with applicable
environmental laws or that Hazardous Materials may be present but does not
definitively establish such fact, the Special Servicer shall cause such further
environmental tests as the Special Servicer shall deem prudent to protect the
interests of Certificateholders to be conducted by an Independent Person who
regularly conducts such tests. Any such tests shall be deemed part of the
environmental assessment obtained by the Special Servicer for purposes of this
Section 3.10.
The environmental assessment contemplated by this Section 3.10(e)
shall be prepared by any Independent Person who regularly conducts environmental
audits for purchasers of commercial properties located in the same general area
as the Mortgaged Property with respect to which the Special Servicer is ordering
such environmental assessment, as determined by the Special Servicer in a manner
consistent with the Servicing Standard. The Master Servicer shall at the
direction of the Special Servicer pay for the cost of preparation of such
environmental assessments as an Advance.
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If the Special Servicer determines pursuant to Section 3.10(e)(A)
that a Mortgaged Property is not in compliance with applicable environmental
laws but that it is in the best economic interest of the Trust Fund to take such
actions as are necessary to bring such Mortgaged Property into compliance
therewith, or if the Special Servicer determines pursuant to Section 3.10(e)(B)
that the circumstances referred to therein relating to Hazardous Materials are
present but that it is in the best economic interest of the Trust Fund to take
such action with respect to the containment, clean-up or remediation of
Hazardous Materials affecting such Mortgaged Property as is required by law or
regulation, the Special Servicer shall take such action as it deems to be in the
best economic interest of the Trust Fund (with due consideration to the
avoidance of "mortgagee-in-possession," "owner" or "operator" status, as set
forth in Section 3.10(e)), but only if the Trustee has mailed notice to the
Holders of the REMIC III Regular Certificates of such proposed action, which
notice shall be prepared by the Special Servicer, and only if the Trustee does
not receive, within 30 days of such notification, instructions from the Holders
of a majority of the aggregate Voting Rights of such Classes directing the
Special Servicer not to take such action. None of the Trustee, the Master
Servicer or the Special Servicer shall be obligated to take any action or not
take any action pursuant to this Section 3.10(e) at the direction of the
Certificateholders unless the Certificateholders agree to indemnify the Trustee,
the Master Servicer and the Special Servicer with respect to such action or
inaction. None of the Special Servicer, Master Servicer or the Trustee shall be
required to advance the cost of any such compliance, containment, clean-up or
remediation and such expense shall be an expense of the Trust Fund.
(f) The Special Servicer shall report to the IRS and to the related
Borrower, in the manner required by applicable law, the information required to
be reported regarding any Mortgaged Property which is abandoned or foreclosed.
The Special Servicer shall deliver a copy of any such report to the Trustee.
SECTION 3.11. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full has been escrowed in a
manner customary for such purposes, the Master Servicer shall immediately notify
the Trustee and the Custodian by a certification (which certification shall
include a statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.5(a) have been or will be so deposited)
of a Servicing Officer and shall request delivery to it of the Mortgage File. No
expenses incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Trust Fund.
From time to time upon request of the Master Servicer or the Special
Servicer, and delivery to the Trustee and the Custodian of a Request for
Release, the Trustee shall promptly cause the Custodian to release the Mortgage
File (or any portion thereof) designated in such Request for Release to the
Master Servicer or the Special Servicer, as applicable. Upon receipt of (a) such
Mortgage File (or portion thereof) by the Custodian from the Master Servicer or
the Special Servicer, as applicable, or (b) in the event of a liquidation or
conversion of the
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related Mortgage Loan into an REO Property, a certificate of a Servicing Officer
stating that such Mortgage Loan was liquidated and that all amounts received or
to be received in connection with such liquidation which are required to be
deposited into the Collection Account or Distribution Account have been so
deposited, or that such Mortgage Loan has become an REO Property, the Custodian
shall return the Request for Release to the Master Servicer or the Special
Servicer, as applicable.
Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Special Servicer any court pleadings, requests for
trustee's sale or other documents prepared by the Special Servicer, its agents
or attorneys, necessary to the foreclosure or trustee's sale in respect of the
Mortgaged Property or to any legal action brought to obtain judgment against any
Borrower on the related Note or Mortgage or to obtain a deficiency judgment, or
to enforce any other remedies or rights provided by such Note or Mortgage or
otherwise available at law or in equity. Each such certification shall include a
request that such pleadings or documents be executed by the Trustee and a
statement as to the reason such documents or pleadings are required and that the
execution and delivery thereof by the Trustee will not invalidate or otherwise
affect the lien of the related Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale.
SECTION 3.1. Servicing Compensation.
(a) As compensation for its activities hereunder, the Master Servicer
shall be entitled to the Master Servicing Fee, which shall be payable solely
from receipts or Advances on the related Mortgage Loans, and may be withheld
from payments or Advances on account of interest prior to deposit in the
Collection Account, or may be withdrawn from amounts on deposit in the
Collection Account as set forth in Section 3.6(iv). The Master Servicer's rights
to the Master Servicing Fee may not be transferred in whole or in part except in
connection with the transfer of all of the Master Servicer's responsibilities
and obligations under this Agreement. In addition, the Master Servicer shall be
entitled to receive, as additional servicing compensation, any Prepayment
Interest Excess (subject to Section 3.25) and, to the extent permitted by
applicable law and the related Notes and Mortgages, any late payment charges or
late fees (to the extent not used to offset Advance Interest Amounts as provided
herein), NSF check charges (including with respect to Specially Serviced
Mortgage Loans), demand fees, assumption fees, loan modification fees, extension
fees, loan service transaction fees, beneficiary statement charges, or similar
items (but not including any Default Interest or Prepayment Premiums), in each
case to the extent received with respect to any Mortgage Loan that is not a
Specially Serviced Mortgage Loan. The Master Servicer shall also be entitled
pursuant to, and to the extent provided in, Section 3.7(b) to withdraw from the
Collection Account and to receive from the Reserve Accounts (to the extent not
required to be paid to the related Borrower pursuant to the related Mortgage
Loan Documents or applicable law) any interest or other income earned on
deposits therein.
Except as otherwise provided herein, the Master Servicer shall pay
all expenses incurred by it in connection with its servicing activities
hereunder. The Master Servicer shall promptly pay, when due, out of its own
funds, all surveillance fees of the Rating Agencies relating to the rating of
the Certificates.
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(b) As compensation for its activities hereunder, the Special
Servicer shall be entitled to the Special Servicing Fee with respect to each
Specially Serviced Mortgage Loan, which shall be payable from amounts on deposit
in the Collection Account as set forth in Section 3.6(iv). The Special
Servicer's rights to the Special Servicing Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Special
Servicer's responsibilities and obligations under this Agreement. The Special
Servicer shall also be entitled pursuant to, and to the extent provided in,
Section 3.7(b) to withdraw from any REO Account any interest or other income
earned on deposits therein.
In addition, the Special Servicer shall be entitled to receive, as
additional Servicing Compensation, to the extent permitted by applicable law and
the related Notes and Mortgages, any late payment charges or late fees (to the
extent not used to offset Advance Interest Amounts as provided herein), demand
fees, assumption fees, loan modification fees, extension fees, loan service
transaction fees, beneficiary statement charges, or similar items (but not
including any Default Interest or Prepayment Premiums), in each case to the
extent received with respect to any Specially Serviced Mortgage Loan.
Furthermore, the Special Servicer shall be entitled to receive, as
additional Servicing Compensation, a workout fee (the "Workout Fee") equal to
the product of 1.0% and the amount of Net Collections received by the Master
Servicer or the Special Servicer with respect to each Corrected Mortgage Loan.
If any Corrected Mortgage Loan again becomes a Specially Serviced Mortgage Loan,
any right to the Workout Fee with respect to such Mortgage Loan earned in
connection with the initial modification, restructuring or workout thereof shall
terminate, and the Special Servicer shall be entitled to a new Workout Fee for
such Mortgage Loan upon resolution or workout of the subsequent event of default
under such Mortgage Loan. If the Special Servicer is terminated for any reason
hereunder it shall retain the right to receive any Workout Fees payable in
respect of any Mortgage Loans which became Corrected Mortgage Loans during the
period that it acted as Special Servicer (and the successor Special Servicer
shall not be entitled to any portion of such Workout Fees), in each case until
the Workout Fees for any such Mortgage Loan ceases to be payable in accordance
with this paragraph.
Except as otherwise provided herein, the Special Servicer shall pay
all expenses incurred by it in connection with its servicing activities
hereunder.
(c) In addition to other Special Servicer compensation provided for
in this Agreement, and not in lieu thereof, the Special Servicer shall be
entitled to the Disposition Fee payable out of the Liquidation Proceeds prior to
the deposit of the related Net Liquidation Proceeds in the Collection Account.
(d) If the Master Servicer, the Special Servicer or the Trustee
receives a request or inquiry from a Borrower, any Certificateholder or any
other Person the response to which would, in the Master Servicer's, the Special
Servicer's or the Trustee's good faith business judgment, require the assistance
of Independent legal counsel or other consultant to the Master Servicer, the
Special Servicer or the Trustee, the cost of which would not be an expense of
the Trust Fund hereunder, then the Master Servicer, the Special Servicer or the
Trustee, as the case
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may be, shall not be required to take any action in response to such request or
inquiry unless such Borrower or such Certificateholder or such other Person, as
applicable, makes arrangements for the payment of the Master Servicer's, the
Special Servicer's or Trustee's expenses associated with such counsel or other
consultant (including, without limitation, posting an advance payment for such
expenses) satisfactory to the Master Servicer, the Special Servicer or the
Trustee, as the case may be, in its sole discretion. Unless such arrangements
have been made, the Master Servicer, the Special Servicer or the Trustee, as the
case may be, shall have no liability to any Person for the failure to respond to
such request or inquiry.
SECTION 3.13. Reports to the Trustee; Collection Account Statements.
(a) The Master Servicer shall deliver to the Paying Agent, with a
copy to the Trustee, the Fiscal Agent and each Rating Agency, (i) no later than
3:00 p.m. on the third Business Day preceding the related Distribution Date, a
report indicating the amount of Available Funds and the Current Principal
Distribution Amount for such Distribution Date and (ii) no later than 3:00 p.m.
central time on the second Business Day preceding the related Distribution Date,
(A) the Servicer Remittance Report with respect to such Determination Date
(which shall include, without limitation, the amount of Available Funds for the
related Distribution Date) and (B) a written statement of required P&I Advances
for the related Determination Date together with the certificate and
documentation required by the definition of Nonrecoverable Advance related to
any determination that any such P&I Advance would constitute a Nonrecoverable
Advance made as of such Determination Date.
(b) For so long as the Master Servicer makes deposits into and
withdrawals from the Collection Account, not later than fifteen days after each
Distribution Date, the Master Servicer shall forward to the Trustee a statement
prepared by the Master Servicer setting forth the status of the Collection
Account as of the close of business on the last Business Day of the related
Collection Period showing the aggregate amount of deposits into and withdrawals
from the Collection Account for each category of deposit specified in Section
3.5 and each category of withdrawal specified in Section 3.6 for such Collection
Period.
(c) The Trustee shall be entitled to rely conclusively on and shall
not be responsible for the content or accuracy of any information provided to it
by the Master Servicer or the Special Servicer pursuant to this Agreement.
SECTION 3.14. Annual Statement as to Compliance.
The Master Servicer and the Special Servicer shall deliver to the
Trustee, the Rating Agencies and to the Depositor on or before March 15 of each
year, beginning with March 15, 1999, an Officer's Certificate stating, as to
each signatory thereof, (i) that a review of the activities of the Master
Servicer or the Special Servicer, as applicable, during the preceding calendar
year (or such shorter period from the Closing Date to the end of the related
calendar year) and of its performance under this Agreement has been made under
such officer's supervision, (ii) that, to the best of such officer's knowledge,
based on such review, it has fulfilled in all material respects all of its
obligations under this Agreement throughout such year (or such shorter period),
or, if there has been a default in the fulfillment of any such obligation,
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specifying each such default known to such officer, the nature and status
thereof and what action it proposes to take with respect thereto, (iii) that, to
the best of such officer's knowledge, each Sub-Servicer has fulfilled its
obligations under its Sub-Servicing Agreement in all material respects, or, if
there has been a material default in the fulfillment of such obligations,
specifying each such default known to such officer and the nature and status
thereof, and (iv) whether it has received any notice regarding qualification, or
challenging the status, of REMIC I, REMIC II or REMIC III as a REMIC from the
IRS or any other governmental agency or body; provided, that each of the Master
Servicer and the Special Servicer shall not be required to cause the delivery of
such Officer's Certificate until April 15 in any given year so long as it has
received written confirmation from the Depositor that a Report on Form 10-K is
not required to be filed in respect of the Trust Fund for the preceding calendar
year.
SECTION 3.15. Annual Independent Public Accountants' Servicing
Report.
On or before March 15 of each year, beginning with March 15, 1999,
the Master Servicer and the Special Servicer at their expense shall cause a
nationally recognized firm of Independent public accountants (who may also
render other services to the Master Servicer or the Special Servicer, as
applicable) to furnish to the Trustee, the Depositor and each Rating Agency a
statement to the effect that such firm has examined certain documents and
records relating to the servicing of the Mortgage Loans under this Agreement or
the servicing of mortgage loans similar to the Mortgage Loans under
substantially similar agreements for the preceding 12 months and that the
assertion of management of the Master Servicer or Special Servicer, as
applicable, that it maintained an effective internal control system over the
servicing of such mortgage loans is fairly stated in all material respects,
based upon established criteria, which statement meets the standards applicable
to accountant's reports intended for general distribution; provided that each of
the Master Servicer and the Special Servicer shall not be required to cause the
delivery of such statement until April 15 in any given year so long as it has
received written confirmation from the Depositor that a Report on Form 10-K is
not required to be filed in respect of the Trust Fund for the preceding calendar
year.
SECTION 3.16. Access to Certain Documentation.
(a) The Master Servicer and the Special Servicer shall provide to any
Certificateholders that are federally insured financial institutions, the
Federal Reserve Board, the FDIC and the OTS and the supervisory agents and
examiners of such boards and such corporations, and any other governmental or
regulatory body to the jurisdiction of which any Certificateholder is subject,
access to the documentation regarding the Mortgage Loans required by applicable
regulations of the Federal Reserve Board, FDIC, OTS or any such governmental or
regulatory body, such access being afforded only upon reasonable request and
during normal business hours at the offices of the Master Servicer or the
Special Servicer, as applicable.
(b) Nothing in this Section 3.16 shall detract from the obligation of
the Master Servicer or the Special Servicer to observe any applicable law or any
provisions of the Mortgage Loan Documents prohibiting disclosure of information
with respect to the Borrowers or the Mortgage Loans, and the failure of the
Master Servicer or the Special Servicer, as applicable, to
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provide access as provided in this Section 3.16 as a result of such obligation
shall not constitute a breach of this Section 3.16.
SECTION 3.17. Title and Management of REO Properties.
(a) In the event that title to any Mortgaged Property is acquired for
the benefit of Certificateholders in foreclosure or by deed in lieu of
foreclosure, the deed or certificate of sale shall be taken in the name of the
Trustee, or its nominee (which shall not include the Master Servicer or the
Special Servicer), or a separate trustee or co-trustee, on behalf of the Trust
Fund. The Special Servicer shall maintain accurate records with respect to each
related REO Property reflecting the status of taxes, assessments and other
similar items that are or may become a lien on such REO Property and the status
of insurance premiums payable with respect thereto. The Special Servicer, on
behalf of the Trust Fund, shall dispose of any REO Property within three taxable
years after the close of the taxable year in which the Trust Fund acquires
ownership of such REO Property (the "REO Grace Period") for purposes of Section
860G(a)(8) of the Code, unless (i) the Special Servicer, on behalf of REMIC I,
has timely applied for and received an extension of such REO Grace Period
pursuant to Sections 856(e)(3) and 860G(a)(8)(A) of the Code, in which case the
Special Servicer shall sell such REO Property within the applicable extension
period or (ii) the Special Servicer seeks and subsequently receives an Opinion
of Counsel (the cost of such opinion shall be advanced as a Servicing Advance,
unless it would be a Nonrecoverable Advance), addressed to the Special Servicer
and the Trustee, to the effect that the holding by the Trust Fund of such REO
Property for an additional specified period will not cause such REO Property to
fail to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code (determined without regard to the exception applicable
for purposes of Section 860D(a) of the Code) at any time that any Certificate is
outstanding, in which case the Special Servicer shall sell such REO Property
within the REO Grace Period (collectively the "REO Extension Period") as
extended by the applicable REO Extension Period subject to any conditions set
forth in such Opinion of Counsel. The Special Servicer, on behalf of the Trust
Fund, shall dispose of any REO Property held by the Trust Fund prior to the last
day of the period (taking into account extensions) within which such REO
Property is required to be disposed of pursuant to the provisions of the
immediately preceding sentence in a manner provided under Section 3.18. The
Special Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders solely for the purpose of its disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code
(determined without regard to the exception applicable for purposes of Section
860D(a)) of the Code or, except as contemplated by Section 3.19(d), result in
the receipt by REMIC I of any "income from non-permitted assets" within the
meaning of Section 860F(a)(2)(B) of the Code or in an Adverse REMIC Event in
respect of any of the REMICs.
(b) The Special Servicer shall have full power and authority, subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with any REO Property as are consistent with
Servicing Standard, all on such terms and for such period as the Special
Servicer deems to be in the best interests of Certificateholders, and, in
connection therewith, the Special Servicer shall agree to the payment of
management fees that are consistent with general market standards. The Special
Servicer shall segregate and hold
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all revenues received by it with respect to any REO Property separate and apart
from its own funds and general assets and shall establish and maintain with
respect to any REO Property a segregated custodial account (each, an "REO
Account"), each of which shall be an Eligible Account and shall be entitled
"LaSalle National Bank, as Trustee, in trust for Holders of Commercial Mortgage
Acceptance Corp., Commercial Mortgage Pass-Through Certificates, Series 1998-C1,
REO Account." The Special Servicer shall be entitled to any interest or
investment income earned on funds deposited in an REO Account to the extent
provided in Section 3.7(b). The Special Servicer shall deposit or cause to be
deposited in the related REO Account within one Business Day after receipt all
REO Proceeds received by it with respect to any REO Property (other than
Liquidation Proceeds), and shall withdraw therefrom funds necessary for the
proper operation, management and maintenance of such REO Property, including:
(i) all insurance premiums and ground rents, if any, due and
payable in respect of such REO Property;
(ii) all real estate taxes and assessments in respect of such REO
Property and such other Mortgaged Properties that may result in the imposition
of a lien thereon; and
(iii) all costs and expenses reasonable and necessary to protect,
maintain, manage, operate, repair and restore such REO Property and such other
Mortgaged Properties, including any property management fees.
To the extent that such REO Proceeds are insufficient for the
purposes set forth in clauses (i) through (iii) above, the Master Servicer shall
make an Advance equal to the amount of such shortfall unless the Master Servicer
determines, in its good faith judgment, that such Advance would be a
Nonrecoverable Advance. The Master Servicer shall be entitled to reimbursement
of such Advances (with interest at the Advance Rate) made pursuant to the
preceding sentence, to the extent permitted pursuant to Section 3.6. The Special
Servicer shall remit to the Master Servicer from each REO Account for deposit in
the Collection Account on a monthly basis prior to the related Remittance Date
the Net REO Proceeds received or collected from the related REO Property, except
that in determining the amount of such Net REO Proceeds, the Special Servicer
may retain in such REO Account reasonable reserves for repairs, replacements and
necessary capital improvements and other related expenses.
Notwithstanding the foregoing, the Special Servicer shall not (unless
permitted pursuant to subsection (d) below):
(i) permit the Trust Fund to enter into, renew or extend any New
Lease if the New Lease, by its terms, will give rise to any income that does not
constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
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(iii) authorize or permit any construction on any REO Property,
other than the repair or maintenance thereof or the completion of a building or
other improvement thereon, and then only if more than 10% of the construction of
such building or other improvement was completed before default on the related
Mortgage Loan became imminent, all within the meaning of Section 856(e)(4)(B) of
the Code; or
(iv) Directly Operate or perform any construction work on, or
allow any Person (other than an Independent Contractor) to Directly Operate or
perform any construction work on, any REO Property on, any date more than 90
days after its date of acquisition by the Trust Fund;
unless, in any such case, the Special Servicer has requested and received an
Opinion of Counsel addressed to the Special Servicer and the Trustee (which
opinion shall be an expense of the Trust Fund) to the effect that such action
will not cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code (determined without regard
to the exception applicable for purposes of Section 860D(a) of the Code) at any
time that it is held by the Trust Fund, in which case the Special Servicer may
take such actions as are specified in such Opinion of Counsel.
The Special Servicer shall be required to contract with an
Independent Contractor for the operation and management of any REO Property
within 90 days of the Trust Fund's acquisition thereof (unless the Special
Servicer shall have provided the Trustee with an Opinion of Counsel that the
operation and management of such REO Property other than through an Independent
Contractor shall not cause such REO Property to fail to qualify as "foreclosure
property" within the meaning of Code Section 860G(a)(8)) (which opinion shall be
an expense of the Trust Fund), provided that:
(i) the terms and conditions of any such contract shall be
reasonable and customary for the area and type of property and shall not be
inconsistent herewith;
(ii) the terms and conditions of any such contract shall reflect
an agreement reached at arm's length and shall be consistent with the provisions
of Treasury Regulation Section 1.856-4(b)(5);
(iii) any such contract shall require, or shall be administered
to require, that the Independent Contractor pay all costs and expenses incurred
in connection with the operation and management of such REO Property, including
those listed above, and remit all related revenues (net of such costs and
expenses) to the Special Servicer as soon as practicable, but in no event later
than thirty days following the receipt thereof by such Independent Contractor
but only to the extent consistent with Section 856 of the Code and Treasury
Regulation Section 1.856-4(b)(5);
(iv) none of the provisions of this Section 3.17(b) relating to
any such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Special Servicer of any of its duties and
obligations to the Trust Fund or the Trustee on
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behalf of the Certificateholders with respect to the operation and management of
any such REO Property; and
(v) the Special Servicer shall be obligated with respect thereto
to the same extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
The Special Servicer shall be entitled to enter into any agreement
with any Independent Contractor performing services for it related to its duties
and obligations hereunder for indemnification of the Special Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification.
(c) When and as necessary, the Special Servicer shall send to the
Trustee a statement prepared by the Special Servicer setting forth the amount of
net income or net loss, as determined for federal income tax purposes, resulting
from the operation and management of a trade or business on, the furnishing or
rendering of a non-customary service to the tenants of, or the receipt of any
other amount not constituting Rents from Real Property in respect of, any REO
Property in accordance with Section 3.17(b).
(d) The Special Servicer shall, prior to acquisitions of title to any
Mortgaged Property, review the operations of such property securing a defaulted
loan and determine the character of the income that the Trust would realize if
the Trust acquired title to such Mortgaged Property. The Special Servicer shall
undertake this analysis with a view to retaining the status of the REO Property
as foreclosure property under the REMIC provisions while maximizing the net
after-tax REO Income received without materially adversely affecting the Special
Servicer's ability to sell such REO Property. The Special Servicer shall, in its
good faith and reasonable judgment, and as it deems appropriate after
consultation with counsel knowledgeable in such matters (with such consultation
being an expense of the Trust Fund) determine which of the following
alternatives is preferred and commercially feasible. The Special Servicer shall
avoid subjecting the income from such Mortgaged Property to tax as either "net
income from foreclosure property" or a "prohibited transaction" within the
meaning of the REMIC Provisions (an "REO Tax") to the maximum extent possible
when evaluating the following alternative courses of action:
(i) Operate, or Directly Operate, as defined herein, the
Mortgaged Property if none of the income would be subject to an REO tax; or
(ii) Contract for operation of the Mortgaged Property through a
lease to another party, by contract with an independent Contractor who Directly
Operates such property or such other method pursuant to which the Special
Servicer would not Directly Operate the Mortgaged Property if the income from
the Mortgaged Property could otherwise be subject to a REO tax; or
(iii) Directly Operate the mortgaged property if there are no
other commercially feasible means of operating such mortgaged property as REO
Property without the Trust potentially or actually incurring an REO Tax;
provided, however, that the Special Servicer
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shall consult with the Trustee regarding the plan of operations, the estimated
income (and character thereof) derived therefrom, the estimated amount of taxes
payable on such income and such other information as is necessary to make a
reasoned judgment as to whether the REO Property will remain a foreclosure
property and whether such plan is likely to maximize the net after tax REO
income to the Trust.
Neither the Special Servicer nor the Trustee shall be liable to the
Certificateholders, the Trust or the other parties to this Agreement or each
other for errors in judgment made in good faith in the exercise of their
discretion while performing their respective responsibilities under this
Section.
(e) Promptly following any acquisition by the Trust Fund of an REO
Property, the Special Servicer shall obtain (i) an update of any appraisal
performed pursuant to Section 3.23 which is more than 12 months old, or (ii) to
the extent that an appraisal has not been obtained pursuant to such Section, an
appraisal of such REO Property by an Independent appraiser familiar with the
area in which such REO Property is located in order to determine the fair market
value of such REO Property and shall notify the Depositor and the Trustee of the
results of such appraisal. Any such appraisal shall be conducted in accordance
with MAI standards by an appraiser with at least 10 years experience in the
relevant property type and in the jurisdiction in which the Mortgaged Property
is located and the cost thereof shall be an expense of the Trust Fund.
SECTION 3.18. Sale of Specially Serviced Mortgage Loans and REO
Properties.
(a) With respect to any Specially Serviced Mortgage Loan or REO
Property which the Special Servicer has determined to sell in accordance with
Section 3.10 or otherwise, the Special Servicer shall deliver to the Trustee an
Officer's Certificate to the effect that the Special Servicer has determined to
sell such Specially Serviced Mortgage Loan or REO Property in accordance with
this Section 3.18. The Special Servicer will give the Trustee not less than 10
Business Days' prior written notice of its intention to sell any Specially
Serviced Mortgage Loan or REO Property. The Trustee shall, within 5 Business
Days after receipt of such notice, notify the Operating Adviser. The Operating
Adviser may, at its option, within 30 days after receipt of such notice,
purchase (or designate an Affiliate to purchase) any such Specially Serviced
Mortgage Loan or REO Property out of the Trust Fund at a cash price equal to the
applicable Repurchase Price. The Repurchase Price for any Specially Serviced
Mortgage Loan or REO Property purchased under this Section 3.18(a) shall be
deposited into the Collection Account, and the Trustee, upon receipt of an
Officer's Certificate from the Master Servicer to the effect that such deposit
has been made, shall release or cause to be released to the Operating Adviser
(or the designated Affiliate thereof) the related Mortgage File, and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranty as shall be provided to it and are
reasonably necessary to vest in the ownership of such Mortgage Loan or REO
Property. In connection with any such purchase, the Special Servicer shall
deliver the related Servicing File to the Certificateholder effecting such
purchase.
(b) If the Operating Adviser (or a designated Affiliate thereof) has
not purchased any Specially Serviced Mortgage Loan or REO Property described in
the first
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sentence of Section 3.18(a) within 30 days of its having received notice in
respect thereof pursuant to Section 3.18(a) above or has specifically waived in
writing its right to purchase such Specially Serviced Mortgage Loan or REO
Property, then the Trustee shall within 5 days of the end of such 30-day period
or within 5 days following its receipt of such waiver send notice to the Master
Servicer and the Special Servicer that the Operating Adviser has not purchased
such Mortgage Loan or REO Property, and either the Special Servicer or the
Master Servicer, in that order, may, at its option, within 30 days after receipt
of such notice, purchase (or designate an Affiliate thereof to purchase) such
Mortgage Loan or REO Property out of the Trust Fund at a cash price equal to the
Repurchase Price. The Repurchase Price for any such Mortgage Loan or REO
Property purchased under this Section 3.18(b) shall be deposited into the
Collection Account, and the Trustee, upon receipt of an Officer's Certificate
from the Master Servicer to the effect that such deposit has been made, shall
release or cause to be released to the Master Servicer or the Special Servicer
(or the designated Affiliate thereof), as applicable, the related Mortgage File,
and shall execute and deliver such instruments of transfer or assignments, in
each case without recourse, representation or warranty as shall be provided to
it and are reasonably necessary to vest in the Master Servicer or the Special
Servicer (or the designated Affiliate thereof), as applicable, the ownership of
such Mortgage Loan or REO Property. In connection with any such purchase by the
Master Servicer, the Special Servicer shall deliver the related Servicing File
to the Master Servicer.
(c) The Special Servicer may offer to sell to any Person (including
the Depositor, the Master Servicer, the Special Servicer and the Operating
Adviser) any Specially Serviced Mortgage Loan or REO Property not otherwise
purchased pursuant to Section 3.18(a) or 3.18(b) if and when the Special
Servicer determines, consistent with the Servicing Standard, that such a sale
would be in the best economic interests of the Certificateholders (as a
collective whole). The Special Servicer shall notify the Operating Adviser at
least 10 Business Days before offering to sell any Specially Serviced Mortgage
Loan or REO Property pursuant to this Section 3.18(c). Such offer shall be made
in a commercially reasonable manner (which, for purposes hereof, includes an
offer to sell without representation or warranty other than customary warranties
of title and condition, if liability for breach thereof is limited to recourse
against the Trust), but shall, in any event, so offer to sell such Specially
Serviced Mortgage Loan or REO Property no later than the time determined by the
Special Servicer to be sufficient to result in the sale of such Specially
Serviced Mortgage Loan or REO Property within the period specified in Section
3.17(a). The Special Servicer shall deliver such Officer's Certificate and give
the Trustee not less than ten Business Days prior written notice of its
intention to sell such Specially Serviced Mortgage Loan or REO Property, in
which case the Special Servicer shall accept any offer received from any Person
that is determined by the Special Servicer to be a fair price, as determined in
accordance with Section 3.18(b), for such Specially Serviced Mortgage Loan or
REO Property if the offeror is a Person other than the Special Servicer or an
Affiliate thereof, or is determined to be such a price by the Trustee if the
offeror is the Special Servicer or an Affiliate thereof; provided, however, that
the Trustee shall be entitled to engage at the expense of the Trust Fund, an
Independent appraiser to determine whether the offer is a fair price; and
provided, further, that any offer by an Interested Person in the amount of the
Repurchase Price shall be deemed to be a fair price. Notwithstanding anything to
the contrary herein, neither the Trustee in its individual capacity nor any of
its Affiliates, may make an offer or purchase any Specially Serviced Mortgage
Loan or any REO Property pursuant hereto.
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In addition, in the event that the Special Servicer receives more
than one fair offer with respect to any Specially Serviced Mortgage Loan or REO
Property, the Special Servicer may accept an offer that is not the highest fair
offer if it determines, in accordance with the Servicing Standard, that
acceptance of such offer would be in the best interests of the
Certificateholders (for example, if the prospective buyer making the lower offer
is more likely to perform its obligations, or the terms offered by the
prospective buyer making the lower offer are more favorable). In the event that
the Special Servicer determines with respect to any REO Property that the offers
being made with respect thereto are not in the best interests of the
Certificateholders and that the end of the REO Grace Period referred to in
Section 3.17(a) with respect to such REO Property is approaching, the Special
Servicer shall seek an extension of such REO Grace Period in the manner
described in Section 3.17(a); provided, however, that the Special Servicer shall
use its best efforts in accordance with the Servicing Standard, to sell any REO
Property no later than the day prior to the Determination Date immediately prior
to the Scheduled Final Distribution Date.
(d) In determining whether any offer received represents a fair price
for any Specially Serviced Mortgage Loan or any REO Property, the Special
Servicer or the Trustee may conclusively rely on the opinion of an Independent
appraiser or other expert in real estate matters retained by the Special
Servicer or the Trustee at the expense of the Trust Fund. In determining whether
any offer constitutes a fair price for any Specially Serviced Mortgage Loan or
any REO Property, the Special Servicer or the Trustee (or, if applicable, such
appraiser) shall take into account, and any appraiser or other expert in real
estate matters shall be instructed to take into account, the appraisal obtained
pursuant to Section 3.23 and, as applicable, among other factors, the period and
amount of any delinquency on such Specially Serviced Mortgage Loan, the physical
(including environmental) condition of the related Mortgaged Property or such
REO Property, the state of the local economy and the Trust Fund's obligation to
dispose of any REO Property within the time period specified in Section 3.17(a).
(e) Subject to the provisions of Section 3.17, the Special Servicer
shall act on behalf of the Trust Fund in negotiating and taking any other action
necessary or appropriate in connection with the sale of any Specially Serviced
Mortgage Loan or REO Property, including the collection of all amounts payable
in connection therewith. Any sale of a Specially Serviced Mortgage Loan or any
REO Property shall be without recourse to, or representation or warranty by, the
Trustee, the Depositor, the Master Servicer, the Special Servicer or the Trust
Fund (except that any contract of sale and assignment and conveyance documents
may contain customary warranties of title and condition, so long as the only
recourse for breach thereof is to the Trust Fund), and, if such sale is
consummated in accordance with the duties of the Special Servicer, the Master
Servicer, the Depositor and the Trustee pursuant to the terms of this Agreement,
no such Person who so performed shall have any liability to the Trust Fund or
any Certificateholder with respect to the purchase price therefor accepted by
the Special Servicer or the Trustee.
(f) Net Liquidation Proceeds related to any such sale shall be
promptly, and in any event within one Business Day following receipt thereof,
deposited in the Collection Account in accordance with Section 3.5(a)(iv).
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SECTION 3.19. Inspections.
Commencing in 1999, the Master Servicer (or, with respect to
Specially Serviced Mortgage Loans and REO Properties, the Special Servicer)
shall inspect or cause to be inspected (at its own expense) each Mortgaged
Property at least once every two years (or, if the related Mortgage Loan has a
then current principal balance greater than $2,000,000, then at least once every
year). The Master Servicer and the Special Servicer shall each prepare or cause
to be prepared as soon as reasonably possible a written report of each such
inspection and shall deliver a copy of such report to the Trustee and the
Operating Adviser within 10 days after the preparation thereof.
SECTION 3.20. Available Information and Notices.
The Master Servicer or the Special Servicer, if applicable, shall
promptly give notice to the Trustee, who will copy each Certificateholder, each
Rating Agency, the Operating Adviser, the Depositor, the Placement Agents and
the applicable Seller of (a) any notice from a Borrower or insurance company
regarding an upcoming voluntary or involuntary prepayment (including that
resulting from a casualty or condemnation) of all or part of the related
Mortgage Loan (provided that a request by a Borrower or other party for a
quotation of the amount necessary to satisfy all obligations with respect to a
Mortgage Loan shall not, in and of itself, be deemed to be such notice); and (b)
of any other occurrence known to it with respect to a Mortgage Loan or REO
Property that the Master Servicer or the Special Servicer determines, in
accordance with the Servicing Standard, would have a material effect on such
Mortgage Loan or REO Property, which notice shall include an explanation as to
the reason for such material effect (provided that any extension of the term of
any Mortgage Loan shall be deemed to have a material effect).
None of the Trustee, the Fiscal Agent, the Master Servicer and the
Special Servicer shall be responsible for the accuracy or completeness of any
information supplied to it by a Borrower or a third party for inclusion in any
such notice or in any other report or information furnished or provided by the
Master Servicer, the Special Servicer or the Trustee hereunder, and the Master
Servicer, the Special Servicer, the Fiscal Agent and the Trustee 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 any statement
or omission or alleged statement or omission therein, including any liability
related to the inclusion of such information in any report filed with the
Commission. Such indemnification shall survive the resignation or termination of
the foregoing parties and the termination of this Agreement.
In addition to the other reports and information made available and
distributed to the Depositor, the Placement Agents, the Trustee, the Rating
Agencies, the Operating Adviser or the Certificateholders pursuant to other
provisions of this Agreement, the Master Servicer and the Special Servicer
shall, in accordance with such reasonable rules and procedures as it may adopt
(which may include the requirement that an agreement governing the availability,
use and disclosure of such information, and which may provide indemnification to
the Master Servicer or the Special Servicer as applicable, for any liability or
damage that may arise therefrom, be executed to the extent the Master Servicer
or the Special Servicer, as applicable, deems such action to be necessary or
appropriate), also make available any information relating to the
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Mortgage Loans, the Mortgaged Properties or the Borrowers for review by the
Depositor, the Rating Agencies, the Placement Agents, the Trustee, the Operating
Adviser, the Certificateholders and any other Persons to whom the Master
Servicer or the Special Servicer, as the case may be, believes such disclosure
is appropriate, in each case except to the extent doing so is prohibited by
applicable law or by any documents related to a Mortgage Loan.
The Trustee shall also make available at its offices primarily
responsible for administration of the Trust Fund, during normal business hours,
for review by the Depositor, the Rating Agencies, the Operating Adviser, any
Certificateholder, the Placement Agents, any Person identified to the Trustee by
a Certificateholder as a prospective transferee of a Certificate and any other
Persons to whom the Trustee believes such disclosure is appropriate, the
following items: (i) this Agreement, (ii) all monthly statements to
Certificateholders delivered since the Closing Date pursuant to Section 4.4(a),
(iii) all annual statements as to compliance delivered to the Trustee and the
Depositor pursuant to Section 3.14, (iv) all annual Independent accountants'
reports delivered to the Trustee and the Depositor pursuant to Section 3.15, and
(v) any reports or information relating to the Mortgage Loans, the Mortgaged
Properties or the Borrowers which the Trustee has received from the Master
Servicer or the Special Servicer. The Master Servicer or the Special Servicer,
as appropriate, shall make available at its offices during normal business
hours, for review by the Depositor, the Placement Agents, the Trustee, the
Rating Agencies, the Operating Adviser, any Certificateholder, any Person
identified to the Master Servicer or the Special Servicer, as applicable, by a
Certificateholder as a prospective transferee of a Certificate and any other
Persons to whom the Master Servicer or the Special Servicer, as applicable,
believes such disclosure is appropriate, the following items: (i) the inspection
reports prepared by or on behalf of the Master Servicer or the Special Servicer,
as applicable, in connection with the property inspections conducted by the
Master Servicer or the Special Servicer, as applicable, pursuant to Section
3.19, (ii) any and all modifications, waivers and amendments of the terms of a
Mortgage Loan entered into by the Master Servicer or the Special Servicer and
(iii) any and all Officer's Certificates and other evidence delivered to the
Trustee and the Depositor to support the Master Servicer's determination that
any Advance was, or if made would be, a Nonrecoverable Advance, in each case
except to the extent doing so is prohibited by applicable laws or by any
documents related to a Mortgage Loan. Copies of any and all of the foregoing
items shall be available from the Master Servicer, the Special Servicer or the
Trustee, as applicable, upon request (subject to the exception in the preceding
sentence). The Master Servicer, the Special Servicer and the Trustee shall be
permitted to require payment (other than from any Rating Agency and the
Operating Adviser) of a sum sufficient to cover the reasonable costs and
expenses incurred by it in providing copies of or access to any information
requested in accordance with the previous sentence.
The Master Servicer shall, on behalf of the Trust Fund, prepare, sign
and file with the Commission any and all reports, statements and information
respecting the Trust Fund which the Master Servicer or the Depositor determines
are required to be filed with the Commission pursuant to Sections 13(a) or 15(d)
of the 1934 Act, each such report, statement and information to be filed on or
prior to the required filing date for such report, statement or information.
Notwithstanding the foregoing, the Depositor shall file with the Commission,
within fifteen days of the Closing Date, a Current Report on Form 8-K together
with this Agreement.
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SECTION 3.21. Reserve Accounts.
The Master Servicer shall administer each Reserve Account in
accordance with the related Mortgage Loan Documents.
SECTION 3.22. Servicing Advances.
(a) The Master Servicer (or, to the extent provided in Section
3.22(b), the Trustee or the Fiscal Agent) shall make any Servicing Advances as
and to the extent otherwise required pursuant to the terms hereof. For purpose
of calculating distributions to the Certificateholders, Servicing Advances shall
not be considered to increase the principal balance of any Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so provide.
(b) The Master Servicer shall notify the Trustee, the Fiscal Agent
and the Rating Agencies in writing promptly upon, and in any event within one
Business Day after, becoming aware that it will be financially unable to make
any Servicing Advance required to be made pursuant to the terms hereof, and in
connection therewith, shall set forth in such notice the amount of such
Servicing Advance, the Person to whom it should be paid, and the circumstances
and purpose of such Servicing Advance, and shall set forth therein information
and instructions for the payment of such Servicing Advance, and, on the date
specified in such notice for the payment of such Servicing Advance, or, if no
such date is specified or such date has already occurred, then within one
Business Day following such notice, the Trustee shall pay the amount of such
Servicing Advance in accordance with such information and instructions. If the
Trustee fails to make any Servicing Advance required to be made under this
Section 3.22, the Fiscal Agent shall make such Advance on the same day the
Trustee was required to make such Servicing Advance and, thereby, the Trustee
shall not be in default under this Agreement.
(c) Notwithstanding anything herein to the contrary, none of the
Master Servicer, the Trustee or the Fiscal Agent shall be obligated to make a
Servicing Advance as to any Mortgage Loan or REO Property if the Master
Servicer, the Trustee or the Fiscal Agent as applicable, determines that such
Servicing Advance, if made, would be a Nonrecoverable Advance. The Trustee and
the Fiscal Agent shall be entitled to rely, conclusively, on any determination
by the Master Servicer that a Servicing Advance, if made, would be a
Nonrecoverable Advance. The Trustee and the Fiscal Agent, in determining whether
or not a Servicing Advance previously made is, or a proposed Servicing Advance,
if made, would be, a Nonrecoverable Advance shall make such determination in
their good faith judgment.
(d) The Master Servicer, the Trustee and/or the Fiscal Agent, as
applicable, shall be entitled to, and the Master Servicer hereby covenants and
agrees to promptly seek and effect, the reimbursement of Servicing Advances to
the extent permitted pursuant to Section 3.6(ii) of this Agreement, together
with any related Advance Interest Amount in respect of such Servicing Advances
(pursuant to Section 3.6(iii)).
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SECTION 3.23. Appraisal Reductions.
(a) Within 60 days after the Special Servicer receives notice or is
otherwise aware of an Appraisal Reduction Event, the Special Servicer shall be
required to obtain an Updated Appraisal of the related Mortgaged Property or REO
Property; provided that if the Special Servicer had completed or obtained an
Updated Appraisal within the immediately preceding 12 months, the Special
Servicer may rely on such Updated Appraisal and shall have no duty to prepare a
new Updated Appraisal, unless such reliance would not be in accordance with the
Servicing Standard. The cost of any such Updated Appraisal if not an internal
valuation performed by the Special Servicer shall be paid by the Master Servicer
as a Servicing Advance, unless such Advance would be a Nonrecoverable Advance.
If no Updated Appraisal has been obtained within 12 months prior to the first
Distribution Date on or after an Appraisal Reduction Event has occurred, the
Special Servicer will be required to estimate the value of the related Mortgaged
Property or REO Property (the "Special Servicer's Appraisal Reduction Estimate")
and such estimate will be used for purposes of determining the Appraisal
Reduction.
(b) The Master Servicer, based on the Updated Appraisal or Special
Servicer's Reduction Estimate provided to it by the Special Servicer, shall
calculate any Appraisal Reduction. If the Appraisal Reduction is calculated
using the Special Servicer's Reduction Estimate, then on the first Distribution
Date occurring on or after the delivery of the Updated Appraisal, the Master
Servicer will be required to adjust the Appraisal Reduction to take into account
the Updated Appraisal (regardless of whether the Updated Appraisal is higher or
lower than the Special Servicer's Appraisal Reduction Estimate).
(c) Annual updates of such Updated Appraisal will be obtained during
the continuance of an Appraisal Reduction Event. The cost of such annual updates
shall be paid as a Servicing Advance, unless such Advance would be a
Nonrecoverable Advance. In addition, the Operating Adviser may at any time
request the Special Servicer to obtain an Updated Appraisal at the Operating
Adviser's expense. The Appraisal Reduction will be adjusted by the Master
Servicer based on such Updated Appraisal. Any Updated Appraisal obtained by the
Special Servicer pursuant to this section shall be delivered by the Special
Servicer to the Master Servicer, and the Master Servicer shall deliver such
Updated Appraisal to the Trustee within 15 days of receipt by the Master
Servicer of such Updated Appraisal from the Special Servicer and the Trustee
shall deliver such Updated Appraisal to the Holders of the Privately Offered
Certificates within 15 days of receipt by the Trustee of such Updated Appraisal
from the Master Servicer. Upon payment in full or liquidation of any Mortgage
Loan for which an Appraisal Reduction has been determined, such Appraisal
Reduction will be eliminated.
SECTION 3.24. Transfer of Servicing Between Master Servicer and
Special Servicer; Record Keeping.
(a) Upon determining that any Mortgage Loan has become a Specially
Serviced Mortgage Loan, the Master Servicer shall immediately give notice
thereof, together with a copy of the related Mortgage File, to the Special
Servicer and shall use its best efforts to provide the Special Servicer with all
information, documents (but excluding the original documents constituting such
Mortgage File) and records (including records stored electronically
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on computer tapes, magnetic discs and the like) relating to such Mortgage Loan
and reasonably requested by the Special Servicer to enable it to assume its
duties hereunder with respect thereto without acting through a Sub-Servicer. The
Master Servicer shall use its best efforts to comply with the preceding sentence
within five Business Days of the date such Mortgage Loan became a Specially
Serviced Mortgage Loan and in any event shall continue to act as Master Servicer
and administrator of such Mortgage Loan until the Special Servicer has commenced
the servicing of such Mortgage Loan, which shall occur upon the receipt by the
Special Servicer of the information, documents and records referred to in the
preceding sentence. With respect to each Mortgage Loan that becomes a Specially
Serviced Mortgage Loan, the Master Servicer shall instruct the related Borrower
to continue to remit all payments in respect of such Mortgage Loan to the Master
Servicer. If Midland Loan Services, Inc. ceases to be the Master Servicer or the
Special Servicer, Midland Loan Services, Inc. and the successor Master Servicer
or Special Servicer, as applicable, may agree that, notwithstanding the
preceding sentence, with respect to each Mortgage Loan that becomes a Specially
Serviced Mortgage Loan, the Master Servicer shall instruct the related Borrower
to remit all payments in respect of such Mortgage Loan to the Special Servicer,
provided that the payee in respect of such payments shall remain the Master
Servicer.
Upon determining that no event has occurred and is continuing with
respect to a Mortgage Loan that causes such Mortgage Loan to be a Specially
Serviced Mortgage Loan, the Special Servicer shall immediately give notice
thereof to the Master Servicer and upon giving such notice, such Mortgage Loan
shall cease to be a Specially Serviced Mortgage Loan pursuant to the first
proviso to the definition of Specially Serviced Mortgage Loan, the Special
Servicer's obligation to service such Mortgage Loan shall terminate and the
obligations of the Master Servicer to service and administer such Mortgage Loan
as a Mortgage Loan that is not a Specially Serviced Mortgage Loan shall resume.
In addition, if the related Borrower has been instructed, pursuant to the last
sentence of the preceding paragraph, to make payments to the Special Servicer,
upon such determination, the Special Servicer shall instruct such Borrower to
remit all payments in respect of such Mortgage Loan that is no longer a
Specially Serviced Mortgage Loan directly to the Master Servicer.
(b) In servicing any Specially Serviced Mortgage Loan, the Special
Servicer shall provide to the Trustee originals of documents included within the
definition of "Mortgage File" for inclusion in the related Mortgage File (to the
extent such documents are in the possession of the Special Servicer) and copies
of any additional related Mortgage Loan information, including correspondence
with the related Borrower, and the Special Servicer shall provide copies of the
foregoing to the Master Servicer.
(c) Not later than the Business Day preceding each date on which
the Master Servicer is required to furnish a report under Section 3.13 to the
Trustee, the Special Servicer shall deliver to the Master Servicer a written
statement describing, on a Mortgage Loan-by-Mortgage Loan basis, the amount of
all payments on account of interest received on each Specially Serviced Mortgage
Loan; the amount of all payments on account of principal, including Principal
Prepayments, on each Specially Serviced Mortgage Loan; the amount of Insurance
Proceeds and Liquidation Proceeds received with respect to each Specially
Serviced Mortgage Loan; and the amount of net income or net loss, as determined
for management of a
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trade or business on, or the furnishing or rendering of a non-customary service
to the tenants of, each REO Property that previously secured a Specially
Serviced Mortgage Loan, in each case in accordance with Section 3.17.
(d) Notwithstanding the provisions of the preceding subsection (c),
the Master Servicer shall maintain ongoing payment records with respect to each
of the Specially Serviced Mortgage Loans and shall provide the Special Servicer
with any information reasonably required by the Special Servicer to perform its
duties under this Agreement. The Special Servicer shall provide the Master
Servicer with any information reasonably required by the Master Servicer to
perform its duties under this Agreement.
(e) No later than 30 days after a transfer of servicing described
in the preceding paragraph for a Mortgage Loan, the Special Servicer shall
deliver to each Rating Agency and the Operating Adviser a report (the "Asset
Status Report") with respect to such Mortgage Loan and the related Mortgaged
Property. Such Asset Status Report shall set forth the following information to
the extent reasonably determinable:
(i) summary of the status of such Specially Serviced Mortgage
Loan and any negotiations with the related Borrower;
(ii) a discussion of the legal and environmental considerations
reasonably known to the Special Servicer, consistent with the Servicing
Standard, that are applicable to the exercise of remedies as aforesaid and to
the enforcement of any related guaranties or other collateral for the related
Mortgage Loan and whether outside legal counsel has been retained;
(iii) the most current rent roll and income or operating state-
ment available for the related Mortgaged Property;
(iv) the Special Servicer's recommendations on how such Specially
Serviced Mortgage Loan might be returned to performing status and returned to
the Master Servicer for regular servicing or otherwise realized upon;
(v) the appraised value of the Mortgaged Property together with
the assumptions used in the calculation thereof; and
(vi) such other information as the Special Servicer deems rele-
vant in light of the Servicing Standard.
SECTION 3.25. Adjustment of Servicing Compensation in Respect of
Prepayment Interest Shortfalls.
The Master Servicer shall deliver to the Trustee for deposit in the
Collection Account on each Remittance Date, without any right of reimbursement
therefor, an amount equal to the lesser of (i) the excess, if any, of all
Prepayment Interest Shortfalls over all Prepayment Interest Excesses, in each
case resulting from Principal Prepayments received in respect of the
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Mortgage Pool during the most recently ended Collection Period, and (ii) an
amount equal to the aggregate Stated Principal Balance of the Mortgage Loans for
which the Master Servicer has received its Master Servicing Fee for such
Distribution Date multiplied by 1/12th of 0.029%.
SECTION 3.26. Operating Advisor; Elections.
(a) In accordance with Section 3.26(c), the Holders of Certificates
representing more than 50% of the aggregate Certificate Balance of the
Controlling Class shall be entitled to elect an operating adviser (the
"Operating Adviser") with the powers set forth in Section 3.27. An election of
an Operating Adviser may also be held upon the resignation or removal of any
Person acting as Operating Adviser. The initial election of an Operating Adviser
may be held at any time on or after the Closing Date.
(b) At the request of the Holders of Certificates representing at
least 50% of the aggregate Certificate Balance of the Controlling Class, the
Trustee shall call a meeting of the Holders of the Controlling Class for purpose
of electing an Operating Adviser. Notice of the meeting shall be mailed or
delivered by the Trustee to each Holder of Certificates of the Controlling Class
not less than 10 nor more than 60 days prior to the meeting. The notice shall
state the place and the time of the meeting, which may be held by telephone.
Holders of Certificates representing a majority of the aggregate Certificate
Balance of the Controlling Class, present in person or represented by proxy,
shall constitute a quorum for the nomination of an Operating Adviser. At the
meeting, each Holder shall be entitled to nominate one Person to act as
Operating Adviser. The Trustee shall cause the election of the Operating Adviser
to be held as soon thereafter as is reasonably practicable.
(c) Each Holder of Certificates of the Controlling Class shall be
entitled to vote in each election of the Operating Adviser. The voting in each
election of the Operating Adviser shall be in writing mailed, telecopied,
delivered or sent by courier and actually received by the Trustee on or prior to
the date of such election. Immediately upon receipt by the Trustee of votes
(which have not been rescinded) from the Holders of Certificates representing
more than 50% of the aggregate Certificate Balance of the Controlling Class
which are cast for a single Person, such Person shall be, upon such Person's
acceptance, the Operating Adviser. The Trustee shall act as judge of each
election and, absent manifest error, the determination of the results of any
election by the Trustee shall be conclusive. Notwithstanding any other
provisions of this Section 3.26, the Trustee may make such reasonable
regulations as it may deem advisable for any election.
(d) The Operating Adviser may be removed at any time by the written
vote, copies of which must be delivered to the Trustee, of the Holders of the
Certificates representing more than 50% of the aggregate Certificate Balance of
the Controlling Class.
(e) For purposes of electing or removing an Operating Adviser, Certi-
ficates of the Controlling Class held by the Depositor, the Master Servicer or
the Special Servicer or by any Affiliate of any of them shall be taken into
account with the same force and effect as if any other Person held such
Certificates.
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SECTION 3.27. Appointment of Special Servicer; Duties of Operating
Adviser.
(a) Midland Loan Services, Inc. is hereby appointed as the
initial Special Servicer hereunder.
(b) The Operating Adviser shall be entitled to advise the Special
Servicer with respect to the following actions of the Special Servicer, and
subject to Section 3.27(c), the Special Servicer shall not be permitted to take
any of the following actions as to which the Operating Adviser has objected in
writing within 10 Business Days of having been notified thereof and having been
provided with all reasonably requested information with respect thereto
(provided that if such written objection has not been received by the Special
Servicer within such 10 Business Day period, then the Operating Adviser's
approval shall be deemed to have been given):
(i) any foreclosure upon or comparable conversion (which may
include acquisitions of an REO Property) of the ownership of properties securing
such of the Specially Serviced Mortgage Loans as come into and continue in
default;
(ii) any amendment, waiver or modification of a Money Term or
any other term of a Specially Serviced Mortgage Loan;
(iii) any proposed sale of a defaulted Mortgage Loan or REO
Property (other than in connection with the termination of the Trust Fund
pursuant to Section 9.1;
(iv) any acceptance of a discounted payoff;
(v) any determination to bring an REO Property into compliance
with applicable environmental laws or to otherwise address hazardous materials
located at an REO Property;
(vi) any release of collateral (other than in accordance with
the terms of, or upon satisfaction of, a Mortgage Loan);
(vii) any acceptance of substitute or additional collateral for
a Mortgage Loan;
(viii) any waiver of a "due-on-sale" or "due-on-encumbrance"
clause; and
(ix) any acceptance of an assumption agreement releasing a
borrower from liability under a Mortgage Loan.
In addition, subject to Section 3.27(c), the Operating Adviser may
direct the Special Servicer to take, or to refrain from taking, such other
actions as Operating Adviser may deem advisable.
(c) Notwithstanding the provisions of Section 3.27(b), no such
advice, direction or objection contemplated by Section 3.27(b) may require or
cause the Special Servicer to violate
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any provision of this Agreement; including the Special Servicer's obligation to
act in accordance with the Servicing Standard.
(d) The Operating Adviser shall have no liability to the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in judgment,
but will be liable for its own gross negligence or willful misconduct. Each
Certificateholder acknowledges and agrees, by its acceptance of its
Certificates, that, the Operating Adviser may have special relationships and
interests that conflict with those of holders of one or more Classes of
Certificates, that the Operating Adviser may act solely in the interests of the
holders of the Controlling Class, that the Operating Adviser does not have any
duties to the holders of any Class of Certificates other than the Controlling
Class, that the Operating Adviser may take actions that favor the interests of
the holders of the Controlling Class over the interests of the holders of one or
more other Classes, that the Operating Adviser shall not be deemed to have been
negligent or reckless, or to have acted in bad faith or engaged in willful
misconduct by reason of its having acted solely in the interests of the
Controlling Class, and that the Operating Adviser shall have no liability
whatsoever for having so acted, and no Certificateholder may take any action
whatsoever against the Operating Adviser for having so acted. The Special
Servicer shall keep confidential all advice, directions, recommendations and/or
objections received from the Operating Adviser; unless such advice, directions,
recommendations and/or objections (i) are of public knowledge at the time of
disclosure by the Special Servicer, (ii) become generally available to the
public other than as a result of a disclosure by the Special Servicer, (iii)
relates to an objection provided to the Special Servicer by the Operating
Adviser pursuant to Section 3.27(b), (iv) were disclosed pursuant to a legal
requirement or (v) were disclosed with the written consent of the Operating
Adviser.
(e) The Operating Adviser, if any, may direct the Trustee to remove
the Special Servicer at any time effective upon the appointment and written
acceptance of such appointment by a successor to the Special Servicer appointed
by the Operating Adviser. The existing Special Servicer shall be deemed to have
resigned simultaneously with such designated successor becoming the Special
Servicer hereunder; provided, however, that (i) the resigning Special Servicer
shall continue to be entitled to receive all amounts accrued or owing to it
under this Agreement on or prior to the effective date of such resignation,
whether in respect of Servicing Compensation or otherwise, and (ii) it and its
directors, officers, employees and agents shall continue to be entitled to the
benefits of Sections 6.1 and 6.3, notwithstanding any such resignation. Such
resigning Special Servicer shall cooperate with the Trustee and the replacement
Special Servicer in effecting the termination of the resigning Special
Servicer's responsibilities and rights hereunder, including, without limitation,
the transfer within two Business Days to the replacement Special Servicer for
administration by it of all cash amounts that shall at the time be or should
have been deposited in any REO Account or delivered by the Special Servicer to
the Master Servicer or that are thereafter received with respect to Specially
Serviced Mortgage Loans and REO Properties.
(f) Notwithstanding the foregoing, the removal of the Special
Servicer and the appointment of a successor Special Servicer shall not be
effective until (i) the successor Special Servicer has assumed in writing all of
the responsibilities, duties and liabilities of the Special Servicer hereunder
pursuant to an agreement satisfactory to the Trustee, and (ii) each of the
Rating Agencies confirms to the Trustee in writing that such appointment and
assumption
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shall not result, in and of itself, in a downgrading, withdrawal or
qualification of the rating then assigned by such Rating Agency to any Class of
Certificates (the cost, if any, of obtaining such confirmation to be paid by the
Operating Adviser).
SECTION 3.28. Modifications, Waivers, Amendments, Extensions and
Consents.
(a) The Master Servicer, in accordance with the Servicing Standard
and subject to the terms of this Agreement, shall have the following powers:
(i) The Master Servicer, in accordance with the Servicing Stan-
dard, may (A) agree to any modification, waiver, amendment or consent of or
relating to any non-Money Term of a Mortgage Loan that is not a Specially
Serviced Mortgage Loan or (B) modify or amend the terms of any Mortgage Loan in
order to (I) cure any ambiguity therein or (II) correct or supplement any
provisions therein which may be inconsistent with any other provisions therein
or correct any error, provided that in the case of either clause (A) or (B) such
modification or amendment would not cause an Adverse REMIC Event to occur. Other
than as set forth above in this Section 3.28(a)(i) the Master Servicer shall not
agree to any modification or amendment of a Mortgage Loan or any waiver or
consent.
(ii) The Master Servicer shall notify the Trustee, the Special
Servicer, the Operating Adviser and the Rating Agencies of any modification,
waiver or amendment of any term of any Mortgage Loan permitted by it under this
Section and the date thereof, and shall deliver to the Trustee for deposit in
the related Mortgage File, an original counterpart of the agreement relating to
such modification, waiver or amendment, promptly following the execution thereof
except to the extent such documents have been submitted to the applicable
recording office, in which event the Master Servicer shall promptly deliver
copies of such documents to the Trustee. The Trustee shall deliver copies of
such documents to the Holders of the Privately Offered Certificates within 15
days of receipt by the Trustee thereof.
(b) The Special Servicer, in accordance with the Servicing Standard
and subject to the terms of this Agreement, shall have the following powers:
(i) The Special Servicer may enter into a modification, waiver
or amendment (including, without limitation, the substitution or release of
collateral or the pledge of additional collateral) of the terms of a Specially
Serviced Mortgage Loan, including any modification, waiver or amendment to (A)
reduce the amounts owing under any Specially Serviced Mortgage Loan by forgiving
principal, accrued interest or any Prepayment Premium, (B) reduce the amount of
the Monthly Payment on any Specially Serviced Mortgage Loan, including by way of
a reduction in the related Mortgage Rate, (C) forebear in the enforcement of any
right granted under any Note or Mortgage relating to a Specially Serviced
Mortgage Loan, (D) extend the Maturity Date of any Specially Serviced Mortgage
Loan and/or (E) accept a principal prepayment on any Specially Serviced Mortgage
Loan during any period during which voluntary Principal Prepayments are
prohibited, provided that (1) the related Borrower is in default with respect to
the Specially Serviced Mortgage Loan or, in the judgment of the Special
Servicer, such default is reasonably foreseeable and (2) in the reasonable
judgment of the Special
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Servicer such modification would increase the recovery on the Mortgage Loan to
Certificateholders on a net present value basis (the relevant discounting of
amounts that will be distributable to Certificateholders to be performed at the
related Net Mortgage Rate).
In no event shall the Special Servicer (x) extend the Maturity Date
of a Specially Serviced Mortgage Loan beyond the date that is two years prior to
the Rated Final Distribution Date; or (y) if the Specially Serviced Mortgage
Loan is secured by a ground lease, extend the Maturity Date of such Specially
Serviced Mortgage Loan beyond a date which is less than 10 years prior to the
expiration of the term of such ground lease.
The determination of the Special Servicer contemplated by clause (2)
of the proviso to the first paragraph of this Section 3.28(b)(i) shall be
evidenced by an Officer's Certificate to such effect delivered to the Trustee
and the Master Servicer and describing in reasonable detail the basis for the
Special Servicer's determination. The Special Servicer shall append to such
Officer's Certificate any information, including but not limited to income and
expense statements, rent rolls, property inspection reports and appraisals, that
support such determination.
(ii) In the event the Special Servicer intends to permit a
Borrower to substitute collateral for all or any portion of a Mortgaged Property
pursuant to Section 3.28(b)(i) or pledge additional collateral for the Mortgage
Loan pursuant to Section 3.28(b)(i), if the security interest of the Trust Fund
in such collateral would be perfected by possession, or if such collateral
requires special care or protection, then prior to agreeing to such substitution
or addition of collateral, the Special Servicer shall make arrangements for such
possession, care or protection, and prior to agreeing to such substitution or
addition of collateral (or such arrangement for possession, care or protection)
shall obtain the prior written consent of the Trustee with respect thereto
(which consent shall not be unreasonably withheld, delayed or conditioned);
provided, however, that any such substitution or addition of collateral shall
require Rating Agency Confirmation; provided further, however, that the Trustee
shall not be required (but has the option) to consent to any substitution or
addition of collateral or to hold any such collateral which will require the
Trustee to undertake any additional duties or obligations or incur any
additional expense.
(iii) The Special Servicer will promptly deliver to the Master
Servicer, the Operating Adviser, the Rating Agencies and the Trustee a notice,
specifying any such modifications, waivers or amendments, such notice
identifying the affected Specially Serviced Mortgage Loan. Such notice shall set
forth the reasons for such waiver, modification, or amendment (including, but
not limited to, information such as related income and expense statements, rent
rolls, occupancy status, property inspections, and an internal or external
appraisal performed in accordance with MAI standards and methodologies (and, if
done externally, the cost of such appraisal shall be recoverable as a Servicing
Advance subject to the provisions of Section 3.22 hereof)). The Special Servicer
shall also deliver to the Trustee, for deposit in the related Mortgage File, an
original counterpart of the agreement relating to such modification, waiver or
amendment promptly following the execution thereof.
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(c) The Master Servicer and the Special Servicer, as applicable,
may require, in its discretion, as a condition to granting any request by a
Borrower for any consent, modification, waiver or amendment, that such Borrower
pay to the Master Servicer or the Special Servicer, as applicable, a reasonable
and customary modification fee to the extent permitted by law. The Master
Servicer and the Special Servicer, as applicable, may charge the Borrower for
any costs and expenses (including attorneys' fees) incurred by the Master
Servicer or the Special Servicer, as applicable, in connection with any request
for a modification, waiver or amendment. No fee described in this Section shall
be collected by the Master Servicer or the Special Servicer, as applicable, from
the Borrower (or on behalf of the Borrower) in conjunction with any consent or
any modification, waiver or amendment of the related Mortgage Loan if the
collection of such fee would cause such consent, modification, waiver or
amendment to be a "significant modification" of the related Note within the
meaning of Treasury Regulation Section 1.860G-2(b). Subject to the foregoing,
the Master Servicer or the Special Servicer, as appropriate, shall use its
reasonable efforts, to collect any modification fees and other expenses
(including the cost of obtaining any Rating Agency Confirmation) connected with
a permitted modification, waiver or amendment of a Mortgage Loan from the
Borrower and if such amount is not paid by the Borrower, such amount shall be
Advanced as a Servicing Advance, unless such Advance would be a Nonrecoverable
Advance. The inability of the Borrower to pay any costs and expenses of a
proposed modification, waiver or amendment shall not impair the right of the
Special Servicer, the Master Servicer or the Trustee to be reimbursed by the
Trust Fund for such expenses.
(d) Notwithstanding any other provision hereof to the contrary, if
the terms of a Mortgage Loan require the related Borrower to obtain the
Mortgagee's consent before changing any franchise with respect to any hotel or
motel located on the related Mortgaged Property, the Master Servicer or Special
Servicer, as applicable, shall not consent to any such change unless it shall
have first obtained written confirmation from each Rating Agency that such
consent shall not result in a qualification, downgrade or withdrawal of the
rating then assigned by such Rating Agency to any Class of Certificates.
ARTICLE IV
DISTRIBUTIONS TO CERTIFICATEHOLDERS
SECTION 4.1. Distributions of REMIC I.
(a) On each Distribution Date, the Trustee shall be deemed to apply
the Available Funds as is attributable to each Mortgage Loan for such date for
the following purposes and in the following order of priority:
(i) to pay interest to REMIC II in respect of each REMIC I
Regular Interest, up to an amount equal to, and pro rata in accordance with, all
Uncertificated Distributable Interest for each such REMIC I Regular Interest for
such Distribution Date;
(ii) to pay principal to REMIC II in respect of each REMIC I
Regular Interest, up to an amount equal to, and pro rata in accordance with, the
excess, if any, of the
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Uncertificated Principal Balance of such REMIC I Regular Interest outstanding
immediately prior to such Distribution Date, over the Stated Principal Balance
of the related Mortgage Loan (including without limitation an REO Mortgage Loan
or, if applicable, a Qualified Substitute Mortgage Loan) that will be
outstanding immediately following such Distribution Date;
(iii) to reimburse REMIC II for any Realized Losses and
Expense Losses previously deemed allocated to the various REMIC I Regular
Interests (with interest), up to an amount equal to, and pro rata in accordance
with, (a) the Realized Loses and Expense Losses, if any, previously allocated to
such REMIC I Regular Interests and for which no reimbursement has previously
been paid, plus (b) all unpaid interest on such amounts (compounded monthly) at
the REMIC I Remittance Rate for such REMIC I Regular Interest for such
Distribution Date; and
(iv) to the Holders of the Class R-I Certificates that portion,
if any, of the Available Funds for such date that has not otherwise been deemed
paid to REMIC II in respect of the REMIC I Regular Interests pursuant to this
Section 4.1(a).
(b) On each Distribution Date, the Trustee shall be deemed to
apply each Prepayment Premium then on deposit in the Distribution Account and
received during or prior to the related Collection Period, to pay additional
interest to REMIC II in respect of the REMIC I Regular Interest that relates to
the Mortgage Loan (including without limitation an REO Mortgage Loan or, if
applicable, a Qualified Substitute Mortgage Loan) as to which such Prepayment
Premium was received.
(c) All amounts (other than additional interest in the form of
Prepayment Premiums) deemed paid to REMIC II in respect of the REMIC I Regular
Interests pursuant to this Section 4.1 on any Distribution Date is herein
referred to as the "REMIC II Distribution Amount" for such date.
SECTION 4.2. Distributions of REMIC II.
(a) On each Distribution Date the Trustee shall be deemed to apply
the REMIC II Distribution Amount for such date for the following purposes and in
the following order of priority:
(i) amounts distributable as interest to the Class A-1 and Class
A-2 Certificates pursuant to Section 4.3(a)(i) shall be allocated 0.0001% to the
Related REMIC II Regular Interest and 99.9999% to the Class WAC-II Interest;
(ii) amounts distributable as principal to the Class A-1 and
Class A-2 Certificates pursuant to Section 4.3(a)(ii) or the proviso to Section
4.3(a) shall be allocated 0.0001% to the Related REMIC II Regular Interest and
99.9999% to the Class WAC-II Interest;
(iii) amounts distributable for unreimbursed amounts of Realized
Losses and Expense Losses previously allocated to the Class A-1 and Class A-2
Certificates
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pursuant to Section 4.3(a)(iii) shall be allocated 0.0001% to the Related REMIC
II Regular Interest and 99.9999% to the Class WAC-II Interest;
(iv) amounts distributable as interest to the Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M
and Class N Certificates pursuant to Section 4.3(b)(i), (iv), (vii), (x),
(xiii), (xvi), (xix), (xxii), (xxv), (xxviii), (xxxi) and (xxxiv), respectively,
shall be allocated 0.0001% to the Related REMIC II Regular Interest and 99.9999%
to the Class WAC-II Interest;
(v) amounts distributable as principal to the Class B, Class C,
Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M
and Class N Certificates pursuant to Section 4.3(b)(ii), (v), (viii), (xi),
(xiv), (xvii), (xx), (xxiii), (xxvi), (xxix), (xxxii) and (xxxv), respectively,
shall be allocated 0.0001% to the Related REMIC II Regular Interest and 99.9999%
to the Class WAC-II Interest;
(vi) amounts distributable for unreimbursed amounts of Realized
Losses and Expense Losses previously allocated to the Class B, Class C, Class D,
Class E, Class F, Class G, Class H, Class J, Class K, Class L, Class M and Class
N Certificates pursuant to Section 4.3(b)(iii), (vi), (ix), (xii), (xv),
(xviii), (xxi), (xiv), (xvii), (xxx), (xxxiii), (xxxvi), respectively, shall be
allocated 0.0001% to the Related REMIC II Regular Interest and 99.9999% to the
Class WAC-II Interest; and
(vii) amounts distributable as interest to the Class X Certifi-
cates pursuant to Section 4.3(a)(i) shall be allocated 100.0000% to the Class
WAC-II Interest.
(b) Any remaining REMIC II Distribution Amount for such Distribution
Date shall be distributed to the Class R-II Certificates.
(c) On each Distribution Date, the Trustee shall be deemed to apply
all Prepayment Premiums then on deposit in the Distribution Account and received
during or prior to the related Collection Period to the REMIC II Regular
Interests from the Distribution Account in proportion to the principal
distributable thereon in accordance with Section 4.2(a).
(d) All amounts (other than additional interest in the form of
Prepayment Premiums) deemed paid to REMIC III in respect of the REMIC II Regular
Interests pursuant to this Section 4.2 on any Distribution Date is herein
referred to as the "REMIC III Distribution Amount" for such date.
SECTION 4.3. Distributions of REMIC III.
(a) On each Distribution Date, the Trustee shall withdraw from the
Distribution Account the Available Funds for such Distribution Date and shall
apply such amount for the following purposes and in the following order of
priority:
(i) to pay interest to the Holders of the respective Classes
of Senior Certificates, up to an amount equal to, and pro rata as among such
Classes in accordance with, all
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Distributable Certificate Interest in respect of each such Class
of Certificates for such Distribution Date,
(ii) to pay principal from the Principal Distribution Amount
for such Distribution Date, first to the Holders of the Class A-1 Certificates
and second to the Holders of the Class A-2 Certificates in each case, up to an
amount equal to the lesser of (1) the then-outstanding aggregate Certificate
Balance of such Class of Certificates and (2) the remaining portion, if any, of
such Principal Distribution Amount;
(iii) to reimburse the Holders of the respective Classes
of Class A Certificates, up to an amount equal to, and pro rata as among such
Classes in accordance with, (a) the respective amounts of Realized Losses and
Expense Losses, if any, previously allocated to such Classes of Certificates and
for which no reimbursement has previously been paid, plus (b) all unpaid
interest on such amounts (compounded monthly) at the respective Pass-Through
Rates of such Classes; and
(iv) to make payments on the Subordinate Certificates as
provided below;
provided that, on each Distribution Date after the aggregate Certificate Balance
of the Subordinate Certificates has been reduced to zero, and in any event on
the final Distribution Date in connection with a termination of the Trust Fund
described in Article IX hereof, the payments of principal to be made pursuant to
clause (ii) above with respect to the Class A Certificates, will be so made to
the Holders of the respective Classes of Class A Certificates, up to an amount
equal to, and pro rata as among such Classes in accordance with, the respective
then-outstanding aggregate Certificate Balances of such Certificates;
(b) On each Distribution Date, following the foregoing distributions
on the Senior Certificates, the Trustee shall apply the remaining portion, if
any, of the Available Funds for such date for the following purposes and in the
following order of priority:
(i) to pay interest to the Holders of the Class B Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(ii) if the aggregate Certificate Balances of the Class A Certi-
ficates have been reduced to zero, to pay principal to the Holders of the Class
B Certificates, up to an amount equal to the lesser of (A) the then-outstanding
aggregate Certificate Balance of such Class of Certificates and (B) the
remaining Principal Distribution Amount for such Distribution Date;
(iii) to reimburse the Holders of the Class B Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
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(iv) to pay interest to the Holders of the Class C Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(v) if the aggregate Certificate Balances of the Class A
and Class B Certificates have been reduced to zero, to pay principal to the
Holders of the Class C Certificates, up to an amount equal to the lesser of (A)
the then-outstanding aggregate Certificate Balance of such Class of Certificates
and (B) the remaining Principal Distribution Amount for such Distribution Date;
(vi) to reimburse the Holders of the Class C Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(vii) to pay interest to the Holders of the Class D Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(viii) if the aggregate Certificate Balances of the Class A,
Class B and Class C Certificates have been reduced to zero, to pay principal to
the Holders of the Class D Certificates, up to an amount equal to the lesser of
(A) the then-outstanding aggregate Certificate Balance of such Class of
Certificates and (B) the remaining Principal Distribution Amount for such
Distribution Date;
(ix) to reimburse the Holders of the Class D Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(x) to pay interest to the Holders of the Class E Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xi) if the aggregate Certificate Balances of the Class A, Class
B, Class C and Class D Certificates have been reduced to zero, to pay principal
to the Holders of the Class E Certificates, up to an amount equal to the lesser
of (A) the then-outstanding aggregate Certificate Balance of such Class of
Certificates and (B) the remaining Principal Distribution Amount for such
Distribution Date;
(xii) to reimburse the Holders of the Class E Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all
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unpaid interest on such amounts (compounded monthly) at the Pass-Through Rate
for such Class of Certificates;
(xiii) to pay interest to the Holders of the Class F Certifi-
cates, up to an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date;
(xiv) if the aggregate Certificate Balances of the Class A,
Class B, Class C, Class D and Class E Certificates have been reduced to zero, to
pay principal to the Holders of the Class F Certificates, up to an amount equal
to the lesser of (A) the then-outstanding aggregate Certificate Balance of such
Class of Certificates and (B) the remaining Principal Distribution Amount for
such Distribution Date;
(xv) to reimburse the Holders of the Class F Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xvi) to pay interest to the Holders of the Class G Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xvii) if the aggregate Certificate Balances of the Class A,
Class B, Class C, Class D, Class E and Class F Certificates have been reduced to
zero, to pay principal to the Holders of the Class G Certificates, up to an
amount equal to the lesser of (A) the then-outstanding aggregate Certificate
Balance of such Class of Certificates and (B) the remaining Principal
Distribution Amount for such Distribution Date;
(xviii) to reimburse the Holders of the Class G Certificates up
to an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xix) to pay interest to the Holders of the Class H Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xx) if the aggregate Certificate Balances of the Class A, Class
B, Class C, Class D, Class E, Class F and Class G Certificates have been reduced
to zero, to pay principal to the Holders of the Class H Certificates, up to an
amount equal to the lesser of (A) the then-outstanding aggregate Certificate
Balance of such Class of Certificates and (B) the remaining Principal
Distribution Amount for such Distribution Date;
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(xxi) to reimburse the Holders of the Class H Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxii) to pay interest to the Holders of the Class J Certifi-
cates, up to an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date;
(xxiii) if the aggregate Certificate Balances of the Class A,
Class B, Class C, Class D, Class E, Class F, Class G and Class H Certificates
have been reduced to zero, to pay principal to the Holders of the Class J
Certificates, up to an amount equal to the lesser of (A) the then-outstanding
aggregate Certificate Balance of such Class of Certificates and (B) the
remaining Principal Distribution Amount for such Distribution Date;
(xxiv) to reimburse the Holders of the Class J Certificates
up to an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxv) to pay interest to the Holders of the Class K Certificates,
up to an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date;
(xxvi) if the aggregate Certificate Balances of the Class A,
Class B, Class C, Class D, Class E, Class F, Class G, Class H and Class J
Certificates have been reduced to zero, to pay principal to the Holders of the
Class K Certificates, up to an amount equal to the lesser of (A) the
then-outstanding aggregate Certificate Balance of such Class of Certificates and
(B) the remaining Principal Distribution Amount for such Distribution Date;
(xxvii) to reimburse the Holders of the Class K Certificates up
to an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxviii) to pay interest to the Holders of the Class L Certifi-
cates, up to an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date;
(xxix) if the aggregate Certificate Balances of the Class A,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J and Class
K Certificates have been reduced to zero, to pay principal to the Holders of the
Class L Certificates, up to an amount equal
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to the lesser of (A) the then-outstanding aggregate Certificate Balance of such
Class of Certificates and (B) the remaining Principal Distribution Amount for
such Distribution Date;
(xxx) to reimburse the Holders of the Class L Certificates up to
an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxxi) to pay interest to the Holders of the Class M Certifi-
cates, up to an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date;
(xxxii) if the aggregate Certificate Balances of the Class A,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K
and Class L Certificates have been reduced to zero, to pay principal to the
Holders of the Class M Certificates, up to an amount equal to the lesser of (A)
the then-outstanding aggregate Certificate Balance of such Class of Certificates
and (B) the remaining Principal Distribution Amount for such Distribution Date;
(xxxiii) to reimburse the Holders of the Class M Certificates
up to an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates;
(xxxiv) to pay interest to the Holders of the Class N Certifi-
cates, up to an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date;
(xxxv) if the aggregate Certificate Balances of the Class A,
Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K,
Class L and Class M Certificates have been reduced to zero, to pay principal to
the Holders of the Class N Certificates, up to an amount equal to the lesser of
(A) the then-outstanding aggregate Certificate Balance of such Class of
Certificates and (B) the remaining Principal Distribution Amount for such
Distribution Date;
(xxxvi) to reimburse the Holders of the Class N Certificates up
to an amount equal to (a) all Realized Losses and Expense Losses, if any,
previously allocated to such Class of Certificates and for which no
reimbursement has previously been paid, plus (b) all unpaid interest on such
amounts (compounded monthly) at the Pass-Through Rate for such Class of
Certificates; and
(xxxvii) to pay to the Holders of the Class R-III Certificates
the balance, if any, of the REMIC III Distribution Amount for such Distribution
Date.
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(c) Each Prepayment Premium received in the related Collection Period
with respect to the Mortgage Loans shall be distributed to the holders of the
Class A-1, Class A-2, Class X, Class B, Class C, Class D and Class E
Certificates outstanding on such Distribution Date, in the following amounts and
order of priority:
(i) to each of the Class A-1, Class A-2, Class B, Class C, Class
D and Class E Certificates, an amount equal to applicable Prepayment Premium
Allocation Amount; and
(ii) any remaining Prepayment Premiums following the
distribution in clause (ii) immediately above, to the Class X Certificates.
(d) All of the foregoing distributions to be made from the Distribu-
tion Account on any Distribution Date with respect to the Regular Certificates
shall be deemed made from the payments deemed made to REMIC III in respect of
the REMIC II Regular Interests on such Distribution Date pursuant to Section
4.2.
SECTION 4.4. Statements to Rating Agencies and Certificateholders;
Available Information.
(a) On each Distribution Date, the Trustee shall prepare and forward
by mail to each Rating Agency and each Holder of a Certificate, with copies to
the Depositor, the Operating Adviser, Paying Agent, the Placement Agents, Master
Servicer and Special Servicer, a statement as to such distribution setting forth
the information set forth on Exhibit L hereto, and including among other things,
for each Class, as applicable:
(i) The Principal Distribution Amount and the amount allocable
to principal for such class included in Available Funds;
(ii) Distributable Certificate Interest for such Class and the
amount of Available Funds allocable thereto, together with any Class Interest
Shortfall allocable to such Class;
(iii) The amount of any P&I Advances by the Master Servicer, the
Trustee or the Fiscal Agent included in the amounts distributed to the
Certificateholders;
(iv) The Certificate Balance of each Class of Certificates after
giving effect to the distribution of amounts in respect of the Principal
Distribution Amount on such Distribution Date;
(v) Realized Losses and Expense Losses and their allocation
to the Certificate Balance of any Class of Certificates;
(vi) The Stated Principal Balance of the Mortgage Loans as of the
Due Date preceding such Distribution Date;
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(vii) The number and aggregate principal balance of Mortgage
Loans (A) delinquent one month, (B) delinquent two months, (C) delinquent three
or more months, (D) as to which foreclosure proceedings have been commenced and
(E) that otherwise constitute Specially Serviced Mortgage Loans, and, with
respect to each Specially Serviced Mortgage Loan, the amount of Servicing
Advances made during the related Collection Period, the amount of the P&I
Advance made on such Distribution Date, the aggregate amount of Servicing
Advances theretofore made that remain unreimbursed and the aggregate amount of
P&I Advances theretofore made that remain unreimbursed;
(viii) With respect to any Mortgage Loan that became an REO Mort-
gage Loan during the preceding calendar month, the principal balance of such
Mortgage Loan as of the date it became an REO Mortgage Loan;
(ix) As of the Due Date preceding such Distribution Date, as to
any REO Property sold during the related Collection Period, the date on which
the Special Servicer made a Final Recovery Determination and the amount of the
proceeds of such sale deposited into the Collection Account, and the aggregate
amount of REO Proceeds and Net REO Proceeds (in each case other than Liquidation
Proceeds) and other revenues collected by the Special Servicer with respect to
each REO Property during the related Collection Period and credited to the
Collection Account, in each case identifying such REO Property by name;
(x) The outstanding principal balance of each REO Mortgage Loan
as of the close of business on the immediately preceding Due Date and the
appraised value of the related REO Property per the most recent Updated
Appraisal obtained;
(xi) The amount of the Servicing Compensation paid to the Master
Servicer with respect to such Distribution Date, and the amount of the
additional servicing compensation described in Section 3.12(a) that was paid to
the Master Servicer with respect to such Distribution Date;
(xii) The amount of any Special Servicing Fee, Disposition Fee
or Workout Fee paid to the Special Servicer with respect to such Distribution
Date;
(xiii) (A) The amount of Prepayment Premiums, if any, received
during the related Collection Period, and (B) the amount of Default Interest
received during the related Collection Period;
(xiv) The Pass-Through Rate applicable to the Interest Only
Certificates and the Class E Certificates for such Distribution Date;
(xv) The amount of any Appraisal Reductions effected during
the related Collection Period on a Mortgage Loan-by-Mortgage Loan basis and the
total Appraisal Reductions as of such Distribution Date; and
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(xvi) Any additional information regarding the Mortgage Loans,
which the Master Servicer or the Special Servicer, in its sole discretion,
delivers to the Trustee for distribution to the Certificateholders.
In the case of information furnished pursuant to subclauses (i),
(ii), (iii) and (xiii)(A) above, the amounts shall be expressed as a dollar
amount in the aggregate for all Certificates of each applicable Class and for
each Class of Certificates for a denomination of $1,000 initial Certificate
Balance or Notional Amount.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Certificate (except for a Class R-I, Class R-II
or Class R-III Certificate) and to each Rating Agency a statement containing the
information set forth in subclauses (i) and (ii) above, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that it provided substantially comparable information
pursuant to any requirements of the Code as from time to time in force.
On each Distribution Date, the Trustee shall forward to each Holder
of a Class R-I, Class R-II or Class R-III Certificate a copy of the reports
forwarded to the other Certificateholders on such Distribution Date and a
statement setting forth the amounts, if any, actually distributed with respect
to the Class R-I, Class R-II or Class R-III Certificates on such Distribution
Date.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Class R-I, Class R-II or Class R-III Certificate
a statement containing the information provided pursuant to the previous
paragraph aggregated for such calendar year or applicable portion thereof during
which such Person was a Certificateholder. Such obligation of the Trustee shall
be deemed to have been satisfied to the extent that it provided substantially
comparable information pursuant to any requirements of the Code as from time to
time in force.
In addition to the reports required to be delivered pursuant to this
Section 4.4(a), the Trustee shall make available upon request to each proposed
transferee of a Privately Placed Certificate such additional information, if
any, required to be delivered under Rule 144A(d)(4) and in its possession so as
to permit the proposed transfer to be effected pursuant to Rule 144A.
For investors that have obtained an account number on the Trustee's
Automatic Statements Accessed by Phone ("ASAP") System, the foregoing report or
a summary report of bond factors may be obtained from the Trustee via automated
facsimile by placing a telephone call to (312) 904-2200 and following the voice
prompts to request "statement number 338." Account numbers on the ASAP System
may be obtained by calling the same telephone number and following the voice
prompts for obtaining account numbers. Separately, bond factor information may
be obtained from the Trustee by calling (800) 246-5761. In addition, if the
Depositor so directs the Trustee, and on terms acceptable to the Trustee, the
Trustee will make available through its electronic bulletin board system, on a
confidential basis, certain information
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related to the Mortgage Loans. The bulletin board is located at (714) 282-3990.
Investors that have an account on the bulletin board may retrieve the loan level
data file for each transaction in the directory. An account number may be
obtained by typing "new" upon logging into the bulletin board. A directory has
been set up on the bulletin board in which an electronic file is stored
containing monthly servicer data. All files are compressed before being put into
the directory and are password protected. Passwords to each file will be
released by the Trustee. Additionally, certain information regarding the
Mortgage Loans will be made available at the website maintained by LaSalle
National Bank at www.lnbabs.com.
(b) On or within two Business Days following each Distribution Date,
the Trustee shall prepare and furnish to the Placement Agents, using the format
and media mutually agreed upon by the Trustee, and the Placement Agents, the
following information regarding each Mortgage Loan and any other information
reasonably requested by the Placement Agents and available to the Trustee:
(i) an identifying loan number;
(ii) the Mortgage Rate; and
(iii) the principal balance as of such Distribution Date.
(c) The Trustee shall only be obligated to deliver the statements,
reports and information contemplated by Section 4.4(a) and 4.4(b) to the extent
it receives the necessary underlying information from the Master Servicer and
the Special Servicer and shall not be liable for any failure to deliver any
thereof on the prescribed due dates, to the extent such failure is caused by the
Master Servicer's or the Special Servicer's failure to deliver such underlying
information in a timely manner. Absent manifest error, the Trustee may
conclusively rely on any such information forwarded to it by the Master Servicer
and the Special Servicer and shall have no obligation to verify the same.
Nothing herein shall obligate the Trustee, the Master Servicer or the Special
Servicer to violate (in the reasonable judgment of the Master Servicer, the
Special Servicer or the Trustee, as appropriate) any applicable law or provision
of any Mortgage Loan document prohibiting disclosure of information with respect
to any Borrower and the failure of the Trustee, the Master Servicer or the
Special Servicer to disseminate information for such reason shall not be a
breach hereof.
SECTION 4.5. Remittances; P&I Advances.
(a) For purposes of this Section 4.5, "Applicable Monthly Payment"
shall mean, for any Mortgage Loan with respect to any month, (A) if such
Mortgage Loan is delinquent as to its Balloon Payment (including any Mortgage
Loan as to which the related Mortgaged Property has become an REO Property and
for any month after the related Balloon Payment would have been due), the
related Assumed Monthly Payment and (B) if such Mortgage Loan is not described
by the preceding clause (including any such Mortgage Loan as to which the
related Mortgaged Property has become an REO Property), the Monthly Payment.
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(b) On the Remittance Date immediately preceding each Distribution
Date, the Master Servicer shall:
(i) remit to the Trustee from the Collection Account for deposit
in the Distribution Account an amount equal to the Prepayment Premiums received
by the Master Servicer in the Collection Period preceding such Remittance Date;
(ii) remit to the Trustee from the Collection Account for
deposit in the Distribution Account an amount equal to the Available Funds for
such Distribution Date (excluding P&I Advances);
(iii) subject to Section 4.5(c), make an advance (each, a "P&I
Advance"), by deposit into the Collection Account, and remit such amount to the
Distribution Account, in an amount equal to the sum of the Applicable Monthly
Payment for each Mortgage Loan, to the extent such amounts were not received on
such Mortgage Loans as of the close of business on the Business Day immediately
preceding the Remittance Date; and
(iv) remit to the Trustee from the Grantor Trust Collection
Account for deposit in the Grantor Trust Distribution Account an amount equal to
the Contingent Interest received by the Master Servicer in the Collection Period
preceding such Remittance Date.
(c) Notwithstanding Section 4.5(b)(iii), upon determination of the
Appraisal Reduction with respect to any Required Appraisal Loan, the amount of
any delinquent interest required to be advanced with respect to such Required
Appraisal Loan shall be an amount equal to the product of (A) the amount of the
delinquent interest that would be required to be advanced in respect of such
Mortgage Loan without regard to the application of this sentence, multiplied by
(B) a fraction, the numerator of which is equal to the Stated Principal Balance
of such Mortgage Loan as of the immediately preceding Determination Date less
the Appraisal Reduction and the denominator of which is such Stated Principal
Balance.
(d) If, as of 3:00 p.m., New York City time, on any Remittance Date
the Master Servicer shall not (i) have made the P&I Advance required to have
been made on such date pursuant to Section 4.5(b)(iii) or (ii) delivered the
certificate and documentation related to a determination of nonrecoverability,
the Trustee shall immediately notify the Fiscal Agent by telephone promptly
confirmed in writing, and the Trustee shall no later than 10:00 a.m., New York
City time, on such Distribution Date deposit into the Distribution Account in
immediately available funds an amount equal to the P&I Advances otherwise
required to have been made by the Master Servicer. If the Trustee fails to make
any P&I Advance required to be made under this Section 4.5, the Fiscal Agent
shall make such P&I Advance not later than 12:00 p.m., New York City time, on
such Distribution Date and, thereby, the Trustee shall not be in default under
this Agreement.
(e) Anything to the contrary in this Agreement notwithstanding, none
of the Master Servicer, the Trustee or the Fiscal Agent shall be obligated to
make a P&I Advance on any date on which a P&I Advance is otherwise required to
be made by this Section 4.5 if the Master Servicer, the Trustee or the Fiscal
Agent, as applicable, determines that such Advance
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will be a Nonrecoverable Advance. The Trustee and the Fiscal Agent shall be
entitled to rely, conclusively, on any determination by the Master Servicer that
a P&I Advance, if made, would be a Nonrecoverable Advance. The Trustee and the
Fiscal Agent, in determining whether or not a P&I Advance previously made is, or
a proposed P&I Advance, if made, would be, a Nonrecoverable Advance shall make
such determination in their good faith judgment.
(f) The Master Servicer, the Trustee or the Fiscal Agent, as applic-
able, shall be entitled to, and the Master Servicer hereby covenants and agrees
to promptly seek and effect, the reimbursement of P&I Advances made to the
extent permitted pursuant to Section 3.6(ii) of this Agreement together with any
related Advance Interest Amount in respect of such P&I Advances to the extent
permitted pursuant to Section 3.6(iii).
SECTION 4.6. Allocation of Realized Losses and Expense Losses.
(a) On each Distribution Date, following the deemed distributions to
be made in respect of the REMIC I Regular Interests pursuant to Section 4.1, the
Uncertificated Principal Balance of each REMIC I Regular Interest (after taking
account of such deemed distributions) shall be reduced to equal the Stated
Principal Balance of the related Mortgage Loan (including without limitation an
REO Mortgage Loan or, if applicable, a Qualified Substitute Mortgage Loan) that
will be outstanding immediately following such Distribution Date. Such
reductions shall be deemed to be an allocation of Realized Losses and Expense
Losses.
(b) On each Distribution Date, Realized Losses and Expense Losses
that are applied to each Class of REMIC III Regular Certificates shall be
allocated to reduce the Uncertificated Principal Balance of the Related REMIC II
Regular Interest and the Class WAC-II Interest in the same manner as principal
is allocated thereto pursuant to Section 4.2(a).
(c) On each Distribution Date, following the distributions to be made
to the Certificateholders on such date pursuant to Section 4.3, the Trustee
shall determine the amount, if any, by which (i) the then-aggregate Certificate
Balance of the Principal Balance Certificates, exceeds (ii) the aggregate Stated
Principal Balance of the Mortgage Pool that will be outstanding immediately
following such Distribution Date. If such excess does exist, then the respective
aggregate Certificate Balances of the Class N, Class M, Class L, Class K, Class
J, Class H, Class G, Class F, Class E, Class D, Class C and Class B Certificates
shall be reduced sequentially, in that order, in each case, until the first to
occur of such excess being reduced to zero or the related Class Principal
Balance being reduced to zero. If, after the foregoing reductions, the amount
described in clause (i) of the second preceding sentence still exceeds the
amount described in clause (ii) of the second preceding sentence, then the
respective aggregate Certificate Balances of the Class A-1 and Class A-2
Certificates shall be reduced, pro rata in accordance with the relative sizes of
the then-outstanding aggregate Certificate Balances of such Classes of
Certificates, until the first to occur of such excess being reduced to zero or
each such aggregate Certificate Balance being reduced to zero. Such reductions
in the aggregate Certificate Balances of the respective Classes of Principal
Balance Certificates shall be deemed to be allocations of Realized Losses and
Expense Losses among the Certificates of each since Class in proportion to their
respective Percentage Interests in such Class.
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SECTION 4.7. Distributions on the Grantor Trust.
(a) On each Distribution Date, the Trustee shall withdraw the amount
of any Edgewater Final Contingent Interest received in the related Collection
Period from the Grantor Trust Distribution Account and shall distribute 22%, 45%
and 33% of any such funds to the holders of the Class A-1, Class X and Class V
Certificates, respectively.
(b) On each Distribution Date, the Trustee shall withdraw the amount
of any Edgewater Annual Contingent Interest or Eastridge Contingent Interest
received in the related Collection Period from the Grantor Trust Distribution
Account and shall distribute any such funds to the holders of the Class V
Certificates.
SECTION 4.8. Distributions in General.
(a) All amounts distributable to a Class of Certificates pursuant
to this Article IV on each Distribution Date shall be allocated pro rata among
the outstanding Certificates in each such Class based on their respective
Percentage Interests. Such distributions shall be made on each Distribution Date
other than the Termination Date to each Certificateholder of record on the
related Record Date by check mailed by first class mail to the address set forth
therefor in the Certificate Register or, provided that such Certificateholder
shall have provided the Paying Agent with wire instructions in writing at least
five Business Days prior to the related Record Date (or upon standing
instructions given to the Trustee or the Paying Agent on the Closing Date or
five Business Days prior to any Record Date, which instructions may be revoked
at any time thereafter upon written notice to the Trustee or the Paying Agent
five Business Days prior to the related Record Date), by wire transfer of
immediately available funds to the account of such Certificateholder at a bank
or other entity located in the United States and having appropriate facilities
therefor. The final distribution on each Certificate shall be made in like
manner, but only upon presentment and surrender of such Certificate (determined
without regard to any possible future reimbursement of any Realized Losses or
Expense Losses previously allocated to such Certificates) at the Corporate Trust
Office of the Trustee or its agent (which may be the Paying Agent or the
Certificate Registrar acting as such agent) that is specified in the notice to
Certificateholders of such final distribution. Any distribution that is to be
made with respect to a Certificate in reimbursement of a Realized Loss or
Expense Loss previously allocated thereto, which reimbursement is to occur after
the date on which such Certificate is surrendered as contemplated by the
preceding sentence, will be made by check mailed to the Certificateholder that
surrendered such Certificate.
(b) Except as otherwise provided in Section 9.1, the Trustee shall,
no later than the 15th day of the month in the month preceding the Distribution
Date on which the final distribution with respect to any Class of Certificates
is expected to be made or such later day as the Trustee becomes aware that the
final distribution with respect to any Class of Certificates is expected to be
made on the succeeding Distribution Date, mail to each Holder of such Class of
Certificates and to the Rating Agencies, on such day a notice to the effect
that:
(i) the Trustee reasonably expects, based upon information
previously provided to it, that the final distribution with respect to such
Class of Certificates will be made
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on such Distribution Date, but only upon presentation and surrender of such
Certificates at the office of the Trustee therein specified; and
(ii) if such final distribution is made on such Distribution
Date, no interest shall accrue on such Certificates from and after such
Distribution Date;
provided, however, that the Class R-I, Class R-II and Class R-III Certificates
shall remain outstanding until there is no other Class of Certificates, REMIC I
Regular Interests or REMIC II Regular Interests outstanding.
Any funds not distributed to any Holder or Holders of Certificates of
such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such Distribution Date, be set
aside and held in trust for the benefit of the appropriate non-tendering Holder
or Holders. If any Certificates as to which notice has been given pursuant to
this Section 4.8(b) shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining non-tendering Certificateholders, at their last
addresses shown in the Certificate Register, to surrender their Certificates for
cancellation in order to receive from such funds held the final distribution
with respect thereto. If, within one year after the second notice, any of such
Certificates shall not have been surrendered for cancellation, the Trustee may,
directly or through an agent, take appropriate steps to contact the remaining
non-tendering Certificateholders concerning surrender of their Certificates. The
costs and expenses of maintaining such funds in trust and of contacting such
Certificateholders shall be paid out of such funds. If, within two years after
the second notice, any such Certificates shall not have been surrendered for
cancellation, the Paying Agent shall pay to the Class R-III Certificateholders
all amounts distributable to the Holders thereof. No interest shall accrue or be
payable to any Certificateholder on any amount held in trust hereunder or by the
Trustee as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section 4.8(b).
Any such amounts transferred to the Trustee may be invested in Permitted
Investments and all income and gain realized from investment of such funds shall
be for the benefit of the Trustee. In the event the Trustee is permitted or
required to invest any amounts in Permitted Investments under this Agreement,
whether in its capacity as Trustee or in the event of its assumption of the
duties of, or becoming the successor to, the Master Servicer in accordance with
the terms of this Agreement, it shall invest such amounts in the following
Permitted Investments and priority, in each case only for so long as any such
investment shall continue to be a Permitted Investment: (1) Permitted
Investments under clause (v) of the definition of Permitted Investments, and (2)
if (1) above is not available, Permitted Investments under clause (i) of the
definition of Permitted Investments. The Trustee shall deposit into the
applicable account funds in the amount of any loss incurred in respect of any
such Permitted Investment immediately upon realization of such loss.
SECTION 4.9. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the Paying
Agent shall comply with all federal withholding requirements with respect to
payments to Certificateholders of interest or original issue discount that the
Paying Agent reasonably believes are applicable
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under the Code. The consent of Certificateholders shall not be required for any
such withholding. The Paying Agent agrees that it will not withhold with respect
to payments of interest or original issue discount in the case of a
Certificateholder that is a non-U.S. Person that has furnished or caused to be
furnished (i) an effective Form W-8 or Form W-9 or an acceptable substitute form
or a successor form and who has informed the Trustee in writing that it is not a
"10-percent shareholder" within the meaning of Code Section 871(h)(3)(B) or a
"controlled foreign corporation" described in Code Section 881(c)(3)(C) with
respect to the Trust Fund or the Depositor, or (ii) an effective Form 4224 or an
acceptable substitute form or a successor form. In the event the Paying Agent or
its agent withholds any amount from interest or original issue discount payments
or advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Paying Agent shall indicate the amount withheld to such
Certificateholder. Any amount so withheld shall be treated as having been
distributed to such Certificateholder for all purposes of this Agreement.
ARTICLE V
THE CERTIFICATES
SECTION 5.1. The Certificates.
The Certificates consist of the Class A-1 Certificates, the Class A-2
Certificates, the Class X Certificates, the Class B Certificates, the Class C
Certificates, the Class D Certificates, the Class E Certificates, the Class F
Certificates, the Class G Certificates, the Class H Certificates, the Class J
Certificates, the Class K Certificates, the Class L Certificates, the Class M
Certificates, the Class N Certificates, the Class V Certificates, the Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates.
The Class A-1, Class A-2, Class X, Class B, Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class N, Class
V, Class R-I, Class R-II and Class R-III Certificates will be substantially in
the forms annexed hereto as Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8,
A-9, A-10, A-11, A-12, A-13, A-14, A-15, A-16, A-17, A-18 and A-19,
respectively. The Certificates of each Class will be issuable in definitive
physical form only, registered in the name of the holders thereof; provided,
however, that in accordance with Section 5.3 beneficial ownership interests in
the REMIC III Regular Certificates shall initially be represented by Book-Entry
Certificates held and transferred through the book-entry facilities of the
Securities Depository, in minimum denominations of authorized initial
Certificate Balance or Notional Amount, as described in the succeeding table.
The Class A Certificates shall be in minimum denominations of $5,000 and
multiples of $1 in excess thereof. The Class X, Class B, Class C, Class D and
Class E Certificates shall be in minimum denominations of $50,000 and multiples
of $1 in excess thereof and the Class F, Class G, Class H, Class J, Class K,
Class L, Class M and Class N Certificates shall be in minimum denominations of
$100,000 and multiples of $1 in excess thereof. The Class V, Class R-I, Class
R-II and Class R-II Certificates shall be in minimum denominations of 5%
Percentage Interests and integral multiples of 1% Percentage Interest in excess
thereof and together aggregating the entire 100% Percentage Interest in each
such Class.
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Aggregate Denominations
of all Certificates of Class
Minimum (in initial Certificate Balance or
Class Denomination initial Notional Amount)
- --------------------------------------------------------------------------
A-1 $ 5,000 $ 277,000,000.00
A-2 $ 5,000 $ 581,412,000.00
X $ 50,000 $ 1,192,237,749.03
B $ 50,000 $ 59,611,000.00
C $ 50,000 $ 59,612,000.00
D $ 50,000 $ 62,593,000.00
E $ 50,000 $ 20,862,000.00
F $ 100,000 $ 53,650,000.00
G $ 100,000 $ 11,923,000.00
H $ 100,000 $ 8,942,000.00
J $ 100,000 $ 14,905,000.00
K $ 100,000 $ 8,939,000.00
L $ 100,000 $ 11,924,000.00
M $ 100,000 $ 8,940,000.00
N $ 100,000 $ 11,925,941.31
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.
Each Certificate may be printed or in typewritten or similar form,
and each Certificate shall, upon original issue, be executed by the Trustee and
authenticated by the Trustee or the Authenticating Agent and delivered to the
Depositor. All Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee or Authenticating Agent by an authorized officer or
signatory. Certificates bearing the signature of an individual who was at any
time the proper officer or signatory of the Trustee or Authenticating Agent
shall bind the Trustee or Authenticating Agent, notwithstanding that such
individual has ceased to hold such office or position prior to the delivery of
such Certificates or did not hold such office or position at the date of such
Certificates. No Certificate shall be entitled to any benefit under this
Agreement, or be valid for any purpose, unless there appears on such Certificate
a certificate of authentication in the form set forth in Exhibits A-1 through
A-19 executed by the Authenticating Agent by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
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SECTION 5.2. Registration, Transfer and Exchange of Certificates.
(a) The Trustee shall keep or cause to be kept at the Corporate Trust
Office books (the "Certificate Register") for the registration, transfer and
exchange of Certificates (the Trustee, in such capacity, being the "Certificate
Registrar"). The names and addresses of all Certificateholders and the names and
addresses of the transferees of any Certificates shall be registered in the
Certificate Register. The Person in whose name any Certificate is so registered
shall be deemed and treated as the sole owner and Holder thereof for all
purposes of this Agreement and the Certificate Registrar, the Master Servicer,
the Special Servicer, the Trustee, the Fiscal Agent, any Paying Agent and any
agent of any of them shall not be affected by any notice or knowledge to the
contrary. An Individual Certificate is transferable or exchangeable only upon
the surrender of such Certificate to the Certificate Registrar at the Corporate
Trust Office together with an assignment and transfer (executed by the Holder or
his duly authorized attorney), subject to the requirements of this Section 5.2.
Upon request of the Trustee, the Certificate Registrar shall provide the Trustee
with the names, addresses and Percentage Interests of the Holders.
(b) Upon surrender for registration of transfer of any Individual
Certificate, subject to the requirements of this Section 5.2, the Trustee shall
execute and the Authenticating Agent shall duly authenticate in the name of the
designated transferee or transferees, one or more new Certificates in authorized
denominations of a like aggregate Certificate Balance. Such Certificates shall
be delivered by the Certificate Registrar in accordance with this Section 5.2.
Each Certificate surrendered for registration of transfer shall be cancelled and
subsequently destroyed by the Certificate Registrar. Each new Certificate issued
pursuant to this Section 5.2 shall be registered in the name of any Person as
the transferring Holder may request, subject to the provisions of this Section
5.2.
(c) The exchange, transfer and registration of transfer of
Individual Certificates that are Privately Placed Certificates shall be subject
to the restrictions set forth below (in addition to the other provisions of this
Section 5.2):
(i) The Certificate Registrar shall register the transfer of an
Individual Certificate that is a Privately Placed Certificate if the requested
transfer is being made to a transferee who has provided the Certificate
Registrar with an Investment Representation Letter substantially in the form of
Exhibit D-1 hereto (an "Investment Representation Letter"), to the effect that
the transfer is being made to a Qualified Institutional Buyer in accordance with
Rule 144A;
(ii) The Certificate Registrar shall register the transfer of
an Individual Certificate that is a Privately Placed Certificate if the
requested transfer is being made pursuant to an exemption from registration
under the Securities Act provided by Rule 144 thereunder (if available); or
(iii) The Certificate Registrar shall register the transfer of
an Individual Certificate that is a Privately Placed Certificate, if prior to
the transfer, the transferee furnishes to the Certificate Registrar (1) an
Investment Representation Letter to the effect that the transfer is being made
to an Institutional Accredited Investor in accordance with an applicable
exemption
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under the 1933 Act, (2) an Opinion of Counsel acceptable to the Certificate
Registrar that such transfer is in compliance with the 1933 Act, and (3) a
written undertaking by the transferor to reimburse the Trust for any costs
incurred by it in connection with the proposed transfer. In addition, the
Certificate Registrar may, as a condition of the registration of any such
transfer, require the transferor to furnish such other certificates, legal
opinions or other information (at the transferor's expense) as the Certificate
Registrar may reasonably require to confirm that the proposed transfer is being
made pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the 1933 Act and other applicable laws.
(d) Subject to the restrictions on transfer and exchange set forth in
this Section 5.2, the Holder of one or more Certificates may transfer or
exchange the same in whole or in part (with a Certificate Balance or Notional
Amount equal to any authorized denomination) by surrendering such Certificate at
the Corporate Trust Office or at the office of any transfer agent appointed as
provided under this Agreement, together with an instrument of assignment or
transfer (executed by the Holder or its duly authorized attorney), in the case
of transfer, and a written request for exchange in the case of exchange. Subject
to the restrictions on transfer set forth in this Section 5.2, following a
proper request for transfer or exchange, the Certificate Registrar shall, within
five Business Days of such request if made at the Corporate Trust Office, or
within ten Business Days if made at the office of a transfer agent (other than
the Certificate Registrar), execute and deliver at the Corporate Trust Office or
at the office of such transfer agent, as the case may be, to the transferee (in
the case of transfer) or the Holder (in the case of exchange) or send by first
class mail (at the risk of the transferee in the case of transfer or the Holder
in the case of exchange) to such address as the transferee or the Holder, as
applicable, may request, an Individual Certificate or Certificates, as the case
may require, for a like aggregate Certificate Balance or Notional Amount and in
such authorized denomination or denominations as may be requested. The
presentation for transfer or exchange of any Individual Certificate shall not be
valid unless made at the Corporate Trust Office or at the office of a transfer
agent by the registered Holder in person, or by a duly authorized
attorney-in-fact. The Certificate Registrar may decline to accept any request
for an exchange or registration of transfer of any Certificate during the period
of 15 days preceding any Distribution Date.
(e) Individual Certificates that are Privately Placed Certificates
may only be transferred to Eligible Investors as described herein. In the event
the Certificate Registrar shall determine that an Individual Certificate that is
a Privately Placed Certificate is being held by or for the benefit of a Person
who is not an Eligible Investor, or that such holding is unlawful under the laws
of a relevant jurisdiction, then the Certificate Registrar shall void such
transfer, if permitted under applicable law.
(f) No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in this Section 5.2 other than for transfers of Privately
Placed Certificates to Institutional Accredited Investors, as provided herein.
In connection with any transfer of Privately Placed Certificates to an
Institutional Accredited Investor, the transferor shall reimburse the Trust for
any costs (including the cost of the Certificate Registrar's counsel's review of
the documents and any legal opinions submitted by the transferor or transferee
to the Certificate Registrar as provided herein) incurred by the Certificate
Registrar in connection with such transfer. The Certificate Registrar may
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require payment by each transferor of a sum sufficient to cover any tax, expense
or other governmental charge payable in connection with any such transfer.
(g) Subject to the other provisions of this Section 5.2, transfers of
the Class R-I, Class R-II and Class R-III Certificates may be made only in
accordance with this Section 5.2(g). The Certificate Registrar shall register
the transfer of a Class R-I, Class R-II or Class R-III Certificate if (i)(x) the
transferor has advised the Certificate Registrar in writing that the Certificate
is being transferred to a buyer that the transferor reasonably believes is a
Qualified Institutional Buyer or an Institutional Accredited Investor; and (y)
prior to transfer the transferor furnishes to the Certificate Registrar an
Investment Representation Letter or (ii) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 thereunder (if
available). In addition, the Certificate Registrar may, as a condition of the
registration of any such transfer, require the transferor to furnish such other
certifications, legal opinions or other information (at the transferor's
expense) as they may reasonably be required to confirm that the proposed
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the 1933 Act and other applicable
laws.
(h) Neither the Depositor, the Master Servicer, the Special Servi-
cer, the Trustee nor the Certificate Registrar is obligated to register or
qualify any Class of Certificates under the 1933 Act or any other securities law
or to take any action not otherwise required under this Agreement to permit the
transfer of such Certificates without registration or qualification. Any
Certificateholder desiring to effect such transfer shall, and does hereby agree
to, indemnify the Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar, against any loss,
liability or expense that may result if the transfer is not exempt from the
registration requirements of the 1933 Act or is not made in accordance with such
federal and state laws.
(i) No transfer of any Ownership Interest in a Subordinate Certi-
ficate shall be made to (i) an employee benefit plan subject to the fiduciary
responsibility provisions of ERISA, or Section 4975 of the Code, or a
governmental plan subject to any federal, state or local law ("Similar Law"),
which is to a material extent, similar to the foregoing provisions of ERISA or
the Code (collectively, a "Plan") or (ii) an insurance company that is using the
assets of any insurance company separate account or general account in which the
assets of any such Plan are invested (or which are deemed pursuant to ERISA or
any Similar Law to include assets of Plans) to acquire any such Subordinate
Certificates, other than using assets of its general account in circumstances
whereby such transfer and the subsequent holding of the applicable Certificate
would not constitute or result in a prohibited transaction within the meaning of
Section 406 or 407 of ERISA, Section 4975 of the Code, or any Similar Law. Each
prospective transferee of a Subordinate Certificate shall deliver to the
Depositor, the Certificate Registrar and the Trustee, (A) a transfer or
representation letter, substantially in the form of Exhibit D-2 hereto, stating
that the prospective transferee is not a Person referred to in (i) or (ii)
above, or (B) an Opinion of Counsel which establishes to the satisfaction of the
Depositor, the Trustee and the Certificate Registrar that the purchase or
holding of the Subordinate Certificate will not result in the assets of the
Trust Fund being deemed to be "plan assets" and subject to the fiduciary
responsibility or prohibited transaction provisions of ERISA, the Code, or any
Similar Law will not constitute or result in a prohibited transaction within the
meaning of Section 406 or Section 407 of ERISA or
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Section 4975 of the Code, and will not subject the Master Servicer, the Special
Servicer, the Depositor, the Trustee or the Certificate Registrar to any
obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code), which Opinion of Counsel shall not be an expense of
the Trustee, the Fiscal Agent, the Trust Fund, the Master Servicer, the Special
Servicer, Certificate Registrar or the Depositor. None of the Trustee, the
Fiscal Agent, the Master Servicer, the Special Servicer, and the Certificate
Registrar will register a Class R-I, Class R-II or Class R-III Certificate in
any Person's name unless such Person has provided the letter referred to in
clause (A) above. Any transfer of a Subordinate Certificate that would violate,
or result in a prohibited transaction under, ERISA or Section 4975 of the Code
shall be deemed absolutely null and void ab initio.
(j) Each Person who has or acquires any Ownership Interest in a Class
R-I, Class R-II or a Class R-III Certificate shall be deemed by the acceptance
or acquisition of such Ownership Interest to have agreed to be bound by the
following provisions, and the rights of each Person acquiring any Ownership
Interest in a Class R-I Certificate, Class R-II Certificate or a Class R-III
Certificate are expressly subject to the following provisions:
(i) Each Person acquiring or holding any Ownership Interest
in a Class R-I Certificate, Class R-II Certificate or a Class R-III Certificate
shall be a Permitted Transferee and shall not acquire or hold such Ownership
Interest as agent (including as a broker, nominee or other middleman) on behalf
of any Person that is not a Permitted Transferee. Any such Person shall promptly
notify the Certificate Registrar of any change or impending change in its status
(or the status of the beneficial owner of such Ownership Interest) as a
Permitted Transferee. Any acquisition described in the first sentence of this
Section 5.2(j)(i) by a Person who is not a Permitted Transferee or by a Person
who is acting as an agent of a Person who is not a Permitted Transferee shall be
void and of no effect, and the immediately preceding owner who was a Permitted
Transferee shall be restored to registered and beneficial ownership of the
Ownership Interest as fully as possible.
(ii) No Ownership Interest in a Class R-I, Class R-II or a
Class R-III Certificate may be transferred, and no such Transfer shall be
registered in the Certificate Register, without the express written consent of
the Certificate Registrar, and the Certificate Registrar shall not recognize a
proposed Transfer, and such proposed Transfer shall not be effective, without
such consent with respect thereto. In connection with any proposed Transfer of
any Ownership Interest in a Class R-I, Class R-II or a Class R-III Certificate,
the Certificate Registrar shall, as a condition to such consent, (x) require
delivery to it in form and substance satisfactory to it, and the proposed
transferee shall deliver to the Certificate Registrar and to the proposed
transferor, an affidavit in substantially the form attached as Exhibit C-1 (a
"Transferee Affidavit") (A) that such proposed transferee is a Permitted
Transferee and (B) stating that (I) the proposed transferee historically has
paid its debts as they have come due and intends to do so in the future, (II)
the proposed transferee understands that, as the holder of an Ownership Interest
in a Class R-I, Class R-II or a Class R-III Certificate, as applicable, it may
incur liabilities in excess of cash flows generated by the residual interest,
(III) the proposed transferee intends to pay taxes associated with holding the
Ownership Interest as they become due, (IV) the proposed transferee will not
transfer the Ownership Interest to any Person that does not provide a Transferee
Affidavit or as to which the proposed transferee has actual knowledge that such
Person is not a
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Permitted Transferee or is acting as an agent (including as a broker, nominee or
other middleman) for a Person that is not a Permitted Transferee, and (V) the
proposed transferee expressly agrees to be bound by and to abide by the
provisions of this Section 5.2(j) and (y) other than in connection with the
initial issuance of the Class R-I, Class R-II and Class R-III Certificates,
require a statement from the proposed transferor substantially in the form
attached as Exhibit C-2 (the "Transferor Letter"), that the proposed transferor
has no actual knowledge that the proposed transferee is not a Permitted
Transferee and has no actual knowledge or reason to know that the proposed
transferee's statements in the preceding clauses (x)(B)(I) or (III) are false.
(iii) Notwithstanding the delivery of a Transferee Affidavit
by a proposed transferee under clause (ii) above, if a Responsible Officer of
the Certificate Registrar has actual knowledge that the proposed transferee is
not a Permitted Transferee, no Transfer to such proposed transferee shall be
effected and such proposed Transfer shall not be registered on the Certificate
Register; provided, however, that the Certificate Registrar shall not be
required to conduct any independent investigation to determine whether a
proposed transferee is a Permitted Transferee.
Upon notice to the Certificate Registrar that there has occurred a
Transfer to any Person that is a Disqualified Organization or an agent thereof
(including a broker, nominee, or middleman) in contravention of the foregoing
restrictions, and in any event not later than 60 days after a request for
information from the transferor of such Ownership Interest in a Class R-I, Class
R-II or a Class R-III Certificate, or such agent thereof, the Certificate
Registrar and the Trustee agree to furnish to the IRS and the transferor of such
Ownership Interest or such agent thereof such information necessary to the
application of Section 860E(e) of the Code as may be required by the Code,
including, but not limited to, the present value of the total anticipated excess
inclusions with respect to such Class R-I, Class R-II or Class R-III Certificate
(or portion thereof) for periods after such Transfer. At the election of the
Certificate Registrar and the Trustee, the Certificate Registrar and the Trustee
may charge a reasonable fee for computing and furnishing such information to the
transferor or to such agent thereof referred to above; provided, however, that
such Persons shall in no event be excused from furnishing such information.
SECTION 5.3. Book-Entry Certificates.
(a) Each Class of REMIC III Certificates shall initially be issued
as one or more Book-Entry Certificates registered in the name of the Securities
Depository or its nominee and, except as provided in subsection (c) below,
transfer of such Certificates may not be registered by the Certificate Registrar
unless such transfer is to a successor Securities Depository that agrees to hold
such Certificates for the respective Certificate Owners with Ownership Interests
therein. Such Certificate Owners shall hold and transfer their respective
Ownership Interest in and to such Certificates through the book-entry facilities
of the Securities Depository and, except as provided in subsection (c) below,
shall not be entitled to definitive, fully registered Certificates ("Definitive
Certificates") in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Securities Depository Participant or brokerage firm representing each such
Certificate Owner. Each Securities Depository Participant shall only transfer
the Ownership Interests in the Book-Entry
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Certificates of Certificate Owners it represents or of brokerage firms for which
it acts as agent in accordance with the Securities Depository's normal
procedures. Neither the Certificate Registrar nor the Trustee shall have any
responsibility to monitor or restrict the transfer of Ownership Interests in
Book-Entry Certificates through the book-entry facilities of the Securities
Depository.
(b) The Trustee, the Master Servicer, the Special Servicer, the
Fiscal Agent and the Certificate Registrar may for all purposes, including the
making of payments due on the Book-Entry Certificates, deal with the Securities
Depository as the authorized representative of the Certificate Owners with
respect to such Certificates for the purposes of exercising the rights of
Certificateholders hereunder. The rights of Certificate Owners with respect to
the Book-Entry Certificates shall be limited to those established by law and
agreements between such Certificate Owners and the Securities Depository
Participants and brokerage firms representing such Certificate Owners. Multiple
requests and directions from, and votes of, the Securities Depository as Holder
of the Book-Entry Certificates with respect to any particular matter shall not
be deemed inconsistent if they are made with respect to different Certificate
Owners. The Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
notice to the Securities Depository of such record date.
(c) If (i)(A) the Depositor advises the Trustee and the Certificate
Registrar in writing that the Securities Depository is no longer willing or able
to properly discharge its responsibilities with respect to any Class of the
Book-Entry Certificates, and (B) the Depositor is unable to locate a qualified
successor, or (ii) the Depositor at its option advises the Trustee and the
Certificate Registrar in writing that it elects to terminate the book-entry
system through the Securities Depository with respect to any Class of the
Book-Entry Certificates, the Certificate Registrar shall notify all affected
Certificate Owners, through the Securities Depository, of the occurrence of any
such event and of the availability of Definitive Certificates to such
Certificate Owners requesting the same. Upon surrender to the Certificate
Registrar of any Class of the Book-Entry Certificates by the Securities
Depository, accompanied by registration instructions from the Securities
Depository for registration of transfer, the Trustee shall execute, and the
Certificate Registrar shall authenticate and deliver, the Definitive
Certificates to the Certificate Owners identified in such instructions. None of
the Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Fiscal Agent or the Certificate Registrar shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates for purposes of evidencing ownership of any Class of the REMIC III
Certificates, the registered holders of such Definitive Certificates shall be
recognized as Certificateholders hereunder and, accordingly, shall be entitled
directly to receive payments on, to exercise Voting Rights with respect to, and
to transfer and exchange such Definitive Certificates.
SECTION 5.4. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) there is delivered
to the Certificate Registrar such security or indemnity as
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may be required by it to save it, the Trustee, the Fiscal Agent, the Special
Servicer and the Master Servicer harmless, then, in the absence of actual
knowledge by a Responsible Officer of the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Trustee or the Authenticating Agent shall authenticate and the
Certificate Registrar shall deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the same
Class and of like tenor and Percentage Interest. Upon the issuance of any new
Certificate under this Section 5.4, the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Certificate Registrar) connected therewith. Any replacement
Certificate issued pursuant to this Section 5.4 shall constitute complete and
indefeasible evidence of ownership of the corresponding interest in the Trust
Fund, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 5.5. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders pursuant to Article IV. The Trustee shall
cause such Paying Agent, if other than the Trustee or the Master Servicer, to
execute and deliver to the Master Servicer and the Trustee an instrument in
which such Paying Agent shall agree with the Master Servicer and the Trustee
that such Paying Agent will hold all sums held by it for payment to
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums have been paid to such Certificateholders or disposed of
as otherwise provided herein. The initial Paying Agent shall be the Trustee. The
Paying Agent shall at all times be an entity having a long-term senior unsecured
debt rating of at least "Baa2" by Moody's and "BBB" by S&P, unless each of the
Rating Agencies has confirmed in writing that a lower rating shall not result,
in and of itself, in a downgrading, withdrawal or qualification of the rating
then assigned by such Rating Agency to any Class of the Certificates (the cost,
if any, of obtaining such confirmation to be paid by the Trustee; provided that
such appointment is made by the Trustee in its sole discretion and otherwise by
the Trust Fund).
SECTION 5.6. Access to Certificateholders' Names and Addresses.
(a) If any Certificateholder (for purposes of this Section 5.6, an
"Applicant") applies in writing to the Certificate Registrar, and such
application states that the Applicant desires to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and is accompanied by a copy of the communication which such
Applicant proposes to transmit, then the Certificate Registrar shall, at the
expense of such Applicant, within ten Business Days after the receipt of such
application, transmit such communication to the Certificateholders as of the
most recent Record Date; provided, however, if such communication relates to
performance by the Master Servicer, the Special Servicer or the Trustee of its
duties hereunder, the Certificate Registrar shall furnish or cause to be
furnished to such Applicant a list of the names and addresses of the
Certificateholders as of the most recent Record Date.
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(b) Every Certificateholder, by receiving and holding its Certifi-
cate, agrees with the Trustee that the Trustee and the Certificate Registrar
shall not be held accountable in any way by reason of the disclosure of any
information as to the names and addresses of the Certificateholders hereunder,
regardless of the source from which such information was derived.
SECTION 5.7. Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or by
an agent duly appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee and, when required, to the Depositor, the Special
Servicer or the Master Servicer. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee, the Depositor, the Special
Servicer and the Master Servicer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Certificateholder of
any such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done, or omitted to be done,
by the Trustee, the Depositor, the Special Servicer or the Master Servicer in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
(d) The Trustee or Certificate Registrar may require such additional
proof of any matter referred to in this Section 5.7 as it shall deem necessary.
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SPECIAL SERVICER
SECTION 6.1. Liability of the Depositor, the Master Servicer and the
Special Servicer.
The Depositor, the Master Servicer and the Special Servicer each
shall be liable in accordance herewith only to the extent of the obligations
specifically imposed by this Agreement.
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SECTION 6.2. Merger or Consolidation of the Master Servicer and
Special Servicer.
Subject to the third paragraph of this Section 6.2, the Master
Servicer will keep in full effect its existence, rights and good standing as a
corporation under the laws of the State of Delaware and will not jeopardize its
ability to do business in each jurisdiction in which one or more of the
Mortgaged Properties are located or to protect the validity and enforceability
of this Agreement, the Certificates or any of the Mortgage Loans and to perform
its respective duties under this Agreement.
Subject to the following paragraph, the Special Servicer will keep in
full effect its existence, rights and good standing as a corporation under the
laws of the State of Delaware and will not jeopardize its ability to do business
in each jurisdiction in which one or more of the Mortgaged Properties are
located or to protect the validity and enforceability of this Agreement, the
Certificates or any of the Specially Serviced Mortgage Loans and to perform its
respective duties under this Agreement.
Each of the Master Servicer and the Special Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which it shall be a party, or any Person succeeding to its
business, shall be the successor of the Master Servicer or the Special Servicer,
as applicable hereunder, and shall be deemed to have assumed all of the
liabilities of the Master Servicer or the Special Servicer, as applicable
hereunder, if each of the Rating Agencies has confirmed in writing that such
merger, consolidation or transfer and succession shall not result, in and of
itself, in a downgrading, withdrawal or qualification of the rating then
assigned by such Rating Agency to any Class of Certificates (the cost, if any,
of obtaining such confirmation to be paid by the Master Servicer or Special
Servicer, as applicable).
SECTION 6.3. Limitation on Liability of the Depositor, the Master
Servicer and Others.
Neither the Depositor, the Master Servicer, the Special Servicer, nor
any of the owners, directors, officers, employees or agents of the Depositor or
the Master Servicer or the Special Servicer shall be under any liability to the
Trust Fund or the Certificateholders for any action taken, or for refraining
from the taking of any action, in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Depositor or the Master Servicer or the Special Servicer or any such Person
against any breach of warranties or representations made herein, or against any
specific liability imposed on the Master Servicer or the Special Servicer for a
breach of the Servicing Standard, or against any liability which would otherwise
be imposed by reason of its respective willful misfeasance, misrepresentation,
bad faith, fraud or negligence in the performance of its duties or by reason of
negligent disregard of its respective obligations or duties hereunder. The
Depositor, the Master Servicer, the Special Servicer and any owner, director,
officer, employee or agent of the Depositor, the Master Servicer or the Special
Servicer may rely in good faith on any document of any kind which, prima facie,
is properly executed and submitted by any appropriate Person with respect to any
matters arising hereunder. The Depositor, the Master Servicer, the Special
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Servicer and any owner, director, officer, employee or agent of the Depositor,
the Master Servicer or the Special Servicer shall be indemnified and held
harmless by the Trust Fund against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense incurred by reason of its respective
willful misfeasance, misrepresentation, bad faith, fraud or negligence or (in
the case of the Master Servicer or Special Servicer) a breach of the Servicing
Standard in the performance of its respective duties or by reason of negligent
disregard of its respective obligations or duties hereunder. Neither the
Depositor nor the Master Servicer nor the Special Servicer shall be under any
obligation to appear in, prosecute or defend any legal action unless such action
is related to its respective duties under this Agreement and in its opinion does
not expose it to any expense or liability; provided, however, that the Depositor
or the Master Servicer or the Special Servicer may in its discretion undertake
any action related to its obligations hereunder which it may deem necessary or
desirable with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. In such
event, the legal expenses and costs of such action and any liability resulting
therefrom (except any liability related to the Master Servicer's or the Special
Servicer's obligations under Section 3.1(a)) shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor, the Master Servicer and the
Special Servicer shall be entitled to be reimbursed therefor from the Collection
Account as provided in Section 3.6(vi) of this Agreement.
SECTION 6.4. Limitation on Resignation of the Master Servicer and of
the Special Servicer.
In addition to the transactions permitted under Section 6.2, each of
the Master Servicer and the Special Servicer may assign its respective rights
and delegate its respective duties and obligations under this Agreement in
connection with the sale or transfer of a substantial portion of its mortgage
servicing or asset management portfolio, provided that: (i) the purchaser or
transferee accepting such assignment and delegation (A) shall be satisfactory to
the Trustee, (B) shall be an established mortgage finance institution, bank or
mortgage servicing institution, organized and doing business under the laws of
any state of the United States or the District of Columbia, authorized under
such laws to perform the duties of a servicer of mortgage loans, and (C) shall
execute and deliver to the Trustee an agreement, in form and substance
reasonably satisfactory to the Trustee, which contains an assumption by such
Person of the due and punctual performance and observance of each covenant and
condition to be performed or observed by the Master Servicer or the Special
Servicer, as applicable, under this Agreement from and after the date of such
agreement; (ii) receipt of Rating Agency Confirmation by the Trustee, with
respect to such assignment and delegation (the cost, if any, of obtaining such
confirmation to be paid by the Master Servicer or the Special Servicer, as
applicable); (iii) the Master Servicer or the Special Servicer, as applicable,
shall not be released from its obligations under this Agreement that arose prior
to the effective date of such assignment and delegation under this Section 6.4;
and (iv) the rate at which the Master Servicing Fee (or any component thereof)
is calculated shall not exceed the rate in effect prior to such assignment and
delegation. Upon acceptance of such assignment and delegation, the purchaser or
transferee shall be the successor Master Servicer or Special Servicer hereunder,
as applicable.
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Except as provided in Section 6.2 or in this Section 6.4, 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. Any such determination
permitting the resignation of the Master Servicer or the Special Servicer, as
applicable, shall be evidenced by an Opinion of Counsel (obtained at the
resigning Master Servicer's or Special Servicer's as applicable, expense) to
such effect delivered to the Trustee.
No resignation or removal of the Master Servicer or the Special
Servicer, as applicable, as contemplated by the preceding paragraphs shall
become effective until the Trustee or a successor Master Servicer or the Special
Servicer, as applicable, shall have assumed the Master Servicer's or the Special
Servicer's responsibilities, duties, liabilities and obligations hereunder.
SECTION 6.5. Rights of the Depositor and the Trustee in Respect of
the Master Servicer and the Special Servicer.
Each of the Master Servicer and the Special Servicer shall afford the
Depositor, the Rating Agencies, and the Trustee, upon reasonable notice, during
normal business hours access to all records maintained by it in respect of its
rights and obligations hereunder and access to its officers responsible for such
obligations. Upon request, each of the Master Servicer and the Special Servicer
shall furnish to the Depositor, the Rating Agencies and the Trustee its most
recent financial statements and such other information in its possession (which
it is not prohibited by applicable law or contract from disclosing) regarding
its business, affairs, property and condition, financial or otherwise, as the
party requesting such information, in its reasonable judgment, determines to be
relevant to the performance of the obligations hereunder of the Master Servicer
or the Special Servicer. Neither the Depositor nor the Trustee shall have any
responsibility or liability for any action or failure to act by the Master
Servicer or the Special Servicer and neither such Person is obligated to
supervise the performance of the Master Servicer or the Special Servicer under
this Agreement or otherwise.
ARTICLE VII
DEFAULT
SECTION 7.1. Events of Default.
"Event of Default," wherever used herein, with respect to the Master
Servicer and the Special Servicer, as applicable (except with respect to item
(vii) in the case of the Special Servicer) means any one of the following
events:
(i) any failure by the Master Servicer or the Special Servicer,
as applicable, to remit to the Collection Account or any failure by the Master
Servicer to remit to the Trustee for deposit into the Distribution Account any
amount required to be so remitted by the Master Servicer or the Special
Servicer, as applicable, pursuant to and in accordance with the terms of this
Agreement; or
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(ii) any failure on the part of the Master Servicer or Special
Servicer, as applicable, duly to observe or perform in any material respect any
other of the covenants or agreements, or the breach of any representations or
warranties provided herein on the part of the Master Servicer or the Special
Servicer, which, in either event, materially and adversely affects the interests
of the Certificateholders, the Master Servicer, the Special Servicer or the
Trustee with respect to any Mortgage Loan and which, in either event, continues
unremedied for a period of 30 days after the date on which written notice of
such failure or breach, requiring the same to be remedied, shall have been given
to the Master Servicer or Special Servicer by the Depositor or the Trustee, or
to the Master Servicer or Special Servicer, the Depositor and the Trustee by the
Holders of Certificates entitled to at least 25% of the aggregate Voting Rights
of any Class affected thereby; or
(iii) confirmation in writing by any of the Rating Agencies
that the then-current rating assigned to any Class of Certificates will be
withdrawn, downgraded or qualified if the Master Servicer or Special Servicer,
as applicable, is not removed as Master Servicer or Special Servicer hereunder;
or
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar law for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Master Servicer or Special Servicer, as applicable, and
such decree or order shall have remained in force, undischarged or unstayed, for
a period of 60 days; or
(v) the Master Servicer or Special Servicer, as applicable, shall
consent to the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Master Servicer or the Special
Servicer, or of or relating to all or substantially all of the property of
either the Master Servicer or the Special Servicer; or
(vi) the Master Servicer or Special Servicer, as applicable,
shall admit in writing its inability to pay its debts generally as they become
due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(vii) the Master Servicer shall fail to make any Advance required
to be made by the Master Servicer hereunder (whether or not the Trustee or the
Fiscal Agent makes such Advance);
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Trustee may, and at the written direction of the Holders
of 25% of the aggregate Voting Rights of all Certificates, the Trustee shall, by
notice in writing to the Master Servicer or the Special Servicer, as the case
may be, terminate (subject to Section 7.2) all of its respective rights and
obligations under this Agreement and in and to the Mortgage Loans and the
proceeds
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thereof, other than any rights it may have hereunder as a Certificateholder and
any rights or obligations that accrued prior to the date of such termination
(including the right to receive all amounts accrued or owing to it under this
Agreement, plus interest at the Advance Rate on such amounts until received to
the extent such amounts bear interest as provided in this Agreement, with
respect to periods prior to the date of such termination, and the right to the
benefits of Section 6.3 notwithstanding any such termination); provided,
however, that in the event the Master Servicer and the Special Servicer are the
same Person, the Trustee may, and at the written direction of the Holders of 25%
of the aggregate Voting Rights of all Certificates, the Trustee shall require
that any termination of the Master Servicer shall constitute a termination of
the Special Servicer and vice versa. On or after the receipt by the Master
Servicer or the Special Servicer, as the case may be, of such written notice,
all of its authority and power under this Agreement, whether with respect to the
Certificates or the Mortgage Loans or otherwise, shall pass to and be vested in
the Trustee pursuant to and under this Section (notwithstanding any failure of
the Trustee to satisfy the criterion set forth in Section 6.4) and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of and at the expense of the defaulting Master Servicer or
Special Servicer, as the case may be, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Each of the Master
Servicer and the Special Servicer, on behalf of itself, agrees in the event it
is terminated pursuant to this Section 7.1 promptly (and in any event no later
than ten Business Days subsequent to such notice) to provide, at its own
expense, the Trustee or the successor Master Servicer or Special Servicer (if
other than the Trustee) with all documents and records requested by the Trustee
or the successor Master Servicer or Special Servicer (if other than the Trustee)
to enable the Trustee or the successor Master Servicer or Special Servicer (if
other than the Trustee) to assume its functions hereunder, and to cooperate with
the Trustee and the successor to its responsibilities hereunder in effecting the
termination of its responsibilities and rights hereunder, including, without
limitation, the transfer to the successor Master Servicer or Special Servicer or
the Trustee, as applicable, for administration by it of all cash amounts which
shall at the time be or should have been credited by the Master Servicer or the
Special Servicer to the Collection Account and any REO Account or Reserve
Account or thereafter be received with respect to the Mortgage Loans, and shall
promptly provide the Trustee or such successor Master Servicer or Special
Servicer (which may include the Trustee), as applicable, all documents and
records reasonably requested by it, such documents and records to be provided in
such form as the Trustee or such successor Master Servicer or Special Servicer
shall reasonably request (including electromagnetic form), to enable it to
assume the Master Servicer's or Special Servicer's function hereunder. All
reasonable costs and expenses of the successor Master Servicer or successor
Special Servicer incurred in connection with transferring the Mortgage Files to
the successor Master Servicer (or copies of the Mortgage Files relating to
Specially Serviced Mortgage Loans to the successor Special Servicer) and
amending this Agreement to reflect such succession as Master Servicer or
successor Special Servicer pursuant to this Section 7.1 shall be paid by the
predecessor Master Servicer or Special Servicer upon presentation of reasonable
documentation of such costs and expenses; provided, however, that if any such
costs and expenses remain unpaid by the predecessor Master Servicer or Special
Servicer within a reasonable time after presentation of such documentation, the
Trustee or the successor Master Servicer or Special Servicer (if other
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than the Trustee) may be reimbursed from the Collection Account for such unpaid
costs and expenses, which shall be deemed to be expenses of the Trust Fund.
SECTION 7.2. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer or the Special Servicer
receives a notice of termination pursuant to Section 7.1, the Trustee shall be
its successor in such capacity in all respects under this Agreement and the
transactions set forth or provided for herein and, except as provided herein,
shall be subject to all the responsibilities, duties, limitations on liability
and liabilities relating thereto and arising thereafter placed on the Master
Servicer or Special Servicer by the terms and provisions hereof; provided,
however, that (i) the Trustee shall have no responsibilities, duties,
liabilities or obligations with respect to any act or omission of the Master
Servicer or of the Special Servicer and (ii) any failure to perform, or delay in
performing, such duties or responsibilities caused by the terminated party's
failure to provide, or delay in providing, records, tapes, disks, information or
monies shall not be considered a default by any successor hereunder. The
appointment of a successor Master Servicer or Special Servicer shall not affect
any liability of the predecessor Master Servicer or Special Servicer, as
applicable, which may have arisen prior to its termination as Master Servicer or
Special Servicer. The Trustee shall not be liable for any of the representations
and warranties of the Master Servicer or of the Special Servicer herein or in
any related document or agreement, for any acts or omissions of the predecessor
Master Servicer or Special Servicer, as applicable, or for any losses incurred
in respect of any Permitted Investment by the Master Servicer pursuant to
Section 3.7 hereunder nor shall the Trustee be required to purchase any Mortgage
Loan hereunder. As compensation therefor, the Trustee as successor Master
Servicer or Special Servicer shall be entitled to all Servicing Compensation
relating to the Mortgage Loans that accrue after the date of the Trustee's
succession to which the Master Servicer or Special Servicer would have been
entitled if the Master Servicer or Special Servicer, as applicable, had
continued to act hereunder (other than Workout Fees payable to the terminated
Special Servicer pursuant to Section 3.12(b)). Unless otherwise agreed to in
writing by the Master Servicer and the Trustee, in the event any Advances made
by the Master Servicer, the Fiscal Agent or the Trustee shall at any time be
outstanding, or any amounts of interest thereon shall be accrued and unpaid, all
amounts available to repay Advances and interest hereunder shall be applied
entirely to the Advances made by the Trustee and the Fiscal Agent (and the
accrued and unpaid interest thereon), until such Advances made by the Trustee
and the Fiscal Agent (and accrued and unpaid interest thereon) shall have been
repaid in full. In addition to the foregoing, any successor Master Servicer
(which, for the purposes of this sentence, shall not include the Trustee) shall
be required to allocate funds available for the payment of unreimbursed Advances
(with interest thereon at the Advance Rate) on a first in, first out basis,
which results in the payment of unreimbursed Advances (with interest thereon at
the Advance Rate) first to the predecessor Master Servicer. Notwithstanding the
above, the Trustee may, if it shall be unwilling to so act, or shall, if it is
unable to so act, or if the Holders of Certificates entitled to a majority of
the aggregate Voting Rights so request in writing to the Trustee, or if neither
the Trustee nor the Fiscal Agent is rated by each Rating Agency in one of its
two highest long-term senior unsecured debt rating categories, promptly appoint,
or petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution, the appointment of which will not result in
the downgrading, withdrawal or qualification of the rating or ratings then
assigned to any Class of Certificates as evidenced in writing by each Rating
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Agency (the cost, if any, of obtaining such confirmation to be paid by the
terminated Master Servicer or Special Servicer, as applicable), as the successor
to the Master Servicer or Special Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Master Servicer
or Special Servicer hereunder. No appointment of a successor to the Master
Servicer or Special Servicer hereunder shall be effective until the assumption
by such successor of all the Master Servicer's or Special Servicer's
responsibilities, duties and liabilities hereunder. Pending appointment of a
successor to the Master Servicer or Special Servicer hereunder, unless the
Trustee shall be prohibited by law from so acting, the Trustee shall act in such
capacity as herein above provided. In connection with such appointment and
assumption described herein, the Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the terminated party hereunder. The Depositor, the
Trustee, the Master Servicer or Special Servicer and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.
SECTION 7.3. Notification to Certificateholders.
(a) Upon any termination pursuant to Section 7.1 above or appointment
of a successor to the Master Servicer or the Special Servicer, the Trustee shall
give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to each Rating Agency.
(b) Within 5 days after the occurrence of any Event of Default of
which a Responsible Officer of the Trustee has actual knowledge, the Trustee
shall transmit by mail to all Holders of Certificates and to each Rating Agency
notice of such Event of Default, unless such Event of Default shall have been
cured or waived.
SECTION 7.4. Other Remedies of Trustee.
During the continuance of any Event of Default, so long as such Event
of Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 7.1, shall have the right, in its own name as trustee of an
express trust, to take all actions now or hereafter existing at law, in equity
or by statute to enforce its rights and remedies and to protect the interests,
and enforce the rights and remedies, of the Certificateholders (including the
institution and prosecution of all judicial, administrative and other
proceedings and the filing of proofs of claim and debt in connection therewith).
In such event, the legal fees, expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund, and the Trustee shall be entitled to be reimbursed therefor from the
Collection Account as provided in Section 3.6(vi). Except as otherwise expressly
provided in this Agreement, no remedy provided for by this Agreement shall be
exclusive of any other remedy, and each and every remedy shall be cumulative and
in addition to any other remedy and no delay or omission to exercise any right
or remedy shall impair any such right or remedy or shall be deemed to be a
waiver of any Event of Default.
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SECTION 7.5. Waiver of Past Events of Default; Termination.
The Holders of Certificates evidencing not less than 66-2/3% of the
aggregate Voting Rights of the Certificates may, on behalf of all Holders of
Certificates, waive any default by the Master Servicer or Special Servicer in
the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to (including P&I Advances) or payments
from the Collection Account or the Distribution Account or in remitting payments
as received, in each case in accordance with this Agreement. Upon any such
waiver of a past default, and payment to the Trustee of all reasonable costs and
expenses incurred by the Trustee in connection with such default and prior to
its waivers (which costs shall be paid as an Additional Trust Fund Expense) such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon. Notwithstanding any other provisions of this Agreement, for
purposes of waiving any Event of Default pursuant to this Section 7.5,
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 any other Person held such
Certificates.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default of
which a Responsible Officer of the Trustee has actual knowledge and after the
curing or waiver of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in this
Agreement and no permissive right of the Trustee shall be construed as a duty.
During the continuance of an Event of Default of which a Responsible Officer of
the Trustee has actual knowledge, the Trustee shall exercise such of the rights
and powers vested in it by this Agreement, and use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; provided, however,
that, the Trustee shall not be responsible for the accuracy or content of any
such resolution, certificate, statement, opinion, report, document, order or
other instrument provided to it hereunder by the Master Servicer, the Special
Servicer, the Depositor or the Paying Agent. If any such instrument is found not
to conform on its face to the requirements of this Agreement in a material
manner, the Trustee shall report such finding to the presenting party and
request a correction of such instrument.
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(c) No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that the
foregoing shall be subject to Section 8.2; and provided, further, that:
(i) Prior to the occurrence of an Event of Default of which
a Responsible Officer of the Trustee has actual knowledge, and after the curing
or waiver of all such Events of Default which may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express provisions
of this Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon any resolutions, certificates, statements,
reports, opinions, documents, orders or other instruments furnished to the
Trustee that conform on their face to the requirements of this Agreement without
responsibility for investigating the contents thereof;
(ii) The Trustee shall not be personally or otherwise liable
for an error of judgment made in good faith by a Responsible Officer or
Responsible Officers, unless it shall be proven that the Trustee was negligent
in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally or otherwise liable
with respect to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of Holders of Certificates entitled to a
majority of the aggregate Voting Rights (or such other percentage as is
specified herein) of each affected Class, or of the aggregate Voting Rights of
the Certificates, relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising or omitting to
exercise any trust or power conferred upon the Trustee, under this Agreement;
(iv) Except as provided in the succeeding sentence, the Trustee
shall not be charged with knowledge of any failure by the Depositor to comply
with the obligations of the Depositor hereunder or any failure of the Master
Servicer or the Special Servicer to comply with the obligations of the Master
Servicer or the Special Servicer referred to in clause (i) or (ii) of Section
7.1, or of any breach or occurrence referred to in clause (iii) through (vi) of
Section 7.1, as the case may be, unless a Responsible Officer of the Trustee
obtains actual knowledge of such failure, breach or occurrence. The Trustee
shall be deemed to have actual knowledge of the Master Servicer's failure to
comply with its obligations listed in clause (i) (except with respect to
remittances to the Collection Account) and (vii) of Section 7.1 (except with
respect to Servicing Advances) or to provide scheduled reports, certificates and
statements when and as required to be delivered to the Trustee pursuant to this
Agreement; and
(v) The Trustee and the Fiscal Agent shall not be under any obli-
gation to appear in prosecute or defend any legal action which is not incidental
to their respective duties as Trustee and Fiscal Agent in accordance with this
Agreement (and, if either does, all legal expenses and costs of such action
shall be expenses and costs of the Trust Fund, and the Trustee and the Fiscal
Agent shall be entitled to be reimbursed therefor from the Collection Account,
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unless such legal action arises out of the negligence or bad faith of the
Trustee or the Fiscal Agent, as the case may be, or any breach of a
representation, warranty or covenant of the Trustee or the Fiscal Agent, as the
case may be, contained herein).
(vi) The execution by the Trustee of any forms or plans of
liquidation in connection with REMIC I, REMIC II or REMIC III shall not
constitute a representation by the Trustee as to the adequacy of such form or
plan of liquidation.
The Trustee, in its capacity as Trustee, shall not be required to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if in the Trustee's opinion the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Master Servicer or the Special Servicer under
this Agreement or during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Master Servicer or the Special Servicer in accordance with the terms of this
Agreement. The Trustee shall not be required to post any surety or bond of any
kind in connection with its performance of its obligations under this Agreement.
SECTION 8.2. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.1:
(i) The Trustee may request and/or rely upon and shall be pro-
tected in acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties and the Trustee shall have no
responsibility to ascertain or confirm the genuineness of any such party or
parties;
(ii) The Trustee may consult with counsel and any memorandum
or Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in good faith
and in accordance with such memorandum or Opinion of Counsel;
(iii) (A) The Trustee shall be under no obligation to institute,
conduct or defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders, pursuant to the provisions
of this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; (B) the right of the
Trustee to perform any discretionary act enumerated in this Agreement shall not
be construed as a duty, and the Trustee shall not be answerable for other than
its negligence or willful misconduct in the performance of any such act;
provided, however, that subject to the foregoing clause (A), nothing contained
herein shall relieve the Trustee of the obligations, upon the occurrence of an
Event of Default (which has not been cured or waived) of which a Responsible
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Officer of the Trustee has actual knowledge, to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs;
(iv) The Trustee shall not be personally or otherwise liable
for any action taken, suffered or omitted by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement;
(v) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval bond or
other paper or document, unless requested in writing to do so by Holders of
Certificates entitled to a majority (or such other percentage as is specified
herein) of the aggregate Voting Rights of any affected Class; provided, however,
that if the payment within a reasonable time to the Trustee of the costs,
expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such expense or liability as a
condition to taking any such action. The reasonable expense of every such
investigation shall be paid by the Master Servicer or the Special Servicer if an
Event of Default shall have occurred and be continuing relating to the Master
Servicer or the Special Servicer, respectively, and otherwise by the
Certificateholders requesting the investigation; and
(vi) The Trustee may execute any of the trusts or powers here-
under or perform any duties hereunder either directly or by or through agents or
attorneys, provided that the Trustee shall not otherwise be relieved of its
duties and obligations hereunder.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Mortgage Loan by the Depositor pursuant to this Agreement or the eligibility
of any Mortgage Loan for purposes of this Agreement.
SECTION 8.3. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates shall not be
taken as the statements of the Trustee, the Fiscal Agent, the Master Servicer or
the Special Servicer and the Trustee, the Fiscal Agent, the Special Servicer and
the Master Servicer assume no responsibility for their correctness. The Trustee,
the Fiscal Agent, the Master Servicer and the Special Servicer make no
representations or warranties as to the validity or sufficiency of this
Agreement, of the Certificates, or any private placement memorandum or
prospectus used to offer the Certificates
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for sale or the validity, enforceability or sufficiency of any Mortgage Loan or
related document. The Trustee and the Fiscal Agent shall at no time have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any Mortgage or any Mortgage Loan, or the perfection and
priority of any Mortgage or the maintenance of any such perfection and priority,
or for or with respect to the sufficiency of the Trust Fund or its ability to
generate the payments to be distributed to Certificateholders under this
Agreement. Without limiting the foregoing, neither the Trustee nor the Fiscal
Agent shall be liable or responsible for: the existence, condition and ownership
of any Mortgaged Property; the existence of any hazard or other insurance
thereon (other than, with respect to the Trustee only, if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 7.2) or the
enforceability thereof; the existence of any Mortgage Loan or the contents of
the related Mortgage File on any computer or other record thereof (other than,
with respect to the Trustee only, if the Trustee shall assume the duties of the
Master Servicer or the Special Servicer pursuant to Section 7.2); the validity
of the assignment of any Mortgage Loan to the Trust Fund or of any intervening
assignment; the completeness of any Mortgage File; the performance or
enforcement of any Mortgage Loan (other than, with respect to the Trustee only,
if the Trustee shall assume the duties of the Master Servicer or the Special
Servicer pursuant to Section 7.2); the compliance by the Depositor, the Master
Servicer or the Special Servicer with any warranty or representation made under
this Agreement or in any related document or the accuracy of any such warranty
or representation prior to the Trustee's receipt of notice or other discovery of
any non-compliance therewith or any breach thereof; any investment of monies by
or at the direction of the Master Servicer or the Special Servicer or any loss
resulting therefrom, it being understood that the Trustee only shall remain
responsible for any Trust Fund property that it may hold in its individual
capacity; the acts or omissions of any of the Depositor, the Master Servicer or
the Special Servicer (other than, with respect to the Trustee only, if the
Trustee shall assume the duties of the Master Servicer or the Special Servicer
pursuant to Section 7.2) or any Sub-Servicer or any Borrower; any action of the
Master Servicer or the Special Servicer (other than, with respect to the Trustee
only, if the Trustee shall assume the duties of the Master Servicer or the
Special Servicer pursuant to Section 7.2) or any Sub-Servicer taken in the name
of the Trustee, except with respect to the Trustee, to the extent such action is
taken at the express written direction of the Trustee; the failure of the Master
Servicer or the Special Servicer or any Sub-Servicer to act or perform any
duties required of it on behalf of the Trust Fund or the Trustee hereunder; or
any action by or omission of the Trustee taken at the instruction of the Master
Servicer or the Special Servicer (other than in each case, with respect to the
Trustee only, if the Trustee shall assume the duties of the Master Servicer or
the Special Servicer pursuant to Section 7.2) unless the taking of such action
is not permitted by the express terms of this Agreement; provided, however, that
the foregoing shall not relieve the Trustee or the Fiscal Agent of its
obligation to perform its duties as specifically set forth in this Agreement.
The Trustee and the Fiscal Agent shall not be accountable for the use or
application by the Depositor, the Master Servicer or the Special Servicer of any
of the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor, the Master Servicer or the
Special Servicer in respect of the Mortgage Loans or deposited in or withdrawn
from the Collection Account, or the Distribution Account by the Depositor, the
Master Servicer or the Special Servicer, other than in each case, with respect
to the Trustee only, any funds held by the Trustee. The Trustee (unless the
Trustee shall have become the successor Master Servicer) or the Fiscal Agent
shall have no responsibility for (A) filing any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain
the
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perfection of any security interest or lien granted to it hereunder or to record
this Agreement, (B) seeing to any insurance, (C) seeing to the payment or
discharge of any tax, assessment, or other governmental charge or any lien or
encumbrance of any kind owing with respect to, assessed or levied against any
part of the Trust Fund, or (D) confirming or verifying the contents of any
reports or certificates of the Master Servicer delivered to the Trustee pursuant
to this Agreement believed by the Trustee to be genuine and to have been signed
or presented by the proper party or parties. In making any calculation hereunder
which includes as a component thereof the payment or distribution of interest
for a stated period at a stated rate "to the extent permitted by applicable
law," the Trustee shall assume that such payment is so permitted unless a
Responsible Officer of the Trustee has actual knowledge, or receives an Opinion
of Counsel (at the expense of the Person asserting the impermissibility) to the
effect, that such payment is not permitted by applicable law.
SECTION 8.4. Trustee May Own Certificates.
The Trustee and the Fiscal Agent in their individual capacities or
any other capacity may become the owner or pledgee of Certificates, and may deal
with the Depositor, the Master Servicer and the Special Servicer in banking
transactions, with the same rights each would have if it were not Trustee or
Fiscal Agent.
SECTION 8.5. Payment of Trustee Fees and Expenses; Indemnification.
(a) The Master Servicer shall pay from the Collection Amount to the
Trustee or any successor Trustee from time to time, and the Trustee or any
successor Trustee shall be entitled to receive from the Collection Account on
each Remittance Date the Trustee Fee (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by the Trustee in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee. The Trustee shall pay the routine fees and expenses of
the Certificate Registrar, the Paying Agent, the Custodian and the
Authenticating Agent. The Trustee's rights to the Trustee Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Trustee's responsibilities and obligations under this Agreement.
(b) Except as otherwise provided herein, the Trustee shall pay all
expenses incurred by it in connection with its activities hereunder. The Master
Servicer and the Special Servicer covenant and agree to pay or reimburse the
Trustee for the reasonable expenses, disbursements and advances incurred or made
by the Trustee in connection with any transfer of the servicing responsibilities
of the Master Servicer or the Special Servicer, as applicable hereunder,
pursuant to or otherwise arising from the resignation or removal of the Master
Servicer or the Special Servicer, as applicable, in accordance with any of the
provisions of this Agreement (and including the reasonable fees and expenses and
disbursements of its counsel and all other persons not regularly in its employ),
except any such expense, disbursement or advance as may arise from the
negligence or bad faith of the Trustee.
(c) Each of the Master Servicer and the Special Servicer shall
indemnify the Trustee and the Fiscal Agent and their respective Affiliates and
each of the directors, officers,
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employees and agents of the Trustee, the Fiscal Agent and their respective
Affiliates (each, an "Indemnified Party"), and hold each of them harmless
against any, and all claims, losses, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments, and any other costs, fees
and expenses that the Indemnified Party may sustain in connection with this
Agreement (including without limitation any liability, cost or expense arising
from the Master Servicer's or Special Servicer's negligent or intentional misuse
of any power of attorney granted pursuant to Section 3.1(a)) related to each
such party's respective willful misconduct, bad faith, fraud, misrepresentation
and/or negligence in the performance of its respective duties hereunder or by
reason of negligent disregard of its respective obligations and duties hereunder
(including in the case of the Master Servicer or the Special Servicer, any agent
of the Master Servicer or the Special Servicer).
(d) The Trust Fund shall indemnify each Indemnified Party from, and
hold it harmless against, any and all losses, liabilities, damages, claims or
expenses (including reasonable attorneys' fees) arising in respect of this
Agreement or the Certificates, in each case to the extent, and only to the
extent, such payments are expressly reimbursable under this Agreement or are
"unanticipated expenses incurred by the REMIC" within the meaning of Treasury
Regulation Section 1.860G-1(b)(3)(ii), other than (i) those resulting from the
negligence, misrepresentation, fraud, bad faith or willful misconduct of the
Trustee and (ii) those as to which such Indemnified Party has received
indemnification payments pursuant to Section 8.5(c) within 30 days after the
request therefor. The term "unanticipated expenses incurred by a REMIC" shall
include any fees, expenses and disbursements of any separate trustee or
co-trustee appointed hereunder, only to the extent such fees, expenses and
disbursements were not reasonably anticipated as of the Closing Date and the
losses, liabilities, damages, claims or expenses (including reasonable
attorneys' fees) incurred or advanced by an Indemnified Party in connection with
any litigation arising out of this Agreement, including, without limitation,
under Section 2.3, Section 3.10, the third paragraph of Section 3.11, Section
8.11, Section 10.3, Section 5.1, and Section 7.1. The right of reimbursement of
the Indemnified Parties under this Section 8.5(d) shall be senior to the rights
of all Certificateholders.
(e) Notwithstanding anything herein to the contrary, this Section
8.5 shall survive the termination or maturity of this Agreement or the
resignation or removal of the Trustee and the Fiscal Agent as regards rights
accrued prior to such resignation or removal and (with respect to any acts or
omissions during their respective tenures) the resignation, removal or
termination of the Master Servicer or the Special Servicer.
(f) This Section 8.5 shall be expressly construed to include, but not
be limited to, such indemnities, compensation, expenses, disbursements,
advances, losses, liabilities, damages and the like, as may pertain or relate to
any environmental law or environmental matter.
SECTION 8.6. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a bank, trust company,
corporation or association organized and doing business under the laws of the
United States of America, any state thereof, or the District of Columbia
authorized under such laws to exercise corporate trust powers and to accept the
trust conferred under this Agreement, having a combined capital and
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surplus of at least $100,000,000 and a rating on its unsecured senior long-term
debt of at least "AA" by S&P or "Aa2" by Moody's (unless a Fiscal Agent is
appointed and acting hereunder that has a long-term senior unsecured debt rating
that is at least "AA" (without regard to any plus or minus) by S&P or "Aa2" by
Moody's), unless each of the Rating Agencies has confirmed in writing that a
lower rating shall not result, in and of itself, in a downgrading, withdrawal or
qualification of the rating then assigned by such Rating Agency to any Class of
the Certificates (the cost, if any, of obtaining such confirmation to be paid by
the Trustee) and subject to supervision or examination by federal or state
authority and shall not be an Affiliate of the Master Servicer or the Special
Servicer (except during any period when the Trustee has assumed the duties of
the Master Servicer or the Special Servicer, as applicable, pursuant to Section
7.2). If a corporation or association publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for purposes of this Section the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In the
event that the place of business from which the Trustee administers the Trust
Fund is a state or local jurisdiction that imposes a tax on the Trust Fund or
the net income of a REMIC (other than a tax corresponding to a tax imposed under
the REMIC Provisions) the Trustee shall elect, at its sole discretion, either to
(i) resign immediately in the manner and with the effect specified in Section
8.7, (ii) pay such tax and continue as Trustee or (iii) administer the Trust
Fund from a state and local jurisdiction that does not impose such a tax. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 8.7.
SECTION 8.7. Designation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer, the Special Servicer and each Rating Agency. Upon such notice of
resignation, the Fiscal Agent shall also be automatically removed and,
accordingly, the Master Servicer shall promptly appoint a successor Trustee,
which appointment of successor Trustee shall not result, in and of itself, in a
downgrading, withdrawal or qualification of the rating then assigned by the
Rating Agencies to any Class of the Certificates as confirmed in writing by each
of the Rating Agencies, and a successor Fiscal Agent, which, if the successor
Trustee is not rated by each Rating Agency in one of its two highest long-term
unsecured debt rating categories, shall be confirmed in writing by each of the
Rating Agencies that such appointment of successor Fiscal Agent shall not
result, in and of itself, in a downgrading, withdrawal or qualification of the
rating then assigned by such Rating Agency to any Class of the Certificates by
written instrument, in triplicate, which instrument shall be delivered to the
resigning Trustee, with a copy to the removed Fiscal Agent and the successor
Trustee and successor Fiscal Agent. The cost, if any, of obtaining the foregoing
confirmations shall be paid by the resigning Trustee. Notwithstanding the
foregoing, if no successor Trustee and Fiscal Agent shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee and departing Fiscal Agent may petition any
court of competent jurisdiction for the appointment of a successor Trustee and
successor Fiscal Agent.
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If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.6 and shall fail to resign after written
request therefor by the Depositor or Master Servicer, or if at any time the
Trustee or the Fiscal Agent shall become incapable of acting, or shall be
adjudged bankrupt or insolvent, or a receiver of the Trustee or the Fiscal Agent
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or the Fiscal Agent or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Depositor
or the Master Servicer may remove the Trustee and the Fiscal Agent and shall
promptly appoint a successor Trustee and successor Fiscal Agent by written
instrument, which shall be delivered to the Trustee and the Fiscal Agent so
removed and to the successor Trustee and successor Fiscal Agent.
The Holders of Certificates entitled to a majority of the Voting
Rights may at any time remove the Trustee and the Fiscal Agent (and any removal
of the Trustee shall cause the Fiscal Agent to be automatically removed) and
appoint a successor Trustee and successor Fiscal Agent (each meeting the
requirements of Section 8.8) by written instrument or instruments, in eight
originals, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Depositor, one
complete set to the Master Servicer, one complete set to the Special Servicer,
one complete set to the Trustee so removed, one complete set to the removed
Fiscal Agent, one complete set to the successor Trustee so appointed and one
complete set to the successor Fiscal Agent so appointed. Such removal of the
Trustee and/or Fiscal Agent, if without cause, shall be effective upon the
payment to the Trustee and the Fiscal Agent of all reasonable costs and expenses
incurred by them in connection with such removal (which costs shall be paid as
an Additional Trust Fund Expense).
In the event of the resignation or removal of the Trustee, the Fiscal
Agent shall be entitled to resign, it being understood that the initial Fiscal
Agent shall not be obligated to act in such capacity hereunder at any time that
LaSalle National Bank is not the Trustee.
Any resignation or removal of the Trustee and Fiscal Agent and
appointment of a successor Trustee and, if such trustee is not rated by each
Rating Agency in one of its two highest long-term unsecured debt rating
categories, a successor Fiscal Agent pursuant to any of the provisions of this
Section 8.7 shall not become effective until acceptance of appointment by the
successor Trustee and, if necessary, Fiscal Agent as provided in Section 8.8.
SECTION 8.8. Successor Trustee.
Any successor Trustee and any successor Fiscal Agent appointed as
provided in Section 8.7 shall execute, acknowledge and deliver to the Depositor
and to the predecessor Trustee and predecessor Fiscal Agent, as the case may be,
instruments accepting their appointment hereunder, and thereupon the resignation
or removal of the predecessor Trustee and predecessor Fiscal Agent shall become
effective and such successor Trustee and successor Fiscal Agent, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with the like
effect as if originally named as Trustee herein, provided that each Rating
Agency shall have confirmed in writing that the appointment of such successor
Trustee and successor Fiscal Agent shall not result, in and of itself, in a
downgrading, withdrawal or qualification of the rating then assigned by such
Rating
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Agency to any Class of the Certificates. The cost, if any, of obtaining such
confirmation shall be paid by the Trustee that resigned or was removed, unless
the Trustee was removed without cause by the Holders of Certificates entitled to
a majority of the Voting Rights, in which case such costs shall be an Additional
Trust Fund Expense. The predecessor Trustee shall deliver to the successor
Trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Depositor, the predecessor Trustee and predecessor Fiscal
Agent shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor Trustee and successor Fiscal Agent all such rights, powers, duties
and obligations. No successor Trustee or successor Fiscal Agent shall accept
appointment as provided in this Section 8.8 unless at the time of such
acceptance such successor Trustee or successor Fiscal Agent shall be eligible
under the provisions of Section 8.6.
Upon acceptance of appointment by a successor Trustee or successor
Fiscal Agent as provided in this Section 8.8, the successor Trustee shall mail
notice of the succession of such Trustee and Fiscal Agent hereunder to all
Holders of Certificates at their addresses as shown in the Certificate Register.
SECTION 8.9. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be eligible under the provisions of Section
8.6, 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.
Any Person into which the Fiscal Agent may be merged or converted or with which
it may be consolidated or any corporation or bank resulting from any merger,
conversion or consolidation to which the Fiscal Agent shall be a party, or any
corporation or banking association succeeding to all or substantially all of the
corporate trust business of the Fiscal Agent shall be the successor of the
Fiscal Agent hereunder, provided that such corporation or bank shall be eligible
under the provisions of Section 8.6 without the execution or filing of any paper
or any farther act on the part of any of the parties hereto, anything to the
contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act (at the expense of the Trustee) as co-trustee or co-trustees,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust Fund, and to vest in such Person or Persons, in such
capacity, such title to the Trust Fund, or any part thereof, and, subject to the
other provisions of this Section 8.10, such powers, duties, obligations, rights
and trusts as the Depositor and the Trustee may consider necessary or desirable.
If the Depositor shall no longer be in existence or shall not have joined in
such
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appointment within 15 days after the receipt by it of a request so to do, or in
case an Event of Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. Except as required by
applicable law, the appointment of a co-trustee or separate trustee shall not
relieve the Trustee of its responsibilities hereunder. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor Trustee under Section 8.6 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 8.8.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act), except to
the extent that under any law of any jurisdiction in which any particular act or
acts are to be performed (whether as Trustee hereunder or as successor to the
Master Servicer hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co-trustee solely at the direction of the Trustee.
No trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement. The Depositor
and the Trustee acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee, except that if the Depositor is no
longer in existence, or if the separate trustee or co-trustee is an employee of
the Trustee, the Trustee acting alone may accept the resignation of or remove
any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Every such instrument shall be filed with the Trustee.
Each separate trustee and co-trustee, upon its acceptance of the trusts
conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Trustee or separately, as may
be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. In no
event shall any such separate trustee or co-trustee be entitled to any provision
relating to the conduct of, affecting the liability of, or affording protection
to such separate trustee or co-trustee that imposes a standard of conduct less
stringent than that imposed on the Trustee hereunder, affording greater
protection than that afforded to the Trustee hereunder or providing a greater
limit on liability than that provided to the Trustee hereunder.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of
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its estates, properties, rights, remedies and trusts hereunder shall vest in and
be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. Authenticating Agent.
The Trustee may appoint an Authenticating Agent to execute and to
authenticate Certificates. The Authenticating Agent must be acceptable to the
Depositor and the Master Servicer and must be a corporation organized and doing
business under the laws of the United States of America or any state, having a
principal office and place of business in a state and city acceptable to the
Depositor and the Master Servicer, having a combined capital and surplus of at
least $15,000,000, authorized under such laws to do a trust business and subject
to supervision or examination by federal or state authorities. The Trustee shall
serve as the initial Authenticating Agent and the Trustee hereby accepts such
appointment.
Any corporation into which the Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Authenticating Agent
shall be party, or any corporation succeeding to the corporate agency business
of the Authenticating Agent, shall be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
The Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee, the Depositor, the
Special Servicer and the Master Servicer. The Trustee may at any time terminate
the agency of the Authenticating Agent by giving written notice of termination
to the Authenticating Agent, the Depositor, the Special Servicer and the Master
Servicer. Upon receiving a notice of resignation or upon such a termination, or
in case at any time the Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 8.11, the Trustee promptly shall
appoint a successor Authenticating Agent, which shall be acceptable to the
Master Servicer and the Depositor, and shall mail notice of such appointment to
all Certificateholders. Any successor Authenticating Agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers,
duties and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent herein. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section
8.11.
The Authenticating Agent shall have no responsibility or liability
for any action taken by it as such at the direction of the Trustee. The Trustee
shall pay the Authenticating Agent reasonable compensation from its own funds.
SECTION 8.12. Appointment of Custodians.
(a) The Trustee may appoint one or more Custodians to hold all or a
portion of the Mortgage Files as agent for the Trustee, by entering into a
Custodial Agreement. The Trustee agrees to comply with the terms of each
Custodial Agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Certificateholders. Each Custodial Agreement
may be amended only as provided in Section 11.7. The Trustee shall pay
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the Custodian reasonable compensation from its own funds. The
Trustee shall serve as the initial Custodian.
(b) Each Custodian shall be a depository institution subject to
supervision by federal or state authority, shall have a combined capital and
surplus of at least $10,000,000, shall have a long-term senior unsecured debt
rating of at least "BBB" from S&P and "Baa2" from Moody's, unless each of the
Rating Agencies has confirmed in writing (the cost, if any, of obtaining such
confirmation to be paid by the Trustee; provided that such appointment was made
by the Trustee in its sole discretion and otherwise by the Trust Fund) that a
lower rating shall not result, in and of itself, in a downgrading, withdrawal or
qualification of the rating then assigned by such Rating Agency to any Class of
the Certificates, and shall be qualified to do business in the jurisdiction in
which it holds any Mortgage File.
(c) Each Custodian shall maintain a fidelity bond and shall keep in
force during the term of this Agreement a policy or policies of insurance
covering loss occasioned by the errors and omissions of its officers and
employees in connection with its obligations hereunder. All fidelity bonds and
policies of errors and omissions insurance obtained under this Section 8.12(c)
shall be issued by a Qualified Insurer. Each Custodian shall be deemed to have
complied with the requirement for a fidelity bond if one of its Affiliates has
such fidelity bond coverage and, by the terms of such fidelity bond, the
coverage afforded thereunder extends to the Custodian. Notwithstanding the
foregoing, so long as the long-term unsecured debt obligations of the Custodian
or its corporate parent have been rated "A" or better by S&P and "A2" or better
by Moody's, the Custodian shall be entitled to provide self-insurance or obtain
from its corporate parent adequate insurance, as applicable, with respect to its
obligation hereunder to maintain a fidelity bond or an errors and omissions
insurance policy.
SECTION 8.13. Fiscal Agent Appointed; Concerning the Fiscal Agent.
(a) The Trustee hereby appoints ABN AMRO Bank N.V. as the initial
Fiscal Agent hereunder for the purposes of exercising and performing the
obligations and duties imposed upon the Fiscal Agent by Sections 3.22 and 4.5.
(b) The Fiscal Agent undertakes to perform such duties and only such
duties as are specifically set forth in Sections 3.22 and 4.5.
(c) No provision of this Agreement shall be construed to relieve
the Fiscal Agent from liability for its own negligent failure to act, bad faith
or its own willful misfeasance; provided, however, that (i) the duties and
obligations of the Fiscal Agent shall be determined solely by the express
provisions of Sections 3.22 and 4.5, the Fiscal Agent shall not be liable except
for the performance of such duties and obligations, no implied covenants or
obligations shall be read into this Agreement against the Fiscal Agent and, in
the absence of bad faith on the part of the Fiscal Agent, the Fiscal Agent may
conclusively rely, as to the truth and correctness of the statements or
conclusions expressed therein, upon any resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Fiscal Agent by any Person and which on their face do not contradict the
requirements of this Agreement, and (ii) the provisions of clauses (ii) and (iv)
of Section 8.1(c) shall apply to the Fiscal Agent.
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(d) Except as otherwise provided in Section 8.1(c), the Fiscal Agent
also shall have the benefit of provisions of clauses (i), (ii), (iii) (other
than the proviso thereto), (iv), (v) (other than the proviso thereto) and (vi)
of Section 8.2(a).
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust.
(a) Subject to Section 9.3, the Trust Fund and the respective obliga-
tions and responsibilities of the Depositor, the Trustee, the Master Servicer,
the Special Servicer and the Fiscal Agent hereunder (other than the obligation
of the Trustee to make payments to Certificateholders on the final Distribution
Date pursuant to Article IV or otherwise as set forth in Section 9.2 and other
than the obligations in the nature of information or tax reporting or
tax-related administrative or judicial contests or proceedings) shall terminate
on the earlier of (i) the later of (A) the final payment or other liquidation of
the last Mortgage Loan held by the Trust Fund and (B) the disposition of the
last REO Property held by the Trust and (ii) the sale of all Mortgage Loans and
any REO Properties held by the Trust Fund in accordance with Section 9.1(b);
provided that in no event shall the Trust Fund created hereby continue beyond
the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
(b) As soon as reasonably practical, the Trustee shall give the
Holders of the Controlling Class, the Depositor, the Master Servicer, the
Special Servicer and the Majority Certificateholder of the Class R-I
Certificates notice of the date when the aggregate Certificate Balance of the
Principal Balance Certificates, after giving effect to distributions of
principal made on the next Distribution Date, will be less than or equal to 1%
of the aggregate principal balance of the Mortgage Loans as of the Cut-off Date.
The Holders of the Controlling Class representing a majority Percentage Interest
in such Class, the Depositor, the Master Servicer, the Special Servicer, and the
Majority Certificateholder of the Class R-I Certificates shall thereafter be
entitled, in that order of priority, to purchase, in whole only, the Mortgage
Loans and any REO Properties then remaining in the Trust Fund. If any such party
desires to exercise such option, it will notify the Trustee who will notify any
other such party with a prior right to exercise such option. If any such party
that has been so provided notice by the Trustee notifies the Trustee within ten
Business Days after receiving notice of the proposed purchase that it wishes to
purchase the assets of the Trust, then such party (or, in the event that more
than one of such parties notifies the Trustee that it wishes to purchase the
assets of the Trust, the party with the first right to purchase the assets of
the Trust) may purchase the assets of the Trust in accordance with this
Agreement. The "Termination Price" shall equal the sum of (i) the aggregate
Repurchase Price of all the remaining Mortgage Loans (other than REO Mortgage
Loans and Mortgage Loans as to which a Final Recovery Determination has been
made) held by the Trust, plus (ii) the appraised value of each remaining REO
Property, if any, held by the Trust (such appraisal to be conducted in
accordance with MAI standards by an appraiser with at least
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ten years experience in the related property type and in the jurisdiction in
which the REO Property is located selected by the Master Servicer and approved
by the Trustee), minus (iii) solely in the case where the Master Servicer is
effecting such purchase, the aggregate amount of unreimbursed Advances made by
the Master Servicer, together with any Advance Interest Amount accrued and
payable to the Master Servicer in respect of such Advances and any unpaid Master
Servicing Fees remaining outstanding (which items shall be deemed to have been
paid or reimbursed to the Master Servicer in connection with such purchase) (or,
solely in the case where the Special Servicer is effecting such purchase, any
unpaid Special Servicing Fees remaining outstanding, which items shall be deemed
to have been paid or reimbursed to the Special Servicer in connection with such
purchase).
In the event that the Holders of the Controlling Class representing a
majority Percentage Interest in such Class, the Depositor, the Master Servicer,
the Special Servicer, or the Majority Certificateholder of Class R-I
Certificates purchase all of the remaining Mortgage Loans and REO Properties
held by the Trust in accordance with the preceding paragraph, the party
effecting such purchase (the "Final Purchaser") shall (i) deposit in the
Collection Account not later than the Determination Date relating to the
Distribution Date on which the final distribution on the Certificates is to
occur, an amount in immediately available funds equal to the Termination Price
and (ii) deliver notice to the Trustee of its intention to effect such purchase.
Upon confirmation that such deposit has been made, the Trustee shall release or
cause to be released to the Final Purchaser or its designee the Mortgage Files
for the remaining Mortgage Loans and shall execute all assignments, endorsements
and other instruments furnished to it by the Final Purchaser without recourse,
representation or warranty as shall be necessary to effectuate transfer of the
remaining Mortgage Loans and REO Properties held by the Trust, in each case
without representation or warranty by the Trustee. All Mortgage Files for the
remaining Mortgage Loans and REO Properties shall be delivered to the Final
Purchaser or its designee.
(c) As a condition to the purchase of the assets of the Trust pur-
suant to Section 9.1(b), the Final Purchaser shall deliver to the Trustee an
Opinion of Counsel, which shall be at the expense of the Final Purchaser,
stating that such termination will be a "qualified liquidation" under Section
860F(a)(4) of the Code. Such purchase shall be made in accordance with Section
9.3.
SECTION 9.2. Procedure Upon Termination of Trust.
(a) Notice of any termination pursuant to the provisions of Section
9.1, specifying the Distribution Date upon which the final distribution shall be
made, shall be given promptly by the Trustee to each Rating Agency and each
Certificateholder by first class mail at least 20 days prior to the date of such
termination. Such notice shall specify (A) the Distribution Date upon which
final distribution on the Certificates will be made and (B) that the Record Date
otherwise applicable to such Distribution Date is not applicable, distribution
being made only upon presentation and surrender of the Certificates at the
office or agency of the Trustee therein specified. The Trustee shall give such
notice to the Depositor and the Certificate Registrar at the time such notice is
given to Certificateholders. Upon any such termination, the Trustee shall
terminate, or request the Master Servicer to terminate, the Collection Account
and the
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Distribution Account and any other account or fund maintained with respect to
the Certificates, subject to the Trustee's obligation hereunder to hold all
amounts payable to the nontendering Certificateholders in trust without interest
pending such payment.
(b) On the final Distribution Date, the Trustee shall distribute
to each Certificateholder that presents and surrenders its Certificates all
amounts payable on such Certificates on such final Distribution Date in
accordance with Article IV.
SECTION 9.3. Additional Trust Termination Requirements.
(a) In the event of a purchase of all the remaining Mortgage Loans
and REO Properties held by the Trust in accordance with Section 9.1 or any other
termination of the Trust under this Article IX, the Trust and each REMIC Pool
shall be terminated in accordance with the following additional requirements,
unless in the case of a termination under Section 9.1 hereof, the Final
Purchaser delivers to the Trustee an Opinion of Counsel at the expense of the
Final Purchaser (or, in the case of any other termination, the Trustee shall
obtain such Opinion of Counsel at the expense of the Trust Fund) addressed to
the Depositor and the Trustee to the effect that the failure of the Trust to
comply with the requirements of this Section 9.3 will not (i) result in the
imposition of taxes on "prohibited transactions" of any Trust REMIC under the
REMIC Provisions or (ii) cause any Trust REMIC to fail to qualify as a REMIC at
any time that any Certificates are outstanding:
(i) within 89 days prior to the final Distribution Date set forth
in the notice given by the Trustee under Section 9.2, the Trustee shall adopt a
plan of complete liquidation prepared by the Final Purchaser and meeting the
requirements for a qualified liquidation for each REMIC Pool under Section 860F
of the Code and any regulations thereunder;
(ii) during such 90-day liquidation period and at or after the
adoption of the plans of complete liquidation and at or prior to the final
Distribution Date, the Trustee shall sell all of the remaining Mortgage Loans
and any REO Properties held by the Trust to the Final Purchaser for cash in an
amount equal to the Termination Price, such cash shall be deposited into the
Collection Account, shall be deemed distributed on the REMIC I Regular Interests
in retirement thereof, shall be deemed distributed on the REMIC II Regular
Interests in retirement thereof, and shall be distributed to the
Certificateholders in retirement of the Certificates;
(iii) at the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be distributed
or credited, to the Holders of the related Class of Residual Certificates all
cash on hand in each REMIC Pool after making such final deemed payment or
payments (other than cash retained to meet claims), and REMIC I, REMIC II and
REMIC III shall terminate at that time; and
(iv) in no event may the final payment on the REMIC I Interests,
the REMIC II Interests, the REMIC III Regular Certificates, or the Class R-III
Certificates be made after the 89th day from the date on which such plans of
complete liquidation are adopted. The
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Trustee shall specify the first day of the 90-day liquidation period in a
statement attached to the final Tax Return for each REMIC Pool pursuant to
Treasury Regulation Section 1.860F-1.
(b) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the Trustee to adopt a plan of complete liquidation for each
of REMIC I, REMIC II and REMIC III prepared by the Final Purchaser in accordance
with the foregoing requirements, which authorization shall be binding upon all
successor Certificateholders.
ARTICLE X
REMIC ADMINISTRATION; GRANTOR TRUST
SECTION 10.1. REMIC Election.
(a) The parties intend that each of REMIC I, REMIC II and REMIC
III shall constitute, and that the affairs of each of REMIC I, REMIC II and
REMIC III shall be conducted so as to qualify it as, a "real estate mortgage
investment conduit" as defined in, and in accordance with, the REMIC Provisions,
and the provisions hereof shall be interpreted consistently with this intention.
In furtherance of such intention, the Trustee shall, to the extent permitted by
applicable law, act as agent, and is hereby appointed to act as agent, of each
of REMIC I, REMIC II and REMIC III and shall, on behalf of each of REMIC I,
REMIC II and REMIC III, make an election to treat each of REMIC I, REMIC II and
REMIC III as a REMIC on Form 1066 for its first taxable year, in accordance with
the REMIC Provisions.
(b) The REMIC I Regular Interests are hereby designated as "regular
interests" in REMIC I within the meaning of Section 860G(a)(1) of the Code, and
the Class R-I Certificates are hereby designated as the sole class of "residual
interests" in REMIC I within the meaning of Section 860G(a)(2) of the Code. The
REMIC II Regular Interests shall be designated as "regular interests" in REMIC
II within the meaning of Section 860G(a)(1) of the Code, and the Class R-II
Certificates are hereby designated as the sole class of "residual interests" in
REMIC II within the meaning of Section 860G(a)(2) of the Code. The Class A-1,
Class A-2, Class X, Class B, Class C, Class D, Class E, Class F, Class G, Class
H, Class J, Class K, Class L, Class M and Class N Certificates are hereby
designated as "regular interests" in REMIC III within the meaning of Section
860G(a)(1) of the Code and the Class R-III Certificates are hereby designated as
the sole class of "residual interests" in REMIC III within the meaning of
Section 860G(a)(2) of the Code. The Class X Certificates represent a "specified
portion" of the interest payments on the Class WAC-II Interest, within the
meaning of Treasury Regulations Section 1.860G-1(a)(2) of the Code.
(c) The Closing Date is hereby designated as the "Startup Day" of
REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of the
Code. The "latest possible maturity date" of the REMIC I Regular Interests, the
REMIC II Regular Interests and the REMIC III Regular Certificates for purposes
of Code Section 860G(a)(1) is the Rated Final Distribution Date.
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SECTION 10.2. REMIC Compliance.
(a) The Trustee shall cause to be prepared, signed, and timely filed
with the Internal Revenue Service, on behalf of each REMIC Pool, an application
for a taxpayer identification number for such REMIC Pool on Internal Revenue
Service Form SS-4. The Trustee shall prepare, sign and file, or cause to be
prepared and signed and filed, all required Tax Returns for each of REMIC I,
REMIC II and REMIC III, using a calendar year as the taxable year for each of
REMIC I, REMIC II and REMIC III, when and as required by the REMIC Provisions
and other applicable federal, state or local income tax laws.
The Trustee shall, within 30 days of the Closing Date, furnish or
cause to be furnished to the Internal Revenue Service, on Form 8811 or as
otherwise may be required by the Code, the name, title and address of the Person
that the holders of the Certificates may contact for tax information relating
thereto (and the Trustee shall act as the representative of each of REMIC I,
REMIC II and REMIC III for this purpose), together with such additional
information as may be required by such Form, and shall update such information
at the time or times and in the manner required by the Code (and the Depositor
agrees within 10 Business Days of the Closing Date, to provide any information
reasonably requested by the Trustee and necessary to make such filing);
(b) The Trustee shall prepare and forward, or cause to be prepared
and forwarded, to the Certificateholders and the Internal Revenue Service and
applicable state and local tax authorities all information reports as and when
required to be provided to them in accordance with the REMIC Provisions and
applicable state and local law. If the filing or distribution of any documents
of an administrative nature not addressed in Section 10.1 or Section 10.2(a) is
then required by the REMIC Provisions in order to maintain the status of REMIC
I, REMIC II or REMIC III as a REMIC or is otherwise required by the Code or
applicable state or local law, the Trustee shall prepare, sign and file or
distribute, or cause to be prepared and signed and filed or distributed, such
documents with or to such Persons when and as required by the REMIC Provisions
or the Code or comparable provisions of state and local law.
(c) The Holder of the largest Percentage Interest in the Class R-I,
Class R-II or Class R-III Certificates shall be the tax matters person of REMIC
I, REMIC II or REMIC III, respectively, pursuant to Treasury Regulation Section
1.860F-4(d); provided, however, that any amendment to such Regulation which
requires that another Person be designated the tax matters person shall be
followed from and after the effective date of such amendment. If more than one
Holder should hold an equal Percentage Interest in the Class R-I, Class R-II or
Class R-III Certificates larger than that held by any other Holder, the first
such Holder to have acquired such Class R-I, Class R-II or Class R-III
Certificates shall be such tax matters person. The Trustee shall act as
attorney-in-fact and agent for the tax matters person of each of REMIC I, REMIC
II and REMIC III, and each Holder of a Percentage Interest in the Class R-I,
Class R-II or Class R-III Certificates, by acceptance thereof, is deemed to have
consented to the Trustee's appointment in such capacity and agrees to execute
any documents required to give effect thereto, and any fees and expenses
incurred by the Trustee in connection with any audit or administrative or
judicial proceeding shall be paid by the Trust Fund.
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(d) The Trustee shall not intentionally take any action or intention-
ally omit to take any action if, in taking or omitting to take such action, the
Trustee knows that such action or omission (as the case may be) would cause the
termination of the REMIC status of REMIC I, REMIC II or REMIC III or the
imposition of tax on REMIC I, REMIC II or REMIC III other than a tax on income
expressly permitted or contemplated to be received by the terms of this
Agreement (any of the foregoing, an "Adverse REMIC Event"). In this regard, the
Trustee shall not permit the creation of any "interests" (within the meaning of
Treasury Regulation Section 1.860D-1(b)(1)) in any of the REMIC Pools other than
the REMIC I Regular Interests, the REMIC II Regular Interests and the interests
evidenced by the Certificates. Notwithstanding any provision of this paragraph
to the contrary, the Trustee shall not be required to take any action that the
Trustee in good faith believes to be inconsistent with any other provision of
this Agreement, nor shall the Trustee be deemed in violation of this paragraph
if it takes any action expressly required or authorized by any other provision
of this Agreement, and the Trustee shall have no responsibility or liability
with respect to any act or omission of the Depositor or the Master Servicer or
the Special Servicer which causes the Trustee to be unable to comply with any of
Sections 10.1(a), 10.2(a), 10.2(b), 10.2(e) or which results in any action
contemplated by the next succeeding paragraph.
In this regard the Trustee shall (i) exercise reasonable care not to
allow the occurrence of any "prohibited transactions" with the meaning of Code
Section 860F(a), unless the party seeking such action shall have delivered to
the Trustee an Opinion of Counsel (at such party's expense) that such occurrence
would not (A) result in a taxable gain, (B) otherwise subject REMIC I, REMIC II
or REMIC III to tax (other than a tax at the highest marginal corporate tax rate
on net income from foreclosure property), or (C) cause either REMIC I, REMIC II
or REMIC III to fail to qualify as a REMIC; and (ii) exercise reasonable care
not to allow the Trust Fund to receive income from the performance of services
or from assets not permitted under the REMIC Provisions to be held by a REMIC
(provided, however, that the receipt of any income expressly permitted or
contemplated by the terms of this Agreement shall not be deemed to violate this
clause).
None of the Master Servicer, the Special Servicer and the Depositor
shall be responsible or liable (except in connection with any act or omission
referred to in the two preceding sentences) for any failure by the Trustee to
comply with the provisions of this Section 10.2.
(e) The Trustee shall maintain such records relating to each of REMIC
I, REMIC II and REMIC III as may be necessary to demonstrate that each REMIC has
complied with the REMIC provisions and to prepare the foregoing returns,
schedules, statements or information, such records, for federal income tax
purposes, to be maintained on a calendar year and on an accrual basis.
(f) The Depositor, the Special Servicer and the Master Servicer shall
cooperate in a timely manner with the Trustee in supplying any information
within the Depositor's, the Special Servicer's or the Master Servicer's control
(other than any confidential
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information) that is reasonably necessary to enable the Trustee to perform its
duties under this Section 10.2.
(g) None of the Depositor, Trustee, Fiscal Agent, Special Servicer
or Master Servicer shall enter into any arrangement by which the Trust Fund will
receive a fee or other compensation for services other than as specifically
contemplated herein.
SECTION 10.3. Imposition of Tax on the Trust Fund.
(a) In the event that any tax, including interest, penalties or
assessments, additional amounts or additions to tax (collectively "Taxes"), is
imposed on REMIC I, REMIC II or REMIC III, such tax shall be charged against
amounts otherwise distributable to the Holders of the Certificates; provided,
that any taxes imposed on any net income from foreclosure property pursuant to
Code Section 860G(d) or any similar tax imposed by a state or local jurisdiction
shall instead be treated as an expense of the related REO Property in
determining Net REO Proceeds with respect to such REO Property (and until such
Taxes are paid, the Master Servicer from time to time shall withdraw from the
Collection Account amounts reasonably determined by the Special Servicer to be
necessary to pay such Taxes, which the Master Servicer shall maintain in a
separate, non-interest-bearing account, and the Master Servicer shall deposit in
the Collection Account the excess determined by the Master Servicer from time to
time of the amount in such account over the amount necessary to pay such Taxes)
and shall be paid therefrom. Except as provided in the preceding sentence, the
Trustee is hereby authorized to and shall retain or cause to be retained from
Available Funds sufficient funds to pay or provide for the payment of, and to
actually pay, such Taxes as are legally owed by REMIC I, REMIC II and REMIC III
(but such authorization shall not prevent the Trustee from contesting, at the
expense of the Trust Fund, any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings).
(b) The Trustee is hereby authorized to and shall segregate or cause
to be segregated, in a separate non-interest bearing account, (i) the net income
from any "prohibited transaction" under Code Section 860F(a) or (ii) the amount
of any contribution to REMIC I, REMIC II or REMIC III after the Startup Day that
is subject to tax under Code Section 860G(d) and use such income or amount, to
the extent necessary, to pay such tax, such amounts to be segregated from the
Collection Account with respect to any such net income of or contribution to
REMIC I and REMIC II and from the Distribution Account with respect to any such
net income of or contribution to REMIC III (and return the balance thereof, if
any, to the Collection Account or the Distribution Account, as the case may be).
(c) The Holders of the Class R-I, Class R-II and Class R-III Certi-
ficates shall pay when due their pro rata share of any and all taxes, interest,
penalties or assessments, additional payments or additions to tax imposed on
REMIC I, REMIC II or REMIC III, as applicable, or their respective assets or
transactions, including, without limitation, "prohibited transaction" taxes, as
defined in Section 860F of the Code, any tax on contributions imposed by Section
860G(d) of the Code, and any tax on "net income from foreclosure property" as
defined in Section 860(G)(c) of the Code. To the extent that any such Taxes are
not paid by the Class R-I, Class R-II or Class R-III Certificateholders,
respectively, and such Taxes are paid to the
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Internal Revenue Service or any state or local taxing authority, the Trustee
shall retain an equal amount from future amounts otherwise distributable to the
Holders of the Class R-I, Class R-II or Class R-III Certificates, as the case
may be, and shall distribute such retained amounts to the Holders of REMIC I
Regular Interests, REMIC II Regular Interests or REMIC III Regular Certificates,
as applicable, until they are fully reimbursed and then to the Holders of the
Class R-I, Class R-II or Class R-III Certificates, as applicable. None of the
Master Servicer, the Special Servicer and the Trustee shall be responsible for
any Taxes imposed on REMIC I, REMIC II or REMIC III, in any case, except to the
extent such Taxes are attributable to a breach of a representation or warranty
of the Master Servicer or the Special Servicer or an act or omission of the
Master Servicer, the Special Servicer or the Trustee in contravention of this
Agreement, unless the Master Servicer, Special Servicer or Trustee would be
entitled to indemnification under Section 6.3 in the case of the Master Servicer
or Special Servicer or Section 8.5, in the case of the Trustee. Notwithstanding
anything in this Agreement to the contrary, in each such case, the Master
Servicer and the Special Servicer shall not be responsible for the Trustee's
breaches, acts or omissions, and the Trustee shall not be responsible for the
breaches, acts or omissions of the Master Servicer or the Special Servicer.
SECTION 10.4. Prohibited Transactions and Activities.
(a) Following the Start-up Day, the Trustee shall not, except as
expressly required by any provision of this Agreement, accept any contribution
of assets to the Trust Fund unless the Trustee shall have received an Opinion of
Counsel (the costs of obtaining such opinion to be borne by the Person
requesting such contribution) to the effect that the inclusion of such assets in
the Trust Fund will not cause REMIC I, REMIC II or REMIC III to fail to qualify
as a REMIC at any time that any Certificates are outstanding or subject REMIC I,
REMIC II or REMIC III to any tax under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.
SECTION 10.5. Grantor Trust Provisions.
There is hereby established a trust which shall be part of the Trust
Fund and which shall hold the Contingent Interest, the Grantor Trust Collection
Account and the Grantor Trust Distribution Account (the "Grantor Trust Assets"),
which assets shall be excluded from REMIC I, REMIC II and REMIC III. The Class
A-1, Class X and Class V Certificates represent undivided beneficial interests
in specified portions of the Grantor Trust Assets, entitled to the distributions
set forth in Section 4.7 hereof, and such Certificates in the aggregate
represent beneficial ownership of 100% of the Grantor Trust Assets. The Trustee
shall treat such assets as a grantor trust under Subpart E of Part 1 of
Subchapter J of the Code, shall account for such assets separately from any
other Trust Fund assets and shall perform all tax reporting obligations with
respect to the Grantor Trust.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 11.2. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right to institute any suit,
action or proceeding in equity or at law upon or under or with respect to this
Agreement or the Mortgage Loans, unless, with respect to this Agreement, such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates representing a majority of the aggregate Voting Rights
allocated to each affected Class of Certificates shall have made written request
upon the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 30 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding. It is understood and intended,
and expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
of any Class shall have any right in any manner whatever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Holders of Certificates of such Class. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
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SECTION 11.3. Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 11.4. Notices.
All demands, notices and communications hereunder shall be in
writing, shall be deemed to have been given upon receipt (or, in the case of
notice by telecopy, upon confirmation of receipt) as follows:
If to the Trustee or the Fiscal Agent, to:
LaSalle National Bank
135 South LaSalle Street, Suite 1625
Chicago, IL 60674-4107
Attention: Asset-Backed Securities Trust
Services Group - Commercial Mortgage
Acceptance Corp. Commercial Mortgage
Pass-Through Certificates, Series 1998-C1
If to the Depositor, to:
Commercial Mortgage Acceptance Corp.
210 West 10th Street
6th Floor
Kansas City, Missouri 64105
Attention: President
Telecopy No.: (816) 435-2326
With copies to:
Morrison & Hecker L.L.P.
2600 Grand Avenue
Kansas City, Missouri 64108-4606
Attention: William A. Hirsch, Esq.
Telecopy No.: (816) 474-4208
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If to the Master Servicer or the Special Servicer, to:
Midland Loan Services, Inc.
210 West 10th Street
6th Floor
Kansas City, Missouri 64105
Attention: President
Telecopy No.: (816) 435-2326
With copies to:
Morrison & Hecker L.L.P.
2600 Grand Avenue
Kansas City, Missouri 64108-4606
Attention: William A. Hirsch, Esq.
Telecopy No.: (816) 474-4208
If to the Seller (for the PNC Loans), to:
PNC Bank, National Association
One PNC Plaza, 249 Fifth Avenue
Pittsburgh, PA 15265
Attn: Douglas Danforth
Telecopy No.: (412) 705-1645
If to the Seller (for the RFC Loans), to:
Residential Funding Corporation
8400 Normandale Lake Blvd., Suite 600
Minneapolis, MN 55437
Attn: Robert Conway
Telecopy No.: (612) 806-6877
If to the Seller (for the MSMC Loans), to:
Morgan Stanley Mortgage Capital Inc.
1585 Broadway
New York, NY 10036
Attn: Andrew Berman
Telecopy No.: (212) 761-0509
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If to the Seller (for the Midland Loans) to:
Midland Loan Services, Inc.
210 West 10th Street
Kansas City, Missouri 64105
Attention: President
Telecopy No.: (816) 435-2326
With copies to:
Morrison & Hecker L.L.P.
2600 Grand Avenue
Kansas City, Missouri 64108-4606
Attention: William A. Hirsch, Esq.
Telecopy No.: (816) 474-4208
If to any Certificateholder, to:
the address set forth in the
Certificate Register,
or, in the case of the parties to this Agreement, to such other address as such
party shall specify by written notice to the other parties hereto.
SECTION 11.5. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then, to the
extent permitted by applicable law, such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 11.6. Notice to the Depositor, the Operating Adviser and Each
Rating Agency.
(a) The Trustee shall use its best efforts to promptly provide
written notice to the Depositor, the Operating Adviser and 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 merger, consolidation, resignation or termination of
the Master Servicer, Special Servicer, Trustee or Fiscal Agent;
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(iv) the repurchase or substitution of Mortgage Loans pursuant
to Section 2.3;
(v) the final payment to any Class of Certificateholders;
(vi) each report to Certificateholders described in Section 4.4;
(b) The Master Servicer and the Special Servicer shall promptly
furnish to the Operating Adviser and each Rating Agency copies of the following:
(i) each of its annual statements as to compliance described
in Section 3.14;
(ii) each of its annual independent public accountants' servicing
reports described in Section 3.15.
(iii) annual reports of each Borrower with respect to the net
operating income and occupancy rates required to be delivered by the related
Mortgage and actually received by the Master Servicer or the Special Servicer,
if applicable, pursuant thereto to the extent consistent with applicable law and
the related Mortgage Loan Documents.
(c) The Special Servicer, shall furnish the Operating Adviser and
each Rating Agency with such information with respect to any Specially Serviced
Mortgage Loan as the Operating Adviser or such Rating Agency shall request and
which the Special Servicer can obtain to the extent consistent with applicable
law and the related Mortgage Loan Documents.
(d) Notices to each Rating Agency shall be addressed as follows:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: Commercial MBS Monitoring Department
Standard & Poor's Ratings Services
25 Broadway
New York, New York 10004
Attention: Commercial Mortgage Surveillance Manager
or in each case to such other address as any Rating Agency shall specify by
written notice to the parties hereto.
SECTION 11.7. Amendment.
This Agreement or any Custodial Agreement may be amended from time to
time by the Depositor, the Master Servicer, the Special Servicer, the Trustee
and the Fiscal Agent,
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without the consent of any of the Certificateholders, (i) to cure any ambiguity,
(ii) to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or in the Prospectus
Supplement (or in the Prospectus referenced in the Prospectus Supplement), (iii)
to amend any provision hereof to the extent necessary or desirable to maintain
the rating or ratings assigned to each of the Classes of REMIC III Regular
Certificates by each Rating Agency, or (iv) to make any other provisions with
respect to matters or questions arising under this Agreement which (x) shall not
be inconsistent with the provisions of this Agreement, (y) shall not result in
the downgrading, withdrawal or qualification of the rating or ratings then
assigned to any outstanding Class of Certificates, as confirmed by each Rating
Agency in writing (the cost, if any, of obtaining such confirmation shall be
paid by the Person requesting such amendment unless such amendment is in the
best interest of the Trust Fund in which case it will be paid by the Trust
Fund), and (z) shall not adversely affect in any material respect the interests
of any Certificateholder.
This Agreement or any Custodial Agreement may also be amended from
time to time by the Depositor, the Master Servicer, the Special Servicer, the
Trustee and the Fiscal Agent with the consent of the Holders of each of the
Classes of REMIC III Regular Certificates representing not less than 51% of the
aggregate Voting Rights allocated to all Classes of Certificates affected by the
amendment for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Certificateholders; provided, however, that no such
amendment shall:
(i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans which are required to be distributed on
any Certificate without the consent of each affected Certificateholder;
(ii) change the percentages of Voting Rights of Holders of
Certificates which are required to consent to any action or inaction under this
Agreement, without the consent of the Holders of all Certificates then
outstanding; or
(iii) alter the obligations of the Master Servicer, the
Trustee or the Fiscal Agent to make a P&I Advance or Servicing Advance without
the consent of the Holders of all Certificates representing all of the Voting
Rights of the Class or Classes affected thereby.
Further, the Depositor, the Master Servicer, the Special Servicer,
the Trustee and the Fiscal Agent, at any time and from time to time, without the
consent of the Certificateholders, may amend this Agreement or any Custodial
Agreement to modify, eliminate or add to any of its provisions to such extent as
shall be necessary to maintain the qualification of the Trust REMICs as three
separate REMICs, or to prevent the imposition of any additional material state
or local taxes, at all times that any Certificates are outstanding; provided,
however, that such action, as evidenced by an Opinion of Counsel (obtained at
the expense of the Trust Fund), is necessary or helpful to maintain such
qualification or to prevent the imposition of any such taxes, and would not
adversely affect in any material respect the interest of any Certificateholder.
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In the event that neither the Depositor nor the successor thereto, if
any, is in existence, any amendment under this Section 11.7 shall be effective
with the consent in writing of the Trustee, the Fiscal Agent, the Master
Servicer, the Special Servicer, and, to the extent required by this Section, the
Certificateholders and each Rating Agency.
Notwithstanding any other provision of this Agreement, for purposes
of the giving or withholding of consents pursuant to this Section 11.7,
Certificates registered in the name of the Depositor, the Master Servicer, the
Special Servicer or any of their respective Affiliates shall be entitled to the
same Voting Rights with respect to matters described above as they would if any
other Person held such Certificates.
Promptly after the execution of any amendment, the Trustee shall
furnish written notification of the substance of such amendment to each
Certificateholder, the Operating Adviser and each Rating Agency (with a copy of
such amendment to each Rating Agency).
It shall not be necessary for the consent of Certificateholders under
this Section 11.7 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof. The
method of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe; provided, however , that such method
shall always be by affirmation and in writing.
Notwithstanding any contrary provision of this Agreement, no
amendment shall be made to this Agreement or any Custodial Agreement unless the
Master Servicer and the Trustee shall have received an Opinion of Counsel, at
the expense of the party requesting such amendment (or, if such amendment is
required by any Rating Agency to maintain the rating issued by it or requested
by the Trustee for any purpose described in clause (i) or (ii) of the first
sentence of this Section, then at the expense of the Trust Fund), to the effect
that such amendment will not cause REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding or cause a
tax to be imposed on the Trust Fund under the REMIC Provisions (other than a tax
at the highest marginal corporate tax rate on net income from foreclosure
property) or cause the Grantor Trust to fail to be treated as such for federal
income tax purposes.
Prior to the execution of any amendment to this Agreement or any
Custodial Agreement, the Trustee, the Fiscal Agent, the Special Servicer and the
Master Servicer shall be entitled to receive and rely conclusively upon an
Opinion of Counsel, at the expense of the party requesting such amendment (or,
if such amendment is required by any Rating Agency to maintain the rating issued
by it or requested by the Trustee for any purpose described in clause (i), (ii)
or (iv) (which do not modify or otherwise relate solely to the obligations,
duties or rights of the Trustee) of the first sentence of this Section, then at
the expense of the Trust Fund) stating that the execution of such amendment is
authorized or permitted by this Agreement. The Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trustee's own
rights, duties or immunities under this Agreement.
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SECTION 11.8. Confirmation of Intent.
It is the express intent of the parties hereto that the conveyance of
the Trust Fund (including the Mortgage Loans) by the Depositor to the Trustee on
behalf of Certificateholders as contemplated by this Agreement and the sale by
the Depositor of the Certificates be, and be treated for all purposes as, a sale
by the Depositor of the undivided portion of the beneficial interest in the
Trust Fund represented by the Certificates. It is, further, not the intention of
the parties that such conveyance be deemed a pledge of the Trust Fund by the
Depositor to the Trustee to secure a debt or other obligation of the Depositor.
However, in the event that, notwithstanding the intent of the parties, the Trust
Fund is held to continue to be property of the Depositor then (a) this Agreement
shall also be deemed to be a security agreement under applicable law; (b) the
transfer of the Trust Fund provided for herein shall be deemed to be a grant by
the Depositor to the Trustee on behalf of Certificateholders of a first priority
security interest in all of the Depositor's right, title and interest in and to
the Trust Fund and all amounts payable to the holders of the Mortgage Loans in
accordance with the terms thereof and all proceeds of the conversion, voluntary
or involuntary, of the foregoing into cash, instruments, securities or other
property, including, without limitation, all amounts from time to time held or
invested in the Collection Account, the REO Accounts, the Reserve Accounts, the
Grantor Trust Collection Account, the Grantor Trust Distribution Account and the
Distribution Account, whether in the form of cash, instruments, securities or
other property; (c) the possession by the Trustee (or the Custodian or any other
agent on its behalf) of Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the Missouri and Illinois Uniform
Commercial Codes; and (d) notifications to Persons holding such property, and
acknowledgments, receipts or confirmations from Persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the Trustee
for the purpose of perfecting such security interest under applicable law. Any
assignment of the interest of the Trustee pursuant to any provision hereof shall
also be deemed to be an assignment of any security interest created hereby. The
Depositor shall, and upon the request of the Master Servicer, the Trustee shall,
to the extent consistent with this Agreement (and at the expense of the Trust
Fund), take such actions as may be necessary to ensure that, if this Agreement
were deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement. It is the intent of the parties that such a security interest would
be effective whether any of the Certificates are sold, pledged or assigned.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Special
Servicer, the Trustee and the Fiscal Agent have caused their names to be signed
to this Pooling and Servicing Agreement by their respective officers thereunto
duly authorized as of the day and year first above written.
COMMERCIAL MORTGAGE ACCEPTANCE
CORP., as Depositor
By: /s/ Clarence A. Krantz
-----------------------------------
Name: Clarence A. Krantz
Title: Executive Vice President
MIDLAND LOAN SERVICES, INC.,
as Master Servicer and Special
Servicer
By: /s/ Leon E. Bergman
-----------------------------------
Name: Leon E. Bergman
Title: Executive Vice President
LASALLE NATIONAL BANK, as Trustee
By: /s/ Russell M. Goldenberg
-----------------------------------
Name: Russell M. Goldenberg
Title: Senior Vice President
ABN AMRO BANK N.V., as Fiscal Agent
By: /s/ Robert C. Smolka
-----------------------------------
Name: Robert C. Smolka
Title: Group Vice President
By: /s/ Mary C. Casey
-----------------------------------
Name: Mary C. Casey
Title: Vice President
