<PAGE>
As filed with the Securities and Exchange Commission on April 28, 2000.
Registration No. ____________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
06-1565524
(I.R.S. employer identification number)
600 Steamboat Road
Greenwich, Connecticut 06830
(203) 625-2756
(Address, including zip code, and telephone number,
including area code, of registrant's
principle executive offices)
Paul D. Stevelman, Esq.
Greenwich Capital Commercial Funding Corp.
600 Steamboat Road
Greenwich, Conneticut 06830
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
George J. Petrow, Esq.
Sidley & Austin
875 Third Avenue
New York, New York 10022
(212) 906-2258
<PAGE>
Approximate date of commencement of proposed sale to the public: From
time to time on or after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest plans, please check the following box. [x]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
-------------------------------
<TABLE>
<CAPTION>
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Amount Price Offering Registration
Title of Securities Being Registered to be Registered Per Unit(1) Price (1) Fee
- ------------------------------------ ---------------- ----------- --------- ---
<S> <C> <C> <C> <C>
Mortgage Pass-Through Certificates $1,000,000,000 100% $1,000,000,000 $264,000
================================== ============== ============== ============== ========
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS SUPPLEMENT
(to Prospectus dated ____________)
$____________ (Approximate)
Greenwich Capital Commercial Funding Corp.,
Commercial Mortgage Pass Through Certificates, Series ______
Class S, Class A-1, Class A-2, Class A-3, Class A-4,
Class A-5, Class B-1 and Class B-2
We are the depositor named above. We have prepared this prospectus
supplement in order to offer the classes of commercial mortgage pass-through
certificates identified above. These certificates are the only securities
offered pursuant to this prospectus supplement. This prospectus supplement
specifically relates to, and is accompanied by, our prospectus dated
____________. We will not list the offered certificates on any national
securities exchange or any automated quotation system of any registered
securities associations, such as NASDAQ.
The offered certificates will represent interests only in the trust
identified above. They will not represent interests in or obligations of any
other party. The assets of the trust will include a pool of secured loans, the
collateral for which primarily consists of multifamily and commercial real
properties. Those loans will have an "initial mortgage pool balance" of
approximately $____________. No governmental agency or instrumentality or
private insurer has insured or guaranteed the offered certificates or any of the
loans that back them.
-------------------------
You should fully consider the risk factors beginning on page S-____ in
this prospectus supplement and on page ____ in the accompanying prospectus prior
to investing in the offered certificates.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus supplement or the accompanying
prospectus. Any representation to the contrary is a criminal offense.
--------------------------
______________________, the "underwriter", will purchase the offered
certificates from us, subject to the satisfaction of various conditions. We
intend to deliver the offered certificates in book-entry form only through the
facilities of The Depository Trust Company, on or about _______________, against
payment for those certificates in immediately available funds. Proceeds to us
from the sale of the offered certificates will be an amount equal to
approximately ____% of the initial aggregate principal balance of the offered
certificates, plus accrued interest, before deducting expenses payable by us.
The underwriter is offering the offered certificates subject to prior
sale, when, as and if delivered to and accepted by it. The underwriter currently
intends to sell the offered certificates from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. See "Method of Distribution" in this prospectus supplement.
The date of this prospectus supplement is _________________.
S-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Prospectus Supplement
<S> <C>
Important Notice about the Information Contained in this
Prospectus Supplement, the Accompanying Prospectus and the Related Registration Statement.............................S-3
Forward-looking Statements..............................................................................................S-3
Summary of Prospectus Supplement........................................................................................S-4
Risk Factors...........................................................................................................S-25
Description of the Mortgage Pool.......................................................................................S-36
Servicing of the Mortgage Loans........................................................................................S-58
Description of the Offered Certificates................................................................................S-87
Yield and Maturity Considerations.....................................................................................S-108
Use of Proceeds.......................................................................................................S-115
Federal Income Tax Consequences.......................................................................................S-116
Certain Erisa Considerations..........................................................................................S-119
Legal Investment......................................................................................................S-123
Method of Distribution................................................................................................S-124
Legal Matters.........................................................................................................S-125
Ratings...............................................................................................................S-125
Exhibit A-1--Certain Characteristics of the Mortgage Loans and the
Underlying Real Properties......................................................................... A-1-1
Exhibit A-2--Mortgage Pool Information................................................................................A-2-1
Exhibit B--Form of Trustee Report.......................................................................................B-1
Exhibit C--Decrement Tables for the Certificates of the "A-1", "A-2", "A-3", "A-4", "A-5",
"B-1" and "B-2" Classes...............................................................................C-1
Exhibit D--Price/Yield Tables for the Certificates of the "S" Class.....................................................D-1
Exhibit E--Summary Term Sheet...........................................................................................E-1
Prospectus
Important Notice about the Information Presented in this Prospectus.......................................................3
Available Information; Incorporation by Reference.........................................................................3
Summary of Prospectus.....................................................................................................4
Risk Factors.............................................................................................................14
Description of the Trust Assets..........................................................................................33
Yield and Maturity Considerations........................................................................................55
Greenwich Capital Commercial Funding Corp................................................................................61
Description of the Certificates..........................................................................................62
Description of the Governing Documents...................................................................................72
Description of Credit Support............................................................................................81
Certain Legal Aspects of Mortgage Loans..................................................................................83
Federal Income Tax Consequences..........................................................................................96
State and Other Tax Consequences........................................................................................143
ERISA Considerations....................................................................................................143
Legal Investment........................................................................................................147
Use of Proceeds.........................................................................................................149
Method of Distribution..................................................................................................149
Legal Matters...........................................................................................................151
Financial Information...................................................................................................151
Rating..................................................................................................................151
</TABLE>
S-2
<PAGE>
IMPORTANT NOTICE ABOUT THE INFORMATION CONTAINED IN THIS PROSPECTUS
SUPPLEMENT, THE ACCOMPANYING PROSPECTUS AND THE RELATED REGISTRATION
STATEMENT
Information about the offered certificates is contained in two separate
documents, each of which provides summary information in the front part thereof
and more detailed information in the text that follows: (a) this prospectus
supplement, which describes the specific terms of the offered certificates; and
(b) the accompanying prospectus, which provides general information, some of
which may not apply to the offered certificates. You should read both this
prospectus supplement and the accompanying prospectus in full to obtain material
information concerning the offered certificates.
In addition, we have filed with the Securities and Exchange Commission
a registration statement under the Securities Act of 1933, as amended, with
respect to the offered certificates. This prospectus supplement and the
accompanying prospectus form a part of that registration statement. However,
this prospectus supplement and the accompanying prospectus do not contain all of
the information contained in our registration statement. For further information
regarding the documents referred to in this prospectus supplement and the
accompanying prospectus, you should refer to our registration statement and the
exhibits to it. Our registration statement and the exhibits to it can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the SEC at its public reference section, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at its regional offices located at: Chicago regional
office, Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661; and
New York regional office, Seven World Trade Center, New York, New York 10048.
Copies of these materials can also be obtained electronically through the SEC's
internet web site (http:\\www.sec.gov).
You should only rely on the information contained in this prospectus
supplement, the accompanying prospectus and our registration statement. We have
not authorized any person to give any other information or to make any
representation that is different from the information contained in this
prospectus supplement, the accompanying prospectus or our registration
statement.
FORWARD-LOOKING STATEMENTS
This prospectus supplement and the accompanying prospectus includes the
words "expects", "intends", "anticipates", "estimates" and similar words and
expressions. These words and expressions are intended to identify forward-
looking statements. Any forward-looking statements are made subject to risks and
uncertainties which could cause actual results to differ materially from those
stated. These risks and uncertainties include, among other things, declines in
general economic and business conditions, increased competition, changes in
demographics, changes in political and social conditions, regulatory initiatives
and changes in customer preferences, many of which are beyond our control and
the control of any other person or entity related to this offering. The
forward-looking statements made in this prospectus supplement are accurate as of
the date stated on the cover of this prospectus supplement. We have no
obligation to update or revise any forward-looking statement.
S-3
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
This summary contains selected information regarding the offering being
made by this prospectus supplement. It does not contain all of the information
you need to consider in making your investment decision. To understand all of
the terms of the offering of the offered certificates, you should read carefully
this prospectus supplement and the accompanying prospectus in full.
Introduction to the Transaction
The offered certificates will be part of a series of commercial
mortgage pass-through certificates designated as the Commercial Mortgage
Pass-Through Certificates, Series ___ and consisting of multiple classes. The
table below identifies the respective classes of that series, specifies various
characteristics of each of those classes and indicates which of those classes
are offered by this prospectus supplement and which are not. The footnotes to
the table below follow on the next page.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Commercial Mortgage Pass-Through Certificates, Series ____
- -----------------------------------------------------------------------------------------------------------------------------------
Initial Approx.
Aggregate % of Approx. Initial Weighted
Principal Initial Initial Pass-Through Pass- Average Principal
Class(1) Ratings(2) Balance or Mortgage Credit Rate Through Life Window(6)
Notional Pool Support(4) Description (5) Rate (5) (years)(6)
Amount(3) Balance
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Offered Certificates
- -----------------------------------------------------------------------------------------------------------------------------------
S $ % % (7) %
- -----------------------------------------------------------------------------------------------------------------------------------
A-1 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
A-2 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
A-3 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
A-4 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
A-5 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
B-1 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
B-2 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
Non-Offered Certificates(8)
- -----------------------------------------------------------------------------------------------------------------------------------
B-3 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
B-4 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
B-5 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
B-6 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
B-7 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
B-8 $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
C $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
D $ % % %
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-4
<PAGE>
- ----------------------
(1) The respective classes of certificates identified in the table above
entitle their holders to varying degrees of seniority for
purposes of--
o receiving payments of interest and, if and when applicable,
payments of principal; and
o bearing the effects of losses on the secured loans that will
back the certificates, as well as default-related and other
unanticipated expenses of the related commercial mortgage
trust.
The class "S" and "A-1" certificates are the most senior. The remaining
classes of certificates identified in the table above are listed from
top to bottom in descending order of seniority.
(2) Ratings shown are those of ___________________________________________.
(3) The actual initial aggregate principal balance or notional amount of
any class of certificates identified in the table above may be larger
or smaller than the amount shown above, depending on the actual size of
the initial mortgage pool balance. The actual size of the initial
mortgage pool balance may be as much as ___% larger or smaller than the
amount presented in this prospectus supplement.
(4) Represents the initial aggregate principal balance, expressed as a
percentage of the initial mortgage pool balance, of all classes of the
certificates that are subordinate to the indicated class.
(5) The "pass-through rate" for any class of certificates identified in the
table above is the annual rate at which that class of certificates will
accrue interest from time to time. [Add summary of variable
pass-through rates.]
(6) Calculated based on the following assumptions with respect to each
secured loan that will back the certificates--
o the related borrower timely makes all payments on that loan,
o if that loan has an anticipated repayment date, as described
under "--The Mortgage Loans and the Underlying Real
Properties" below, the loan will be paid in full on that date,
and
o that loan will not otherwise be prepaid prior to stated
maturity.
Further based on the other "Maturity Assumptions" described under
"Yield and Maturity Considerations" in this prospectus supplement.
(7) Initial aggregate notional amount. The aggregate notional amount of the
class "S" certificates will equal the aggregate principal balance of
the other classes of certificates identified in the table above
outstanding from time to time. The aggregate notional amount of the
class "S" certificates will be used solely to calculate the accrual of
interest with respect to those certificates. The class "S" certificates
will not have principal balances and will not entitle their holders to
payments of principal.
(8) The non-offered certificates will also include the following classes of
certificates which are not shown above: "R-I", "R-II" and "R-III".
These other non-offered certificates do not have principal balances,
notional amounts or pass-through rates. They do not provide any
material credit support for the offered certificates.
--------------------
S-5
<PAGE>
<TABLE>
<S> <C>
The Trust....................................... The certificates will evidence the entire beneficial ownership of
a common law trust designated as _________________.
Throughout this prospectus supplement, we refer to the common
law trust as the "trust".
We will form the trust at or prior to the time of initial issuance
of the certificates. The assets of the trust will include a pool of
secured loans, the collateral for which primarily consists of
multifamily and commercial real properties. We will deposit those
loans into the trust at the time of initial issuance of the
certificates. Throughout this prospectus supplement, we refer to
those loans as the "mortgage loans" and to the pool thereof as the
"mortgage pool".
The Governing Document.......................... The governing document for purposes of forming the trust and
issuing the certificates will be a pooling and servicing
agreement to be dated as of ______________. Whenever we
refer in this prospectus supplement to the "pooling and servicing
agreement", we mean that particular pooling and servicing
agreement. The pooling and servicing agreement will also
govern the servicing and administration of the mortgage loans
and the other assets of the trust. A copy of the pooling and
servicing agreement will be filed with the SEC as an exhibit to
a current report on Form 8-K, within 15 days after the initial
issuance of the certificates. The SEC will make that current
report on Form 8-K and its exhibits available to the public for
inspection.
The parties to the pooling and servicing agreement will include us,
a trustee, a master servicer and a special servicer. Whenever we
refer in this prospectus supplement to the "trustee", the "master
servicer" or the "special servicer", we mean the person or entity
acting in that capacity under the pooling and servicing agreement.
Source of the Mortgage Loans.................... We are not the originator of the mortgage loans. We will
acquire the mortgage loans from _______________, which we
refer to in this prospectus supplement as the "mortgage loan
seller". Each of the mortgage loans was originated by--
o the mortgage loan seller,
o the parent or another affiliate of the mortgage loan
seller, or
o a correspondent in the mortgage loan seller's conduit
lending program.
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Relevant Parties
<S> <C>
"We" and "Us"................................... Our name is Greenwich Capital Commercial Funding Corp., and
we are a Delaware corporation. Our address is 600 Steamboat
Road, Greenwich, Connecticut 06830 and our telephone number
is (203) 625-2700. We will form the trust and deposit the
mortgage loans into it. See "Greenwich Capital Commercial
Funding Corp." in the accompanying prospectus.
Initial Trustee.................................. ________________________, will act as the initial trustee. See
"Description of the Offered Certificates--The Trustee" in this
prospectus supplement. The trustee will also have, or be
responsible for appointing an agent to perform, additional duties
with respect to tax administration. We refer to the trustee or its
agent in that capacity as the "tax administrator" in this
prospectus supplement.
Initial Master Servicer......................... ________________________, a ________ corporation, will act as the
initial master servicer. See "Servicing of the Mortgage Loans--The
Initial Master Servicer and the Initial Special Servicer" in this
prospectus supplement.
Initial Special Servicer........................ ________________________, a __________ corporation, will act as the
initial special servicer. See "Servicing of the Mortgage Loans--The
Initial Master Servicer and the Initial Special Servicer" in this
prospectus supplement.
Controlling Class
of Certificateholders........................ The holders of certificates representing a majority interest in a
designated "controlling class" of the series ________ certificates
will have the right, subject to the conditions described in this
prospectus supplement, to--
o replace the special servicer, and
o select a representative that may direct and advise the
special servicer on various servicing matters.
Unless there are significant losses on the mortgage pool, the
controlling class of the series _____________ certificates will be a
class of non-offered certificates. See "Servicing of the Mortgage
Loans--The Controlling Class Representative" and "--Replacement of
the Special Servicer" in this prospectus supplement.
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
Mortgage Loan Seller............................ We will acquire the mortgage loans of the initial mortgage pool
balance, from ________________________, a __________
corporation. See "Description of the Mortgage Pool--The
Mortgage Loan Seller" in this prospectus supplement.
Underwriter..................................... ________________________, a __________ corporation, is the
underwriter of the offering being made by this prospectus
supplement. See "Method of Distribution" in this prospectus
supplement.
Relevant Dates and Periods
Cut-off Date.................................... The mortgage loans will be considered part of the trust as of a
"cut-off date" of _________________. All payments and
collections received on the mortgage loans after that date,
excluding any payments or collections that represent amounts
due on or before that date, will belong to the trust. Accordingly,
______________ is the date as of which we present much of the
information relating to the mortgage pool and the underlying
real properties in this prospectus supplement.
Issue Date...................................... The date of initial issuance, or "issue date", for the offered
certificates will be on or about ____________.
Payment Date.................................... Payments on the offered certificates are scheduled to occur
monthly, commencing in _____________. During any given
month, the "payment date" will be the later of--
o the _____ calendar day of that month, or, if that _____
calendar day of that month is not a business day, then
the next succeeding business day, and
o the _____ business day following the _____ calendar
day of that month.
Record Date..................................... The "record date" for each monthly payment on an offered
certificate will be the last business day of the prior calendar
month. The registered holders of the offered certificates at the
close of business on each record date, will be entitled to receive
any payments on those certificates on the following payment
date.
Collection Period............................... Amounts available for payment on the offered certificates on
any payment date will depend on the payments and other
collections received, and any advances of payments due, on the
mortgage loans during the related collection period. Each
"collection period"--
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
o will relate to a particular payment date,
o will be approximately one month long,
o will begin when the prior collection period ends or, in
the case of the first collection period, will begin on
______________, and
o will end during the month of, but prior to, the related
payment date.
Interest Accrual Period......................... The amount of interest payable with respect to the offered
certificates on any payment date will be a function of the
interest accrued during the related interest accrual period. The
"interest accrual period" for any payment date will be the
calendar month immediately preceding the month in which that
payment date occurs.
Rated Final Payment Date........................ The "rated final payment date" is the payment date in
_______________. As discussed in this prospectus supplement,
each rating assigned to the offered certificates will represent the
respective rating agency's assessment of the likelihood of timely
receipt by the holders of those certificates of all interest to
which they are entitled on each payment date and, except in the
case of the class "S" certificates, the ultimate receipt by the
holders of those certificates of all principal to which they are
entitled by the related final payment date.
Assumed Final Payment Date...................... The "assumed final payment date" for each class of offered
certificates will be the payment date on which the holders of
those certificates would be expected to receive their last
payment based upon--
o the assumption that each underlying borrower timely makes all
payments on its mortgage loan,
o the assumption that each mortgage loan with an anticipated
repayment date is paid in full on that date,
o the assumption that no underlying borrower otherwise prepays
its mortgage loan prior to stated maturity, and
o the other "Maturity Assumptions" set forth under "Yield and
Maturity Considerations" in this prospectus supplement.
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
The assumed final payment date for each class of offered certificates
will occur in the calendar month and year set forth below for that
class.
Month and Year
of Assumed Final
Class Payment Date
----- ------------
S
A-1
A-2
A-3
A-4
A-5
B-1
B-2
<CAPTION>
Description of the Offered Certificates
<S> <C>
Registration and Denominations.................. We intend to deliver the offered certificates in book-entry form
in original denominations of:
o in the case of the class "S" certificates, $_______ initial
notional amount and in any whole dollar denomination in excess
of $_______; and
o in the case of the other offered certificates, $_______
initial principal balance and in any whole dollar
denomination in excess of $________.
Payments
You will initially hold your certificates through The Depository
Trust Company. As a result, you will not receive a fully registered
physical certificate representing your interest in any offered
certificate, except under the limited circumstances described in this
prospectus supplement and in the accompanying prospectus. We may
elect to terminate the book- entry system through DTC with respect to
all or any portion of any class of offered certificates. See
"Description of the Offered Certificates--Registration and
Denominations" in this prospectus supplement and "Description of the
Certificates--Book-Entry Registration" in the accompanying
prospectus.
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
A. General..................................... The trustee will make payments of interest and principal to the
respective classes of certificateholders entitled to those
payments, sequentially as follows:
Payment Order Class
------------- -----
1 S and A-1
2 A-2
3 A-3
4 A-4
5 A-5
6 B-1
7 B-2
8 B-3
9 B-4
10 B-5
11 B-6
12 B-7
13 B-8
14 C
15 D
-----------------
* Allocation of interest payments among these classes is pro rata
based on entitlement. The class "S" certificates do not have
principal balances and do not entitle their holders to payments of
principal.
See "Description of the Offered Certificates--Payments-- Priority of
Payments" in this prospectus supplement.
B. Payments of Interest........................ Each class of offered certificates will bear interest. In each case,
that interest will accrue during each interest accrual period
based upon--
o the pass-through rate applicable for the particular class for
that interest accrual period,
o the aggregate principal balance or notional amount, as the
case may be, of the particular class outstanding immediately
prior to the related payment date, and
o the assumption that each year consists of 12 30-day months.
</TABLE>
S-11
<PAGE>
<TABLE>
<S> <C>
A whole or partial prepayment on a mortgage loan may not be
accompanied by the amount of one full month's interest on the
prepayment. As and to the extent described in this prospectus
supplement, these shortfalls may be allocated to reduce the amount of
accrued interest otherwise payable to the holders of the respective
classes of interest-bearing certificates, including the offered
certificates, on a pro rata basis in accordance with
the respective amounts of interest otherwise payable on those classes
for the corresponding interest accrual period.
On each payment date, subject to available funds and the payment
priorities described above, you will be entitled to receive your
proportionate share of all unpaid distributable interest accrued in
respect of your class of offered certificates through the end of the
related interest accrual period.
See "Description of the Offered Certificates--Payments --Payments of
Interest" and "--Payments--Priority of Payments" in this prospectus
supplement.
C. Payments of Principal....................... The class "S" certificates do not have principal balances and do
not entitle their holders to payments of principal. Subject to
available funds and the payment priorities described above,
however, the holders of each other class of offered certificates
will be entitled to receive a total amount of principal over time
equal to the aggregate principal balance of their particular class.
The trustee must make payments of principal in a specified
sequential order to ensure that--
o No payments of principal will be made to the holders of any
class of non-offered certificates until the aggregate
principal balance of the offered certificates is reduced to
zero.
o No payments of principal will be made to the holders of the
class "A-1", "A-2", "A-3", "A-4", "A-5", "B-1" or "B-2"
certificates until, in the case of each of those classes, the
aggregate principal balance of all more senior classes of
offered certificates is reduced to zero.
The total payments of principal to be made on the respective classes
of the certificates entitled thereto on any payment date will be a
function of--
o the amount of scheduled payments of principal due or, in some
cases, deemed due on the mortgage loans during the related
collection period, which payments are either
</TABLE>
S-12
<PAGE>
<TABLE>
<S> <C>
received as of the end of that collection period or advanced by
the master servicer, and
o the amount of any prepayments and other unscheduled
collections of previously unadvanced principal in respect of
the mortgage loans that are received during the related
collection period.
See "Description of the Offered Certificates--Payments --Payments of
Principal" and "--Payments--Priority of Payments" in this prospectus
supplement.
D. Payments of Prepayment
Premiums and Yield
Maintenance Charges....................... If any prepayment premium or yield maintenance charge is
collected on a mortgage loan, then the trustee will pay that
amount in the proportions described in this prospectus
supplement, to--
o the holders of the class "S" certificates, and/or
o the holders of any other class or classes of certificates,
senior to the class "___" certificates, that are then entitled
to receive payments of principal.
See "Description of the Offered Certificates--Payments --Payments of
Prepayment Premiums and Yield Maintenance Charges" in this prospectus
supplement.
Reductions of Certificate Balances
in Connection With Losses
and Certain Expenses........................ Realized losses on the mortgage loans, together with default-
related and other unanticipated expenses of the trust, may cause
the aggregate principal balance of the mortgage pool, net of
advances of principal, to be less than the aggregate principal
balance of the certificates. If and to the extent that those losses
and expenses cause such a deficit to exist following the
payments made on the certificates on any payment date, then the
aggregate principal balances of those classes of certificates of
that series with principal balances, will be successively reduced
in the following order, until that deficit is eliminated:
Reduction Order Class
--------------- -----
1 D
2 C
3 B-8
4 B-7
</TABLE>
S-13
<PAGE>
<TABLE>
<CAPTION>
Reduction Order Class
--------------- -----
<S> <C>
5 B-6
6 B-5
7 B-4
8 B-3
9 B-2
10 B-1
11 A-5
12 A-4
13 A-3
14 A-2
15 A-1
See "Description of the Offered Certificates--Reductions of
Certificate Principal Balances in Connection With Realized Losses and
Additional Trust Fund Expenses" in this prospectus supplement.
Advances of Delinquent Monthly
Debt Service Payments....................... Except as described below, the master servicer will be required
to make advances with respect to any delinquent monthly
payments, other than balloon payments, of principal and/or
interest due on the mortgage loans. In addition, if (i) the master
servicer fails to make any advance that it is required to make
and (ii) the trustee is aware of the failure, the trustee will be
required to make the advance. Neither of the master servicer
nor the trustee, however, will be required to make any advance
that it determines, in its good faith and reasonable judgment,
will not be recoverable from proceeds of the related mortgage
loan. As described in this prospectus supplement, any party that
makes an advance will be entitled to be reimbursed for the
advance, together with interest thereon at the prime rate
described in this prospectus supplement.
If certain adverse events or circumstances, which we will describe
later in this prospectus supplement, occur or exist with respect to
any mortgage loan or the underlying real property for that loan, the
special servicer will be obligated to obtain a new appraisal of or,
in limited cases, conduct a valuation of that real property. If,
based on that appraisal or other valuation, it is determined that (i)
the principal balance of, and other delinquent amounts due under,
that mortgage loan exceed (ii) ____% of the new estimated value of
that real property, then the amount otherwise required to be advanced
in respect of interest on that mortgage loan will be reduced,
generally in the same proportion that such excess bears to the
principal balance of the mortgage loan, net of related advances of
principal. Due to the payment
</TABLE>
S-14
<PAGE>
<TABLE>
<S> <C>
priorities, this reduction in advances will reduce the funds
available to pay interest on the most subordinate class of
interest-bearing certificates then outstanding.
See "Description of the Offered Certificates--Advances of Delinquent
Monthly Debt Service Payments" and "Servicing of the Mortgage
Loans--Required Appraisals" in this prospectus supplement. See also
"Description of the Certificates--Advances" in the accompanying
prospectus.
Reports to Certificateholders................... On each payment date, the trustee will provide to the registered
holders of the offered certificates a monthly report substantially
in the form of Exhibit B to this prospectus supplement. The
trustee's report will detail the payments made to the
certificateholders on that payment date and the performance of
the mortgage loans and the underlying real properties.
Upon reasonable prior notice, you may also review at the trustee's
offices during normal business hours a variety of information and
documents that pertain to the mortgage loans and the underlying real
properties, including loan documents, borrower operating statements,
rent rolls and property inspection reports, to the extent the trustee
receives the information and documents.
See "Description of the Offered Certificates--Reports to
Certificateholders; Certain Available Information" in this prospectus
supplement.
Optional Termination............................ Specified parties to the transaction may terminate the trust when
the aggregate principal balance of the mortgage pool, net of
advances of principal, is less than approximately ____% of the
initial mortgage pool balance. See "Description of the Offered
Certificates--Termination" in this prospectus supplement.
<CAPTION>
The Mortgage Loans and the Underlying Real Properties
<S> <C>
General......................................... Each of the mortgage loans is the obligation of a borrower to
repay a specified sum with interest. Each of the mortgage loans
will be secured by a mortgage lien on the ownership and/or
leasehold interest of the related borrower in one or more
commercial or multifamily real properties. Except for limited
permitted encumbrances, which we will describe later in this
prospectus supplement, that mortgage lien will be a first priority
lien.
</TABLE>
S-15
<PAGE>
<TABLE>
<S> <C>
All of the mortgage loans are or should be considered nonrecourse.
None of the mortgage loans are insured or guaranteed by any
governmental agency or instrumentality or by any private mortgage
insurer.
We include in this prospectus supplement a variety of information
regarding the mortgage loans and the underlying real properties. In
reviewing this information, you should be aware that--
o All numerical information provided with respect to the
mortgage loans is provided on an approximate basis.
o All weighted average information provided with respect to the
mortgage loans or any sub-group of mortgage loans reflects the
weighting of those mortgage loans by their respective
scheduled principal balances as of _____________________. The
"scheduled principal balance" of any mortgage loan, as of any
date of determination, will equal its then unpaid principal
balance, after application of all payments of principal due
with respect to the mortgage loan on or before that date,
whether or not those payments are received.
o In presenting the __/__/__ scheduled principal balances of the
mortgage loans, we have assumed that--
(i) all scheduled payments of principal and/or
interest due on the mortgage loans on or before
________________ are timely made, and,
(ii) there are no prepayments or other unscheduled
collections of principal with respect to any of the
mortgage loans during the period from
______________ up to and including
_______________.
o When information with respect to the underlying real
properties is expressed as a percentage of the initial
mortgage pool balance, the percentages are based upon the
__/__/__ scheduled principal balances of the related mortgage
loans.
o Some of the mortgage loans provide that they are cross-
collateralized and cross-defaulted with one or more
other mortgage loans. Except as otherwise indicated,
when a mortgage loan is cross-collateralized and cross-
defaulted
</TABLE>
S-16
<PAGE>
<TABLE>
<S> <C>
with another mortgage loan, we have presented the information
regarding those mortgage loans as if each of them was secured only by
a mortgage lien on the corresponding real property identified on
Exhibit A-1 to this prospectus supplement. One such exception is that
each and every mortgage loan in any particular group of
cross-collateralized and cross- defaulted mortgage loans is treated
as having the same loan-to-value ratio and the same debt service
coverage ratio. None of the mortgage loans is cross-collateralized
with any loan that will not be included in the trust.
o In some cases, when multiple underlying real properties secure
a single mortgage loan, we have allocated that mortgage loan
among those properties based upon--
(i) relative appraised values,
(ii) relative underwritten net cash flow, or
(iii) prior allocations reflected in the related loan
documents,
for purposes of providing certain property-specific
information.
o In some cases, when multiple parcels of real property secure a
single mortgage loan, we have treated those parcels as a
single "real property" because of their proximity to each
other, the interrelationship of their operations or for other
reasons deemed appropriate by us.
o Whenever we refer to a particular underlying real property by
name, we mean the property identified by that name on Exhibit
A-1 to this prospectus supplement.
o Statistical information regarding the mortgage loans may
change prior to the date of initial issuance of the
certificates due to changes in the composition of the mortgage
pool prior to that date.
</TABLE>
S-17
<PAGE>
<TABLE>
<S> <C>
For more detailed information on the mortgage loans than is provided
in this "Summary of Prospectus Supplement" section, see the following
sections in this prospectus supplement:
o "Description of the Mortgage Pool"
o "Risk Factors--Risks Related to the Mortgage Loans"
o Exhibit A-1 - Certain Characteristics of the Mortgage Loans
and the Underlying Real Properties
o Exhibit A-2 - Mortgage Pool Information
Payment Terms................................... Each mortgage loan currently accrues interest at the annual rate
specified with respect to that loan on Exhibit A-1 to this
prospectus supplement. Except as otherwise described below,
the mortgage interest rate for each mortgage loan is, in the
absence of default, fixed for the entire term of the loan. [If any
of the mortgage loans have floating or adjustable mortgage
interest rates, provide a summary description of how to
calculate those rates.]
Each mortgage loan provides for scheduled payments of principal
and/or interest to be due on the first day of each month. We refer to
these scheduled payments as "monthly debt service payments". [Provide
summary description regarding any adjustments to the monthly debt
service payments and any potential negative amortization of
interest.]
________ of the mortgage loans, representing ____% of the
initial mortgage pool balance, provide for:
o an amortization schedule that is significantly longer than
its remaining term to stated maturity; and
o a substantial payment of principal on its maturity date.
We refer to these ________ mortgage loans as the "balloon loans".
________ of the mortgage loans, representing ____% of the initial
mortgage pool balance, provide material incentives to the related
borrower to pay the mortgage loan in full by a specified date, which
we refer to as an "anticipated repayment date". There can be no
assurance, however, that these incentives will result in any of these
mortgage loans being paid in full on or before its anticipated
repayment date. The incentives, which in
</TABLE>
S-18
<PAGE>
<TABLE>
<S> <C>
each case will become effective as of the related anticipated
repayment date, include:
o The calculation of interest in excess of the initial mortgage
interest rate. The additional interest will be deferred and
will be payable only after the outstanding principal balance
of the mortgage loan is paid in full.
o The application of excess cash flow from the underlying real
property to pay the principal amount of the mortgage loan. The
payment of principal will be in addition to the principal
portion of the normal monthly debt service payment.
We refer to these _____ mortgage loans as the "ARD loans".
The remaining _______ mortgage loans, representing ____% of the
initial mortgage pool balance, have payment schedules that provide
for the payment of these mortgage loans in full or substantially in
full by their respective maturity dates. We refer to these _____
mortgage loans as the "fully amortizing loans".
Delinquency Status.............................. None of the mortgage loans was ____ days or more delinquent
in respect of any monthly debt service payment as of
_____________ or at any time during the ___-month period
preceding that date.
Prepayment Lock-Out Periods..................... A prepayment lock-out period is currently in effect for all of the
mortgage loans. Set forth below is information regarding the
remaining terms of those lock-out periods:
Maximum remaining lock-out period: months
Minimum remaining lock-out period: months
Weighted average remaining lock-out period: months
Defeasance...................................... ________ of the mortgage loans, representing ____% of the
initial mortgage pool balance, permit the related borrower to
obtain a release of the underlying real property (or, where
applicable, one or more of the underlying real properties) from
the lien of the related mortgage by delivering U.S. Treasury
obligations as substitute collateral. None of the mortgage loans
permits defeasance prior to the second anniversary of the date
of initial issuance of the certificates.
</TABLE>
S-19
<PAGE>
<TABLE>
<S> <C>
Additional Statistical Information
A. General Characteristics..................... The mortgage pool will have the following general
characteristics as of _________________:
Initial mortgage pool balance(1)....................... $
Number of mortgage loans...............................
Number of underlying real properties ..................
Maximum __/__/__ scheduled principal
balance........................................... $
Minimum __/__/__ scheduled principal
balance........................................... $
Average __/__/__ scheduled principal
balance(2)........................................ $
Maximum mortgage interest rate......................... %
Minimum mortgage interest rate......................... %
Weighted average mortgage interest rate................ %
Maximum original term to maturity
or anticipated repayment date..................... months
Minimum original term to maturity
or anticipated repayment date..................... months
Weighted average original term to maturity
or anticipated repayment date..................... months
Maximum remaining term to maturity
or anticipated repayment date...................... months
Minimum remaining term to maturity
or anticipated repayment date..................... months
Weighted average remaining term to
maturity or anticipated repayment date............ months
Maximum underwritten debt
service coverage ratio(3).......................... x
Minimum underwritten debt
service coverage ratio(3).......................... x
Weighted average underwritten
debt service coverage ratio(3)..................... x
Maximum __/__/__ loan-to-value ratio(4)................ %
Minimum __/__/__ loan-to-value ratio(4)................ %
Weighted average 10/1/99 loan-to-value %
ratio(4)..........................................
---------------------
</TABLE>
S-20
<PAGE>
<TABLE>
<S> <C>
(1) The "initial mortgage pool balance" is equal to the aggregate
cut-off date principal balance of the mortgage loans and is
subject to a permitted variance of plus or minus ___%.
(2) Presented without regard to cross-collateralization. If each
group of cross-collateralized mortgage loans were treated as a
single mortgage loan, the average ________ scheduled principal
balance would be $_______________.
(3) Calculated as described under "Description of the Mortgage
Pool--Certain Mortgage Pool Characteristics" in this
prospectus supplement, based on--
o the total cash flow that the related mortgage loan
seller has estimated will be available from the
underlying real property or properties to pay the
annual debt service on the subject mortgage loan and
any other mortgage loans that are cross-
collateralized with it, and
o the scheduled annual debt service that will be
payable on the subject mortgage loan and any other
mortgage loans that are cross-collateralized with it,
assuming, in the case of mortgage loans with an
initial interest-only period, that amortization has
begun.
(4) Calculated as described under "Description of the Mortgage
Pool--Certain Mortgage Pool Characteristics" in this prospectus
supplement, based on--
o the __/__/__ scheduled principal balance for that
mortgage loan and any other mortgage loans that are
cross- collateralized with it, and
o the estimated value of the underlying real property
or properties as set forth in the most recent
appraisal(s) obtained by or otherwise in the
possession of the related mortgage loan seller.
B. State Concentration......................... The table below shows the number of, and percentage of the
initial mortgage pool balance secured by, underlying real
properties located in the indicated states:
% of
Number of Initial Mortgage
State Properties Pool Balance
----- ---------- ------------
%
%
%
%
The remaining underlying real properties are located throughout
______ other states and _________________. No more than ____% of the
initial mortgage pool balance is secured by real properties located
in any of these other jurisdictions.
</TABLE>
S-21
<PAGE>
<TABLE>
<S> <C>
C. Property Types.............................. The table below shows the number of, and percentage of the
initial mortgage pool balance secured by, underlying real
properties operated for each indicated purpose:
% of
Number of Initial Mortgage
Property Type Properties Pool Balance
------------- ---------- ------------
[Specify Property Types]
D. Encumbered Interests........................ The table below shows the number of, and percentage of the
initial mortgage pool balance secured by, underlying real
properties for which the encumbered interest is as indicated:
% of
Encumbered Interest in the Number of Initial Mortgage
Underlying Real Property Properties Pool Balance
------------------------ ---------- ------------
Ownership* %
Ownership in part,
Leasehold in part %
Leasehold %
Other %
-------------
* "Ownership" also includes cases where the ownership and
leasehold interests in the same property are both encumbered.
</TABLE>
S-22
<PAGE>
<TABLE>
<CAPTION>
Legal and Investment Considerations
<S> <C>
Federal Income
Tax Consequences............................. The trustee or its agent will make elections to treat designated
portions of the assets of the trust as three separate "real estate
mortgage investment conduits" under Sections 860A through
860G of the Internal Revenue Code of 1986. The designations
for each REMIC are as follows:
o "REMIC I", the lowest tier REMIC, will consist generally of
the mortgage loans, as well as any of the underlying real
properties that may have been acquired by the trust following
a borrower default, but will exclude collections of additional
interest accrued and deferred as to payment in respect of each
ARD loan with an anticipated repayment date that remains
outstanding past that date.
o "REMIC II" will hold the "regular interests" in REMIC I.
o "REMIC III" will hold the "regular interests" in REMIC II.
[Any assets not included in a REMIC will constitute a grantor trust
for federal income tax purposes.]
The offered certificates will be treated as "regular interests" in
REMIC III. This means that they will be treated as newly issued debt
instruments for federal income tax purposes. You will have to report
income on your offered certificates in accordance with the accrual
method of accounting even if you are otherwise a cash method
taxpayer. The offered certificates will not represent any interest in
the grantor trust referred to above.
The class "_____" and "____" certificates will be issued with more
than a de minimis amount of original issue discount. The class
"_____" certificates will be issued with a de minimis amount of
original issue discount. The other offered certificates will not be
issued with any original issue discount. If you own an offered
certificate issued with original issue discount, you may have to
report original issue discount income and be subject to a tax on this
income before you receive a corresponding cash payment.
For a more detailed discussion of the federal income tax aspects of
investing in the offered certificates, see "Federal Income Tax
</TABLE>
S-23
<PAGE>
<TABLE>
<S> <C>
Consequences" in this prospectus supplement and "Federal Income Tax
Consequences" in the accompanying prospectus.
ERISA........................................... We anticipate that certain retirement plans and other employee
benefit plans and arrangements subject to Title I of the
Employee Retirement Income Security Act of 1974, commonly
referred to as "ERISA", or Section 4975 of the Internal Revenue
Code of 1986 will be able to invest in the [class "S" and "A-1"]
certificates, without giving rise to a prohibited transaction. This
is based upon an individual prohibited transaction exemption
granted to the underwriter by the U.S. Department of Labor.
However, investments in the other offered certificates by, on
behalf of or with assets of these entities, will be restricted as
described under "Certain ERISA Considerations" in this
prospectus supplement.
If you are a fiduciary of any retirement plan or other employee
benefit plan or arrangement subject to Title I of ERISA or section
4975 of the Internal Revenue Code of 1986, you should review
carefully with your legal advisors whether the purchase or holding of
the offered certificates could give rise to a transaction that is
prohibited under ERISA or Section 4975 of the Internal Revenue Code
of 1986. See "Certain ERISA Considerations" in this prospectus
supplement and "ERISA Considerations" in the accompanying prospectus.
Legal Investment................................ The following classes of offered certificates, upon initial
issuance, will constitute "mortgage related securities" for
purposes of the Secondary Mortgage Market Enhancement Act
of 1984, commonly referred to as "SMMEA": [Specify SMMEA
certificates]
The other offered certificates will not be "mortgage related
securities" within the meaning of SMMEA.
You should consult your own legal advisors to determine whether and
to what extent the offered certificates will be legal investments for
you. See "Legal Investment" in this prospectus supplement and in the
accompanying prospectus.
Certain Investment
Considerations............................... The rate and timing of payments and other collections of
principal on or in respect of the mortgage loans will affect the
yield to maturity on each offered certificate. In the case of
offered certificates purchased at a discount, a slower than
anticipated rate of payments and other collections of principal
on the mortgage loans could result in a lower than anticipated
yield.
</TABLE>
S-24
<PAGE>
<TABLE>
<S> <C>
In the case of class "S" certificates or any other offered
certificates purchased at a premium, a faster than anticipated rate
of payments and other collections of principal on the mortgage loans
could result in a lower than anticipated yield. If you are
contemplating the purchase of class "S" certificates, you should be
aware that--
o the yield to maturity on those certificates will be highly
sensitive to the rate and timing of principal prepayments and
other liquidations on or in respect of the mortgage loans, and
o that an extremely rapid rate of prepayments and/or other
liquidations on or in respect of the mortgage loans could
result in a substantial loss of your initial investment.
See "Yield and Maturity Considerations" in this prospectus supplement
and in the accompanying prospectus.
Ratings......................................... It is a condition to their issuance that the respective classes of
the offered certificates receive the credit ratings shown in the
table entitled "Commercial Mortgage Pass-Through Certificates,
Series _______" on page S-___.
The ratings of the offered certificates address the timely payment of
interest and, except in the case of the class "S" certificates, the
ultimate payment of principal on or before the rated final payment
date. A security rating is not a recommendation to buy, sell or hold
securities and the assigning rating agency may revise or withdraw its
rating at any time.
For a description of the limitations of the ratings of the offered
certificates, see "Ratings" in this prospectus supplement.
</TABLE>
S-25
<PAGE>
RISK FACTORS
The offered certificates are not suitable investments for all
investors. In particular, you should not purchase any class of offered
certificates unless you understand and are able to bear the risks associated
with that class.
The offered certificates are complex securities and it is important
that you possess, either alone or together with an investment advisor, the
expertise necessary to evaluate the information contained in this prospectus
supplement and the accompanying prospectus in the context of your financial
situation.
You should consider the following factors, as well as those set forth
under "Risk Factors" in the accompanying prospectus, in deciding whether to
purchase any offered certificates. The "Risk Factors" section in the
accompanying prospectus includes a number of general risks associated with
making an investment in the offered certificates.
Risks Related to the Offered Certificates
Many Factors, Including Lack of Liquidity, Can Adversely Affect the
Market Value of Your Certificates. There is currently no secondary market for
the offered certificates. The underwriter has informed us that it intends to
make a secondary market in the offered certificates. However, it has no
obligation to do so, and there can be no assurance that a secondary market for
the offered certificates will develop. Even if a secondary market does develop
for the offered certificates, there is no assurance that it will provide you
with liquidity of investment or that the market will continue for the life of
the offered certificates. We will not list the offered certificates on any
securities exchange or on any automated quotation system, such as NASDAQ. Lack
of liquidity could result in a significant reduction in the market value of your
certificates. In addition, the market value of your certificates at any time may
be affected by many factors, including then prevailing interest rates and the
then perceived riskiness of commercial mortgage-backed securities relative to
other investments. You may be forced to hold your certificates indefinitely.
Alternatively, you may only be able to sell your certificates at less than 100%
of their principal balance and/or the unamortized portion of your purchase price
for reasons unrelated to the performance of your certificates or the mortgage
loans. See "Risk Factors--Lack of Liquidity Will Impair Your Ability to Sell
Your Certificates and May Have an Adverse Effect on the Market Value of Your
Certificates" and "--The Market Value of Your Certificates Will be Sensitive to
Factors Unrelated to the Performance of Your Certificates and the Underlying
Mortgage Assets" in the accompanying prospectus.
Your Timely Receipt of All Amounts Payable with Respect to Your
Certificates Will Completely Depend on the Performance of the Mortgage Loans.
The mortgage loans are subject to delinquencies, defaults and losses. The rate
and timing of delinquencies and defaults on the mortgage loans will affect the
rate, timing and amount of payments on your certificates, the yield to maturity
of your certificates and the weighted average life of your certificates.
Delinquencies on the mortgage loans, unless covered by an advance by the master
servicer or the trustee, may result in shortfalls in payments of interest and/or
principal on your certificates for the current month. In addition, even if an
advance is made to cover a delinquency, the party making that advance will have
a right to receive interest on that advance that is prior to the rights of the
certificateholders to receive payments on their certificates. The accrual of
interest on advances may result in shortfalls in payments of interest and/or
principal on the certificates. In addition, with respect to each mortgage loan
that is serviced by the special servicer, the special servicer will receive
compensation out of amounts that would otherwise have been applied to pay
interest and/or principal on the certificates.
S-26
<PAGE>
The non-offered certificates, as well as any other class or classes of
offered certificates that are subordinate to your certificates, are intended to
provide credit support for your certificates. However, that credit support is
limited. There can be no assurance that it will protect you from shortfalls and
delays in payments on your certificates. As a holder of offered certificates,
you will bear the effects of any losses and other default-related shortfalls on
the mortgage loans in excess of the credit support provided to your
certificates. Even if shortfalls in payments on your certificates are made up on
a future payment date, no interest will accrue on those shortfalls. Thus, those
shortfalls would adversely affect the yield on your certificates.
If you purchase class "A-2", "A-3", "A-4", "A-5", "B-1" or "B-2"
certificates, then your certificates will provide credit support to other
classes of offered certificates. As a result, you will receive payments after,
and must bear the effects of losses on the mortgage loans before, the holders of
those other classes of offered certificates.
If the assets of the trust are insufficient to make payments on your
certificates, no other assets will be available to you for payment of the
deficiency. Neither we nor any of our affiliates have guaranteed or will
otherwise be obligated to make payments on your certificates. No governmental
agency or instrumentality or private insurer has guaranteed or insured the
payments on your certificates.
When making an investment decision, you should consider, among other
things--
o the payment priorities of the respective classes of the
certificates,
o the order in which the principal balances of the respective
classes of the certificates with balances will be reduced in
connection with losses and default-related shortfalls, and
o the characteristics and quality of the mortgage loans.
See "Description of the Mortgage Pool" and "Description of the Offered
Certificates--Payments" and "--Reductions of Certificate Principal Balances in
Connection With Realized Losses and Additional Trust Fund Expenses" in this
prospectus supplement. See also "Risk Factors--The Investment Performance of
Your Certificates Will Depend Upon Payments, Defaults and Losses on the
Underlying Mortgage Loans", "--Any Credit Support for Your Certificates may be
Insufficient to Protect you Against all Potential Losses" and "--Payments on the
Offered Certificates Will be Made Solely from the Limited Assets of the Related
Trust" in the accompanying prospectus.
The Offered Certificates Have Uncertain Yields to Maturity. The yield
on your certificates will depend on (a) the price you paid for your certificates
and (b) the rate, timing and amount of payments on your certificates. The rate,
timing and amount of payments on your certificates will, in turn, depend on:
o the pass-through rate for your certificates;
o the rate and timing of payments and other collections of
principal on the mortgage loans;
o the rate and timing of defaults, and the severity of losses,
if any, on the mortgage loans;
S-27
<PAGE>
o the rate, timing, severity and allocation of other shortfalls
and expenses that reduce amounts available for payment on your
certificates;
o the collection and payment of prepayment premiums and yield
maintenance charges with respect to the mortgage loans; and
o servicing decisions with respect to the mortgage loans.
These factors cannot be predicted with any certainty. Accordingly, you
may find it difficult to analyze the effect that these factors might have on the
yield to maturity of your certificates.
In particular, the investment performance of your certificates may vary
materially and adversely from your expectations due to the rate of prepayments
and other unscheduled collections of principal on the mortgage loans being
faster or slower than you anticipated. In deciding whether to purchase any
offered certificates, you should make an independent decision as to the
appropriate prepayment assumptions to be used.
If you purchase your certificates at a premium, and if payments and
other collections of principal on the mortgage loans occur at a rate faster than
you anticipated at the time of your purchase, then your actual yield to maturity
may be lower than you had assumed at the time of your purchase. Conversely, if
you purchase your certificates at a discount, and if payments and other
collections of principal on the mortgage loans occur at a rate slower than you
anticipated at the time of your purchase, then your actual yield to maturity may
be lower than you had assumed at the time of your purchase. You should consider
that prepayment premiums and yield maintenance charges may not be collected in
all circumstances. Furthermore, even if a prepayment premium or yield
maintenance charge is available and payable on your certificates, it may not be
sufficient to offset fully any loss in yield on your certificates.
If you purchase class "S" certificates, your yield to maturity will be
particularly sensitive to the rate and timing of principal payments and losses
on the mortgage loans. Prior to investing in those certificates, you should
fully consider the associated risks, including the risk that an extremely rapid
rate of amortization, prepayment or other liquidation of the mortgage loans
could result in your failure to recover fully your initial investment. The
ratings on the class "S" certificates do not address whether a purchaser of
those certificates would be able to recover its initial investment in them.
The yield on the offered certificates with variable pass-through rates
could also be adversely affected if the mortgage loans with higher mortgage
interest rates pay principal faster than the mortgage loans with lower mortgage
interest rates. This is because those classes bear interest at pass-through
rates equal to, based upon or limited by, as applicable, a weighted average of
net interest rates derived from the mortgage loans.
See "Description of the Mortgage Pool", "Servicing of the Mortgage
Loans", "Description of the Offered Certificates--Payments" and "--Reductions of
Certificate Principal Balances in Connection With Realized Losses and Additional
Trust Fund Expenses" and "Yield and Maturity Considerations" in this prospectus
supplement. See also "Risk Factors--The Investment Performance of Your
Certificates Will Depend Upon Payments, Defaults and Losses on the Underlying
Mortgage Loans" and "Yield and Maturity Considerations" in the accompanying
prospectus.
S-28
<PAGE>
Potential Conflicts of Interest. The master servicer, the special
servicer or any of their respective affiliates may acquire certificates. In
addition, the holders of certificates representing a majority interest in the
controlling class of the certificates may replace the special servicer. See
"Servicing of the Mortgage Loans--Replacement of the Special Servicer" in this
prospectus supplement.
The master servicer and the special servicer each will be obligated to
observe the terms of the pooling and servicing agreement and will be governed by
the servicing standard described in this prospectus supplement. However, either
of those parties may, especially if it or an affiliate holds non-offered
certificates, or has financial interests in or other financial dealings with a
borrower under any of the mortgage loans, have interests when dealing with the
mortgage loans that are in conflict with those of holders of the offered
certificates. For instance, a special servicer that holds non-offered
certificates could seek to mitigate the potential for loss to its class from a
troubled mortgage loan by deferring enforcement in the hope of maximizing future
proceeds. However, that action could result in less proceeds to the trust than
would have been realized if earlier action had been taken. In general, neither
the master servicer nor the special servicer is required to act in a manner more
favorable to the offered certificates or any particular class thereof than to
the non-offered certificates.
In addition, the master servicer and the special servicer each services
and will, in the future, service, in the ordinary course of its business,
existing and new loans for third parties, including portfolios of loans similar
to the loans that will be included in the trust. The real properties securing
these other loans may be in the same markets as, and compete with, certain of
the real properties securing the loans that will be included in the trust.
Consequently, personnel of the master servicer and special servicer may perform
services, on behalf of the trust, with respect to the mortgage loans at the same
time as they are performing services, on behalf of other persons, with respect
to other mortgage loans secured by properties that compete with the real
properties securing the mortgage loans. This may pose inherent conflicts for the
master servicer or special servicer.
Certain of the mortgage loans included in the trust may have been
refinancings of debt previously held by an affiliate of one of the mortgage loan
seller.
ERISA Considerations. The regulations that govern pension and other
employee benefit plans subject to ERISA and plans and other retirement
arrangements subject to Section 4975(c) of the Internal Revenue Code of 1986 are
complex. Accordingly, if you are using the assets of a plan or arrangement to
acquire offered certificates, you are urged to consult legal counsel regarding
consequences under ERISA and the Internal Revenue Code of 1986 of the
acquisition, ownership and disposition of offered certificates. In particular,
the purchase or holding of class "A-2", "A-3", "A-4", "A-5", "B-1" and "B-2"
certificates by any plan or arrangement may result in a prohibited transaction
or the imposition of excise taxes or civil penalties. As a result, these offered
certificates should not be acquired by, on behalf of, or with assets of any plan
or arrangement, unless the purchase and continued holding of the certificate or
an interest in the certificate is exempt from the prohibited transaction
provisions of Section 406 of ERISA and Section 4975 of the Internal Revenue Code
of 1986 under Sections I and III of Prohibited Transaction Class Exemption
95-60. Sections I and III of Prohibited Transaction Class Exemption 95-60
provide an exemption from the prohibited transaction rules for certain
transactions involving an insurance company general account.
See "Certain ERISA Considerations" in this prospectus supplement and
"ERISA Considerations" in the accompanying prospectus.
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Risks Related to the Mortgage Loans
Repayment of the Mortgage Loans Depends on the Operation of the
Underlying Real Properties. The mortgage loans are secured by mortgage liens on
ownership and/or leasehold interests in the following types of real property:
o [Specify property types]
The risks associated with lending on these types of real properties are
inherently different from those associated with lending on the security of
single-family residential properties. This is because, among other reasons,
repayment of each of the mortgage loans is dependent on--
o the successful operation and value of the underlying real
property, and
o the related borrower's ability to sell or refinance the
underlying real property.
See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage
Loan Depends Upon the Performance and Value of the Underlying Real Property and
the Related Borrower's Ability to Refinance the Property" and "Description of
the Trust Assets--Mortgage Loans--A Discussion of Various Types of Multifamily
and Commercial Properties That May Secure Mortgage Loans Underlying a Series of
Offered Certificates" in the accompanying prospectus.
The Mortgage Loans Have a Variety of Characteristics Which May Expose
Investors to Greater Risk of Default and Loss. When making an investment
decision, you should consider, among other things, the following characteristics
of the mortgage loans and/or the underlying real properties. Any or all of these
characteristics can affect, perhaps materially and adversely, the investment
performance of your certificates. Each of the respective items below includes a
cross-reference to where the associated risks are further discussed in this
prospectus supplement or in the accompanying prospectus. In addition, each of
those items may include a cross reference to where further information about the
particular characteristic may be found in this prospectus supplement.
o The Underlying Real Property Will Be the Sole Asset Available
to Satisfy the Amounts Owing Under a Mortgage Loan in the
Event of Default. All of the mortgage loans are or should be
considered nonrecourse loans. If the related borrower
defaults on any of the mortgage loans, only the underlying
real property, and not the other assets of the borrower, is
available to satisfy the debt. Even if the related loan
documents permit recourse to the borrower or a guarantor, the
trust may not be able to ultimately collect the amount due
under a defaulted mortgage loan. None of the mortgage loans
are insured or guaranteed by any governmental agency or
instrumentality or by any private mortgage insurer. See "Risk
Factors--Repayment of a Commercial or Multifamily Mortgage
Loan Depends Upon the Performance and Value of the Underlying
Real Property and the Related Borrower's Ability to Refinance
the Property--Most of the Mortgage Loans Underlying Your
Certificates Will be Nonrecourse" in the accompanying
prospectus.
o In Some Cases, an Underlying Real Property Is Dependent on a
Single Tenant or on One or a Few Major Tenants. In the case
of ________ underlying real properties, securing ____% of the
initial mortgage pool balance, the related borrower has
leased the property to at least
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one tenant that occupies ____% or more of the particular
property. In the case of ______ of those mortgage loans,
representing ____% of the initial mortgage pool balance, the
related borrower has leased the underlying real property to a
single tenant that occupies all or substantially all of the
particular property. Accordingly, the full and timely payment
of each of those mortgage loans is highly dependent on the
continued operation of the major tenant or tenants, which, in
some cases, is the sole tenant, at the underlying real
property. See "Risk Factors--Repayment of a Commercial or
Multifamily Mortgage Loan Depends Upon the Performance and
Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property--The Successful
Operation of a Multifamily or Commercial Property Depends on
Tenants", "--Repayment of a Commercial or Multifamily
Mortgage Loan Depends Upon the Performance and Value of the
Underlying Real Property and the Related Borrower's Ability
to Refinance the Property--Dependence on a Single Tenant or a
Small Number of Tenants Makes a Property Riskier Collateral"
and "Repayment of a Commercial or Multifamily Mortgage Loan
Depends Upon the Performance and Value of the Underlying Real
Property and the Related Borrower's Ability to Refinance the
Property--Tenant Bankruptcy Adversely Affects Property
Performance" in the accompanying prospectus.
o 10% or More of the Initial Mortgage Pool Balance Will Be
Secured by Mortgage Liens on Each of the Following Property
Types--[Specify property types]. [Add disclosure relating to
each property type as to which there exists a material
concentration based on the scheduled principal balances of
the mortgage loans.]
The inclusion in the trust of a significant concentration of
mortgage loans that are secured by mortgage liens on a
particular type of income-producing property makes the
overall performance of the mortgage pool materially more
dependent on the factors that affect the operations at and
value of that property type. See "Description of the Trust
Assets--Mortgage Loans--A Discussion of Various Types of
Multifamily and Commercial Properties That May Secure
Mortgage Loans Underlying a Series of Offered Certificates"
in the accompanying prospectus.
o ___% or More of the Initial Mortgage Pool Balance Will be
Secured by Mortgage Liens on Real Property Located in Each of
the Following States--[Specify States]. The underlying real
properties located in each of the following states secure
mortgage loans or allocated portions of mortgage loans that
represent ___% or more of the initial mortgage pool balance:
% of
Number of Initial Mortgage
State Properties Pool Balance
----- ---------- ------------
The inclusion of a significant concentration of mortgage
loans that are secured by mortgage liens on real properties
located in a particular state makes the overall performance
of the mortgage pool materially more depending on economic
and other conditions or events in that
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<PAGE>
state. See "Risk Factors--Geographic Concentration Within a
Trust Exposes Investors to Greater Risk of Default and Loss"
in the accompanying prospectus.
o The Mortgage Pool Will Include Adjustable Rate Mortgage
Loans. _____________ of the mortgage loans, representing ___%
of the initial mortgage pool balance, provide for adjustments
to their respective interest rates and corresponding
adjustments to their respective monthly debt service
payments. See "Risk Factors--Adjustable Rate Mortgage Loans
Entail Greater Risks of Default to Lenders than Fixed Rate
Mortgage Loans" in the accompanying prospectus.
o The Mortgage Pool Will Include Material Concentrations of
Balloon Loans and ARD Loans. ________ of the mortgage loans,
representing ____% of the initial mortgage pool balance, are
balloon loans, and ________ of the mortgage loans,
representing ____% of the initial mortgage pool balance, are
ARD loans. The ability of a borrower to make the required
balloon payment on a balloon loan at maturity, and the
ability of a borrower to repay an ARD loan on or before the
related anticipated repayment date, in each case depends upon
its ability either to refinance the loan or to sell the
underlying real property. Although an ARD loan may provide
the related borrower with incentives to repay the loan by the
related anticipated repayment date, the failure of that
borrower to do so will not be a default under that loan. ---
See "Description of the Mortgage Pool--Certain Terms and
Conditions of the Mortgage Loans" in this prospectus
supplement and "Risk Factors--The Investment Performance of
Your Certificates Will Depend Upon Payments, Defaults and
Losses on the Underlying Mortgage Loans--There is an
Increased Risk of Default Associated with Balloon Payments"
in the accompanying prospectus.
o The Mortgage Pool Will Include Some Disproportionately Large
Mortgage Loans and Groups of Cross-Collateralized Mortgage
Loans. The inclusion in the mortgage pool of one or more
loans that have outstanding principal balances that are
substantially larger than the other mortgage loans can result
in losses that are more severe, relative to the size of the
mortgage pool, than would be the case if the aggregate
balance of the mortgage pool were distributed more evenly.
The ____ largest mortgage loans and groups of
cross-collateralized mortgage loans represent ____% of the
initial mortgage pool balance. See "Description of the
Mortgage Pool--General", "--Cross-Collateralized Mortgage
Loans, Multi-Property Mortgage Loans and Mortgage Loans With
Affiliated Borrowers" and "--Significant Mortgage Loans" in
this prospectus supplement and "Risk Factors--Loan
Concentration Within a Trust Exposes Investors to Greater
Risk of Default and Loss" in the accompanying prospectus.
o The Mortgage Pool Will Include Leasehold Mortgage Loans.
________ of the underlying real properties, securing ____% of
the initial mortgage pool balance, are secured by mortgage
liens on the related borrower's leasehold interest in all or
a portion of the underlying real property, but not by the
corresponding ownership interest in the property that is
subject to the ground lease. Because of possible termination
of the related ground lease, lending on a leasehold interest
in a real property is riskier than lending on an actual
ownership interest in that property. See "Description of the
Mortgage Pool--Additional Loan and Property
Information--Leaseholds" in this prospectus supplement. See
also "Risk Factors--Ground Leases Create Risks for Lenders
that are not Present When Lending on an Actual Ownership
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<PAGE>
Interest in a Real Property" and "Certain Legal Aspects of
Mortgage Loans--Foreclosure--Leasehold Considerations" in the
accompanying prospectus.
o Some of the Underlying Real Properties Are "Legal
Nonconforming Uses" or "Legal Nonconforming Structures".
Certain of the mortgage loans are secured by a mortgage lien
on a real property that is a "legal nonconforming use" or a
"legal nonconforming structure". This may impair the ability
of the borrower to restore the improvements on an underlying
real property to its current form or use following a major
casualty. See "Description of the Mortgage Pool--Certain
Underwriting Matters--Zoning and Building Code Compliance" in
this prospectus supplement and "Risk Factors--Changes in
Zoning may Adversely Affect the Use or Value of a Real
Property" in the accompanying prospectus.
o Some of the Underlying Real Properties Are Encumbered by
Subordinate Debt. ________ of the mortgage loans,
representing ____% of the initial mortgage pool balance, have
underlying real properties which are known to us to be
encumbered by secured subordinate debt that is not part of
the mortgage pool. The existence of secured subordinate
indebtedness may adversely affect the borrower's financial
viability and/or the trust's security interest in the
underlying real property. Any or all of the following may
result from the existence of secured subordinate indebtedness
on an underlying real property.
(i) refinancing the mortgage loan at maturity for the
purpose of making any balloon payments may be more
difficult;
(ii) reduced cash flow could result in deferred
maintenance at the particular real property;
(iii) if the holder of the subordinated debt files for
bankruptcy or is placed in involuntary receivership,
foreclosing on the particular real property could be
delayed; and
(iv) if the underlying real property depreciates for
whatever reason, the related borrower's equity is
more likely to be wiped out, thereby eliminating the
related borrower's incentive to continue making
payments on its mortgage loan.
[The lender of any material subordinate debt on the underlying
real properties known to us has agreed not to foreclose or
take other legal action against the underlying real property
or the related borrower, for so long as the related mortgage
loan is outstanding and the trust has not done so.]
See "Description of the Mortgage Pool--Additional Loan and
Property Information--Additional and Other Financing" in this
prospectus supplement and "Risk Factors--Subordinate Debt
Increases the Likelihood That a Borrower Will Default on a
Mortgage Loan Underlying Your Certificates" in the
accompanying prospectus.
o Some of the Underlying Real Properties Do Not Comply with the
Americans with Disabilities Act of 1990. Not all of the
underlying real properties securing the mortgage loans comply
with the Americans with Disabilities Act of 1990. Compliance
can be expensive. See "Risk Factors--Compliance with the
Americans with Disabilities Act of 1990 May be Expensive" in
the accompanying prospectus.
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<PAGE>
o Multiple Underlying Real Properties Are Owned by the Same
Borrower or Affiliated Borrowers or Are Occupied, in Whole or
in Part, by the Same Tenant or Affiliated Tenants. Some groups
of the mortgage loans have borrowers that, in the case of each
of those groups, are the same or under common control. See
"Description of the Mortgage Pool--Cross- Collateralized
Mortgage Loans, Multi-Property Mortgage Loans and Mortgage
Loans With Affiliated Borrowers" in this prospectus
supplement.
In addition, there may be tenants which lease space at more
than one underlying real property, and there may be tenants
that are related to or affiliated with a borrower. See
[Exhibit A-1] to this prospectus supplement for a list of the
three most significant tenants at each of the underlying real
properties used for [Specify property use.]
The bankruptcy or insolvency of, or other financial problems
with respect to, any borrower or tenant that is (directly or
through affiliation) associated with two or more of the
underlying real properties could have an adverse effect on all
of those properties and on the ability of those properties to
produce sufficient cash flow to make required payments on the
related mortgage loans in the trust. See "Risk
Factors--Repayment of a Commercial or Multifamily Mortgage
Loan Depends upon the Performance and Value of the Underlying
Real Property and the Related Borrower's Ability to Refinance
the Property--Tenant Bankruptcy Adversely Affects Property
Performance", "--Borrower Concentration Within a Trust Exposes
Investors to Greater Risk of Default and Loss" and "--Borrower
Bankruptcy Proceedings Can Delay and Impair Recovery on a
Mortgage Loan Underlying Your Certificates" in the
accompanying prospectus.
o Some Borrowers under the Mortgage Loans Will Not Be Special
Purpose Entities. The business activities of certain of the
borrowers under the mortgage loans are not limited to owning
their respective underlying real properties. Accordingly, the
financial success of each of those borrowers may be affected
by the performance of its other business activities, including
other real estate interests. Those other business activities
increase the possibility that the borrower may become bankrupt
or insolvent.
Changes in Mortgage Pool Composition can Change the Nature of Your
Investment. If you purchase any offered certificates other than the class "___"
certificates, you will be more exposed to risks associated with changes in
concentrations of borrower, loan or property characteristics than are persons
who own offered certificates that have an earlier assumed final payment date
than your certificates. See "Risk Factors--Changes in Pool Composition Will
Change the Nature of Your Investment" in the accompanying prospectus.
Lending on Income-Producing Real Properties Entails Environmental
Risks. The trust could become liable for a material adverse environmental
condition at an underlying real property. Any such potential liability could
reduce or delay payments on the offered certificates.
A third-party consultant conducted an environmental site assessment, or
updated a previously conducted assessment, with respect to ________ of the
underlying real properties, securing ____% of the initial mortgage pool balance,
during the _____-month period ending on ______________. Each of those
environmental site assessments or updates, as the case may be, complied with
industry-wide standards. Not all of those environmental site assessments,
however, satisfied all the requirements necessary to be considered
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<PAGE>
a "Phase I" environmental site assessment. In certain cases, a third-party
consultant also conducted a "Phase II" environmental site assessment of the
underlying real property. If any assessment or update revealed a material
adverse environmental condition or circumstance at any underlying real property
and the consultant recommended action, then, depending on the nature of the
condition or circumstance, the borrower has--
o implemented or agreed to implement an operations and
maintenance plan, in the manner and within the time frames
specified in the related loan documents;
o agreed to monitor periodically nearby properties, in the
manner and within the time frames specified in the related
loan documents; or
o established a reserve account with the lender to cover the
estimated cost of addressing the
condition or circumstances.
In many cases, the identified condition related to the presence of
asbestos-containing materials, lead- based paint and/or radon. Where these
substances were present, the environmental consultant generally recommended, and
the related loan documents required, the establishment of an operation and
maintenance plan to address the issue or, in the case of asbestos-containing
materials and lead-based paint, an abatement or removal program. In a few cases,
the particular asbestos-containing materials or lead-based paint was in poor
condition. This could result in a claim for damages by any party injured by such
condition.
In some cases, the cost to remediate, prevent or otherwise deal with an
adverse environmental condition at a particular underlying real property was
estimated to be more than $__________.
[In some cases, the environmental consultant did not recommend that any
action be taken with respect to a potential adverse environmental condition at
an underlying real property or a nearby property because a responsible party
with respect to that condition had already been identified.]
[In the case of ________ of the underlying real properties, securing
____% of the initial mortgage pool balance, either--
o no environmental site assessment was conducted in connection
with the origination of the related mortgage loan, or
o a "Phase II" environmental site assessment was recommended but
not performed.]
[In general, the related originator's election not to take the foregoing actions
with respect to any of those underlying real properties was based upon the
delivery of a secured creditor impaired property policy covering certain
environmental matters with respect to the property. Some of those ______
underlying real properties are, in each case, are covered by individual secured
creditor impaired property policies. In addition, we will obtain a separate
secured creditor impaired property policy covering certain environmental matters
with respect to all of the underlying real properties that are not covered by
individual policies. All of the policies referred to in the prior two sentences
provide for certain coverage limits. In addition, those policies do not provide
coverage for adverse environmental conditions at levels below legal limits or
for conditions involving asbestos and lead-based paint. In some cases, the
originator of the related mortgage loan agreed to release a principal of the
related borrower from its obligations under an environmental or hazardous
substances indemnity with respect to the particular underlying real property in
connection with
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<PAGE>
the delivery of a secured creditor impaired property policy covering that
property. See "Description of the Mortgage Pool--Certain Underwriting
Matters--Environmental Insurance" in this prospectus supplement.]
See "Risk Factors--Environmental Liabilities Will Adversely Affect the
Value and Operation of the Contaminated Property and May Deter a Lender from
Foreclosing" and "Certain Legal Aspects of Mortgage Loans--Environmental
Considerations" in the accompanying prospectus.
Lending on Income-Producing Properties Entails Risks Related to
Property Condition. Licensed engineers inspected all of the underlying real
properties during the _____-month period preceding _____________ to assess the
structure, exterior walls, roofing, interior construction, mechanical and
electrical systems and general condition of the site, buildings and other
improvements located at each underlying real property. At certain of the
underlying real properties, the inspections identified conditions requiring
escrows to be established for repairs or replacements estimated to cost in
excess of $_________. In most of these cases, the originator required the
related borrower to fund reserves, or deliver letters of credit or other
instruments, to cover these costs.
Limitations on Enforceability of Cross-Collateralization. The mortgage
pool will include ________ mortgage loans that are secured, including through
cross-collateralization with other mortgage loans, by multiple underlying real
properties. These mortgage loans are identified in the tables contained in
[Exhibit A-1]. The purpose of securing any particular mortgage loan or group of
cross-collateralized mortgage loans with multiple real properties is to reduce
the risk of default or ultimate loss as a result of an inability of any
particular property to generate sufficient net operating income to pay debt
service. [However, ________ of these mortgage loans permit--
o the release of one or more of the underlying real properties
from the related mortgage lien, and/or
o a full or partial termination of the applicable
cross-collateralization, in each case, upon the satisfaction
of the conditions described under "Description of the Mortgage
Pool--Certain Terms and Conditions of the Mortgage Loans" in
this prospectus supplement.]
In addition, when multiple real properties secure a mortgage loan or
group of cross-collateralized mortgage loans, the amount of the mortgage
encumbering any particular one of those properties may be less than the full
amount of the related mortgage loan or group of cross-collateralized mortgage
loans (in general, to avoid recording tax). This mortgage amount may equal the
appraised value or allocated loan amount for the underlying real property and
will limit the extent to which proceeds from the property will be available to
offset declines in value of the other properties securing the same mortgage loan
or group of cross- collateralized mortgage loans.
________ mortgage loans are, in each case, secured by real properties
located in two or more states. These mortgage loans represent ____% of the
initial mortgage pool balance. Foreclosure actions are brought in state court
and the courts of one state cannot exercise jurisdiction over property in
another state. Upon a default under any of these mortgage loans, it may not be
possible to foreclose on the related underlying real properties simultaneously.
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<PAGE>
Limited Information Causes Uncertainty. Some of the mortgage loans are
acquisition financing. Accordingly, limited or no operating information is
available with respect to the underlying real properties for those mortgage
loans. As a result, you may find it difficult to analyze the performance of
those properties.
[Prior Bankruptcies. Some of the borrowers under the mortgage loans or
their affiliates have been parties to, and/or some of the underlying real
properties have been the subject of, prior bankruptcy proceedings.]
DESCRIPTION OF THE MORTGAGE POOL
General
We are establishing a trust, to be designated as
"_________________________". The assets of the trust will primarily consist of
the mortgage loans, which have the characteristics described in this prospectus
supplement. The mortgage pool will have an initial mortgage pool balance of
$___________, subject to a variance of plus or minus ___%. The "initial mortgage
pool balance" will equal the aggregate __/__/__ scheduled principal balance of
the mortgage loans. The "scheduled principal balance" of any mortgage loan, as
of any date of determination, is equal to its unpaid principal balance as of
that date, after application of all scheduled payments of principal due in
respect of the mortgage loan on or before that date, whether or not those
payments were received. The __/__/__ scheduled principal balances of the
mortgage loans will range from $_______ to $__________, and the average __/__/__
scheduled principal balance of the mortgage loans will be $_________.
Each of the mortgage loans is an obligation of the related borrower to
repay a specified sum with interest. Each of the mortgage loans is evidenced by
a promissory note and secured by a mortgage, deed of trust, deed to secure debt
or other similar security instrument (each, for purposes of this prospectus
supplement, a "mortgage") that creates a [first] mortgage lien on the ownership
and/or leasehold interest of the related borrower or another party in one or
more commercial or multifamily real properties, subject only to the following
(collectively, the "Permitted Encumbrances")--
o the lien of current real property taxes, ground rents, water
charges, sewer rents and assessments not yet due and payable,
o covenants, conditions and restrictions, rights of way,
easements and other matters that are of public record and/or
are referred to in the related lender's title insurance policy
(or, if not yet issued, referred to in a pro forma title
policy or a "marked-up" commitment), none of which materially
interferes with the security intended to be provided by the
mortgage, the current use of the related underlying real
property or the current ability of the related underlying real
property to generate income sufficient to service the related
mortgage loan,
o exceptions and exclusions specifically referred to in such
lender's title insurance policy (or such pro forma title
policy or "marked-up" commitment), none of which materially
interferes with the security intended to be provided by the
mortgage, the current use of the related underlying real
property or the current ability of the related underlying real
property to generate income sufficient to service the related
mortgage loan,
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<PAGE>
o other matters to which like properties are commonly subject,
none of which materially interferes with the security intended
to be provided by the mortgage, the use of the related
underlying real property or the current ability of the related
underlying real property to generate income sufficient to
service the related mortgage loan,
o the rights of tenants to remain, whether under ground leases
or space leases, at the underlying real property following a
foreclosure or similar proceeding, provided that those tenants
are performing under such leases, and
o if the mortgage loan is a cross-collateralized mortgage loan,
the lien of the mortgage for another mortgage loan contained
in the same group of cross-collateralized mortgage loans.
You should consider each of the mortgage loans a nonrecourse obligation
of the related borrower. In the event of a payment default by the related
borrower, recourse will be limited to the underlying real property or properties
for satisfaction of that borrower's obligations. In those cases where recourse
to a borrower or guarantor is permitted under the related mortgage loan
documents, we have not undertaken an evaluation of the financial condition of
any of these persons. None of the mortgage loans is insured or guaranteed by any
governmental entity or by any other person.
We include in this prospectus supplement a variety of information
regarding the mortgage loans and the underlying real properties. In reviewing
this information, you should be aware that--
o All numerical information provided with respect to the
mortgage loans is provided on an approximate basis.
o All weighted average information provided with respect to the
mortgage loans or any sub- group of mortgage loans reflects
the weighting of those mortgage loans by their respective
__/__/__ scheduled principal balances.
o In presenting the __/__/__ scheduled principal balances of the
mortgage loans, we have assumed that--
(i) all scheduled payments of principal and/or interest
due on the mortgage loans on or before _____________
are timely made, and,
(ii) there are no prepayments or other unscheduled
collections of principal with respect to any of the
mortgage loans during the period from _____________
up to and including ____________.
o When information with respect to the underlying real
properties is expressed as a percentage of the initial
mortgage pool balance, the percentages are based upon the
__/__/__ scheduled principal balances of the related mortgage
loans.
o Some of the mortgage loans are cross-collateralized and
cross-defaulted with one or more other mortgage loans. Except
as otherwise indicated, when a mortgage loan is cross-
collateralized and cross-defaulted with another mortgage loan,
we have presented the information regarding those mortgage
loans as if each of them was secured only by a
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mortgage lien on the corresponding real property identified on
Exhibit A-1 to this prospectus supplement. One such exception
is that each and every mortgage loan in any particular group
of cross-collateralized and cross-defaulted mortgage loans is
treated as having the same loan-to-value ratio and the same
debt service coverage ratio. None of the mortgage loans is
cross-collateralized with any loan that will not be included
in the trust.
o In some cases, when multiple underlying real properties secure
a single mortgage loan, we have allocated that mortgage loan
among those properties based upon--
(i) relative appraised values,
(ii) relative underwritten net cash flow, or
(iii) prior allocations reflected in the related loan
documents,
for purposes of providing certain property-specific
information.
o In some cases, when multiple parcels of real property secure a
single mortgage loan, we have treated those parcels as a
single "real property" because of their proximity to each
other, the interrelationship of their operations or for other
reasons deemed appropriate by us.
o Whenever we refer to a particular underlying real property by
name, we mean the property identified by that name on Exhibit
A-1 to this prospectus supplement.
o Statistical information regarding the mortgage loans may
change prior to the date of initial issuance of the
certificates due to changes in the composition of the mortgage
pool prior to that date.
Cross-Collateralized Mortgage Loans, Multi-Property Mortgage Loans and Mortgage
Loans With Affiliated Borrowers
The mortgage pool includes ________ mortgage loans that are, in each
case, individually or through cross-collateralization with other mortgage loans,
secured by two or more real properties. [However, the amount of the mortgage
encumbering any particular one of those properties may be less than the full
amount of the related mortgage loan or group of cross-collateralized mortgage
loans in the trust, generally to avoid recording tax. The mortgage amount may
equal the appraised value or allocated loan amount for the particular real
property, thereby limiting the extent to which proceeds from that property would
be available to offset declines in value of the other underlying real properties
securing the same mortgage loan or group of cross-collateralized mortgage loans
in the trust.]
________ of the mortgage loans referred to in the prior paragraph
entitle the related borrower(s) to obtain a release of one or more of the
underlying real properties and/or a termination of any applicable cross-
collateralization, subject, in each case, to the fulfillment of one or more of
the following conditions--
o the pay down of the mortgage loan(s) in an amount equal to a
specified percentage, which is usually ______%, of the portion
of the total loan amount allocated to the property or
properties to be released;
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<PAGE>
o the satisfaction of certain debt service coverage and
loan-to-value tests for the property or properties that will
remain as collateral; and/or
o receipt by the lender of confirmation from each applicable
rating agency that the action will not result in a
qualification, downgrade or withdrawal of any of the
then-current ratings of the certificates.
In addition, certain of the mortgage loans referred to in the prior paragraph
also entitle the related borrower to a release of one or more of the underlying
real properties through defeasance. See "--Certain Terms and Conditions of the
Mortgage Loans--Defeasance Loans" below.
The table below identifies the underlying real properties that secure
the individual multi-property mortgage loans ("Multi") and groups of
cross-collateralized mortgage loans ("Cross") that will, in each case, represent
at least ____% of the initial mortgage pool balance.
<TABLE>
<CAPTION>
Number of States % of
Where the Initial Mortgage
Property Names Multi/Cross Properties are Located Pool Balance
- -------------- ----------- ---------------------- ------------
<S> <C> <C> <C>
</TABLE>
The table below shows the underlying real properties that secure the
groups of non-cross- collateralized mortgage loans that, in the case of each of
those groups, represent ____% or more of the initial mortgage pool balance and
generally are secured by underlying real properties with the same managing
entity and/or have the same or affiliated borrowers.
Number of States % of
Where the Initial Mortgage
Property Names Properties are Located Pool Balance
- -------------- ---------------------- ------------
Certain Terms and Conditions of the Mortgage Loans
Due Dates. All of the mortgage loans provide for scheduled payments of
principal and/or interest to be due on the [first day] of each month. We refer
to these scheduled payments as "monthly debt service payments".
Mortgage Rates; Calculations of Interest. In general, each of the
mortgage loans bears interest at a mortgage interest rate that, in the absence
of default, is fixed until maturity. However, as described below, each of the
mortgage loans that has an anticipated repayment date will accrue interest after
that date at a rate that is in excess of its mortgage interest rate prior to
that date. [If any of the mortgage loans have floating or adjustable mortgage
interest rates, discuss calculation of those rates, including indices, gross
margins, adjustment dates, floors and caps.]
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<PAGE>
As of ______________, the mortgage interest rates for the mortgage
loans ranged from ____% per annum to ____% per annum, and the weighted average
mortgage interest rate for the mortgage loans was ____%.
None of the mortgage loans provides for negative amortization or,
except as described below with respect to the ARD loans, which have anticipated
repayment dates, for the deferral of interest. [Describe any potential negative
amortization.]
Each of the mortgage loans will accrue interest on the basis of one of
the following conventions:
o the actual number of days elapsed during each one-month
accrual period in a year of 360 days (an "actual/360 basis");
o a 360-day year consisting of twelve 30-day months (a "30/360
basis"); or
o [Specify any other basis.]
The table below shows the number of, and percentage of initial mortgage
pool balance represented by, mortgage loans that accrue interest based on each
of the foregoing conventions.
% of
Number of Initial Mortgage
Interest Accrual Basis Mortgage Loans Pool Balance
- ---------------------- -------------- ------------
Actual/360 Basis %
30/360 Basis %
[Other] %
Balloon Loans. ________ of the mortgage loans, representing ____% of
the initial mortgage pool balance, are balloon loans.
A "balloon loan" is characterized by--
o an amortization schedule that is significantly longer than the
actual term of the mortgage loan, and
o a substantial payment being due in respect of the mortgage
loan on its stated maturity date.
[ARD Loans. ________ of the mortgage loans, representing ____% of the
initial mortgage pool balance, are ARD loans.
An "ARD loan" is characterized by the following features:
o A maturity date that is more than _______________ years
following origination.
o The designation of an "anticipated repayment date" that is
generally ______ years following origination. The anticipated
repayment date for each of the ARD loans is listed on [Exhibit
A-1] to this prospectus supplement.
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<PAGE>
o The ability of the related borrower to prepay the mortgage
loan, without restriction, including without any obligation to
pay a prepayment premium or a yield maintenance charge, at any
time on or after a date that is generally _____ to ______
months prior to the related anticipated repayment date.
o Until its anticipated repayment date, the calculation of
interest at its initial mortgage interest rate.
o From and after its anticipated repayment date, the accrual of
interest at a revised annual rate that is, in most cases,
equal to the sum of (i) its initial mortgage interest rate,
plus (ii) a specified margin that is, in some cases, not more
than _____ percentage points.
o The deferral of any additional interest, which we refer to as
"Post-ARD Additional Interest", accrued in respect of the
mortgage loan from and after the related anticipated repayment
date at the difference between its revised mortgage interest
rate and its initial mortgage interest rate. Post-ARD
Additional Interest may, in some cases, compound at the new
revised mortgage interest rate. Any Post-ARD Additional
Interest accrued in respect of an ARD loan following its
anticipated repayment date will not be payable until the
entire principal balance of the mortgage loan has been paid in
full.
o From and after its anticipated repayment date, the accelerated
amortization of the mortgage loan out of any and all monthly
cash flow from the underlying real property which remains
after payment of the applicable monthly debt service payments
and permitted operating expenses and capital expenditures.
These accelerated amortization payments and the Post-ARD
Additional Interest are considered separate from the monthly
debt service payments due in respect of an ARD loan.
In the case of each of the ARD loans, the related borrower has agreed
to enter into a cash management agreement not less than _______ months prior to
the related anticipated repayment date if it has not already done so. The
related borrower or the manager of the underlying real property will be required
under the terms of that cash management agreement to deposit or cause the
deposit of all revenue from that property received after the related anticipated
repayment date into a designated account controlled by the lender under the ARD
loan.
Fully Amortizing Loans. ________ of the mortgage loans, representing
____% of the initial mortgage pool balance, are fully amortizing loans.
A "fully amortizing loan" is generally characterized by--
o constant monthly debt service payments throughout the
substantial term of the mortgage loan, and
o an amortization schedule that is approximately equal to the
actual term of the mortgage loan.
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<PAGE>
However, a "fully amortizing loan" does not have either--
o an anticipated repayment date, or
o the associated repayment incentives.
Amortization of Principal. The table below shows, in months, the
original and, as of ____________, the remaining amortization schedules and terms
to maturity for the mortgage loans [or the specified sub- groups of mortgage
loans]. For purposes of the following table, ARD loans are assumed to "mature"
on their respective anticipated repayment dates.
<TABLE>
<CAPTION>
Fully Amortizing
Balloon Loans ARD Loans Loans All Mortgage Loans
------------- --------- ----- ------------------
<S> <C> <C> <C> <C>
Original Term to Maturity
Maximum
Minimum
Weighted Average
Remaining Term to Maturity
Maximum
Minimum
Weighted Average
Original Amortization Term
Maximum
Minimum
Weighted Average
Remaining Amortization Term
Maximum
Minimum
Weighted Average
</TABLE>
Some of the mortgage loans provide for a recast of the amortization
schedule and an adjustment of the monthly debt service payments on the mortgage
loan upon application of specified amounts of condemnation proceeds or insurance
proceeds to pay the unpaid principal balance of the mortgage loan.
[Discuss any adjustments to the monthly debt service payments for the
mortgage loans.]
Voluntary Prepayment Provisions. In general, at origination, the
mortgage loans provided for:
o a period (a "prepayment lock-out period") during which
voluntary principal prepayments are prohibited, followed by
o a period (an "open prepayment period") during which voluntary
principal prepayments may be made without any prepayment
consideration.
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<PAGE>
Notwithstanding otherwise applicable lock-out periods, partial
prepayments of some of the mortgage loans are required under the circumstances
described under "--Certain Terms and Conditions of the Mortgage Loans--Other
Prepayment Provisions" below.
The table titled "Characteristics of the Mortgage Loans" on Exhibit A-1
shows the type of prepayment provision that corresponds to each mortgage loan,
commencing as of its respective date of origination. In addition, the table
titled "Prepayment Provisions as of __/__/__" on [Exhibit A-2] shows a breakdown
of the mortgage loans based on (i) remaining term to stated maturity [(or, in
the case of the ARD loans, to their respective anticipated repayment dates)] and
(ii) the remaining prepayment lock-out period applicable to, and the remaining
period, if any, during which prepayment consideration is payable upon a
voluntary prepayment of, each mortgage loan. The prepayment restrictions
relating to each of the mortgage loans generally do not apply to prepayments
arising out of a casualty or condemnation of the underlying real property, and
prepayments of this type are generally not required to be accompanied by any
prepayment consideration. The aggregate characteristics of the prepayment
provisions of the mortgage pool will vary over time as--
o lock-out periods expire and mortgage loans enter periods
during which a prepayment consideration may be required in
connection with principal prepayments and, thereafter, enter
open prepayment periods, and
o mortgage loans are prepaid, repurchased, replaced or
liquidated on account of default or delinquency.
The table titled "Mortgage Pool Prepayment Profile" on [Exhibit A-2]
shows the percentage of the aggregate scheduled principal balance of the
mortgage loans expected to be outstanding immediately prior to the payment date
occurring in ______ of each year (through ____) as to which each type of
prepayment provision would be in effect, based on the "Maturity Assumptions" and
a 0% CPR. See "Yield and Maturity Considerations--The Maturity Assumptions" in
this prospectus supplement.
As described below under "--Defeasance Loans", [substantially all] of
the mortgage loans permit the borrower to obtain a release of the underlying
real property (or, where applicable, one or more of the underlying real
properties) from the lien of the related mortgage by delivering U.S. government
securities as substitute collateral. None of the mortgage loans permit
defeasance prior to the second anniversary of the date of initial issuance of
the certificates. The table titled "Prepayment Type as of __/__/__" on [Exhibit
A-2] shows a breakdown of the mortgage loans based on (i) the type of
combination of prepayment and/or defeasance provisions and (ii) the remaining
prepayment lock-out period applicable to, and the remaining period, if any,
during which prepayment consideration is payable upon a voluntary prepayment of,
each of those mortgage loans.
Prepayment Lock-out Periods. _________ of the mortgage loans,
representing ___% of the initial mortgage pool balance, provide for prepayment
lock-out periods as of ______________ and--
o the maximum remaining prepayment lock-out period of those
mortgage loans as of that date is ____ months,
o the minimum remaining prepayment lock-out period of those
mortgage loans as of that date
is ____ months, and
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<PAGE>
o the weighted average remaining prepayment lock-out period of
those mortgage loans as of that date is ____ months.
Notwithstanding otherwise applicable lock-out periods, partial
prepayments of some mortgage loans are required under the circumstances
described under "--Certain Terms and Conditions of the Mortgage Loans--Other
Prepayment Provisions" below.
Prepayment Consideration. Following an initial prepayment lock-out
period, ________ mortgage loans, representing ____% of the initial mortgage pool
balance, provide for the payment of prepayment consideration in connection with
a voluntary prepayment during part of the loan term. That prepayment
consideration will equal [Specify calculation of prepayment consideration]:
Prepayment premiums and yield maintenance charges received on the
mortgage loans, whether in connection with voluntary or involuntary prepayments,
will be allocated and paid to the persons, in the amounts and in accordance with
the priorities described under "Description of the Offered
Certificates--Payments--Payments of Prepayment Premiums and Yield Maintenance
Charges" in this prospectus supplement. Limitations may exist under applicable
state law on the enforceability of the provisions of the mortgage loans that
require payment of prepayment premiums or yield maintenance charges, and neither
we nor the underwriter makes any representation or warranty as to the
collectability of any prepayment premium or yield maintenance charge in respect
of any of the those mortgage loans. See "Risk Factors--Some Provisions in the
Mortgage Loans Underlying Your Certificates May be Challenged as Being
Unenforceable--Prepayment Premiums, Fees and Charges" and "Certain Legal Aspects
of Mortgage Loans--Default Interest and Limitations on Prepayments" in the
accompanying prospectus.
Open Prepayment Periods. Where a mortgage loan provides for an open
prepayment period, the open prepayment period generally begins ____ to ____
months prior to stated maturity [(or, in the case of an ARD loan, prior to the
related anticipated repayment date).
Other Prepayment Provisions. Certain of the mortgage loans provide for
mandatory partial prepayments, notwithstanding any lock-out period that may
otherwise be in effect. In some cases, the related borrower has established
reserves or delivered a letter of credit that will be applied to a partial
prepayment of the mortgage loan if one or more property performance conditions
do not occur.
Investors should not expect any prepayment consideration to be paid in
connection with any mandatory partial prepayment described above.
"Due-on-Sale" and "Due-on-Encumbrance" Provisions. __________ of the
mortgage loans, representing ____% of the initial mortgage pool balance, contain
both a "due-on-sale" clause and a "due-on- encumbrance" clause. In general,
except for the permitted transfers discussed below, these clauses either permit
the holder of the related mortgage to accelerate the maturity of the mortgage
loan if the borrower sells or otherwise transfers or encumbers the underlying
real property or prohibit the borrower from doing so without the consent of the
holder of the mortgage. See, however, "Risk Factors--The Investment Performance
of Your Certificates Will Depend upon Payments, Defaults and Losses on the
Underlying Mortgage Loans--Delinquencies, Defaults and Losses on the Underlying
Mortgage Loans May Affect the Amount and Timing of Payments on Your
Certificates" and "--Some Provisions in the Mortgage Loans Underlying Your
Certificates may be Challenged as Being Unenforceable--Due-on-Sale and Debt
S-45
<PAGE>
Acceleration Clauses" and "Certain Legal Aspects of Mortgage Loans--Due on Sale
and Due-on- Encumbrance Provisions" in the accompanying prospectus.
Many of the mortgage loans permit one or more of the following types of
transfers:
o transfers of the underlying real property if specified
conditions are satisfied, which conditions normally include--
(i) confirmation by each applicable rating agency that
the transfer will not result in a qualification,
downgrade or withdrawal of any of its then current
ratings of the certificates, or
(ii) the reasonable acceptability of the transferee to the
lender;
o a transfer of the underlying real property to a person that is
affiliated with or otherwise related to the borrower;
o certain specified transfers by the borrower of the underlying
real property in accordance with the provisions of the
mortgage loan; or
o a transfer of certain ownership interests in the borrower.
Defeasance Loans. _________ of the mortgage loans, representing ___% of
the initial mortgage pool balances, permit the borrower to deliver U.S.
government securities as substitute collateral.
Each of these mortgage loans permits the related borrower, during
specified periods and subject to certain conditions, to pledge to the holder of
the mortgage loan the requisite amount of direct, non-callable U.S. government
securities (the "defeasance collateral") and obtain a release of the underlying
real property (or, in the case of a mortgage loan secured by multiple real
properties, one or more of the underlying real properties). In general, the
defeasance collateral to be delivered in connection with the defeasance of any
mortgage loan must provide for a series of payments that--
o will be made prior, but as closely as possible, to all
successive due dates through and including the maturity date,
and
o will, in the case of each due date, be in a total amount equal
to or greater than the monthly debt service payment
(including, if applicable, any balloon payment) scheduled to
be due on that date (with any excess to be returned to the
related borrower).
[For purposes of determining the defeasance collateral for an ARD loan,
however, that mortgage loan will be treated as if a balloon payment is due on
its anticipated repayment date.]
If fewer than all of the real properties securing any particular
mortgage loan or group of cross- collateralized mortgage loans are to be
released in connection with any defeasance, the requisite defeasance collateral
will be calculated based on the allocated loan amount for the properties to be
released and the portion of the monthly debt service payments attributable to
that allocated loan amount.
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<PAGE>
In connection with any delivery of defeasance collateral, the related
borrower will be required to deliver a security agreement granting the trust a
first priority security interest in the collateral, together with an opinion of
counsel confirming the first priority status of the security interest.
None of the mortgage loans may be defeased prior to the _________
anniversary of the date of initial issuance of the certificates.
Certain Mortgage Pool Characteristics
General. A detailed presentation of certain characteristics of the
mortgage loans and the underlying real properties, on an individual basis and in
tabular format, is shown on [Exhibits A-1 and A-2] to this prospectus
supplement. Certain terms that appear in those exhibits, as well as elsewhere in
this prospectus supplement, are defined or otherwise discussed below. Due to
rounding, percentages and amounts in the tables on Exhibits A-1 and A-2 to this
prospectus supplement may not add up to the indicated totals. See the notes to
the tables on Exhibit A-1 for an identification of each group of mortgage loans
that are collectively represented by a single mortgage note or form a group of
cross-collateralized mortgage loans.
1. "Underwritten net cash flow" is _________________________.
2. "Underwritten net operating income" is _____________________________.
3. The "Most Recent Appraised Value" is ________________________.
4. "Underwritten net cash flow debt service coverage ratio" or "U/W #NCF#,
DSCR" means ____________________.
5. "__/__/__ loan-to-value ratio", "cut-off date loan-to-value ratio",
"__/__/__ LTV ratio" or "cut-off date LTV ratio" all mean
____________________________.
6. "Leasable square footage", "S.F." or "Sq. Ft." means
_________________________.
7. "Units" means _______________________.
8. "Rooms" means __________________________.
9. "Occupancy rate at underwriting" or "occupancy rate at U/W" means
______________________.
10. A "major tenant" is _______________________.
11. "Year built" means _______________________________.
12. "Year renovated" means ____________________________.
13. Underwritten net operating income debt service coverage ratio" or "U/W
NOI SDCR" means ____________________________.
S-47
<PAGE>
14. "Most recent operating statement date" means ________________________.
16. The "Maturity/ARD Balance" of each of the mortgage loans is
_______________________.
17. "Maturity/ARD loan-to-value ratio" means ___________________________:
Additional Loan and Property Information
Delinquencies. None of the mortgage loans was as of ________________,
or has been at any time during the _____-month period preceding that date,
______ days or more delinquent in respect of any monthly debt service payment.
Tenant Matters. Described below are special considerations regarding
tenants at the underlying real properties--
o ________ of the underlying real properties, securing ____% of
the initial mortgage pool balance, are, in each case, [Specify
property types] that is leased to one or more major tenants
that each occupy ____% or more of the net rentable area of the
particular property.
o A number of companies are major tenants at more than one of
the underlying real properties.
o There are several cases in which a particular entity is a
tenant at multiple underlying real properties, and although it
may not be a major tenant at any of those properties, it may
be significant to the success of the properties.
[o ________ of the mortgage loans, representing ____% of the
initial mortgage pool balance, are secured by multifamily
rental properties that have material concentrations of student
tenants.]
[Ground Leases. ________ of the mortgage loans, representing ____% of
the initial mortgage pool balance, are secured, in whole or in material part, by
a mortgage on the borrower's leasehold interest in the underlying real property.
In each case, the related ground lease (giving effect to all extension options)
expires more than ten years after the stated maturity of the related mortgage
loan and either:
o the ground lessor has subordinated its interest in the
underlying real property to the interest of the holder of that
mortgage loan; or
o the ground lessor has agreed to give the holder of that
mortgage loan notice of, and the right to cure, any default or
breach by the lessee [Describe any exceptions.]
See "Risk Factors--Ground Leases Create Risks for Lenders That Are Not
Present When Lending on an Actual Ownership Interest in a Real Property" and
"Certain Legal Aspects of Mortgage Loans--Foreclosure--Leasehold Considerations"
in the accompanying prospectus.
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<PAGE>
[Additional and Other Financing. ________ of the underlying real
properties, securing ____% of the initial mortgage pool balance, are known to us
to be encumbered by secured subordinate debt that is not part of the mortgage
pool. The following table identifies those properties, indicates the initial
principal amount of the secured subordinate debt and sets forth the __/__/__
scheduled principal balances of the related mortgage loans. The table also
shows, in the case of each of those properties, whether the subordinate lender
has entered into a "subordination and standstill agreement" with the holder of
the related mortgage loan whereby that subordinate lender--
o expressly subordinated its right to receive collections and
proceeds from, and otherwise deal with, that property, and
o agrees not to take any enforcement or other legal action
against that property or the related borrower as long as the
related mortgage loan is outstanding and the mortgagee under
that mortgage loan has not taken any such enforcement or other
legal action.]
<TABLE>
<CAPTION>
% of Initial
__/__/__ Scheduled Mortgage Pool
Principal Balance Balance Represented Initial Principal
of Related by Related Amount of Secured
Names Mortgage Loans Mortgage Loans Subordinate Debt
- ----- -------------- -------------- ----------------
<S> <C> <C> <C>
</TABLE>
- ------------------
* In these cases, the subordinate lender has entered into a subordination
and standstill agreement in favor of the mortgagee under the related
mortgage loan.
[In addition, borrowers under ________ of the mortgage loans,
representing ____% of the initial mortgage pool balance, have unsecured debt of
which we are aware. In some cases, the lender on the debt is an affiliate of the
borrower. In each case, the lender on the unsecured debt has executed and
delivered a subordination and standstill agreement in favor of the mortgagee
under the related mortgage loan. In addition, some of the mortgage loans permit
the related borrower to incur unsecured subordinated debt in the future, subject
to conditions such as limiting the use of proceeds to refurbishing or renovating
the underlying real property and/or acquiring furniture, fixtures and equipment
for the underlying real property. Borrowers that do not meet special purpose
entity, bankruptcy-remote criteria, generally do not have any restriction on the
incurrence of unsecured debt. Additional debt, in any form, may cause a
diversion of funds from property maintenance and increase the likelihood that
the borrower will become the subject of a bankruptcy proceeding]. See "Risk
Factors--Subordinate Debt Increases the Likelihood that a Borrower Will Default
on a Mortgage Loan Underlying Your Certificates" and "Certain Legal Aspects of
Mortgage Loans--Subordinate Financing" in the accompanying prospectus.
Except as described above, we have not been able to confirm whether the
respective borrowers under the mortgage loans have any other debt outstanding.
S-49
<PAGE>
Certain Underwriting Matters
General. In connection with the origination of each of the mortgage
loans, the related originator of the mortgage loan evaluated the underlying real
property or properties in a manner generally consistent with the standards
described below. See also "Description of the Trust Assets--Mortgage
Loans--Default and Loss Considerations with Respect to the Mortgage Loans" in
the accompanying prospectus.
Environmental Assessments. A third-party environmental consultant
conducted an environmental site assessment, or updated a previously conducted
assessment, with respect to ________ of the underlying real properties, during
the ____-month period ending on _____________. Each of those environmental site
assessments or updates, as the case may be, complied with industry-wide
standards. Not all of those environmental site assessments, however, satisfied
all the requirements necessary to be considered a "Phase I" environmental site
assessment. The environmental testing at any particular underlying real property
did not necessarily cover all potential environmental issues. [Discuss results
and corresponding actions].
[The information contained in this prospectus supplement regarding
environmental conditions at the respective underlying real properties is based
on the environmental site assessments referred to above and has not been
independently verified by us or the mortgage loan seller, the underwriter, the
master servicer, the special servicer, the trustee or the affiliates of any of
these parties. There can be no assurance that the environmental assessments or
studies, as applicable, identified all environmental conditions and risks at, or
that any environmental conditions will not have a material adverse effect on the
value of or cash flow from, one or more of the underlying real properties.]
[The pooling and servicing agreement requires that the special servicer
obtain an environmental site assessment of an underlying real property prior to
acquiring title to the property or assuming its operation. This requirement
precludes enforcement of the security for the related mortgage loan until a
satisfactory environmental site assessment is obtained or until any required
remedial action is taken. In addition, there can be no assurance that the
requirements of the pooling and servicing agreement will effectively insulate
the trust from potential liability for a materially adverse environmental
condition at any underlying real property.] See "Servicing of the Mortgage
Loans" in this prospectus supplement and "Risk Factors--Environmental
Liabilities Will Adversely Affect the Value and Operation of the Contaminated
Property and May Deter a Lender from Foreclosing" and "Certain Legal Aspects of
Mortgage Loans--Environmental Considerations" in the accompanying prospectus.
Environmental Insurance. [In connection with the issuance of the
certificates, we will obtain a secured creditor impaired property policy
covering environmental matters with respect to the _______ underlying real
properties that are not covered by individual policies. In general, that group
policy provides coverage for the following losses, subject to the applicable
deductibles and, further, to the coverage limits discussed below:]
Property Condition Assessments. [Third-party engineering firms
inspected _________ of the underlying real properties or updated previously
conducted inspections during the __-month period ending on ____________, to
assess exterior walls, roofing, interior construction, mechanical and electrical
systems and general condition of the site, buildings and other improvements
located at each of the underlying real properties.] [Discuss results and
corresponding actions.]
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<PAGE>
See the table titled "Engineering Reserves and Recurring Replacement
Reserves" on Exhibit A-1 to this prospectus supplement.
Appraisals and Market Studies. [An independent appraiser that is
state-certified and/or a member of the Appraisal Institute conducted an
appraisal of ________ of the underlying real properties during the _____ month
period ending on _______________, in order to establish the approximate value of
the underlying real property. Those appraisals are the basis for the "Appraised
Values" for the respective underlying real properties set forth on Exhibit A-1
to this prospectus supplement.]
[Each of the appraisals referred to above represents the analysis and
opinions of the appraiser at or before the origination of the related mortgage
loan. The appraisals are not guarantees of, and may not be indicative of, the
present or future value of the subject underlying real property. There can be no
assurance that another appraiser would not have arrived at a different valuation
of any particular underlying real property, even if the appraiser used the same
general approach to, and the same method of, appraising that property. Neither
we nor the underwriter has confirmed the values of the respective underlying
real properties in the appraisals referred to above.]
[In general, appraisals seek to establish the amount a typically
motivated buyer would pay a typically motivated seller. However, this amount
could be significantly higher than the amount obtained from the sale of a
property under a distress or liquidation sale. Implied in the Most Recent
Appraised Values for the respective underlying real properties shown on Exhibit
A-1 to this prospectus supplement, is the contemplation of a sale at a specific
date and the passing of ownership from seller to buyer under conditions whereby:
o buyer and seller are motivated;
o both parties are well informed or well advised, and each is
acting in what he considers his own best interests;
o a reasonable time is allowed to show the property in the open
market;
o payment is made in terms of cash in U.S. dollars or in
comparable financial arrangements; and
o the price paid for the property is not adjusted by special or
creative financing or sales concessions granted by anyone
associated with the sale.]
[Either the appraisal upon which is based the Most Recent Appraised
Value for each underlying real property shown on Exhibit A-1 to this prospectus
supplement, or a separate letter, contains a statement by the respective
appraiser to the effect that the appraisal guidelines set forth in Title XI of
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 were
followed in preparing that appraisal. However, neither we nor any of the
underwriter, the related mortgage loan seller or the related originator has
independently verified the accuracy of this statement.]
Zoning and Building Code Compliance. [In connection with the
origination of ______ of the mortgage loans, the related originator examined
whether the use and operation of the underlying real property were in material
compliance with zoning, land-use, building, fire and health ordinances, rules,
regulations and orders then-applicable to the underlying real property. Evidence
of this compliance may have been in the
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<PAGE>
form of legal opinions, certifications from government officials, title
insurance endorsements, engineering or consulting reports and/or representations
by the related borrower. In certain instances, a certificate of occupancy was
not available. Where the property as currently operated is a permitted
nonconforming use and/or structure, an analysis was generally conducted as to--
o the likelihood that a material casualty would occur that would
prevent the property from being rebuilt in its current form,
and
o whether existing replacement cost hazard insurance or, if
necessary, supplemental "law or ordinance coverage" would, in
the event of a material casualty, be sufficient to satisfy the
entire mortgage loan or, taking into account the cost of
repair, be sufficient to pay down that mortgage loan to a
level that the remaining collateral would be adequate security
for the remaining loan amount.]
Hazard, Liability and Other Insurance. [Although exceptions exist, the
related loan documents generally require the related borrower to maintain with
respect to each of the underlying real properties the following insurance
coverage--
o Hazard insurance in an amount that is subject to a customary
deductible, at least equal to the lesser of the outstanding
principal balance of the related mortgage loan and 100% of the
full insurable replacement cost of the improvements located on
the insured property. In general, the standard form of hazard
insurance policy covers physical damage to, or destruction of,
the improvements on the insured property by fire, lightning,
explosion, smoke, windstorm and hail, riot or strike and civil
commotion, subject to the conditions and exclusions set forth
in each policy. In some cases, however, a borrower or tenant
is permitted to self-insure the subject property, provided
that the insuring party or an affiliate maintains a specified
net worth.
o If any portion of the property was in an area identified in
the federal register by the Flood Emergency Management Agency
as having special flood hazards, flood insurance meeting the
requirements of the Federal Insurance Administration
guidelines was required. Such insurance is required to be in
an amount that is equal to the lesser of: (i) the outstanding
principal balance of the related mortgage loan; (ii) except in
certain cases, the full insurable value of the insured
property; and (iii) the maximum amount of insurance available
under the National Flood Insurance Act of 1968.
o Comprehensive general liability insurance against claims for
personal and bodily injury, death or property damage occurring
on, in or about the insured property, in an amount at least
equal to $__________ per occurrence.
o Business interruption or rent loss insurance either in an
amount not less than 100% of the projected rental income or
revenue from the insured property for at least six months or,
alternatively, in a specified dollar amount.]
[In general, the underlying real properties, including those located in
California, are not insured against earthquake risks. In the case of properties
(other than those that are manufactured housing communities or self storage
facilities) located in California, a third party consultant conducted seismic
studies
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to assess the "probable maximum loss" for the property. In general, when the
resulting reports concluded that an underlying real property was likely to
experience a "probable maximum loss" in excess of 20% of the estimated
replacement cost of the improvements, the related originator required the
borrower to obtain earthquake insurance or establish reserves to cover the
estimated costs of completing seismic retrofitting recommended by the
consultant, unless the original loan-to-value ratio was relatively low.]
[With respect to each of the underlying real properties, the master
servicer is required to cause the maintenance of all insurance coverage as is
required under the related mortgage to the extent (i) the trust has an insurable
interest and (ii) the master servicer can require maintenance of insurance under
applicable law.]
[Under the terms of several of the mortgage loans, the related borrower
is required to keep its property insured against loss by fire, hazards, rent
loss and other hazards, casualties, liabilities and contingencies as the lender
determines to require and in the amounts and for the periods as the lender
determines to require. The master servicer will be required to use reasonable
efforts to cause the related borrowers under those mortgage loans to maintain
insurance generally in the amounts, type and scopes of coverage required under
the other mortgage loans.]
[Various forms of insurance maintained with respect to any of the
underlying real properties, including casualty insurance, environmental
insurance, earthquake insurance or other insurance, may be provided under a
blanket policy that also covers other underlying real properties and/or other
properties that will not secure loans in the trust. As a result of total limits
under any blanket policy, losses at other properties covered by the blanket
insurance policy may reduce the amount of insurance coverage with respect to a
property securing one of the loans in the trust. See "Risk Factors--Lack of
Insurance Coverage Exposes a Trust to Risk for Certain Special Hazard Losses" in
the accompanying prospectus.]
[With limited exception, the mortgage loans generally provide that
insurance and condemnation proceeds are to be applied either--
o to restore the underlying real property; or
o towards payment of the related mortgage loan.]
[If any underlying real property is acquired by the trust through
foreclosure, deed in lieu of foreclosure or otherwise following a default on the
related mortgage loan, the special servicer will be required to maintain for
that property generally the same types of insurance policies providing coverages
in the same amounts as were previously required under the mortgage that had
covered the property.]
[The master servicer and the special servicer may each satisfy its
obligations regarding maintenance of the hazard insurance policies referred to
in this prospectus supplement by maintaining a blanket policy or master force
placed insurance policy insuring against hazard losses on all of the related
mortgage loans. If any blanket or master policy contains a deductible clause,
however, the master servicer or the special servicer, as the case may be, will
be required, in the event of a casualty covered by the blanket or master policy,
to pay out of its own funds all sums that--
o are not paid because of the deductible clause, and
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o would have been paid if an individual hazard insurance policy
referred to above had been in place.]
[The applicable originator and its successors and assigns are the
beneficiaries under separate title insurance policies with respect to each
mortgage loan. Each title insurer will enter into co-insurance and reinsurance
arrangements with respect to the title insurance policy as are customary in the
title insurance industry. Subject to certain exceptions, including standard
exceptions regarding claims made in the context of insolvency proceedings, each
title insurance policy will provide coverage to the trustee for the benefit of
the certificateholders for claims made against the trustee regarding the
priority and validity of the borrowers' title to the subject underlying real
property.]
Cash Management and Certain Escrows and Reserves
Cash Management and Central Accounts. [In the case of ________ of the
mortgage loans, representing approximately ____% of the initial mortgage pool
balance, a "cash management" system has been implemented for the deposit of
property revenues into a separate account.]
[In the case of __________ of the mortgage loans, tenants are required
to remit rental payments to an account that is under the sole control of the
lender and the borrower is not authorized to make withdrawals from the account.
In the other cases, the related borrower or the manager of the underlying real
property is required to deposit property revenues into an account that is under
the joint control of the related borrower and the master servicer. In these
other cases, the borrower is authorized to make withdrawals from the account
from time to time until the occurrence of an event of default under the related
mortgage loan, in which case the lender would be entitled, under preexisting
instructions furnished to the depository institution at which the account is
maintained, to direct the depository institution to no longer honor payment
requests made by the borrower. In general, no later than the related anticipated
repayment date, the borrower under each ARD loan in the trust will be required,
if it has not previously done so, to establish an account which is under the
sole control of the master servicer and into which all revenue from the
underlying real property will be directly deposited.]
[In the case of ________ of the mortgage loans, including ______ of
those mortgage loans as to which a "cash management" system has been
implemented, central accounts have been established for the purpose of holding
amounts required to be on deposit as reserves for taxes and insurance, capital
improvements, furniture, fixtures and equipment and certain other purposes. As
of the date of initial issuance of the certificates, these accounts will be
under the sole control of the master servicer. In the case of most of the
mortgage loans as to which there is this type of account, the account will be
funded out of monthly escrow and/or reserve payments by the related borrower or
from funds transferred from another account.]
Tax and Insurance Escrows. [In the case of ________ of the mortgage
loans, representing ____% of the initial mortgage pool balance, tax and
insurance escrows were established, either as separate accounts or, if
applicable, as sub-accounts of another account. In those cases, the related
borrower is generally required to deposit on a monthly basis an amount equal to
one-twelfth of the annual real estate taxes and assessments and one-twelfth of
the annual premiums payable on insurance policies that the borrower is required
to maintain. If an escrow was established, the funds will be applied by the
master servicer to pay for items such as taxes, assessments and insurance
premiums at the underlying real property.]
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[In case of ________________ of the mortgage loans, the insurance
carried by the related borrower is in the form of a blanket policy. In these
cases, the amount of the escrow is an estimate of the proportional share of the
premium allocable to the underlying real property, or the related borrower pays
the premium directly.]
[In the case of _________ of the mortgage loans, either--
o the related borrower delivered letters of credit from third
parties in lieu of establishing and funding a deposit account
for tax and insurance escrows, or
o no escrow was required because a tenant at the underlying real
property is responsible for paying all or a portion of the
real estate taxes and assessments and/or insurance premiums
directly.]
Recurring Replacement Reserves. [The table titled "Engineering Reserves
and Recurring Replacement Reserves" on Exhibit A-1 to this prospectus supplement
shows the reserve deposits that the borrowers have been or are, in each case,
required to make into a separate account or, if applicable, a sub-account of
another account for capital replacements, repairs and furniture, fixtures and
equipment (such reserve, a "contractual recurring replacement reserve") and/or
for leasing commissions and tenant improvements (such a reserve, a "contractual
recurring LC & TI reserve") on the underlying real properties under the terms of
the respective mortgage loans.]
[The contractual recurring replacement reserves and the contractual
recurring LC & TI reserves shown in the table are, in each case, expressed as
dollars per unit for multifamily rental properties and manufactured housing
communities, a percentage of total departmental revenues for hospitality
properties and dollars per leasable square foot for other commercial properties.
The contractual recurring replacement reserves and the contractual recurring LC
& TI reserves for _________ of the underlying real properties are initial
amounts and may vary over time. In these cases, the related mortgage and/or
other related loan documents may provide for applicable reserve deposits to
cease upon achieving predetermined maximum amounts in the related reserve
account. In addition, in some cases, reserves for leasing commissions and tenant
improvements were determined for specific tenant spaces, in which cases, the
execution of a lease covering the space could result in the termination and/or
release of the corresponding reserve. Under _________ of the mortgage loans, the
related borrowers are permitted to deliver letters of credit from third parties
in lieu of establishing and funding a deposit account for replacement reserves
or reserves for leasing commissions and tenant improvements.]
Engineering Reserves. [The table titled "Engineering Reserves and
Recurring Replacement Reserves" on Exhibit A-1 to this prospectus supplement
shows the "engineering reserves" established, either as a separate account or a
sub-account or, in some cases in the form of a letter of credit pledged to the
lender, as a result of the inspections of certain of the underlying real
properties described above under "--Certain Underwriting Matters--Property
Condition Assessments". The repair/replacement items for which these reserves
were established are generally items identified by the property inspection firm
as in need of repair or replacement in order to restore the subject property to
a condition generally consistent with competitive properties of similar age and
quality or to comply with regulatory requirements. In some cases, the
engineering reserve for certain of the underlying real properties is less than
the cost estimate in the related inspection report because--
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o the related originator may have considered certain items
identified in the related inspection report significant enough
to require a reserve, and/or
o certain items identified in the related inspection report have
been corrected.]
[No engineering reserve is required to be replenished. The amounts set
forth in this table represent the amounts of the engineering reserves required
at the respective dates of origination of the corresponding mortgage loans, and
there can be no assurance that the work for which reserves were required will be
completed in a timely manner or that the reserved amount will be enough.]
Significant Mortgage Loans
[Insert Description of Significant Mortgage Loans]
The Mortgage Loan Seller
[Insert Description of Mortgage Loan Seller.]
The information set forth in this prospectus supplement concerning the
mortgage loan seller has been provided by the mortgage loan seller, and neither
we nor the underwriter makes any representation or warranty as to the accuracy
or completeness of this information.
Assignment of the Mortgage Loans
On or before the date of initial issuance of the certificates, the
following transfers of the mortgage loans will occur. In each case, the
transferor will assign the subject mortgage loans, without recourse, to the
transferee.
------------------------------
Greenwich Capital
Financial Products, Inc.
------------------------------
|
| _______ mortgage loans $_______
|
------------------------------
Greenwich Capital
Commercial
Funding Corp.
------------------------------
|
| All mortgage loans
| $
------------------------------
Trust
------------------------------
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In connection with the foregoing transfers, the mortgage loan seller
will be required to deliver the following documents, among others, to the
trustee with respect to each of its mortgage loans--[Specify select documents.]
The trustee, either directly or through a custodian, is required to
hold all of the documents delivered to it with respect to the mortgage loans in
trust for the benefit of the certificateholders and, within a specified period
of time following the delivery, to conduct a review of those documents. All of
the above-described documents actually delivered to the trustee in respect of
any of the mortgage loans will collectively be the "mortgage file" for that
mortgage loan. The scope of the trustee's review of each mortgage file is, in
general, limited solely to confirming that the documents listed above have been
received. None of the trustee, the master servicer, the special servicer or any
custodian is under any duty or obligation to inspect, review or examine any of
the documents relating to the mortgage loans to determine whether the document
is valid, effective, enforceable, in recordable form or otherwise appropriate
for the represented purpose.
Within a specified period following the later of (i) the date on which
the offered certificates are initially issued and (ii) the date on which all
recording information necessary to complete the subject document is received by
the trustee, the trustee must submit for recording in the real property records
of the applicable jurisdiction each of the assignments of recorded loan
documents in its favor described above. Because most of the mortgage loans are
newly originated, many of those assignments cannot be completed and recorded
until the related mortgage and/or assignment of leases and rents, reflecting the
necessary recording information, is returned from the applicable recording
office.
Representations and Warranties
As of the date of initial issuance of the certificates ___________ will
make with respect to each mortgage loan sold by it to us, certain
representations and warranties generally to the effect listed below, together
with such other representations and warranties as may be required by the rating
agencies.
The representations and warranties to be made in respect of each
mortgage loan by the warranting party will include: [Specify select
representations and warranties.]
The representations and warranties made by ______________________ as
described above will be assigned by us to the trustee pursuant to the pooling
and servicing agreement. If there exists a breach of any of the above-described
representations and warranties made by ______________________ that materially
and adversely affects the value of the subject mortgage loan or the interests of
the certificateholders therein, then that breach will be a "material breach" of
the representation and warranty. The rights of certificateholders against the
applicable warranting party with respect to any material breach are described
under "--Cures, Repurchases and Substitutions" below.
Cures, Repurchases and Substitutions
If there exists a material breach of any of the representations and
warranties made with respect to any of the mortgage loans, as discussed under
"--Representations and Warranties" above, then the warranting party will be
required either:
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o to cure the material breach in all material respects; or
o subject to the discussion below regarding substitution, to
repurchase the mortgage loan at a price generally equal to the
sum of--
(i) the unpaid principal balance of the mortgage loan,
(ii) accrued and unpaid interest at the related mortgage
rate to but not including the due date occurring in
the collection period in which the repurchase occurs,
(iii) the amount of any related unreimbursed servicing
advances and, to the extent not otherwise included in
the servicing advances, the costs and expenses of
enforcing the repurchase obligation, and
(iv) interest on any related unreimbursed advances and, if
the mortgage loan was a specially serviced mortgage
loan, the ______-basis point special servicing fees
earned thereon as described under "Servicing of the
Mortgage Loans--Servicing and Other Compensation and
Payment of Expenses" in this prospectus supplement.
[Specify any other remedies.]
The time period within which the applicable warranting party must
complete such cure or repurchase will generally be limited to ____ days or, if
it is diligently attempting to correct the problem and certain other conditions
are satisfied, ____ days] following its receipt of notice of the subject
material breach.
If, at any time until the ______ anniversary of the date of initial
issuance of the offered certificates, any warranting party is required to
repurchase any mortgage loan as a result of a material breach of any of
its representations and warranties, as contemplated above, then that warranting
party may, in lieu of repurchasing the affected mortgage loan:
[o replace the mortgage loan with one or more substitute mortgage
loans that (i) has certain payment terms comparable to the
mortgage loan to be replaced and (ii) is otherwise acceptable
to the designated representative of the controlling class of
the certificateholders or, if none has been appointed, to the
holder(s) of certificates representing a majority interest in
that controlling class; and
o pay an amount generally equal to the excess of the applicable
repurchase price for the mortgage loan to be replaced over the
unpaid principal balance of the applicable replacement
mortgage loan(s) as of the date of substitution, after
application of all payments of principal due on or before that
date, whether or not those payments have been received;
except that no substitution will be permitted unless, as confirmed in writing by
each of Moody's and Fitch, it would not result in a qualification, downgrade or
withdrawal of the rating then assigned to any class of the certificates by that
rating agency.]
[The warranting parties are not obligated, however, to replace rather
than repurchase any mortgage loan as to which there is a material breach. Any
substitution will be at the sole discretion of the responsible warranting party.
Furthermore, the controlling class of the certificateholders and their
designated
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representative will generally have a disincentive to find any prospective
replacement mortgage loan acceptable.]
If the applicable warranting party fails to repurchase or replace any
mortgage loan affected by a material breach, then, except as described in the
next paragraph, neither we nor any other person will have any obligation to do
so.
The warranting party may only have limited assets with which to fulfill
any repurchase/substitution obligations on its part that may arise in respect of
breaches of any of its representations or warranties. There can be no assurance
that the warranting party have or will have sufficient assets with which to
fulfill any repurchase/substitution obligations that may arise. Expenses
incurred by the master servicer and the trustee with respect to enforcing any
such repurchase/substitution obligation will be borne by the warranting party
or, if not, will be reimbursable out of the collection account to be maintained
by the master servicer.
Changes in Mortgage Pool Characteristics
The description in this prospectus supplement of the mortgage pool and
the underlying real properties is based upon the mortgage pool as it is expected
to be constituted at the time the offered certificates are issued, with
adjustments for the scheduled principal payments due on the mortgage loans on or
before ____________. Prior to the issuance of the offered certificates, one or
more mortgage loans may be removed from the mortgage pool if we consider the
removal necessary or appropriate. A limited number of other mortgage loans may
be included in the mortgage pool prior to the issuance of the offered
certificates, unless including those mortgage loans would materially alter the
characteristics of the mortgage pool as described in this prospectus supplement.
We believe that the information in this prospectus supplement will be generally
representative of the characteristics of the mortgage pool as it will be
constituted at the time the offered certificates are issued; however, the range
of mortgage rates and maturities, as well as the other characteristics of the
mortgage loans described in this prospectus supplement, may vary, and the actual
initial mortgage pool balance may be as much as 5% larger or smaller than the
initial mortgage pool balance specified in this prospectus supplement.
A current report on Form 8-K will be available to purchasers of the
offered certificates on or shortly after the date of initial issuance of the
certificates. That current report on Form 8-K will be filed, together with the
pooling and servicing agreement, with the SEC within 15 days after the initial
issuance of the offered certificates. In the event mortgage loans are removed
from or added to the mortgage pool, such removal or addition will be noted in
that current report on Form 8-K.
SERVICING OF THE MORTGAGE LOANS
General
The servicing of the mortgage loans will be governed by the pooling and
servicing agreement. The following summaries describe certain provisions of the
pooling and servicing agreement relating to the servicing and administration of
the mortgage loans and any real property owned by the trust. You should also
refer to the accompanying prospectus, in particular the section captioned
"Description of the Governing Documents" for additional important information
regarding provisions of the pooling and servicing agreement that relate to the
rights and obligations of the master servicer and the special servicer. See
"Description of
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the Governing Documents--Collection and Other Servicing Procedures with
Respect to Mortgage Loans" in the accompanying prospectus.
The pooling and servicing agreement provides that the master servicer
and the special servicer must each service and administer the mortgage loans and
any real estate owned by the trust for which it is responsible, directly or
through sub-servicers, in accordance with--
o any and all applicable laws, and
o the express terms of the pooling and servicing agreement and
the respective mortgage loans.
Furthermore, to the extent consistent with the foregoing, the master servicer
and the special servicer must each service and administer the mortgage loans and
any real estate owned by the trust for which it is responsible in accordance
with the following standard (the "Servicing Standard"), which is set forth in
further detail in the pooling and servicing agreement:
o with the same care, skill and diligence as is normal and usual
in its general mortgage servicing and asset management
activities with respect to comparable loans and real
properties that either are part of other third party
portfolios (giving due consideration to customary and usual
standards of practice of prudent institutional commercial
lenders) or are held as part of its own portfolio, whichever
servicing procedures are of a higher standard;
o with a view to the timely collection of all scheduled payments
of principal and interest under the mortgage loans, the full
collection of all prepayment premiums and yield maintenance
charges that may become payable under the mortgage loans and,
in the case of the special servicer, if a mortgage loan comes
into and continues in default and, in the judgment of the
special servicer, no satisfactory arrangements can be made for
the collection of the delinquent payments, including payments
of prepayment premiums and yield maintenance charges, the
maximization of the recovery on that defaulted mortgage loan
to the certificateholders (as a collective whole) on a present
value basis; and
o without regard to:
(i) any known relationship that the master servicer or
the special servicer, as the case may be, or any of
its affiliates may have with any of the underlying
borrowers or any other party to the pooling and
servicing agreement;
(ii) the ownership of any series __________ certificate by
the master servicer or the special servicer, as the
case may be, or by any of its affiliates;
(iii) the obligation of the master servicer or the special
servicer, as the case may be, to make advances;
(iv) the right of the master servicer or the special
servicer, as the case may be, or any of its
affiliates to receive reimbursement of costs, or the
sufficiency of any compensation payable to it under
the pooling and servicing agreement or with respect
to any particular transaction;
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(v) the ownership, servicing or management by the master
servicer or the special servicer, as the case may be,
or any of its affiliates of any other loans or real
properties not included in or securing, as the case
may be, the mortgage pool, or the right to service or
manage for others any such other loans or real
properties; and
(vi) any obligation of the master servicer or the special
servicer, as the case may be, or any of its
affiliates, as a mortgage loan seller, to pay any
indemnity or cure any document defect or breach with
respect to or to repurchase or replace any mortgage
loan.
In general, the master servicer will be responsible for the servicing
and administration of--
o all mortgage loans as to which no Servicing Transfer Event (as
defined below) has occurred,
and
o all worked-out mortgage loans as to which no new Servicing
Transfer Event has occurred.
The special servicer, on the other hand, will be responsible for the
servicing and administration of each mortgage loan as to which a Servicing
Transfer Event has occurred and which has not yet become a worked-out mortgage
loan with respect to that Servicing Transfer Event. The special servicer will
also be responsible for the administration of each underlying real property that
has been acquired by the trust in respect of a defaulted mortgage loan through
foreclosure, deed-in-lieu of foreclosure or otherwise (each such property, for
so long as it is real estate owned by the trust, an "REO property").
Mortgage loans as to which no Servicing Transfer Event has ever
occurred, and worked-out mortgage loans as to which no new Servicing Transfer
Event has occurred, are collectively referred to in this prospectus supplement
as "performing mortgage loans". Specially serviced mortgage loans and REO
properties are collectively referred to in this prospectus supplement as
"specially serviced assets". Performing mortgage loans will include mortgage
loans which may be delinquent, but not to the point of resulting in a Servicing
Transfer Event.
Despite the foregoing, the pooling and servicing agreement will require
the master servicer to continue to collect information and prepare all reports
to the trustee required to be collected or prepared with respect to any
specially serviced assets and, otherwise, to render certain incidental services
with respect to any specially serviced assets. Neither the master servicer nor
the special servicer will have responsibility for the performance by the other
of its respective obligations and duties under the pooling and servicing
agreement.
A mortgage loan will become a specially serviced mortgage loan, if it
has not already done so, upon the occurrence of a Servicing Transfer Event. A
"Servicing Transfer Event" will be considered to have occurred with respect to
any mortgage loan if--
(1) the related borrower fails to make when due any monthly debt
service payment, including a balloon payment, or any other
payment required under the related promissory note or the
related mortgage, and either the failure actually continues,
or the master servicer believes it will continue, unremedied
for _______ days;
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(2) the master servicer determines that a default in the making of
a monthly debt service payment, including a balloon payment,
or any other material payment required to be made under the
related promissory note or the related mortgage, is likely to
occur within ___ days] and either (a) the default is likely to
remain unremedied for at least ____ days] or (b) the related
borrower has requested a material modification of the related
mortgage loan;
(3) the master servicer determines that a non-payment default has
occurred under the mortgage loan that may materially impair
the value of the related underlying real property as security
for the mortgage loan and the default continues unremedied for
the applicable cure period under the terms of the mortgage
loan or, if no cure period is specified, for ___ days;
(4) certain events of bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar
proceedings occur with respect to the related borrower or the
related underlying real property, or the related borrower
takes certain actions indicating its bankruptcy, insolvency or
inability to pay its obligations; or
(5) the master servicer receives notice of the commencement of
foreclosure or similar proceedings with respect to the related
underlying real property.
So long as no other Servicing Transfer Event then exists, a mortgage
loan will cease to be a specially serviced mortgage loan and will become a
"worked-out mortgage loan" as to which the master servicer will re-assume
servicing responsibilities, if and when:
(a) with respect to the circumstances described in clause (1) of
the preceding paragraph, the related borrower makes three
consecutive full and timely monthly debt service payments
under the terms of the mortgage loan, as those terms may be
changed or modified in connection with a bankruptcy or similar
proceeding involving the related borrower or by reason of a
modification, waiver or amendment granted or agreed to by the
master servicer or the special servicer;
(b) with respect to the circumstances described in clauses (2) and
(4) above, those circumstances cease to exist in the judgment
of the special servicer;
(c) with respect to the circumstances described in clause (3)
above, the default is cured in the judgment of the special
servicer; and
(d) with respect to the circumstances described in clause (5)
above, the proceedings are
terminated.
[If any cross-collateralized mortgage loan becomes a specially serviced mortgage
loan, then all the other mortgage loans with which it is cross-collateralized
must also become specially serviced mortgage loans.]
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The Initial Master Servicer and the Initial Special Servicer
The Master Servicer.
[Insert information re Master Servicer.]
The information set forth in this prospectus supplement concerning
___________ has been provided by it. Neither we nor the underwriter makes any
representation or warranty as to the accuracy or completeness of this
information.
The Special Servicer.
[Insert information re Special Servicer.]
The information set forth in this prospectus supplement concerning
___________ has been provided by it. Neither we nor the underwriter makes any
representation or warranty as to the accuracy of this information.
Servicing and Other Compensation and Payment of Expenses
The Master Servicing Fee. The principal compensation to be paid to the
master servicer with respect to its master servicing activities will be the
master servicing fee.
The "master servicing fee":
o will be earned in respect of each and every mortgage loan,
including each specially serviced mortgage loan, if any, and
each mortgage loan, if any, as to which the related underlying
real property has become an REO property; and
o in the case of each such mortgage loan, will--
(i) be calculated on a 30/360 basis,
(ii) accrue at the related master servicing fee rate,
(iii) accrue on the same principal amount as interest
accrues or is deemed to accrue from time to time with
respect to that mortgage loan, and
(iv) be payable monthly from amounts received in respect
of interest on that mortgage loan.
The "master servicing fee" will be ____% per annum.
Additional Master Servicing Compensation. As additional master
servicing compensation, the master servicer will be entitled to receive--
o All prepayment interest excesses, if any, collected in respect
of the entire mortgage pool. If a borrower prepays its
mortgage loan, in whole or in part, after the borrower has
made its monthly debt service payment on the related due date
during any collection period, the
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amount of any interest collected on the subject prepayment for
the period following that due date, less the amount of related
master servicing fees payable therefrom and exclusive of any
Default Interest and Post-ARD Additional Interest included
therein, will be a "Prepayment Interest Excess". "Default
Interest" is any interest that (i) accrues on a defaulted
mortgage loan solely by reason of the subject default and (ii)
is in excess of all interest at the related mortgage rate and
any Post-ARD Additional Interest accrued on the mortgage loan.
o All late payment charges and Default Interest, if any, that
were collected in respect of any mortgage loan and that
accrued while such mortgage loan was a performing mortgage
loan (but only to the extent that any such late payment
charges and default interest have not otherwise been applied
to pay the master servicer, the special servicer or the
trustee, as applicable, interest on advances made thereby with
respect to the related mortgage loan as described in this
prospectus supplement).
In addition, all modification fees, assumption fees, assumption
application fees, consent/waiver fees and other comparable transaction fees and
charges, if any, collected in respect of the mortgage loans will be allocated
between the master servicer and the special servicer, as additional
compensation, or otherwise applied to cover related expenses, as provided in the
pooling and servicing agreement.
The master servicer will be authorized to invest or direct the
investment of funds held in its collection account (see "--Collection Account"
below), or in any and all accounts maintained by it that are escrow and/or
reserve accounts, in certain government securities and other investment grade
obligations specified in the pooling and servicing agreement ("Permitted
Investments"). The master servicer will be entitled to retain any interest or
other income earned on those funds and will be required to cover any losses of
principal from its own funds. The master servicer will not be obligated,
however, to cover any losses resulting from the bankruptcy or insolvency of any
depository institution or trust company holding any of those accounts.
Prepayment Interest Shortfalls. If a borrower prepays a mortgage loan,
in whole or in part, prior to the related due date during any collection period
and does not pay interest on the prepayment through that due date, then the
shortfall in a full month's interest, less the amount of related master
servicing fees that would have been payable therefrom and exclusive of any
Default Interest and [Post-ARD Additional Interest] that would have been
included therein, will be a "prepayment interest shortfall".
The pooling and servicing agreement provides that, if any prepayment
interest shortfalls are incurred with respect to the mortgage pool during any
collection period, the master servicer must make a non- reimbursable payment (a
"Compensating Interest Payment") with respect to the related payment date in an
amount equal to the lesser of:
(a) the total amount of those prepayment interest shortfalls, and
(b) [Describe.]
No other master servicing compensation will be available to cover prepayment
interest shortfalls.
Any Compensating Interest Payment made by the master servicer with
respect to any payment date will be included among the amounts payable as
principal and interest on the certificates on that payment date as described
under "Description of the Offered Certificates--Payments" in this prospectus
supplement. If
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the amount of the Compensating Interest Payment made by the master servicer with
respect to any payment date is less than the total of all prepayment interest
shortfalls incurred with respect to the mortgage pool during the related
collection period, then that shortfall (a "Net Aggregate Prepayment Interest
Shortfall") will be allocated among the respective classes of interest-bearing
certificates, in reduction of the interest payable on those certificates, as and
to the extent described under "Description of the Offered
Certificates--Payments--Payments of Interest" in this prospectus supplement.
Principal Special Servicing Compensation. The principal compensation to
be paid to the special servicer with respect to its special servicing activities
will be--
o the special servicing fee,
o the workout fee, and
o the liquidation fee.
The "special servicing fee":
o will be earned with respect to each specially serviced
mortgage loan, and each mortgage loan as to which the related
underlying real property has become an REO property,
o with respect to each such mortgage loan, will--
(i) be calculated on a 30/360 basis,
(ii) accrue at a "special servicing fee rate" of _____%
per annum, and
(iii) accrue on the same principal amount as interest
accrues or is deemed to accrue from time to time on
that mortgage loan, and
o will be payable monthly from general collections on all the
mortgage loans and any REO properties on deposit in the master
servicer's collection account from time to time.
The Workout Fee. The special servicer will, in general, be entitled to
receive a workout fee with respect to each worked-out mortgage loan. The
"workout fee" will be payable out of, and will be calculated by application of a
"workout fee rate" of ____% to, each collection of interest and principal
received on the mortgage loan for so long as it remains a worked-out mortgage
loan, exclusive of any portion of that collection that represents a recovery of
Default Interest or Post-ARD Additional Interest. The workout fee with respect
to any worked-out mortgage loan will cease to be payable if a new Servicing
Transfer Event occurs with respect to the loan. However, a new workout fee would
become payable if the mortgage loan again became a worked-out mortgage loan with
respect to that new Servicing Transfer Event. If the special servicer is
terminated other than for cause or resigns, it will retain the right to receive
any and all workout fees payable with respect to mortgage loans that became
worked-out mortgage loans during the period that it acted as special servicer
and remained worked-out mortgage loans at the time of its termination or
resignation. The successor special servicer will not be entitled to any portion
of those workout fees. Although workout fees are intended to provide the special
servicer with an incentive to better perform its duties, the payment of any
workout fee will reduce amounts payable to the certificateholders.
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The Liquidation Fee. The special servicer will be entitled to receive a
liquidation fee with respect to each specially serviced mortgage loan for which
it obtains a full or discounted payoff from the related borrower. The special
servicer will also be entitled to receive a liquidation fee with respect to any
specially serviced mortgage loan or REO property as to which it receives any
liquidation proceeds, condemnation proceeds or insurance proceeds, except as
described below. As to each specially serviced mortgage loan and REO property,
the "liquidation fee" will be payable from, and will be calculated by
application of a "liquidation fee rate" of ____% to, the related payment or
proceeds, exclusive of any portion of that payment or proceeds that represents a
recovery of Default Interest or Post-ARD Additional Interest.
Despite anything to the contrary described above, no liquidation fee
will be payable based on, or out of, proceeds received in connection with:
o the repurchase or replacement of any mortgage loan for a
breach of representation or warranty (see "Description of the
Mortgage Pool--Cures, Repurchases and Substitutions" in this
prospectus supplement);
o the purchase of any defaulted mortgage loan or REO property by
the master servicer, the special servicer or any holder or
holders of certificates evidencing a majority interest in the
"controlling class" of the series _____ certificates (see
"--Sale of Defaulted Mortgage Loans" below); or
o the purchase of all of the mortgage loans and REO properties
by the master servicer, the special servicer or any holder or
holders of certificates evidencing a majority interest in the
"controlling class" of the certificates in connection with the
termination of the trust (see "Description of the Offered
Certificates--Termination" in this prospectus supplement).
Although liquidation fees are intended to provide the special servicer
with an incentive to better perform its duties, the payment of any liquidation
fee will reduce amounts payable to the certificateholders.
Additional Special Servicing Compensation. As additional special
servicing compensation, the special servicer will be entitled to receive all
late payment charges and Default Interest, if any, collected in respect of any
mortgage loan that accrued while the mortgage loan was a specially serviced
mortgage loan, but only to the extent that those late payment charges and
Default Interest have not otherwise been applied to pay the master servicer, the
special servicer or the trustee, as applicable, interest on advances made the
master servicer, the special servicer or the trustee, as the case may be, with
respect to the related mortgage loan as described in this prospectus supplement.
All modification fees, assumption fees, assumption application fees and
other comparable transaction fees and charges, if any, collected in respect of
the specially serviced mortgage loans, will be allocated between the master
servicer and the special servicer, as additional compensation, or otherwise
applied to cover related expenses, as provided in the pooling and servicing
agreement.
In addition, the special servicer will be authorized to invest or
direct the investment of funds held in its REO account (see "--REO Properties"
below) in Permitted Investments. The special servicer will be entitled to retain
any interest or other income earned on those funds and will be required to cover
any losses of principal from its own funds without any right to reimbursement.
The special servicer will not be
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obligated, however, to cover any losses resulting from the bankruptcy or
insolvency of any depository institution or trust company holding the special
servicer's REO account.
Payment of Expenses; Servicing Advances. Each of the master servicer
and the special servicer will be required to pay its overhead and any general
and administrative expenses incurred by it in connection with its servicing
activities under the pooling and servicing agreement. The master servicer and
the special servicer will not be entitled to reimbursement for these expenses
except as expressly provided in the pooling and servicing agreement.
Any and all customary, reasonable and necessary "out of pocket" costs
and expenses incurred by the master servicer or the special servicer in
connection with the servicing of a mortgage loan after a default, delinquency or
other unanticipated event, or in connection with the administration of any REO
property, will be "servicing advances". Servicing advances will be reimbursable
from future payments and other collections, including insurance proceeds,
condemnation proceeds and liquidation proceeds, in connection with the related
mortgage loan or REO property. In addition, the special servicer may
periodically require the master servicer to reimburse the special servicer for
any servicing advances made by it. Upon reimbursing the special servicer for any
servicing advance, the master servicer will be deemed to have made the advance.
The special servicer may request the master servicer to make servicing
advances with respect to a specially serviced mortgage loan or REO property, in
lieu of the special servicer's making that advance itself. The special servicer
must make the request in writing, in a timely manner that does not adversely
affect the interests of any certificateholder. The master servicer must make the
requested servicing advance within a specified number of days following the
master servicer's receipt of the request. If the request is timely and properly
made, the special servicer will be relieved of any obligations with respect to a
servicing advance that it requests the master servicer to make, regardless of
whether or not the master servicer actually makes that advance.
If the master servicer or the special servicer is required under the
pooling and servicing agreement to make a servicing advance, but neither does so
within ______ days after the servicing advance is required to be made, then the
trustee will be required: (a) if it has actual knowledge of the failure, to give
the defaulting party notice of its failure; and (b) if the failure continues for
______ more business days, to make the servicing advance.
Despite the foregoing discussion or anything else to the contrary in
this prospectus supplement, none of the master servicer, the special servicer
or, the trustee will be obligated to make servicing advances that, in the
judgment of any such party, would not be ultimately recoverable from expected
collections on the related mortgage loan or REO property. If the master
servicer, the special servicer or, the trustee makes any servicing advance that
it subsequently determines, in its judgment, is not recoverable from expected
collections on the related mortgage loan or REO property, it may obtain
reimbursement for that advance, together with interest thereon, out of general
collections on the mortgage loans and any REO properties on deposit in the
master servicer's collection account from time to time.
The master servicer will be permitted to pay, and the special servicer
may direct the payment of, certain servicing expenses directly out of the master
servicer's collection account and at times without regard to the relationship
between the expense and the funds from which it is being paid, including in
connection with the remediation of any adverse environmental circumstance or
condition at any of the underlying real properties. In addition, the pooling and
servicing agreement will require the master servicer, at the direction
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of the special servicer if a specially serviced asset is involved, to pay
directly out of the master servicer's collection account any servicing expense
that, if advanced by the master servicer or the special servicer, would not be
recoverable from expected collections on the related mortgage loan or REO
property, provided that the master servicer, or the special servicer if a
specially serviced asset is involved, has determined in accordance with the
Servicing Standard that making the payment is in the best interests of the
certificateholders (as a collective whole).
The master servicer, the special servicer and, the trustee will be
entitled to receive interest on servicing advances made by them. The interest
will accrue on the amount of each servicing advance, and compound monthly, for
so long as the servicing advance is outstanding, at a rate per annum equal to
the "prime rate" as published in the "Money Rates" section of The Wall Street
Journal, as that "prime rate" may change from time to time. Interest accrued
with respect to any servicing advance will be payable in the collection period
in which that advance is reimbursed--
o first, out of Default Interest and late payment charges
collected on the related mortgage loan during that collection
period, and
o then, if and to the extent that the Default Interest and late
charges referred to in clause first above are insufficient to
cover the advance interest, out of any amounts then on deposit
in the master servicer's collection account.
Sub-Servicers
The master servicer and, subject to certain restrictions, the special
servicer may each delegate any of its servicing obligations under the pooling
and servicing agreement to any one or more third-party servicers. The master
servicer or the special servicer, as the case may be, will remain obligated
under the pooling and servicing agreement for any duties delegated to a
sub-servicer. Some of the mortgage loans are currently being serviced by
third-party servicers that are entitled to and will become sub-servicers of
these loans on behalf of the master servicer (those sub-servicers, the
"Designated Sub-Servicers"). Each sub- servicing agreement between the master
servicer or special servicer, as the case may be, and a sub-servicer must
provide that, if for any reason the master servicer or special servicer, as the
case may be, is no longer acting in that capacity, the trustee or any other
successor to the master servicer or special servicer, as applicable, may:
o assume the party's rights and obligations under the
sub-servicing agreement;
o enter into a new sub-servicing agreement with the sub-servicer
on terms which are acceptable to the trustee or successor
master servicer or special servicer, as the case may be, and
that sub-servicer; or
o terminate the sub-servicing agreement without cause.
Notwithstanding the foregoing, neither the trustee nor any other successor
master servicer may terminate the sub-servicing agreement for a Designated
Sub-Servicer without cause, unless it pays that Designated Sub-Servicer a
termination fee.
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The master servicer and special servicer will each be required to
monitor the performance of sub-servicers retained by it. The master servicer
and special servicer will each be solely liable for all fees owed by it to any
sub-servicer retained by it, irrespective of whether its compensation pursuant
to the pooling and servicing agreement is sufficient to pay those fees. Each
sub-servicer will be reimbursed by the master servicer or special servicer, as
the case may be, for certain expenditures which it makes, generally to the same
extent the master servicer or special servicer, as the case may be, would be
reimbursed under the pooling and servicing agreement.
The Controlling Class Representative
Controlling Class. As of any date of determination, the controlling
class of the certificates (the "Controlling Class") will be the most subordinate
class of certificates then outstanding that is eligible to be the Controlling
Class and that has an aggregate principal balance that is not less than _____%
of that class' original aggregate principal balance. However, if no class of
certificates that is eligible to be the Controlling Class has an aggregate
principal balance that satisfies this requirement, then the Controlling Class
will be the most subordinate eligible class of certificates. The classes of
certificates eligible to be the Controlling Class are the ["A-1", "A-2", "A-3",
A-4", "A-5", "B-1", "B-2", "B-3", "B-4", "B-5", "B-6", "B-7", "B-8", "C" and "D"
classes].
Election, Resignation and Removal. The holders (or, in the case of
certificates held in book-entry form, the beneficial owners) of certificates
representing greater than [50%] of the aggregate principal balance of the
Controlling Class will be entitled to select a representative (the "Controlling
Class Representative") having certain rights and powers described below or
replace an existing Controlling Class Representative.
The trustee will be required to promptly notify all the holders (and,
in the case of certificates held in book-entry form, to the extent actually
known to certain designated officers of the trustee, all the beneficial owners)
of certificates of the Controlling Class that they may select a Controlling
Class Representative upon:
(i) the receipt by the trustee of written requests for the
selection of a Controlling Class Representative from the
holders (or, in the case of certificates held in book-entry
form, the beneficial owners) of certificates representing
greater than [50%] of the aggregate principal balance of the
Controlling Class;
(ii) the resignation or removal of the person acting as Controlling
Class Representative; or
(iii) a determination by the trustee that the Controlling Class has
changed.
The notice will explain the process for selecting a Controlling Class
Representative. The process may include the designation of the Controlling Class
Representative by any holder of certificates representing a majority interest in
the Controlling Class by written instructions delivered to the trustee. The
appointment of any person as a Controlling Class Representative will not be
effective until the person provides the trustee with written confirmation of its
acceptance of its appointment, an address and telecopy number for the delivery
of notices and other correspondence and a list of officers or employees of the
person with whom the parties to the pooling and servicing agreement may deal,
including their names, titles, work addresses and telecopy numbers.
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Resignation and Removal of the Controlling Class Representative. The
Controlling Class Representative may at any time resign by giving written notice
to the trustee and to each holder (or, in the case of certificates held in
book-entry form, each beneficial owner) of certificates of the Controlling
Class. The holders (or, in the case of certificates held in book-entry form, the
beneficial owners) of certificates representing greater than [50%] of the
aggregate principal balance of the Controlling Class will be entitled to remove
any existing Controlling Class Representative by giving written notice to the
trustee and to the existing Controlling Class Representative.
Certain Rights and Powers of the Controlling Class Representative. The
Controlling Class Representative will be entitled to advise the special servicer
with respect to the following actions. In addition, except as otherwise
described below, the special servicer will not be permitted to take any of the
following actions as to which the Controlling Class Representative has objected
in writing within [ten business days] of having been notified in writing thereof
and having been provided with all reasonably requested information with respect
thereto--
o any foreclosure upon or comparable conversion, which may
include acquisitions of an REO property, of the ownership of
properties securing those specially serviced mortgage loans as
come into and continue in default;
o any modification, amendment or waiver of a monetary term,
including the timing of payments, or any material non-monetary
term of a mortgage loan;
o any proposed sale of a defaulted mortgage loan or any related
REO property, other than in connection with the termination of
the trust as described under "Description of the Offered
Certificates--Termination" in this prospectus supplement, for
less than par;
o any acceptance of a discounted payoff;
o any determination to bring an REO property into compliance
with applicable environmental laws or to otherwise address
hazardous material located at an REO property;
o any release of collateral for a mortgage loan, other than in
accordance with the terms of, or upon satisfaction of, that
mortgage loan;
o any acceptance of substitute or additional collateral for a
mortgage loan, other than in accordance with the terms of that
mortgage loan;
o any waiver of a "due-on-sale" or "due-on-encumbrance" clause;
and
o any acceptance of an assumption agreement releasing a borrower
from liability under a mortgage loan.
In addition, except as otherwise described below, the Controlling Class
Representative may direct the special servicer to take, or to refrain from
taking, such actions as the Controlling Class Representative may consider
advisable or as to which provision is otherwise made in the pooling and
servicing agreement.
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Notwithstanding the foregoing, no advice, direction or objection given
or made by the Controlling Class Representative, as contemplated by either of
the two preceding paragraphs, may--
o require or cause the special servicer to violate applicable
law, the terms of any mortgage loan or any other provision of
the pooling and servicing agreement described in this
prospectus supplement or the accompanying prospectus,
including the special servicer's obligation to act in
accordance with the Servicing Standard;
o result in certain adverse tax consequences for the trust;
o expose the trust, the depositor, the master servicer, the
special servicer, the trustee or any of their respective
affiliates, directors, officers, employees or agents, to any
material claim, suit or liability; or
o materially expand the scope of the master servicer's or
special servicer's responsibilities under the pooling and
servicing agreement.
The special servicer is to disregard any such advice, direction or objection
that does so. Furthermore, the special servicer will not be obligated to seek
approval from the Controlling Class Representative for any actions to be taken
by the special servicer with respect to any particular specially serviced
mortgage loan if--
o the special servicer has, as described above, notified the
Controlling Class Representative in writing of various actions
that the special servicer proposes to take with respect to the
work-out or liquidation of that mortgage loan, and
o for 60 days following the first such notice, the Controlling
Class Representative has objected to all of those proposed
actions and has failed to suggest any alternative actions that
the special servicer considers to be consistent with the
Servicing Standard.
When reviewing the rest of this "Servicing of the Mortgage Loans"
section, it is important that you consider the effects that the rights and
powers of the Controlling Class Representative discussed above could have on the
actions of the special servicer.
Liability to Borrowers. In general, any and all expenses of the
Controlling Class Representative are to be borne by the holders (or, if
applicable, the beneficial owners) of the Controlling Class, in proportion to
their respective percentage interests in that class, and not by the trust.
However, if a claim is made against the Controlling Class Representative by a
borrower with respect to the pooling and servicing agreement or any particular
mortgage loan, the Controlling Class Representative is to immediately notify the
trustee, the master servicer and the special servicer. If (a) the special
servicer or the trust are also named parties to the same action, and (b) in the
sole judgment of the special servicer, (i) the Controlling Class Representative
acted in good faith, without negligence or willful misfeasance, with regard to
the particular matter at issue, and (ii) there is no potential for the special
servicer or the trust to be an adverse party in the action as regards the
Controlling Class Representative, then the special servicer on behalf of the
trust will, subject to the discussion under "Description of the Governing
Documents--Certain Matters Regarding the Master Servicer, the Special Servicer,
the Manager and Us" in the accompanying prospectus, assume the defense of the
claim against the Controlling Class Representative.
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Liability to the Trust and Certificateholders. The Controlling Class
Representative may have special relationships and interests that conflict with
those of the holders of one or more classes of the offered certificates. In
addition, the Controlling Class Representative does not have any duties to the
holders of any class of certificates other than the Controlling Class. It may
act solely in the interests of the certificateholders of the Controlling Class
and will have no liability to any other certificateholders for having done so.
No certificateholder may take any action against the Controlling Class
Representative for its having acted solely in the interests of the
certificateholders of the Controlling Class.
Replacement of the Special Servicer
The holders (or, in the case of certificates held in book-entry form,
the beneficial owners) of certificates representing more than [50%] of the
aggregate principal balance of the Controlling Class may terminate an existing
special servicer and appoint a successor. In addition, if the special servicer
is terminated in connection with an event of default (see "--Events of Default"
and "--Rights Upon Event of Default" below), the holders (or, in the case of
certificates held in book-entry form, the beneficial owners) of certificates
representing more than [50%] of the aggregate principal balance of the
Controlling Class may appoint a successor. In either case, any appointment of a
successor special servicer will be subject to, among other things, receipt by
the trustee of--
(i) written confirmation from each of __________ and __________ that
the appointment will not result in a qualification, downgrade or
withdrawal of any of the ratings then assigned thereby to the
certificates, and
(ii) the written agreement of the proposed special servicer to be
bound by the terms and conditions of the pooling and servicing
agreement, together with an opinion of counsel regarding, among
other things, the enforceability of the pooling and servicing
agreement against the proposed special servicer.
Subject to the foregoing, any holder (or, in the case of certificates
held in book-entry form, any beneficial owner) of a certificate or any of their
affiliates may be appointed as special servicer.
If the certificateholders of the Controlling Class terminate an
existing special servicer without cause, then the reasonable "out-of-pocket"
costs and expenses of any related transfer of servicing duties are to be paid by
the successor special servicer or the holders (or, if applicable, the beneficial
owners) of certificates of the Controlling Class that voted to remove the
terminated special servicer, as the parties may agree. The terminated special
servicer will be entitled to:
o payment out of the master servicer's collection account for
all accrued and unpaid special servicing fees; and
o reimbursement by the successor special servicer for any
outstanding servicing advances made by the terminated special
servicer, together with interest.
Upon reimbursement, any advance will be treated as if it were made by the
successor special servicer.
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Enforcement of "Due-on-Sale" and "Due-on-Encumbrance" Provisions
Subject to the discussion under "--The Controlling Class
Representative" above, the master servicer or the special servicer, as
applicable, will be required to determine, in a manner consistent with the
Servicing Standard, whether to exercise any right the lender under any mortgage
loan may have under either a "due-on- sale" or "due-on-encumbrance clause" to
accelerate payment of that mortgage loan. However, under the circumstances
described below, neither the master servicer nor the special servicer may waive
its rights or grant its consent under any "due-on-sale" or "due-on-encumbrance"
clause unless it has received written confirmation from each applicable rating
agency that this action would not result in the qualification, downgrade or
withdrawal of any of the then-current ratings then assigned by the rating agency
to the certificates. With respect to "due-on-sale" clauses, this requirement
will apply only if the outstanding principal balance of the subject mortgage
loan, together with the total outstanding principal balance of all other
mortgage loans that are cross-collateralized with the subject mortgage loan or
have been made to the same borrower or affiliated borrowers, is equal to or
greater than a specified percentage of the then total principal balance of the
mortgage pool. In the case of "due-on-encumbrance" provisions, this requirement
will always apply. In addition, the master servicer may not waive its rights or
grant its consent under any "due-on-sale" or "due-on-encumbrance" clause without
the consent of the special servicer.
Modifications, Waivers, Amendments and Consents
Subject to the discussion under "--The Controlling Class
Representative" above, the special servicer, with respect to specially serviced
mortgage loans, and the master servicer, with respect to performing mortgage
loans, each may, consistent with the Servicing Standard, agree to:
o any modification, waiver or amendment of any term of any mortgage
loan;
o extend the maturity of any mortgage loan;
o defer or forgive the payment of interest on and principal of any
mortgage loan;
o defer or forgive the payment of prepayment premiums, yield
maintenance charges and late payment charges on any mortgage loan;
o permit the release, addition or substitution of collateral
securing any mortgage loan; or
o permit the release, addition or substitution of the borrower or
any guarantor of any mortgage loan.
The ability of the special servicer, in the case of specially serviced mortgage
loans, and the master servicer, in the case of performing mortgage loans, to
agree to any of the foregoing, however, is subject to each of the following
limitations, conditions and restrictions:
o With limited exception, including with respect to certain routine
matters, the master servicer may not agree to any modification,
waiver or amendment of any term of, or take any of the other
above-referenced actions with respect to, any mortgage loans
without the consent of the special servicer, provided that such
consent--
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(i) is to be withheld or granted by the special servicer in
accordance with the Servicing Standard, and
(ii) will be deemed to have been granted if not expressly denied
within ten business days following the special servicer's
receipt from the master servicer of all information
reasonably requested by it in order to make an informed
decision.
o With limited exception, including with respect to Post-ARD
Additional Interest as described below, the special servicer may
not agree to or consent to the master servicer's agreeing to any
modification, waiver or amendment of any term of any mortgage
loan, or take or consent to the master servicer's taking any of
the other above-referenced actions with respect to any mortgage
loan, if doing so would--
(i) affect the amount or timing of any related payment of
principal, interest or other amount payable under the
mortgage loans, or
(ii) in the special servicer's judgment, materially impair the
security for the mortgage loan or reduce the likelihood of
timely payment of amounts due thereon,
unless a material default on the mortgage loan has occurred or,
in the special servicer's judgment, a default in respect of
payment on the mortgage loan is reasonably foreseeable, and the
modification, waiver, amendment or other action is reasonably
likely to produce a greater recovery to the certificateholders,
as a collective whole, on a present value basis than would
liquidation.
o The special servicer may not extend or consent to the master
servicer's extending the date on which any balloon payment is
scheduled to be due on any mortgage loan to a date beyond the
earliest of--
(i) the ______ anniversary of the mortgage loan's original
stated maturity date,
(ii) _____ years prior to the rated final payment date, and
(iii) if the mortgage loan is secured by a mortgage solely or
primarily on the related borrower's leasehold interest in
the related underlying real property, ten years prior to the
end of the then current term of the related ground lease,
plus any unilateral options to extend.
o Neither the master servicer nor the special servicer may make or
permit any modification, waiver or amendment of any term of, or
take any of the other above-referenced actions with respect to,
any mortgage loan that would--
(i) cause any of REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC under the Internal Revenue Code of 1986,
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(ii) result in the imposition of any tax on "prohibited
transactions" or "contributions" after the startup date of
any of REMIC I, REMIC II or REMIC III under the Internal
Revenue Code of 1986, or
(iii) adversely affect the status of either grantor trust created
under the pooling and servicing agreement as a grantor trust
under the Internal Revenue Code of 1986;
o The special servicer may not permit or consent to the master
servicer's permitting any borrower to add or substitute any real
estate collateral for its mortgage loans, unless the special
servicer has first--
(i) determined, based upon an environmental assessment prepared
by an independent person who regularly conducts
environmental assessments, at the expense of the borrower,
that:
(a) the additional or substitute collateral is in
compliance with applicable environmental laws and
regulations, and
(b) that there are no circumstances or conditions present
with respect to the new collateral relating to the use,
management or disposal of any hazardous materials for
which investigation, testing, monitoring, containment,
clean-up or remediation would be required under any
then applicable environmental laws or regulations, and
(ii) received confirmation from each of __________ and __________
that the addition or substitution of collateral will not
result in a qualification, downgrade or withdrawal of any
rating then assigned by the rating agency to a class of
certificates.
o Subject to limited exceptions, the special servicer may not
release or consent to the master servicer's releasing any
material collateral securing an outstanding mortgage loan other
than in accordance with the terms of, or upon satisfaction of,
the mortgage loan.
The limitations, conditions and restrictions described above will not
apply to any of the acts referenced in this "--Modifications, Waivers,
Amendments and Consents" section that is required under the terms of the subject
mortgage loan in effect on the date of initial issuance of the certificates (or,
in the case of a replacement mortgage loan, on the related date of substitution)
or that is solely within the control of the related borrower. Also, neither the
master servicer nor the special servicer will be required to oppose the
confirmation of a plan in any bankruptcy or similar proceeding involving a
borrower if, in its judgment, opposition would not ultimately prevent the
confirmation of the plan or one substantially similar, despite the discussion
above.
Notwithstanding the foregoing, the master servicer will be permitted,
in the case of certain ARD loans, in its discretion, after the related
anticipated repayment date, to waive any or all of the Post-ARD Additional
Interest accrued on that mortgage loan, if, prior to the related maturity date,
the related borrower
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has requested the right to prepay the mortgage loan in full, together with all
payments required by the related loan documents in connection with the
prepayment except for that Post-ARD Additional Interest. However, the master
servicer's determination to waive the trust's right to receive that Post-ARD
Additional Interest--
o must be in accordance with the Servicing Standard, and
o will be subject to approval by the special servicer.
The master servicer will not have any liability to the trust, the
certificateholders or any other person for any such determination that is made
in accordance with the Servicing Standard. [The pooling and servicing agreement
will also limit the master servicer's and the special servicer's ability to
institute an enforcement action solely for the collection of Post-ARD Additional
Interest.]
All modifications, waivers and amendments entered into in respect of
the mortgage loans are to be in writing. Each of the master servicer and the
special servicer must deliver to the trustee for deposit in the related mortgage
file, an original counterpart of the agreement relating to each modification,
waiver or amendment agreed to by it, promptly following its execution.
Required Appraisals
Promptly following the occurrence of any of the following events (each,
an "Appraisal Trigger Event") with respect to any of the mortgage loans, the
special servicer must obtain, and deliver to the trustee and master servicer a
copy of, an appraisal of the related underlying real property from an
independent appraiser meeting certain specified qualifications (a "Required
Appraisal"), unless such an appraisal had previously been obtained within the
prior ____ months--
o the mortgage loan becomes a Modified Mortgage Loan (as defined
below);
o the related borrower fails to make any monthly debt service
payment with respect to the mortgage loan and the failure
continues for ____ days;
o a receiver is appointed and continues in that capacity in respect
of the underlying real property securing the mortgage loan;
o the related borrower becomes the subject of bankruptcy,
insolvency or similar proceedings; or
o the underlying real property securing the mortgage loan becomes
an REO property.
Notwithstanding the foregoing, if the unpaid principal balance of the
subject mortgage loan, net of related unreimbursed advances of principal, is
less than $___________, the special servicer may perform an internal valuation
of the underlying real property.
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As a result of any such appraisal or other valuation, it may be
determined that an Appraisal Reduction Amount exists with respect to the subject
mortgage loan. The "Appraisal Reduction Amount" for any mortgage loan as to
which an Appraisal Trigger Event has occurred--
o will be determined shortly following the later of the date on
which the relevant appraisal or other valuation is obtained or
performed and the date on which the first relevant Appraisal
Trigger Event occurred, and
o will equal the excess, if any, of "x" over "y" where--
(a) "x" is equal to the sum of:
(i) the unpaid principal balance of the mortgage loan, net
of any related unreimbursed advances of principal;
(ii) to the extent not previously advanced by or on behalf
of the master servicer or the trustee, all unpaid
interest, other than any Default Interest and Post- ARD
Additional Interest, accrued on the mortgage loan
through the most recent due date prior to the date of
determination;
(iii) all accrued but unpaid special servicing fees in
respect of the mortgage loan;
(iv) all related unreimbursed advances made by or on behalf
of the master servicer, the special servicer or the
trustee with respect to the required appraisal loan,
together with interest thereon; and
(v) all currently due and unpaid real estate taxes and
assessments, insurance premiums and, if applicable,
ground rents in respect of the related underlying real
property, net of any escrow reserves held by the master
servicer or the special servicer which covers the
particular item and certain other related reserves; and
(b) "y" is equal to 90% of the resulting appraised or estimated
value of the related underlying real property or REO
property, as such appraised or estimated value may be
reduced, to not less than zero, by the amount of any
obligations secured by liens on the property that are prior
to the lien of the mortgage loan.
If, however, any Required Appraisal or other valuation is not obtained
or performed within [60 days] of an Appraisal Trigger Event, and no comparable
appraisal or other valuation had been obtained or performed during the
_____-month period prior to that Appraisal Trigger Event, then until the
Required Appraisal or other valuation is obtained or performed, the "Appraisal
Reduction Amount" for the subject mortgage loan will equal approximately ____%
of the unpaid principal balance of that mortgage loan, net of any related
unreimbursed advances of principal. After receipt of the Required Appraisal or
other valuation, the special servicer will determine the Appraisal Reduction
Amount, if any, for the subject mortgage loan as described in the prior
paragraph.
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An Appraisal Reduction Amount is relevant to the determination of the
amount of any advances of delinquent interest required to be made with respect
to the affected mortgage loan. See "Description of the Offered
Certificates--Advances of Delinquent Monthly Debt Service Payments" in this
prospectus supplement.
If an Appraisal Trigger Event occurs with respect to any mortgage loan,
then the special servicer will have an ongoing obligation to obtain or perform,
as the case may be, within _____ days of each anniversary of the occurrence of
that Appraisal Trigger Event, an update of the prior Required Appraisal or other
valuation. Based upon that update, the special servicer is to redetermine and
report to the trustee and the master servicer the new Appraisal Reduction
Amount, if any, with respect to the mortgage loan. This ongoing obligation will
cease if and when--
o the subject mortgage loan has become a worked-out mortgage loan
as contemplated under "--General" above,
o the subject mortgage loan has remained current for at least three
consecutive monthly debt service payments, and
o no other Servicing Transfer Event has occurred with respect to
the subject mortgage loan during the preceding three months.
The cost of each required appraisal (and any update thereof) will be
advanced by the master servicer and will be reimbursable to the master servicer
as a servicing advance.
At any time that an Appraisal Reduction Amount exists with respect to
any mortgage loan, the Controlling Class Representative will be entitled, at its
own expense, to obtain and deliver to the master servicer, the special servicer
and the trustee an appraisal that satisfies the criteria for a Required
Appraisal. Upon request of the Controlling Class Representative, the special
servicer will be required to recalculate the Appraisal Reduction Amount with
respect to the subject mortgage loan based on that appraisal.
A "Modified Mortgage Loan" is any mortgage loan as to which any
Servicing Transfer Event has occurred and which has been modified by the special
servicer in a manner that:
(A) affects the amount or timing of any payment of principal or
interest due thereon, other than, or in addition to, bringing
current scheduled payments of principal and/or interest with
respect to the mortgage loan;
(B) except as expressly contemplated by the related loan
documents, results in a release of the lien of the mortgage on
any material portion of the related underlying real property
without a corresponding principal prepayment in an amount not
less than the fair market value (as is) of the property to be
released; or
(C) in the judgment of the special servicer, otherwise materially
impairs the security for the mortgage loan or reduces the
likelihood of timely payment of amounts due thereon.
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Custodial Account
General. The master servicer will be required to establish and maintain
an account for purposes of holding payments and other collections that it
receives with respect to the mortgage loans. That "custodial account" must be
maintained in a manner and with a depository institution that satisfies rating
agency standards for securitizations similar to the one involving the
certificates.
The funds held in the master servicer's collection account may be held
as cash or invested in Permitted Investments. Any interest or other income
earned on funds in the master servicer's custodial account will be paid to the
master servicer as additional compensation subject to the limitations set forth
in the pooling and servicing agreement.
Deposits. Under the pooling and servicing agreement, the master
servicer must deposit or cause to be deposited in its custodial account within
one business day following receipt, in the case of payments and other
collections on the mortgage loans, or as otherwise required under the pooling
and servicing agreement, the following payments and collections received or made
by or on behalf of the master servicer with respect to the mortgage pool
subsequent to the date of initial issuance of the certificates, other than
monthly debt service payments due on or before ________________, which monthly
debt service payments belong to the related mortgage loan seller:
(i) all payments on account of principal on the mortgage loans,
including principal prepayments;
(ii) all payments on account of interest on the mortgage loans,
including Default Interest and Post-ARD Additional Interest;
(iii) all prepayment premiums, yield maintenance charges and late
payment charges collected with respect to the mortgage loans;
(iv) all proceeds received under any hazard, flood, title or other
insurance policy that provides coverage with respect to an
underlying real property or the related mortgage loan, and all
proceeds received in connection with the condemnation or the
taking by right of eminent domain of an underlying real
property, in each case to the extent not otherwise required to
be applied to the restoration of the underlying real property
or released to the related borrower;
(v) all amounts received and retained in connection with the
liquidation of defaulted mortgage loans by foreclosure or as
otherwise contemplated under "--Realization Upon Defaulted
Mortgage Loans" below;
(vi) any amounts paid by ________________________ in connection
with the repurchase or replacement of a mortgage loan as
described under "Description of the Mortgage Pool--Cures,
Repurchases and Substitutions" in this prospectus supplement;
(vii) any amounts paid to purchase all the mortgage loans and any
REO properties in connection with the termination of the trust
as contemplated under "Description of the Offered
Certificates--Termination" in this prospectus supplement;
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(viii) any amounts required to be deposited by the master servicer in
connection with losses incurred with respect to Permitted
Investments of funds held in the collection account;
(ix) all payments required to be paid by the master servicer or the
special servicer with respect to any deductible clause in any
blanket insurance policy as described under "Description of
the Mortgage Pool--Certain Underwriting Matters--Hazard,
Liability and Other Insurance" in this prospectus supplement;
(x) any amount required to be transferred from the special
servicer's REO account (see "--REO Properties" below); and
(xi) any amounts required to be transferred from any debt service
reserve accounts with respect to the mortgage loans.
Upon receipt of any of the amounts described in clauses (i) through (v)
above with respect to any specially serviced mortgage loan, the special servicer
is required to promptly remit these amounts to the master servicer for deposit
in the master servicer's collection account.
Withdrawals. The master servicer may make withdrawals from its
collection account for any of the following purposes, which are not listed in
any order of priority: ---
(i) to remit to the trustee for deposit in the trustee's payment
account (see "Description of the Offered Certificates--Payment
Account" in this prospectus supplement) on the business day
preceding each payment date, all payments and other
collections on the mortgage loans and any REO properties that
are then on deposit in the collection account, exclusive of
any portion of those payments and other collections that
represents one or more of the following--
o monthly debt service payments due on a due date
subsequent to the end of the related collection period,
o payments and other collections received after the end
of the related collection period, and
o amounts that are payable or reimbursable from the
collection account to any person other than the
certificateholders in accordance with any of clauses
(ii) through (xvii) below;
(ii) to reimburse itself, the special servicer or the trustee, as
applicable, for any unreimbursed advances made by that party,
such reimbursement to be made out of collections on the
mortgage loan or REO property as to which the advance was
made;
(iii) to pay itself earned and unpaid master servicing fees in
respect of each mortgage loan, such payment to be made out of
collections on that mortgage loan that are allocable as
interest;
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(iv) to pay the special servicer, out of general collections on the
mortgage loans and any REO properties, earned and unpaid
special servicing fees in respect of each specially serviced
mortgage loan and each mortgage loan as to which the related
underlying property has become an REO property;
(v) to pay the special servicer (or, if applicable, any
predecessor special servicer) earned and unpaid workout fees
and liquidation fees to which it is entitled, such payment to
be made from the sources described under "--Servicing and
Other Compensation and Payment of Expenses" above;
(vi) to reimburse itself, the special servicer or the trustee, as
applicable, out of general collections on the mortgage loans
and any REO properties, for any unreimbursed advance made by
that party that has been determined not to be ultimately
recoverable pursuant to clause (ii) above;
(vii) to pay itself, the special servicer or the trustee, as
applicable, unpaid interest on any advance made by that party,
such payment to be made out of Default Interest and late
payment charges received (A) with respect to the mortgage loan
as to which the advance was made and (B) during the collection
period in which that advance is reimbursed;
(viii) in connection with the reimbursement of advances as described
in clause (ii) or (vi) above, to pay itself, the special
servicer or the trustee, as the case may be, out of general
collections on the mortgage loans and any REO properties, any
interest accrued and payable on that advance and not otherwise
payable pursuant to clause (vii) above;
(ix) to pay itself any items of additional master servicing
compensation on deposit in the collection account as discussed
under "--Servicing and Other Compensation and Payment of
Expenses--Additional Master Servicing Compensation" above;
(x) to pay the special servicer any items of additional special
servicing compensation on deposit in the collection account as
discussed under "--Servicing and Other Compensation and
Payment of Expenses--Additional Special Servicing
Compensation" above;
(xi) to pay any unpaid liquidation expenses incurred with respect
to any liquidated mortgage loan or REO property, such payments
to be made out of collections on that mortgage loan or REO
property, as the case may be;
(xii) to pay, out of general collections on the mortgage loans and
any REO properties, any servicing expenses that would, if
advanced, be nonrecoverable pursuant to clause (ii) above;
(xiii) to pay, out of general collections on the mortgage loans and
any REO properties, for certain costs and expenses incurred by
the trust in connection with the remediation of adverse
environmental conditions at any underlying real property that
secures a defaulted mortgage loan;
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(xiv) to pay itself, the special servicer, the trustee, us or any of
their or our respective directors, officers, employees and
agents, as the case may be, out of general collections on the
mortgage loans and any REO properties, any of the
reimbursements or indemnities to which we or any of those
other persons or entities are entitled as described under
"Description of the Governing Documents--Certain Matters
Regarding the Master Servicer, the Special Servicer, the
Manager and Us" and "--Certain Matters Regarding the Trustee"
in the accompanying prospectus;
(xv) to pay, out of general collections on the mortgage loans and
any REO properties, for the costs of certain opinions of
counsel, the cost of recording the pooling and servicing
agreement and certain expenses incurred by the tax
administrator in connection with providing advice to the
special servicer;
(xvi) to pay any other items described in this prospectus supplement
as being payable from the collection account;
(xvii) to withdraw amounts deposited in the collection account in
error, including amounts received on any mortgage loan or REO
property that has been purchased or otherwise removed from the
trust; and
(xviii) to clear and terminate the collection account upon the
termination of the pooling and servicing agreement.
Realization Upon Defaulted Mortgage Loans
The pooling and servicing agreement grants to the master servicer, the
special servicer and any single certificateholder or group of certificateholders
of the Controlling Class, a right to purchase from the trust certain defaulted
mortgage loans in the priority described below.
If the special servicer has determined, in its judgment, that the sale
of any defaulted mortgage loan under the circumstances described below is in
accordance with the Servicing Standard, the special servicer must give prompt
written notice of its determination to the trustee and the master servicer. The
trustee will then be required, within five days after receipt of that notice, to
provide a similar notice to all certificateholders of the Controlling Class. Any
single certificateholder or group of certificateholders of the Controlling Class
may, at its or their option, within ten days after receiving the notice from the
trustee, purchase that defaulted mortgage loan from the trust, at a cash price
generally equal to the outstanding principal balance of, all accrued and unpaid
interest on and all unreimbursed servicing advances with respect to, the subject
mortgage loan. If two or more separate certificateholders or groups of
certificateholders of the Controlling Class want to purchase the defaulted
mortgage loan, preference will be given to the certificateholder or group of
certificateholders with the largest interest in the Controlling Class. If
certificateholders of the Controlling Class have not purchased that defaulted
mortgage loan within ___ days of their having received the relevant notice, then
for a limited period, either the special servicer or the master servicer, in
that order of priority, may at its option purchase the defaulted mortgage loan
from the trust at the same cash price as was applicable for the
certificateholders of the Controlling Class. Each of the master servicer and the
special servicer may designate an affiliate to complete the purchase.
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The special servicer may offer to sell any defaulted mortgage loan not
otherwise purchased as described in the preceding paragraph, if and when the
special servicer determines, consistent with the Servicing Standard, that a sale
would be in the best economic interests of the certificateholders (as a
collective whole). Any offer must be made in a commercially reasonable manner
for a period of not less than ten days. Subject to the discussion in the next
paragraph and under "--The Controlling Class Representative" above, the special
servicer will be required to accept the highest cash bid received from any
person that is a "fair price", determined in accordance with the pooling and
servicing agreement, for the mortgage loan.
The special servicer will not be obligated to accept the highest cash
bid if the special servicer determines, in accordance with the Servicing
Standard, that rejection of the highest cash bid would be in the best interests
of the certificateholders, as a collective whole. Furthermore, subject to the
discussion under "--The Controlling Class Representative" above, the special
servicer may accept a lower cash bid from any person or entity other than itself
or an affiliate if it determines, in accordance with the Servicing Standard,
that acceptance of the bid would be in the best interests of the
certificateholders, as a collective whole. For example, the prospective buyer
making the lower bid may be more likely to perform its obligations or the terms,
other than the price, offered by the prospective buyer making the lower bid may
be more favorable.
Neither the trustee, in its individual capacity, nor any of its
affiliates may bid for or purchase any defaulted mortgage loan or any REO
property.
In connection with the sale of any defaulted mortgage loan, the special
servicer may charge prospective bidders, and retain, fees that approximate the
special servicer's actual costs in the preparation and delivery of information
pertaining to the sales or evaluating bids without obligation to deposit the
amounts into its collection account.
If a default on a mortgage loan has occurred or, in the special
servicer's judgment, a payment default is imminent, then, subject to the
discussion under "--The Controlling Class Representative" above, the special
servicer may, on behalf of the trust, take any of the following actions:
o institute foreclosure proceedings;
o exercise any power of sale contained in the related mortgage;
o obtain a deed in lieu of foreclosure; or
o otherwise acquire title to the related underlying real property,
by operation of law or otherwise.
The special servicer may not, however, acquire title to any underlying
real property, have a receiver of rents appointed with respect to any underlying
real property or take any other action with respect to any underlying real
property that would cause the trustee, for the benefit of the
certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of the particular real property within the meaning of certain federal
environmental laws, unless--
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o the special servicer has previously received a report prepared by
a person who regularly conducts environmental audits, which
report will be an expense of the trust, and
o either:
(a) the report indicates that (i) the particular real property is in
compliance with applicable environmental laws and regulations and
(ii) there are no circumstances or conditions present at the real
property that have resulted in any contamination for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any applicable environmental
laws and regulations; or
(b) the special servicer, based solely as to environmental matters
and related costs on the information set forth in the report,
determines that taking the actions necessary to bring the
particular real property into compliance with applicable
environmental laws and regulations and/or taking the actions
contemplated by clause (a)(ii) above, is reasonably likely to
produce a greater recovery, taking into account the time value of
money, than not taking those actions.
If the trust acquires title to any underlying real property, the
special servicer, on behalf of the trust, has to sell the particular real
property prior to the close of the third taxable year following the taxable year
in which that acquisition occurred, subject to limited exceptions as described
under "--REO Properties" below.
If liquidation proceeds collected with respect to a defaulted mortgage
loan are less than the outstanding principal balance of the defaulted mortgage
loan, together with accrued interest on and reimbursable expenses incurred by
the special servicer and/or the master servicer in connection with the defaulted
mortgage loan, then the trust will realize a loss in the amount of the
shortfall. The special servicer and/or the master servicer will be entitled to
reimbursement out of the liquidation proceeds recovered on any defaulted
mortgage loan, prior to the payment of the liquidation proceeds to the
certificateholders, for any and all amounts that represent unpaid servicing
compensation in respect of the mortgage loan, unreimbursed servicing expenses
incurred with respect to the mortgage loan and any unreimbursed advances,
including interest thereon, of delinquent payments made with respect to the
mortgage loan. In addition, amounts otherwise payable on the certificates may be
further reduced by interest payable to the master servicer and/or special
servicer on the servicing expenses and advances.
If any underlying real property suffers sufficient damage that the
proceeds, if any, of the related hazard insurance policy are insufficient to
restore fully the damaged property, neither the special servicer nor the master
servicer will be required to expend its own funds to complete the restoration
unless it determines that--
o the restoration would be in accordance with the Servicing
Standard; and
o the expenses will be recoverable by it from related insurance
proceeds, condemnation proceeds and/or liquidation proceeds.
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REO Properties
If title to any underlying real property is acquired by the special
servicer on behalf of the trust, the special servicer will be required to sell
that property not later than the end of the third calendar year following the
year of acquisition, unless--
o the IRS grants an extension of time to sell the property, or
o the special servicer obtains an opinion of independent counsel
generally to the effect that the holding of the property
subsequent to the end of the third calendar year following the
year in which the acquisition occurred will not result in the
imposition of a tax on the trust assets or cause any of REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC under the
Internal Revenue Code of 1986.
Subject to the foregoing, the special servicer will generally be
required to solicit cash offers for any REO property in a manner that will be
reasonably likely to realize a fair price for the property. The special servicer
may retain an independent contractor to operate and manage any REO property. The
retention of an independent contractor will not relieve the special servicer of
its obligations with respect to the REO property. Regardless of whether the
special servicer applies for or is granted an extension of time to sell the
property, the special servicer shall act in accordance with the Servicing
Standard to liquidate an REO property on a timely basis. If an extension is
granted or opinion given, the special servicer must sell the REO property within
the period specified in the extension or opinion.
In general, the special servicer or an independent contractor employed
by the special servicer at the expense of the trust will be obligated to operate
and manage any underlying real property acquired as REO property in a manner
that:
(i) maintains its status as "foreclosure property" under the REMIC
provisions of the Internal Revenue Code of 1986, and
(ii) is in accordance with the Servicing Standard.
The special servicer must review the operation of each REO property and
consult with the trustee, or any person appointed by the trustee to act as tax
administrator, to determine the trust's federal income tax reporting position
with respect to the income it is anticipated that the trust would derive from
the property. The special servicer could determine that it would not be
consistent with the Servicing Standard to manage and operate the property in a
manner that would avoid the imposition of a tax on "net income from foreclosure
property", within the meaning of Section 857(b)(4)(B) of the Internal Revenue
Code of 1986, or a tax on "prohibited transactions" under Section 860F of the
Internal Revenue Code of 1986. This determination is most likely to occur in the
case of an REO property that is a hotel or residential health care facility. To
the extent that income the trust receives from an REO property is subject to--
o a tax on "net income from foreclosure property", that income
would be subject to federal tax at the highest marginal
corporate tax rate, which is currently 35%,
o a tax on "prohibited transactions", that income would be
subject to federal tax at a 100% rate.
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The determination as to whether income from an REO property would be
subject to a tax will depend on the specific facts and circumstances relating to
the management and operation of each REO property. Generally, income from an REO
property that is directly operated by the special servicer would be apportioned
and classified as "service" or "non-service" income. The "service" portion of
the income could be subject to federal tax either at the highest marginal
corporate tax rate or at the 100% rate. The "non- service" portion of the income
could be subject to federal tax at the highest marginal corporate tax rate or,
although it appears unlikely, at the 100% rate. Any tax imposed on the trust's
income from an REO property would reduce the amount available for payment to the
certificateholders. See "Federal Income Tax Consequences" in this prospectus
supplement and in the accompanying prospectus. The reasonable "out-of- pocket"
costs and expenses of obtaining professional tax advice in connection with the
foregoing will be payable out of the master servicer's collection account.
The special servicer will be required to segregate and hold all funds
collected and received in connection with any REO property separate and apart
from its own funds and general assets. If an REO property is acquired, the
special servicer will be required to establish and maintain an account for the
retention of revenues and other proceeds derived from the REO property. That
"REO account" must be maintained in a manner and with a depository institution
that satisfies rating agency standards for securitizations similar to the one
involving the certificates. The special servicer will be required to deposit, or
cause to be deposited, in its REO account, upon receipt, all net income,
insurance proceeds, condemnation proceeds and liquidation proceeds received with
respect to an REO property. The funds held in this REO account may be held as
cash or invested in Permitted Investments. Any interest or other income earned
on funds in the special servicer's REO account will be payable to the special
servicer, subject to the limitations described in the pooling and servicing
agreement.
The special servicer will be required to withdraw from its REO account
funds necessary for the proper operation, management, leasing, maintenance and
disposition of any REO property, but only to the extent of amounts on deposit in
the account relating to that particular REO property. Promptly following the end
of each collection period, the special servicer will be required to withdraw
from the REO account and deposit, or deliver to the master servicer for deposit,
into the master servicer's collection account the total of all amounts received
in respect of each REO property during that collection period, net of (i) any
withdrawals made out of those amounts as described in the preceding sentence and
(ii) any portion of those amounts that may be retained as reserves as described
in the next sentence. The special servicer may, subject to certain limitations
described in the pooling and servicing agreement, retain in its REO account the
portion of the proceeds and collections as may be necessary to maintain a
reserve of sufficient funds for the proper operation, management, leasing,
maintenance and disposition of the related REO property, including the creation
of a reasonable reserve for repairs, replacements, necessary capital
improvements and other related expenses.
The special servicer shall keep and maintain separate records, on a
property-by-property basis, for the purpose of accounting for all deposits to,
and withdrawals from, its REO account.
Inspections; Collection of Operating Information
The special servicer will be required, at the expense of the trust, to
inspect or cause an inspection of the related underlying real property as soon
as practicable after any mortgage loan becomes a specially serviced mortgage
loan. The master servicer also will be required, at its own expense, to inspect
or cause an inspection of each underlying real property at least once per
$______________ (or, in the case of each
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mortgage loan with an unpaid principal balance of under $___________, once every
____ years), if the special servicer has not already undertaken an inspection in
that period as described in the preceding sentence. The master servicer and the
special servicer will each be required to prepare or cause to be prepared a
written report of each inspection performed by it that generally describes the
condition of the particular real property and that specifies--
o any sale, transfer or abandonment of the property of which the
master servicer or the special servicer, as applicable, is aware,
or
o any change in the property's condition, occupancy or value that
the master servicer or the special servicer, as applicable, in
accordance with the Servicing Standard, considers to be material.
The special servicer, in the case of each specially serviced mortgage
loan, and the master servicer, in the case of each performing mortgage loan,
will each be required to use reasonable efforts to collect from the related
borrower and review the following items, to the extent that those items are
required to be delivered pursuant to the related loan documents:
(i) the quarterly and annual operating statements, budgets and
rent rolls of the underlying real property; and
(ii) the quarterly and annual financial statements of the borrower.
The special servicer will also be required to cause quarterly and
annual operating statements, budgets and rent rolls to be prepared for each REO
property. However, there can be no assurance that any operating statements
required to be delivered by a borrower will in fact be delivered, nor is the
master servicer or the special servicer likely to have any practical means of
compelling delivery.
Evidence as to Compliance
On or before ___________ of each year, beginning ___________, each of
the master servicer and the special servicer must--
o at its expense, cause a firm of independent public accountants,
that is a member of the American Institute of Certified Public
Accountants to furnish a statement to the trustee, among others,
to the effect that the firm has examined the servicing operations
of the master servicer or the special servicer, as the case may
be, for the previous year and, on the basis of that examination,
conducted substantially in compliance with the Uniform Single
Attestation Program for Mortgage Bankers established by the
Mortgage Bankers of America ("USAP"), the firm confirms that the
master servicer or the special servicer, as applicable, has
complied with the minimum servicing standards identified in USAP,
in all material respects, except for the significant exceptions
or errors in records that, in the opinion of the firm, USAP
requires it to report. In rendering its report the firm may rely,
as to matters relating to the direct servicing of commercial and
multifamily mortgage loans by sub-servicers, upon comparable
reports of firms of independent certified public accountants
rendered on the basis of examinations conducted in accordance
with the same standards, within one year of the report, with
respect to those sub-servicers.
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o deliver to the trustee, among others, a statement signed by an
officer of the master servicer or the special servicer, as the
case may be, to the effect that, to the best knowledge of that
officer, the master servicer or special servicer, as the case may
be, has fulfilled its obligations under the pooling and servicing
agreement in all material respects throughout the preceding
calendar year or portion thereof during which the series ____
certificates were outstanding.
Events of Default
Each of the following events, circumstances and conditions will be
considered "events of default" under the pooling and servicing agreement:
o the master servicer or the special servicer fails to deposit,
or to remit to the appropriate party for deposit, into the
master servicer's collection account or the special servicer's
REO account, as applicable, any amount required to be so
deposited, and that failure continues unremedied for _____
business days following the date on which the deposit or
remittance was required to be made;
o the master servicer fails to remit to the trustee for deposit
in the trustee's payment account any amount required to be so
remitted, and that failure continues unremedied for _____
business days following the date on which the remittance was
required to be made;
o the master servicer or the special servicer fails to timely make
any servicing advance required to be made by it under the pooling
and servicing agreement, and that failure continues unremedied
for _____ business days following the date on which notice has
been given to the master servicer or the special servicer, as the
case may be, by the trustee;
o the master servicer or the special servicer fails to observe or
perform in any material respect any of its other covenants or
agreements under the pooling and servicing agreement, and that
failure continues unremedied for ____ days after written notice
of it has been given to the master servicer or the special
servicer, as the case may be, by any other party to the pooling
and servicing agreement or by certificateholders entitled to not
less than _____% of the voting rights for the series;
o it is determined that there is a breach by the master servicer or
the special servicer of any of its representations or warranties
contained in the pooling and servicing agreement that materially
and adversely affects the interests of any class of
certificateholders, and that breach continues unremedied for
_____ days after written notice of it has been given to the
master servicer or the special servicer, as the case may be, by
any other party to the pooling and servicing agreement or by the
certificateholders entitled to not less than ___% of the voting
rights for the series;
o a decree or order of a court having jurisdiction in an
involuntary case for the appointment of a receiver, liquidator,
trustee or similar official in any bankruptcy, insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings is entered against the master servicer or the
special servicer and the decree or order remains in force for a
period of _____ days;
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o the master servicer or special servicer consents to the
appointment of a receiver, liquidator, trustee or similar
official relating to it or of or relating to all or substantially
all of its property;
o the master servicer or special servicer admits in writing its
inability to pay its debts or take certain other actions
indicating its insolvency or inability to pay its obligations;
o one or more ratings assigned by either ____________ or
____________ to the series _____ certificates are qualified,
downgraded or withdrawn as a result of the master servicer or
special servicer acting in that capacity; and
o the trustee receives written notice from either ____________
or ____________ that the continuation of the master servicer
or the special servicer, as the case may be, in that capacity
would result in a qualification, downgrade or withdrawal of
any rating then assigned by that rating agency to any class of
the series _____ certificates.
When a single entity acts as master servicer and special servicer, an
event of default in one capacity will be an event of default in the other
capacity.
Rights Upon Event of Default
If an event of default described above under "--Events of Default"
occurs with respect to the master servicer or the special servicer and remains
unremedied, the trustee will be authorized, and at the direction of
certificateholders entitled to not less than ____% of the voting rights for the
series, the trustee will be required, to terminate all of the rights and
obligations of the defaulting party under the pooling and servicing agreement
and in and to the trust assets other than any rights the defaulting party may
have as a certificateholder. Upon any termination, the trustee must either:
o succeed to all of the responsibilities, duties and liabilities of
the master servicer or special servicer, as the case may be,
under the pooling and servicing agreement; or
o appoint an established mortgage loan servicing institution to act
as successor master servicer or special servicer, as the case may
be.
The holders of series _____ certificates entitled to a majority of the voting
rights for the series may require the trustee to appoint an established mortgage
loan servicing institution to act as successor master servicer or special
servicer, as the case may be, rather than have the trustee act as that
successor. The appointment of a successor special servicer by the trustee is
subject to the rights of the holders of series ______ certificates evidencing a
majority interest in the Controlling Class to designate a successor special
servicer as described under "--Replacement of the Special Servicer" above.
In general, certificateholders entitled to at least ______% of the
voting rights allocated to each class of certificates affected by any event of
default may waive the event of default. However, certain of the events of
default described under "--Events of Default" above may only be waived by all of
the holders of the affected classes of the certificates. Furthermore, if the
trustee is required to spend any monies in connection with any event of default,
then that event of default may not be waived unless and until the trustee has
been reimbursed, with interest, by the defaulting party. Upon any waiver of an
event of default, the event of
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default will cease to exist and will be deemed to have been remedied for every
purpose under the pooling and servicing agreement.
DESCRIPTION OF THE OFFERED CERTIFICATES
General
The certificates will be issued, on or about ____________________,
pursuant to the pooling and servicing agreement. They will represent the entire
beneficial ownership interest of the trust. The assets of the trust will
include:
o the mortgage loans;
o any and all payments under and proceeds of the mortgage loans
received after _____________, exclusive of payments of principal,
interest and other amounts due on or before that date or, in the
case of a replacement mortgage loan (see "Description of the
Mortgage Pool--Cures, Repurchases and Substitutions" in this
prospectus supplement), on or before the related date of
substitution;
o the loan documents for the mortgage loans;
o any REO properties acquired in respect of defaulted mortgage
loans;
o those funds or assets as from time to time are deposited in the
master servicer's collection account, the special servicer's REO
account, the trustee's payment account (see "--Payment Account"
below) or the trustee's interest reserve account (see
"--Payments--Interest Reserve Account" below); and
o various rights incidental to the representations and warranties
made by __________________________ as described under
"Description of the Mortgage Pool--Representations and
Warranties" and "--Cures, Repurchases and Substitutions" in this
prospectus supplement.
The certificates will include the following classes:
o the "A-1", "A-2", "A-3", "A-4", "A-5", "B-1" and "B-2" classes,
which are the classes of certificates that are offered by this
prospectus supplement, and
o the "B-3", "B-4", "B-5", "B-6", "B-7", "B-8", "C", "D", "R-I",
"R-II" and "R-III" classes, which are the classes of certificates
that--
(i) will be retained or privately placed by us, and
(ii) are not offered by this prospectus supplement.
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The class "A-1", "A-2", "A-3", "A-4", "A-5", "B-1", "B-2", "B-3",
"B-4", "B-5", "B-6", "B-7", "B- 8", "C" and "D" certificates are the only
certificates that will have principal balances. We refer to these certificates
as the "principal balance certificates". The principal balance of any of these
certificates will represent the total payments of principal to which the holder
of the certificate is entitled over time out of payments, or advances in lieu
thereof, and other collections on the assets of the trust. Accordingly, on each
payment date, the principal balance of each of these certificates will be
permanently reduced by any payments of principal actually made with respect to
the certificate on that payment date. See "--Payments" below. On any particular
payment date, the principal balance of each of these certificates may also be
permanently reduced, without any corresponding payment, in connection with
losses on the mortgage loans and default-related and otherwise unanticipated
expenses. See "--Reductions in Certificate Principal Balances in Connection with
Realized Losses and Additional Trust Fund Expenses" below.
The class "S" certificates will not have principal balances, and the
holders of the class "S" certificates will not be entitled to receive payments
of principal. However, each class "S" certificate will have a notional amount
for purposes of calculating the accrual of interest with respect to that
certificate. The aggregate notional amount of all the class "S" certificates
will equal the aggregate principal balance of all the principal balance
certificates outstanding from time to time.
In general, principal balances and notional amounts will be reported on
a class-by-class basis. In order to determine the principal balance or notional
amount of any of your certificates from time to time, you may multiply the
original principal balance or notional amount of that certificate as of the date
of initial issuance of the certificates, as specified on the face of that
certificate, by the then-applicable certificate factor for the relevant class.
The "certificate factor" for any class of offered certificates, as of any date
of determination, will equal a fraction, expressed as a percentage, the
numerator of which will be the then outstanding aggregate principal balance or
notional amount, as applicable, of that class, and the denominator of which will
be the original aggregate principal balance or notional amount, as applicable,
of that class. Certificate factors will be reported monthly in the trustee's
report.
Registration and Denominations
General. The offered certificates will be issued in book-entry form in
original denominations of:
o in the case of the class "S" certificates, $________ initial
notional amount and in any whole dollar denomination in excess of
$___________; and
o in the case of the other offered certificates, $_________ initial
principal balance and in any whole dollar denomination in excess
of $_____________.
Each class of offered certificates will initially be represented by one
or more certificates registered in the name of Cede & Co., as nominee of The
Depository Trust Company. You will not be entitled to receive an offered
certificate issued in fully registered, certificated form, except under the
limited circumstances described in the accompanying prospectus under
"Description of the Certificates--Book- Entry Registration". For so long as any
class of offered certificates is held in book-entry form--
o all references to actions by holders of those certificates will
refer to actions taken by DTC upon instructions received from
beneficial owners of those certificates through its participating
organizations, and
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o all references in this prospectus supplement to payments,
notices, reports, statements and other information to holders of
those certificates will refer to payments, notices, reports and
statements to DTC or Cede & Co., as the registered holder of
those certificates, for payment to beneficial owners of offered
certificates through its participating organizations in
accordance with DTC's procedures.
The trustee will initially serve as registrar for purposes of providing
for the registration of the offered certificates and, if and to the extent
physical certificates are issued to the actual beneficial owners of any of the
offered certificates, the registration of transfers and exchanges of those
certificates.
For a discussion of DTC, See "Description of the Certificates--Book
Entry Registration" in the accompanying prospectus.
Payment Account
General. The trustee must establish and maintain an account in which it
will hold funds pending their payment on the certificates and from which it will
make those payments. That "payment account" must be maintained in a manner and
with a depository institution that satisfies rating agency standards for
securitizations similar to the one involving the certificates. Funds held in the
trustee's payment account will remain uninvested.
Deposits. On the business day prior to each payment date, the master
servicer will be required to remit to the trustee for deposit in the payment
account the following funds:
o All payments and other collections on the mortgage loans and any
REO properties that are then on deposit in the master servicer's
collection account, exclusive of any portion of those payments
and other collections that represents one or more of the
following:
(a) monthly debt service payments due on a due date subsequent
to the end of the related collection period;
(b) payments and other collections received after the end of the
related collection period;
(c) amounts that are payable or reimbursable from the master
servicer's collection account to any person other than the
certificateholders, including--
(i) amounts payable to the master servicer or the special
servicer as compensation, including master servicing
fees, special servicing fees, workout fees, liquidation
fees, assumption fees, modification fees and, to the
extent not otherwise applied to cover interest on
advances, Default Interest and late payment charges,
(ii) amounts payable in reimbursement of outstanding
advances, together with interest thereon, and
(iii) amounts payable in respect of other expenses of the
trust; and
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(d) amounts deposited in the master servicer's collection
account in error.
o Any advances of delinquent monthly debt service payments and
Compensating Interest Payments made with respect to that
payment date.
See "--Advances of Delinquent Monthly Debt Service Payments" below and
"Servicing of the Mortgage Loans--Collection Account" and "Servicing and Other
Compensation and Payment of Expenses" in this prospectus supplement.
With respect to each payment date that occurs during March, commencing
in ____________, the trustee will be required to transfer from its interest
reserve account, which we describe under "--Interest Reserve Account" below, to
its payment account the interest reserve amounts that are then being held in
that interest reserve account with respect to those mortgage loans that accrue
interest on an actual/360 basis.
Withdrawals. The trustee may from time to time make withdrawals from
its payment account for any of the following purposes:
o to pay itself a monthly fee which is described under "--The
Trustee" below;
o to indemnify itself and certain related persons as described
under "Description of the Governing Documents--Certain
Matters Regarding the Trustee" in the accompanying
prospectus;
o to pay for any opinions of counsel required to be obtained
in connection with any amendments to the pooling and
servicing agreement;
o to pay any federal, state and local taxes imposed on the
trust, its assets and/or transactions, together with all
incidental costs and expenses, that are required to be borne
by the trust as described under "Federal Income Tax
Consequences--REMICs--Prohibited Transactions Tax and Other
Taxes" in the accompanying prospectus and "Servicing of the
Mortgage Loans--REO Properties" in this prospectus
supplement;
o with respect to each payment date during February of any
year or during January of any year that is not a leap year,
commencing in 2000, to transfer to the trustee's interest
reserve account the interest reserve amounts required to be
so transferred in that month with respect to those mortgage
loans that accrue interest on an actual/360 basis; and
o to pay to the person entitled thereto any amounts deposited
in the payment account in error.
On each payment date, all amounts on deposit in the trustee's payment
account, exclusive of any portion of those amounts that are to be withdrawn for
the purposes contemplated in the foregoing paragraph, will be withdrawn and
applied to make payments on the certificates. We refer to those funds that are
available to make payments on the certificates on any payment date as the
"Available Funds" for that date. The Available Funds for any payment date will
reflect the deposits to be made to the trustee's payment account in connection
with that payment date as described under "--Payment Account--Deposits" above.
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The Available Funds for any payment date will consist of two separate
components--
o the portion of those funds that represent prepayment
consideration collected on the mortgage loans as a result of
voluntary or involuntary prepayments that occurred during
the related collection period, which will be paid to the
holders of the offered certificates as described under
"--Payments--Payments of Prepayment Premiums and Yield
Maintenance Charges" below, and
o the remaining portion of those funds, which we refer to as
the "Available P&I Funds" and which will be paid to the
holders of all the certificates, other than the class "___"
certificates, as described under "--Payments--Priority of
Payments" below.
Interest Reserve Account
The trustee must maintain an account in which it will hold certain
"interest reserve amounts" described below with respect to those mortgage loans
that accrue interest on an actual/360 basis. That "interest reserve account"
must be maintained in a manner and with a depository that satisfies rating
agency standards for similar securitizations as the one involving the
certificates. Funds held in the trustee's interest reserve account will remain
uninvested.
During January, except in a leap year, and February of each calendar
year, beginning in ______, the trustee will, on or before the payment date in
that month, withdraw from its payment account and deposit in its interest
reserve account the interest reserve amount with respect to each mortgage loan
that accrues interest on an actual/360 basis and for which the monthly debt
service payment due in that month was either received or advanced. That
"interest reserve amount" for each such mortgage loan will equal one day's
interest accrued at the related mortgage interest rate on the unpaid principal
balance of that loan as of the end of the related collection period, net of all
unreimbursed advances of principal then outstanding with respect to that loan.
During March of each calendar year, beginning in ______, the trustee
will, on or before the payment date in that month, withdraw from its interest
reserve account and deposit in its payment account any and all interest reserve
amounts then on deposit in the interest reserve account with respect to those
mortgage loans that accrue interest on an actual/360 basis. All interest reserve
amounts that are so transferred from the interest reserve account to the payment
account will be included in the Available P&I Funds for the payment date during
the month of transfer.
Payments
General. On each payment date, the trustee will, subject to the
Available Funds, make all payments required to be made on the series ______
certificates on that date to the holders of record as of the close of business
on the last business day of the calendar month preceding the month in which
those payments are to occur. The final payment of principal and/or interest on
any offered certificate, however, will be made only upon presentation and
surrender of that certificate at the location to be specified in a notice of the
pendency of that final payment.
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In order for a certificateholder to receive payments by wire transfer
on and after any particular payment date, that certificateholder must provide
the trustee with written wiring instructions no later than the last day of the
calendar month preceding the month in which that payment date occurs. Otherwise,
that certificateholder will receive its payments by check mailed to it.
Cede & Co. will be the registered holder of your certificates, and you
will receive payments on your certificates through DTC and its participating
organizations, until physical certificates are issued to the actual beneficial
owners. See "--Registration and Denominations" above.
Payments of Interest. All of the classes of the series ________
certificates will bear interest, except for the "R-I", "R-II" and "R-III"
classes.
With respect to each class of interest-bearing certificates, that
interest will accrue during each interest accrual period based upon--
o the pass-through rate for that class and the related payment
date,
o the aggregate principal balance or notional amount, as the case
may be, of that class outstanding immediately prior to the
related payment date, and
o the assumption that each year consists of twelve 30-day months.
On each payment date, subject to the Available P&I Funds for that date
and the priorities of payment described under "--Payments--Priority of Payments"
below, the holders of each class of interest-bearing certificates will be
entitled to receive--
o the total amount of interest accrued during the related interest
accrual period with respect to that class of certificates,
reduced by
o the portion of any Net Aggregate Prepayment Interest Shortfall
for that payment date that is allocable to that class of
certificates.
If the holders of any class of interest-bearing certificates do not
receive all of the interest to which they are entitled on any payment date, then
they will continue to be entitled to receive the unpaid portion of that interest
on future payment dates, subject to the Available P&I Funds for those future
payment dates and the priorities of payment described under
"--Payments--Priority of Payments" below.
The portion of any Net Aggregate Prepayment Interest Shortfall for any
payment date that is allocable to any particular class of interest-bearing
certificates will equal the product of--
o the total amount of interest accrued during the related interest
accrual period with respect to that class of certificates,
multiplied by
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o a fraction, the numerator of which is the total amount of
interest accrued during the related interest accrual period with
respect to that class of certificates, and the denominator of
which is the total amount of interest accrued during the related
interest accrual period with respect to all of the
interest-bearing classes.
Calculation of Pass-Through Rates.
General. The pass-through rates for [Describe pass-through rates.]
The pass-through rate applicable to the class "S" certificates for each
payment date will equal the excess, if any, of--
o the Weighted Average Pool Pass-Through Rate for that payment
date, over
o the weighted average of the pass-through rates for each of the
respective classes of the principal balance certificates for that
payment date, weighted on the basis of the relative aggregate
principal balances of those classes of principal balance
certificates outstanding immediately prior to that payment date.
The pass-through rates for the class "B-3", "B-4", "B-5", "B-6", "B-7",
"B-8", "C" and "D" certificates for each payment date will, in each case,
[Describe pass-through rates.]
The class "R-I", "R-II" and "R-III" certificates will not be
interest-bearing and, therefore, will not have pass-through rates.
Weighted Average Pool Pass-Through Rate. The "Weighted Average Pool
Pass-Through Rate" for each payment date will equal the weighted average of the
following annual rates with respect to all of the mortgage loans, weighted on
the basis of the mortgage loans' respective stated principal balances
immediately prior to that payment date:
o in the case of each mortgage loan that accrues interest on a
30/360 basis, an annual rate equal to--
(a) the mortgage interest rate in effect for that mortgage loan
as of _____________, minus
(b) the sum of (i) the related master servicing fee rate and
(ii) ____% per annum; and
o in the case of each mortgage loan that accrues interest on an
actual/360 basis, an annual rate generally equal to--
(x) a fraction, expressed as a percentage, the numerator of
which is, subject to adjustment as described below, the
product of (i) 12, multiplied by (ii) the amount of interest
that accrued or would have accrued with respect to that
mortgage loan on an actual/360 basis during the related
interest accrual period, based on its stated principal
balance immediately preceding that payment date and its
mortgage interest rate in effect as of
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_____________, and the denominator of which is the stated
principal balance of the mortgage loan immediately prior to
that payment date, minus
(y) the sum of (i) the related master servicing fee rate and
(ii) ____% per annum.
Notwithstanding the foregoing, if the subject payment date occurs during January
(except during a leap year) or February, then, in the case of any particular
mortgage loan that accrues interest on an actual/360 basis, the amount of
interest referred to in subclause (ii) of the numerator of the fraction
described in clause (x) of the second bullet point above will be decreased by
any interest reserve amount with respect to that mortgage loan that is
transferred from the trustee's payment account to the trustee's interest reserve
account during that month. Furthermore, if the subject payment date occurs
during March, then, in the case of any particular mortgage loan that accrues
interest on an actual/360 basis, the amount of interest referred to in subclause
(ii) of the numerator of the fraction described in clause (x) of the second
bullet point above will be increased by any interest reserve amounts with
respect to that mortgage loan that are transferred from the trustee's interest
reserve account to the trustee's payment account during that month.
The calculation of the Weighted Average Pool Pass-Through Rate will be
unaffected by any change in the mortgage interest rate for any mortgage loan,
including in connection with any bankruptcy or insolvency of the related
borrower or any modification of that mortgage loan agreed to by the master
servicer or the special servicer.
Stated Principal Balance. The "stated principal balance" of each
mortgage loan:
o will initially equal its scheduled principal balance as of
_________________ or, in the case of a replacement mortgage loan
(see "Description of the Mortgage Pool--Cures, Repurchases and
Substitutions" in this prospectus supplement), as of the related
date of substitution; and
o will be permanently reduced on each subsequent payment date, to
not less than zero, by--
(i) that portion, if any, of the Total Principal Payment Amount
for that payment date that is attributable to that mortgage
loan (see "--Payments--Payments of Principal" below), and
(ii) the principal portion of any Realized Loss incurred in
respect of that mortgage loan during the related collection
period (see "--Reductions to Certificate Principal Balances
in Connection with Realized Losses and Additional Trust Fund
Expenses" below).
However, the stated principal balance of a mortgage loan will, in all
cases, be zero as of the payment date following the collection period in which
it is determined that all amounts ultimately collectible with respect to the
mortgage loan or any related REO property have been received.
Payments of Principal. Subject to the Available P&I Funds and the
priority of payments described under "--Payments--Priority of Payments" below,
the total amount of principal payable with respect to each class of the
principal balance certificates on each payment date will equal that class'
allocable share of the Total Principal Payment Amount for that payment date.
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The "Total Principal Payment Amount" for any payment date will, in
general, equal the total, without duplication, of the following:
o all payments of principal (other than voluntary principal
prepayments) received on the mortgage loans during the related
collection period, exclusive of any of those payments that
represents a late collection of principal for which an advance
was previously made for a prior payment date or that represents a
scheduled payment of principal due on or before _______________
or on a due date subsequent to the end of the related collection
period;
o all scheduled payments of principal received on the mortgage
loans prior to, but that are due during, the related collection
period;
o all voluntary principal prepayments received on the mortgage
loans during the related collection period;
o all other collections, including liquidation proceeds,
condemnation proceeds, insurance proceeds and repurchase
proceeds, that were received on or in respect of any of the
mortgage loans during the related collection period and that were
identified and applied by the master servicer as recoveries of
principal thereof, in each case net of any portion of the
particular collection that represents a late collection of
principal due on or before __________________ or for which an
advance of principal was previously made for a prior payment
date; and
o all advances of principal made in respect of the mortgage loans
for that payment date.
While the class "A-1" certificates are outstanding, no portion of the
Total Principal Payment Amount for any payment date will be allocated to any
other class of principal balance certificates. Following the retirement of the
class "A-1" certificates, the Total Principal Payment Amount for each payment
date will be allocated to the remaining classes of the principal balance
certificates in the order of priority set forth below, in each such case up to
the lesser of (i) the portion of that Total Principal Payment Amount that
remains unallocated and (ii) the principal balance of the particular class
immediately prior to that payment date. In general, this means that, following
the retirement of the class "A-1" certificates, the holders of the outstanding
class of principal balance certificates that is ranked the highest in the
following table will be entitled to receive payments of principal in an amount
equal to the entire Total Principal Payment Amount for each payment date until
the aggregate principal balance of that class is reduced to zero. In no event
will the holders of any class of principal balance certificates listed in the
following table be entitled to receive any payments of principal until the
aggregate principal balance of the class "A-1" certificates is reduced to zero.
Furthermore, in no event will the holders of any class of principal balance
certificates listed in the following table be entitled to receive any payments
of principal until the aggregate principal balance of all other classes, if any,
of principal balance certificates listed above it in the following table is
reduced to zero.
S-98
<PAGE>
Order of Allocation Class
------------------- -----
1. A-2
2. A-3
3. A-4
4. A-5
5. B-1
6. B-2
7. B-3
8. B-4
9. B-5
10. B-6
11. B-7
12. B-8
13. C
14. D
Reimbursement Amounts. As discussed under "--Reductions of Certificate
Principal Balances in Connection with Realized Losses and Additional Trust Fund
Expenses" below, the aggregate principal balance of any class of the principal
balance certificates may be reduced without a corresponding payment of
principal. If that occurs with respect to any such class of principal balance
certificates, then, subject to Available P&I Funds and the priority of payment
described under "--Payments--Priority of Payments" below, the holders of that
class will be entitled to be reimbursed for the amount of that reduction,
without interest. References in this prospectus supplement to the "reimbursement
amount" mean, in the case of any class of the principal balance certificates for
any payment date, the total amount to which the holders of that class are
entitled as reimbursement for all reductions, if any, made in the aggregate
principal balance of that class on all prior payment dates as discussed under
"--Reductions of Certificate Principal Balances in Connection with Realized
Losses and Additional Trust Fund Expenses" below.
Priority of Payments. On each payment date, the trustee will apply the
Available P&I Funds for that date to make the following payments in the
following order of priority, in each case to the extent of the remaining
Available P&I Funds:
<TABLE>
<CAPTION>
Order of Recipient
Payment Class or Classes Type and Amount of Payment
- ------- ---------------- --------------------------
<S> <C> <C>
1 S and A-1 Interest up to the total interest payable on those classes(1)
2 A-1 Principal up to the total principal payable on that class
3 A-1 Reimbursement up to the reimbursement amounts for those classes
- ----------------------------------------------------------------------------------------------------------
4 A-2 Interest up to the total interest payable on that class
5 A-2 Principal up to the total principal payable on that class(2)
6 A-2 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
</TABLE>
S-99
<PAGE>
<TABLE>
<CAPTION>
Order of Recipient
Payment Class or Classes Type and Amount of Payment
- ------- ---------------- --------------------------
<S> <C> <C>
7 A-3 Interest up to the total interest payable on that class
8 A-3 Principal up to the total principal payable on that class(2)
9 A-3 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
10 A-4 Interest up to the total interest payable on that class
11 A-4 Principal up to the total principal payable on that class(2)
12 A-4 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
13 A-5 Interest up to the total interest payable on that class
14 A-5 Principal up to the total principal payable on that class(2)
15 A-5 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
16 B-1 Interest up to the total interest payable on that class
17 B-1 Principal up to the total principal payable on that class(2)
18 B-1 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
19 B-2 Interest up to the total interest payable on that class
20 B-2 Principal up to the total principal payable on that class(2)
21 B-2 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
22 B-3 Interest up to the total interest payable on that class
23 B-3 Principal up to the total principal payable on that class(2)
24 B-3 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
25 B-4 Interest up to the total interest payable on that class
26 B-4 Principal up to the total principal payable on that class(2)
27 B-4 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
28 B-5 Interest up to the total interest payable on that class
29 B-5 Principal up to the total principal payable on that class(2)
30 B-5 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
31 B-6 Interest up to the total interest payable on that class
32 B-6 Principal up to the total principal payable on that class(2)
33 B-6 Reimbursement up to the reimbursement amount for that class
- ----------------------------------------------------------------------------------------------------------
</TABLE>
S-100
<PAGE>
<TABLE>
<CAPTION>
Order of Recipient
Payment Class or Classes Type and Amount of Payment
- ------- ---------------- --------------------------
<S> <C> <C>
34 B-7 Interest up to the total interest payable on that class
35 B-7 Principal up to the total principal payable on that class(2)
36 B-7 Reimbursement up to the reimbursement amount for that class
- -------------------------------------------------------------------------------------------------------
37 B-8 Interest up to the total interest payable on that class
38 B-8 Principal up to the total principal payable on that class(2)
39 B-8 Reimbursement up to the reimbursement amount for that class
- -------------------------------------------------------------------------------------------------------
40 C Interest up to the total interest payable on that class
41 C Principal up to the total principal payable on that class(2)
42 C Reimbursement up to the reimbursement amount for that class
- -------------------------------------------------------------------------------------------------------
43 D Interest up to the total interest payable on that class
44 D Principal up to the total principal payable on that class(2)
45 D Reimbursement up to the reimbursement amount for that class
- -------------------------------------------------------------------------------------------------------
46 R-I, R-II and R-III Any remaining Available P&I Funds
</TABLE>
- ------------------
(1) Pro rata among the recipient classes based on the respective amounts of
interest payable thereon.
(2) No principal will be payable on the recipient class unless and until
the aggregate principal balance of all classes of the principal balance
certificates listed above the recipient class in the foregoing table
has been reduced to zero.
-----------------------
Payments of Prepayment Premiums and Yield Maintenance Charges. If any
prepayment consideration is collected during any particular collection period
with respect to any mortgage loan and that prepayment consideration is
calculated as a percentage of the amount prepaid, including where the prepayment
consideration equals the greater of a specified percentage of the amount prepaid
and an amount calculated pursuant to a yield maintenance formula, then the
entire amount of that prepayment consideration will be paid as additional
interest on the payment date corresponding to that collection period to the
holders of the class "S" certificates.
If any prepayment consideration is collected during any particular
collection period with respect to any mortgage loan and that prepayment
consideration is calculated pursuant to a yield maintenance formula, including
where the prepayment consideration equals the greater of a specified percentage
of the amount prepaid and an amount calculated pursuant to a yield maintenance
formula, then that prepayment consideration will be paid as additional interest
on the payment date corresponding to that collection period as follows:
S-101
<PAGE>
o The holders of each class of offered certificates (other than the
class "S" certificates) then entitled to payments of principal on
that payment date will be entitled to an amount equal to the
product of--
(i) the amount of that prepayment consideration, multiplied by
(ii) a fraction, not greater than one or less than zero, the
numerator of which is equal to the excess, if any, of the
pass-through rate applicable to that class of offered
certificates for that payment date, over the relevant
Discount Rate, and the denominator of which is equal to the
excess, if any, of the mortgage interest rate for the
related prepaid mortgage loan, over the relevant Discount
Rate, multiplied by
(iii) a fraction, not greater than one or less than zero, the
numerator of which is equal to the aggregate payments of
principal to be made with respect to that class of offered
certificates on that payment date, and the denominator of
which is equal to the Total Principal Payment Amount for
that payment date.
o Any portion of the prepayment consideration that may remain after
the payment(s) on the other classes of offered certificates as
contemplated by the prior bullet point, will be payable to the
holders of the class "S" certificates.
For purposes of the foregoing, the relevant "Discount Rate" will be the
rate which, when compounded monthly, is equivalent to the Treasury Rate when
compounded semi-annually. For example, a ____% per annum Treasury Rate would
equate to a ____% per annum Discount Rate.
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 weighted average life,
calculated in accordance with the related loan documents, of the prepaid
mortgage loan immediately prior to the prepayment. If Release H.15 is no longer
published, the master servicer will select a comparable publication to determine
the Treasury Rate.
Neither we nor the underwriter makes any representation as to the
enforceability of the provision of any promissory note evidencing one of the
mortgage loans requiring the payment of a prepayment premium or yield
maintenance charge or as to the collectability of any prepayment premium or
yield maintenance charge. See "Description of the Mortgage Pool--Certain Terms
and Conditions of the Mortgage Loans--Prepayment Provisions" in this prospectus
supplement.
Payments of Additional Interest. The class "___" certificates will
entitle the holders to all amounts, if any, applied as Post-ARD Additional
Interest collected on the ARD loans.
Treatment of REO Properties. Notwithstanding that any underlying real
property may be acquired as part of the trust assets through foreclosure, deed
in lieu of foreclosure or otherwise, the related mortgage loan will be treated
as having remained outstanding, until the REO property is liquidated, for
purposes of determining--
S-102
<PAGE>
o payments on the certificates,
o allocations of Realized Losses and Additional Trust Fund Expenses
to the certificates, and
o the amount of all fees payable to the master servicer, the
special servicer and the trustee under the pooling and servicing
agreement.
In connection with the foregoing, that mortgage loan will be taken into account
when determining the Weighted Average Pool Pass-Through Rate and the Total
Principal Payment Amount for each payment date.
Operating revenues and other proceeds derived from an REO property will
be applied--
o first, to pay, or to reimburse the master servicer, the special
servicer and/or the trustee for the payment of, certain costs and
expenses incurred in connection with the operation and
disposition of the REO property, and
o thereafter, as collections of principal, interest and other
amounts "due" on the related mortgage loan.
To the extent described under "--Advances of Delinquent Monthly Debt
Service Payments" below, the master servicer and the trustee will be required to
make advances of principal and/or interest in respect of each mortgage loan as
to which the related underlying real property has become an REO property, in all
cases as if the mortgage loan had remained outstanding.
Reductions to Certificate Principal Balances in Connection With Realized Losses
and Additional Trust Fund Expenses
As a result of Realized Losses and Additional Trust Fund Expenses, the
aggregate stated principal balance of the mortgage pool may decline below the
aggregate principal balance of the principal balance certificates. If this
occurs following the payments made to the certificateholders on any payment
date, then the respective aggregate principal balances of the various classes of
the principal balance certificates are to be successively reduced in the
following order, until the aggregate principal balance of the principal balance
certificates equals the aggregate stated principal balance of the mortgage pool
that will be outstanding immediately following that payment date.
S-103
<PAGE>
Order of Allocation Class
------------------- -----
1. D
2. C
3. B-8
4. B-7
5. B-6
6. B-5
7. B-4
8. B-3
9. B-2
10. B-1
11. A-5
12. A-4
13. A-3
14. A-2
15. A-1
The reductions in the aggregate principal balances of the respective
classes of the principal balance certificates, as described in the previous
paragraph, will represent an allocation of the Realized Losses and/or Additional
Trust Fund Expenses that caused the particular mismatch in balances between the
mortgage loans and the principal balance certificates. A reduction of this type
in the aggregate principal balance of a class of the principal balance
certificates will result in a corresponding reduction in the aggregate notional
amount of the class "S" certificates.
Any "Realized Losses" are losses on or in respect of the mortgage loans
arising from the inability of the master servicer and/or the special servicer to
collect all amounts due and owing under the mortgage loans, including by reason
of the fraud or bankruptcy of a borrower or, to the extent not covered by
insurance, a casualty of any nature at an underlying real property. The Realized
Loss in respect of a liquidated mortgage loan (or related REO property) is an
amount generally equal to the excess, if any, of:
o the outstanding principal balance of the mortgage loan as of the
date of liquidation, together with (i) all accrued and unpaid
interest on the mortgage loan to but not including the due date
in the collection period in which the liquidation occurred,
exclusive, however, of any portion of that interest that
represents Default Interest or Post-ARD Additional Interest, and
(ii) all related unreimbursed servicing advances and unpaid
liquidation expenses, over
o the total amount of liquidation proceeds, if any, recovered in
connection with the liquidation.
If any portion of the debt due under a mortgage loan is forgiven, whether in
connection with a modification, waiver or amendment granted or agreed to by the
master servicer or the special servicer or in connection with the bankruptcy,
insolvency or similar proceeding involving the related borrower, the amount
forgiven, other than Default Interest and Post-ARD Additional Interest, also
will be treated as a Realized Loss.
An "Additional Trust Fund Expense" is, in general, an expense of the
trust that (i) arises out of a default on a mortgage loan or an otherwise
unanticipated event and (ii) is not covered by a servicing advance or a
corresponding collection from the related borrower. Some examples of Additional
Trust Fund Expenses are:
S-104
<PAGE>
o any special servicing fees, workout fees and liquidation fees
paid to the special servicer;
o any interest paid to the master servicer, the special servicer
and/or the trustee in respect of unreimbursed advances, which
interest payment is not covered out of late payment charges and
Default Interest actually collected on the related mortgage loan;
o the cost of various opinions of counsel required or permitted to
be obtained in connection with the servicing of the mortgage
loans and the administration of the other trust assets;
o certain unanticipated, non-mortgage loan specific expenses of the
trust, including--
(i) certain reimbursements and indemnifications to the trustee
as described under "Description of the Governing
Documents--Certain Matters Regarding the Trustee" in the
accompanying prospectus,
(ii) certain reimbursements to the master servicer, the special
servicer and us as described under "Description of the
Governing Documents--Certain Matters Regarding the Master
Servicer, the Special Servicer, the Manager and Us" in the
accompanying prospectus, and
(iii) certain federal, state and local taxes, and certain
tax-related expenses, payable out of the trust assets as
described under "Federal Income Tax
Consequences--REMICs--Prohibited Transactions Tax and Other
Taxes" in the accompanying prospectus;
o rating agency fees, other than on-going surveillance fees, that
cannot be recovered from the borrower; and
o any amounts expended on behalf of the trust to remediate an
adverse environmental condition at any underlying real property
securing a defaulted mortgage loan as described under "Servicing
of the Mortgage Loans--Realization Upon Defaulted Mortgage Loans"
in this prospectus supplement.
Advances of Delinquent Monthly Debt Service Payments
The master servicer will be required to make, for each payment date, an
aggregate amount of advances of principal and/or interest ("P&I advances")
generally equal to all monthly debt service payments (other than balloon
payments) and assumed monthly debt service payments, in each case net of related
master servicing fees, that (a) were due or deemed due, as the case may be, in
respect of the mortgage loans during the related collection period and (b) were
not paid by or on behalf of the respective borrowers or otherwise collected as
of the close of business on the last day of the related collection period.
Notwithstanding the foregoing, if it is determined that an Appraisal Reduction
Amount exists with respect to any mortgage loan, then the master servicer will
reduce the interest portion, but not the principal portion, of each P&I advance
that it must make with respect to that mortgage loan during the period that the
Appraisal Reduction Amount exists. The interest portion of any P&I advance
required to be made with respect to any mortgage loan as to which there exists
an Appraisal Reduction Amount, will equal the product of:
S-105
<PAGE>
o the amount of the interest portion of that P&I advance that
would otherwise be required to be made for the subject payment
date without regard to this sentence and the prior sentence,
multiplied by
o a fraction, the numerator of which is equal to the stated
principal balance of the mortgage loan, net of the Appraisal
Reduction Amount, and the denominator of which is equal to the
stated principal balance of the mortgage loan. See "Servicing
of the Mortgage Loans--Required Appraisals" in this prospectus
supplement.
With respect to any payment date, the master servicer will be required to make
P&I advances either out of its own funds or, subject to the replacement thereof
as and to the extent provided in the pooling and servicing agreement, funds held
in the master servicer's collection account that are not required to be part of
the Available Funds for that payment date.
If the master servicer fails to make a required P&I advance and the
trustee is aware of that failure, the trustee will be obligated to make the
advance. See "--The Trustee" below.
The master servicer and the trustee will each be entitled to recover
any P&I advance made by it, out of its own funds, from collections on the
mortgage loan as to which the advance was made. Neither the master servicer nor
the trustee will be obligated to make any P&I advance that, in its judgment,
would not ultimately be recoverable out of collections on the related mortgage
loan. If the master servicer or the trustee makes any P&I advance that it
subsequently determines, in its judgment, will not be recoverable out of
collections on the related mortgage loan, it may obtain reimbursement for that
advance, together with interest accrued thereon as described below, out of
general collections on the mortgage loans and any REO properties on deposit in
the master servicer's collection account from time to time. See "Description of
the Certificates--Advances in Respect of Delinquencies" in the accompanying
prospectus and "Servicing of the Mortgage Loans--Collection Account" in this
prospectus supplement.
The master servicer and the trustee will each be entitled to receive
interest on P&I advances made thereby out of its own funds. That interest will
accrue on the amount of each P&I advance, and compound monthly, for so long as
that advance is outstanding at an annual rate equal to the "prime rate" as
published in the "Money Rates" section of The Wall Street Journal, as that
"prime rate" may change from time to time. Interest accrued with respect to any
P&I advance will be payable in the collection period in which that advance is
reimbursed--
o first, out of Default Interest and late payment charges collected
on the related mortgage loan during that collection period, and
o then, if and to the extent that the Default Interest and late
charges referred to in clause first are insufficient to cover the
advance interest, out of any amounts then on deposit in the
master servicer's collection account.
Any delay between a sub-servicer's receipt of a late collection of a
monthly debt service payment as to which a P&I advance was made and the
forwarding of that late collection to the master servicer, will increase the
amount of interest accrued and payable to the master servicer or the trustee, as
the case may be, on that P&I advance. To the extent not offset by Default
Interest and/or late payment charges accrued and
S-106
<PAGE>
actually collected, interest accrued on outstanding P&I advances will result in
a reduction in amounts payable on the certificates.
An "assumed monthly debt service payment" will be an amount of
principal and/or interest deemed due with respect to:
o each mortgage loan that is delinquent in respect of its balloon
payment beyond the end of the collection period in which its
maturity date occurs and as to which no arrangements have been
agreed to for the collection of the delinquent amounts, including
an extension of maturity; and
o each mortgage loan as to which the related underlying real
property has become an REO property.
The assumed monthly debt service payment deemed due on any mortgage loan
described in the prior sentence that is delinquent as to its balloon payment,
will equal, for its stated maturity date and for each successive due date that
it remains outstanding and part of the trust, the monthly debt service payment
that would have been due on the mortgage loan on the relevant date if the
related balloon payment had not come due and the mortgage loan had, instead,
continued to amortize and accrue interest according to its terms in effect prior
to that stated maturity date. The assumed monthly debt service payment deemed
due on any mortgage loan described in the second preceding sentence as to which
the related underlying real property has become an REO property, will equal, for
each due date that the REO property remains part of the trust, the monthly debt
service payment (or, in the case of a mortgage loan delinquent in respect of its
balloon payment, the assumed monthly debt service payment) due (or deemed due)
on the last due date prior to the acquisition of that REO property. [Assumed
monthly debt service payments for ARD loans do not include Post-ARD Additional
Interest or accelerated amortization payments.]
Reports to Certificateholders; Certain Available Information
Trustee Reports. Based solely on information provided in monthly
reports prepared by the master servicer and the special servicer and delivered
to the trustee, the trustee will prepare and make available electronically (or,
upon request, provide by first class mail) on each payment date to each
certificateholder a reporting statement substantially in the form of, and
containing the information set forth in, [Exhibit B] to this prospectus
supplement, detailing the payments on that payment date and the performance,
both in the aggregate and individually to the extent available, of the mortgage
loans and the underlying real properties.
Book-Entry Certificates. If you hold your certificates in book-entry
from through DTC, you may obtain direct access to the monthly reports of the
trustee as if you were a certificateholder, provided that you deliver a written
certification to the trustee confirming your beneficial ownership in the offered
certificates. Otherwise, until definitive certificates are issued in respect of
your certificates, the information contained in the trustee's monthly reports
will be available to you only to the extent that it is made available through
DTC and the DTC participants or is available on the trustee's internet website.
Conveyance of notices and other communications by DTC to the DTC participants,
and by the DTC participants to beneficial owners of the offered certificates,
will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. We, the master
servicer, the special servicer, the trustee and the certificate registrar are
required to recognize as certificateholders only those persons in whose names
the certificates are registered on the books and records of the certificate
registrar.
S-107
<PAGE>
Information Available Electronically. The trustee will make available
each month, to any interested party, the trustee's reports via the trustee's
internet website, electronic bulletin board and fax-on-demand service. In
addition, the trustee will also make certain mortgage loan information as
presented in the standard Commercial Mortgage Securities Association loan setup
file and loan periodic update file formats available to any holder or beneficial
owner of an offered certificate via the trustee's internet website. The
trustee's internet website will initially be located at "____________________".
The trustee's electronic bulletin board may be accessed by calling
(___) ___-____, and its fax-on- demand service may be accessed by calling (___)
___-____. For assistance with regard to the services described above, investors
may call (___) ___-____.
The trustee will make no representations or warranties as to the
accuracy or completeness of, and may disclaim responsibility for, any
information made available by the trustee for which it is not the original
source.
The trustee may require registration and the acceptance of a disclaimer
in connection with providing access to its electronic bulletin board and
internet website. The trustee shall not be liable for the dissemination of
information made in accordance with the pooling and servicing agreement.
Other Information. The pooling and servicing agreement will obligate
the trustee to make available at its offices, during normal business hours, upon
reasonable advance written notice, for review by any holder or beneficial owner
of an offered certificate or any person identified to the trustee by any such
holder or beneficial owner as a prospective transferee of an offered certificate
or any interest therein, subject to the discussion in the following paragraph,
originals or copies of, among other things, the following items:
o the pooling and servicing agreement, including exhibits, and any
amendments to the pooling and servicing agreement;
o all monthly reports of the trustee delivered to
certificateholders since the date of initial issuance of the
certificates;
o all officer's certificates delivered to the trustee by the master
servicer and/or the special servicer since the date of initial
issuance of the certificates, as described under "Servicing of
the Mortgage Loans--Evidence as to Compliance" in this prospectus
supplement;
o all accountant's reports delivered to the trustee in respect of
the master servicer and/or the special servicer since the date of
initial issuance of the certificates, as described under
"Servicing of the Mortgage Loans--Evidence as to Compliance" in
this prospectus supplement;
o the most recent inspection report in respect of each underlying
real property prepared by the master servicer or the special
servicer and delivered to the trustee as described under
"Servicing of the Mortgage Loans--Inspections; Collection of
Operating Information" in this prospectus supplement;
S-108
<PAGE>
o the most recent appraisal, if any, with respect to each
underlying real property obtained by the master servicer or the
special servicer and delivered to the trustee (see "Servicing of
the Mortgage Loans--Required Appraisals" in this prospectus
supplement);
o the most recent quarterly and annual operating statement and rent
roll for each underlying real property and financial statements
of the related borrower collected by the master servicer or the
special servicer and delivered to the trustee as described under
"Servicing of the Mortgage Loans--Inspections; Collection of
Operating Information" in this prospectus supplement; and
o the mortgage files, including all documents, such as
modifications, waivers and amendments of the mortgage loans, that
are to be added to the mortgage files from time to time.
Copies of any and all of the foregoing items will be available from the
trustee upon request. However, the trustee will be permitted to require payment
of a sum sufficient to cover the reasonable costs and expenses of providing the
copies.
In connection with providing access to or copies of the items described
above, the trustee may require:
o in the case of a beneficial owner of a certificate held in
book-entry form, a written confirmation executed by the
requesting person or entity, in a form reasonably acceptable to
the trustee, generally to the effect that the person or entity is
a beneficial owner of offered certificates and will keep the
information confidential; and
o in the case of a prospective purchaser of certificates or
interests therein, confirmation executed by the requesting person
or entity, in a form reasonably acceptable to the trustee,
generally to the effect that the person or entity is a
prospective purchaser of certificates or an interest therein, is
requesting the information for use in evaluating a possible
investment in the certificates and will otherwise keep the
information confidential.
certificateholders will be deemed to have agreed to keep the information
described above confidential by the acceptance of their certificates. However,
no holder, beneficial owner or prospective transferee of any certificate or
interest therein will be required to keep confidential any information that has
previously been filed with the SEC, and the trustee will not be required to
obtain either of the confirmations referred to in the second preceding sentence
in connection with providing any information that has previously been filed with
the SEC.
Voting Rights
___% of the voting rights for the certificates will be allocated among
the respective classes of principal balance certificates in proportion to the
respective aggregate principal balances thereof at all times during the term of
the pooling and servicing agreement. ___% of the voting rights will be allocated
to the class "S" certificates. Voting rights allocated to a class of
certificates will be allocated among those certificates in proportion to the
percentage interests in that class evidenced by each such certificate.
S-109
<PAGE>
Termination
The obligations created by the pooling and servicing agreement will
terminate following the earliest of--
(i) the final payment, or advance in respect thereof, or other
liquidation of the last mortgage loan or related REO property
remaining in the trust, and
(ii) the purchase of all of the mortgage loans and REO properties
remaining in the trust assets by the master servicer, the
special servicer or any single certificateholder or group of
certificateholders in the Controlling Class (in that order of
preference).
Written notice of termination of the pooling and servicing agreement
will be given to each certificateholder. The final payment with respect to each
certificate will be made only upon surrender and cancellation of that
certificate at the office of the certificate registrar or at any other location
specified in the notice of termination.
Any purchase by the master servicer, the special servicer or any single
holder or group of holders of the Controlling Class of all the mortgage loans
and REO properties remaining in the trust is required to be made at a price
equal to (a) the sum of (i) the aggregate principal balance of all the mortgage
loans then included in the trust (other than any mortgage loans as to which the
related underlying real properties have become REO properties), together with
interest (other than Default Interest and [Post-ARD Additional Interest)] on and
unreimbursed servicing advances for those mortgage loans and (ii) the appraised
value of all REO properties then included in the trust, as determined by an
appraiser mutually agreed upon by the master servicer, the special servicer and
the trustee, minus (b) solely in the case of a purchase by the master servicer
or the special servicer, the total of all amounts payable or reimbursable to the
purchaser under the pooling and servicing agreement. The purchase will effect
early retirement of the outstanding certificates, but the right of the master
servicer, the special servicer or any single holder or group of holders of the
Controlling Class to effect the termination is subject to the requirement that
the aggregate stated principal balance of the mortgage pool be less than ____%
of the initial mortgage pool balance. The termination price, exclusive of any
portion of the termination price payable or reimbursable to any person other
than the certificateholders, will constitute part of the available distribution
amount for the final payment date. Any person or entity effecting a purchase
will be responsible for reimbursing the parties to the pooling and servicing
agreement (other than itself, if applicable) for all reasonable out-of-pocket
costs and expenses incurred by the parties in connection with the purchase.
The Trustee
[Insert description of trustee]
The trustee is at all times required to be a corporation, bank, trust
company or association organized and doing business under the laws of the U.S.
or any State of the U.S. or the District of Columbia. In addition, the trustee
must at all times--
o be authorized under those laws to exercise trust powers,
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o have a combined capital and surplus of at least $50,000,000,
and
o be subject to supervision or examination by federal or state
authority.
If the corporation, bank, trust company or association publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority, then the combined capital and surplus of the
corporation, bank, trust company or association will be deemed to be its
combined capital and surplus as described in its most recent published report of
condition.
We, the master servicer, the special servicer and our and their
respective affiliates, may from time to time enter into normal banking and
trustee relationships with the trustee and its affiliates. The trustee and any
of its respective affiliates may hold certificates in their own names. In
addition, for purposes of meeting the legal requirements of certain local
jurisdictions, the master servicer and the trustee acting jointly will have the
power to appoint a co-trustee or separate trustee of all or any part of the
trust assets. All rights, powers, duties and obligations conferred or imposed
upon the trustee will be conferred or imposed upon the trustee and the separate
trustee or co-trustee jointly (or, in any jurisdiction in which the trustee
shall be incompetent or unqualified to perform certain acts, singly upon the
separate trustee or co-trustee who shall exercise and perform its rights,
powers, duties and obligations solely at the direction of the trustee).
The trustee will be entitled to a monthly fee for its services, which
fee will accrue on a 30/360 basis at ____% per annum on the stated principal
balance outstanding from time to time of each mortgage loan. The trustee fee is
payable out of general collections on the mortgage loans and any REO properties.
See also "Description of the Governing Documents--The Trustee",
"--Duties of the Trustee", "--Certain Matters Regarding the Trustee" and
"--Resignation and Removal of the Trustee" in the accompanying prospectus.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any offered certificate will depend on:
(a) the price at which the certificate is purchased by an
investor, and
(b) the rate, timing and amount of payments on the certificate.
The rate, timing and amount of payments on any offered certificate will
in turn depend on, among other things,
o the pass-through rate for the certificate,
o the rate and timing of principal payments, including principal
prepayments, and other principal collections on the mortgage
loans and the extent to which those amounts are to be applied
or otherwise result in reduction of the principal balance or
notional amount of the certificate,
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o the rate, timing and severity of Realized Losses and
Additional Trust Fund Expenses and the extent to which those
losses and expenses result in the reduction of the principal
balance or notional amount of the certificate, and
o the timing and severity of any Net Aggregate Prepayment
Interest Shortfalls and the extent to which those shortfalls
result in the reduction of the interest payments on the
certificate.
Pass-Through Rates. The pass-through rates applicable to the class "S",
"A-2", "A-3", "A-4", "A-5", "B-1" and "B-2" certificates will, in each case.
[Specify calculation.] [Accordingly, the yields on the class "S", "A-2", "A-3",
"A-4", "A-5", "B-1" and "B-2" certificates will be sensitive in varying degrees
to changes in the relative composition of the mortgage pool as a result of
scheduled amortization, voluntary prepayments and liquidations of mortgage loans
following default.] In addition, the pass-through rate for the class "S"
certificates will vary with changes in the relative sizes of the aggregate
principal balances of the respective classes of the principal balance
certificates. See "Description of the Offered
Certificates--Payments--Calculation of Pass-Through Rates" and "Description of
the Mortgage Pool" in this prospectus supplement and "--Rate and Timing of
Principal Payments" below.
Rate and Timing of Principal Payments. The yield to maturity on the
class "S" certificates will be extremely sensitive to, and the yield to maturity
on any other offered certificates purchased at a discount or a premium will be
affected by, the rate and timing of principal payments made in reduction of the
certificate principal balances or certified notional amounts of the
certificates. In turn, the rate and timing of principal payments that are paid
or otherwise result in reduction of the aggregate principal balance or notional
amount, as the case may be, of each class of offered certificates will be
directly related to the rate and timing of principal payments on or in respect
of the mortgage loans. Finally, the rate and timing of principal payments on or
in respect of the mortgage loans will be affected by their amortization
schedules, the dates on which balloon payments are due and the rate and timing
of principal prepayments and other unscheduled collections thereon, including
for this purpose, collections made in connection with liquidations of mortgage
loans due to defaults, casualties or condemnations affecting the underlying real
properties, or purchases or other removals of mortgage loans from the trust.
Prepayments and other early liquidations of the mortgage loans will
result in payments on the principal balance certificates of amounts that would
otherwise be paid over the remaining terms of the mortgage loans. This will tend
to shorten the weighted average lives of those certificates. Defaults on the
mortgage loans, particularly at or near their maturity dates, may result in
significant delays in payments of principal on the mortgage loans and,
accordingly, on the principal balance certificates, while work-outs are
negotiated or foreclosures are completed. These delays will tend to lengthen the
weighted average lives of those certificates. See "Servicing of The Mortgage
Loans--Modifications, Waivers, Amendment and Consent" in this prospectus
supplement. In addition, the ability of a borrower under an ARD loan, to repay
that loan on the related anticipated repayment date will generally depend on its
ability to either refinance the mortgage loan or sell the related underlying
real property. Also, a borrower may have little incentive to repay its mortgage
loan on the related anticipated repayment date if then prevailing interest rates
are relatively high. Accordingly, there can be no assurance that any ARD loan
will be paid in full on its anticipated repayment date.
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The extent to which the yield to maturity on any offered certificate
may vary from the anticipated yield will depend upon the degree to which the
certificate is purchased at a discount or premium and when, and to what degree,
payments of principal on the mortgage loans are in turn paid or otherwise result
in a reduction of the principal balance or notional amount of the certificate.
If you purchase your certificates at a discount, you should consider the risk
that a slower than anticipated rate of principal payments on the mortgage loans
could result in an actual yield to you that is lower than your anticipated
yield. If you purchase class "S" certificates, or if you purchase any other
offered certificates at a premium, you should consider the risk that a faster
than anticipated rate of principal payments on the mortgage loans could result
in an actual yield to you that is lower than your anticipated yield.
If you are contemplating an investment in the class "S" certificates,
you should fully consider the risk that an extremely rapid rate of principal
payments on the mortgage loans could result in your failure to recoup fully your
initial investment.
Because the rate of principal payments on or in respect of the mortgage
loans will depend on future events and a variety of factors, as described more
fully below, no assurance can be given as to the rate or the rate of principal
prepayments in particular. We are not aware of any relevant publicly available
or authoritative statistics with respect to the historical prepayment experience
of a large group of real estate loans comparable to those in the mortgage pool.
Even if they are available and payable on your certificates, prepayment
premiums and yield maintenance charges may not be sufficient to offset fully any
loss in yield on your certificates attributable to the related prepayments of
the mortgage loans.
Delinquencies and Defaults on the Mortgage Loans. The rate and timing
of delinquencies and defaults on the mortgage loans will affect the amount of
payments on your certificates, the yield to maturity of your certificates, the
rate of principal payments on your certificates and the weighted average life of
your certificates. Delinquencies on the mortgage loans, unless covered by P&I
advances, may result in shortfalls in payments of interest and/or principal on
your certificates for the current month. Although any shortfalls in payments of
interest may be made up on future payment dates, no interest would accrue on
those shortfalls. Thus, any shortfalls in payments of interest would adversely
affect the yield to maturity of your certificates.
If--
o you calculate the anticipated yield to maturity for your
certificates based on an assumed rate of default and amount of
losses on the mortgage loans that is lower than the default
rate and amount of losses actually experienced, and
o the additional losses result in a reduction of the total
payments on or the aggregate principal balance or notional
amount of your certificates,
then your actual yield to maturity will be lower than you calculated and could,
under certain scenarios, be negative.
The timing of any loss on a liquidated mortgage loans that results in a
reduction of the total payments on or the aggregate principal balance or
notional amount of your certificates will also affect your actual yield
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to maturity, even if the rate of defaults and severity of losses are consistent
with your expectations. In general, the earlier your loss occurs, the greater
the effect on your yield to maturity.
Even if losses on the mortgage loans do not result in a reduction of
the total payments on or the aggregate principal balance or certificate notional
amount of your certificates, the losses may still affect the timing of payments
on (and, accordingly, the weighted average life and yield to maturity of) your
certificates.
Certain Relevant Factors. The following factors, among others, will
affect the rate and timing of principal payments and defaults and the severity
of losses on or in respect of the mortgage loans:
o prevailing interest rates;
o the terms of the mortgage loans, including provisions that
require the payment of prepayment premiums and yield
maintenance charges, provisions that impose prepayment
lock-out periods and amortization terms that require balloon
payments;
o the demographics and relative economic vitality of the areas
in which the underlying real properties are located;
o the general supply and demand for commercial and multifamily
rental space of the type available at the underlying real
properties in the areas in which the underlying real
properties are located;
o the quality of management of the underlying real properties;
o the servicing of the mortgage loans;
o possible changes in tax laws; and
o other opportunities for investment.
See "Risk Factors--Risks Related to the Mortgage Loans", "Description
of the Mortgage Pool" and "Servicing of the Mortgage Loans" in this prospectus
supplement and "Description of the Governing Documents" and "Yield and Maturity
Considerations--Yield and Prepayment Considerations" in the accompanying
prospectus.
The rate of prepayment on the mortgage loans is likely to be affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below the
annual rate at which a mortgage loan accrues interest, the related borrower may
have an increased incentive to refinance the mortgage loan. Conversely, to the
extent prevailing market interest rates exceed the annual rate at which a
mortgage loan accrues interest, the related borrower may be less likely to
voluntarily prepay the mortgage loan. Assuming prevailing market interest rates
exceed the revised mortgage interest rate at which an ARD loan accrues interest
following its anticipated repayment date, the primary incentive for the related
borrower to prepay the mortgage loan on or before its anticipated repayment date
is to give the borrower access to excess cash flow, all of which, net of the
minimum required debt service, approved property expenses and any required
reserves, must be applied to pay down principal of the
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mortgage loan. Accordingly, there can be no assurance that any ARD loan will be
prepaid on or before its anticipated repayment date or on any other date prior
to maturity.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
underlying real properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some underlying
borrowers may be motivated by federal and state tax laws, which are subject to
change, to sell their underlying real properties prior to the exhaustion of tax
depreciation benefits.
A number of the underlying borrowers are limited or general
partnerships. Under certain circumstances, the bankruptcy of the general partner
in a partnership may result in the dissolution of the partnership. The
dissolution of a borrower partnership, the winding-up of its affairs and the
distribution of its assets could result in an acceleration of its payment
obligations under the related mortgage loan.
We make no representation or warranty regarding:
o the particular factors that will affect the rate and timing of
prepayments and defaults on the mortgage loans;
o the relative importance of those factors;
o the percentage of the aggregate principal balance of the
mortgage loans that will be prepaid or as to which a default
will have occurred as of any particular date; or
o the overall rate of prepayment or default on the mortgage
loans.
Unpaid Interest. If the portion of the Available P&I Funds payable in
respect of interest on any class of offered certificates on any payment date is
less than the total amount of interest then payable for the class, the shortfall
will be payable to the holders of those certificates on subsequent payment
dates, subject to the Available P&I Funds on those subsequent payment dates and
the priority of payments described under "Description of the Offered
Certificates--Payments--Priority of Payments" in this prospectus supplement.
That shortfall will not bear interest, however, and will therefore negatively
affect the yield to maturity of that class of offered certificates for so long
as it is outstanding.
Weighted Average Lives of Certain Classes Offered Certificates
The tables set forth on [Exhibit C] to this prospectus supplement
indicate the respective weighted average lives of the class "A-1", "A-2", "A-3",
"A-4", "A-5", "B-1" and "B-2" certificates, and set forth the percentages of the
respective initial aggregate principal balances of those classes of offered
certificates that would be outstanding after the payment dates in each of the
calendar months shown, subject, however, to the following discussion and the
maturity assumptions specified below.
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For purposes in this prospectus supplement, "weighted average life"
refers to the average amount of time that will elapse from the date of issuance
of a security until each dollar of principal of the security will be repaid to
the investor, assuming no losses. For purposes of this "Yield and Maturity
Considerations" section and Exhibit C to this prospectus supplement, the
weighted average life of a principal balance certificate, such as a class "A-1",
"A-2", "A-3", "A-4", "A-5", "B-1" or "B-2" certificate, is determined by:
(i) multiplying the amount of each principal payment on the
certificate by the number of years from the assumed settlement
date, as discussed under "--The Maturity Assumptions" below,
to the related payment date,
(ii) summing the results, and
(iii) dividing the sum by the total amount of the reductions in the
principal balance of the certificate.
The weighted average life of any principal balance certificate will be
influenced by, among other things, the rate at which principal of the mortgage
loans is paid, which may be in the form of scheduled amortization, balloon
payments, prepayments, liquidation proceeds, condemnation proceeds or insurance
proceeds, as described in this prospectus supplement. The weighted average life
of any principal balance certificate may also be affected to the extent that
additional payments in reduction of the principal balance of that certificate
occur as a result of the purchase of a mortgage loan from the trust or the
optional termination of the trust as described under "Description of the Offered
Certificates--Termination" in this prospectus supplement. The purchase of a
mortgage loan from the trust will have the same effect on payments to the
certificateholders as if the mortgage loan had prepaid in full, except that no
prepayment premium or yield maintenance charge is collectable in respect
thereof.
The actual characteristics and performance of the mortgage loans will
differ from the assumptions used in calculating the tables on Exhibit C to this
prospectus supplement,. Those tables are hypothetical in nature and are provided
only to give a general sense of how the principal cash flows might behave under
the assumed prepayment and loss scenarios. Any difference between the
assumptions used in calculating the tables on Exhibit C to this prospectus
supplement and the actual characteristics and performance of the mortgage loans,
or actual prepayment or loss experience, will affect the percentages of initial
aggregate principal balances outstanding over time and the weighted average
lives of the respective classes of the offered certificates. You must make your
own decisions as to the appropriate prepayment, liquidation and loss assumptions
to be used in deciding whether to purchase any offered certificate.
The Maturity Assumptions
The tables set forth on Exhibits C and D to this prospectus supplement
have been prepared on the basis of the following assumptions regarding the
characteristics of the certificates and the mortgage loans and the performance
of the mortgage loans (collectively, the "Maturity Assumptions"):
o as of the date of initial issuance of the certificates, the
mortgage loans have the terms identified in the table titled
"Characteristics of the Mortgage Loans" in [Exhibit A-1] to
this prospectus supplement;
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o each ARD loan is paid in full on its anticipated repayment
date, no mortgage loan is prepaid during its prepayment
lock-out period, during any period that a yield maintenance
charge is required or during any period that defeasance
thereof may be required and, otherwise, each mortgage loan is
assumed to prepay at the specified CPR;
o no mortgage loan is repurchased or replaced as a result of a
material breach of a representation or warranty;
o none of the master servicer, the special servicer or any
single certificateholder or group of certificateholders of the
Controlling Class exercises its option to purchase the
mortgage loans and thereby cause a termination of the trust;
o there are no delinquencies or losses on the mortgage loans,
and there is no extension of the maturity date of any mortgage
loan;
o payments on the certificates will be made on the _____ day of
each month, commencing in _____________;
o payments on the mortgage loans earn no reinvestment return;
o the only expenses payable out of the trust assets are the
master servicing fee and the trustee's fee;
o the respective classes of the certificates will, in each case,
be issued with the initial aggregate principal balance or
notional amount described in this prospectus supplement;
o the pass-through rates for the respective classes of the
certificates will be as described in this prospectus
supplement; and
o the certificates will be settled with investors on
_______________.
Yield Sensitivity of the Class S Certificates
The yield to investors on the class "S" certificates will be highly
sensitive to the rate and timing of principal payments, including prepayments,
on the mortgage loans. If you are contemplating an investment in the class "S"
certificates, you should fully consider the associated risks, including the risk
that an extremely rapid rate of prepayment and/or liquidation of the mortgage
loans could result in your failure to recoup fully your initial investment.
The tables set forth on Exhibit D to this prospectus supplement show
pre-tax corporate bond equivalent yields for the class "S" certificates based on
the Maturity Assumptions and, further assuming the specified purchase prices and
the indicated prepayment scenarios. The assumed purchase prices for the class
"S" certificates are--
o expressed in 32nds (e.g., ____ means ____%) as a percentage of
the initial aggregate notional amount of the class "S"
certificates, and
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o exclusive of accrued interest.
The yields set forth in the tables on Exhibit D to this prospectus
supplement were calculated by--
o determining the monthly discount rate that, when applied to
the assumed stream of cash flows to be paid on the class "S"
certificates, would cause the discounted present value of each
assumed stream of cash flows to equal--
(i) each of the assumed purchase prices for the class "S"
certificates, plus
(ii) accrued interest at the initial pass-through rate for
the class "S" certificates from and including
_______________ to but excluding the assumed
settlement date, and
o converting those monthly discount rates to corporate bond
equivalent rates.
Those calculations do not take into account variations that may occur
in the interest rates at which investors may be able to reinvest funds received
by them as payments on the class "S" certificates. Consequently, they do not
purport to reflect the return on any investment on the class "S" certificates
when reinvestment rates are considered.
There can be no assurance that--
o the mortgage loans will prepay in accordance with the
assumptions used in preparing the tables on Exhibit D to this
prospectus supplement,
o the mortgage loans will prepay as assumed at any of the rates
shown in the tables,
o the mortgage loans will not experience losses,
o mortgage loans will not be liquidated during any applicable
prepayment lock-out period or during any other period that
prepayments are assumed not to occur,
o the ARD loans will be paid in full on their respective
anticipated repayment dates,
o the cash flows on the class "S" certificates will correspond
to the cash flows shown in this prospectus supplement, or
o the purchase price of the class "S" certificates will be as
assumed.
It is unlikely that the mortgage loans will prepay as assumed at any of
the specified percentages of CPR until maturity or that all of the mortgage
loans will so prepay at the same rate. Actual yields to maturity for investors
in the class "S" certificates may be materially different than those indicated
on Exhibit D to this prospectus supplement. Timing of changes in rate of
prepayments and other liquidations may significantly affect the actual yield to
maturity to investors, even if the average rate of principal prepayments and
other liquidations is consistent with the expectations of investors. You must
make your own decisions as to the appropriate prepayment, liquidation and loss
assumptions to be used in deciding whether to purchase any offered certificates.
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USE OF PROCEEDS
Substantially all of the proceeds from the sale of the offered
certificates will be used by us to purchase the mortgage loans and to pay
certain expenses in connection with the issuance of the certificates.
FEDERAL INCOME TAX CONSEQUENCES
General
Upon the issuance of the certificates, Sidley & Austin, our counsel,
will deliver its opinion generally to the effect that, assuming compliance with
the pooling and servicing agreement, and subject to certain other assumptions
set forth in the opinion, REMIC I, REMIC II and REMIC III, respectively, will
each qualify as a REMIC under the Internal Revenue Code of 1986 (for purposes of
this "Federal Income Tax Consequences" section, the "Code"). The assets of REMIC
I will generally include the mortgage loans, any REO properties acquired on
behalf of the certificateholders, the master servicer's collection account, the
special servicer's REO account and the trustee's payment account and interest
reserve account, but will exclude any collections of Post-ARD Additional
Interest on the ARD loans. For federal income tax purposes,
o the separate non-certificated regular interests in REMIC I
will be the "regular interests" in REMIC I and will be the
assets of REMIC II,
o the class "R-I" certificates will evidence the sole class of
"residual interests" in REMIC I and in each of the "single
mortgage loan REMICs",
o the separate non-certificated regular interests in REMIC II
will be the "regular interests" in REMIC II and will be the
assets of REMIC III,
o the class "R-II" certificates will evidence the sole class of
"residual interests" in REMIC II,
o the class "A-1", "A-2", "A-3", "A-4", "A-5", "B-1", "B-2",
"B-3", "B-4", "B-5", "B-6", "B- 7", "B-8", "C" and "D"
certificates will evidence the "regular interests" in, and
will generally be treated as debt obligations of, REMIC III,
and
o the class "R-III" certificates will evidence the sole class of
"residual interests" in REMIC III.
Discount and Premium; Prepayment Consideration
For federal income tax reporting purposes, it is anticipated that the
class "___" and class "___" certificates will be issued with more than a de
minimis amount of original issue discount. The class "__" certificates will be
issued with a de minimis amount of original issue discount. The other classes of
offered certificates will not be issued with original issue discount. When
determining the rate of accrual of market discount and premium, if any, for
federal income tax purposes the prepayment assumption used will be that
subsequent to the date of any determination:
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[o the ARD loans will be paid in full on their respective
anticipated repayment dates,]
o no mortgage loan will otherwise be prepaid prior to maturity,
and
o there will be no extension of maturity for any mortgage loan.
However, no representation is made as to the actual rate at which the mortgage
loans will prepay, if at all. See "Federal Income Tax
Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" in the
accompanying prospectus.
The IRS has issued regulations under Sections 1271 to 1275 of the Code
generally addressing the treatment of debt instruments issued with original
issue discount. You should be aware, however, that those regulations and Section
1272(a)(6) of the Code do not adequately address certain issues relevant to, or
are not applicable to, prepayable securities such as the offered certificates.
We recommend that you consult with your own tax advisor concerning the tax
treatment of your certificates.
If the method for computing original issue discount described in the
accompanying prospectus results in a negative amount for any period with respect
to any holder of offered certificates, the amount of original issue discount
allocable to that period would be zero. This is a possibility of particular
relevance to a holder of a class "S" certificate. The holder would be permitted
to offset the negative amount only against future original issue discount, if
any, attributable to the certificates. Although the matter is not free from
doubt, a holder of a class "S" certificate may be permitted to deduct a loss to
the extent that his or her respective remaining basis in the certificate exceeds
the maximum amount of future payments to which the holder is entitled, assuming
no further prepayments of the mortgage loans. Any loss might be treated as a
capital loss.
Certain classes of the offered certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
these classes of offered certificates will be treated as holding a certificate
with amortizable bond premium will depend on the certificateholder's purchase
price and the payments remaining to be made on the certificate at the time of
its acquisition by the certificateholder. If you acquire an interest in any
class of offered certificates issued at a premium, you should consider
consulting your own tax advisor regarding the possibility of making an election
to amortize the premium. See "Federal Income Tax Consequences--REMICs--Taxation
of Owners of REMIC Regular Certificates--Premium" in the accompanying
prospectus.
Prepayment premiums and yield maintenance charges actually collected on
the mortgage loans will be paid on the offered certificates as and to the extent
described in this prospectus supplement. It is not entirely clear under the Code
when the amount of a prepayment premium or yield maintenance charge should be
taxed to the holder of a class of offered certificates entitled to that amount.
For federal income tax reporting purposes, the tax administrator will report
prepayment premiums or yield maintenance charges as income to the holders of a
class of offered certificates entitled thereto only after the master servicer's
actual receipt thereof. The IRS may nevertheless seek to require that an assumed
amount of prepayment premiums and yield maintenance charges be included in
payments projected to be made on the offered certificates and that taxable
income be reported based on the projected constant yield to maturity of the
offered certificates. Therefore, the projected prepayment premiums and yield
maintenance charges would be included prior to their actual receipt by holders
of the offered certificates. If the projected prepayment premiums and yield
maintenance charges were not actually received, presumably the holder of an
offered certificate would be allowed to claim a deduction or reduction in gross
income at the time the unpaid prepayment premiums and
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yield maintenance charges had been projected to be received. Moreover, it
appears that prepayment premiums and yield maintenance charges are to be treated
as ordinary income rather than capital gain. The correct characterization of the
income is not entirely clear. We recommend you consult your own tax advisors
concerning the treatment of prepayment premiums and yield maintenance charges.
Constructive Sales of Class S Certificates
The Taxpayer Relief Act of 1997 added a provision to the Code that
requires the recognition of gain upon the "constructive sale of an appreciated
financial position". A constructive sale of a financial position occurs if a
taxpayer enters into certain transactions or series of transactions that have
the effect of substantially eliminating the taxpayer's risk of loss and
opportunity for gain with respect to the financial instrument. Debt instruments
that:
o entitle the holder to a specified principal amount,
o pay interest at a fixed or variable rate, and
o are not convertible into the stock of the issuer or a related
party,
cannot be the subject of a constructive sale for this purpose. Accordingly, only
class "S" certificates, which do not have principal balances, could be subject
to this provision and only if a holder of those certificates engages in a
constructive sale transaction.
Characterization of Investments in Offered Certificates
Except to the extent noted below, the offered certificates will be
"real estate assets" within the meaning of Section 856(c)(5)(B) of the Code in
the same proportion that the assets of the trust would be so treated. In
addition, interest, including original issue discount, if any, on the offered
certificates will be interest described in Section 856(c)(3)(B) of the Code to
the extent that the certificates are treated as "real estate assets" within the
meaning of Section 856(c)(5)(B) of the Code.
Most of the mortgage loans are not secured by real estate used for
residential or certain other purposes prescribed in Section 7701(a)(19)(C) of
the Code. Consequently, the offered certificates will be treated as assets
qualifying under that section to only a limited extent. Accordingly, investment
in the offered certificates may not be suitable for a thrift institution seeking
to be treated as a "domestic building and loan association" under Section
7701(a)(19)(C) of the Code. The offered certificates will be treated as
"qualified mortgages" for another REMIC under Section 860G(a)(3)(C) of the Code
and "permitted assets" for a "financial asset securitization investment trust"
under Section 860L(c) of the Code.
To the extent an offered certificate represents ownership of an
interest in a mortgage loan that is secured in part by the related borrower's
interest in a bank account, that mortgage loan is not secured solely by real
estate. Therefore:
o a portion of that certificate may not represent ownership of
"loans secured by an interest in real property" or other
assets described in Section 7701(a)(19)(C) of the Code;
o a portion of that certificate may not represent ownership of
"real estate assets" under Section 856(c)(5)(B) of the Code;
and
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o the interest on that certificate may not constitute "interest
on obligations secured by mortgages on real property" within
the meaning of Section 856(c)(3)(B) of the Code.
See "Description of the Mortgage Pool" in this prospectus supplement and
"Federal Income Tax Consequences--REMICs--Characterization of Investments in
REMIC Certificates" in the accompanying prospectus.
For further information regarding the federal income tax consequences
of investing in the offered certificates, see "Federal Income Tax
Consequences--REMICs" in the accompanying prospectus.
CERTAIN ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Code of 1986 impose various requirements
on--
o employee benefit plans, and on certain other retirement plans,
arrangements and accounts, that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the
Internal Revenue Code of 1986 (each, an "ERISA Plan"), and
o persons that are fiduciaries with respect to ERISA Plans,
in connection with the investment of the assets of an ERISA Plan ("Plan
Assets"). For purposes of this discussion, ERISA Plans may include individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts, including as applicable, insurance company general
accounts, in which other ERISA Plans are invested.
A fiduciary of any ERISA Plan should carefully review with its legal
advisors whether the purchase or holding of offered certificates could be or
give rise to a transaction that is prohibited or is not otherwise permitted
either under ERISA or Section 4975 of the Internal Revenue Code of 1986 or
whether there exists any statutory or administrative exemption applicable
thereto. Certain fiduciary and prohibited transaction issues arise only if the
assets of the trust are "plan assets" for purposes of Part 4 of Title I of ERISA
and Section 4975 of the Internal Revenue Code of 1986. Whether the assets of the
trust will be plan assets at any time will depend on a number of factors,
including the portion of any class of certificates that is held by "benefit plan
investors" (as defined in U.S. Department of Labor Regulation Section
2510.3-101).
The U.S. Department of Labor has issued an individual prohibited
transaction exemption to the underwriter, identified as Prohibited Transaction
Exemption 90-59 (the "Exemption"). Subject to the satisfaction of certain
conditions set forth therein, the Exemption generally exempts from the
application of the prohibited transaction provisions of Sections 406(a) and (b)
and 407(a) of ERISA, and the excise taxes imposed on these prohibited
transactions pursuant to Sections 4975(a) and (b) of the U.S. tax code, certain
transactions relating to, among other things, the servicing and operation of
pools of real estate loans, such as the mortgage pool, and the purchase, sale
and holding of mortgage pass-through certificates, such as the class "S" and
"A-1" certificates, that are underwritten by one of the following parties (each,
an "Exemption-Favored Party")--
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(a) the underwriter,
(b) any person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common
control with the underwriter, and
(c) any member of the underwriting syndicate or selling group of
which a person described in (a) or (b) is a manager or
co-manager with respect to those mortgage pass-through
certificates.
The Exemption sets forth six general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of a class "S" or
"A-1" certificate to be eligible for exemptive relief thereunder. The conditions
are as follows:
o first, the acquisition of the certificate by a plan must be on
terms that are at least as favorable to the ERISA Plan as they
would be in an arm's-length transaction with an unrelated
party;
o second, the rights and interests evidenced by that certificate
must not be subordinated to the rights and interests evidenced
by the other certificates;
o third, at the time of its acquisition by the plan, that
certificate must be rated in one of the three highest generic
rating categories by Moody's, Fitch, Standard & Poor's or Duff
& Phelps;
o fourth, the trustee cannot be an affiliate of any other member
of the "restricted group", which (in addition to the trustee)
consists of the Exemption-Favored Parties, us, the master
servicer, the special servicer, any sub-servicers, the
mortgage loan seller, each borrower, if any, with respect to
mortgage loans constituting more than 5.0% of the aggregate
unamortized principal balance of the mortgage pool as of the
date of initial issuance of the certificates and any and all
affiliates of any of the aforementioned persons;
o fifth, the sum of all payments made to and retained by the
Exemption-Favored Parties must represent not more than
reasonable compensation for underwriting the relevant class of
certificates; the sum of all payments made to and retained by
us pursuant to the assignment of the mortgage loans to the
trust must represent not more than the fair market value of
the obligations; and the sum of all payments made to and
retained by the master servicer, the special servicer and any
sub-servicer must represent not more than reasonable
compensation for that person's services under the pooling and
servicing agreement and reimbursement of that person's
reasonable expenses in connection therewith; and
o sixth, the investing ERISA Plan must be an accredited investor
as defined in Rule 501(a)(1) of Regulation D under the
Securities Act of 1933, as amended.
Because the class "S" and "A-1" certificates are not subordinated to
any other class of certificates, the second general condition set forth above is
satisfied with respect to the class "S" and "A-1" certificates. It is a
condition of their issuance that the class "S" and "A-1" certificates be rated
not lower than "___" by _______ and "___" by _____. In addition, the initial
trustee is not an affiliate of any other member of the restricted group.
Accordingly, as of the date of initial issuance of the certificates, the third
and fourth general conditions set forth above will be satisfied with respect to
the class "S" and "A-1" certificates. A fiduciary
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<PAGE>
of an ERISA Plan contemplating the purchase of a class "S" or "A-1" certificate
in the secondary market must make its own determination that, at the time of the
purchase, the certificate continues to satisfy the third and fourth general
conditions set forth above. A fiduciary of an ERISA Plan contemplating the
purchase of a class "S" or "A-1" certificate, whether in the initial issuance of
the certificate or in the secondary market, must make its own determination that
the first and fifth general conditions set forth above will be satisfied with
respect to the certificate as of the date of the purchase. An ERISA Plan's
authorizing fiduciary will be deemed to make a representation regarding
satisfaction of the sixth general condition set forth above in connection with
the purchase of a class "S" or "A-1" certificate.
The Exemption also requires that the trust meet the following
requirements:
o the trust assets must consist solely of assets of the type
that have been included in other investment pools;
o certificates evidencing interests in those other investment
pools must have been rated in one of the three highest generic
categories of Moody's, Fitch, Standard & Poor's or Duff &
Phelps for at least one year prior to the ERISA Plan's
acquisition of a class "S" or "A-1" certificate; and
o certificates evidencing interests in those other investment
pools must have been purchased by investors other than ERISA
Plans for at least one year prior to any ERISA Plan's
acquisition of a class "S" or "A-1" certificate.
We believe that these requirements have been satisfied as of the date
of this prospectus supplement.
If the general conditions of the Exemption are satisfied, the Exemption
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA, as well as the excise taxes imposed by Sections 4975(a) and (b)
of the Internal Revenue Code of 1986 by reason of Sections 4975(c)(1)(A) through
(D) of the Internal Revenue Code of 1986, in connection with--
o the direct or indirect sale, exchange or transfer of class "S"
or "A-1" certificates acquired by an ERISA Plan upon initial
issuance from us or an Exemption-Favored Party when we are, or
a mortgage loan seller, the trustee, the master servicer, the
special servicer or any sub- servicer, provider of credit
support, Exemption-Favored Party or mortgagor is, a Party in
Interest (as defined in the accompanying prospectus) with
respect to the investing ERISA Plan,
o the direct or indirect acquisition or disposition in the
secondary market of class "S" or "A-1" certificates by an
ERISA Plan, and
o the continued holding of class "S" or "A-1" certificates by an
ERISA Plan.
However, no exemption is provided from the restrictions of Sections
406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of a
class "S" or "A-1" certificate on behalf of an Excluded ERISA Plan by any person
who has discretionary authority or renders investment advice with respect to the
assets of that ERISA Plan. For purposes of this prospectus supplement, an
"Excluded ERISA Plan" is an ERISA Plan sponsored by any member of the restricted
group referred to above.
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<PAGE>
Moreover, if the general conditions of the Exemption, as well as
certain other conditions set forth in the Exemption, are satisfied, the
Exemption may also provide an exemption from the restrictions imposed by
Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section
4975(c)(1)(E) of the Internal Revenue Code of 1986 in connection with--
o the direct or indirect sale, exchange or transfer of class "S"
or "A-1" certificates in the initial issuance of those
certificates between us or an Exemption-Favored Party and an
ERISA Plan when the person who has discretionary authority or
renders investment advice with respect to the investment of
the assets of the ERISA Plan in those certificates is (i) a
borrower with respect to 5.0% or less of the fair market value
of the mortgage loans or (ii) an affiliate of this person,
o the direct or indirect acquisition or disposition in the
secondary market of class "S" or "A-1" certificates by an
ERISA Plan, and
o the continued holding of class "S" or "A-1" certificates by an
ERISA Plan.
Further, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a), 406(b)
and 407(a) of ERISA, and the taxes imposed by Sections 4975(a) and (b) of the
Internal Revenue Code of 1986 by reason of Section 4975(c) of the Internal
Revenue Code of 1986, for transactions in connection with the servicing,
management and operation of the trust assets.
Lastly, if the general conditions of the Exemption are satisfied, the
Exemption also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Internal Revenue Code of 1986 by reason of Sections 4975(c)(1)(A)
through (D) of the Internal Revenue Code of 1986 if the restrictions are deemed
to otherwise apply merely because a person is deemed to be a Party in Interest
with respect to an investing plan by virtue of providing services to the ERISA
Plan (or by virtue of having certain specified relationships to this person)
solely as a result of the ERISA Plan's ownership of class "S" or "A-1"
certificates.
Before purchasing a class "S" or "A-1" certificate, a fiduciary of an
ERISA Plan should itself confirm that:
o the class "S" and "A-1" certificates are "certificates" for
purposes of the Exemption, and
o the general and other conditions set forth in the Exemption
and the other requirements set forth in the Exemption would be
satisfied at the time of the purchase.
In addition to determining the availability of the exemptive relief
provided in the Exemption, a fiduciary of an ERISA Plan considering an
investment in class "S" or "A-1" certificates should consider the availability
of any other prohibited transaction class exemptions. See "ERISA Considerations"
in the accompanying prospectus. There can be no assurance that any such
exemption will apply with respect to any
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<PAGE>
particular investment by an ERISA Plan in class "S" or "A-1" certificates or,
even if it were deemed to apply, that it would apply to all prohibited
transactions that may occur in connection with the investment. A purchaser of
class "S" or "A-1" certificates should be aware, however, that even if the
conditions specified in one or more class exemptions are satisfied, the scope of
relief provided by a class exemption may not cover all acts which might be
construed as prohibited transactions.
The characteristics of the class "A-2", "A-3", "A-4", "A-5", "B-1" and
"B-2" certificates do not meet the requirements of the Exemption. Accordingly,
those offered certificates may not be acquired by, on behalf of or with the
assets of an ERISA Plan, except in the case of an insurance company using funds
in its general account, which may be able to rely on Section III of Prohibited
Transaction Class Exemption 95- 60 ("PTCE 95-60"), which we discuss below.
So long as certain conditions are satisfied, Section III of PTCE 95-60
exempts from the application of the prohibited transaction provisions of
Sections 406(a), 406(b) and 407(a) of ERISA and Section 4975 of the Internal
Revenue Code of 1986 transactions in connection with the servicing, management
and operation of the trust under circumstances where an insurance company
general account has an interest in the trust as a result of its acquisition of
certificates. If these conditions are met, insurance company general accounts
would be allowed to purchase certain classes of the certificates, such as the
class "A-2", "A-3", "A- 4", "A-5", "B-1" and "B-2" certificates, that do not
meet the requirements of the Exemption solely because they (a) are subordinated
to other classes of the certificates or (b) have not received a rating at the
time of the purchase in one of the three highest rating categories from
[Moody's, Fitch, Standard & Poor's or Duff & Phelps]. All other conditions of
the Exemption would have to be satisfied in order for PTCE 95-60 to be
available. Before purchasing any class "A-2", "A-3", "A-4", "A-5", "B-1" or
"B-2" certificates, an insurance company general account seeking to rely on
Section III of PTCE 95-60 should itself confirm that all applicable conditions
and other requirements have been satisfied.
A governmental plan as defined in Section 3(32) of ERISA is not subject
to Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986.
However, a governmental plan may be subject to a federal, state or local law
which is, to a material extent, similar to the foregoing provisions of ERISA or
the Internal Revenue Code of 1986. A fiduciary of a governmental plan should
make its own determination as to the need for and the availability of any
exemptive relief under any such similar law.
Any fiduciary of an ERISA Plan considering whether to purchase an
offered certificate on behalf of that ERISA Plan should consult with its counsel
regarding the applicability of the fiduciary responsibility and prohibited
transaction provisions of ERISA and the Internal Revenue Code of 1986 to the
investment.
The sale of offered certificates to an ERISA Plan is in no way a
representation or warranty by us or the underwriter that the investment meets
all relevant legal requirements with respect to investments by ERISA Plans
generally or by any particular ERISA Plan, or that the investment is appropriate
for ERISA Plans generally or for any particular ERISA Plan.
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<PAGE>
LEGAL INVESTMENT
[Upon issuance, the class "___", "___" and "___" Certificates
(collectively, the "SMMEA certificates") will constitute "mortgage related
securities" for purposes of SMMEA. However, in order to remain "mortgage related
securities", the SMMEA certificates must, among other things, continue to be
rated in one of the two highest rating categories by at least one nationally
recognized statistical rating organization. In addition, the SMMEA certificates
will constitute "mortgage related securities" in part because they evidence
interest in notes secured by first mortgage liens on one or more real properties
upon which is located a residential, commercial or mixed residential and
commercial structure.
The remaining offered certificates will not be "mortgage related
securities" for purposes of SMMEA. As a result, the appropriate characterization
of such certificates under various legal investment restrictions, and thus the
ability of investors subject to these restrictions to purchase such
certificates, is subject to significant interpretive uncertainties.]
Neither we nor the underwriter makes any representation as to the
ability of particular investors to purchase the offered certificates under
applicable legal investment or other restrictions. All institutions whose
investment activities are subject to legal investment laws and regulations,
regulatory capital requirements or review by regulatory authorities should
consult with their own legal advisors in determining whether and to what extent
the offered certificates--
o are legal investments for them, or
o are subject to investment, capital or other
restrictions.
All depository institutions considering an investment in the offered
certificates should review the Federal Financial Institutions Examination
Council's Supervisory Policy Statement on the Selection of Securities Dealers
and Unsuitable Investment Practices (to the extent adopted by their respective
regulatory authorities), setting forth, in relevant part, certain investment
practices deemed to be unsuitable for an institution's investment portfolio, as
well as guidelines for investing in certain types of mortgage related
securities.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying".
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase offered certificates or to
purchase offered certificates representing more than a specified percentage of
the investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the offered certificates are legal
investments for the investors.
See "Legal Investment" in the accompanying prospectus.
S-127
<PAGE>
METHOD OF DISTRIBUTION
Subject to the terms and conditions of an underwriting agreement dated
_____________ between us and the underwriter, the underwriter has agreed to
purchase from us and we have agreed to sell to the underwriter _____% of each
class of the offered certificates. It is expected that delivery of the offered
certificates will be made to the underwriter in book-entry form through the same
day funds settlement system of DTC on or about ______________ against payment
therefor in immediately available funds.
The underwriting agreement provides that the obligation of the
underwriter to pay for and accept delivery of the offered certificates is
subject to, among other things, the receipt of certain legal opinions and to the
conditions, among others, that no stop order suspending the effectiveness of our
registration statement shall be in effect, and that no proceedings for the
purpose of obtaining a stop order shall be pending before or threatened by the
SEC.
The distribution of the offered certificates by the underwriter may be
accomplished from time to time in one or more negotiated transactions, or
otherwise, at varying prices to be determined at the time of sale. Proceeds to
us from the sale of the offered certificates, before deducting expenses payable
by us, will be approximately ____% of the aggregate principal balance of the
offered certificates, plus accrued interest on all the offered certificates from
_______________. The underwriter may accomplish the transactions by selling the
offered certificates to or through dealers, and the dealers may receive
compensation in the form of underwriting discounts, concessions or commissions
from the underwriter. The underwriter may be deemed to have received
compensation from us, in connection with the sale of the offered certificates,
in the form of underwriting compensation. The underwriter and any dealers that
participate with the underwriter in the distribution of the offered certificates
may be deemed to be statutory underwriters and any profit on the resale of the
offered certificates positioned by them may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933, as amended.
The underwriting agreement provides that we will indemnify the
underwriter, and that under limited circumstances the underwriter will indemnify
us, against certain civil liabilities under the Securities Act of 1933, as
amended, or contribute to payments required to be made in respect of any such
liabilities.
We have also been advised by the underwriter that it presently intends
to make a market in the offered certificates. The underwriter has no obligation
to do so, however, and any market making may be discontinued at any time. There
can be no assurance that an active public market for the offered certificates
will develop. See "Risk Factors--Risks Related to the Offered Certificates--Many
Factors, Including Lack of Liquidity, Can Adversely Affect the Market Value of
Your Certificates" in this prospectus supplement and "Risk Factors--Lack of
Liquidity Will Impair Your Ability to Sell Your Certificates and May Have an
Adverse Effect on the Market Value of Your Certificates" in the accompanying
prospectus.
LEGAL MATTERS
Certain legal matters relating to the certificates will be passed upon
for us and the underwriter by Sidley & Austin, New York, New York.
S-128
<PAGE>
RATINGS
It is a condition to their issuance that the respective classes of
offered certificates receive the credit ratings shown in the table on page S-4
from ___________ and ___________.
The ratings on the offered certificates address the likelihood of the
timely receipt by their holders of all payments of interest to which they are
entitled on each payment date and, except in the case of the class "S"
certificates, the ultimate receipt by their holders of all payments of principal
to which they are entitled on or before the rated final payment date. The
ratings take into consideration the credit quality of the mortgage pool,
structural and legal aspects associated with the offered certificates, and the
extent to which the payment stream from the mortgage pool is adequate to make
payments of interest and/or principal required under the offered certificates.
The ratings on the respective classes of offered certificates do not
represent any assessment of--
o the tax attributes of the offered certificates or of the
trust,
o whether or to what extent prepayments of principal may be
received on the mortgage loans,
o the likelihood or frequency of prepayments of principal on the
mortgage loans,
o the degree to which the amount or frequency of prepayments of
principal on the mortgage loans might differ from those
originally anticipated,
o whether or to what extent the interest payable on any class of
offered certificates may be reduced in connection with Net
Aggregate Prepayment Interest Shortfalls, and
o whether and to what extent prepayment premiums, yield
maintenance charges, Default Interest or [Post-ARD Additional
Interest] will be received.
Also, a security rating does not represent any assessment of the yield
to maturity that investors may experience or the possibility that the class "S"
certificateholders might not fully recover their investment in the event of
rapid prepayments and/or other liquidations of the mortgage loans.
In general, the ratings address credit risk and not prepayment risk. As
described in this prospectus supplement, the amounts payable with respect to the
class "S" certificates consist primarily of interest. Even if the entire
mortgage pool were to prepay in the initial month, with the result that the
class "S" certificateholders receive only a single month's interest payment and,
accordingly, suffer a nearly complete loss of their investment, all amounts
"due" to those certificateholders will nevertheless have been paid. This result
would be consistent with the respective ratings received on the class "S"
certificates. The aggregate notional amount of the class "S" certificates is
subject to reduction in connection with each reduction in the aggregate
principal balance of a class of principal balance certificates, whether as a
result of payments of principal or in connection with Realized Losses and
Additional Trust Fund Expenses. The ratings of the class "S" certificates do not
address the timing or magnitude of reduction of the aggregate notional amount of
those certificates, but only the obligation to pay interest timely on that
aggregate notional amount as so reduced from time to time.
S-129
<PAGE>
There can be no assurance as to whether any rating agency not requested
to rate the offered certificates will nonetheless issue a rating to any class of
offered certificates and, if so, what the rating would be. A rating assigned to
any class of offered certificates by a rating agency that has not been requested
by us to do so may be lower than the rating assigned thereto by ___________ or
____________.
The ratings on the offered certificates should be evaluated
independently from similar ratings on other types of securities. A security
rating is not a recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the assigning rating
organization. Each security rating should be evaluated independently of any
other security rating. See "Rating" in the accompanying prospectus.
S-130
<PAGE>
EXHIBIT A-1
CERTAIN CHARACTERISTICS OF THE
MORTGAGE LOANS AND THE UNDERLYING REAL PROPERTIES
See this Exhibit for tables titled:
Managers and Locations of the Underlying Real Properties
Descriptions of the Underlying Real Properties
Characteristics of the Mortgage Loans
Additional Mortgage Loan Information
Engineering Reserves and Recurring Replacement Reserves
Major Tenants of the Commercial Properties
Multifamily Schedule
A-1-1
<PAGE>
EXHIBIT A-2
MORTGAGE POOL INFORMATION
See this Exhibit for tables titled:
Mortgage Interest Rates
__/__/__ Scheduled Principal Balances
Original Amortization Terms
Original Terms to Stated Maturity
Remaining Amortization Terms
Remaining Terms to Stated Maturity
Year Built/Year Renovated
Occupancy Rates at Underwriting
Underwritten Debt Service Coverage Ratios
__/__/__ Loan-to-Value Ratios
Underlying Real Properties by State
Mortgage Loans by Amortization Type
Underlying Real Properties by Property Type
Mortgage Loans by Property Sub-Type
Prepayment Provision as of __/__/__
Prepayment Option
Mortgage Pool Prepayment Profile
A-2-1
<PAGE>
EXHIBIT B
FORM OF TRUSTEE REPORT
B-1
<PAGE>
EXHIBIT C
DECREMENT TABLES FOR CLASS A-1, CLASS A-2, CLASS A-3,
CLASS A-4, CLASS A-5, CLASS B-1 AND CLASS B-2 CERTIFICATES
Percentage of Initial Principal Balance Outstanding For:
C-1
<PAGE>
EXHIBIT D
PRICE/YIELD TABLES FOR THE CLASS S CERTIFICATES
Corporate Bond Equivalent (CBE) Yield of the Class S Certificates
at Various CPRs
_____% Initial Pass-Through Rate
$___________ Initial Aggregate Notional Amount
D-1
<PAGE>
EXHIBIT E
SUMMARY TERM SHEET
E-1
<PAGE>
The attached diskette contains one spreadsheet file (the "spreadsheet file")
that can be put on a user-specified hard drive or network drive. This file is
"___________________". The file "__________________" is a Microsoft Excel(1),
Version 5.0 spreadsheet. The file provides, in electronic format, certain
statistical information that appears under the caption "Description of the
Mortgage Pool" in, and on Exhibits A-1 and A-2 to, this prospectus supplement.
Defined terms used, but not otherwise defined, in the spreadsheet file will have
the respective meanings assigned to them in this prospectus supplement. All the
information contained in the spreadsheet file is subject to the same limitations
and qualifications contained in this prospectus supplement. Prospective
investors are strongly urged to read this prospectus supplement and accompanying
prospectus in its entirety prior to accessing the spreadsheet file.
- ----------------
(1) Microsoft Excel is a registered trademark of Microsoft Corporation.
<PAGE>
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TABLE OF CONTENTS
Page
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Prospectus Supplement
IMPORTANT NOTICE ABOUT THE INFORMATION CONTAINED
IN THIS PROSPECTUS SUPPLEMENT, THE ACCOMPANYING
PROSPECTUS AND THE RELATED REGISTRATION STATEMENT
S-3
FORWARD-LOOKING STATEMENTS..................................................S-3
SUMMARY OF PROSPECTUS SUPPLEMENT............................................S-4
RISK FACTORS...............................................................S-25
DESCRIPTION OF THE MORTGAGE POOL...........................................S-36
SERVICING OF THE MORTGAGE LOANS............................................S-58
DESCRIPTION OF THE OFFERED CERTIFICATES....................................S-87
YIELD AND MATURITY CONSIDERATIONS.........................................S-108
USE OF PROCEEDS...........................................................S-115
FEDERAL INCOME TAX CONSEQUENCES...........................................S-116
CERTAIN ERISA CONSIDERATIONS..............................................S-119
LEGAL INVESTMENT..........................................................S-123
METHOD OF DISTRIBUTION....................................................S-124
LEGAL MATTERS.............................................................S-125
RATINGS...................................................................S-125
Exhibit A-1--Certain Characteristics of the Mortgage Loans and
the Underlying Real Properties........................................A-1-1
Exhibit A-2--Mortgage Pool Information....................................A-2-1
Exhibit B--Form of Trustee Report...........................................B-1
Exhibit C--Decrement Tables for the Certificates of the
"A-1", "A-2", "A-3", "A-4", "A-5", "B-1" and "B-2" Classes...............C-1
Exhibit D--Price/Yield Tables for the Certificates of the "S" Class.........D-1
Exhibit E--Summary Term Sheet...............................................E-1
Prospectus
Important Notice about the Information Presented in this Prospectus...........3
Available Information; Incorporation by Reference.............................3
Summary of Prospectus.........................................................4
Risk Factors.................................................................14
Description of the Trust Assets..............................................33
Yield and Maturity Considerations............................................55
Greenwich Capital Commercial Funding Corp....................................61
Description of the Certificates..............................................62
Description of the Governing Documents.......................................72
Description of Credit Support................................................81
Certain Legal Aspects of Mortgage Loans......................................83
Federal Income Tax Consequences..............................................96
State and Other Tax Consequences............................................143
ERISA Considerations........................................................143
Legal Investment............................................................147
Use of Proceeds.............................................................149
Method of Distribution......................................................149
Legal Matters...............................................................151
Financial Information.......................................................151
Rating......................................................................151
Until _______________, all dealers that effect transactions in the offered
certificates, whether or not participating in this offering, may be required to
deliver this prospectus supplement and the accompanying prospectus. This
delivery requirement is in addition to the obligation of dealers to deliver this
prospectus supplement and the accompanying prospectus when acting as
underwriters and with respect to their unsold allotments or subscriptions.
================================================================================
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$-----------
(Approximate)
Greenwich Capital Commercial
Funding Corp.
(Depositor)
Class S, Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5,
Class B-1 and Class B-2
Mortgage Pass-Through Certificates,
Series ________
-----------------------------
PROSPECTUS SUPPLEMENT
-----------------------------
================================================================================
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<PAGE>
Prospectus
Greenwich Capital Commercial Funding Corp., the Depositor
Mortgage Pass-Through Certificates (issuable in series)
Our name is Greenwich Capital Commercial Funding Corp. We intend to
offer from time to time mortgage pass-through certificates. These offers may be
made through one or more different methods, including offerings through
underwriters. We do not currently intend to list the offered certificates of any
series on any national securities exchange or the NASDAQ stock market. See
"Method of Distribution."
<TABLE>
<CAPTION>
The Offered Certificates: The Trust Assets:
<S> <C>
The offered certificates will be issuable in The assets of each of our trusts will include--
series. Each series of offered certificates
will-- o mortgage loans secured by first and junior
liens on, or security interests in, various
o have its own series designation, interests in commercial and multifamily
real properties,
o consist of one or more classes with
various payment characteristics, o mortgage-backed securities that directly
or indirectly evidence interests in, or are
o evidence beneficial ownership interests directly or indirectly secured by, such
in a trust established by us, and types of mortgage loans, or
o be payable solely out of trust assets. o some combination of such types of
mortgage loans and mortgage-backed
No governmental agency or instrumentality securities.
will insure or guarantee payment on the
offered certificates. Neither we nor any of our Trust assets may also include letters of credit,
affiliates are responsible for making payments surety bonds, insurance policies, guarantees,
on the offered certificates if collections on the reserve funds, guaranteed investment contracts,
related trust assets are insufficient. interest rate exchange agreements, interest rate
cap or floor agreements, or other similar
instruments and agreements.
</TABLE>
In connection with each offering, we will prepare a supplement to this
prospectus in order to describe in more detail the particular certificates being
offered and the related trust assets. In that document, we will also state the
price to public for each class of offered certificates or explain the method for
determining that price. In addition, in that document, we will identify the
applicable lead or managing underwriter(s), if any, and the relevant
underwriting arrangements. You may not purchase the offered certificates of any
series unless you have also received the prospectus supplement for that series.
You should carefully consider the risk factors beginning on page ____ in this
prospectus, as well as those set forth in the related prospectus supplement,
prior to investing.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of the offered certificates or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
The date of this prospectus is _____________________, 2000.
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<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
<S> <C>
Important Notice about the Information Presented in this Prospectus.......................................................3
Available Information; Incorporation by Reference.........................................................................3
Summary of Prospectus.....................................................................................................4
Risk Factors.............................................................................................................14
Description of the Trust Assets..........................................................................................33
Yield and Maturity Considerations........................................................................................55
Greenwich Capital Commercial Funding Corp................................................................................61
Description of the Certificates..........................................................................................62
Description of the Governing Documents...................................................................................72
Description of Credit Support............................................................................................81
Certain Legal Aspects of Mortgage Loans..................................................................................83
Federal Income Tax Consequences..........................................................................................96
State and Other Tax Consequences........................................................................................143
Erisa Considerations....................................................................................................143
Legal Investment........................................................................................................147
Use of Proceeds.........................................................................................................149
Method of Distribution..................................................................................................149
Legal Matters...........................................................................................................151
Financial Information...................................................................................................151
Rating..................................................................................................................151
</TABLE>
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<PAGE>
IMPORTANT NOTICE ABOUT THE INFORMATION PRESENTED IN THIS PROSPECTUS
When deciding whether to invest in any of the offered certificates, you
should only rely on the information contained in this prospectus and the related
prospectus supplement. We have not authorized any dealer, salesman or other
person to give any information or to make any representation that is different.
In addition, information in this prospectus or any related prospectus supplement
is current only as of the date on its cover. By delivery of this prospectus and
any related prospectus supplement, we are not offering to sell any securities,
and are not soliciting an offer to buy any securities, in any state where the
offer and sale is not permitted.
AVAILABLE INFORMATION; INCORPORATION BY REFERENCE
We have filed with the SEC a registration statement under the
Securities Act of 1933, as amended, with respect to the certificates offered by
this prospectus. This prospectus forms a part of the registration statement.
This prospectus and the related prospectus supplement do not contain all of the
information with respect to an offering that is contained in the registration
statement. For further information regarding the documents referred to in this
prospectus and the related prospectus supplement, you should refer to the
registration statement and its exhibits. You can inspect the registration
statement and its exhibits, and make copies of these documents at prescribed
rates, at the public reference facilities maintained by the SEC at its Public
Reference Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its
Regional Offices located as follows: Chicago Regional Office, 500 West Madison,
14th Floor, Chicago, Illinois 60661; and New York Regional Office, Seven World
Trade Center, New York, New York 10048. You can also obtain copies of such
materials electronically through the SEC's Web site (http://www.sec.gov).
In connection with each series of offered certificates, we will file or
arrange to have filed with the SEC with respect to the related trust any
periodic reports that are required under the Securities Exchange Act of 1934, as
amended. All documents and reports that are so filed for the related trust prior
to the termination of an offering of certificates are incorporated by reference
into, and should be considered a part of, this prospectus. Upon request, we will
provide without charge to each person receiving this prospectus in connection
with an offering, a copy of any or all documents or reports that are so
incorporated by reference. All requests should be directed to us in writing at
600 Steamboat Road, Greenwich, Connecticut 06830, attention: Paul D. Stevelman,
Esq., or by telephone at (203) 625-2700.
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<PAGE>
SUMMARY OF PROSPECTUS
This summary contains selected information from this prospectus. It
does not contain all of the information you need to consider in making your
investment decision. To understand all of the terms of a particular offering of
certificates, you should read carefully this prospectus and the related
prospectus supplement in full.
<TABLE>
<S> <C>
Who We Are........................................... Greenwich Capital Commercial Funding Corp. is a Delaware
corporation. Our principal offices are located at 600 Steamboat
Road, Greenwich, Connecticut 06830. Our main telephone number is
(203) 625-2700. See "Greenwich Capital Commercial Funding Corp."
The Securities Being Offered......................... The securities that will be offered pursuant to this prospectus and
the related prospectus supplements consist of mortgage pass-through
certificates. These certificates will be issued in series, and each
series will, in turn, consist of one or more classes. Each class of
offered certificates must, at the time of issuance, be assigned an
investment grade rating by at least one nationally recognized
statistical rating organization. Typically, the four highest rating
categories, within which there may be sub- categories or gradations
to indicate relative standing, signify investment grade. See
"Rating."
Each series of offered certificates will evidence beneficial
ownership interests in a trust established by us and containing the
assets described in this prospectus and the related prospectus
supplement.
The Offered Certificates may be
Issued with Other Certificates.................. We may not publicly offer all the mortgage pass-through certificates
evidencing interests in one of our trusts. We may elect to retain
some of those certificates, to place some privately with
institutional investors or to deliver some to the applicable seller
as partial consideration for the related mortgage assets. In
addition, some of those certificates may not satisfy the rating
requirement described above for offered certificates.
The Governing Documents.............................. In general, a pooling and servicing agreement or other similar
agreement or collection of agreements will govern, among other
things--
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
o the issuance of each series of offered certificates,
o the creation of and transfer of assets to the related
trust, and
o the servicing and administration of those assets.
The parties to the governing document(s) for a series of offered
certificates will always include us and a trustee. We will be
responsible for establishing the trust relating to each series of
offered certificates. In addition, we will transfer or arrange for
the transfer of the initial trust assets to that trust. In general,
the trustee for a series of offered certificates will be responsible
for, among other things, making payments and preparing and
disseminating certain reports to the holders of those offered
certificates.
If the trust assets for a series of offered certificates include
mortgage loans, the parties to the governing document(s) will also
include--
o a master servicer that will generally be responsible for
performing customary servicing duties with respect to those
mortgage loans that are not defaulted, nonperforming or
otherwise problematic in any material respect, and
o a special servicer that will generally be responsible for
servicing and administering such of those mortgage loans
that are defaulted, nonperforming or otherwise problematic
in any material respect and real estate assets acquired as
part of the related trust in respect of defaulted mortgage
loans.
The same person or entity, or affiliated entities, may act as both
master servicer and special servicer for any trust.
If the trust assets for a series of offered certificates include
mortgage-backed securities, the parties to the governing document(s)
may also include a manager that will be responsible for performing
various administrative duties with respect to those mortgage-backed
securities. If the related trustee assumes those duties, however,
there will be no manager.
In the related prospectus supplement, we will identify the trustee
and any master servicer, special servicer or manager for each series
of offered certificates and will
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
describe their respective duties in further detail. See
"Description of the Governing Documents."
Certain Characteristics of
the Mortgage Assets............................. The trust assets with respect to any series of offered certificates
will, in general, include mortgage loans. Each of those mortgage
loans will constitute the obligation of one or more persons to repay
a debt, and the performance of that obligation will be secured by a
first or junior lien on, or security interest in, the ownership,
leasehold or other interest(s) of the related borrower or another
person in or with respect to one or more commercial or multifamily
real properties. In particular, the those properties may include:
o rental or cooperatively-owned buildings with
multiple dwelling units;
o retail properties related to the sale of consumer goods and
other products, or related to providing entertainment,
recreational or personal services, to the general public;
o office buildings;
o hospitality properties;
o casino properties;
o health care-related facilities;
o industrial facilities;
o warehouse facilities, mini-warehouse facilities and
self-storage facilities;
o restaurants, taverns and other establishments
involved in the food and beverage industry;
o manufactured housing communities, mobile home
parks and recreational vehicle parks;
o recreational and resort properties;
o arenas and stadiums;
o churches and other religious facilities;
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
o parking lots and garages;
o mixed use properties;
o other income-producing properties; and
o unimproved land.
The mortgage loans underlying a series of offered certificates may
have a variety of payment terms. For example, any of those mortgage
loans--
o may provide for the accrual of interest at a mortgage
interest rate that is fixed over its term, that resets on
one or more specified dates or that otherwise adjusts from
time to time;
o may provide for the accrual of interest at a mortgage
interest rate that may be converted at the borrower's
election from an adjustable to a fixed interest rate or
from a fixed to an adjustable interest rate;
o may provide for no accrual of interest;
o may provide for level payments to stated maturity, for
payments that reset in amount on one or more specified
dates or for payments that otherwise adjust from time to
time to accommodate changes in the mortgage interest rate
or to reflect the occurrence of certain events;
o may be fully amortizing or, alternatively, may be partially
amortizing or nonamortizing, with a substantial payment of
principal due on its stated maturity date;
o may permit the negative amortization or deferral of accrued
interest;
o may prohibit some or all voluntary prepayments or require
payment of a premium, fee or charge in connection with
those prepayments;
o may permit defeasance and the release of real property
collateral in connection with that defeasance;
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
o may provide for payments of principal, interest or both, on
due dates that occur monthly, bi-monthly, quarterly,
semi-annually, annually or at some other interval; and/or
o may have two or more component parts, each having
characteristics that are otherwise described in this
prospectus as being attributable to separate and distinct
mortgage loans.
Most, if not all, of the mortgage loans underlying a series of
offered certificates will be secured by liens on real properties
located in the United States, its territories and possessions.
However, some of those mortgage loans may be secured by liens on
real properties located outside the United States, its territories
and possessions, provided that "foreign mortgage loans" do not
represent more than 10% of the related mortgage asset pool, by
balance.
We do not originate mortgage loans. However, some or all of the
mortgage loans included in one of our trusts may be originated by
our affiliates.
Neither we nor any of our affiliates will guarantee or insure
repayment of any of the mortgage loans underlying a series of
offered certificates. Unless we expressly state otherwise in the
related prospectus supplement, no governmental agency or
instrumentality will guarantee or insure repayment of any of the
mortgage loans underlying a series of offered certificates. See
"Description of the Trust Assets--Mortgage Loans."
The trust assets with respect to any series of offered certificates
may also include mortgage participations, mortgage pass-through
certificates, collateralized mortgage obligations and other
mortgage-backed securities, that evidence an interest in, or are
secured by a pledge of, one or more mortgage loans of the type
described above. We will not include a mortgage-backed security
among the trust assets with respect to any series of offered
certificates unless--
o the security has been registered under the
Securities Act of 1933, as amended, or
o we would be free to publicly resell the security
without registration.
</TABLE>
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<TABLE>
<S> <C>
See "Description of the Trust Assets--Mortgage-Backed Securities."
We will describe the specific characteristics of the mortgage assets
underlying a series of offered certificates in the related
prospectus supplement.
In general, the aggregate outstanding principal balance of the
mortgage assets transferred by us to any particular trust will equal
or exceed the initial aggregate outstanding principal balance of the
related series of certificates. In the event that the aggregate
outstanding principal balance of the related mortgage assets
initially delivered by us to the related trustee is less than the
initial aggregate outstanding principal balance of any series of
certificates, we may deposit or arrange for the deposit of cash or
liquid investments on an interim basis with the related trustee to
cover the shortfall. For 90 days following the date of initial
issuance of that series of certificates, we will be entitled to
obtain a release of the deposited cash or investments if we deliver
or arrange for delivery of a corresponding amount of mortgage
assets. If we fail, however, to deliver mortgage assets sufficient
to make up the entire shortfall, any of the cash or, following
liquidation, investments remaining on deposit with the related
trustee will be used by the related trustee to pay down the
aggregate principal balance of the related series of certificates,
as described in the related prospectus supplement.
Certain Characteristics of
the Offered Certificates........................ An offered certificate may entitle the holder to receive:
o a stated principal amount;
o interest on a principal balance or notional amount,
at a fixed, variable or adjustable pass-through rate;
o specified, fixed or variable portions of the interest,
principal or other amounts received on the related
mortgage assets;
o payments of principal, with disproportionate,
nominal or no payments of interest;
o payments of interest, with disproportionate,
nominal or no payments of principal;
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
o payments of interest or principal that commence only as of
a specified date or only after the occurrence of certain
events, such as the payment in full of the interest and
principal outstanding on one or more other classes of
certificates of the same series;
o payments of principal to be made, from time to time or for
designated periods, at a rate that is faster (and, in some
cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or
other collections of principal are received on the related
mortgage assets;
o payments of principal to be made, subject to available
funds, based on a specified principal payment schedule or
other methodology; or
o payments of all or part of the prepayment or repayment
premiums, fees and charges, equity participations payments
or other similar items received on the related mortgage
assets.
Any class of offered certificates may be senior or subordinate to
one or more other classes of certificates of the same series,
including a non-offered class of certificates of that series, for
purposes of some or all payments and/or allocations of losses.
A class of offered certificates may have two or more component
parts, each having characteristics that are otherwise described in
this prospectus as being attributable to separate and distinct
classes.
We will describe the specific characteristics of each class of
offered certificates in the related prospectus supplement. See
"Description of the Certificates."
Credit Support and
Interest Rate Protection for
the Offered Certificates........................ Some classes of offered certificates may be protected in full or in
part against certain defaults and losses on the related mortgage
assets through the subordination of one or more other classes of
certificates of the same series or by other types of credit support.
The other types of credit support may include a letter of credit, a
surety bond, an
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
insurance policy, a guarantee or a reserve fund. We will describe
the credit support, if any, for each class of offered certificates
in the related prospectus supplement.
The trust assets with respect to any series of offered certificates
may also include any of the following agreements:
o guaranteed investment contracts pursuant to which moneys
held in the funds and accounts established with respect to
those offered certificates will be invested at a specified
rate; or
o interest rate exchange agreements, interest rate cap or
floor agreements, or other agreements and arrangements
designed to reduce the effects of interest rate
fluctuations on the related mortgage assets or on one or
more classes of those offered certificates.
We will describe the types of reinvestment and interest rate
protection, if any, for each class of offered certificates in the
related prospectus supplement.
See "Risk Factors," "Description of the Trust Assets" and
"Description of Credit Support."
Advances With Respect to
the Mortgage Assets............................. If the trust assets for a series of offered certificates include
mortgage loans, then, as and to the extent described in the related
prospectus supplement, the related master servicer, the related
special servicer, the related trustee, any related provider of
credit support and/or any other specified person may be obligated to
make, or may have the option of making, certain advances with
respect to those mortgage loans to cover--
o delinquent scheduled payments of principal and/or
interest, other than balloon payments,
o property protection expenses,
o other servicing expenses, or
o any other items specified in the related prospectus
supplement.
</TABLE>
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<TABLE>
<S> <C>
Any party making advances will be entitled to reimbursement from
subsequent recoveries on the related mortgage loan and as otherwise
described in this prospectus or the related prospectus supplement.
That party may also be entitled to receive interest on its advances
for a specified period. See "Description of the
Certificates--Advances."
If the trust assets for a series of offered certificates include
mortgage-backed securities, we will describe in the related
prospectus supplement any comparable advancing obligations in
respect of those mortgage-backed securities or the underlying
mortgage loans.
Optional Termination................................. We will describe in the related prospectus supplement any
circumstances in which a specified party is permitted or
obligated to purchase or sell any of the mortgage assets
underlying a series of offered certificates. In particular, a
master servicer, special servicer or other designated party
may be permitted or obligated to purchase or sell--
o all the mortgage assets in any particular trust,
thereby resulting in a termination of the trust, or
o that portion of the mortgage assets in any particular trust
as is necessary or sufficient to retire one or more classes
of offered certificates of the related series.
See "Description of the Certificates--Termination."
Federal Income Tax Consequences...................... Any class of offered certificates will constitute or evidence
ownership of:
o "regular interests" or "residual interests" in a "real
estate mortgage investment conduit" under Sections 860A
through 860G of the Internal Revenue Code of 1986;
o "regular interests" in a "financial asset
securitization investment trust" within the meaning
of Section 860L(a) of the Internal Revenue Code
of 1986; or
</TABLE>
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<TABLE>
<S> <C>
o interests in a grantor trust under Subpart E of Part I of
Subchapter J of the Internal Revenue Code of 1986.
See "Federal Income Tax Consequences."
ERISA Considerations................................. If you are a fiduciary of an employee benefit plan or other
retirement plan or arrangement, you should review with your legal
advisor whether the purchase or holding of offered certificates
could give rise to a transaction that is prohibited or is not
otherwise permissible under applicable law. See "ERISA
Considerations."
Legal Investment..................................... If your investment authority is subject to legal restrictions, you
should consult your legal advisor to determine whether and to what
extent the offered certificates constitute a legal investment for
you. We will specify in the related prospectus supplement which
classes of the offered certificates will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market
Enhancement Act of 1984, as amended. See "Legal Investment."
</TABLE>
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<PAGE>
RISK FACTORS
You should consider the following factors (as well as the factors set
forth under "Risk Factors" in the related prospectus supplement) in deciding
whether to purchase offered certificates.
Lack of Liquidity Will Impair Your Ability to Sell Your Certificates and may
Have an Adverse Effect on the Market Value of Your Certificates
The offered certificates may have limited or no liquidity. We cannot
assure you that a secondary market for your certificates will develop. There
will be no obligation on the part of anyone to establish a secondary market.
Even if a secondary market does develop for your certificates, it may provide
you with less liquidity than you anticipated and it may not continue for the
life of your certificates.
We will describe in the related prospectus supplement the information
that will be available to you with respect to your certificates. The limited
nature of such information may adversely affect the liquidity of your
certificates.
We do not currently intend to list the offered certificates on any
national securities exchange or the NASDAQ stock market.
Lack of liquidity will impair your ability to sell your certificates
and may prevent you from doing so at a time when you may want or need to. Lack
of liquidity could adversely affect the market value of your certificates. We do
not expect that you will have any redemption rights with respect to your
certificates.
If you decide to sell your certificates, you may have to sell them at a
discount from the price you paid for reasons unrelated to the performance of
your certificates or the related mortgage assets. Pricing information regarding
your certificates may not be generally available on an ongoing basis.
The Market Value of Your Certificates Will be Sensitive to Factors Unrelated to
the Performance of Your Certificates and the Underlying Mortgage Assets
The market value of your certificates can decline even if those
certificates and the underlying mortgage assets are performing at or above your
expectations.
The market value of your certificates will be sensitive to fluctuations
in current interest rates. However, a change in the market value of your
certificates as a result of an upward or downward movement in current interest
rates may not equal the change in the market value of your certificates as a
result of an equal but opposite movement in interest rates.
The market value of your certificates will also be influenced by the
supply of and demand for mortgage-backed securities generally. The supply of
commercial mortgage-backed securities will depend on, among other things, the
amount of and multifamily mortgage loans, whether newly originated or held in
portfolio, that are available for securitization. A number of factors will
affect investors' demand for mortgage-backed securities, including--
o the availability of alternative investments that offer higher
yields or are perceived as being a better credit risk, having
a less volatile market value or being more liquid,
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<PAGE>
o legal and other restrictions that prohibit a particular entity
from investing in mortgage-backed securities or limit the
amount or types of mortgage-backed securities that it may
acquire,
o investors' perceptions regarding the commercial and
multifamily real estate markets, which may be adversely
affected by, among other things, a decline in real estate
values or an increase in defaults and foreclosures on mortgage
loans secured by income-producing properties, and
o investors' perceptions regarding the capital markets in
general, which may be adversely affected by political, social
and economic events completely unrelated to the commercial and
multifamily real estate markets.
If you decide to sell your certificates, you may have to sell at
discount from the price you paid for reasons unrelated to the performance of
your certificates or the related mortgage assets. Pricing information regarding
your certificates may not be generally available on an ongoing basis.
Payments on the Offered Certificates Will be Made Solely From the Limited Assets
of the Related Trust
The offered certificates do not represent obligations of any person or
entity and do not represent a claim against any assets other than those of the
related trust. No governmental agency or instrumentality will guarantee or
insure payment on the offered certificates. In addition, neither we nor our
affiliates are responsible for making payments on the offered certificates if
collections on the related trust assets are insufficient. If the related trust
assets are insufficient to make payments on your certificates, no other assets
will be available to you for payment of the deficiency, and you will bear the
resulting loss. Any advances made by a master servicer or other party with
respect to the mortgage assets underlying your certificates are intended solely
to provide liquidity and not credit support. The party making those advances
will have a right to reimbursement, probably with interest, which is senior to
your right to receive payment on your certificates.
Any Credit Support for Your Certificates may be Insufficient to Protect you
Against all Potential Losses
The Amount of Credit Support Will Be Limited. The rating agencies that
assign ratings to your certificates will establish the amount of credit support,
if any, for your certificates based on, among other things, an assumed level of
defaults, delinquencies and losses with respect to the related mortgage assets.
Actual losses may, however, exceed the assumed levels. See "Description of the
Certificates--Allocation of Losses and Shortfalls" and "Description of Credit
Support." If actual losses on the related mortgage assets exceed the assumed
levels, you may be required to bear the additional losses.
Credit Support May Not Cover All Types of Losses. The credit support,
if any, for your certificates may not cover all of your potential losses. For
example, certain forms of credit support may not cover or may provide limited
protection against losses that you may suffer by reason of fraud or negligence
or as a result of certain uninsured casualties at the real properties securing
the underlying mortgage loans. You may be required to bear any losses which are
not covered by the credit support.
Disproportionate Benefits to Certain Classes and Series. If a form of
credit support covers multiple classes or series and losses exceed the amount of
such credit support, it is possible that the holders of offered
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certificates of another series or class will be disproportionately benefited by
such credit support to your detriment.
The Investment Performance of Your Certificates Will Depend Upon Payments,
Defaults and Losses on the Underlying Mortgage Loans
The Terms of the Underlying Mortgage Loans Will Affect Payments on Your
Certificates. Each of the mortgage loans underlying the offered certificates
will specify the terms on which the related borrower must repay the outstanding
principal amount of the loan. The rate, timing and amount of scheduled payments
of principal may vary, and may vary significantly, from mortgage loan to
mortgage loan. The rate at which the underlying mortgage loans amortize will
directly affect the rate at which the principal balance or notional amount of
your certificates is paid down or otherwise reduced.
In addition, any mortgage loan underlying the offered certificates may
permit the related borrower during some or all of the loan term to prepay the
loan. In general, a borrower will be more likely to prepay its mortgage loan
when it has an economic incentive to do so, such as obtaining a larger loan on
the same underlying real property or a lower or otherwise more advantageous
interest rate through refinancing. If a mortgage loan includes some form of
prepayment restriction, the likelihood of prepayment should decline. These
restrictions may include--
o an absolute or partial prohibitionagainst voluntary
prepayments during some or all of the loan term, or
o a requirement that voluntary prepayments be accompanied by
some form of prepayment premium, fee or charge during some or
all of the loan term.
In many cases, there will be no restriction associated with the application of
insurance proceeds or condemnation proceeds as a prepayment of principal.
Notwithstanding the terms of the mortgage loans backing your
certificates, the amount, rate and timing of payments and other collections
thereon will, to some degree, be unpredictable because of borrower defaults and
because of casualties and condemnations with respect to the underlying real
properties.
The investment performance of your certificates may vary materially and
adversely from your expectations due to--
o the rate of prepaymentsand other unscheduled collections of
principal on the underlying mortgage loans being faster or
slower than you anticipated, or
o the rate of defaults on the underlying mortgage loans being
faster, or the severity of losses on the underlying mortgage
loans being greater, than you anticipated.
The actual yield to you, as a holder of an offered certificate, may not
equal the yield you anticipated at the time of your purchase, and the total
return on investment that you expected may not be realized. In deciding whether
to purchase any offered certificates, you should make an independent decision as
to the appropriate prepayment, default and loss assumptions to be used. If the
trust assets underlying your certificates include mortgage-backed securities,
the terms of those securities may soften or enhance the
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effects to you that may result from prepayments, defaults and losses on the
mortgage loans that ultimately back those securities.
Prepayments on the Underlying Mortgage Loans Will Affect the Average
Life of Your Certificates. Payments of principal and/or interest on your
certificates will depend upon, among other things, the rate and timing of
payments on the related mortgage assets. Prepayments on the underlying mortgage
loans may result in a faster rate of principal payments on your certificates,
thereby resulting in a shorter average life for your certificates than if those
prepayments had not occurred. The rate and timing of principal prepayments on
pools of mortgage loans varies among pools and is influenced by a variety of
economic, demographic, geographic, social, tax and legal factors. Accordingly,
neither you nor we can predict the rate and timing of principal prepayments on
the mortgage loans underlying your certificates. As a result, repayment of your
certificates could occur significantly earlier or later, and the average life of
your certificates could be significantly shorter or longer, than you expected.
The extent to which prepayments on the underlying mortgage loans
ultimately affect the average life of your certificates depends on the terms and
provisions of your certificates. A class of offered certificates may entitle the
holders to a pro rata share of any prepayments on the underlying mortgage loans,
to all or a disproportionately large share of those prepayments, or to none or a
disproportionately small share of those prepayments. If you are entitled to a
disproportionately large share of any prepayments on the underlying mortgage
loans, your certificates may be retired at an earlier date. If, however, you are
only entitled to a small share of the prepayments on the underlying mortgage
loans, the average life of your certificates may be extended. Your entitlement
to receive payments, including prepayments, of principal of the underlying
mortgage loans may--
o vary based on the occurrence of certain events, such as the
retirement of one or more other classes of certificates of the
same series, or
o be subject to certain contingencies, such as prepayment and
default rates with respect to the underlying mortgage loans.
We will describe the terms and provisions of your certificates more
fully in the related prospectus supplement.
Prepayments on the Underlying Mortgage Loans Will Affect the Yield on
Your Certificates. If you purchase your certificates at a discount or premium,
the yield on your certificates will be sensitive to prepayments on the
underlying mortgage loans. If you purchase your certificates at a discount, you
should consider the risk that a slower than anticipated rate of principal
payments on the underlying mortgage loans could result in your actual yield
being lower than your anticipated yield. Alternatively, if you purchase your
certificates at a premium, you should consider the risk that a faster than
anticipated rate of principal payments on the underlying mortgage loans could
result in your actual yield being lower than your anticipated yield. The
potential effect that prepayments may have on the yield of your certificates
will increase as the discount deepens or the premium increases. If the amount of
interest payable on your certificates is disproportionately large, as compared
to the amount of principal payable on your certificates, you may fail to recover
your original investment under some prepayment scenarios.
Delinquencies, Defaults and Losses on the Underlying Mortgage Loans may
Affect the Amount and Timing of Payments on Your Certificates. The rate and
timing of delinquencies and defaults, and the severity
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of losses, on the underlying mortgage loans will impact the amount and timing of
payments on a series of offered certificates to the extent that their effects
are not offset by delinquency advances or some form of credit support.
Unless otherwise covered by delinquency advances or some form of credit
support, defaults on the underlying mortgage loans may delay payments on a
series of offered certificates while the defaulted mortgage loans are worked-out
or liquidated. However, liquidations of defaulted mortgage loans prior to
maturity could affect the yield and average life of an offered certificate in a
manner similar to a voluntary prepayment.
If you calculate your anticipated yield to maturity based on an assumed
rate of default and amount of losses on the underlying mortgage loans that is
lower than the default rate and amount of losses actually experienced, then, to
the extent that you are required to bear the additional losses, your actual
yield to maturity will be lower than you calculated and could, under certain
scenarios, be negative. Furthermore, the timing of losses on the underlying
mortgage loans can affect your yield. In general, the earlier you bear any loss
on an underlying mortgage loan, the greater the negative effect on your yield.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends
Upon the Performance and Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property below."
There is an Increased Risk of Default Associated With Balloon Payments.
Any of the mortgage loans underlying your certificates may be nonamortizing or
only partially amortizing. The borrower under a mortgage loan of that type is
required to make substantial payments of principal and interest (that is,
balloon payments) on the maturity date of the loan. The ability of the borrower
to make a balloon payment depends upon the borrower's ability to refinance or
sell the real property securing the loan. The ability of the borrower to
refinance or sell the property will be affected by a number of factors,
including:
o the fair market value and condition of the underlying real
property;
o the level of interest rates;
o the borrower's equity in the underlying real property;
o the borrower's financial condition;
o the operating history of the underlying real property;
o changes in zoning and tax laws;
o changes in competition in the relevant area;
o changes in rental rates in the relevant area;
o changes in governmental regulation and fiscal policy;
o prevailing general and regional economic conditions;
o the state of the fixed income and mortgage markets; and
o the availability of credit for multifamily rental or
commercial properties.
See "--Repayment of a Commercial or Multifamily Mortgage Loan Depends
Upon the Performance and Value of the Underlying Real Property and the Related
Borrower's Ability to Refinance the Property" below.
Neither we nor any of our affiliates will be obligated to refinance any
mortgage loan underlying your certificates.
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The related master servicer or special servicer may (within prescribed
limits) extend and modify mortgage loans underlying your certificates that are
in default or as to which a payment default is imminent in order to maximize
recoveries on the defaulted loans. The related master servicer or special
servicer is only required to determine that any such extension or modification
is reasonably likely to produce a greater recovery than a liquidation of the
real property securing the defaulted loan. There is a risk that the decision of
the master servicer or special servicer to extend or modify a mortgage loan may
not in fact produce a greater recovery.
Repayment of a Commercial or Multifamily Mortgage Loan Depends upon the
Performance and Value of the Underlying Real Property and the Related Borrower's
Ability to Refinance the Property
Most of the Mortgage Loans Underlying Your Certificates Will be
Nonrecourse. You should consider all of the mortgage loans underlying your
certificates to be nonrecourse loans. This means that, in the event of a
default, recourse will be limited to the related real property or properties
securing the defaulted mortgage loan. In those cases where recourse to a
borrower or guarantor is permitted by the loan documents, we generally will not
undertake any evaluation of the financial condition of such borrower or
guarantor. Consequently, full and timely payment on each mortgage loan
underlying your certificates will depend on one or more of the following:
o the sufficiency of the net operating income of the
applicable real property;
o the market value of the applicable real property at or
prior to maturity; and
o the ability of the related borrower to refinance or sell
the applicable real property.
In general, the value of a multifamily or commercial property will depend on its
ability to generate net operating income. The ability of an owner to finance a
multifamily or commercial property will depend, in large part, on the property's
value and ability to generate net operating income.
Unless we state otherwise in the related prospectus supplement, none of
the mortgage loans underlying your certificates will be insured or guaranteed by
any governmental entity or private mortgage insurer.
The risks associated with lending on multifamily and commercial
properties are inherently different from those associated with lending on the
security of single-family residential properties. This is because multifamily
rental and commercial real estate lending involves larger loans and, as
described above, repayment is dependent upon the successful operation and value
of the related real estate project.
Many Risk Factors are Common to Most or all Multifamily and Commercial
Properties. The following factors, among others, will affect the ability of a
multifamily or commercial property to generate net operating income and,
accordingly, its value:
o the age, design and construction quality of the property;
o perceptions regarding the safety, convenience and
attractiveness of the property;
o the characteristics of the neighborhood where the property is
located;
o the proximity and attractiveness of competing properties;
o the existence and construction of competing properties;
o the adequacy of the property's management and maintenance;
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o national, regional or local economic conditions, including
plant closings, industry slowdowns and unemployment rates;
o local real estate conditions, including an increase in or
oversupply of comparable commercial
or residential space;
o demographic factors;
o customer tastes and preferences;
o retroactive changes in building codes; and
o changes in governmental rules, regulations and fiscal
policies, including environmental legislation.
Particular factors that may adversely affect the ability of a
multifamily or commercial property to generate net operating income include:
o an increase in interest rates, real estate taxes and other
operating expenses;
o an increase in the capital expenditures needed to maintain the
property or make improvements;
o a decline in the financial condition of a major tenant and, in
particular, a sole tenant or anchor tenant;
o an increase in vacancy rates;
o a decline in rental rates as leases are renewed or replaced;
and
o natural disasters and civil disturbances such as earthquakes,
hurricanes, floods, eruptions or riots.
The volatility of net operating income generated by a multifamily or
commercial property over time will be influenced by many of the foregoing
factors, as well as by:
o the length of tenant leases;
o the creditworthiness of tenants;
o the rental rates at which leases are renewed or replaced;
o the percentage of total property expenses in relation to
revenue;
o the ratio of fixed operating expenses to those that vary
with revenues; and
o the level of capital expenditures required to maintain the
property and to maintain or replace tenants.
Therefore, commercial and multifamily properties with short-term or less
creditworthy sources of revenue and/or relatively high operating costs, such as
those operated as hospitality and self-storage properties, can be expected to
have more volatile cash flows than commercial and multifamily properties with
medium- to long-term leases from creditworthy tenants and/or relatively low
operating costs. A decline in the real estate market will tend to have a more
immediate effect on the net operating income of commercial and multifamily
properties with short-term revenue sources and may lead to higher rates of
delinquency or defaults on the mortgage loans secured by those properties.
The Successful Operation of a Multifamily or Commercial Property
Depends on Tenants. Generally, multifamily and commercial properties are subject
to leases. The owner of a multifamily or commercial property typically uses
lease or rental payments for the following purposes:
o to pay for maintenance and other operating expenses associated
with the property;
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o to fund repairs, replacements and capital improvements at the
property; and
o to service mortgage loans secured by, and any other debt
obligations associated with operating, the property.
Factors that may adversely affect the ability of a multifamily or
commercial property to generate net operating income from lease and rental
payments include:
o an increase in vacancy rates, which may result from tenants
deciding not to renew an existing lease or discontinuing
operations;
o an increase in tenant payment defaults;
o a decline in rental rates as leases are entered into, renewed
or extended at lower rates;
o an increase in the capital expenditures needed to maintain the
property or to make improvements; and
o a decline in the financial condition of a major or sole
tenant.
Various factors that will affect the operation and value of a
commercial property include:
o the business operated by the tenants;
o the creditworthiness of the tenants; and
o the number of tenants.
Dependence on a Single Tenant or a Small Number of Tenants Makes a
Property Riskier Collateral. In those cases where an income-producing property
is leased to a single tenant or is primarily leased to one or a small number of
major tenants, a deterioration in the financial condition or a change in the
plan of operations of any such tenant can have particularly significant effects
on the net operating income generated by the property. If any such tenant
defaults under or fails to renew its lease, the resulting adverse financial
effect on the operation of the property will be substantially more severe than
would be the case with respect to a property occupied by a large number of less
significant tenants.
An income-producing property operated for retail, office or industrial
purposes also may be adversely affected by a decline in a particular business or
industry if a concentration of tenants at the property is engaged in that
business or industry.
Tenant Bankruptcy Adversely Affects Property Performance. The
bankruptcy or insolvency of a major tenant, or a number of smaller tenants, at a
commercial property may adversely affect the income produced by the property.
Under the U.S. Bankruptcy Code, a tenant has the option of assuming or rejecting
any unexpired lease. If the tenant rejects the lease, the landlord's claim for
breach of the lease would be a general unsecured claim against the tenant unless
there is collateral securing the claim. The claim would be limited to:
(i) the unpaid rent reserved under the lease for the periods prior
to the bankruptcy petition or any earlier surrender of the
leased premises, plus
(ii) an amount, not to exceed three years' rent, equal to the
greater of one year's rent and 15% of the remaining reserved
rent.
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The Success of an Income-Producing Property Depends on Reletting Vacant
Spaces. The operations at an income-producing property will be adversely
affected if the owner or property manager is unable to renew leases or relet
space on comparable terms when existing leases expire and/or become defaulted.
Even if vacated space is successfully relet, the costs associated with
reletting, including tenant improvements and leasing commissions in the case of
income-producing properties operated for retail, office or industrial purposes,
can be substantial and could reduce cash flow from the income-producing
properties. Moreover, if a tenant at a income-producing property defaults in its
lease obligations, the landlord may incur substantial costs and experience
significant delays associated with enforcing its rights and protecting its
investment, including costs incurred in renovating and reletting the property.
If an income-producing property has multiple tenants, re-leasing
expenditures may be more frequent than in the case of a property with fewer
tenants, thereby reducing the cash flow generated by the multi- tenanted
property. Multi-tenanted properties may also experience higher continuing
vacancy rates and greater volatility in rental income and expenses.
Property Value may be Adversely Affected Even When Current Operating
Income is not. Various factors may affect the value of multifamily and
commercial properties without affecting their current net operating income,
including:
o changes in interest rates;
o the availability of refinancing sources;
o changes in governmental regulations, licensing or fiscal
policy;
o changes in zoning or tax laws; and
o potential environmental or other legal liabilities.
Property Management may Affect Property Operations and Value. The
operation of an income- producing property will depend upon the property
manager's performance and viability. The property manager generally is
responsible for:
o responding to changes in the local market;
o planning and implementing the rental structure, including
staggering durations of leases and establishing levels of rent
payments;
o operating the property and providing building services;
o managing operating expenses; and
o ensuring that maintenance and capital improvements are carried
out in a timely fashion.
Income-producing properties that derive revenues primarily from
short-term rental commitments, such as hospitality or self-storage properties,
generally require more intensive management than properties leased to tenants
under long-term leases.
By controlling costs, providing appropriate and efficient services to
tenants and maintaining improvements in good condition, a property manager can
maintain or improve occupancy rates, business and cash flow, reduce operating
and repair costs and preserve building value. On the other hand, management
errors can, in some cases, impair the long term viability of an income-producing
property.
Maintaining a Property in Good Condition is Expensive. The owner may
be required to expend a substantial amount to maintain, renovate or refurbish a
commercial or multifamily property. Failure to do
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so may materially impair the property's ability to generate cash flow. The
effects of poor construction quality will increase over time in the form of
increased maintenance and capital improvements. Even superior construction will
deteriorate over time if management does not schedule and perform adequate
maintenance in a timely fashion. There can be no assurance that an
income-producing property will generate sufficient cash flow to cover the
increased costs of maintenance and capital improvements in addition to paying
debt service on the mortgage loan(s) that may encumber that property.
Competition Will Adversely Affect the Profitability and Value of an
Income-Producing Property. Some income-producing properties are located in
highly competitive areas. Comparable income-producing properties located in the
same area compete on the basis of a number of factors including:
o rental rates;
o location;
o type of business or services and amenities offered; and
o nature and condition of the particular property.
The profitability and value of an income-producing property may be
adversely affected by a comparable property that:
o offers lower rents;
o has lower operating costs;
o offers a more favorable location; or
o offers better facilities.
Costs of renovating, refurbishing or expanding an income-producing
property in order to remain competitive can be substantial.
Various Types of Income-Producing Properties may Present Special Risks.
The relative importance of any factor affecting the value or operation of an
income-producing property will depend on the type and use of the property. In
addition, the type and use of a particular income-producing property may present
special risks. For example--
o Health care-related facilities and casinos are subject to
significant governmental regulation of the ownership,
operation, maintenance and/or financing of such properties.
o Multifamily rental properties, manufactured housing
communities and mobile home parks may be subject to rent
control or rent stabilization laws and laws governing
landlord/tenant relationships.
o Hospitality and restaurant properties are often operated
pursuant to franchise, management or operating agreements,
which may be terminable by the franchisor or operator.
Moreover, the transferability of a hotel's or restaurant's
operating, liquor and other licenses upon a transfer of the
hotel or restaurant is subject to local law requirements.
o Recreational and resort properties, properties that provide
entertainment services, hospitality properties, restaurants
and taverns, mini-warehouses and self-storage facilities tend
to be adversely affected more quickly by a general economic
downturn than other types of commercial properties.
o Marinas will be affected by various statutes and government
regulations that govern the use of, and construction on,
rivers, lakes and other waterways.
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o Certain recreational and hospitality properties may have
seasonal fluctuations and/or may be adversely affected by
prolonged unfavorable weather conditions.
o Churches and other religious facilities may be highly
dependent on donations which are likely to decline as economic
conditions decline.
o Properties used as gas stations, automotive sales and service
centers, dry cleaners, warehouses and industrial facilities
may be more likely to have environmental issues.
Additionally, many types of commercial properties are not readily
convertible to alternative uses if the original use is not successful or may
require significant capital expenditures to effect any conversion to an
alternative use. As a result, the liquidation value of any of those types of
property would be substantially less than would otherwise be the case. See
"Description of the Trust Assets--Mortgage Loans--A Discussion of the Various
Types of Multifamily and Commercial Properties that may Secure Mortgage Loans
Underlying a Series of Offered Certificates."
Borrower Concentration Within a Trust Exposes Investors to Greater Risk of
Default and Loss
A particular borrower or group of related borrowers may be associated
with multiple real properties securing the mortgage loans underlying a series of
offered certificates. The bankruptcy or insolvency of, or other financial
problems with respect to, that borrower or group of borrowers could have an
adverse effect on the operation of all of the related real properties and on the
ability of those properties to produce sufficient cash flow to make required
payments on the related mortgage loans. For example, if a borrower or group of
related borrowers that owns or controls several real properties experiences
financial difficulty at one of those properties, it could defer maintenance at
another of those properties in order to satisfy current expenses with respect to
the first property. That borrower or group of related borrowers could also
attempt to avert foreclosure by filing a bankruptcy petition that might have the
effect of interrupting debt service payments on all the related mortgage loans
for an indefinite period. In addition, multiple real properties owned by the
same borrower or related borrowers are likely to have common management. This
would increase the risk that financial or other difficulties experienced by the
property manager could have a greater impact on the owner of the related loans.
Loan Concentration Within a Trust Exposes Investors to Greater Risk of Default
and Loss
Any of the mortgage assets in one of our trusts may be substantially
larger than the other assets in that trust. In general, the inclusion in a trust
of one or more mortgage assets that have outstanding principal balances that are
substantially larger than the other mortgage assets in the trust can result in
losses that are more severe, relative to the size of the related mortgage asset
pool, than would be the case if the aggregate balance of that pool were
distributed more evenly.
Geographic Concentration Within a Trust Exposes Investors to Greater Risk of
Default and Loss
If a material concentration of mortgage loans underlying a series of
offered certificates is secured by real properties in a particular locale, state
or region, then the holders of those certificates will have a greater exposure
to:
o any adverse economic developments that occur in the locale,
state or region where the properties are located;
o changes in the real estate market where the properties are
located;
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o changes in governmental rules and fiscal policies in the
governmental jurisdiction where the properties are located;
and
o acts of nature, including floods, tornadoes and earthquakes,
in the areas where properties are located.
Changes in Pool Composition Will Change the Nature of Your Investment
The mortgage loans underlying any series of offered certificates will
amortize at different rates and mature on different dates. In addition, some of
those mortgage loans may be prepaid or liquidated. As a result, the relative
composition of the related mortgage asset pool will change over time.
If you purchase certificates with a pass-through rate that is equal to
or calculated based upon a weighted average of interest rates on the underlying
mortgage loans, your pass-through rate will be affected, and may decline, as the
relative composition of the mortgage pool changes.
In addition, as payments and other collections of principal are
received with respect to the underlying mortgage loans, the remaining mortgage
pool backing your certificates may exhibit an increased concentration with
respect to property type, number and affiliation of borrowers and geographic
location.
Adjustable Rate Mortgage Loans may Entail Greater Risks of Default to Lenders
than Fixed Rate Mortgage Loans
Some or all of the mortgage loans underlying a series of offered
certificates may provide for adjustments to their respective mortgage interest
rates and corresponding adjustments to their respective periodic debt service
payments. As the periodic debt service payment for any of those mortgage loans
increases, the likelihood that cash flow from the underlying real property will
be insufficient to make that periodic debt service payment and pay operating
expenses also increases.
Subordinate Debt Increases the Likelihood That a Borrower Will Default on a
Mortgage Loan Underlying Your Certificates
Certain mortgage loans included in one of our trusts may either (i)
prohibit the related borrower from encumbering the related real property with
additional secured debt or (ii) require the consent of the holder of the
mortgage loan prior to so encumbering such property. However, a violation of
this prohibition may not become evident until the affected mortgage loan
otherwise defaults, and a lender, such as one of our trusts, may not
realistically be able to prevent a borrower from incurring subordinate debt.
The existence of any secured subordinated indebtedness increases the
difficulty of refinancing a mortgage loan at the loan's maturity. In addition,
the related borrower may have difficulty repaying multiple loans. Moreover, the
filing of a petition in bankruptcy by, or on behalf of, a junior lienholder may
stay the senior lienholder from taking action to foreclose out the junior lien.
See "Certain Legal Aspects of Mortgage Loans--Subordinate Financing."
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Borrower Bankruptcy Proceedings can Delay and Impair Recovery on a Mortgage Loan
Underlying Your Certificates
Under the U.S. Bankruptcy Code, the filing of a petition in bankruptcy
by or against a borrower will stay the sale of a real property owned by that
borrower, as well as the commencement or continuation of a foreclosure action.
In addition, if a court determines that the value of a real property is less
than the principal balance of the mortgage loan it secures, the court may reduce
the amount of secured indebtedness to the then-value of the property. Such an
action would make the lender a general unsecured creditor for the difference
between the then-value of the property and the amount of its outstanding
mortgage indebtedness. A bankruptcy court also may:
o grant a debtor a reasonable time to cure a payment default on
a mortgage loan;
o reduce monthly payments due under a mortgage loan;
o change the rate of interest due on a mortgage loan; or
o otherwise alter a mortgage loan's repayment schedule.
Additionally, the borrower, as debtor-in-possession, or its bankruptcy
trustee has certain special powers to avoid, subordinate or disallow debts. In
certain circumstances, the claims of a secured lender, such as one of our
trusts, may be subordinated to financing obtained by a debtor-in-possession
subsequent to its bankruptcy.
Under the U.S. Bankruptcy Code, a lender will be stayed from enforcing
a borrower's assignment of rents and leases. The U.S. Bankruptcy Code also may
interfere with a lender's ability to enforce lockbox requirements. The legal
proceedings necessary to resolve these issues can be time consuming and may
significantly delay the receipt of rents. Rents also may escape an assignment to
the extent they are used by borrower to maintain its property or for other court
authorized expenses.
As a result of the foregoing, the related trust's recovery with respect
to borrowers in bankruptcy proceedings may be significantly delayed, and the
aggregate amount ultimately collected may be substantially less than the amount
owed.
Taxes on Foreclosure Property Will Reduce Amounts Available to Make Payments on
the Offered Certificates
If one of our trusts is designated, in whole or in part, as a "real
estate mortgage investment conduit," and if that trust acquires a real property
pursuant to a foreclosure or deed in lieu of foreclosure, then the related
special servicer may be required to retain an independent contractor to operate
and manage the property. Any net income from that operation and management,
other than qualifying "rents from real property" within the meaning of Section
856(d) of the Internal Revenue Code of 1986, as well as any rental income based
on the net profits of a tenant or sub-tenant or allocable to a service that is
non-customary in the area and for the type of building involved, will subject
the trust to federal, and possibly state or local, tax on that income at the
highest marginal corporate tax rate. This would reduce the net proceeds
available for payment with respect to the related offered certificates.
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Environmental Liabilities Will Adversely Affect the Value and Operation of the
Contaminated Property and May Deter a Lender from Foreclosing
There can be no assurance--
o as to the degree of environmental testing conducted at any of
the real properties securing the mortgage loans that back your
certificates;
o that the environmental testing conducted by or on behalf of
the applicable originators or any other parties in connection
with the origination of those mortgage loans or otherwise
identified all adverse environmental conditions and risks at
the related real properties;
o that the results of the environmental testing were accurately
evaluated in all cases;
o that the related borrowers have implemented or will implement
all operations and maintenance plans and other remedial
actions recommended by any environmental consultant that may
have conducted testing at the related real properties; or
o that the recommended action will fully remediate or otherwise
address all the identified adverse environmental conditions
and risks.
Environmental site assessments vary considerably in their content,
quality and cost. Even when adhering to good professional practices,
environmental consultants will sometimes not detect significant environmental
problems because to do an exhaustive environmental assessment would be far too
costly and time-consuming to be practical.
In addition, the current environmental condition of a real property
securing a mortgage loan underlying your certificates could be adversely
affected by tenants, such as gasoline stations or dry cleaners, or by the
conditions or operations in the vicinity of the properties, such as leaking
underground storage tanks at another property nearby.
Various environmental laws may make a current or previous owner or
operator of real property liable for the costs of removal or remediation of
hazardous or toxic substances on, under or adjacent to the property. Those laws
often impose liability whether or not the owner or operator knew of, or was
responsible for, the presence of the hazardous or toxic substances. For example,
certain laws impose liability for release of asbestos containing materials into
the air or require the removal or containment of the materials. The owner's
liability for any required remediation generally is unlimited and could exceed
the value of the property and/or the aggregate assets of the owner. In addition,
the presence of hazardous or toxic substances, or the failure to remediate the
adverse environmental condition, may adversely affect the owner's or operator's
ability to use the affected property. In certain states, contamination of a
property may give rise to a lien on the property to ensure the costs of cleanup.
In some of those states, this lien has priority over the lien of an existing
mortgage, deed of trust or other security instrument. In addition, third parties
may seek recovery from owners or operators of real property for personal injury
associated with exposure to hazardous substances, including asbestos and
lead-based paint. Persons who arrange for the disposal or treatment of hazardous
or toxic substances may be liable for the costs of removal or remediation of the
substances at the disposal or treatment facility.
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The federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, commonly referred to as "CERCLA," together
with certain other federal and state laws, provide that a secured lender, such
as one of our trusts, may be liable as an "owner" or "operator" of the real
property, regardless of whether the borrower or a previous owner caused the
environmental damage, if--
o agents or employees of the lender are deemed to have
participated in the management of the borrower, or
o under certain conditions, the lender actually takes possession
of a borrower's property or control of its day-to-day
operations, including through the appointment of a receiver or
foreclosure.
Although recently enacted legislation clarifies the activities in which a lender
may engage without becoming subject to liability under CERCLA and similar
federal laws, that legislation has no applicability to state environmental laws.
Moreover, future laws, ordinances or regulations could impose material
environmental liability.
Federal law requires owners of residential housing constructed prior to
1978 to disclose to potential residents or purchasers--
o any condition on the property that causes exposure to
lead-based paint, and
o the potential hazards to pregnant women and young children,
including that the ingestion of lead-based paint chips and/or
the inhalation of dust particles from lead-based paint by
children can cause permanent injury, even at low levels of
exposure.
Property owners may be liable for injuries to their tenants resulting from
exposure under various laws that impose affirmative obligations on property
owners of residential housing containing lead-based paint.
Some Provisions in the Mortgage Loans Underlying Your Certificates May Be
Challenged as Being Unenforceable
Cross-Collateralization Arrangements. It may be possible to challenge
cross-collateralization arrangements involving more than one borrower as a
fraudulent conveyance, even if the borrowers are related. If one of those
borrowers were to become a debtor in a bankruptcy case, creditors of the
bankrupt party or the representative of the bankruptcy estate of the bankrupt
party could seek to have the bankruptcy court avoid any lien granted by the
bankrupt party to secure repayment of another borrower's loan. In order to do
so, the court would have to determine that--
o the bankrupt party was insolvent at the time of granting the
lien, was rendered insolvent by the granting of the lien, was
left with inadequate capital, or was not able to pay its debts
as they matured; and
o the bankrupt party did not, when it allowed its property to be
encumbered by a lien securing the other borrower's loan,
receive fair consideration or reasonably equivalent value for
pledging its property for the equal benefit of the other
borrower.
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If the court were to conclude that the granting of the lien was an avoidable
fraudulent conveyance, it could nullify the lien or security instrument
effecting the cross-collateralization. The court could also allow the bankrupt
party to recover payments it made pursuant to the avoided
cross-collateralization.
Prepayment Premiums, Fees and Charges. Under the laws of a number of
states, the enforceability of any mortgage loan provisions that require payment
of a prepayment premium, fee or charge upon an involuntary prepayment, is
unclear. If those provisions were unenforceable, borrowers would have an
incentive to default in order to prepay their loans.
Due-on-Sale and Debt Acceleration Clauses. Some or all of the mortgage
loans included in one of our trusts may contain a due-on-sale clause, which
permits the lender, with some exceptions, to accelerate the maturity of the
mortgage loan upon the sale, transfer or conveyance of (i) the related real
property or (ii) a majority ownership interest in the related borrower. We
anticipate that all of the mortgage loans included in one of our trusts will
contain some form of debt-acceleration clause, which permits the lender to
accelerate the debt upon specified monetary or non-monetary defaults by the
related borrower. The courts of all states will enforce acceleration clauses in
the event of a material payment default. The equity courts of any state,
however, may refuse to allow the foreclosure of a mortgage, deed of trust or
other security instrument or to permit the acceleration of the indebtedness if:
o the default is deemed to be immaterial,
o the exercise of such remedies would be inequitable or unjust,
or
o the circumstances would render the acceleration
unconscionable.
Assignments of Leases. Some or all of the mortgage loans included in
one of our trusts may be secured by, among other things, an assignment of leases
and rents. Pursuant to that document, the related borrower will assign its
right, title and interest as landlord under the leases on the related real
property and the income derived therefrom to the lender as further security for
the related mortgage loan, while retaining a license to collect rents for so
long as there is no default. In the event the borrower defaults, the license
terminates and the lender is entitled to collect rents. In some cases, those
assignments may not be perfected as security interests prior to actual
possession of the cash flow. Accordingly, state law may require that the lender
take possession of the property and obtain a judicial appointment of a receiver
before becoming entitled to collect the rents. In addition, the commencement of
bankruptcy or similar proceedings by or in respect of the borrower will
adversely affect the lender's ability to collect the rents. See "Certain Legal
Aspects of Mortgage Loans--Bankruptcy Laws."
Defeasance. A mortgage loan underlying a series of offered certificates
may permit the related borrower, during specified periods and subject to certain
conditions, to pledge to the holder of the mortgage loan a specified amount of
direct, non-callable United States government securities and thereby obtain a
release of the related mortgaged property. The cash amount which a Borrower must
expend to purchase, or must deliver to a master servicer in order for the master
servicer to purchase, the required United States government securities may be in
excess of the principal balance of the mortgage loan. There can be no assurance
that a court would not interpret that excess amount as a form of prepayment
premium or would not take it into account for usury purposes. In some states,
some forms of prepayment premiums are unenforceable. If the payment of that
excess amount were held to be unenforceable, the remaining portion of the cash
amount to be delivered may be insufficient to purchase the requisite amount of
United States government securities.
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Lack of Insurance Coverage Exposes a Trust to Risk for Certain Special Hazard
Losses
In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements of a property by
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
civil commotion, subject to the conditions and exclusions specified in the
related policy. Most insurance policies typically do not cover any physical
damage resulting from:
o war,
o revolution,
o governmental actions,
o floods and other water-related causes,
o earth movement, including earthquakes, landslides and
mudflows,
o wet or dry rot,
o vermin,
o domestic animals, and
o certain other kinds of risks.
Unless the related mortgage loan documents specifically require the
borrower to insure against physical damage arising from such causes, then the
resulting losses may be borne by you as a holder of offered certificates.
Ground Leases Create Risks for Lenders That are not Present When Lending on an
Actual Ownership Interest in a Real Property
In order to secure a mortgage loan, a borrower may grant a lien on its
leasehold interest in a real property as tenant under a ground lease. If the
ground base does not provide for notice to a lender of a default thereunder on
the part of the borrower, together with a reasonable opportunity for the lender
to cure the default, the lender may be unable to prevent termination of the
lease and may lose its collateral.
In addition, upon the bankruptcy of a landlord or a tenant under a
ground lease, the debtor entity has the right to assume or reject the ground
lease. If a debtor landlord rejects the lease, the tenant has the right to
remain in possession of its leased premises at the rent reserved in the lease
for the term, including renewals. If a debtor tenant rejects any or all of its
leases, the tenant's lender may not be able to succeed to the tenant's position
under the lease unless the landlord has specifically granted the lender that
right. If both the landlord and the tenant are involved in bankruptcy
proceedings, the trustee for your certificates may be unable to enforce the
bankrupt tenant's obligation to refuse to treat as terminated a ground lease
rejected by a bankrupt landlord. In those circumstances, it is possible that the
trustee could be deprived of its security interest in the leasehold estate,
notwithstanding lender protection provisions contained in the lease or mortgage
loan documents.
Changes in Zoning Laws may Adversely Affect the Use or Value of a Real Property
Due to changes in zoning requirements since the construction thereof,
an income-producing property may not comply with current zoning laws, including
density, use, parking and set back requirements. Accordingly, the property may
be a "permitted non-conforming structure" or the operation of the property may
be a "permitted non-conforming use." This means that the owner is not required
to alter the property's structure or use to comply with the new law, but the
owner may be limited in its ability to rebuild the
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premises "as is" in the event of a substantial casualty loss. This may adversely
affect the cash flow available following the casualty. If a substantial casualty
were to occur, insurance proceeds may not be sufficient to pay a mortgage loan
secured by the property in full. In addition, if the property were repaired or
restored in conformity with the current law, its value or revenue-producing
potential may be less than that which existed before the casualty.
Compliance with the Americans with Disabilities Act of 1990 May Be Expensive
Under the Americans with Disabilities Act of 1990, all public
accommodations are required to meet certain federal requirements related to
access and use by disabled persons. If a property does not currently comply with
that Act, the owner thereof may be required to incur significant costs in order
to effect such compliance. This will reduce the amount of cash flow available to
cover other required maintenance and capital improvements and to pay debt
service on the mortgage loan(s) that may encumber that property. There can be no
assurance that the owner will have sufficient funds to cover the costs necessary
to comply with that Act. In addition, noncompliance could result in the
imposition of fines by the federal government or an award or damages to private
litigants.
Litigation May Adversely Affect a Borrower's Ability to Repay its Mortgage Loan
The owner of a multifamily or commercial property may be a defendant in
a litigation arising out of, among other things, the following:
o breach of contract involving a tenant, a supplier or other
party;
o negligence resulting in a personal injury, or
o responsibility for an environmental problem.
Litigation will divert the owner's attention from operating its
property. If the litigation were decided adversely to the owner, the award to
the plaintiff may adversely affect the owner's ability to repay a mortgage loan
secured by the property.
"Residual Interests" in a "Real Estate Mortgage Investment Conduit" Have Adverse
Tax Consequences
Inclusion of Taxable Income in Excess of Cash Received. If you own a
certificate that is a "residual interest" in a "real estate mortgage investment
conduit," or "REMIC," you will have to report on your income tax return as
ordinary income your pro rata share of the taxable income of the REMIC,
regardless of the amount or timing of your possible receipt of any cash on the
certificate. As a result, your certificate may have "phantom income" early in
the term of the REMIC because the taxable income from the certificate may exceed
the amount of economic income, if any, attributable to the certificate. While
you will have a corresponding amount of tax losses later in the term of the
REMIC, the present value of the "phantom income" may significantly exceed the
present value of the tax losses. Therefore, the after-tax yield on any "residual
interest" certificate may be significantly less than that of a corporate bond or
other instrument having similar cash flow characteristics. In fact, certain
offered certificates which are "residual interests" may have a negative value.
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You have to report your share of the taxable income and net loss of the
REMIC until all the certificates in the related series have a principal balance
of zero. See "Federal Income Tax Consequences--REMICs."
Some Taxable Income of a "Residual Interest" can not be Offset Under
the Internal Revenue Code of 1986. A portion of the taxable income from a
"residual interest" certificate may be treated as "excess inclusions" under the
Internal Revenue Code of 1986. You will have to pay tax on the "excess
inclusions" regardless of whether you have other credits, deductions or losses.
In particular, the tax on "excess inclusion":
o generally will not be reduced by losses from other
activities,
o for a tax-exempt holder, will be treated as unrelated
business taxable income, and
o for a foreign holder, will not qualify for any exemption
from withholding tax.
Certain Entities Should not Invest in Certificates Which are "Residual
Interests." The fees and non- interest expenses of a REMIC will be allocated pro
rata to certificates that are "residual interests" in the REMIC. However,
individuals will only be able to deduct these expenses as miscellaneous itemized
deductions, which are subject to numerous restrictions and limitations under the
Internal Revenue Code of 1986. Therefore, the certificates that are "residual
interests" generally are not appropriate investments for:
o individuals,
o estates,
o trusts beneficially owned by any individual or estate, and
o pass-through entities having any individual, estate or trust
as a shareholder, member or partner.
In addition, the "residual interest" certificates are subject to
numerous transfer restrictions. These restrictions reduce your ability to
liquidate a "residual interest" certificate. For example, unless we indicate
otherwise in the related prospectus supplement, you will not be able to transfer
a "residual interest" certificate to a foreign person under the Internal Revenue
Code of 1986.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates."
Problems With Book-Entry Registration
Your certificates may be issued in book-entry form through the
facilities of the Depository Trust Company. As a result--
o you will be able to exercise your rights as
a certificateholder only indirectly through the
Depository Trust Company and its participating organizations;
o you may have only limited access to information regarding your
certificates;
o you may suffer delays in the receipt of payments on your
certificates; and
o your ability to pledge or otherwise take action with respect
to your certificates may be limited due to the lack of a
physical certificate evidencing your ownership of those
certificates.
See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates."
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Potential Conflicts of Interest can Affect a Person's Performance
The master servicer or special servicer for one of our trusts, or any
of their respective affiliates, may purchase certificates evidencing interests
in that trust.
In addition, the master servicer or special servicer for one of our
trusts, or any of their respective affiliates, may have interests in, or other
financial relationships with, borrowers under the related mortgage loans.
In servicing the mortgage loans in any of our trusts, the related
master servicer and special servicer will each be required to observe the terms
of the governing document(s) for the related series of offered certificates and,
in particular, to act in accordance with the servicing standard described in the
related prospectus supplement. You should consider, however, that either of
these parties, if it or an affiliate owns certificates, or has financial
interests in or other financial dealings with any of the related borrowers, may
have interests when dealing with the mortgage loans underlying your certificates
that are in conflict with your interests. For example, if the related special
servicer owns any certificates, it could seek to mitigate the potential loss on
its certificates from a troubled mortgage loan by delaying enforcement in the
hope of realizing greater proceeds in the future. However, this action by a
special servicer could result a lower recovery to the related trust than would
have been the case if the special servicer had not delayed in taking enforcement
action.
Furthermore, the master servicer or special servicer for any of our
trusts may service existing and new loans for third parties, including
portfolios of loans similar to the mortgage loans included in that trust. The
properties securing these other loans may be in the same markets as and compete
with the properties securing mortgage loans in our trust. Accordingly, that
master servicer or special servicer may be acting on behalf of parties with
conflicting interests.
The Transition from the Year 1999 to the Year 2000 may Disrupt the Ability of
Computerized Systems to Process Information
The collection of payments on the mortgage assets backing your
certificates, the servicing and administration of those mortgage assets and the
payments on your certificates are highly dependent upon computer systems of the
related master servicer, manager, special servicer, trustee, borrowers and other
third parties.
We will inquire from each of the parties to the governing document(s)
for a series of offered certificates whether and how the transition from 1999 to
2000 has affected their computer systems. We also will obtain assurances from
these parties that they are taking the necessary steps to cure any problems
their computer systems may have with the manipulation or calculation of dates
after December 31, 1999. Notwithstanding those inquiries and assurances,
unforeseen problems in this regard could still occur.
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DESCRIPTION OF THE TRUST ASSETS
General
We will be responsible for establishing the trust underlying each
series of offered certificates. The assets of the trust will primarily consist
of:
o various types of multifamily and/or commercial mortgage loans;
o mortgage participations, pass-through certificates,
collateralized mortgage obligations or other mortgage-backed
securities that directly or indirectly evidence interests in,
or are secured by pledges of, one or more of various types of
multifamily and/or commercial mortgage loans; or
o a combination of mortgage loans and mortgage-backed securities
of the types described above.
We do not originate mortgage loans. Accordingly, we must acquire each
of the mortgage loans to be included in one of our trusts from the originator or
a subsequent assignee. In some cases, that originator or subsequent assignee
will be one of our affiliates.
Unless we indicate otherwise in the related prospectus supplement, we
will acquire, directly or through one of our affiliates, in the secondary
market, any mortgage-backed security to be included in one of our trusts.
Neither we nor any of our affiliates will guarantee any of the mortgage
assets included in one of our trusts. Furthermore, unless we indicate otherwise
in the related prospectus supplement, no governmental agency or instrumentality
will guarantee or insure any of those mortgage assets.
Mortgage Loans
General. Each mortgage loan underlying the offered certificates will
constitute the obligation of one or more persons to repay a debt. That
obligation will be evidenced by a promissory note or bond. In addition, that
obligation will be secured by a mortgage, deed of trust or other security
instrument that creates a first or junior lien on, or security interest in, an
interest in one or more of the following types of real property:
o rental or cooperatively-owned buildings with multiple dwelling
units;
o retail properties related to the sale of consumer goods and
other products to the general public, such as shopping
centers, malls, factory outlet
centers, automotive sales centers, department stores and other
retail stores, grocery stores, specialty shops, convenience
stores and gas stations;
o retail properties related to providing entertainment,
recreational and personal services to the general public, such
as movie theaters, fitness centers, bowling alleys, salons,
dry cleaners and automotive service centers;
o office properties;
o hospitality properties, such as hotels, motels and other
lodging facilities;
o casino properties;
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o health care-related properties, such as hospitals, skilled
nursing facilities, nursing homes, congregate care facilities
and, in some cases, assisted living centers and senior
housing;
o industrial properties;
o warehouse facilities, mini-warehouse facilities and
self-storage facilities;
o restaurants, taverns and other establishments involved in
the food and beverage industry;
o manufactured housing communities, mobile home parks and
recreational vehicle parks;
o recreational and resort properties, such as recreational
vehicle parks, golf courses, marinas, ski resorts and
amusement parks;
o arenas and stadiums;
o churches and other religious facilities;
o parking lots and garages;
o mixed use properties;
o other income-producing properties; and
o unimproved land.
The real property interests that may be encumbered in order to secure a
mortgage loan underlying your certificates, include--
o a fee interest or estate, which consists of ownership of
the property for an indefinite period,
o an estate for years, which consists of ownership of the
property for a specified period of years,
o a leasehold interest or estate, which consists of a
right to occupy and use the property for a specified period
of years, subject to the terms and conditions of a lease,
o shares in a cooperative corporation which owns the property,
or
o any other real estate interest under applicable local law.
Any of these real property interests may be subject to deed restrictions,
easements, rights of way and other matters of public record with respect to the
related property. In addition, the use of, and improvements that may be
constructed on, any particular real property will, in most cases, be subject to
zoning laws and other legal restrictions.
Most, if not all, of the mortgage loans underlying a series of offered
certificates will be secured by liens on real properties located in the United
States, its territories and possessions. However, some of those mortgage loans
may be secured by liens on real properties located outside the United States,
its territories and possessions, provided that "foreign mortgage loans" do not
represent more than 10% of the related mortgage asset pool, by balance.
If we so indicate in the related prospectus supplement, one or more of
the mortgage loans underlying a series of offered certificates may be secured by
a junior lien on the related real property. However, the loan or loans secured
by the more senior liens on that property may not be included in the related
trust. The primary risk to the holder of a mortgage loan secured by a junior
lien on a real property is the possibility that the foreclosure proceeds
remaining after payment of the loans secured by more senior liens on that
property will be insufficient to pay the junior loan in full. In a foreclosure
proceeding, the sale proceeds are applied first to the payment of court costs
and fees in connection with the foreclosure, second to the payment of real
estate taxes, and third to the payment of all principal, interest, prepayment or
acceleration penalties, if any, and all other amounts owing to the holder of the
senior loans. The claims of the holders of the senior loans
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must be satisfied in full before the holder of the junior loan receives any
payments in respect of the junior loan. If a lender forecloses on a junior loan,
it does so subject to any related senior loans.
If we so indicate in the related prospectus supplement, the mortgage
loans underlying a series of offered certificates may be delinquent as of the
date the certificates are initially issued. In those cases, we will describe in
the related prospectus supplement the period of the delinquency, any forbearance
arrangement then in effect, the condition of the related real property and the
ability of the related real property to generate income to service the mortgage
debt. We will not, however, transfer any mortgage loan to a trust if we know
that the mortgage loan is, at the time of transfer, more than 90 days delinquent
in respect of any scheduled payment of principal or interest or in foreclosure.
A Discussion of the Various Types of Multifamily and Commercial
Properties that may Secure Mortgage Loans Underlying a Series of Offered
Certificates. The mortgage loans underlying a series of offered certificates may
be secured by numerous types of multifamily and commercial properties. As we
discuss below under "--Mortgage Loans--Default and Loss Considerations with
Respect to Commercial and Multifamily Mortgage Loans," the adequacy of an
income-producing property as security for a mortgage loan depends in large part
on its value and ability to generate net operating income. Set forth below is a
discussion of some of the various factors that may affect the value and
operations of the indicated types of multifamily and commercial properties.
Multifamily Rental Properties. Factors affecting the value and
operation of a multifamily rental property include:
o the physical attributes of the property, such as its age,
appearance, amenities and construction quality;
o the types of services offered at the property;
o the location of the property;
o the characteristics of the surrounding neighborhood, which may
change over time;
o the rents charged for dwelling units at the property relative
to the rents charged for comparable units at competing
properties;
o the ability of management to provide adequate maintenance and
insurance;
o the property's reputation;
o the level of mortgage interest rates, which may encourage
tenants to purchase rather than lease housing;
o the existence or construction of competing or alternative
residential properties, including other apartment buildings
and complexes, manufactured housing communities, mobile home
parks and single-family housing;
o the ability of management to respond to competition;
o the tenant mix and whether the property is primarily occupied
by workers from a particular company or type of business,
personnel from a local military base or students;
o adverse local, regional or national economic conditions, which
may limit the amount that may be charged for rents and may
result in a reduction in timely rent payments or a reduction
in occupancy levels;
o state and local regulations, which may affect the property
owner's ability to increase rent to the market rent for an
equivalent apartment;
o the extent to which the property is subject to land use
restrictive covenants or contractual covenants that require
that units be rented to low income tenants;
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o the extent to which the cost of operating the property,
including the cost of utilities and the cost of required
capital expenditures, may increase; and
o the extent to which increases in operating costs may be passed
through to tenants.
Because units in a multifamily rental property are leased to
individuals, usually for no more than a year, the property is likely to respond
relatively quickly to a downturn in the local economy or to the closing of a
major employer in the area.
Certain states regulate the relationship of an owner and its tenants at
a multifamily rental property. Among other things, these states may--
o require written leases;
o require good cause for eviction;
o require disclosure of fees;
o prohibit unreasonable rules;
o prohibit retaliatory evictions;
o prohibit restrictions on a resident's choice of unit vendors;
o limit the bases on which a landlord may increase rent; or
o prohibit a landlord from terminating a tenancy solely by
reason of the sale of the owner's building.
Apartment building owners have been the subject of suits under state
"Unfair and Deceptive Practices Acts" and other general consumer protection
statutes for coercive, abusive or unconscionable leasing and sales practices.
Some counties and municipalities also impose rent control regulations
on apartment buildings. These regulations may limit rent increases to--
o fixed percentages,
o percentages of increases in the consumer price index,
o increases set or approved by a governmental agency, or
o increases determined through mediation or binding arbitration.
In many cases, the rent control laws do not provide for decontrol of
rental rates upon vacancy of individual units. Any limitations on a landlord's
ability to raise rents at a multifamily rental property may impair the
landlord's ability to repay a mortgage loan secured by the property or to meet
operating costs.
Some multifamily rental properties are subject to land use restrictive
covenants or contractual covenants in favor of federal or state housing
agencies. These covenants generally require that a minimum number or percentage
of units be rented to tenants who have incomes that are substantially lower than
median incomes in the area or region. These covenants may limit the potential
rental rates that may be charged at a multifamily rental property, the potential
tenant base for the property or both. An owner may subject a multifamily rental
property to these covenants in exchange for tax credits or rent subsidies. When
the credits or subsidies cease, net operating income will decline.
Some mortgage loans underlying the offered certificates will be secured
by the related borrower's interest in multiple units in a residential
condominium project and the related voting rights in the owners'
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association for such project. Due to the nature of condominiums, a default on
any of those mortgage loans will not allow the related special servicer the same
flexibility in realizing on the real property collateral as is generally
available with respect to multifamily rental properties that are not
condominiums. The rights of other unit owners, the governing documents of the
owners' association and the state and local laws applicable to condominiums must
be considered and respected. Consequently, servicing and realizing upon the
collateral for those mortgage loans could subject the related trust to greater
delay, expense and risk than a loan secured by a multifamily rental property
that is not a condominium.
Cooperatively-Owned Apartment Buildings. Some multifamily properties
are owned or leased by cooperative corporations. In general, each shareholder in
the corporation is entitled to occupy a particular apartment unit pursuant to a
long-term proprietary lease or occupancy agreement.
A tenant/shareholder of a cooperative corporation must make a monthly
maintenance payment to the corporation. The monthly maintenance payment
represents a tenant/shareholder's pro rata share of the corporation's mortgage
loan payments, real property taxes, maintenance expenses and other capital and
ordinary expenses of the property. These monthly maintenance payments are in
addition to any payments of principal and interest the tenant/shareholder must
make on any loans of the tenant/shareholder secured by its shares in the
corporation.
A cooperative corporation is directly responsible for building
maintenance and payment of real estate taxes and hazard and liability insurance
premiums. A cooperative corporation's ability to meet debt service obligations
on a mortgage loan secured by, and to pay all other operating expenses of, the
cooperatively owned property depends primarily upon the receipt of--
o maintenance payments from the tenant/shareholders, and
o any rental income from units or commercial space that the
cooperative corporation might control.
A cooperative corporation may have to impose special assessments on the
tenant/shareholders in order to pay unanticipated expenditures. Accordingly, a
cooperative corporation is highly dependent on the financial well being of its
tenant/shareholders. A cooperative corporation's ability to pay the amount of
any balloon payment due at the maturity of a mortgage loan secured by the
cooperatively owned property depends primarily on its ability to refinance the
property.
In a typical cooperative conversion plan, the owner of a rental
apartment building contracts to sell the building to a newly formed cooperative
corporation. Shares are allocated to each apartment unit by the owner or
sponsor, and the current tenants have a certain period to subscribe at prices
discounted from the prices to be offered to the public after such period. As
part of the consideration for the sale, the owner or sponsor receives all the
unsold shares of the cooperative corporation. In general the sponsor controls
the corporation's board of directors and management for a limited period of
time. If the sponsor holds the shares allocated to a large number of apartment
units, the lender on a mortgage loan secured by a cooperatively owned property
may be adversely affected by a decline in the creditworthiness of the sponsor.
Many cooperative conversion plans are "non-eviction" plans. Under a
non-eviction plan, a tenant at the time of conversion who chooses not to
purchase shares is entitled to reside in the unit as a subtenant from the owner
of the shares allocated to such apartment unit. Any applicable rent control or
rent stabilization laws would continue to be applicable to such subtenancy. In
addition, the subtenant may be entitled to renew
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its lease for an indefinite number of years with continued protection from rent
increases above those permitted by any applicable rent control and rent
stabilization laws. The owner/shareholder is responsible for the maintenance
payments to the cooperative corporation without regard to whether it receives
rent from the subtenant or whether the rent payments are lower than maintenance
payments on the unit. Newly-formed cooperative corporations typically have the
greatest concentration of non-tenant/shareholders.
Retail Properties. The term "retail property" encompasses a broad range
of properties at which businesses sell consumer goods and other products and
provide various entertainment, recreational or personal services to the general
public. Some examples of retail properties include:
o shopping centers
o factory outlet centers
o malls
o automotive sales and service centers
o consumer oriented businesses
o department stores
o grocery stores
o convenience stores
o specialty shops
o gas stations
o movie theaters
o fitness centers
o bowling alleys
o salons
o dry cleaners
Unless owner occupied, retail properties generally derive all or a
substantial percentage of their income from lease payments from commercial
tenants. Therefore, it is important for the owner of a retail property to
attract and keep tenants, particularly significant tenants, that are able to
meet their lease obligations. In order to attract tenants, the owner of a retail
property may be required--
o to lower rents;
o to grant a potential tenant a "free rent" or reduced rent
period;
o to improve the condition of the property generally; or
o to make at its own expense, or grant a rent abatement to
cover, tenant improvements for a potential tenant.
A prospective tenant will also be interested in the number and type of
customers that it will be able to attract at a particular retail property. The
ability of a tenant at a particular retail property to attract customers will be
affected by a number of factors related to the property and the surrounding
area, including--
o competition from other retail properties;
o perceptions regarding the safety, convenience and
attractiveness of the property;
o perceptions regarding the safety of the surrounding area;
o demographics of the surrounding area;
o the strength and stability of the local, regional and national
economies;
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o traffic patterns and access to major thoroughfares;
o the visibility of the property;
o availability of parking;
o the particular mixture of the goods and services offered at
the property;
o customer tastes, preferences and spending patterns; and
o the drawing power of other tenants.
The success of a retail property is often dependent on the success of
its tenants' businesses. A significant component of the total rent paid by
tenants of retail properties is often tied to a percentage of gross sales or
revenues. Declines in sales or revenues of the tenants will likely cause a
corresponding decline in percentage rents and/or impair the tenants' ability to
pay their rent or other occupancy costs. A default by a tenant under its lease
could result in delays and costs in enforcing the landlord's rights. Retail
properties would be directly and adversely affected by a decline in the local
economy and reduced consumer spending.
Repayment of a mortgage loan secured by a retail property will be
affected by the expiration of space leases at the property and the ability of
the borrower to renew or relet the space on comparable terms. Even if vacant
space is successfully relet, the costs associated with reletting, including
tenant improvements, leasing commissions and free rent, may be substantial and
could reduce cash flow from a retail property.
The presence or absence of an anchor tenant in a multi-tenanted retail
property can be important. Anchor tenants play a key role in generating customer
traffic and making the center desirable for other tenants. An "anchor tenant"
is, in general, a retail tenant whose space is substantially larger in size than
that of other tenants at the same retail property and whose operation is vital
in attracting customers to the property. At some retail properties, the anchor
tenant owns the space it occupies. In those cases where the property owner does
not control the space occupied by the anchor tenant, the property owner may not
be able to take actions with respect to the space that it otherwise typically
would, such as granting concessions to retain an anchor tenant or removing an
ineffective anchor tenant. In some cases, an anchor tenant may cease to operate
at the property, thereby leaving its space unoccupied even though it continues
to own or pay rent on the vacant space. If an anchor tenant ceases operations at
a retail property, other tenants at the property may be entitled to terminate
their leases prior to the scheduled termination date or to pay rent at a reduced
rate for the remaining term of the lease.
Various factors will adversely affect the economic performance of an
"anchored" retail property, including:
o an anchor tenant's failure to renew its lease;
o termination of an anchor tenant's lease;
o the bankruptcy or economic decline of an anchor tenant or a
self-owned anchor;
o the cessation of the business of a self-owned anchor or of an
anchor tenant, notwithstanding its continued ownership of the
previously occupied space or its continued payment of rent, as
the case may be; or
o a loss of an anchor tenant's ability to attract shoppers.
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Retail properties may also face competition from sources outside a
given real estate market or with lower operating costs. For example, all of the
following compete with more traditional department stores and specialty shops
for consumer dollars:
o factory outlet centers;
o discount shopping centers and clubs;
o catalogue retailers;
o television shopping networks and programs;
o internet web sites; and
o telemarketing.
Similarly, home movie rentals and pay-per-view movies provide alternate sources
of entertainment to movie theaters. Continued growth of these alternative retail
outlets (which are often characterized by lower operating costs) and
entertainment sources could adversely affect the rents collectible at retail
properties.
Gas stations, automotive sales and service centers and dry cleaners
also pose unique environmental risks because of the nature of their businesses.
Office Properties. Factors affecting the value and operation of an
office property include:
o the number and quality of the tenants, particularly
significant tenants, at the property;
o the physical attributes of the building in relation to
competing buildings;
o the location of the property with respect to the central
business district or population centers;
o demographic trends within the metropolitan area to move
away from or towards the central business district;
o social trends combined with space management trends, which may
change towards options such as telecommuting or hoteling to
satisfy space needs;
o tax incentives offered to businesses or property owners by
cities or suburbs adjacent to or near where the building is
located;
o local competitive conditions, such as the supply of office
space or the existence or construction of new competitive
office buildings;
o the quality and philosophy of building management;
o access to mass transportation; and
o changes in zoning laws.
Office properties may be adversely affected by an economic decline in
the business operated by their tenants. The risk of such an economic decline is
increased if revenue is dependent on a single tenant or if there is a
significant concentration of tenants in a particular business or industry.
Office properties are also subject to competition with other office
properties in the same market. Competitive factors affecting an office property
include:
o rental rates;
o the building's age, condition and design, including
floor sizes and layout;
o access to public transportation and availability of parking;
and
o amenities offered to its tenants, including sophisticated
building systems, such as fiber optic cables, satellite
communications or other base building technological features.
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The cost of refitting office space for a new tenant is often higher
than for other property types.
The success of an office property also depends on the local economy.
Factors influencing a company's decision to locate in a given area include:
o the cost and quality of labor;
o tax incentives; and
o quality of life matters, such as schools and cultural
amenities.
The strength and stability of the local or regional economy will affect
an office property's ability to attract stable tenants on a consistent basis. A
central business district may have a substantially different economy from that
of a suburb.
Hospitality Properties. Hospitality properties may involve different
types of hotels and motels, including:
o full service hotels;
o resort hotels with many amenities;
o limited service hotels;
o hotels and motels associated with national or regional
franchise chains;
o hotels that are not affiliated with any franchise chain but
may have their own brand identity; and
o other lodging facilities.
Factors affecting the economic performance of a hospitality property
include:
o the location of the property and its proximity to major
population centers or attractions;
o the seasonal nature of business at the property;
o the level of room rates relative to those charged by
competitors;
o quality and perception of the franchise affiliation;
o economic conditions, either local, regional or national,
which may limit the amount that can be charged for a room
and may result in a reduction in occupancy levels;
o the existence or construction of competing hospitality
properties;
o nature and quality of the services and facilities;
o financial strength and capabilities of the owner and
operator;
o the need for continuing expenditures for modernizing,
refurbishing and maintaining existing facilities;
o increases in operating costs, which may not be offset
by increased room rates;
o the property's dependence on business and commercial
travelers and tourism; and
o changes in travel patterns caused by changes in access,
energy prices, labor strikes, relocation of highways, the
reconstruction of additional highways or other factors.
Because limited service hotels and motels are relatively quick and
inexpensive to construct and may quickly reflect a positive value, an
over-building of these hotels and motels could occur in any given region, which
would likely adversely affect occupancy and daily room rates. Further, because
rooms at hospitality properties are generally rented for short periods of time,
hospitality properties tend to be more sensitive to adverse economic conditions
and competition than many other types of commercial properties. Additionally,
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the revenues of certain hospitality properties, particularly those located in
regions whose economies depend upon tourism, may be highly seasonal in nature.
Hospitality properties may be operated pursuant to franchise
agreements. The continuation of a franchise is typically subject to specified
operating standards and other terms and conditions. The franchisor periodically
inspects its licensed properties to confirm adherence to its operating
standards. The failure of the hospitality property to maintain those standards
or adhere to those other terms and conditions could result in the loss or
cancellation of the franchise license. It is possible that the franchisor could
condition the continuation of a franchise license on the completion of capital
improvements or the making of certain capital expenditures that the owner of the
hospitality property determines are too expensive or are otherwise unwarranted
in light of the operating results or prospects of the property. In that event,
the owner of the hospitality property may elect to allow the franchise license
to lapse. In any case, if the franchise is terminated, the owner of the
hospitality property may seek to obtain a suitable replacement franchise or to
operate property independently of a franchise license. The loss of a franchise
license could have a material adverse effect upon the operations or value of the
hospitality property because of the loss of associated name recognition,
marketing support and centralized reservation systems provided by the
franchisor.
The viability of any hospitality property that is a franchise of a
national or a regional hotel or motel chain is dependent upon:
o the continued existence and financial strength of the
franchisor;
o the public perception of the franchise service mark; and
o the duration of the franchise licensing agreement.
The transferability of franchise license agreements may be restricted.
The consent of the franchisor would be required for the continued use of the
franchise license by the hospitality property following a foreclosure.
Conversely, a lender may be unable to remove a franchisor that it desires to
replace following a foreclosure. Further, in the event of a foreclosure on a
hospitality property, the lender or other purchaser of the hospitality property
may not be entitled to the rights under any associated liquor license. That
party would be required to apply in its own right for a new liquor license.
There can be no assurance that a new license could be obtained or that it could
be obtained promptly.
Casino Properties. Factors affecting the economic performance of a
casino property include:
o location, including proximity to or easy access from
major population centers;
o appearance;
o economic conditions, either local, regional or national,
which may limit the amount of disposable income that
potential patrons may have for gambling;
o the existence or construction of competing casinos;
o dependence on tourism; and
o local or state governmental regulation.
Competition among major casinos may involve attracting patrons by
providing alternate forms of entertainment, such as performers and sporting
events, and offering low-priced or free food and lodging. In addition, casino
owners may expend substantial sums to modernize, refurbish and maintain existing
facilities.
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Because of their dependence on disposable income of patrons, casino
properties are likely to respond quickly to a downturn in the economy.
To avoid criminal influence, the ownership and operation of casino
properties is often subject to local or state governmental regulation. A
government agency or authority may have jurisdiction over or influence with
respect to the foreclosure of a casino property and/or the bankruptcy of its
owner or operator. In some jurisdictions, it may be necessary to receive
governmental approval before foreclosing, thereby resulting in substantial
delays to a lender. Gaming licenses are not transferable, including in
connection with a foreclosure. There can be no assurance that a lender or
another purchaser in foreclosure or otherwise will be able to obtain the
requisite approvals to continue operating the foreclosed property as a casino.
Any given state or municipality that currently allows legalized
gambling could pass legislation banning it.
The loss of a gaming license for any reason would have a material
adverse effect on the value of a casino property.
Health Care-Related Properties. Health-care related properties include
o hospitals;
o skilled nursing facilities;
o nursing homes;
o congregate care facilities; and
o in some cases, assisted living centers and housing for
seniors.
Health care-related facilities, particularly nursing homes, may receive
a substantial portion of their revenues from government reimbursement programs,
primarily Medicaid and Medicare. Medicaid and Medicare are subject to
o statutory and regulatory changes;
o retroactive rate adjustments;
o administrative rulings;
o policy interpretations;
o delays by fiscal intermediaries; and
o government funding restrictions.
All of the foregoing can adversely affect revenues from the operation a health
care-related facility. Moreover, governmental payors have employed
cost-containment measures that limit payments to health care providers. In
addition, there are currently under consideration various proposals for national
health care relief that could further limit these payments.
Providers of long-term nursing care and other medical services are
highly regulated by federal, state and local law. They are subject to numerous
factors which can increase the cost of operation, limit growth and, in extreme
cases, require or result in suspension or cessation of operations, including:
o federal and state licensing requirements;
o facility inspections;
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o rate setting;
o reimbursement policies; and
o laws relating to the adequacy of medical care, distribution of
pharmaceuticals, use of equipment, personnel operating
policies and maintenance of and additions to facilities and
services.
Under applicable federal and state laws and regulations, Medicare and
Medicaid reimbursements generally may not be made to any person other than the
provider who actually furnished the related material goods and services.
Accordingly, in the event of foreclosure on a health care-related facility,
neither a lender nor other subsequent lessee or operator of the property would
generally be entitled to obtain from federal or state governments any
outstanding reimbursement payments relating to services furnished at the
property prior to such foreclosure. Furthermore, in the event of foreclosure,
there can be no assurance that a lender or other purchaser in a foreclosure sale
would be entitled to the rights under any required licenses and regulatory
approvals. The lender or other purchaser may have to apply in its own right for
such licenses and approvals. There can be no assurance that a new license could
be obtained or that a new approval would be granted.
Health care-related facilities are generally "special purpose"
properties that could not be readily converted to general residential, retail or
office use. This will adversely affect their liquidation value. Furthermore,
transfers of health care-related facilities are subject to regulatory approvals
under state, and in some cases federal, law not required for transfers of most
other types of commercial properties.
Industrial Properties. Industrial properties may be adversely affected
by reduced demand for industrial space occasioned by a decline in a particular
industry segment and/or by a general slowdown in the economy. In addition, an
industrial property that suited the particular needs of its original tenant may
be difficult to relet to another tenant or may become functionally obsolete
relative to newer properties.
The value and operation of an industrial property depends on:
o location of the property, the desirability of which in a
particular instance may depend on--
(i) availability of labor services,
(ii) proximity to supply sources and customers, and
(iii) accessability to various modes of transportation
and shipping, including railways, roadways,
airline terminals and ports;
o building design of the property, the desirability of which in
a particular instance may depend on--
(i) ceiling heights,
(ii) column spacing,
(iii) number and depth of loading bays,
(iv) divisibility,
(v) floor loading capacities,
(vi) truck turning radius,
(vii) overall functionality, and
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(viii) adaptability of the property, because industrial
tenants often need space that is acceptable for
highly specialized activities; and
o the quality and creditworthiness of individual tenants,
because industrial properties frequently have higher tenant
concentrations.
Industrial properties are generally "special purpose" properties that
could not be readily converted to general residential, retail or office use.
This will adversely affect their liquidation value.
Warehouse, Mini-Warehouse and Self-Storage Facilities. Warehouse,
mini-warehouse and self- storage properties are considered vulnerable to
competition because both acquisition costs and break-even occupancy are
relatively low. In addition, it would require substantial capital expenditures
to convert a warehouse, mini-warehouse or self-storage property to an
alternative use. This will materially impair the liquidation value of the
property if its operation for storage purposes becomes unprofitable due to
decreased demand, competition, age of improvements or other factors.
Successful operation of a warehouse, mini-warehouse or self-store
property depends on--
o building design;
o location and visibility;
o tenant privacy;
o efficient access to the property;
o proximity to potential users, including apartment complexes or
commercial users;
o services provided at the property, such as security;
o age and appearance of the improvements; and
o quality of management.
Restaurants and Taverns. Factors affecting the economic viability of
individual restaurants, taverns and other establishments that are part of the
food and beverage service industry include:
o competition from facilities having businesses similar
to a particular restaurant or tavern;
o perceptions by prospective customers of safety,
convenience, services and attractiveness;
o the cost, quality and availability of food and beverage
products;
o negative publicity, resulting from instances of food
contamination, food-borne illness and similar events;
o changes in demographics, consumer habits and traffic patterns;
o the ability to provide or contract for capable management; and
o retroactive changes to building codes, similar ordinances and
other legal requirements.
Adverse economic conditions, whether local, regional or national, may
limit the amount that may be charged for food and beverages and the extent to
which potential customers dine out. Because of the nature of the business,
restaurants and taverns tend to respond to adverse economic conditions more
quickly than do many other types of commercial properties. Furthermore, the
transferability of any operating, liquor and other licenses to an entity
acquiring a bar or restaurant, either through purchase or foreclosure, is
subject to local law requirements.
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The food and beverage service industry is highly competitive. The
principal means of competition are--
o segment,
o product,
o price,
o value,
o quality,
o service,
o convenience,
o location, and
o the nature and condition of the restaurant facility.
A restaurant or tavern operator competes with the operators of
comparable establishments in the area in which its restaurant or tavern is
located. Other restaurants could have--
o lower operating costs,
o more favorable locations,
o more effective marketing,
o more efficient operations, or
o better facilities.
The location and condition of a particular restaurant or tavern will
affect the number of customers and, to a certain extent, the prices that may be
charged. The characteristics of an area or neighborhood in which a restaurant or
tavern is located may change over time or in relation to competing facilities.
Also, the cleanliness and maintenance at a restaurant or tavern will affect its
appeal to customers. In the case of a regionally- or nationally-known chain
restaurant, there may be costly expenditures for renovation, refurbishment or
expansion, regardless of its condition.
Factors affecting the success of a regionally- or nationally-known
chain restaurant include:
o actions and omissions of any franchisor, including management
practices that adversely affect the nature of the business or
that require renovation, refurbishment, expansion or other
expenditures;
o the degree of support provided or arranged by the franchisor,
including its franchisee organizations and third-party
providers of products or services; and
o the bankruptcy or business discontinuation of the franchisor
or any of its franchisee organizations or third-party
providers.
Chain restaurants may be operated under franchise agreements, and such
agreements typically do not contain provisions protective of lenders. A
borrower's rights as franchisee typically may be terminated without informing
the lender, and the borrower may be precluded from competing with the franchisor
upon such termination. In addition, a lender that acquires title to a restaurant
site through foreclosure or similar proceedings may be restricted in the use of
such site or may be unable to succeed to the rights of the franchisee under the
related franchise agreement. The transferability of a franchise may be subject
to other restrictions. Also, federal and state franchise regulations may impose
additional risk, including the risk that the transfer of a franchise acquired
through foreclosure or similar proceedings may require registration with
governmental authorities or disclosure to prospective transferees.
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Manufactured Housing Communities, Mobile Home Parks and Recreational
Vehicle Parks. Manufactured housing communities and mobile home parks consist of
land that is divided into "spaces" or "home sites" that are primarily leased to
owners of the individual mobile homes or other housing units. The home owner
often invests in site-specific improvements such as carports, steps, fencing,
skirts around the base of the home, and landscaping. The land owner typically
provides private roads within the park, common facilities and, in many cases,
utilities. Due to relocation costs and, in some cases, demand for homesites, the
value of a mobile home or other housing unit in place in a manufactured housing
community or mobile home park is generally higher, and can be significantly
higher, than the value of the same unit not placed in a manufactured housing
community or mobile home park. As a result, a well-operated manufactured housing
community or mobile home park that has achieved stabilized occupancy is
typically able to maintain occupancy at or near that level. For the same reason,
a lender that provided financing for the home of a tenant who defaulted in his
or her space rent generally has an incentive to keep rental payments current
until the home can be resold in place, rather than to allow the unit to be
removed from the park. In general, the individual mobile homes and other housing
units will not constitute collateral for a mortgage loan underlying a series of
offered certificates.
Recreational vehicle parks lease spaces primarily or exclusively for
motor homes, travel trailers and portable truck campers, primarily designed for
recreational, camping or travel use. In general, parks that lease recreational
vehicle spaces can be viewed as having a less stable tenant population than
parks occupied predominantly by mobile homes. However, it is not unusual for the
owner of a recreational vehicle to leave the vehicle at the park on a year-round
basis or to use the vehicle as low cost housing and reside in the park
indefinitely.
Factors affecting the successful operation of a manufactured housing
community, mobile home park or recreational vehicle park include:
o the number of comparable competing properties in the local
market;
o the age, appearance and reputation of the property;
o the quality of management, and
o the types of facilities and services it provides.
Manufactured housing communities and mobile home parks also compete
against alternative forms of residential housing, including multifamily rental
properties, cooperatively-owned apartment buildings, condominium complexes and
single-family residential developments. Recreational vehicle parks also compete
against alternative forms of recreation and short-term lodging, such as staying
at a hotel at the beach.
Manufactured housing communities, mobile home parks and recreational
vehicle parks are "special purpose" properties that could not be readily
converted to general residential, retail or office use. This will adversely
affect the liquidation value of the property if its operation as a manufactured
housing community, mobile home park or recreational vehicle park, as the case
may be, becomes unprofitable due to competition, age of the improvements or
other factors.
Certain states regulate the relationship of an owner of a manufactured
housing community or mobile home park and its tenants in a manner similar to the
way they regulate the relationship between a landlord and tenant at a
multifamily rental property. In addition, some states also regulate changes in
the use of a manufactured housing community or mobile home park and require that
the owner give written notice to its tenants a substantial period of time prior
to the projected change.
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In addition to state regulation of the landlord-tenant relationship,
numerous counties and municipalities impose rent control on manufactured housing
communities and mobile home parks. These ordinances may limit rent increases to:
o fixed percentages,
o percentages of increases in the consumer price index,
o increases set or approved by a governmental agency, or
o increases determined through mediation or binding arbitration.
In many cases, the rent control laws either do not permit vacancy decontrol or
permit vacancy decontrol only in the relatively rare event that the mobile home
or manufactured housing unit is removed from the homesite. Local authority to
impose rent control on manufactured housing communities and mobile home parks is
pre- empted by state law in certain states and rent control is not imposed at
the state level in those states. In some states, however, local rent control
ordinances are not pre-empted for tenants having short-term or month-to- month
leases, and properties there may be subject to various forms of rent control
with respect to those tenants.
Recreational and Resort Properties. Any mortgage loan underlying a
series of offered certificates may be secured by a golf course, marina, ski
resort, amusement park or other property used for recreational purposes or as a
resort. Factors affecting the economic performance of a property of this type
include:
o the location and appearance of the property;
o the appeal of the recreational activities offered;
o the existence or construction of competing properties, whether
are not they offer the same activities;
o the need to make capital expenditures to maintain, refurbish,
improve and/or expand facilities in order to attract potential
patrons;
o geographic location and dependence on tourism;
o changes in travel patterns caused by changes in energy prices,
strikes, location of highways, construction of additional
highways and similar factors;
o seasonality of the business, which may cause periodic
fluctuations in operating revenues and expenses;
o sensitivity to weather and climate changes; and
o local, regional and national economic conditions.
A marina or other recreational or resort property located next to water
will also be affected by various statutes and government regulations that govern
the use of, and construction on, rivers, lakes and other waterways.
Because of the nature of the business, recreational and resort
properties tend to respond to adverse economic conditions more quickly than do
many other types of commercial properties.
Recreational and resort properties are generally "special purpose"
properties that are not readily convertible to alternative uses. This will
adversely affect their liquidation value.
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Arenas and Stadiums. The success of an arena or stadium generally
depends on its ability to attract patrons to a variety of events, including:
o sporting events;
o musical events;
o theatrical events;
o animal shows; and/or
o circuses.
The ability to attract patrons is dependent on such factors as:
o the appeal of the particular event;
o the cost of admission;
o perceptions by prospective patrons of the safety, convenience,
services and attractiveness of the arena or stadium;
o perceptions by prospective patrons of the safety of the
surrounding area; and
o the alternative forms of entertainment available in the
particular locale.
In some cases, an arena's or stadium's success will depend on its
ability to attract and keep a sporting team as a tenant. An arena or stadium may
become unprofitable, or unacceptable to such a tenant, due to decreased
attendance, competition and age of improvements. Often, substantial expenditures
must be made to modernize, refurbish and/or maintain existing facilities.
Arenas and stadiums are "special purpose" properties which cannot be
readily convertible to alternative uses. This will adversely affect their
liquidation value.
Churches and Other Religious Facilities. Churches and other religious
facilities generally depend on charitable donations to meet expenses and pay for
maintenance and capital expenditures. The extent of such donations is dependent
on the attendance at any particular religious facility and the extent to which
attendees are prepared to make donations, which is influenced by a variety of
social, political and economic factors. Donations may be adversely affected by
economic conditions, whether local, regional or national. Religious facilities
are "special purpose" properties that are not readily convertible to alternative
uses. This will adversely affect their liquidation value.
Parking Lots and Garages. The primary source of income for parking lots
and garages is the rental fees charged for parking spaces. Factors affecting the
success of a parking lot or garage include:
o the number of rentable parking spaces and rates charged;
o the location of the lot or garage and, in particular, its
proximity to places where large numbers of people work, shop
or live;
o the amount of alternative parking spaces in the area;
o the availability of mass transit; and
o the perceptions of the safety, convenience and services of the
lot or garage.
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Unimproved Land. The value of unimproved land is largely a function of
its potential use. This may depend on--
o its location,
o its size,
o the surrounding neighborhood, and
o local zoning laws.
Default and Loss Considerations with Respect to Commercial and
Multifamily Mortgage Loans. Mortgage loans secured by liens on income-producing
properties are substantially different from mortgage loans made on the security
of owner-occupied single-family homes. The repayment of a loan secured by a lien
on an income-producing property is typically dependent upon the successful
operation of the property and its ability to generate income sufficient to make
payments on the loan. This is particularly true because most or all of the
mortgage loans underlying the offered certificates will be nonrecourse loans.
The debt service coverage ratio of a multifamily or commercial mortgage
loan is an important measure of the likelihood of default on the loan. In
general, the "debt service coverage ratio" of a multifamily or commercial
mortgage loan at any given time is the ratio of--
(a) the amount of income derived or expected to be derived from
the related real property for a twelve-month period that is
available to pay debt service, to
(b) the annualized scheduled payments of principal and/or
interest on the mortgage loan and any other senior loans that
are secured by the related real property.
The amount described in clause (a) of the preceding sentence is often a highly
subjective number based on a variety of assumptions regarding, and adjustments
to revenues and expenses in respect of the related real property. We will
provide a more detailed discussion of its calculation in the related prospectus
supplement.
The cash flow generated by a multifamily or commercial property will
generally fluctuate over time and may or may not be sufficient to make the loan
payments on the related mortgage loan, cover operating expenses and fund capital
improvements at any given time. Operating revenues of a nonowner occupied,
income- producing property may be affected by the condition of the applicable
real estate market and/or area economy. Properties leased, occupied or used on a
short-term basis (such as certain health care-related facilities, hotels and
motels, recreational vehicle parks, and mini-warehouse and self-storage
facilities) tend to be affected more rapidly by changes in market or business
conditions than do properties typically leased for longer periods (such as
warehouses, retail stores, office buildings and industrial facilities).
Some commercial properties may be owner-occupied or leased to a small
number of tenants. Accordingly, the operating revenues may depend substantially
on the financial condition of the borrower or one or a few tenants. Mortgage
loans secured by liens on owner-occupied and single tenant properties may pose a
greater likelihood of default and loss than loans secured by liens on
multifamily properties or on multi- tenant commercial properties.
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Increases in property operating expenses can increase the likelihood of
a borrower default on a multifamily or commercial mortgage loan secured by the
property. Increases in property operating expenses may result from:
o increases in energy costs and labor costs;
o increases in interest rates and real estate tax rates; and
o changes in governmental rules, regulations and fiscal
policies.
Some "net leases" of commercial properties may provide that the lessee,
rather than the borrower/landlord, is responsible for payment of operating
expenses. However, a net lease will result in stable net operating income to the
borrower/landlord only if the lessee is able to pay the increased operating
expense while also continuing to make rent payments.
Lenders also look to the loan-to-value ratio of a mortgage loan as a
factor in evaluating the likelihood of loss if a property is liquidated
following a default. In general, the "loan-to-value ratio" of a multifamily or
commercial mortgage loan at any given time is the ratio, expressed as a
percentage, of--
(a) the then outstanding principal balance of the mortgage loan
and any other senior loans that are secured by the related
real property, to
(b) the estimated value of the related real property based on an
appraisal, a cash flow analysis, a recent sales price or
another method or benchmark of valuation.
A low loan-to-value ratio means the borrower has a large amount of its
own equity in the multifamily or commercial property that secures its loan. In
these circumstances--
(x) the borrower has a greater incentive to perform under the
terms of the related mortgage loan in order to protect that
equity, and
(y) the lender has greater protection against loss on liquidation
following a borrower default.
Loan-to-value ratios are not necessarily an accurate measure of the
likelihood of liquidation loss in a pool of multifamily and commercial mortgage
loans. For example, the value of a multifamily or commercial property as of the
date of initial issuance of a series of offered certificates may be less than
the estimated value determined at loan origination. The value of any real
property, in particular a multifamily or commercial property, will likely
fluctuate from time to time. Moreover, even a current appraisal is not
necessarily a reliable estimate of value. Appraised values of income-producing
properties are generally based on--
o the market comparison method, which takes into account the
recent resale value of comparable properties at the date of
the appraisal;
o the cost replacement method, which takes into account the cost
of replacing the property at such date;
o the income capitalization method, which takes into account the
property's projected net cash flow; or
o a selection from the values derived from the foregoing
methods.
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Each of these appraisal methods presents analytical difficulties. For
example,
o it is often difficult to find truly comparable properties
that have recently been sold;
o the replacement cost of a property may have little to do
with its current market value; and
o income capitalization is inherently based on inexact
projections of income and expense and the selection of
an appropriate capitalization rate and discount rate.
If more than one appraisal method is used and significantly different results
are produced, an accurate determination of value and, correspondingly, a
reliable analysis of the likelihood of default and loss, is even more difficult.
The value of a multifamily or commercial property will be affected by
property performance. As a result, if a multifamily or commercial mortgage loan
defaults because the income generated by the related property is insufficient to
pay operating costs and expenses as well as debt service), then the value of the
property will decline and a liquidation loss may occur.
We believe that the foregoing considerations are important factors that
generally distinguish mortgage loans secured by liens on income-producing real
estate from single-family mortgage loans. However, the originators of the
mortgage loans underlying your certificates may not have considered all of those
factors for all or any of those loans.
See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage
Loan Depends Upon the Performance and Value of the Underlying Real Property and
the Related Borrower's Ability to Refinance the Property."
Payment Provisions of the Mortgage Loans. Each of the mortgage loans
included in one of our trusts will have the following features:
o an original term to maturity of not more than approximately
40 years; and
o scheduled payments of principal, interest or both, to be
made on specified dates, that occur monthly, bi-monthly,
quarterly, semi-annually, annually or at some other interval.
A mortgage loan included in one of our trusts may also include terms
that:
o provide for the accrual of interest at a mortgage interest
rate that is fixed over its term, that resets on one or more
specified dates or that otherwise adjusts from time to time;
o provide for the accrual of interest at a mortgage interest
rate that may be converted at the borrower's election from an
adjustable to a fixed interest rate or from a fixed to an
adjustable interest rate;
o provide for no accrual of interest;
o provide for level payments to stated maturity, for payments
that reset in amount on one or more specified dates or for
payments that otherwise adjust from time to time to
accommodate changes in the coupon rate or to reflect the
occurrence of certain events;
o be fully amortizing or, alternatively, may be partially
amortizing or nonamortizing, with a substantial payment of
principal due on its stated maturity date;
o permit the negative amortization or deferral of accrued
interest;
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o permit defeasance and the release of the real property
collateral in connection with that defeasance; and/or
o prohibit some or all voluntary prepayments or require payment
of a premium, fee or charge in connection with those
prepayments.
Mortgage Loan Information in Prospectus Supplements. We will describe
in the related prospectus supplement the characteristics of the mortgage loans
that we will include in any of our trusts. In general, we will provide in the
related prospectus supplement, among other items, the following information on
the particular mortgage loans in one of our trusts:
o the aggregate outstanding principal balance and the largest,
smallest and average outstanding
principal balance of the mortgage loans;
o the type or types of property that provide security for
repayment of the mortgage loans;
o the earliest and latest origination date and maturity date
of the mortgage loans;
o the original and remaining terms to maturity of the mortgage
loans, or the range thereof, and the weighted average
original and remaining terms to maturity of the mortgage
loans;
o loan-to-value ratios of the mortgage loans either at
origination or as of a more recent date, or the range
thereof, and the weighted average of those loan-to-value
ratios;
o the mortgage interest rates of the mortgage loans, or the
range thereof, and the weighted average mortgage interest rate
of the mortgage loans;
o if any mortgage loans have adjustable mortgage interest rates,
the index or indices upon which the adjustments are based, the
adjustment dates, the range of gross margins and the weighted
average gross margin, and any limits on mortgage interest rate
adjustments at the time of any adjustment and over the life of
the loan;
o information on the payment characteristics of the mortgage
loans, including applicable prepayment restrictions;
o debt service coverage ratios of the mortgage loans either at
origination or as of a more recent date, or the range thereof,
and the weighted average of those debt service coverage
ratios; and
o the geographic distribution of the properties securing the
mortgage loans on a state-by-state basis.
If we are unable to provide the specific information described above at
the time a series of offered certificates is initially offered, we will
provide--
o more general information in the related prospectus supplement,
and
o specific information in a report which will be filed with the
SEC as part of a Current Report on Form 8-K within 15 days
following the issuance of the certificates.
If any mortgage loan, or group of related mortgage loans, included in
one of our trusts represents a material concentration of credit risk, we will
include in the related prospectus supplement financial statements or other
financial information on the related real property or properties.
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Mortgage-Backed Securities
The mortgage backed-securities underlying a series of offered
certificates may include:
o mortgage participations, mortgage pass-through certificates,
collateralized mortgage obligations or other mortgage-backed
securities that are not insured or guaranteed by any
governmental agency or instrumentality, or
o certificates issued and/or insured or guaranteed by the
Federal Home Loan Mortgage Corporation ("FHLMC"), the Federal
National Mortgage Association ("FNMA"), the Governmental
National Mortgage Association ("GNMA"), the Federal
Agricultural Mortgage Corporation ("FAMC") or another federal
or state governmental agency or instrumentality.
In addition, each of those mortgage-backed securities will directly or
indirectly evidence an interest in, or be secured by a pledge of, multifamily
and/or commercial mortgage loans.
Each mortgage-backed security included in one of our trusts--
o will have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), or
o will be exempt from the registration requirements of the
Securities Act, or
o will have been held for at least the holding period specified
in Rule 144(k) under the Securities Act, or
o may otherwise be resold by us publicly without registration
under Securities Act.
We will describe in the related prospectus supplement the
characteristics of the mortgage-backed securities that we will include in any of
our trusts. In general, we will provide in the related prospectus supplement,
among other items, the following information on the particular mortgage-backed
securities included in one of our trusts:
o the initial and outstanding principal amount(s) and type of
the securities;
o the original and remaining term(s) to stated maturity of the
securities;
o the pass-through or bond rate(s) of the securities or the
formula for determining such rate(s);
o the payment characteristics of the securities;
o the identity of the issuer(s), servicer(s) and trustee(s) for
the securities;
o a description of the related credit support (if any);
o the type of mortgage loans underlying the securities;
o the circumstances under which the related underlying mortgage
loans, or the securities themselves, may be purchased prior to
maturity;
o the terms and conditions for substituting mortgage loans
backing the securities; and
o the characteristics of any agreements or instruments providing
interest rate protection to the securities.
With respect to any mortgage-backed security included in one of our
trusts, we will provide in our reports filed under the Exchange Act of 1934, as
amended (the "Exchange Act") the same information regarding the security as is
provided by the issuer of the security in its own reports filed under the
Exchange Act, if the security was publicly offered, or in the reports the issuer
of the security provides to the related trustee, if the security was privately
issued.
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Undelivered Mortgage Assets
In general, the aggregate outstanding principal balance of the mortgage
assets transferred by us to any particular trust will equal or exceed the
initial aggregate outstanding principal balance of the related series of
certificates. In the event that the aggregate outstanding principal balance of
the related mortgage assets initially delivered by us to the related trustee is
less than the initial aggregate outstanding principal balance of any series of
certificates, we may deposit or arrange for the deposit of cash or liquid
investments on an interim basis with the related trustee to cover the shortfall.
For 90 days following the date of initial issuance of that series of
certificates, we will be entitled to obtain a release of the deposited cash or
investments if we deliver or arrange for delivery of a corresponding amount of
mortgage assets. If we fail, however, to deliver mortgage assets sufficient to
make up the entire shortfall, any of the cash or, following liquidation,
investments remaining on deposit with the related trustee will be used by the
related trustee to pay down the aggregate principal balance of the related
series of certificates, as described in the related prospectus supplement.
Accounts
The trust assets underlying a series of offered certificates will
include one or more accounts established and maintained on behalf of the
holders. All payments and collections received or advanced on the mortgage
assets and other trust assets will be deposited and held in those accounts. We
will identify and describe those accounts, and will further describe the
deposits to and withdrawals from those accounts, in the related prospectus
supplement.
Credit Support
General. The holders of any class of offered certificates may be the
beneficiaries of credit support designed to protect them partially or fully
against all or particular defaults and losses on the related mortgage assets.
The types of credit support that may benefit the holders of a class of offered
certificates include:
o the subordination or one or more other classes of certificates
of the same series;
o a letter of credit;
o a surety bond;
o an insurance policy;
o a guarantee; and/or
o a reserve fund.
In the related prospectus supplement, we will describe the amount and
types of any credit support benefiting the holders of a class of offered
certificates.
Arrangements Providing Interest Rate Protection
The trust assets for a series of offered certificates may include
guaranteed investment contracts pursuant to which moneys held in the funds and
accounts established for that series will be invested at a specified rate. Those
trust assets may also include:
o interest rate exchange agreements;
o interest rate cap agreements;
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o interest rate floor agreements; or
o other agreements or arrangements designed to reduce the
effects of interest rate fluctuations with respect to the
related mortgage assets on one or more classes of offered
certificates
In the related prospectus supplement, we will describe any agreements
or other arrangements designed to protect the holders of a class of offered
certificates against shortfalls resulting from movements or fluctuations in
interest rates. If applicable, we will also identify any obligor under the
agreement or other arrangement.
YIELD AND MATURITY CONSIDERATIONS
General
The yield on your certificates will depend on--
o the price you paid for your certificates,
o the pass-through rate on your certificates,
o the amount and timing of payments on your certificates.
The following discussion contemplates a trust established by us that
consists only of mortgage loans. If one of our trusts also includes a
mortgage-backed security, the payment terms of that security will soften or
enhance the effects that the characteristics and behavior of mortgage loans
backing that security can have on the yield to maturity and/or weighted average
life of a class of offered certificates. If one of our trusts includes a
mortgage-backed security, we will discuss in the related prospectus supplement
the effect, if any, that the security may have on the yield to maturity and
weighted average lives of the related offered certificates.
Pass-Through Rate
A class of interest-bearing offered certificates may have a fixed,
variable or adjustable pass-through rate. We will specify in the related
prospectus supplement the pass-through rate for each class of interest- bearing
offered certificates or, if the pass-through rate is variable or adjustable, the
method of determining the pass-through rate.
Payment Delays
There will be a delay between the date on which payments on the
underlying mortgage loans are due and the date on which those payments are
passed through to you and other investors. That delay will reduce the yield that
would otherwise be produced if those payments were passed through on your
certificates on the same date that they were due.
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Yield and Prepayment Considerations
The yield to maturity on your certificates will be affected by the rate
of principal payments on the underlying mortgage loans and the allocation of
those principal payments to reduce the principal balance or notional amount of
your certificates. The rate of principal payments on those mortgage loans will
be affected by the following:
o the amortization schedules of the mortgage loans, which may
change from time to time to reflect, among other things,
changes in mortgage interest rates or partial prepayments of
principal;
o the dates on which any balloon payments are due; and
o the rate of principal prepayments on the mortgage loans,
including voluntary prepayments by borrowers and involuntary
prepayments resulting from liquidations, casualties or
purchases of mortgage loans.
Because the rate of principal prepayments on the mortgage loans
underlying your certificates will depend on future events and a variety of
factors, we cannot give you any assurance as to that rate.
The extent to which the yield to maturity of your certificates may vary
from your anticipated yield will depend upon--
o whether you purchased your certificates at a discount or
premium and, if so, the extent of that discount or premium,
and
o when, and to what degree, payments of principal on the
underlying mortgage loans are applied or otherwise result in
the reduction of the principal balance or notional amount of
your certificates.
If you purchase your certificates at a discount, you should consider
the risk that a slower than anticipated rate of principal payments on the
underlying mortgage loans could result in an actual yield to you that is lower
than your anticipated yield. If you purchase your certificates at a premium, you
should consider the risk that a faster than anticipated rate of principal
payments on the underlying mortgage loans could result in an actual yield to you
that is lower than your anticipated yield.
If your certificates entitle you to payments of interest, with
disproportionate, nominal or no payments of principal, you should consider that
your yield will be extremely sensitive to prepayments on the underlying mortgage
loans and, under some prepayment scenarios, may be negative.
If a class of offered certificates accrues interest on a notional
amount, that notional amount will, in general, either--
(a) be based on the principal balances of some or all of the
mortgage assets in the related trust, or
(b) equal the aggregate principal balance of one or more of the
other classes of certificates of the same series.
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Accordingly, the yield on that class of certificates will be inversely
related to, as applicable, the rate at which payments and other collections of
principal are received on the mortgage assets or referred to in clause (a) above
or payments are made in reduction of the aggregate principal balance of the
class or classes of certificates referred to in clause (b) above.
The extent of prepayments of principal of the mortgage loans underlying
your certificates may be affected by a number of factors, including:
o the availability of mortgage credit;
o the relative economic vitality of the area in which the
related real properties are located;
o the quality of management of the related real properties;
o the servicing of the mortgage loans;
o possible changes in tax laws; and
o other opportunities for investment.
In general, those factors that increase the attractiveness of selling or
refinancing a commercial or multifamily property, as well as those factors that
increase the likelihood of default under a commercial or multifamily mortgage
loan, would be expected to cause the rate of prepayment to accelerate. In
contrast, those factors having an opposite effect would be expected to cause the
rate of prepayment to slow.
The rate of principal payments on the mortgage loans underlying your
certificates may also be affected by the existence and enforceability of
prepayment restrictions, such as prepayment lock-out periods and requirements
that voluntary principal prepayments be accompanied by prepayment premiums, fees
or charges. If enforceable, those provisions could constitute either an absolute
prohibition, in the case of a prepayment lock-out period, or a disincentive, in
the case of a prepayment premium, fee or charge, to a borrower's voluntarily
prepaying its mortgage loan, thereby slowing the rate of prepayments.
The rate of prepayment on a pool of mortgage loans is likely to be
affected by prevailing market interest rates for mortgage loans of a comparable
type, term and risk level. As prevailing market interest rates decline, a
borrower may have an increased incentive to refinance its mortgage loan. Even in
the case of adjustable rate mortgage loans, as prevailing market interest rates
decline, the related borrowers may have an increased incentive to refinance for
the following purposes:
o to convert to a fixed rate loan and thereby "lock in" that
rate, or
o to take advantage of a different index, margin or rate cap or
floor on another adjustable rate mortgage loan.
Subject to prevailing market interest rates and economic conditions
generally, a borrower may sell a real property in order to--
o realize its equity in the property,
o meet cash flow needs or
o make other investments.
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Additionally, some borrowers may be motivated by federal and state tax laws,
which are subject to change, to sell their properties prior to the exhaustion of
tax depreciation benefits. We make no representation as to--
o the particular factors that will affect the prepayment of the
mortgage loans underlying any series of offered certificates,
o the relative importance of those factors
o the percentage of the principal balance of those mortgage
loans that will be paid as of any date; or
o the overall rate of prepayment on those mortgage loans.
Weighted Average Life and Maturity
The rate at which principal payments are received on the mortgage loans
underlying any series of offered certificates will affect the ultimate maturity
and the weighted average life of one or more classes of those certificates. In
general, weighted average life refers to the average amount of time that will
elapse from the date of issuance of an instrument until each dollar allocable as
principal of such instrument is repaid to the investor.
The weighted average life and maturity of a class of offered
certificates will be influenced by the rate at which principal on the underlying
mortgage loans is paid to that class, whether in the form of scheduled
amortization or prepayments, including voluntary prepayments by borrowers and
involuntary prepayments resulting from liquidations, casualties or condemnations
and purchases of mortgage loans out of the related trust.
Prepayment rates on loans are commonly measured relative to a
prepayment standard or model, such as the Constant Prepayment Rate ("CPR")
prepayment model or the Standard Prepayment Assumption ("SPA") prepayment model.
CPR represents an assumed constant rate of prepayment each month (expressed as
an annual percentage) relative to the then outstanding principal balance of a
pool of mortgage loans for the life of such loans. SPA represents an assumed
variable rate of prepayment each month (expressed as an annual percentage)
relative to the then outstanding principal balance of a pool of mortgage loans,
with different prepayment assumptions often expressed as percentages of SPA. For
example, a prepayment assumption of 100% of SPA assumes prepayment rates of 0.2%
per annum of the then outstanding principal balance of those loans in the first
month of the life of the loans and an additional 0.2% per annum in each month
thereafter until the 30th month. Beginning in the 30th month, and in each month
thereafter during the life of the loans, 100% of SPA assumes a constant
prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption is a
historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any particular pool of mortgage loans.
Moreover, the CPR and SPA models were developed based upon historical prepayment
experience for single-family mortgage loans. It is unlikely that the prepayment
experience of the mortgage loans underlying your certificates will conform to
any particular level of CPR or SPA.
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In the prospectus supplement for a series of offered certificates, we
will include tables, if applicable, setting forth the projected weighted average
life of each class of those offered certificates with an aggregate principal
balance, and the percentage of the initial aggregate principal balance of each
such class that would be outstanding on specified dates, based on the
assumptions stated in that prospectus supplement, including assumptions
regarding prepayments on the underlying mortgage loans. Those tables and
assumptions illustrate the sensitivity of the weighted average lives of the
certificates to various assumed prepayment rates and are not intended to
predict, or to provide information that will enable you to predict, the actual
weighted average lives of your certificates.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity. Some or all of the mortgage
loans underlying a series of offered certificates may require that balloon
payments be made at maturity. The ability of a borrower to make a balloon
payment typically will depend upon its ability either (a) to refinance the loan,
or (b) to sell the related real property. If a borrower is unable to refinance
or sell the related real property, there is a possibility that the borrower may
default on the mortgage loan or that the maturity of the mortgage loan may be
extended in connection with a workout. If a borrower defaults, recovery of
proceeds may be delayed by (a) the bankruptcy of the borrower, or (b) adverse
economic conditions in the market where the related real property is located.
In order to minimize losses on defaulted mortgage loans, the related
master servicer or special servicer may be authorized within prescribed limits
to modify mortgage loans that are in default or as to which a payment default is
reasonably foreseeable. Any defaulted balloon payment or modification that
extends the maturity of a mortgage loan may delay payments of principal on your
certificates and extend the weighted average life of your certificates.
Negative Amortization. The weighted average life of a class of offered
certificates can be affected by mortgage loans that permit negative amortization
to occur. Those are the mortgage loans that provide for the current payment of
interest calculated at a rate lower than the rate at which interest accrues on
the mortgage loan, with the unpaid portion of that interest being added to the
related principal balance. Negative amortization most commonly occurs in respect
of an adjustable rate mortgage loan that:
o limits the amount by which its scheduled payment may adjust in
response to a change in its mortgage interest rate;
o provides that its scheduled payment will adjust less
frequently than its mortgage interest rate; or
o provides for constant scheduled payments regardless of
adjustments to its mortgage interest rate.
Negative amortization on one or more mortgage loans in any of our
trusts may result in negative amortization on a related class of offered
certificates. We will describe in the related prospectus supplement, if
applicable, the manner in which negative amortization in respect of the
underlying mortgage loans is allocated among the respective classes of a series
of offered certificates.
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The portion of any mortgage loan negative amortization allocated to a
class of offered certificates may result in a deferral of some or all of the
interest payable on those certificates. Deferred interest may be added to the
aggregate principal balance of a class of offered certificates. In addition, an
adjustable rate mortgage loan that permits negative amortization would be
expected during a period of increasing interest rates to amortize, if at all, at
a slower rate than if interest rates were declining or were remaining constant.
This slower rate of mortgage loan amortization would be reflected in a slower
rate of amortization for one or more classes of certificates of the related
series. Accordingly, there may be an increase in the weighted average lives of
those classes of certificates to which any mortgage loan negative amortization
would be allocated or that would bear the effects of a slower rate of
amortization of the underlying mortgage loans.
The extent to which the yield on your certificates may be affected by
any negative amortization on the underlying mortgage loans will depend, in part,
upon whether you purchase your certificates at a premium or a discount.
During a period of declining interest rates, the scheduled payment on
an adjustable rate mortgage loan may exceed the amount necessary to amortize the
loan fully over its remaining amortization schedule and pay interest at the then
applicable mortgage interest rate. The result is the accelerated amortization of
the mortgage loan. The acceleration in amortization of a mortgage loan will
shorten the weighted average lives of those classes of certificates that entitle
their holders to a portion of the principal payments on the mortgage loan.
Foreclosures and Payment Plans. The weighted average life of and yield
on your certificates will be affected by--
o the number of foreclosures with respect to the underlying
mortgage loans; and
o the principal amount of the foreclosed mortgage loans in
relation to the principal amount of those mortgage loans that
are repaid in accordance with their terms.
Servicing decisions made with respect to the underlying mortgage loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of mortgage loans in bankruptcy proceedings or otherwise, may also
affect the payment patterns of particular mortgage loans and, as a result, the
weighted average life of and yield on your certificates.
Losses and Shortfalls on the Mortgage Assets. The yield on your
certificates will directly depend on the extent to which you are required to
bear the effects of any losses or shortfalls in collections on the underlying
mortgage loans and the timing of those losses and shortfalls. In general, the
earlier that you bear any loss or shortfall, the greater will be the negative
effect on the yield of your certificates.
The amount of any losses or shortfalls in collections on the mortgage
assets in any of our trusts will to the extent not covered or offset by draws on
any reserve fund or under any instrument of credit support, be allocated among
the various classes of certificates of the related series in the priority and
manner, and subject to the limitations, that we specify in the related
prospectus supplement. As described in the related prospectus supplement, those
allocations may be effected by the following:
o a reduction in the entitlements to interest and/or the
aggregate principal balances of one or more classes of
certificates; and/or
o the establishment of a priority of payments among classes of
certificates.
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If you purchase subordinated certificates, the yield to maturity on
those certificates may be extremely sensitive to losses and shortfalls in
collections on the underlying mortgage loans.
Additional Certificate Amortization. If your certificates have a
principal balance, then they entitle you to a specified portion of the principal
payments received on the underlying mortgage loans. They may also entitle you to
payments of principal from the following sources:
o amounts attributable to interest accrued but not currently
payable on one or more other classes of certificates of the
applicable series;
o interest received or advanced on the underlying mortgage
assets that is in excess of the interest currently accrued on
the certificates of the applicable series;
o prepayment premiums, fees and charges, payments from equity
participations or any other amounts received on the underlying
mortgage assets that do not constitute interest or principal;
or
o any other amounts described in the related prospectus
supplement.
The amortization of your certificates out of the sources described in
the prior paragraph would shorten their weighted average life and, if your
certificates were purchased at a premium, reduce their yield to maturity.
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
We were incorporated in Delaware on December ___, 1999. [o We were
organized, among other things, for the purposes of--
o acquiring mortgage loans secured by first or junior liens on
commercial and multifamily real properties;
o acquiring mortgage-backed securities that evidence interests
in mortgage loans that are secured by commercial and
multifamily real properties;
o forming pools of mortgage loans and mortgage-backed
securities; and
o acting as settler or depositor of trusts formed to issue
bonds, notes or other evidences of indebtedness or to issue
shares, participation certificates or like instruments, that
are secured by or represent interests in, pools of mortgage
loans and mortgage-backed securities.]
Our principal executive offices are located at 600 Steamboat Road, Greenwich,
Connecticut 06830. Our telephone number is (203) 625-2700. We do not have, and
we do not expect to have, any significant assets.
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DESCRIPTION OF THE CERTIFICATES
General
Each series of offered certificates, together with any non-offered
certificates of the same series, will represent the entire beneficial ownership
interest in a trust established by us. Each series of offered certificates will
consist of one or more classes. Any non-offered certificates of that series will
likewise consist of one or more classes.
A "series" of certificates are all those certificates that--
o have the same series designation;
o were issued pursuant to the same governing documents; and
o represent beneficial ownership interests in the same trust.
A "class" of certificates are all those certificates of a particular
series that--
o have the same class designation; and
o have the same payment terms.
The respective classes of offered and non-offered certificates of any
series may have a variety of payment terms. An offered certificate may entitle
the holder to receive:
o a stated principal amount, which will be represented by its
principal balance;
o interest on a principal balance or notional amount, at a
fixed, variable or adjustable pass-through rate;
o specified, fixed or variable portions of the interest,
principal or other amounts received on the related mortgage
assets;
o payments of principal, with disproportionate, nominal or no
payments of interest;
o payments of interest, with disproportionate, nominal or no
payments of principal;
o payments of interest or principal that commence only as of a
specified date or only after the occurrence of certain events,
such as the payment in full of the interest and principal
outstanding on one or more other classes of certificates of
the same series;
o payments of principal to be made, from time to time or for
designated periods, at a rate that is faster (and, in some
cases, substantially faster) or slower (and, in some cases,
substantially slower) than the rate at which payments or other
collections of principal are received on the related mortgage
assets;
o payments of principal to be made, subject to available funds,
based on a specified principal payment schedule or other
methodology; or
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o payments of all or part of the prepayment or repayment
premiums, fees and charges, equity participations payments or
other similar items received on the related mortgage assets.
Any class of offered certificates may be senior or subordinate to one
or more other classes of certificates of the same series, including a
non-offered class of certificates of that series, for purposes of some or all
payments and/or allocations of losses or other shortfalls.
A class of offered certificates may have two or more component parts,
each having characteristics that are described in this prospectus as being
attributable to separate and distinct classes. For example, a class of offered
certificates may have an aggregate principal balance on which it accrues
interest at a fixed, variable or adjustable rate. That class of offered
certificates may also accrue interest on an aggregate notional amount at a
different fixed, variable or adjustable rate. In addition, a class of offered
certificates may accrue interest on one portion of its aggregate principal
balance or notional amount at one fixed, variable or adjustable rate and on
another portion of its aggregate principal balance or notional amount at a
different fixed, variable or adjustable rate.
Each class of offered certificates will be issued in minimum
denominations corresponding to specified principal balances, notional amounts or
percentage interests, as described in the related prospectus supplement. A class
of offered certificates may be issued in fully registered, definitive form and
evidenced by physical certificates or may be issued in book-entry form through
the facilities of The Depository Trust Company. Offered certificates held in
fully registered, definitive form may be transferred or exchanged, subject to
any restrictions on transfer described in the related prospectus supplement, at
the location specified in the related prospectus supplement, without the payment
of any service charges, except for any tax or other governmental charge payable
in connection with the transfer or exchange. Interests in offered certificates
held in book-entry form will be transferred on the book-entry records of DTC and
its participating organizations. If we so specify in the related prospectus
supplement, we will arrange for clearance and settlement through Clearstream
Banking, societe anonyme or the Euroclear System, for so long as they are
participants in DTC.
Payments on the Certificates
General. Payments on a series of offered certificates may occur
monthly, bi-monthly, quarterly, semi- annually, annually or at any other
specified interval. In the prospectus supplement for each series of offered
certificates, we will identify:
o the periodic payment date for that series, and
o the record date as of which certificateholders entitled to
payments on any particular payment date will be established.
All payments with respect to a class of offered certificates on any
payment date will be allocated pro rata among the outstanding certificates of
that class in proportion to the respective principal balances, notional amounts
or percentage interests, as the case may be, of those certificates. Payments on
an offered certificate will be made to the holder entitled thereto either--
o by wire transfer of immediately available funds to the account
of that holder at a bank or similar entity, provided that the
holder has furnished the party making the payments with
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wiring instructions no later than the applicable record date
and has satisfied any other conditions specified in the
related prospectus supplement, or
o by check mailed to the address of that holder as it appears in
the certificate register, in all other cases.
In general, the final payment on any offered certificate will be made
only upon presentation and surrender of that certificate at the location
specified to the holder in notice of final payment.
Payments of Interest. In the case of each class of interest-bearing
offered certificates, interest will accrue from time to time, at the applicable
pass-through rate and in accordance with the applicable interest accrual method,
on the aggregate outstanding principal balance or notional amount of that class.
The pass-through rate for a class of interest-bearing offered
certificates may be fixed, variable or adjustable. We will specify in the
related prospectus supplement the pass-through rate for each class of
interest-bearing offered certificates or, in the case of a variable or
adjustable pass-through rate, the method for determining that pass-through rate.
Interest may accrue with respect to any offered certificate on the
basis of:
o a 360-day year consisting of 12 30-day months,
o the actual number of days elapsed during each relevant
period in a year assumed to consist of 360 days,
o the actual number of days elapsed during each relevant
period in a normal calendar year, or
o such other method identified in the related prospectus
supplement.
We will identify the interest accrual method for each class of offered
certificates in the related prospectus supplement.
Subject to available funds and any adjustments to interest entitlements
described in the related prospectus supplement, accrued interest in respect of
each class of interest-bearing offered certificates will normally be payable on
each payment date. However, in the case of some classes of interest-bearing
offered certificates, which we will refer to as "compound interest
certificates," payments of accrued interest will only begin on a particular
payment date or under the circumstances described in the related prospectus
supplement. Prior to that time, the amount of accrued interest otherwise payable
on that class will be added to its aggregate principal balance on each date or
otherwise deferred as described in the related prospectus supplement.
If a class of offered certificates accrues interest on an aggregate
notional amount, that aggregate notional amount, in general, will be either:
(a) based on the principal balances of some or all of the related
mortgage assets; or
(b) equal to the aggregate principal balances of one or more other
classes of certificates of the same series.
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Reference to the notional amount of any certificate is solely for convenience in
making certain calculations of interest and does not represent the right to
receive any payments of principal.
We will describe in the related prospectus supplement the extent to
which the amount of accrued interest that is payable on, or that may be added to
the aggregate principal balance of, a class of interest- bearing offered
certificates may be reduced as a result of any contingencies, including
shortfalls in interest collections due to prepayments, delinquencies, losses and
deferred interest on the related mortgage assets.
Payments of Principal. A class of offered certificates may or may not
have an aggregate principal balance. If it does, that aggregate principal
balance outstanding from time to time will represent the maximum amount that the
holders of that class will be entitled to receive as principal out of the future
cash flow on the related mortgage assets and the other related trust assets. The
aggregate outstanding principal balance of any class of offered certificates
will be reduced by--
o payments of principal actually made to the holders of that
class, and
o if and to the extent that we so specify in the related
prospectus supplement, losses of principal on the related
mortgage assets that are allocated to or are required to be
borne by that class.
If a class of offered certificates are compound interest certificates, then the
aggregate outstanding principal balance of that class may be increased by the
amount of any interest accrued, but not currently payable, on that class. We
will describe in the related prospectus supplement any other adjustments to the
aggregate outstanding principal balance of a class of offered certificates.
Unless we so state in the related prospectus supplement, the initial
aggregate principal balance of all classes of a series will not be greater than
the aggregate outstanding principal balance of the related mortgage assets
transferred by us to the related trust. We will specify the expected initial
aggregate principal balance of each class of offered certificates in the related
prospectus supplement.
The payments of principal to be made on a series of offered
certificates from time to time will, in general, be a function of the payments,
other collections and advances received or made with respect to the related
prospectus supplement. Payments of principal on a series of offered certificates
may also be made from the following sources:
o amounts attributable to interest accrued but not currently
payable on one or more other classes of certificates of the
applicable series;
o interest received or advanced on the underlying mortgage
assets that is in excess of the interest currently accrued on
the certificates of the applicable series;
o prepayment premiums, fees and charges, payments from equity
participations or any other amounts received on the underlying
mortgage assets that do not constitute interest or principal;
or
o any other amounts described in the related prospectus
supplement.
We will describe in the related prospectus supplement the principal
entitlement of each class of offered certificates on each payment date.
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Allocation of Losses and Shortfalls
If and to the extent that any losses or shortfalls in collections on
the mortgage assets in any of our trusts are not covered or offset by
delinquency advances or draws on any reserve fund or under any instrument of
credit support, they will be allocated among the various classes of certificates
of the related series in the priority and manner, and subject to the
limitations, specified in the related prospectus supplement. As described in the
related prospectus supplement, the allocations may be effected as follows:
(i) by reducing the entitlements to interest and/or the aggregate
principal balances of one or more of those classes; and/or
(ii) by establishing a priority of payments among those classes.
See "Description of Credit Support."
Advances
If any trust established by us includes mortgage loans, then as and to
the extent described in the related prospectus supplement, then, as and to the
extent described in the related prospectus supplement, the related master
servicer, the related special servicer, the related trustee, any related
provider of credit support and/or any other specified person may be obligated to
make, or may have the option of making, certain advances with respect to those
mortgage loans to cover--
o delinquent payments of principal and/or interest, other than
balloon payments,
o property protection expenses,
o other servicing expenses, or
o any other items specified in the related prospectus
supplement.
If there are any limitations with respect to a party's advancing obligations, we
will discuss those limitations in the related prospectus supplement.
Advances are intended to maintain a regular flow of scheduled interest
and principal payments to certificateholders. Advances are not a guarantee
against losses. The advancing party will be entitled to recover all of its
advances out of subsequent recoveries on the related mortgage loans, including
amounts drawn under any fund or instrument constituting credit support, and out
of any other specific sources identified in the related prospectus supplement.
If and to the extent that we so specify in the related prospectus
supplement, any entity making advances will be entitled to receive interest on
some or all of those advances for a specified period during which they are
outstanding at the rate specified in that prospectus supplement. That entity may
be entitled to payment of interest on its outstanding advances periodically from
general collections on the mortgage assets in the related trust, prior to any
payment to the related series of certificateholders, or at such other times and
from such sources as we may describe in the related prospectus supplement.
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If any trust established by us includes mortgage-backed securities, we
will discuss in the related prospectus supplement any comparable advancing
obligations in respect of those securities or the mortgage loans that back them.
Reports to Certificateholders
On or about each payment date, the related master servicer, manager or
trustee will forward to each offered certificateholder a statement substantially
in the form, or specifying the information, set forth in the related prospectus
supplement. In general, that statement will include information regarding (i)
the payments made on that payment date with respect to the applicable class of
offered certificates and (ii) the recent performance of the mortgage assets.
Within a reasonable period of time after the end of each calendar year,
the related master servicer, manager or trustee, as the case may be, will be
required to furnish to each person who at any time during the calendar year was
a holder of an offered certificate a statement containing information regarding
the principal, interest and other amounts paid on the applicable class of
offered certificates, aggregated for that calendar year or the applicable
portion thereof during which the person was a certificateholder. The obligation
to provide that annual statement will be deemed to have been satisfied by the
related master servicer, manager or trustee, as the case may be, to the extent
that substantially comparable information is provided pursuant to any
requirements of the Internal Revenue Code of 1986..
If one of our trusts includes mortgage-backed securities, the ability
of the related master servicer, manager or trustee, as the case may be, to
include in any payment date statement information regarding the mortgage loans
that back those securities will depend on comparable reports being received with
respect to them.
Voting Rights
Voting rights will be allocated among the respective classes of offered
and non-offered certificates of each series in the manner described in the
related prospectus supplement. Certificateholders will generally not have a
right to vote, except with respect to certain amendments to the governing
documents or as otherwise specified in this prospectus or in the related
prospectus supplement. See "Description of the Governing Documents--Amendment."
As and to the extent described in the related prospectus supplement,
the certificateholders entitled to a specified amount of the voting rights for a
particular series will have the right to act as a group to remove or replace the
related trustee, master servicer, special servicer or manager. In general, any
such removal or replacement must be for cause. We will identify exceptions in
the related prospectus supplement.
Termination
The trust for each series of offered certificates will terminate and
cease to exist following:
o the final payment or other liquidation of the last mortgage
asset in that trust; and
o the payment, or provision for payment, to the
certificateholders of that series of all amounts required to
be paid to them.
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Written notice of termination of a trust will be given to each affected
certificateholder, and the final payment will be made only upon presentation and
surrender of the certificates of the related series at the location to be
specified in the notice of termination.
If we so specify in the related prospectus supplement, one or more
designated parties will be entitled to purchase all of the mortgage assets
underlying a series of offered certificates, thereby effecting early retirement
of the certificates and early termination of the related trust. We will describe
in the related prospectus supplement the circumstances under which that purchase
may occur.
In addition, if we so specify in the related prospectus supplement, on
a specified date or upon the reduction of the aggregate principal balance of a
specified class or classes of certificates by a specified percentage or amount,
a party designated in the related prospectus supplement may be authorized or
required to solicit bids for the purchase of all the mortgage assets of the
related trust or of a sufficient portion of the mortgage assets to retire that
class or those classes of certificates. The solicitation of bids must be
conducted in a commercially reasonable manner, and assets will, in general, be
sold at their fair market value. If the fair market value of the mortgage assets
being sold is less than their unpaid balance, then the certificateholders of one
or more classes of certificates may receive an amount less than the aggregate
certificate principal balance of, and accrued and unpaid interest on, their
certificates.
Book-Entry Registration
General. Any class of offered certificates may be issued in book-entry
form through the facilities of DTC. If so, that class will be represented by one
or more global certificates registered in the name of DTC or its nominee. If we
so specify in the related prospectus supplement, we will arrange for clearance
and settlement through Clearstream Banking, societe anonyme or the Euroclear
System, for so long they are participants in DTC.
DTC, Euroclear and Clearstream. DTC is:
o a limited-purpose trust company organized under the New York
Banking Law,
o a "banking corporation" within the meaning of the New York
Banking Law,
o a member of the Federal Reserve System,
o a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and
o a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act.
DTC was created to hold securities for participants in the DTC system
and to facilitate the clearance and settlement of securities transactions
between those participants through electronic computerized book- entry changes
in their accounts, thereby eliminating the need for physical movement of
securities certificates. Organizations that maintain accounts with DTC include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include other organizations. DTC is owned by a number of its
participating organizations and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system is also available to others such as
banks, brokers, dealers and trust companies that directly or indirectly clear
through or maintain a custodial relationship with one of the organizations that
maintains an account with DTC. The rules applicable to DTC and its participating
organizations are on file with the SEC.
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It is our understanding that Clearstream was incorporated in 1970 as
"Cedel S.A.," a company with limited liability under the laws of Luxembourg.
Cedel S.A. subsequently changed its name to Cedelbank. On January 10, 2000,
Cedelbank's parent company, Cedel International, societe anonyme merged its
clearing, settlement and custody business with that of Deutsche Borse Clearing
AG. The merger involved the transfer by Cedel International of substantially all
of its assets and liabilities, including its shares in Cedelbank, to a new
Luxembourg company, New Cedel International, societe anonyme. New Cedel
International is 50% owned by Cedel International and 50% by Deutsche Borse AG,
the parent of Deutsche Borse Clearing AG. The shareholders of these two entities
are recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. On January 18, 2000, Cedelbank was renamed
Clearstream Banking, societe anonyme. Clearstream holds securities for its
member organizations and facilitates the clearance and settlement of securities
transactions between its member organizations through electronic book-entry
changes in accounts of those organizations, thereby eliminating the need for
physical movement of certificates. Transactions may be settled in Clearstream in
any of 36 currencies, including United States dollars. Clearstream provides to
its member organizations, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded securities
and securities lending and borrowing. Clearstream interfaces with domestic
securities markets in over 30 countries through established depository and
custodial relationships. Clearstream is registered as a bank in Luxembourg, and
as such is subject to regulation by the Commission de Surveillance du Secteur
Financier, which supervises Luxembourg banks. Clearstream's customers are
world-wide financial institutions including underwriters, securities brokers and
dealers, banks, trust companies and clearing corporations. Clearstream's U.S.
customers are limited to securities brokers and dealers, and banks. Currently,
Clearstream has approximately 2,000 customers located in over 80 countries,
including all major European countries, Canada and the United States. Indirect
access to Clearstream is available to other institutions that clear through or
maintain a custodial relationship with an account holder of Clearstream.
Clearstream and Euroclear have established an electronic bridge between their
two systems across which their respective participants may settle trades with
each other.
It is our understanding that Euroclear was founded in December 1968 to
hold securities for its member organizations and to clear and settle
transactions between its member organizations through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Over 100,000 different securities are accepted for
settlement through Euroclear, the majority of which are domestic securities from
over 30 markets. Transactions may be settled in Euroclear in any of over 35
currencies, including United States dollars. The Euroclear system includes
various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangements for cross-market transfers with DTC described below. Euroclear is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium office
(the "Euroclear Operator"), under contract with Euroclear Clearance System,
S.C., a Belgian cooperative corporation ("ECS"). All operations are conducted by
the Euroclear Operator, and all Euroclear securities clearance accounts and
Euroclear cash accounts are accounts with the Euroclear Operator, not ECS. ECS
establishes policy for the Euroclear system on behalf of the more than 120
member organizations of Euroclear. Those member organizations include banks
(including central banks), securities brokers and dealers and other professional
financial intermediaries. Indirect access to the Euroclear system is also
available to other firms that clear through or maintain a custodial relationship
with a member organization of Euroclear, either directly or indirectly.
Euroclear and Clearstream have established an electronic bridge between their
two systems across which their respective participants may settle trades with
each other.
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The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Euroclear Terms and Conditions"). The Euroclear Terms
and Conditions govern transfers of securities and cash within the Euroclear
system, withdrawal of securities and cash from the Euroclear system, and
receipts of payments with respect to securities in the Euroclear system. All
securities in the Euroclear system are held on a fungible basis without
attribution of specific securities to specific securities clearance accounts.
The Euroclear Operator acts under the Euroclear Terms and Conditions only on
behalf of member organizations of Euroclear and has no record of or relationship
with persons holding through those member organizations.
The information in this prospectus concerning DTC, Clearstream and
Euroclear, and their book-entry systems, has been obtained from sources believed
to be reliable, but we do not take any responsibility for the accuracy or
completeness thereof.
Holding and Transferring Book-Entry Certificates. Purchases of
book-entry certificates under the DTC system must be made by or through, and
will be recorded on the records of, the brokerage firm, bank, thrift institution
or other financial intermediary (each, a "Financial Intermediary") that
maintains the beneficial owner's account for that purpose. In turn, the
Financial Intermediary's ownership of those certificates will be recorded on the
records of DTC or, alternatively, if the Financial Intermediary does not
maintain an account with DTC, on the records of a participating firm that acts
as agent for the Financial Intermediary, whose interest will in turn be recorded
on the records of DTC. A beneficial owner of book-entry certificates must rely
on the foregoing procedures to evidence its beneficial ownership of those
certificates.
DTC has no knowledge of the actual beneficial owners of the book-entry
certificates. DTC's records reflect only the identity of the direct participants
to whose accounts those certificates are credited, which may or may not be the
actual beneficial owners. The participants in the DTC System will remain
responsible for keeping account of their holdings on behalf of their customers.
Transfers between participants in the DTC system will be effected in
the ordinary manner in accordance with DTC's rules and will be settled in
same-day funds. Transfers between direct account holders at Clearstream and
Euroclear, or between persons or entities participating indirectly in
Clearstream or Euroclear, will be effected in the ordinary manner in accordance
with their respective procedures and in accordance with DTC's rules.
Cross-market transfers between direct participants in DTC, on the one
hand, and member organizations at Clearstream or Euroclear, on the other, will
be effected through DTC in accordance with DTC's rules and the rules of
Clearstream or Euroclear, as applicable. Such cross-market transactions will
require, among other things, delivery of instructions by the applicable member
organization to Clearstream or Euroclear, as the case may be, in accordance with
the rules and procedures and within deadlines (Brussels time) established in
Clearstream or Euroclear, as the case may be. If the transaction complies with
all relevant requirements, Clearstream or Euroclear, as the case may be, will
then deliver instructions to its depositary to take action to effect final
settlement on its behalf.
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Because of time-zone differences, the securities account of a member
organization of Clearstream or Euroclear purchasing an interest in a global
certificate from a DTC participant that is not such a member organization, will
be credited during the securities settlement processing day (which must be a
business day for Clearstream or Euroclear, as the case may be) immediately
following the DTC settlement date. Transactions in interests in a book-entry
certificate settled during any securities settlement processing day will be
reported to the relevant member organization of Clearstream or Euroclear on the
same day. Cash received in Clearstream or Euroclear as a result of sales of
interests in a book-entry certificate by or through a member organization
thereof to a DTC participant that is not such a member organization will be
received with value on the DTC settlement date, but will not be available in the
relevant Clearstream or Euroclear cash account until the business day following
settlement in DTC. The related prospectus supplement will contain additional
information regarding clearance and settlement procedures for the book-entry
certificates and with respect to tax documentation procedures relating to the
book-entry certificates.
Conveyance of notices and other communications by DTC to DTC
participants, and by DTC participants to Financial Intermediaries and beneficial
owners, will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payments on the book-entry certificates will be made to DTC. DTC's
practice is to credit DTC participants' accounts on the related payment date in
accordance with their respective holdings shown on DTC's records, unless DTC has
reason to believe that it will not receive payment on that date. Disbursement of
such payments by DTC participants to Financial Intermediaries and beneficial
owners will be--
o governed by standing instructions and customary practices, as
is the case with securities held for the accounts of customers
in bearer form or registered in "street name," and
o the sole responsibility of each such DTC participant, subject
to any statutory or regulatory requirements in effect from
time to time.
Under a book-entry system, beneficial owners may receive payments after the
related payment date.
The only "certificateholder" of book-entry certificates will be DTC or
its nominee. Parties to the governing documents for any series of offered
certificates need not recognize beneficial owners of book-entry certificates as
"certificateholders." The beneficial owners of book-entry certificates will be
permitted to exercise the rights of "certificateholders" only indirectly through
the DTC participants, who in turn will exercise their rights through DTC. We
have been informed that DTC will take action permitted to be taken by a
"certificateholder" only at the direction of one or more DTC participants. DTC
may take conflicting actions with respect to the book-entry certificates to the
extent that such actions are taken on behalf of Financial Intermediaries whose
holdings include those certificates.
Because DTC can act only on behalf of DTC participants, who in turn act
on behalf of Financial Intermediaries and certain beneficial owners, the ability
of a beneficial owner to pledge its interest in a class of book-entry
certificates to persons or entities that do not participate in the DTC system,
or otherwise to take actions in respect of its interest in a class of book-entry
certificates, may be limited due to the lack of a physical certificate
evidencing that interest.
Issuance of Definitive Certificates. Unless we specify otherwise in the
related prospectus supplement, beneficial owners of affected offered
certificates initially issued in book-entry form will not be able to obtain
physical certificates that represent those offered certificates, unless:
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o we advise the related trustee in writing that DTC is no longer
willing or able to discharge properly its responsibilities as
depository with respect to those offered certificates and we
are unable to locate a qualified successor; or
o we elect, at our option, to terminate the book-entry system
through DTC with respect to those offered certificates.
Upon the occurrence of either of the two events described above, DTC
will be required to notify all DTC participants of the availability through DTC
of physical certificates with respect to the affected offered certificates. Upon
surrender by DTC of the certificate or certificates representing a class of
book-entry offered certificates, together with instructions for registration,
the related trustee or other designated party will be required to issue to the
beneficial owners identified in those instructions physical certificates
representing those offered certificates.
DESCRIPTION OF THE GOVERNING DOCUMENTS
General
The offered certificates of each series will be issued pursuant to a
pooling and servicing agreement or other similar agreement or collection of
agreements (individually and collectively, as to that series, the "Governing
Document"). In general, the parties to the Governing Document for a series of
offered certificates will include us, a trustee, a master servicer and a special
servicer. However, if the related trust assets include mortgage-backed
securities, the Governing Document may include a manager as a party, but may not
include a master servicer, special servicer or other servicer as a party. We
will identify in the related prospectus supplement the parties to the Governing
Document for a series of offered certificates.
If we so specify in the related prospectus supplement, a party from
whom we acquire mortgage assets or one of its affiliates may perform the
functions of master servicer, special servicer or manager for the trust to which
we transfer those assets. If we so specify in the related prospectus supplement,
the same person or entity may act as both master servicer and special servicer
for one of our trusts.
Any party to the Governing Document for a series of offered
certificates, or any of its affiliate, may own certificates issued thereunder.
However, except in limited circumstances, including with respect to required
consents to certain amendments to the Governing Document for a series of offered
certificates, certificates that are held by the related master servicer, special
servicer or manager will not be allocated voting rights.
A form of a pooling and servicing agreement has been filed as an
exhibit to the registration statement of which this prospectus is a part.
However, the provisions of the Governing Document for each series of offered
certificates will vary depending upon the nature of the certificates to be
issued thereunder and the nature of the related trust assets. The following
summaries describe certain provisions that may appear in the Governing Document
for each series of offered certificates. The prospectus supplement for each
series of offered certificates will provide material additional information
regarding the Governing Document for that series. The summaries in this
prospectus do not purport to be complete, and you should refer to the provisions
of the Governing Document for your certificates and, further, to the description
of those provisions in the related prospectus supplement. We will provide a copy
of the Governing Document,
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exclusive of exhibits, that relates to your certificates, without charge, upon
written request addressed to our principal executive offices specified under
"Greenwich Capital Commercial Funding Corp."
Assignment of Mortgage Assets
At the time of initial issuance of any series of offered certificates,
we will assign or cause to be assigned to the designated trustee the mortgage
assets to be included in the related trust, together with certain related
assets. We will specify in the related prospectus all material documents to be
delivered, and all other material actions to be taken, by us or any prior holder
of the related mortgage assets, in connection with that assignment. We will also
specify in the related prospectus supplement any remedies available to the
related certificateholders, or the related trustee on their behalf, in the event
that any of those material documents are not delivered or any of those other
material actions are not taken as required. Concurrently with that assignment,
the related trustee will deliver to us or our designee the certificates of that
series in exchange for the mortgage assets and the other assets to be included
in the related trust.
Each mortgage asset included in one of our trusts will be identified in
a schedule appearing as an exhibit to the related Governing Document. That
schedule generally will include detailed information about each mortgage asset
transferred to the related trust, including:
o in the case of a mortgage loan, the address of the related
real property and the type of that property; the mortgage
interest rate and, if applicable, the applicable index, gross
margin, adjustment date and any rate cap information; the
remaining term to maturity; the remaining amortization term;
and the outstanding principal balance; and
o in the case of a mortgage-backed security, the outstanding
principal balance and the pass- through rate or coupon rate.
Representations and Warranties with respect to Mortgage Assets
Unless we state otherwise in the prospectus supplement for any series
of offered certificates, we will, with respect to each mortgage asset in the
related trust, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example:
o the accuracy of the information set forth for each mortgage
asset on the schedule of mortgage assets appearing as an
exhibit to the Governing Document for that series;
o the Warranting Party's title to each mortgage asset and the
authority of the Warranting Party to sell that mortgage asset;
and
o in the case of a mortgage loan, the enforceability of the
related mortgage note and mortgage, the existence of title
insurance insuring the lien priority of the related mortgage
and the payment status of the mortgage loan.
We will identify the Warranting Party, and give a more complete
sampling of the representations and warranties made thereby, in the related
prospectus supplement. We will also specify in the related prospectus supplement
any remedies against the warranting party available to the related
certificateholders, or the related
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trustee on their behalf, in the event of a breach of any of those
representations and warranties. In most cases, the Warranting Party will be a
prior holder of the particular mortgage assets.
Collection and Other Servicing Procedures with Respect to Mortgage Loans
The Governing Document for each series of offered certificates will
govern the servicing and administration of any mortgage loans included in the
related trust.
In general, the related master servicer and special servicer,
directly or through sub-servicers, will be obligated to service and administer
for the benefit of the related certificateholders the mortgage loans in any of
our trusts. The master servicer and the special servicer will be required to
service and administer those mortgage loans in accordance with applicable law
and, further, in accordance with the terms of the related Governing Document,
the mortgage loans themselves and any instrument of credit support included in
that trust. Subject to the foregoing, the master servicer and the special
servicer will each have full power and authority to do any and all things in
connection with that servicing and administration that it may deem necessary and
desirable.
As part of its servicing duties, each of the master servicer and the
special servicer for one of our trusts will be required to make reasonable
efforts to collect all payments called for under the terms and provisions of the
related mortgage loans that it services and, in general, will be obligated to
follow the same collection procedures as it would follow for comparable mortgage
loans held for its own account, provided that:
(i) those procedures are consistent with the terms of the related
Governing Document; and
(ii) they do not impair recovery under any instrument of credit
support included in the related trust.
Consistent with the foregoing, the master servicer and the special servicer will
each be permitted, in its discretion, to waive any default charge in connection
with collecting a late payment on any defaulted mortgage loan.
The master servicer and/or the special servicer for one or our trusts,
directly or through sub-servicers, will also be required to perform various
other customary functions of a servicer of comparable loans, including:
o maintaining escrow or impound accounts for the payment of
taxes, insurance premiums, ground rents and similar items, or
otherwise monitoring the timely payment of those items;
o ensuring that the related properties are properly insured;
o attempting to collect delinquent payments;
o supervising foreclosures;
o negotiating modifications;
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o responding to borrower requests for partial releases of the
encumbered property, easements, consents to alteration or
demolition and similar matters;
o protecting the interests of certificateholders with respect to
senior lienholders;
o conducting inspections of the related real properties on a
periodic or other basis;
o collecting and evaluating financial statements for the related
real properties;
o managing or overseeing the management of real properties
acquired on behalf of the trust through foreclosure,
deed-in-lieu of foreclosure or otherwise; and
o maintaining servicing records relating to mortgage loans in
the trust.
We will specify in the related prospectus supplement when, and the
extent to which, servicing of a mortgage loan is to be transferred from a master
servicer to a special servicer. In general, a special servicer for any of our
trusts will be responsible for the servicing and administration of:
o mortgage loans that are delinquent in respect of a specified
number of scheduled payments;
o mortgage loans as to which there is a material non-monetary
default;
o mortgage loans as to which the related borrower has entered
into or consented to bankruptcy, appointment of a receiver or
conservator or similar insolvency proceeding, or the related
borrower has become the subject of a decree or order for such
a proceeding which shall have remained in force undischarged
or unstayed for a specified number of days; and
o real properties acquired as part of the trust in respect of
defaulted mortgage loans.
The related Governing Document may also may provide that if a default on a
mortgage loan in the related trust has occurred or, in the judgment of the
related master servicer, a payment default is reasonably foreseeable, the
related master servicer may elect to transfer the servicing of that mortgage
loan, in whole or in part, to the related special servicer. When the
circumstances no longer warrant a special servicer's continuing to service a
particular mortgage loan, such as when the related borrower is paying in
accordance with the forbearance arrangement entered into between the special
servicer and that borrower, the master servicer will generally resume the
servicing duties with respect to the particular mortgage loan.
A borrower's failure to make required mortgage loan payments may mean
that operating income from the related real property is insufficient to service
the mortgage debt, or may reflect the diversion of that income from the
servicing of the mortgage debt. In addition, a borrower that is unable to make
mortgage loan payments may also be unable to make timely payment of taxes and
otherwise to maintain and insure the related real property. In general, with
respect to each series of offered certificates, the related special servicer
will be required to monitor any mortgage loan in the related trust that is in
default, evaluate whether the causes of the default can be corrected over a
reasonable period without significant impairment of the value of the related
real property, initiate corrective action in cooperation with the mortgagor if
cure is likely, inspect the related real property and take such other actions as
it deems necessary and appropriate. A significant period of time may elapse
before a special servicer is able to assess the success of any such
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corrective action or the need for additional initiatives. The time within which
a special servicer can make the initial determination of appropriate action,
evaluate the success of corrective action, develop additional initiatives,
institute foreclosure proceedings and actually foreclose, or accept a deed to a
real property in lieu of foreclosure, on behalf of the certificateholders of the
related series may vary considerably depending on the particular mortgage loan,
the related real property, the borrower, the presence of an acceptable party to
assume the mortgage loan and the laws of the jurisdiction in which the related
real property is located. If a borrower files a bankruptcy petition, the special
servicer may not be permitted to accelerate the maturity of the defaulted loan
or to foreclose on the related real property for a considerable period of time.
See "Certain Legal Aspects of Mortgage Loans--Bankruptcy Laws."
A special servicer for one of our trusts may also perform certain
limited duties in respect of mortgage loans in that trust for which the related
master servicer is primarily responsible, such as performing property
inspections and collecting and evaluating financial statements. A master
servicer for one of our trusts may perform certain limited duties in respect of
any mortgage loan in that trust for which the related special servicer is
primarily responsible, such as continuing to receive payments on the mortgage
loan, making certain calculations with respect to the mortgage loan and making
remittances and preparing certain reports to the related trustee and/or
certificateholders with respect to the mortgage loan. The duties of the master
servicer and special servicer for your series will be more fully described in
the related prospectus supplement.
Unless we state otherwise in the related prospectus supplement, the
master servicer for your series will be responsible for filing and settling
claims in respect of particular mortgage loans for your series under any
applicable instrument of credit support. See "Description of Credit Support" in
this prospectus.
Sub-Servicers
A master servicer or special servicer may delegate its servicing
obligations to one or more third-party servicers or sub-servicers. However,
unless we specify otherwise in the related prospectus supplement, the master
servicer or special servicer will remain obligated under the related Governing
Document. Each sub- servicing agreement between a master servicer or special
servicer, as applicable, and a sub-servicer must provide for servicing of the
applicable mortgage loans consistent with the related Governing Document. Any
master servicer and special servicer for one of our trusts will each be required
to monitor the performance of sub-servicers retained by it.
Unless we specify otherwise in the related prospectus supplement, any
master servicer or special servicer for one of our trusts will be solely liable
for all fees owed by it to any sub-servicer, regardless of whether the master
servicer's or special servicer's compensation pursuant to the related Governing
Document is sufficient to pay those fees. Each sub-servicer will be entitled to
reimbursement from the master servicer or special servicer, as the case may be,
that retained it, for certain expenditures which it makes, generally to the same
extent the master servicer or special servicer would be reimbursed under the
related Governing Document.
Collection of Payments on Mortgage-Backed Securities
Unless we specify otherwise in the related prospectus supplement, if a
mortgage-backed security is included among the trust assets underlying any
series of offered certificates, then--
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o that mortgage-backed security will be registered in the name
of the related trustee or its designee;
o the related trustee will receive payments on that
mortgage-backed security; and
o subject to any conditions described in the related prospectus
supplement, the related trustee or a designated manager will,
on behalf and at the expense of the trust, exercise all rights
and remedies in respect of that mortgaged-backed security,
including the prosecution of any legal action necessary in
connection with any payment default.
Certain Matters Regarding the Master Servicer, the Special Servicer, the Manager
and Us
Unless we specify otherwise in the related prospectus supplement, no
master servicer, special servicer or manager for any of our trusts may resign
from its obligations in that capacity, except upon--
o the appointment of, and the acceptance of that appointment by,
a successor to the resigning party and receipt by the related
trustee of written confirmation from each applicable rating
agency that the resignation and appointment will not result in
a withdrawal or downgrade of any rating assigned by that
rating agency to any class of certificates of the related
series, or
o a determination that those obligations are no longer
permissible under applicable law or are in material conflict
by reason of applicable law with any other activities carried
on by the resigning party.
In general, no resignation will become effective until the related
trustee or other successor has assumed the obligations and duties of the
resigning master servicer, special servicer or manager, as the case may be.
In no event will we, any master servicer, special servicer or manager
for one of our trusts, or any of our or their respective directors, officers,
employees or agents be under any liability to that trust or the related
certificateholders for any action taken, or not taken, in good faith pursuant to
the related Governing Document or for errors in judgment. Neither we nor any of
those other persons or entities will be protected, however, against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of obligations or duties under the
Governing Document for any series of offered certificates or by reason of
reckless disregard of those obligations and duties.
Furthermore, the Governing Document for each series of offered
certificates will entitle us, the master servicer, special servicer and/or
manager for the related trust, and our and their respective directors, officers,
employees and agents to indemnification out of the related trust assets for any
loss, liability or expense incurred in connection with any legal action that
relates to that Governing Document or series of offered certificates or to the
related trust. The indemnification will not extend, however, to any loss,
liability or expense--
o specifically required to be borne by the relevant party,
without right of reimbursement, pursuant to the terms of that
Governing Document,
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o incurred in connection with any legal action against the
relevant party resulting from any breach of a representation
or warranty made in that Governing Document, or
o incurred in connection with any legal action against the
relevant party resulting from any willful misfeasance, bad
faith or gross negligence in the performance of obligations or
duties under that Governing Document.
Neither we nor any master servicer, special servicer or manager for the
related trust will be under any obligation to appear in, prosecute or defend any
legal action unless--
o the action is related to the respective responsibilities of
that party under the Governing Document for the affected
series of offered certificates, and
o either (i) that party is specifically required to bear the
expense of the action, or (ii) the action will not, in its
opinion, involve that party in any ultimate expense or
liability for which it would not be reimbursed under the
Governing Document for the affected series of offered
certificates.
However, we and each of those other parties may undertake any legal action that
may be necessary or desirable with respect to the enforcement or protection of
the rights and duties of the parties to the Governing Document for any series of
offered certificates and the interests of the certificateholders of that series
under that Government Document. In that event, the legal expenses and costs of
the action, and any liability resulting therefrom, will be expenses, costs and
liabilities of the related trust and payable out of related trust assets.
With limited exception, any person or entity--
o into which we or any related master servicer, special servicer
or manager may be merged or consolidated, or
o resulting from any merger or consolidation to which we or any
related master servicer, special servicer or manager is a
party, or
o succeeding to our business or the business of any related
master servicer, special servicer or manager,
will be the successor of us or that master servicer, special servicer or
manager, as the case may be, under the Governing Document for a series of
offered certificates.
The compensation arrangements with respect to any master servicer,
special servicer or manager for any of our trusts will be set forth in the
related prospectus supplement. In general, that compensation will be payable out
of the related trust assets.
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Events of Default
We will identify in related prospectus supplement the various events of
default under the Governing Document for each series of offered certificates for
which any related master servicer, special servicer or manager may be terminated
in that capacity.
Amendment
The Governing Document for each series of offered certificates may be
amended by the parties thereto, without the consent of any of the holders of
those certificates, or of any non-offered certificates of the same series, for
the following reasons:
(i) to cure any ambiguity;
(ii) to correct, modify or supplement any provision in the
Governing Document which may be inconsistent with any other
provision in that document or with the description of that
document set forth in the related prospectus supplement;
(iii) to add any other provisions with respect to matters or
questions arising under the Governing Document that are not
inconsistent with the existing provisions of that document;
(iv) to the extent applicable, to relax or eliminate any
requirement under the Governing Document imposed by the
provisions of the Internal Revenue Code of 1986 relating to
REMICs if the provisions of that Code are amended or clarified
so as to allow for the relaxation or elimination of that
requirement;
(v) to relax or eliminate any requirement under the Governing
Document imposed by the Securities Act of 1933, as amended, or
the rules under that Act if that Act or those rules are
amended or clarified so as to allow for the relaxation or
elimination of that requirement;
(vi) to comply with any requirements imposed by the Internal
Revenue Code of 1986 or any final, temporary or, in some
cases, proposed regulation, revenue ruling, revenue procedure
or other written official announcement or interpretation
relating to federal income tax laws, or to avoid a prohibited
transaction or reduce the incidence of any tax that would
arise from any actions taken with respect to the operation of
any REMIC created under the Governing Document;
(vii) to the extent applicable, to modify, add to or eliminate
certain transfer restrictions relating to the certificates
which are "residual interests" in a REMIC; or
(viii) to otherwise modify or delete existing provisions of the
Governing Document.
However, no amendment of the Governing Document for any series of
offered certificates, covered solely by clauses (iii) and (viii) above, may
adversely affect in any material respect the interests of any holders of offered
or non-offered certificates of that series.
In general, the Governing Document for a series of offered certificates
may also be amended by the parties to that document, with the consent of the
holders of offered and non-offered certificates representing,
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in the aggregate, not less than 66-2/3%, or such other percentage specified in
the related prospectus supplement, of all the voting rights allocated to those
classes of that series that are affected by the amendment. However, the
Governing Document for a series of offered certificates may not be amended to--
o reduce in any manner the amount of, or delay the timing of,
payments received on the related mortgage assets which are
required to be distributed on any offered or non-offered
certificate of that series without the consent of the holder
of that certificate; or
o adversely affect in any material respect the interests of the
holders of any class of offered or non-offered certificates of
that series in any other manner without the consent of the
holders of all certificates of that class; or
o modify the provisions of the Governing Document relating to
amendments thereof without the consent of the holders of all
offered and non-offered certificates of that series then
outstanding.
List of Certificateholders
Upon written request of three or more certificateholders of record of
any series made for purposes of communicating with other holders of certificates
of the same series with respect to their rights under the related Governing
Document, the related trustee or other certificate registrar of that series will
afford the requesting certificateholders access during normal business hours to
the most recent list of certificateholders of that series. However, the trustee
may first require a copy of the communication that the requesting
certificateholders propose to send.
The Trustee
The trustee for each series of offered certificates will be named in
the related prospectus supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as trustee for any
series of offered certificates may have typical banking relationships with the
us and our affiliates and with any of the other parties to the related Governing
Document and its affiliates.
Duties of the Trustee
The trustee for each series of offered certificates will make no
representation as to the validity or sufficiency of those certificates, the
related Governing Document or any underlying mortgage asset or related document
and will not be accountable for the use or application by or on behalf of any
other party to the related Governing Document of any funds paid to that party in
respect of those certificates or the underlying mortgage assets. If no event of
default has occurred and is continuing under the related Governing Document, the
trustee for each series of offered certificates will be required to perform only
those duties specifically required under the related Governing Document.
However, upon receipt of any of the various certificates, reports or other
instruments required to be furnished to it pursuant to the related Governing
Document, the trustee must examine those documents and determine whether they
conform to the requirements of that Governing Document.
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Certain Matters Regarding the Trustee
As and to the extent described in the related prospectus supplement,
the fees and normal disbursements of the trustee for any series of offered
certificates may be the expense of the related master servicer or other
specified person or may be required to be paid by the related trust assets.
The trustee for each series of offered certificates will be entitled to
indemnification, out of related trust assets, for any loss, liability or expense
incurred by that trustee in connection with its acceptance or administration of
its trusts under the related Governing Document. However, the indemnification of
a trustee will not extend to any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or gross negligence on the part of the trustee
in the performance of its obligations and duties under the related Governing
Document.
No trustee for any series of offered certificates will be required to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties under the related Governing Document, or in the
exercise of any of its rights or powers, if it has reasonable grounds for
believing that repayment of those funds or adequate indemnity against that risk
or liability is not reasonably assured to it.
The trustee for each series of offered certificates will be entitled to
execute any of its trusts or powers and perform any of its duties under the
related Governing Document, either directly or by or through agents or
attorneys. The trustee will not be responsible for any willful misconduct or
gross negligence on the part of any such agent or attorney appointed by it with
due care.
Resignation and Removal of the Trustee
The trustee for any series of offered certificates may resign at any
time. We will be obligated to appoint a successor to a resigning trustee. We may
also remove the trustee for any series of offered certificates if that trustee
ceases to be eligible to continue as such under the related Governing Document
or if that trustee becomes insolvent. Unless we indicate otherwise in the
related prospectus supplement, the trustee for any series of offered
certificates may also be removed at any time by the holders of the offered and
non-offered certificates of that series evidencing not less than 51%, or such
other percentage specified in the related prospectus supplement, of the voting
rights for that series. However, if the removal was without cause, the
certificateholders effecting the removal may be responsible for any costs and
expenses incurred by the terminated trustee in connection with its removal. Any
resignation or removal of a trustee and appointment of a successor trustee will
not become effective until acceptance of the appointment by the successor
trustee.
DESCRIPTION OF CREDIT SUPPORT
General
Credit support may be provided with respect to one or more classes of
the offered certificates of any series or with respect to the related mortgage
assets. That credit support may be in the form of any of the following:
o the subordination of one or more other classes of certificates
of the same series;
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o the use of a letter of credit, a surety bond, an insurance
policy or a guarantee;
o the establishment of one or more reserve funds; or
o any combination of the foregoing.
If and to the extent described in the related prospectus supplement,
any of the above forms of credit support may provide credit enhancement for
non-offered certificates, as well as offered certificates, or for more than one
series of certificates.
If you are the beneficiary of any particular form of credit support,
that credit support may not protect you against all risks of loss and will not
guarantee payment to you of all amounts to which you are entitled under your
certificates. If losses or shortfalls occur that exceed the amount covered by
that credit support or that are of a type not covered by that credit support,
you will bear your allocable share of deficiencies. Moreover, if that credit
support covers the offered certificates of more than one class or series and
total losses on the related mortgage assets exceed the amount of that credit
support, it is possible that the holders of offered certificates of other
classes and/or series will be disproportionately benefited by that credit
support to your detriment.
If you are the beneficiary of any particular form of credit support, we
will include in the related prospectus supplement a description of the
following:
o the nature and amount of coverage under that credit support;
o any conditions to payment not otherwise described in this
prospectus;
o any conditions under which the amount of coverage under
that credit support may be reduced and under which that
credit support may be terminated or replaced; and
o the material provisions relating to that credit support.
Additionally, we will set forth in the related prospectus supplement certain
information with respect to the obligor, if any, under any instrument of credit
support.
Subordinate Certificates
If and to the extent described in the related prospectus supplement,
one or more classes of certificates of any series may be subordinate to one or
more other classes of certificates of that series. If you purchase subordinate
certificates, your right to receive payments out of collections and advances on
the related trust assets on any payment date will be subordinated to the
corresponding rights of the holders of the more senior classes of certificates.
If and to the extent described in the related prospectus supplement, the
subordination of a class of certificates may apply only in the event of certain
types of losses or shortfalls. In the related prospectus supplement, we will set
forth information concerning the method and amount of subordination provided by
a class or classes of subordinate certificates in a series and the circumstances
under which that subordination will be available.
If the mortgage assets in any trust established us are divided into
separate groups, each supporting a separate class or classes of certificates of
the related series, credit support may be provided by cross- support provisions
requiring that payments be made on senior certificates evidencing interests in
one group of those mortgage assets prior to payments on subordinate certificates
evidencing interests in a different group of those mortgage assets. We will
describe in the related prospectus supplement the manner and conditions for
applying any cross-support provisions.
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Insurance or Guarantees with Respect to Mortgage Loans
The mortgage loans included in any trust established by us may be
covered for certain default risks by insurance policies or guarantees. If so, we
will describe in the related prospectus supplement the nature of such default
risks and the extent of such coverage.
Letter of Credit
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered by one or more letters of
credit, issued by a bank or other financial institution specified in the related
prospectus supplement (the "Letter of Credit Bank"). Under a letter of credit,
the Letter of Credit Bank will be obligated to honor draws under the letter of
credit in an aggregate fixed dollar amount, net of unreimbursed payments under
the letter of credit, generally equal to a percentage specified in the related
prospectus supplement of the aggregate principal balance of some or all of the
related mortgage assets as of the date the related trust was formed or of the
initial aggregate principal balance of one or more classes of certificates of
the applicable series. The letter of credit may permit draws only in the event
of certain types of losses and shortfalls. The amount available under the letter
of credit will, in all cases, be reduced to the extent of the unreimbursed
payments thereunder and may otherwise be reduced as described in the related
prospectus supplement. The obligations of the Letter of Credit Bank under the
letter of credit for any series of offered certificates will expire at the
earlier of the date specified in the related prospectus supplement or the
termination of the related trust.
Certificate Insurance and Surety Bonds
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered by insurance policies or
surety bonds provided by one or more insurance companies or sureties. Those
instruments may cover, with respect to one or more classes of the offered
certificates of the related series, timely payments of interest and principal or
timely payments of interest and payments of principal on the basis of a schedule
of principal payments set forth in or determined in the manner specified in the
related prospectus supplement. We will describe in the related prospectus
supplement any limitations on the draws that may be made under any such
instrument.
Reserve Funds
If and to the extent described in the related prospectus supplement,
deficiencies in amounts otherwise payable on a series of offered certificates or
certain classes of those certificates will be covered, to the extent of
available funds, by one or more reserve funds in which cash, a letter of credit,
permitted investments, a demand note or a combination of the foregoing, will be
deposited, in the amounts specified in the related prospectus supplement. If and
to the extent described in the related prospectus supplement, the reserve fund
for the related series of offered certificates may also be funded over time.
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Amounts on deposit in any reserve fund for a series of offered
certificates will be applied for the purposes, in the manner, and to the extent
specified in the related prospectus supplement. If and to the extent described
in the related prospectus supplement, reserve funds may be established to
provide protection only against certain types of losses and shortfalls.
Following each payment date for the related series of offered certificates,
amounts in a reserve fund in excess of any required balance may be released from
the reserve fund under the conditions and to the extent specified in the related
prospectus supplement.
Credit Support with Respect to MBS
If and to the extent described in the related prospectus supplement,
any mortgage-backed security included in one of our trusts and/or the mortgage
loans that back that security may be covered by one or more of the types of
credit support described in this prospectus. We will specify in the related
prospectus supplement, as to each such form of credit support, the information
indicated above with respect to that mortgage-backed security, to the extent
that the information is material and available.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
Most, if not all, of the mortgage loans underlying a series of offered
certificates will be secured by multifamily and commercial properties in the
United States its territories and possessions. However, some of those mortgage
loans may be secured by multifamily and commercial properties outside the United
States, its territories and possessions.
The following discussion contains general summaries of certain legal
aspects of mortgage loans secured by multifamily and commercial properties in
the United States. Because these legal aspects are governed by applicable state
law, which may differ substantially from state to state, the summaries do not
purport to be complete, to reflect the laws of any particular state, or to
encompass the laws of all jurisdictions in which the security for the mortgage
loans underlying the offered certificates is situated. Accordingly, you should
be aware that the summaries are qualified in their entirety by reference to the
applicable laws of those states. See "Description of the Trust Assets--Mortgage
Loans."
If a significant percentage of mortgage loans underlying a series of
offered certificates, are secured by properties in a particular state, we will
discuss the relevant state laws, to the extent they vary materially from this
discussion, in the related prospectus supplement.
General
Each mortgage loan underlying a series of offered certificates will be
evidenced by a note or bond and secured by an instrument granting a security
interest in real property. The instrument granting a security interest in real
property may be a mortgage, deed of trust or a deed to secure debt, depending
upon the prevailing practice and law in the state in which that real property is
located. Mortgages, deeds of trust and deeds to secure debt are often herein
collectively referred to as "mortgages." A mortgage creates a lien upon, or
grants a title interest in, the real property covered by the mortgage, and
represents the security for the repayment of the indebtedness customarily
evidenced by a promissory note. The priority of the lien created or interest
granted will depend on--
o the terms of the mortgage,
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o the terms of separate subordination agreements or
intercreditor agreements with others that hold interests in
the real property,
o the knowledge of the parties to the mortgage, and
o in general, the order of recordation of the mortgage in the
appropriate public recording office.
However, the lien of a recorded mortgage will generally be subordinate to
later-arising liens for real estate taxes and assessments and other charges
imposed under governmental police powers.
Types of Mortgage Instruments
There are two parties to a mortgage--
o a mortgagor, who is the owner of the encumbered interest in
the real property, and
o a mortgagee, who is the lender.
In general, the mortgagor is also the borrower.
In contrast, a deed of trust is a three-party instrument. The parties
to a deed of trust are--
o the trustor, who is the equivalent of a mortgagor,
o the trustee to whom the real property is conveyed, and
o the beneficiary for whose benefit the conveyance is made, who
is the lender.
Under a deed of trust, the trustor grants the property, irrevocably until the
debt is paid, in trust and generally with a power of sale, to the trustee to
secure repayment of the indebtedness evidenced by the related note.
A deed to secure debt typically has two parties. Pursuant to a deed to
secure debt, the grantor, who is the equivalent of a mortgagor, conveys title to
the real property to the grantee, who is the lender, generally with a power of
sale, until the debt is repaid.
Where the borrower is a land trust, there would be an additional party
because legal title to the property is held by a land trustee under a land trust
agreement for the benefit of the borrower. At origination of a mortgage loan
involving a land trust, the borrower may execute a separate undertaking to make
payments on the mortgage note. In no event is the land trustee personally liable
for the mortgage note obligation.
The mortgagee's authority under a mortgage, the trustee's authority
under a deed of trust and the grantee's authority under a deed to secure debt
are governed by:
o the express provisions of the related instrument,
o the law of the state in which the real property is located,
o certain federal laws, and
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o in some deed of trust transactions, the directions of the
beneficiary.
Leases and Rents
A mortgage that encumbers an income-producing property often contains
an assignment of rents and leases and/or may be accompanied by a separate
assignment of rents and leases. Under an assignment of rents and leases, the
borrower assigns to the lender the borrower's right, title and interest as
landlord under each lease and the income derived from each lease. However, the
borrower retains a revocable license to collect the rents, provided there is no
default and the rents are not directly paid to the lender. If the borrower
defaults, the license terminates and the lender is entitled to collect the
rents. Local law may require that the lender take possession of the property
and/or obtain a court-appointed receiver before becoming entitled to collect the
rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code (the "UCC"). Room rates are
generally pledged by the borrower as additional security for the loan when a
mortgage loan is secured by a hotel or motel. In general, the lender must file
financing statements in order to perfect its security interest in the room rates
and must file continuation statements, generally every five years, to maintain
that perfection. Mortgage loans secured by hotels or motels may be included in
one of our trusts even if the security interest in the room rates was not
perfected or the requisite UCC filings were allowed to lapse. A lender will
generally be required to commence a foreclosure action or otherwise take
possession of the property in order to enforce its rights to collect the room
rates following a default, even if the lender's security interest in room rates
is perfected under applicable nonbankruptcy law.
In the bankruptcy setting, the lender will be stayed from enforcing its
rights to collect hotel and motel room rates. However, the room rates will
constitute "cash collateral" and cannot be used by the bankrupt borrower--
o without a hearing or the lender's consent, or
o unless the lender's interest in the room rates is given
adequate protection.
Such "adequate protection" may include a cash payment for otherwise encumbered
funds or a replacement lien on unencumbered property, in either case equal in
value to the amount of room rates that the bankrupt borrower proposes to use.
See "--Bankruptcy Laws" below.
Personalty
Certain types of income-producing real properties, such as hotels,
motels and nursing homes, may include personal property, which may, to the
extent it is owned by the borrower and not previously pledged, constitute a
significant portion of the property's value as security. The creation and
enforcement of liens on personal property are governed by the UCC. Accordingly,
if a borrower pledges personal property as security for a mortgage loan, the
lender generally must file UCC financing statements in order to perfect its
security interest in the personal property and must file continuation
statements, generally every five years, to maintain that perfection. In certain
cases, mortgage loans secured in part by personal property may be included in
one of our trusts even if the security interest in the personal property was not
perfected or the requisite UCC filings were allowed to lapse.
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Foreclosure
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property security at public auction to
satisfy the indebtedness.
Foreclosure Procedures Vary From State to State. The two primary
methods of foreclosing a mortgage are--
o judicial foreclosure, involving court proceedings, and
o nonjudicial foreclosure pursuant to a power of sale granted in
the mortgage instrument.
Other foreclosure procedures are available in some states, but they are
either infrequently used or available only in limited circumstances.
A foreclosure action is subject to most of the delays and expenses of
other lawsuits if defenses are raised or counterclaims are interposed. A
foreclosure action sometimes requires several years to complete.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted
in a court having jurisdiction over the mortgaged property. Generally, a lender
initiates the action by the service of legal pleadings upon--
o all parties having a subordinate interest of record in the
real property, and
o all parties in possession of the property, under leases or
otherwise, whose interests are subordinate to the mortgage.
Delays in completion of the foreclosure may occasionally result from
difficulties in locating defendants. When the lender's right to foreclose is
contested, the legal proceedings can be time-consuming. The court generally
issues a judgment of foreclosure and appoints a referee or other officer to
conduct a public sale of the mortgaged property upon successful completion of a
judicial foreclosure proceeding. The proceeds of that public sale are used to
satisfy the judgment. The procedures that govern these public sales vary from
state to state.
Equitable and Other Limitations on Enforceability of Certain
Provisions. United States courts have traditionally imposed general equitable
principles to limit the remedies available to lenders in foreclosure actions.
These principles are generally designed to relieve borrowers from the effects of
mortgage defaults perceived as harsh or unfair. Relying on such principles, a
court may:
o alter the specific terms of a loan to the extent it considers
necessary to prevent or remedy an injustice, undue oppression
or overreaching;
o require the lender to undertake affirmative actions to
determine the cause of the borrower's default and the
likelihood that the borrower will be able to reinstate the
loan;
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o require the lender to reinstate a loan or recast a payment
schedule in order to accommodate a borrower that is suffering
from a temporary financial disability; or
o limit the right of the lender to foreclose in the case of a
nonmonetary default, such as a failure to adequately maintain
the mortgaged property or an impermissible further encumbrance
of the mortgaged property.
Some courts have addressed the issue of whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that a borrower receive notice in addition to statutorily- prescribed
minimum notice. For the most part, these cases have--
o upheld the reasonableness of the notice provisions, or
o found that a public sale under a mortgage providing for a
power of sale does not involve sufficient state action to
trigger constitutional protections.
In addition, some states may have statutory protection such as the
right of the borrower to reinstate its mortgage loan after commencement of
foreclosure proceedings but prior to a foreclosure sale.
Nonjudicial Foreclosure/Power of Sale. In states permitting nonjudicial
foreclosure proceedings, foreclosure of a deed of trust is generally
accomplished by a nonjudicial trustee's sale pursuant to a power of sale
typically granted in the deed of trust. A power of sale may also be contained in
any other type of mortgage instrument if applicable law so permits. A power of
sale under a deed of trust allows a nonjudicial public sale to be conducted
generally following--
o a request from the beneficiary/lender to the trustee to sell
the property upon default by the borrower, and
o notice of sale is given in accordance with the terms of the
deed of trust and applicable state law.
In some states, prior to a nonjudicial public sale, the trustee under
the deed of trust must--
o record a notice of default and notice of sale, and
o send a copy of those notices to the borrower and to any other
party who has recorded a request for a copy of them.
In addition, in some states, the trustee must provide notice to any other party
having an interest of record in the real property, including junior lienholders.
A notice of sale must be posted in a public place and, in most states, published
for a specified period of time in one or more newspapers. Some states require a
reinstatement period during which the borrower or junior lienholder may have the
right to cure the default by paying the entire actual amount in arrears, without
regard to the acceleration of the indebtedness, plus the lender's expenses
incurred in enforcing the obligation. In other states, the borrower or the
junior lienholder has only the right to pay off the entire debt to prevent the
foreclosure sale. Generally, state law governs the procedure for public sale,
the parties entitled to notice, the method of giving notice and the applicable
time periods.
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Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of--
o the difficulty in determining the exact status of title to the
property due to, among other things, redemption rights that
may exist, and
o the possibility that physical deterioration of the property
may have occurred during the foreclosure proceedings.
As a result of the foregoing, it is common for the lender to purchase
the mortgaged property and become the owner thereof, subject to the borrower's
right in some states to remain in possession during a redemption period. In that
case, the lender will have both the benefits and burdens of ownership, including
the obligation to pay debt service on any senior mortgages, to pay taxes, to
obtain casualty insurance and to make repairs necessary to render the property
suitable for sale. The costs of operating and maintaining a commercial or
multifamily residential property may be significant and may be greater than the
income derived from that property. The lender also will commonly obtain the
services of a real estate broker and pay the broker's commission in connection
with the sale or lease of the property. Whether, the ultimate proceeds of the
sale of the property equal the lender's investment in the property depends upon
market conditions. Moreover, because of the expenses associated with acquiring,
owning and selling a mortgaged property, a lender could realize an overall loss
on the related mortgage loan even if the mortgaged property is sold at
foreclosure, or resold after it is acquired through foreclosure, for an amount
equal to the full outstanding principal amount of the loan plus accrued
interest.
The holder of a junior mortgage that forecloses on a mortgaged property
does so subject to senior mortgages and any other prior liens. In addition, it
may be obliged to keep senior mortgage loans current in order to avoid
foreclosure of its interest in the property. Furthermore, if the foreclosure of
a junior mortgage triggers the enforcement of a "due-on-sale" clause contained
in a senior mortgage, the junior mortgagee could be required to pay the full
amount of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are--
o to enable the lender to realize upon its security, and
o to bar the borrower, and all persons who have interests in the
property that are subordinate to that of the foreclosing
lender, from exercising their "equity of redemption."
The doctrine of equity of redemption provides that, until the property
encumbered by a mortgage has been sold in accordance with a properly conducted
foreclosure and foreclosure sale, those having interests that are subordinate to
that of the foreclosing lender have an equity of redemption and may redeem the
property by paying the entire debt with interest. Those having an equity of
redemption must generally be made parties to the foreclosure proceeding in order
for their equity of redemption to be terminated.
The equity of redemption is a common-law, nonstatutory right which
should be distinguished from post-sale statutory rights of redemption. In some
states, the borrower and foreclosed junior lienors are given a statutory period
in which to redeem the property after sale pursuant to a deed of trust or
foreclosure of a mortgage. In some states, statutory redemption may occur only
upon payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due.
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A statutory right of redemption will diminish the ability of the lender to sell
the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
Anti-Deficiency Legislation. Some or all of the mortgage loans
underlying a series of offered certificates may be nonrecourse loans. Therefore,
recourse in the case of default on such a mortgage loan will be limited to the
mortgaged property and such other assets, if any, that were pledged to secure
the mortgage loan. However, even if a mortgage loan by its terms provides for
recourse to the borrower's other assets, a lender's ability to realize upon
those assets may be limited by state law. For example, in some states, a lender
cannot obtain a deficiency judgment against the borrower following foreclosure
or sale under a deed of trust. A deficiency judgment is a personal judgment
against the former borrower equal to the difference between the net amount
realized upon the public sale of the real property and the amount due to the
lender. Other statutes may require the lender to exhaust the security afforded
under a mortgage before bringing a personal action against the borrower. In
certain other states, the lender has the option of bringing a personal action
against the borrower on the debt without first exhausting the security, but in
doing so, the lender may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders will usually
proceed first against the security in states where an election of remedy
provision exists. Finally, other statutory provisions limit any deficiency
judgment to the excess of the outstanding debt over the fair market value of the
property at the time of the sale. These other statutory provisions are intended
to protect borrowers from exposure to large deficiency judgments that might
result from bidding at below-market values at the foreclosure sale.
Leasehold Considerations. Some or all of the mortgage loans underlying
a series of offered certificates may be secured by a mortgage on the borrower's
leasehold interest under a ground lease. Leasehold mortgage loans are subject to
certain risks not associated with mortgage loans secured by a lien on the fee
estate of the borrower. The most significant of these risks is that if the
borrower's leasehold were to be terminated upon a lease default, the leasehold
mortgagee would lose its security. This risk may be lessened if the ground
lease:
o requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them,
o permits the leasehold estate to be assigned to and by the
leasehold mortgagee or the purchaser at a foreclosure sale,
and
o contains certain other protective provisions typically
included in a "mortgageable" ground lease.
Certain mortgage loans underlying a series of offered certificates,
however, may be secured by ground leases which do not contain these provisions.
Cooperative Shares. Some or all of the mortgage loans underlying a
series of offered certificates may be secured by a security interest on the
borrower's ownership interest in shares, and the proprietary leases belonging to
those shares, allocable to cooperative dwelling units that may be vacant or
occupied by nonowner tenants. Loans secured in this manner are subject to
certain risks not associated with mortgage loans secured by a lien on the fee
estate of a borrower in real property. Loans secured in this manner
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typically are subordinate to the mortgage, if any, on the cooperative's
building. That mortgage, if foreclosed, could extinguish the equity in the
building and the proprietary leases of the dwelling units derived from ownership
of the shares of the cooperative. Further, transfer of shares in a cooperative
is subject to various regulations as well as to restrictions under the governing
documents of the cooperative. The shares may be canceled in the event that
associated maintenance charges due under the related proprietary leases are not
paid. Typically, a recognition agreement between the lender and the cooperative
provides, among other things, that the lender may cure a default under a
proprietary lease.
Under the laws applicable in many states, "foreclosure" on cooperative
shares is accomplished by a sale in accordance with the provisions of Article 9
of the UCC and the security agreement relating to the shares. Article 9 of the
UCC requires that a sale be conducted in a "commercially reasonable" manner,
which may be dependent upon, among other things, the notice given the debtor and
the method, manner, time, place and terms of the sale. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. A recognition agreement, however, generally provides
that the lender's right to reimbursement is subject to the right of the
cooperative corporation to receive sums due under the proprietary leases.
Bankruptcy Laws
Operation of the U.S. Bankruptcy Code and related state laws may
interfere with or affect the ability of a lender to realize upon collateral or
to enforce a deficiency judgment. For example, under the U.S. Bankruptcy Code,
virtually all actions, including foreclosure actions and deficiency judgment
proceedings, to collect a debt are automatically stayed upon the filing of the
bankruptcy petition. Often, no interest or principal payments are made during
the course of the bankruptcy case. The delay caused by an automatic stay and its
consequences can be significant. Also, under the U.S. Bankruptcy Code, the
filing of a petition in bankruptcy by or on behalf of a junior lienor may stay
the senior lender from taking action to foreclose out the junior lien.
Under the U.S. Bankruptcy Code, the amount and terms of a mortgage loan
secured by a lien on property of the debtor may be modified provided that
substantive and procedural safeguards protective of the lender are met. A
bankruptcy court may, among other things--
o reduce the secured portion of the outstanding amount of the
loan to the then-current value of the property, thereby
leaving the lender a general unsecured creditor for the
difference between the then-current value of the property and
the outstanding balance of the loan;
o reduce the amount of each scheduled payment, by means of a
reduction in the rate of interest and/or an alteration of the
repayment schedule, with or without affecting the unpaid
principal balance of the loan;
o extend or shorten the term to maturity of the loan;
o permit the bankrupt borrower to cure of the subject loan
default by paying the arrearage over a number of years; or
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o permit the bankrupt borrower, through its rehabilitative plan,
to reinstate the loan payment schedule even if the lender has
obtained a final judgment of foreclosure prior to the filing
of the debtor's petition.
Federal bankruptcy law may also interfere with or affect the ability of
a secured lender to enforce the borrower's assignment of rents and leases
related to the mortgaged property. A lender may be stayed from enforcing the
assignment under the U.S. Bankruptcy Code. In addition, the legal proceedings
necessary to resolve the issue could be time-consuming, and result in delays in
the lender's receipt of the rents. However, recent amendments to the U.S.
Bankruptcy Code may minimize the impairment of the lender's ability to enforce
the borrower's assignment of rents and leases. In addition to the inclusion of
hotel revenues within the definition of "cash collateral" as noted above, the
amendments provide that a pre-petition security interest in rents or hotel
revenues is designed to overcome those cases holding that a security interest in
rents is unperfected under the laws of certain states until the lender has taken
some further action, such as commencing foreclosure or obtaining a receiver
prior to activation of the assignment of rents.
A borrower's ability to make payment on a mortgage loan may be impaired
by the commencement of a bankruptcy case relating to the tenant under a lease of
the related property. Under the U.S. Bankruptcy Code, the filing of a petition
in bankruptcy by or on behalf of a tenant results in a stay in bankruptcy
against the commencement or continuation of any state court proceeding for--
o past due rent,
o accelerated rent,
o damages, or
o a summary eviction order with respect to a default under the
lease that occurred prior to the filing of the tenant's
bankruptcy petition.
In addition, the U.S. Bankruptcy Code generally provides that a trustee
or debtor-in-possession may, subject to approval of the court:
o assume the lease and either retain it or assign it to a third
party, or
o reject the lease.
If the lease is assumed, the trustee, debtor-in-possession or assignee,
if applicable, must cure any defaults under the lease, compensate the lessor for
its losses and provide the lessor with "adequate assurance" of future
performance. These remedies may be insufficient, and any assurances provided to
the lessor may be inadequate. If the lease is rejected, the lessor will be
treated, except potentially to the extent of any security deposit, as an
unsecured creditor with respect to its claim for damages for termination of the
lease. The U.S. Bankruptcy Code also limits a lessor's damages for lease
rejection to:
o the rent reserved by the lease without regard to acceleration
for the greater of one year, or 15%, not to exceed three
years, of the remaining term of the lease, plus
o unpaid rent to the earlier of the surrender of the property or
the lessee's bankruptcy filing.
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Environmental Considerations
General. A lender may be subject to environmental risks when taking a
security interest in real property. Of particular concern may be properties that
are or have been used for industrial, manufacturing, military or disposal
activity. Those environmental risks include the possible diminution of the value
of a contaminated property or, as discussed below, potential liability for
clean-up costs or other remedial actions that could exceed the value of the
property or the amount of the lender's loan. In certain circumstances, a lender
may decide to abandon a contaminated real property as collateral for its loan
rather than foreclose and risk liability for clean-up costs.
Superlien Laws. Under the laws of many states, contamination on a
property may give rise to a lien on the property for clean-up costs. In several
states, that lien has priority over all existing liens, including those of
existing mortgages. In these states, the lien of a mortgage may lose its
priority to such a "superlien."
CERCLA. The federal Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), imposes strict liability on
present and past "owners" and "operators" of contaminated real property for the
costs of clean-up. A secured lender may be liable as an "owner" or "operator" of
a contaminated mortgaged property if agents or employees of the lender have
participated in the management of the property or the operations of the
borrower. Liability may exist even if the lender did not cause or contribute to
the contamination and regardless of whether the lender has actually taken
possession of the contaminated property through foreclosure, deed in lieu of
foreclosure or otherwise. Moreover, liability is not limited to the original or
unamortized principal balance of a loan or to the value of the property securing
a loan. Excluded from CERCLA's definition of "owner" or "operator," however, is
a person who, without participating in the management of the facility, holds
indicia of ownership primarily to protect his security interest. This is the so
called "secured creditor exemption."
The Asset Conservation, Lender Liability and Deposit Insurance Act of
1996 (the "Lender Liability Act") amended, among other things, the provisions of
CERCLA with respect to lender liability and the secured creditor exemption. The
Lender Liability Act offers substantial protection to lenders by defining the
activities in which a lender can engage and still have the benefit of the
secured creditor exemption. In order for a lender to be deemed to have
participated in the management of a mortgaged property, the lender must actually
participate in the operational affairs of the property of the borrower. The
Lender Liability Act provides that "merely having the capacity to influence, or
unexercised right to control" operations does not constitute participation in
management. A lender will lose the protection of the secured creditor exemption
only if--
o it exercises decision-making control over a borrower's
environmental compliance and hazardous substance handling and
disposal practices, or
o assumes day-to-day management of operational functions of a
mortgaged property.
The Lender Liability Act also provides that a lender will continue to have the
benefit of the secured creditor exemption even if it forecloses on a mortgaged
property, purchases it at a foreclosure sale or accepts a deed- in-lieu of
foreclosure, provided that the lender seeks to sell that property at the
earliest practicable commercially reasonable time on commercially reasonable
terms.
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Certain Other Federal and State Laws. Many states have statutes similar
to CERCLA, and not all those statutes provide for a secured creditor exemption.
In addition, under federal law, there is potential liability relating to
hazardous wastes and underground storage tanks under the federal Resource
Conservation and Recovery Act.
Certain federal, state and local laws, regulations and ordinances
govern the management, removal, encapsulation or disturbance of
asbestos-containing materials. These laws, as well as common law standards, may
impose liability for releases of or exposure to asbestos-containing materials
and may provide for third parties to seek recovery from owners or operators of
real properties for personal injuries associated with such releases.
Recent federal legislation will require owners of residential housing
constructed prior to 1978 to disclose to potential residents or purchasers any
known lead-based paint hazards and will impose treble damages for any failure to
disclose. In addition, the ingestion of lead-based paint chips or dust particles
by children can result in lead poisoning. If lead-based paint hazards exist at a
property, then the owner of that property may be held liable for injuries and
for the costs of removal or encapsulation of the lead-based paint.
In a few states, transfers of some types of properties are conditioned
upon cleanup of contamination prior to transfer. In these cases, a lender that
becomes the owner of a property through foreclosure, deed in lieu of foreclosure
or otherwise, may be required to clean up the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law
causes of action related to hazardous environmental conditions on a property,
such as actions based on nuisance or on toxic tort resulting in death, personal
injury or damage to property. While it may be more difficult to hold a lender
liable under common law causes of action, unanticipated or uninsured liabilities
of the borrower may jeopardize the borrower's ability to meet its loan
obligations.
Federal, state and local environmental regulatory requirements change
often. It is possible that compliance with a new regulatory requirement could
impose significant compliance costs on a borrower. These costs may jeopardize
the borrower's ability to meet its loan obligations.
Additional Considerations. The cost of remediating hazardous substance
contamination at a property can be substantial. If a lender becomes liable, it
can bring an action for contribution against the owner or operator who created
the environmental hazard. However, that individual or entity may be without
substantial assets. Accordingly, it is possible that the costs could become a
liability of the related trust and occasion a loss to the related
certificateholders.
If the operations on a foreclosed property are subject to environmental
laws and regulations, the lender will be required to operate the property in
accordance with those laws and regulations. This compliance may entail
substantial expense, especially in the case of industrial or manufacturing
properties.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers,
including prospective buyers at a foreclosure sale or following foreclosure.
This disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property, sometimes substantially.
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Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the mortgage loans underlying a series of offered
certificates may contain "due-on-sale" and "due-on-encumbrance" clauses that
purport to permit the lender to accelerate the maturity of the loan if the
borrower transfers or encumbers the a mortgaged property. In recent years, court
decisions and legislative actions placed substantial restrictions on the right
of lenders to enforce these clauses in many states. However, the Garn-St Germain
Depository Institutions Act of 1982 generally preempts state laws that prohibit
the enforcement of due-on-sale clauses and permits lenders to enforce these
clauses in accordance with their terms, subject to the limitations prescribed in
that Act and the regulations promulgated thereunder.
Junior Liens; Rights of Holders of Senior Liens
Any of our trusts may include mortgage loans secured by junior liens,
while the loans secured by the related senior liens may not be included in that
trust. The primary risk to holders of mortgage loans secured by junior liens is
the possibility that adequate funds will not be received in connection with a
foreclosure of the related senior liens to satisfy fully both the senior loans
and the junior loan.
In the event that a holder of a senior lien forecloses on a mortgaged
property, the proceeds of the foreclosure or similar sale will be applied as
follows:
o first, to the payment of court costs and fees in connection
with the foreclosure;
o second, to real estate taxes;
o third, in satisfaction of all principal, interest,
prepayment or acceleration penalties, if any, and any other
sums due and owing to the holder of the senior liens; and
o last, in satisfaction of all principal, interest, prepayment
and acceleration penalties, if any, and any other sums due and
owing to the holder of the junior mortgage loan.
Subordinate Financing
The terms of certain mortgage loans underlying a series of offered
certificates may not restrict the ability of the borrower to use the mortgaged
property as security for one or more additional loans, or the restrictions may
be unenforceable. Where a borrower encumbers a mortgaged property with one or
more junior liens, the senior lender is subjected to the following additional
risks:
o the borrower may have difficulty servicing and repaying
multiple loans;
o if the subordinate financing permits recourse to the borrower,
as is frequently the case, and the senior loan does not, a
borrower may have more incentive to repay sums due on the
subordinate loan;
o acts of the senior lender that prejudice the junior lender or
impair the junior lender's security, such as the senior
lender's agreeing to an increase in the principal amount of or
the interest rate payable on the senior loan, may create a
superior equity in favor of the junior lender;
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o if the borrower defaults on the senior loan and/or any junior
loan or loans, the existence of junior loans and actions taken
by junior lenders can impair the security available to the
senior lender and can interfere with or delay the taking of
action by the senior lender; and
o the bankruptcy of a junior lender may operate to stay
foreclosure or similar proceedings by the senior lender.
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that obligate the borrower
to pay a late charge or additional interest if payments are not timely made.
They may also contain provisions that prohibit prepayments for a specified
period and/or condition prepayments upon the borrower's payment of prepayment
premium, fee or charge. In certain states, there are or may be specific
limitations upon the late charges that a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment premiums,
fees and charges upon an involuntary prepayment is unclear under the laws of
many states.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980 ("Title V") provides that state usury limitations shall not
apply to certain types of residential, including multifamily, first mortgage
loans originated by certain lenders after March 31, 1980. Title V authorized any
state to reimpose interest rate limits by adopting, before April 1, 1983, a law
or constitutional provision that expressly rejects application of the federal
law. In addition, even where Title V is not rejected, any state is authorized by
the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
Americans with Disabilities Act
Under Title III of the Americans with Disabilities Act of 1990 and
rules promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, owners of public accommodations, such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments, must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, the altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected property
owner, landlord or other applicable person. In addition to imposing a possible
financial burden on the borrower in its capacity as owner or landlord, the ADA
may also impose requirements on a foreclosing lender who succeeds to the
interest of the borrower as owner or landlord. Furthermore, because the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord, a foreclosing lender that is financially more capable than the
borrower of complying with the requirements of the ADA may be subject to more
stringent requirements than those to which the borrower is subject.
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Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended (the "Relief Act"), a borrower who enters military service after the
origination of the borrower's mortgage loan, including a borrower who was in
reserve status and is called to active duty after origination of the mortgage
loan, may not be charged interest, including fees and charges, above an annual
rate of 6% during the period of the borrower's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
individuals who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service, including reservists who are called to
active duty, after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act.
Application of the Relief Act would adversely affect, for an
indeterminate period of time, the ability of a master servicer or special
servicer to collect full amounts of interest on an affected mortgage loan. Any
shortfalls in interest collections resulting from the application of the Relief
Act would result in a reduction of the amounts payable to the holders of
certificates of the related series, and would not be covered by advances or,
unless otherwise specified in the related prospectus supplement, any form of
credit support provided in connection with the certificates. In addition, the
Relief Act imposes limitations that would impair the ability of a master
servicer or special servicer to foreclose on an affected mortgage loan during
the borrower's period of active duty status and, under certain circumstances,
during an additional three month period after the active duty status ceases.
Forfeitures in Drug and RICO Proceedings
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, those crimes. Under
procedures contained in the comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property," including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that--
o its mortgage was executed and recorded before commission of
the crime upon which the forfeiture is based, or
o the lender was, at the time of execution of the mortgage,
"reasonably without cause to believe" that the property was
used in, or purchased with the proceeds of, illegal drug or
RICO activities.
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FEDERAL INCOME TAX CONSEQUENCES
General
This is a general discussion of the material federal income tax
consequences of owning the offered certificates. To the extent it relates to
matters of law or legal conclusions, it represents the opinion of our counsel,
subject to any qualifications as may be expressed in this discussion. Unless we
otherwise specify in the related prospectus supplement, our counsel for each
series will be Sidley & Austin.
This discussion is directed to certificateholders that hold the offered
certificates as "capital assets" within the meaning of Section 1221 of the
Internal Revenue Code of 1986, which we will refer to throughout this "Federal
Income Tax Consequences" section as the "Code." It does not discuss all federal
income tax consequences that may be relevant to owners of offered certificates,
particularly as to investors subject to special treatment under the Code,
including:
o banks,
o insurance companies, and
o foreign investors.
Further, this discussion and any legal opinions referred to in this
discussion are based on authorities that can change, or be differently
interpreted, with possible retroactive effect. No rulings have been or will be
sought from the IRS with respect to any of the federal income tax consequences
discussed below. Accordingly, the IRS may take contrary positions.
Investors and preparers of tax returns should be aware that under
applicable Treasury regulations a provider of advice on specific issues of law
is not considered an income tax return preparer unless the advice is--
o given with respect to events that have occurred at the time
the advice is rendered, and
o is directly relevant to the determination of an entry on a tax
return.
Accordingly, even if this discussion addresses an issue regarding the tax
treatment of the owner of the offered certificates, investors should consult
their own tax advisors regarding that issue. Investors should do so not only as
to federal taxes, but also state and local taxes. See "State and Other Tax
Consequences."
The following discussion addresses securities of three general types:
o "REMIC certificates" representing interests in a trust, or a
portion thereof, as to which a specified person or entity will
make a "real estate mortgage investment conduit", or "REMIC,"
election under Sections 860A through 860G of the Code;
o "FASIT certificates" representing interests in a trust, or a
portion thereof, as to which a specified person or entity will
make a "financial asset securitization investment trust," or
"FASIT," election within the meaning of Section 860L(a) of the
Code; and
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o "grantor trust certificates" representing interests in a trust
or a portion thereof, as to which no REMIC or FASIT election
will be made.
We will indicate in the prospectus supplement for each series whether
the related trustee, another party to the related Governing Document or an agent
appointed by that trustee or other party (in any event, a "tax administrator")
will make a REMIC or FASIT election for the related trust. If the related tax
administrator is required to make a REMIC or FASIT election, we also will
identify in the related prospectus supplement all "regular interests", "residual
interests" and/or "ownership interests", as applicable in the resulting REMIC or
FASIT.
The following discussion is limited to certificates offered under this
prospectus. In addition, this discussion applies only to the extent that the
related trust holds only mortgage loans. If a trust holds assets other than
mortgage loans, such as mortgage-backed securities, we will disclose in the
related prospectus supplement the tax consequences associated with those other
assets being included. In addition, if agreements other than guaranteed
investment contracts are included in a trust to provide interest rate protection
for the related offered certificates, the anticipated material tax consequences
associated with those agreements also will be discussed in the related
prospectus supplement. See "Description of the Trust Assets--Arrangements
Providing Interest Rate Protection."
The following discussion is based in part on the rules governing
original issue discount in Sections 1271-1273 and 1275 of the Code and in the
Treasury regulations issued under those sections. It is also based in part on
the rules governing REMICs in Sections 860A-860G of the Code and in the Treasury
regulations issued under those sections. The regulations relating to original
issue discount do not adequately address certain issues relevant to, and in some
instances provide that they are not applicable to, securities such as the
offered certificates.
REMICs
General. With respect to each series of offered certificates as to
which the related tax administrator will make a REMIC election, our counsel will
deliver its opinion generally to the effect that, assuming compliance with all
provisions of the related Governing Document, and subject to certain assumptions
set forth in the opinion:
o the related trust, or the relevant designated portion of the
trust, will qualify as a REMIC, and
o those offered certificates will be considered to evidence
ownership of--
(i) REMIC "regular interests," or
(ii) REMIC "residual interests."
We refer in this discussion to--
o certificates that evidence REMIC "regular interests" as the
"REMIC regular certificates," and
o certificates that represent REMIC "residual interests" as the
"REMIC residual certificates."
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If an entity electing to be treated as a REMIC fails to comply with the
ongoing requirements of the Code for REMIC status, it may lose its REMIC status.
If so, the entity may become taxable as a corporation. Therefore, the related
certificates may not be given the tax treatment summarized below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, the Treasury Department
has not done so. Any relief mentioned above, moreover, may be accompanied by
sanctions. These sanctions could include the imposition of a corporate tax on
all or a portion of a trust's income for the period in which the requirements
for REMIC status are not satisfied. The Governing Document with respect to each
REMIC will include provisions designed to maintain its status as a REMIC under
the Code.
Characterization of Investments in REMIC Certificates. Unless we state
otherwise in the related prospectus supplement, the offered certificates that
are REMIC certificates will be treated as--
o "real estate assets" within the meaning of Section
856(c)(5)(B) of the Code in the hands of a real estate
investment trust, and
o "loans secured by an interest in real property" or other
assets described in Section 7701(a)(19)(C) of the Code in the
hands of a thrift institution,
in the same proportion that the assets of the related REMIC are so treated.
However, to the extent that the REMIC assets constitute mortgage loans
on property not used for residential or certain other prescribed purposes, the
related offered certificates will not be treated as assets qualifying under
Section 7701(a)(19)(C). If 95% or more of the assets of the REMIC qualify for
any of the foregoing characterizations at all times during a calendar year, the
related offered certificates will qualify for the corresponding status in their
entirety for that calendar year.
In addition, offered certificates that are REMIC regular certificates
will be:
o "qualified mortgages" within the meaning of Section 860G(a)(3)
of the Code in the hands of another REMIC; and
o "permitted assets" under Section 860L(c)(1)(G) for a financial
asset securitization investment trust or "FASIT."
Finally, interest, including original issue discount, on offered
certificates that are REMIC regular certificates, and income allocated to
offered certificates that are REMIC residual certificates, will be interest
described in Section 856(c)(3)(B) of the Code if received by a real estate
investment trust, to the extent that these certificates are treated as "real
estate assets" within the meaning of Section 856(c)(5)(B) of the Code.
The related tax administrator will determine the percentage of the
REMIC's assets that constitute assets described in the above-referenced sections
of the Code with respect to each calendar quarter based on the average adjusted
basis of each category of the assets held by the REMIC during that calendar
quarter. The related tax administrator will report those determinations to
certificateholders in the manner and at the times required by applicable
Treasury regulations.
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The assets of the REMIC will include, in addition to mortgage loans,
collections on mortgage loans held pending payment on the related offered
certificates and any property acquired by foreclosure held pending sale, and may
include amounts in reserve accounts. It is unclear whether property acquired by
foreclosure held pending sale, and amounts in reserve accounts, would be
considered to be part of the mortgage loans, or whether these assets otherwise
would receive the same treatment as the mortgage loans for purposes of the
above-referenced sections of the Code. In addition, in some instances, the
mortgage loans may not be treated entirely as assets described in those sections
of the Code. If so, we will describe in the related prospectus supplement those
mortgage loans that are characterized differently. The Treasury regulations do
provide, however, that cash received from collections on mortgage loans held
pending payment is considered part of the mortgage loans for purposes of Section
856(c)(5)(B) of the Code, relating to real estate investment trusts.
To the extent a REMIC certificate represents ownership of an interest
in a mortgage loan that is secured in part by the related borrower's interest in
a bank account, that mortgage loan is not secured solely by real estate and
therefore:
o a portion of that certificate may not represent ownership of
"loans secured by an interest in real property" or other
assets described in Section 7701(a)(19)(C) of the Code;
o a portion of that certificate may not represent ownership of
"real estate assets" under Section 856(c)(5)(B) of the Code;
and
o the interest on that certificate may not constitute "interest
on obligations secured by mortgages on real property" within
the meaning of Section 856(c)(3)(B) of the Code.
Tiered REMIC Structures. For certain series of REMIC certificates, the
related tax administrator may make two or more REMIC elections as to the related
trust for federal income tax purposes. As to each of these series of REMIC
certificates, our counsel will opine that each portion of the related trust as
to which a REMIC election is to be made will qualify as a REMIC. Each of these
series will be treated as one REMIC solely for purposes of determining:
o whether the related REMIC certificates will be "real estate
assets" within the meaning of Section 856(c)(5)(B) of the
Code,
o whether the related REMIC certificates will be "loans secured
by an interest in real property" under Section 7701(a)(19)(C)
of the Code, and
o whether the interest/income on the related REMIC certificates
is interest described in Section 856(c)(3)(B) of the Code.
Taxation of Owners of REMIC Regular Certificates.
General. Except as otherwise stated in this discussion, the Code treats
REMIC regular certificates as debt instruments issued by the REMIC and not as
ownership interests in the REMIC or its assets. Holders of REMIC regular
certificates that otherwise report income under the cash method of accounting
must nevertheless report income with respect to REMIC regular certificates under
the accrual method.
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Original Issue Discount. Certain REMIC regular certificates may be
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code. Any holders of REMIC regular certificates issued with original issue
discount generally will have to include original issue discount in income as it
accrues, in accordance with the "constant yield" method described below, prior
to the receipt of the cash attributable to that income. The IRS has issued
regulations under Section 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. Section
1272(a)(6) of the Code provides special rules applicable to the accrual of
original issue discount on, among other things, REMIC regular certificates. The
Treasury Department has not issued regulations under that section. You should be
aware, however, that Section 1272(a)(6) and the regulations under Sections 1271
to 1275 of the Code do not adequately address certain issues relevant to, or are
not applicable to, prepayable securities such as the offered certificates. We
recommend that you consult with your own tax advisor concerning the tax
treatment of your certificates.
The Code requires, in computing the accrual of original issue discount
on REMIC regular certificates, that a reasonable assumption be used concerning
the rate at which borrowers will prepay the mortgage loans held by the related
REMIC. Further, adjustments must be made in the accrual of that original issue
discount to reflect differences between the prepayment rate actually experienced
and the assumed prepayment rate. The prepayment assumption is to be determined
in a manner prescribed in Treasury regulations that the Treasury Department has
not yet issued. The Conference Committee Report accompanying the Tax Reform Act
of 1986 (the "Committee Report") indicates that the regulations should provide
that the prepayment assumption used with respect to a REMIC regular certificate
is determined once, at initial issuance, and must be the same as that used in
pricing. The prepayment assumption used in reporting original issue discount for
each series of REMIC regular certificates will be consistent with this standard
and will be disclosed in the related prospectus supplement. However, neither we
nor any other person will make any representation that the mortgage loans
underlying any series of REMIC regular certificates will in fact prepay at a
rate conforming to the prepayment assumption or at any other rate or that the
IRS will not challenge on audit the prepayment assumption used.
The original issue discount, if any, on a REMIC regular certificate
will be the excess of its stated redemption price at maturity over its issue
price.
The issue price of a particular class of REMIC regular certificates
will be the first cash price at which a substantial amount of those certificates
are sold, excluding sales to bond houses, brokers and underwriters. If less than
a substantial amount of a particular class of REMIC regular certificates is sold
for cash on or prior to the related date of initial issuance of those
certificates, the issue price for that class will be the fair market value of
that class on the date of initial issuance.
Under the Treasury regulations, the stated redemption price of a REMIC
regular certificate is equal to the total of all payments to be made on that
certificate other than "qualified stated interest." "Qualified stated interest"
is interest that is unconditionally payable at least annually, during the entire
term of the instrument, at:
o a single fixed rate,
o a "qualified floating rate,"
o an "objective rate,"
o a combination of a single fixed rate and one or more
"qualified floating rates,"
o a combination of a single fixed rate and one "qualified
inverse floating rate," or
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o a combination of "qualified floating rates" that does not
operate in a manner that accelerates or defers interest
payments on the REMIC regular certificate.
In the case of REMIC regular certificates bearing adjustable interest
rates, the determination of the total amount of original issue discount and the
timing of the inclusion thereof will vary according to the characteristics of
those certificates. If the original issue discount rules apply to those
certificates, we will describe in the related prospectus supplement the manner
in which those rules will be applied with respect to those certificates in
preparing information returns to the certificateholders and the IRS.
Certain classes of REMIC regular certificates may provide that the
first interest payment with respect to those certificates be made more than one
month after the date of initial issuance, a period that is longer than the
subsequent monthly intervals between interest payments. Assuming the "accrual
period" for original issue discount is the monthly period that ends on each
payment date, then, as a result of this "long first accrual period," some or all
interest payments may be required to be included in the stated redemption price
of the REMIC regular certificate and accounted for as original issue discount.
Because interest on REMIC regular certificates must in any event be accounted
for under an accrual method, applying this analysis would result in only a
slight difference in the timing of the inclusion in income of the yield on the
REMIC regular certificates.
In addition, if the accrued interest to be paid on the first payment
date is computed with respect to a period that begins prior to the date of
initial issuance, a portion of the purchase price paid for a REMIC regular
certificate will reflect that accrued interest. In those cases, information
returns provided to the certificateholders and the IRS will be based on the
position that the portion of the purchase price paid for the interest accrued
prior to the date of initial issuance is treated as part of the overall cost of
the REMIC regular certificate. Therefore, the portion of the interest paid on
the first payment date in excess of interest accrued from the date of initial
issuance to the first payment date is included in the stated redemption price of
the REMIC regular certificate. However, the Treasury regulations state that all
or some portion of this accrued interest may be treated as a separate asset, the
cost of which is recovered entirely out of interest paid on the first payment
date. It is unclear how an election to do so would be made under these
regulations and whether this election could be made unilaterally by a
certificateholder.
Notwithstanding the general definition of original issue discount,
original issue discount on a REMIC regular certificate will be considered to be
de minimis if it is less than 0.25% of the stated redemption price of the
certificate multiplied by its weighted average maturity. For this purpose, the
weighted average maturity of a REMIC regular certificate is computed as the sum
of the amounts determined, as to each payment included in the stated redemption
price of the certificate, by multiplying:
o the number of complete years, rounding down for partial years,
from the date of initial issuance, until that payment is
expected to be made, presumably taking into account the
prepayment assumption, by
o a fraction--
(i) the numerator of which is the amount of the payment,
and
(ii) the denominator of which is the stated redemption
price at maturity of the certificate.
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Under the Treasury regulations, original issue discount of only a de
minimis amount, other than de minimis original issue discount attributable to a
so-called "teaser" interest rate or an initial interest holiday, will be
included in income as each payment of stated principal is made, based on the
product of:
o the total amount of the de minimis original issue discount,
and
o a fraction--
(i) the numerator of which is the amount of the principal
payment, and
(ii) the denominator of which is the outstanding stated
principal amount of the subject REMIC regular
certificate.
The Treasury regulations also would permit you to elect to accrue de
minimis original issue discount into income currently based on a constant yield
method. See "--REMICs--Taxation of Owners of REMIC Regular Certificates--Market
Discount" below for a description of that election under the applicable Treasury
regulations.
If original issue discount on a REMIC regular certificate is in excess
of a de minimis amount, the holder of the certificate must include in ordinary
gross income the sum of the "daily portions" of original issue discount for each
day during its taxable year on which it held the certificate, including the
purchase date but excluding the disposition date. In the case of an original
holder of a REMIC regular certificate, the daily portions of original issue
discount will be determined as described below.
As to each accrual period, the related tax administrator will calculate
the original issue discount that accrued during that accrual period. For these
purposes, an accrual period is, unless we otherwise state in the related
prospectus supplement, the period that begins on a date that corresponds to a
payment date, or in the case of the first accrual period, begins on the date of
initial issuance, and ends on the day preceding the immediately following
payment date. The portion of original issue discount that accrues in any accrual
period will equal the excess, if any, of:
o the sum of:
(i) the present value, as of the end of the accrual
period, of all of the payments remaining to be made
on the subject REMIC regular certificate, if any, in
future periods, presumably taking into account the
prepayment assumption, and
(ii) the payments made on that certificate during the
accrual period of amounts included in the stated
redemption price, over
o the adjusted issue price of the subject REMIC regular
certificate at the beginning of the
accrual period.
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The adjusted issue price of a REMIC regular certificate is:
o the issue price of the certificate, increased by
o the aggregate amount of original issue discount previously
accrued on the certificate, reduced by
o the amount of all prior payments of amounts included in its
stated redemption price.
The present value of the remaining payments referred to in item (i) of
the second preceding sentence will be calculated:
o assuming that payments on the REMIC regular certificate will
be received in future periods based on the related mortgage
loans being prepaid at a rate equal to the prepayment
assumption;
o using a discount rate equal to the original yield to maturity
of the certificate, based on its issue price and the
assumption that the related mortgage loans will be prepaid at
a rate equal to the prepayment assumption; and
o taking into account events, including actual prepayments, that
have occurred before the close of the accrual period.
The original issue discount accruing during any accrual period,
computed as described above, will be allocated ratably to each day during the
accrual period to determine the daily portion of original issue discount for
that day.
A subsequent purchaser of a REMIC regular certificate that purchases
the certificate at a cost, excluding any portion of that cost attributable to
accrued qualified stated interest, that is less than its remaining stated
redemption price, will also be required to include in gross income the daily
portions of any original issue discount with respect to the certificate.
However, the daily portion will be reduced, if the cost is in excess of its
"adjusted issue price," in proportion to the ratio that such excess bears to the
aggregate original issue discount remaining to be accrued on the certificate.
The adjusted issue price of a REMIC regular certificate, as of any date of
determination, equals the sum of:
(i) the adjusted issue price or, in the case of the first accrual
period, the issue price, of the certificate at the beginning
of the accrual period which includes that date of
determination, and
(ii) the daily portions of original issue discount for all days
during such accrual period prior to that date of
determination.
If the foregoing method for computing original issue discount results
in a negative amount of original issue discount as to any accrual period with
respect to a REMIC regular certificate held by you, the amount of original issue
discount accrued for that accrual period will be zero. You may not deduct the
negative amount currently. Instead, you will only be permitted to offset it
against future positive original issue discount, if any, attributable to the
certificate. Although not free from doubt, it is possible that you may be
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permitted to recognize a loss to the extent your basis in the certificate
exceeds the maximum amount of payments that you could ever receive with respect
to the certificate. However, any such loss may be a capital loss, which is
limited in its deductibility. The foregoing considerations are particularly
relevant to certificates that have no, or disproportionately small, amount of
principal because they can have negative yields if the mortgage loans held by
the related REMIC prepay more quickly than anticipated. See "Risk Factors--The
Investment Performance of Your Certificate Will Depend Upon Payments, Defaults
and Losses on the Underlying Mortgage Loans."
The Treasury regulations in some circumstances permit the holder of a
debt instrument to recognize original issue discount under a method that differs
from that used by the issuer. Accordingly, it is possible that you may be able
to select a method for recognizing original issue discount that differs from
that used by the trust in preparing reports to you and the IRS. Prospective
purchasers of the REMIC regular certificates should consult their tax advisors
concerning the tax treatment of these certificates in this regard.
Market Discount. You will be considered to have purchased a REMIC
regular certificate at a market discount if--
o in the case of a certificate issued without original issue
discount, you purchased the certificate at a price less than
its remaining stated principal amount, or
o in the case of a certificate issued with original issue
discount, you purchased the certificate at a price less than
its adjusted issue price.
If you purchase a REMIC regular certificate with more than a de minimis
amount of market discount, you will recognize gain upon receipt of each payment
representing stated redemption price. Under Section 1276 of the Code, you
generally will be required to allocate the portion of each payment representing
some or all of the stated redemption price first to accrued market discount not
previously included in income. You must recognize ordinary income to that
extent. You may elect to include market discount in income currently as it
accrues rather than including it on a deferred basis in accordance with the
foregoing. If made, this election will apply to all market discount bonds
acquired by you on or after the first day of the first taxable year to which
this election applies.
The Treasury regulations also permit you to elect to accrue all
interest and discount, including de minimis market or original issue discount,
in income as interest, and to amortize premium, based on a constant yield
method. Your making this election with respect to a REMIC regular certificate
with market discount would be deemed to be an election to include currently
market discount in income with respect to all other debt instruments with market
discount that you acquire during the taxable year of the election or thereafter,
and possibly previously acquired instruments. Similarly, your making this
election as to a certificate acquired at a premium would be deemed to be an
election to amortize bond premium with respect to all debt instruments having
amortizable bond premium that you own or acquire. See "--REMICs --Taxation of
Owners of REMIC Regular Certificates--Premium" below.
Each of the elections described above to accrue interest and discount,
and to amortize premium, with respect to a certificate on a constant yield
method or as interest would be irrevocable except with the approval of the IRS.
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However, market discount with respect to a REMIC regular certificate
will be considered to be de minimis for purposes of Section 1276 of the Code if
the market discount is less than 0.25% of the remaining stated redemption price
of the certificate multiplied by the number of complete years to maturity
remaining after the date of its purchase. In interpreting a similar rule with
respect to original issue discount on obligations payable in installments, the
Treasury regulations refer to the weighted average maturity of obligations.
It is likely that the same rule will be applied with respect to market
discount, presumably taking into account the prepayment assumption. If market
discount is treated as de minimis under this rule, it appears that the actual
discount would be treated in a manner similar to original issue discount of a de
minimis amount. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above. This treatment would result in
discount being included in income at a slower rate than discount would be
required to be included in income using the method described above.
Section 1276(b)(3) of the Code specifically authorizes the Treasury
Department to issue regulations providing for the method for accruing market
discount on debt instruments, the principal of which is payable in more than one
installment. Until regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. The Committee Report indicates
that in each accrual period, you may accrue market discount on a REMIC regular
certificate held by you, at your option:
o on the basis of a constant yield method,
o in the case of a certificate issued without original issue
discount, in an amount that bears the same ratio to the total
remaining market discount as the stated interest paid in the
accrual period bears to the total amount of stated interest
remaining to be paid on the certificate as of the beginning of
the accrual period, or
o in the case of a certificate issued with original issue
discount, in an amount that bears the same ratio to the total
remaining market discount as the original issue discount
accrued in the accrual period bears to the total amount of
original issue discount remaining on the certificate at the
beginning of the accrual period.
The prepayment assumption used in calculating the accrual of original
issue discount is also used in calculating the accrual of market discount.
To the extent that REMIC regular certificates provide for monthly or
other periodic payments throughout their term, the effect of these rules may be
to require market discount to be includible in income at a rate that is not
significantly slower than the rate at which the discount would accrue if it were
original issue discount. Moreover, in any event a holder of a REMIC regular
certificate generally will be required to treat a portion of any gain on the
sale or exchange of the certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the foregoing
methods, less any accrued market discount previously reported as ordinary
income.
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Further, Section 1277 of the Code may require you to defer a portion of
your interest deductions for the taxable year attributable to any indebtedness
incurred or continued to purchase or carry a REMIC regular certificate purchased
with market discount. For these purposes, the de minimis rule referred to above
applies. Any deferred interest expense would not exceed the market discount that
accrues during the related taxable year and is, in general, allowed as a
deduction not later than the year in which the related market discount is
includible in income. If you have elected, however, to include market discount
in income currently as it accrues, the interest deferral rule described above
would not apply.
Premium. A REMIC regular certificate purchased at a cost, excluding any
portion of the cost attributable to accrued qualified stated interest, that is
greater than its remaining stated redemption price will be considered to be
purchased at a premium. You may elect under Section 171 of the Code to amortize
the premium under the constant yield method over the life of the certificate. If
you elect to amortize bond premium, bond premium would be amortized on a
constant yield method and would be applied as an offset against qualified stated
interest. If made, this election will apply to all debt instruments having
amortizable bond premium that you own or subsequently acquire. The IRS has
issued regulations on the amortization of bond premium, but they specifically do
not apply to holders of REMIC regular certificates.
The Treasury regulations also permit you to elect to include all
interest, discount and premium in income based on a constant yield method,
further treating you as having made the election to amortize premium generally.
See "--Taxation of Owners of REMIC Regular Certificates--Market Discount" above.
The Committee Report states that the same rules that apply to accrual of market
discount and require the use of a prepayment assumption in accruing market
discount with respect to REMIC regular certificates without regard to whether
those certificates have original issue discount, will also apply in amortizing
bond premium under Section 171 of the Code.
Whether you will be treated as holding a REMIC regular certificate with
amortizable bond premium will depend on--
o the purchase price paid for your certificate, and
o the payments remaining to be made on your certificate at the
time of its acquisition by you.
If you acquire an interest in any class of REMIC regular certificates issued at
a premium, you should consider consulting your own tax advisor regarding the
possibility of making an election to amortize the premium.
Realized Losses. Under Section 166 of the Code, if you are either a
corporate holder of a REMIC regular certificate and or a noncorporate holder of
a REMIC regular certificate that acquires the certificate in connection with a
trade or business, you should be allowed to deduct, as ordinary losses, any
losses sustained during a taxable year in which your certificate becomes wholly
or partially worthless as the result of one or more realized losses on the
related mortgage loans. However, if you are a noncorporate holder that does not
acquire a REMIC regular certificate in connection with a trade or business, it
appears that--
o you will not be entitled to deduct a loss under Section 166 of
the Code until your certificate becomes wholly worthless,
which is when its principal balance has been reduced to zero,
and
o the loss will be characterized as a short-term capital loss.
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You will also have to accrue interest and original issue discount with
respect to your REMIC regular certificate, without giving effect to any
reductions in payments attributable to defaults or delinquencies on the related
mortgage loans, until it can be established that those payment reductions are
not recoverable. As a result, your taxable income in a period could exceed your
economic income in that period. If any such amounts previously included in
taxable income are not ultimately received due to a loss on the related mortgage
loans, you should be able to recognize a loss or reduction in income. However,
the law is unclear with respect to the timing and character of this loss or
reduction in income.
Taxation of Owners of REMIC Residual Certificates.
General. Although a REMIC is a separate entity for federal income tax
purposes, the Code does not subject a REMIC to entity-level taxation, except
with regard to prohibited transactions and certain other transactions. See
"--REMICs--Prohibited Transactions Tax and Other Taxes" below. Rather, a holder
of REMIC residual certificates must generally take in income the taxable income
or net loss of the related REMIC. Accordingly, the Code treats the REMIC
residual certificates much differently than it would if they were direct
ownership interests in the related mortgage loans or as debt instruments issued
by the related REMIC.
Holders of REMIC residual certificates generally will be required to
report their daily portion of the taxable income or, subject to the limitations
noted in this discussion, the net loss of the related REMIC for each day during
a calendar quarter that they own those certificates. For this purpose, the
taxable income or net loss of the REMIC will be allocated to each day in the
calendar quarter ratably using a "30 days per month/90 days per quarter/360 days
per year" convention unless we otherwise disclose in the related prospectus
supplement. These daily amounts then will be allocated among the holders of the
REMIC residual certificates in proportion to their respective ownership
interests on that day. Any amount included in the certificateholders' gross
income or allowed as a loss to them by virtue of this paragraph will be treated
as ordinary income or loss. The taxable income of the REMIC will be determined
under the rules described below in "--REMICs--Taxation of Owners of REMIC
Residual Certificates--Taxable Income of the REMIC." Holders of REMIC residual
certificates must report the taxable income of the related REMIC without regard
to the timing or amount of cash payments by the REMIC until the REMIC's
termination. Income derived from the REMIC residual certificates will be
"portfolio income" for the purposes of the limitations under Section 469 of the
Code on the deductibility of "passive losses."
A holder of a REMIC residual certificate that purchased the certificate
from a prior holder also will be required to report on its federal income tax
return amounts representing its daily share of the taxable income, or net loss,
of the related REMIC for each day that it holds the REMIC residual certificate.
These daily amounts generally will equal the amounts of taxable income or net
loss determined as described above. The Committee Report indicates that certain
modifications of the general rules may be made, by regulations, legislation or
otherwise to reduce, or increase, the income of a holder of a REMIC residual
certificate. These modifications would occur when a holder purchases the REMIC
residual certificate from a prior holder at a price other than the adjusted
basis that the REMIC residual certificate would have had in the hands of an
original holder of that certificate. The Treasury regulations, however, do not
provide for these modifications.
Any payments that you receive from the seller of a REMIC residual
certificate in connection with the acquisition of that certificate will be
income to you. Although it is possible that these payments would be includible
in income immediately upon receipt, the IRS might assert that you should include
these payments in income over time according to an amortization schedule or
according to some other method. Because of
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the uncertainty concerning the treatment of these payments, we recommend that
you consult your tax advisor concerning the treatment of these payments for
income tax purposes.
Tax liability with respect to the amount of income that holders of
REMIC residual certificates will be required to report, will often exceed the
amount of cash payments received from the related REMIC for the corresponding
period. Consequently, you should have (i) other sources of funds sufficient to
pay any federal income taxes due as a result of your ownership of REMIC residual
certificates or (ii) unrelated deductions against which income may be offset.
See, however, the rules discussed below relating to:
o "excess inclusions,"
o residual interests without "significant value," and
o "noneconomic" residual interests.
The fact that the tax liability associated with this income allocated to you may
exceed the cash payments received by you for the corresponding period may
significantly and adversely affect their after-tax rate of return. This
disparity between income and payments may not be offset by corresponding losses
or reductions of income attributable to your REMIC residual certificates until
subsequent tax years. Even then, the extra income may not be completely offset
due to changes in the Code, tax rates or character of the income or loss.
Therefore, REMIC residual certificates will ordinarily have a negative "value at
the time of issuance." See "Risk Factors--'Residual Interests' in a 'Real Estate
Mortgage Investment Conduit' Have Adverse Tax Consequences."
Taxable Income of the REMIC. The taxable income of a REMIC will equal:
o the income from the mortgage loans and other assets of the
REMIC; plus
o any cancellation of indebtedness income due to the allocation
of realized losses to those REMIC certificates, constituting
"regular interests" in the REMIC; less the following items--
(i) the deductions allowed to the REMIC for interest,
including original issue discount but reduced by any
premium on issuance, on any class of REMIC
certificates constituting "regular interests" in the
REMIC, whether offered or not,
(ii) amortization of any premium on the mortgage loans
held by the REMIC,
(iii) bad debt losses with respect to the mortgage loans
held by the REMIC, and
(iv) except as described below, servicing, administrative
and other expenses.
For purposes of determining its taxable income, a REMIC will have an
initial aggregate basis in its assets equal to the sum of the issue prices of
all REMIC certificates, or in the case of REMIC certificates not sold initially,
their fair market values. The aggregate basis will be allocated among the
mortgage loans and the other assets of the REMIC in proportion to their
respective fair market values. The issue price of any REMIC certificates offered
hereby will be determined in the manner described above under
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount." The issue price of a REMIC certificate received in exchange for an
interest in the mortgage loans or other property will equal the fair market
value of the interests in the mortgage loans or other property. Accordingly, if
one or
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more classes of REMIC certificates are retained initially rather than sold, the
related tax administrator may be required to estimate the fair market value of
these interests in order to determine the basis of the REMIC in the mortgage
loans and other property held by the REMIC.
Subject to possible application of the de minimis rules, the method of
accrual by a REMIC of original issue discount income and market discount income
with respect to mortgage loans that it holds will be equivalent to the method
for accruing original issue discount income for holders of REMIC regular
certificates. That method is a constant yield method taking into account the
prepayment assumption. However, a REMIC that acquires loans at a market discount
must include that market discount in income currently, as it accrues, on a
constant yield basis. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates" above, which describes a method for accruing the discount income
that is analogous to that required to be used by a REMIC as to mortgage loans
with market discount that it holds.
A REMIC will acquire a mortgage loan with discount, or premium, to the
extent that the REMIC's basis, determined as described in the preceding
paragraph, is different from its stated redemption price. Discount will be
includible in the income of the REMIC as it accrues, in advance of receipt of
the cash attributable to that income, under a method similar to the method
described above for accruing original issue discount on the REMIC regular
certificates. A REMIC probably will elect under Section 171 of the Code to
amortize any premium on the mortgage loans that it holds. Premium on any
mortgage loan to which this election applies may be amortized under a constant
yield method, presumably taking into account the prepayment assumption.
A REMIC will be allowed deductions for interest, including original
issue discount, on all of the certificates that constitute "regular interests"
in the REMIC, whether or not offered hereby, as if those certificates were
indebtedness of the REMIC. Original issue discount will be considered to accrue
for this purpose as described above under "--REMICs--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount." However, the de minimis rule
described in that Section will not apply in determining deductions.
If a class of REMIC regular certificates is issued at a price in excess
of the stated redemption price of that class, the net amount of interest
deductions that are allowed to the REMIC in each taxable year with respect to
those certificates will be reduced by an amount equal to the portion of that
excess that is considered to be amortized in that year. It appears that this
excess should be amortized under a constant yield method in a manner analogous
to the method of accruing original issue discount described above under
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Original Issue
Discount."
As a general rule, the taxable income of a REMIC will be determined as
if the REMIC were an individual having the calendar year as its taxable year and
using the accrual method of accounting. However, no item of income, gain, loss
or deduction allocable to a prohibited transaction will be taken into account.
See "--REMICs--Prohibited Transactions Tax and Other Taxes" below. Further, the
limitation on miscellaneous itemized deductions imposed on individuals by
Section 67 of the Code will not be applied at the REMIC level so that the REMIC
will be allowed full deductions for servicing, administrative and other
noninterest expenses in determining its taxable income. All such expenses will
be allocated as a separate item to the holders of the related REMIC
certificates, subject to the limitation of Section 67 of the Code. See
"--REMICs--Taxation of Owners of REMIC Residual Certificates--Possible
Pass-Through of Miscellaneous Itemized Deductions" below. If the deductions
allowed to the REMIC exceed its gross income for a calendar quarter, the excess
will be the net loss for the REMIC for that calendar quarter.
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Basis Rules, Net Losses and Payments. The adjusted basis of a REMIC
residual certificate will be equal to:
(i) the amount paid for that REMIC residual certificate,
(ii) increased by, amounts included in the income of the holder of
that REMIC residual certificate, and
(iii) decreased, but not below zero, by payments made, and by net
losses allocated, to the holder of that REMIC residual
certificate.
A holder of a REMIC residual certificate is not allowed to take into
account any net loss for any calendar quarter to the extent that the net loss
exceeds the adjusted basis to that holder as of the close of that calendar
quarter, determined without regard to that net loss. Any loss that is not
currently deductible by reason of this limitation may be carried forward
indefinitely to future calendar quarters and, subject to the same limitation,
may be used only to offset income from the REMIC residual certificate.
Any payment on a REMIC residual certificate will be treated as a
nontaxable return of capital to the extent it does not exceed the holder's
adjusted basis in the REMIC residual certificate. To the extent a payment on a
REMIC residual certificate exceeds the holder's adjusted basis, it will be
treated as gain from the sale of that REMIC residual certificate.
A holder's basis in a REMIC residual certificate will initially equal
the amount paid for the certificate and will be increased by that holder's
allocable share of taxable income of the related REMIC. However, these increases
in basis may not occur until the end of the calendar quarter, or perhaps the end
of the calendar year, with respect to which the related REMIC's taxable income
is allocated to that holder. To the extent the initial basis of the holder of a
REMIC residual certificate is less than the payments to that holder, and
increases in the initial basis either occur after these payments or, together
with the initial basis, are less than the amount of these payments, gain will be
recognized to that holder on these payments. This gain will be treated as gain
from the sale of its REMIC residual certificate.
The effect of these rules is that a holder of a REMIC residual
certificate may not amortize its basis in a REMIC residual certificate, but may
only recover its basis:
o through payments,
o through the deduction of any net losses of the REMIC, or
o upon the sale of its REMIC residual certificate. See
"--REMICs--Sales of REMIC Certificates" below.
For a discussion of possible modifications of these rules that may
require adjustments to income of a holder of a REMIC residual certificate other
than an original holder see "--REMICs--Taxation of Owners of REMIC Residual
Certificates--General" above. These adjustments could require a holder of a
REMIC residual certificate to account for any difference between the cost of the
certificate to the holder and the adjusted basis of the certificate would have
been in the hands of an original holder.
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Excess Inclusions. Any "excess inclusions" with respect to a REMIC
residual certificate will be subject to federal income tax in all events. In
general, the "excess inclusions" with respect to a REMIC residual certificate
for any calendar quarter will be the excess, if any, of:
(i) the daily portions of REMIC taxable income allocable to that
certificate, over
(ii) the sum of the "daily accruals" for each day during the
quarter that the certificate was held by that holder.
The daily accruals of a holder of a REMIC residual certificate will be
determined by allocating to each day during a calendar quarter its ratable
portion of a numerical calculation. That calculation is the product of the
"adjusted issue price" of the REMIC residual certificate at the beginning of the
calendar quarter and 120% of the "long-term Federal rate" in effect on the date
of initial issuance. For this purpose, the adjusted issue price of a REMIC
residual certificate as of the beginning of any calendar quarter will be equal
to:
(i) the issue price of the certificate, increased by
(ii) the sum of the daily accruals for all prior quarters, and
decreased, but not below zero, by
(iii) any payments made with respect to the certificate before the
beginning of that quarter.
The issue price of a REMIC residual certificate is the initial offering
price to the public at which a substantial amount of the REMIC residual
certificates were sold, but excluding sales to bond houses, brokers and
underwriters or, if no sales have been made, their initial value. The "long-term
Federal rate" is an average of current yields on Treasury securities with a
remaining term of greater than nine years, computed and published monthly by the
IRS.
Although it has not done so, the Treasury Department has authority to
issue regulations that would treat the entire amount of income accruing on a
REMIC residual certificate as excess inclusions if the REMIC residual interest
evidenced by that certificate is considered not to have "significant value."
For holders of REMIC residual certificates, excess inclusions:
o will not be permitted to be offset by deductions, losses or
loss carryovers from other activities,
o will be treated as "unrelated business taxable income" to an
otherwise tax-exempt organization, and
o will not be eligible for any rate reduction or exemption under
any applicable tax treaty with respect to the 30% United
States withholding tax imposed on payments to holders of REMIC
residual certificates that are foreign investors. See,
however, "--REMICs--Foreign Investors in REMIC Certificates"
below.
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Furthermore, for purposes of the alternative minimum tax:
o excess inclusions will not be permitted to be offset by the
alternative tax net operating loss deduction, and
o alternative minimum taxable income may not be less than the
taxpayer's excess inclusions.
This last rule has the effect of preventing non-refundable tax credits from
reducing the taxpayer's income tax to an amount lower than the alternative
minimum tax on excess inclusions.
In the case of any REMIC residual certificates held by a real estate
investment trust, or REIT, the aggregate excess inclusions with respect to these
REMIC residual certificates will be allocated among the shareholders of the REIT
in proportion to the dividends received by the shareholders from the REIT. Any
amount so allocated will be treated as an excess inclusion with respect to a
REMIC residual certificate as if held directly by the shareholder. The aggregate
excess inclusions referred to in the previous sentence will be reduced, but not
below zero, by any REIT taxable income, within the meaning of Section 857(b)(2)
of the Code, other than any net capital gain. Treasury regulations yet to be
issued could apply a similar rule to:
o regulated investment companies,
o common trusts, and
o certain cooperatives.
The Treasury regulations, however, currently do not address this subject.
Noneconomic REMIC Residual Certificates. Under the Treasury
regulations, transfers of "noneconomic" REMIC residual certificates will be
disregarded for all federal income tax purposes if "a significant purpose of the
transfer was to enable the transferor to impede the assessment or collection of
tax." If a transfer is disregarded, the purported transferor will continue to
remain liable for any taxes due with respect to the income on the "noneconomic"
REMIC residual certificate. The Treasury regulations provide that a REMIC
residual certificate is noneconomic unless, based on the prepayment assumption
and on any required or permitted clean up calls, or required liquidation
provided for in the related Governing Document:
o the present value of the expected future payments on the REMIC
residual certificate equals at least the present value of the
expected tax on the anticipated excess inclusions, and
o the transferor reasonably expects that the transferee will
receive payments with respect to the REMIC residual
certificate at or after the time the taxes accrue on the
anticipated excess inclusions in an amount sufficient to
satisfy the accrued taxes.
The present value calculation referred to above is calculated using the
"applicable Federal rate" for obligations whose term ends on the close of the
last quarter in which excess inclusions are expected to accrue with respect to
the REMIC residual certificate. This rate is computed and published monthly by
the IRS.
Accordingly, all transfers of REMIC residual certificates that may
constitute noneconomic residual interests will be subject to certain
restrictions under the terms of the related Governing Document that are intended
to reduce the possibility of any transfer being disregarded. These restrictions
will require an affidavit:
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o from each party to the transfer, stating that no purpose of
the transfer is to impede the assessment or collection of tax,
o from the prospective transferee, providing certain
representations as to its financial condition, and
o from the prospective transferor, stating that it has made a
reasonable investigation to determine the transferee's
historic payment of its debts and ability to continue to pay
its debts as they come due in the future.
The Treasury recently issued proposed regulations that would revise
this safe harbor. The proposed regulations would make the safe harbor
unavailable unless the present value of the anticipated tax liabilities
associated with holding the residual interest did not exceed the sum of:
o the present value of any consideration given to the transferee
to acquire the interest,
o the present value of the expected future distributions on the
interest, and
o the present value of the anticipated tax savings associated
with the holding of the interest as the REMIC generates
losses.
Present values would be computed using a discount rate equal to an "applicable
Federal rate," except that if a transferee could demonstrate that it borrowed
regularly in the course of its trade or business substantial funds at a lower
rate from unrelated third parties, that lower rate could be used as the discount
rate.
It is not clear when those regulations would be effective. Although the
text of the proposed regulations states that they would be effective on February
4, 2000, the preamble to the proposed regulations says that these regulations
will apply to transfers of REMIC residual interests made after the date the
final regulations are published in the Federal Register. The Treasury Department
is anticipated to issue clarification with regard to these conflicting
statements regarding the effective date of the proposed regulations shortly.
Prior to purchasing a REMIC residual certificate, prospective
purchasers should consider the possibility that a purported transfer of a REMIC
residual certificate to another party at some future date may be disregarded in
accordance with the above-described rules. This would result in the retention of
tax liability by the transferor in respect of that purported transfer.
We will disclose in the related prospectus supplement whether the
offered REMIC residual certificates may be considered "noneconomic" residual
interests under the Treasury regulations. However, we will base any disclosure
that a REMIC residual certificate will not be considered "noneconomic" upon
certain assumptions. Further, we will make no representation that a REMIC
residual certificate will not be considered "noneconomic" for purposes of the
above-described rules.
See "--REMICs--Foreign Investors in REMIC Certificates" below for
additional restrictions applicable to transfers of certain REMIC residual
certificates to foreign persons.
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Mark-to-Market Rules. Regulations under Section 475 of the Code require
that a securities dealer mark to market securities held for sale to customers.
This mark-to-market requirement applies to all securities owned by a dealer,
except to the extent that the dealer has specifically identified a security as
held for investment. These regulations provide that for purposes of this
mark-to-market requirement, a REMIC residual certificate is not treated as a
security for purposes of Section 475 of the Code. Thus, a REMIC residual
certificate is not subject to the mark-to-market rules. We recommend that
prospective purchasers of a REMIC residual certificate consult their tax
advisors regarding these regulations.
Foreigners may not Hold REMIC Residual Certificates. Unless we
otherwise state in the related prospectus supplement, transfers of REMIC
residual certificates to investors that are foreign persons under the Code will
be prohibited under the related Governing Document. If transfers of REMIC
residual certificates to investors that are foreign persons are permitted
pursuant to the related Governing Document, we will describe in the related
prospectus supplement additional restrictions applicable to transfers of certain
REMIC residual certificates to these persons.
Pass-Through of Miscellaneous Itemized Deductions. Fees and expenses of
a REMIC generally will be allocated to the holders of the related REMIC residual
certificates. The applicable Treasury regulations indicate, however, that in the
case of a REMIC that is similar to a single class grantor trust, all or a
portion of these fees and expenses should be allocated to the holders of the
related REMIC regular certificates. Unless we state otherwise in the related
prospectus supplement, however, these fees and expenses will be allocated to
holders of the related REMIC residual certificates in their entirety and not to
the holders of the related REMIC regular certificates.
If the holder of a REMIC certificate receives an allocation of fees and
expenses in accordance with the preceding discussion, and if that holder is:
o an individual,
o an estate or trust, or
o a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts,
then--
o an amount equal to this individual's, estate's or trust's
share of these fees and expenses will be added to the gross
income of this holder, and
o the individual's, estate's or trust's share of these fees and
expenses will be treated as a miscellaneous itemized deduction
allowable subject to the limitation of Section 67 of the Code,
which permits the deduction of these fees and expenses only to
the extent they exceed in the aggregate 2% of a taxpayer's
adjusted gross income.
In addition, Section 68 of the Code provides that the amount of
itemized deductions otherwise allowable for an individual whose adjusted gross
income exceeds a specified amount will be reduced by the lesser of:
o 3% of the excess of the individual's adjusted gross income
over the specified amount, or
o 80% of the amount of itemized deductions otherwise allowable
for the taxable year.
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Furthermore, in determining the alternative minimum taxable income of a
holder of a REMIC certificate that is--
o an individual,
o an estate or trust, or
o a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts,
no deduction will be allowed for the holder's allocable portion of servicing
fees and other miscellaneous itemized deductions of the REMIC, even though an
amount equal to the amount of these fees and other deductions will be included
in the holder's gross income.
The amount of additional taxable income reportable by holders of REMIC
certificates that are subject to the limitations of either Section 67 or Section
68 of the Code, or the complete disallowance of the related expenses for
alternative minimum tax purposes, may be substantial.
Accordingly, REMIC certificates to which these expenses are allocated
will generally not be appropriate investments for:
o an individual,
o an estate or trust, or
o a "pass-through entity" beneficially owned by one or more
individuals, estates or trusts.
We recommend that such prospective investors consult with their tax
advisors prior to making an investment in a REMIC certificate to which these
expenses are allocated.
Sales of REMIC Certificates. If a REMIC certificate is sold, the
selling certificateholder will recognize gain or loss equal to the difference
between the amount realized on the sale and its adjusted basis in the REMIC
certificate. The adjusted basis of a REMIC regular certificate generally will
equal:
o the cost of the certificate to that certificateholder,
increased by
o income reported by that certificateholder with respect to the
certificate, including original issue discount and market
discount income, and reduced, but not below zero, by
o payments on the certificate received by that certificateholder
and by that amortized premium.
The adjusted basis of a REMIC residual certificate will be determined
as described above under "--REMICs--Taxation of Owners of REMIC Residual
Certificates--Basis Rules, Net Losses and Distributions." Except as described
below, any gain or loss from your sale of a REMIC certificate will be capital
gain or loss, provided that you hold the certificate as a capital asset within
the meaning of Section 1221 of the Code, which is generally property held for
investment.
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In addition to the recognition of gain or loss on actual
sales, the Code requires the recognition of gain (but not loss) upon the
"constructive sale of an appreciated financial position." A constructive sale of
an appreciated financial position occurs if a taxpayer enters into certain
transactions or series of such transactions that have the effect of
substantially eliminating the taxpayer's risk of loss and opportunity for gain
with respect to the financial instrument. Debt instruments that--
o entitle the holder to a specified principal amount,
o pay interest at a fixed or variable rate, and
o are not convertible into the stock of the issuer or a related
party,
cannot be the subject of a constructive sale for this purpose. Because most
REMIC regular certificates meet this exception, Section 1259 will not apply to
most REMIC regular certificates. However, REMIC regular certificates that have
no, or a disproportionately small, amount of principal, can be the subject of a
constructive sale.
Finally, a taxpayer may elect to have net capital gain taxed at
ordinary income rates rather than capital gains rates in order to include the
net capital gain in total net investment income for the taxable year. A taxpayer
would do so because of the rule that limits the deduction of interest on
indebtedness incurred to purchase or carry property held for investment to a
taxpayer's net investment income.
As of the date of this prospectus, the Code provides for lower rates as
to long-term capital gains than those applicable to the short-term capital gains
and ordinary income recognized or received by individuals. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss is relevant for other purposes
to both individuals and corporations.
Gain from the sale of a REMIC regular certificate that might otherwise
be a capital gain will be treated as ordinary income to the extent that the gain
does not exceed the excess, if any, of:
o the amount that would have been includible in the seller's
income with respect to that REMIC regular certificate assuming
that income had accrued thereon at a rate equal to 110% of the
"applicable Federal rate" determined as of the date of
purchase of the certificate, which is a rate based on an
average of current yields on Treasury securities having a
maturity comparable to that of the certificate based on the
application of the prepayment assumption to the certificate,
over
o the amount of ordinary income actually includible in the
seller's income prior to that sale.
In addition, gain recognized on the sale of a REMIC regular certificate
by a seller who purchased the certificate at a market discount will be taxable
as ordinary income in an amount not exceeding the portion of that discount that
accrued during the period the certificate was held by the seller, reduced by any
market discount included in income under the rules described above under
"--REMICs--Taxation of Owners of REMIC Regular Certificates--Market Discount"
and "--Premium."
REMIC certificates will be "evidences of indebtedness" within the
meaning of Section 582(c)(1) of the Code, so that gain or loss recognized from
the sale of a REMIC certificate by a bank or thrift institution to which that
section of the Code applies will be ordinary income or loss.
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A portion of any gain from the sale of a REMIC regular certificate that
might otherwise be capital gain may be treated as ordinary income to the extent
that a holder holds the certificate as part of a "conversion transaction" within
the meaning of Section 1258 of the Code. A conversion transaction generally is
one in which the taxpayer has taken two or more positions in the same or similar
property that reduce or eliminate market risk, if substantially all of the
taxpayer's return is attributable to the time value of the taxpayer's net
investment in that transaction. The amount of gain so realized in a conversion
transaction that is recharacterized as ordinary income generally will not exceed
the amount of interest that would have accrued on the taxpayer's net investment
at 120% of the appropriate "applicable Federal rate" at the time the taxpayer
enters into the conversion transaction, subject to appropriate reduction for
prior inclusion of interest and other ordinary income items from the
transaction.
Except as may be provided in Treasury regulations yet to be issued, a
loss realized on the sale of a REMIC residual certificate will be subject to the
"wash sale" rules of Section 1091 of the Code, if during the period beginning
six months before, and ending six months after, the date of that sale the seller
of that certificate:
o reacquires that same REMIC residual certificate,
o acquires any other residual interest in a REMIC, or
o acquires any similar interest in a "taxable mortgage pool," as
defined Section 7701(i) of the Code.
In that event, any loss realized by the holder of a REMIC residual certificate
on the sale will not be recognized or deductible currently, but instead will be
added to that holder's adjusted basis in the newly- acquired asset.
Prohibited Transactions Tax and Other Taxes. The Code imposes a tax on
REMICs equal to 100% of the net income derived from "prohibited transactions."
In general, subject to certain specified exceptions, a prohibited transaction
includes:
o the disposition of a non-defaulted mortgage loan,
o the receipt of income from a source other than a mortgage loan
or certain other permitted investments,
o the receipt of compensation for services, or
o the gain from the disposition of an asset purchased with the
collections on the mortgage loans for temporary investment
pending payment on the REMIC certificates.
It is not anticipated that any REMIC will engage in any prohibited transactions
as to which it would be subject to this tax.
In addition, certain contributions to a REMIC made after the day on
which the REMIC issues all of its interests could result in the imposition of a
tax on the REMIC equal to 100% of the value of the contributed property. The
related Governing Document will include provisions designed to prevent the
acceptance of any contributions that would be subject to this tax.
REMICs also are subject to federal income tax at the highest corporate
rate on "net income from foreclosure property," determined by reference to the
rules applicable to REITs. "Net income from foreclosure property" generally
means income from foreclosure property other than qualifying rents and other
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qualifying income for a REIT. Under certain circumstances, the special servicer
may be authorized to conduct activities with respect to a mortgaged property
acquired by a trust that causes the trust to incur this tax if doing so would,
in the reasonable discretion of the special servicer, maximize the net after-tax
proceeds to certificateholders. However, under no circumstance will the special
servicer cause the acquired mortgaged property to cease to be a "permitted
investment" under Section 860G(a)(5) of the Code.
Unless we otherwise disclose in the related prospectus supplement, it
is not anticipated that any material state or local income or franchise tax will
be imposed on any REMIC.
Unless we state otherwise in the related prospectus supplement, and to
the extent permitted by then applicable laws, any tax on prohibited
transactions, certain contributions or "net income from foreclosure property,"
and any state or local income or franchise tax, that may be imposed on the REMIC
will be borne by the related trustee, tax administrator, master servicer,
special servicer or manager, in any case out of its own funds, provided that--
o the person has sufficient assets to do so, and
o the tax arises out of a breach of that person's obligations
under the related Governing Document.
Any tax not borne by one of these persons would be charged against the related
trust resulting in a reduction in amounts payable to holders of the related
REMIC certificates.
The Clinton Administration recently proposed in its budget certain amendments to
the REMIC provisions designed to ensure that income taxes imposed on the holder
of a REMIC residual interest are paid when due. Those provisions would impose
secondary liability on the REMIC itself for any tax required to be paid with
respect to the income allocated to a REMIC residual interest if the holder does
not pay its taxes on that income when they are due. If adopted, the amendments
would be effective for REMICs created after the date of enactment. It is not
possible to predict whether the legislation will be adopted or, if so, in what
form.
Tax and Restrictions on Transfers of REMIC Residual Certificates to
Certain Organizations. If a REMIC residual certificate is transferred to a
"disqualified organization," a tax will be imposed in an amount equal to the
product of:
o the present value of the total anticipated excess inclusions
with respect to the REMIC residual certificate for periods
after the transfer, and
o the highest marginal federal income tax rate applicable to
corporations.
The value of the anticipated excess inclusions is discounted using the
"applicable Federal rate" for obligations whose term ends on the close of the
last quarter in which excess inclusions are expected to accrue with respect to
the REMIC residual certificate.
The anticipated excess inclusions must be determined as of the date
that the REMIC residual certificate is transferred and must be based on:
o events that have occurred up to the time of the transfer,
o the prepayment assumption, and
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o any required or permitted clean up calls or required
liquidation provided for in the related Governing Document.
The tax on transfers to "disqualified organizations" generally would be
imposed on the transferor of the REMIC residual certificate, except when the
transfer is through an agent for a disqualified organization. In that case, the
tax would instead be imposed on the agent. However, a transferor of a REMIC
residual certificate would in no event be liable for the tax with respect to a
transfer if:
o the transferee furnishes to the transferor an affidavit that
the transferee is not a disqualified organization, and
o as of the time of the transfer, the transferor does not have
actual knowledge that the affidavit is false.
In addition, if a "pass-through entity" includes in income excess
inclusions with respect to a REMIC residual certificate, and a disqualified
organization is the record holder of an interest in that entity, then a tax will
be imposed on that entity equal to the product of:
o the amount of excess inclusions on the certificate that are
allocable to the interest in the pass- through entity held by
the disqualified organization, and
o the highest marginal federal income tax rate imposed on
corporations.
A pass-through entity will not be subject to this tax for any period,
however, if each record holder of an interest in that pass-through entity
furnishes to that pass-through entity:
o the holder's social security number and a statement under
penalties of perjury that the social security number is that
of the record holder, or
o a statement under penalties of perjury that the record holder
is not a disqualified organization.
For taxable years beginning on or after January 1, 1998, if an
"electing large partnership" holds a REMIC residual certificate, all interests
in the electing large partnership are treated as held by disqualified
organizations for purposes of the tax imposed on pass-through entities described
in the second preceding paragraph. This tax on electing large partnerships must
be paid even if each record holder of an interest in that partnership provides a
statement mentioned in the prior paragraph.
For these purposes, a "disqualified organization" means:
o the United States,
o any State or political subdivision thereof,
o any foreign government,
o any international organization,
o any agency or instrumentality of the foregoing, except for
instrumentalities described in Section 168(h)(2)(D) of the
Code or the FHLMC,
o any organization, other than a cooperative described in
Section 521 of the Code, that is exempt from federal income
tax, except if it is subject to the tax imposed by Section 511
of the Code, or
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o any organization described in Section 1381(a)(2)(C) of the
Code.
For these purposes, a "pass-through entity" means any:
o regulated investment company,
o real estate investment trust,
o trust,
o partnership, or
o certain other entities described in Section 860E(e)(6) of the
Code.
For these purposes, an "electing large partnership" means any
partnership having more than 100 members during the preceding tax year which
elects to apply simplified reporting provisions under the Code, except for
certain service partnerships and commodity pools.
In addition, a person holding an interest in a pass-through entity as a
nominee for another person will, with respect to that interest, be treated as a
pass-through entity.
Moreover, an entity will not qualify as a REMIC unless there are
reasonable arrangements designed to ensure that:
o the residual interests in the entity are not held by
disqualified organizations, and
o the information necessary for the application of the tax
described herein will be made available.
We will include in the related Governing Document restrictions on the
transfer of REMIC residual certificates and certain other provisions that are
intended to meet this requirement, and we will discuss those restrictions and
provisions in any prospectus supplement relating to the offering of any REMIC
residual certificate.
Termination. A REMIC will terminate immediately after the payment date
following receipt by the REMIC of the final payment in respect of the related
mortgage loans or upon a sale of the REMIC's assets following the adoption by
the REMIC of a plan of complete liquidation. The last payment on a REMIC regular
certificate will be treated as a payment in retirement of a debt instrument. In
the case of a REMIC residual certificate, if the last payment on that
certificate is less than the REMIC residual certificateholder's adjusted basis
in the certificate, that holder should, but may not, be treated as realizing a
capital loss equal to the amount of that difference.
Reporting and Other Administrative Matters. Solely for purposes of the
administrative provisions of the Code, a REMIC will be treated as a partnership
and holders of the related REMIC residual certificates will be treated as
partners. Unless we otherwise state in the related prospectus supplement, the
related tax administrator will file REMIC federal income tax returns on behalf
of the REMIC, and will be designated as and will act as or on behalf of the "tax
matters person" with respect to the REMIC in all respects. The related tax
administrator may hold at least a nominal amount of REMIC residual certificates.
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As, or as agent for, the tax matters person, the related tax
administrator, subject to certain notice requirements and various restrictions
and limitations, generally will have the authority to act on behalf of the REMIC
and the holders of the REMIC residual certificates in connection with the
administrative and judicial review of the REMIC's--
o income,
o deductions
o gains,
o losses, and
o classification as a REMIC.
Holders of REMIC residual certificates generally will be required to
report these REMIC items consistently with their treatment on the related
REMIC's tax return. In addition, these holders may in some circumstances be
bound by a settlement agreement between the related tax administrator, as, or as
agent for, the tax matters person, and the IRS concerning any REMIC item.
Adjustments made to the REMIC's tax return may require these holders to make
corresponding adjustments on their returns. An audit of the REMIC's tax return,
or the adjustments resulting from that audit, could result in an audit of a
holder's return.
No REMIC will be registered as a tax shelter pursuant to Section 6111
of the Code. Any person that holds a REMIC residual certificate as a nominee for
another person may be required to furnish to the related REMIC, in a manner to
be provided in Treasury regulations, the name and address of that other person,
as well as other information.
Reporting of interest income, including any original issue discount,
with respect to REMIC regular certificates is required annually, and may be
required more frequently under Treasury regulations. These information reports
generally are required to be sent or made readily available through electronic
means to individual holders of REMIC regular certificates and the IRS. Holders
of REMIC regular certificates that are--
o corporations,
o trusts,
o securities dealers, and
o certain other non-individuals,
will be provided interest and original issue discount income information and the
information set forth in the following paragraphs. This information will be
provided upon request in accordance with the requirements of the applicable
regulations. The information must be provided by the later of:
o 30 days after the end of the quarter for which the information
was requested, or
o two weeks after the receipt of the request.
The REMIC must also comply with rules requiring a REMIC regular
certificate issued with original issue discount to disclose on its face the
amount of original issue discount and the issue date, and requiring that
information to be reported to the IRS. Reporting with respect to REMIC residual
certificates, including--
o income,
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o excess inclusions,
o investment expenses, and
o relevant information regarding qualification of the REMIC's
assets,
will be made as required under the Treasury regulations, generally on a
quarterly basis.
As applicable, the REMIC regular certificate information reports will
include a statement of the adjusted issue price of the REMIC regular certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, the regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Market Discount."
Unless we otherwise specify in the related prospectus supplement, the
responsibility for complying with the foregoing reporting rules will be borne by
the related tax administrator for the subject REMIC.
Backup Withholding with Respect to REMIC Certificates. Payments of
interest and principal, as well as payments of proceeds from the sale of REMIC
certificates, may be subject to the "backup withholding tax" under Section 3406
of the Code at a rate of 31% if recipients of these payments:
o fail to furnish to the payor certain information, including
their taxpayer identification numbers, or
o otherwise fail to establish an exemption from this tax.
Any amounts deducted and withheld from a payment to a recipient would
be allowed as a credit against the recipient's federal income tax. Furthermore,
certain penalties may be imposed by the IRS on a recipient of payments that is
required to supply information but that does not do so in the proper manner.
Foreign Investors in REMIC Certificates. Unless we otherwise disclose
in the related prospectus supplement, a holder of a REMIC regular certificate
that is--
o a foreign person, and
o not subject to federal income tax as a result of any direct or
indirect connection to the United States in addition to its
ownership of that certificate,
will normally not be subject to United States federal income or withholding tax
in respect of a payment on a REMIC regular certificate. To avoid withholding or
tax, that holder must comply with certain identification requirements. These
requirements include delivery of a statement, signed by the certificateholder
under penalties of perjury, certifying that the certificateholder is a foreign
person and providing the name and address of the certificateholder.
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On October 6, 1997, the Treasury Department issued new regulations that
modify the withholding, backup withholding and information reporting rules
described above. These regulations, as modified by Treasury Decision 8856, will
generally be effective for investments made after December 31, 2000, subject to
certain transition rules. Prospective investors are urged to consult their own
tax advisors regarding these regulations.
For these purposes, a foreign person is anyone other than a United
States person. A "United States person" is:
o a citizen or resident of the United States,
o a corporation, partnership or other entity created or
organized in, or under the laws of, the United States or any
political subdivision thereof,
o an estate whose income from sources without the United States
is includible in gross income for United States federal income
tax purposes regardless of its connection with the conduct of
a trade or business within the United States, or
o a trust as to which--
(i) a court in the United States is able to exercise
primary supervision over the administration of the
trust, and
(ii) one or more United States persons have the authority
to control all substantial decisions of the trust.
In addition, to the extent provided in the Treasury Regulations, a trust will be
a United States person if it was in existence on August 20, 1996 and it elected
to be treated as a United States person.
It is possible that the IRS may assert that the foregoing tax exemption
should not apply with respect to a REMIC regular certificate held by a person or
entity that owns directly or indirectly a 10% or greater interest in the related
REMIC residual certificates. If the holder does not qualify for exemption,
payments of interest, including payments in respect of accrued original issue
discount, to that holder may be subject to a tax rate of 30%, subject to
reduction under any applicable tax treaty.
It is possible, under regulations promulgated under Section 881 of the
Code concerning conduit financing transactions, that the exemption from
withholding taxes described above may not be available to a holder who is a
foreign person and either--
o owns 10% or more of one or more underlying mortgagors, or
o if the holder is a controlled foreign corporation, is related
to one or more mortgagors in the applicable trust.
Further, it appears that a REMIC regular certificate would not be
included in the estate of a nonresident alien individual and would not be
subject to United States estate taxes. However, it is recommended that
certificateholders who are nonresident alien individuals consult their tax
advisors concerning this question.
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Unless we otherwise state in the related prospectus supplement, the
related Governing Document will prohibit transfers of REMIC residual
certificates to investors that are:
o foreign persons, or
o United States persons, if classified as a partnership under
the Code, unless all of their beneficial owners are United
States persons.
FASITs
General. An election may be made to treat the trust for a series of
offered certificates or specified assets thereof, as a financial asset
securitization investment trust, or "FASIT," within the meaning of Section
860L(a) of the Code. Such an election would be noted in the applicable
prospectus supplement. If such an election is made, the offered certificates
will be designated as classes of "regular interests" and there will be one class
of "ownership interest" in the FASIT. With respect to each series of offered
certificates as to which the related tax administrator makes a FASIT election
and assuming:
o the making of an appropriate election,
o compliance with the related Governing Document, and
o subject to certain assumptions set forth in the opinion,
our counsel will deliver its opinion generally to the effect that,
o the relevant assets will qualify as a FASIT,
o one class thereof, the "FASIT ownership certificate" or the
"class "O" certificate," will represent the sole class of
ownership interest in that FASIT, and
o the remaining classes thereof, the "FASIT regular
certificates," will represent "regular interests" in that
FASIT.
Only the FASIT regular certificates are offered pursuant to this
prospectus. If so specified in the applicable prospectus supplement, a portion
of the trust for a series of certificates as to no FASIT election is made may be
treated as a grantor trust for federal income tax purposes. See "--Grantor
Trusts."
On February 4, 2000, the Treasury Department issued proposed
regulations relating to FASITs. References to the "FASIT proposed regulations"
in this discussion refer to those proposed regulations. The proposed regulations
have not been adopted as final and, in general, are not proposed to be effective
as of the date of this prospectus. They nevertheless are indicative of the rules
the Treasury Department currently views as appropriate with regard to the FASIT
provisions.
Characterization of Investments in FASIT Regular Certificates. FASIT
regular certificates held by a real estate investment trust will constitute
"real estate assets" within the meaning of Section 856(c)(4)(A) of the Code and
interest on the FASIT regular certificates will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Section 856(c)(3)(B) of the Code in the same
proportion, for both purposes, that the assets and income of the FASIT would be
so treated. FASIT regular certificates held by a domestic building and loan
association will be treated as "regular interest[s] in a FASIT" under Section
7701(a)(19)(C)(xi) of the Code, but only in the proportion that the FASIT holds
"loans secured by an interest in real property which is . . . residential real
property" within the meaning of Section 7701(a)(19)(C)(v) of the Code. For this
purpose, mortgage loans secured by
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multifamily residential housing should qualify. It is also likely that mortgage
loans secured by health care related facilities would qualify as "loans secured
by an interest in . . . health institutions or facilities, including structures
designed or used primarily for residential purposes for . . . persons under
care" within the meaning of Section 7701(a)(19)(C)(vii) of the Code. If at all
times 95% or more of the assets of the FASIT or the income thereon qualify for
the foregoing treatments, the FASIT regular certificates will qualify for the
corresponding status in their entirety. Mortgage loans which have been defeased
with Treasury obligations and the income therefrom will not qualify for the
foregoing treatments. Accordingly, the FASIT regular certificates may not be a
suitable investment for you if you require a specific amount or percentage of
assets or income meeting the foregoing treatments. For purposes of Section
856(c)(4)(A) of the Code, payments of principal and interest on a mortgage loan
that are reinvested pending distribution to holders of FASIT regular
certificates should qualify for that treatment. FASIT regular certificates held
by a regulated investment company will not constitute "government securities"
within the meaning of Section 851(b)(4)(A)(i) of the Code. FASIT regular
certificates held by certain financial institutions will constitute an "evidence
of indebtedness" within the meaning of Section 582(c)(1) of the Code.
Qualification as a FASIT.
General. In order to qualify as a FASIT, the trust for a series of
offered certificates or specified assets thereof must comply with the
requirements set forth in the Code on an ongoing basis. The FASIT must fulfill
an asset test, which requires that substantially all of the assets of the FASIT,
as of the close of the third calendar month beginning after the "startup day"
(which for purposes of this discussion is the date of the initial issuance of
the FASIT regular certificates) and at all times thereafter, be "permitted
assets." "Permitted assets" include cash or cash equivalents, certain debt
instruments (other than debt instruments issued by the owner of the FASIT or a
related party) and hedges (and contracts to acquire the same), foreclosure
property and regular interests in another FASIT or in a REMIC. Certain
restrictions apply to each type of permitted asset, as discussed below. Under
the FASIT proposed regulations, the "substantially all" requirement would be met
if at all times the aggregate adjusted basis of the "permitted assets" is more
than 99 percent of the aggregate adjusted basis of all the assets held by the
FASIT, including assets deemed to be held by the FASIT under Section 860I(b)(2)
of the Code because they "support" a regular interest in the FASIT. The FASIT
provisions also require the FASIT ownership interest to be held only by certain
fully taxable domestic corporations and do not recognize transfers of certain
"high-yield" regular interests (described below) to taxpayers other than fully
taxable domestic corporations or other FASITs. The related Governing Document
will provide that no legal or beneficial interest in the ownership interest or
in any class or classes of certificates that we determine to be a high-yield
regular interests may be transferred or registered unless certain conditions,
designed to prevent violation of this requirement, are met.
Permitted Assets. The proposed regulations enumerate certain types of
debt that qualify as permitted assets for a FASIT. The FASIT provisions provide
that permitted debt instruments must bear interest, if any, at a fixed or
qualified variable rate. Under the FASIT proposed regulations, the definition of
permitted debt would include REMIC regular interests, regular interests of other
FASITs, inflation indexed debt instruments, credit card receivables and certain
stripped bonds and coupons. However, the FASIT proposed regulations except
equity linked debt instruments and defaulted debt instruments from "permitted
assets." In addition, debt of the owner of the FASIT ownership interest, debt
guaranteed by the owner of the FASIT ownership interest in circumstances such
that the owner is in substance the primary obligor on the debt instrument, or
debt issued by third-parties that is linked to the performance or payments of
debt instruments issued by the owner or a related person, are not "permitted
assets. Finally, debt that is traded on an established securities market and
subject to a foreign withholding tax is not a "permitted asset."
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Permitted hedges include interest rate or foreign currency notional
principal contracts, letters of credit, insurance, guarantees of payment default
and similar instruments. Such hedges must be reasonably required to guarantee or
hedge against the FASIT's risks associated with being the obligor on interests
issued by the FASIT. The FASIT proposed regulations do not include a list of
specified permitted hedges or guarantees, but rather focus on the intended
function of a hedge and permit such a contract to offset the following risk
factors:
o fluctuations in market interest rates;
o fluctuations in currency exchange rates;
o the credit quality of, or default on, the FASIT's assets or
debt instruments underlying the FASIT's assets; and
o the receipt of payments on the FASIT's assets earlier or later
than originally anticipated.
The FASIT proposed regulations prohibit a hedge or guarantee from
referencing assets other than permitted assets, indices, economic indicators or
financial averages that are not both widely disseminated and designed to
correlate closely with the changes in one or more of the risk factors described
above. However, under the FASIT proposed regulations, FASIT owners will be able
to hold hedges or guarantees inside a FASIT that do not relate to the already
issued regular interests, or to assets the FASIT already holds, if the FASIT
expects to issue regular interests, or expects to hold assets, that are related
to the hedge or guarantee in question. The proposed regulations also place
certain restrictions on hedges and guarantees entered into with the holder of
the FASIT ownership interest or a related party.
Property acquired in connection with the default or imminent default of
a debt instrument held by a FASIT may qualify both as foreclosure property and
as a type of permitted asset under the FASIT provisions. It will in general
continue to qualify as foreclosure property during a grace period that runs
until the end of the third taxable year beginning after the taxable year in
which the FASIT acquires the foreclosure property. Under the FASIT proposed
regulations, if the foreclosure property also would qualify as another type of
permitted asset, it may be held beyond the close of that grace period. However,
at the close of the grace period, gain, if any, on the property must be
recognized as if the property had been contributed by the owner of the FASIT on
that date. In addition, the FASIT proposed regulations provide that, after the
close of the grace period, disposition of the foreclosure property is
potentially subject to a 100% prohibited transactions tax (described below)
without the benefit of an exception to this tax applicable to sales of
foreclosure property.
Permitted Interests. In addition to the foregoing, interests in a FASIT
also must meet certain requirements. All of the interests in a FASIT must be
either of the following:
o a single class of ownership interest, or
o one or more classes of regular interests.
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An ownership interest is an interest in a FASIT other than a regular interest
that is issued on the startup day, is designated an ownership interest and is
held by a single, fully-taxable, domestic corporation. A regular interest is an
interest in a FASIT that is issued on or after the startup day with fixed terms,
is designated as a regular interest, and--
1. unconditionally entitles the holder to receive a specified
principal amount (or other similar amount),
2. provides that interest payments (or other similar amounts), if
any, at or before maturity either are payable based on a fixed
rate or a qualified variable rate,
3. has a stated maturity of not longer than 30 years,
4. has an issue price not greater than 125% of its stated
principal amount, and
5. has a yield to maturity not greater than 5 percentage points
higher than the applicable Federal rate (as defined in Section
1274(d) of the Code) for Treasury obligations of a similar
maturity.
A regular interest that is described in the preceding sentence except that it
fails to meet one or more of requirements 1, 4 or 5, is a "high-yield" regular
interest. Further, to be a high-yield regular interest, an interest that fails
requirement 2 must consist of a "specified portion" of the interest payments on
the permitted assets, determined by reference to the rules related to permitted
rates for REMIC regular interests that have no, or a disproportionately small,
amount of principal. An interest in a FASIT may be treated as a regular interest
even if payments of principal with respect to that interest are subordinated to
payments on other regular interests or the ownership interest in the FASIT, and
are contingent on--
o the absence of defaults or delinquencies on permitted assets,
o lower than reasonably expected returns on permitted assets,
o unanticipated expenses incurred by the FASIT, or
o prepayment interest shortfalls.
Cessation of FASIT. If an entity fails to comply with one or more of
the ongoing requirements of the Code for status as a FASIT during any taxable
year, the Code provides that the entity or applicable portion thereof will not
be treated as a FASIT thereafter. In this event, any entity that holds mortgage
loans and is the obligor with respect to debt obligations with two or more
maturities will be classified, presumably, as a taxable mortgage pool under
general federal income tax principles, and the FASIT regular certificates may be
treated as equity interests therein. Under the FASIT proposed regulations, the
underlying arrangement generally cannot reelect FASIT status and any election a
FASIT owner made (other than the FASIT election) and any method of accounting
adopted with respect to the FASIT assets, binds the underlying arrangement as if
the underlying arrangement itself had made those elections or adopted that
method. In the case of an inadvertent cessation of a FASIT, under the FASIT
proposed regulations, the Commissioner of the IRS may grant relief from the
adverse consequences of that cessation, subject to such adjustments as the
Commissioner may require the FASIT and all holders of interests in the FASIT to
accept with respect to the period in which the FASIT failed to qualify as such.
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Under the proposed FASIT regulation, apart from failure to qualify as a
FASIT, a FASIT may not revoke its election or cease to be a FASIT without the
consent of the Commissioner of the IRS.
Regular interest holders, in the case of cessation of a FASIT, are
treated as exchanging their FASIT regular interests for new interests in the
underlying arrangement. The FASIT proposed regulations would classify the new
interests under general principles of Federal income tax law, for example, as
interests in debt instruments, as interest in a partnership or interests in an
entity subject to corporate taxation, depending on what the classification of
those interests would have been in the absence of a FASIT election. On the
deemed receipt of that new interest, under the FASIT proposed regulations, you
would be required to mark the new interests to market and to recognize gain, but
would not be permitted to recognize loss, as though the old interest had been
sold for an amount equal to the fair market value of the new interest. Your
basis in the new interest deemed received in the underlying arrangement would
equal your basis in the FASIT regular interest exchanged for it, increased by
any gain you recognized on the deemed exchange.
Taxation of FASIT Regular Certificates. The FASIT regular certificates
generally will be treated for federal income tax purposes as newly-originated
debt instruments. In general, subject to the discussion below concerning
"high-yield interests," interest, original issue discount ("OID") and market
discount on a FASIT regular certificate will be treated as ordinary income to
the holder of that certificate, and principal payments (other than principal
payments that do not exceed accrued market discount) on a FASIT regular
certificate will be treated as a return of capital to the extent of the holder's
basis allocable thereto. You must use the accrual method of accounting with
respect to FASIT regular certificate, regardless of the method of accounting you
otherwise use.
Except as set forth in the applicable prospectus supplement and in the
immediately following discussion concerning "high-yield interests," the
discussions above under the headings "--REMICs--Taxation of Owners of REMIC
Regular Certificates--Original Issue Discount," "--Market Discount,"
"--Premium," and "--Realized Losses" will apply to the FASIT regular
certificates. The discussion under the headings "--REMICs--Sale of REMIC regular
certificates" will also apply to the FASIT regular certificates, except that the
treatment of a portion of the gain on a REMIC regular interest as ordinary
income to the extent the yield thereon did not exceed 110% of the applicable
Federal rate will not apply.
High Yield Interests; Anti-Avoidance Excise Taxes on Tiered
Arrangements. The taxable income, and the alternative minimum taxable income, of
any holder of a high-yield interest may not be less than the taxable income from
all high-yield interests and FASIT ownership interests that it holds, together
with any "excess inclusions" with respect to REMIC residual interests that it
owns.
High yield interests may only be held by fully taxable, domestic C
corporations or another FASIT. Any attempted transfer of a high-yield interest
to any other type of taxpayer will be disregarded, and the transferor will be
required to include in its gross income the amount of income attributable to the
high-yield interest notwithstanding its attempted transfer. The related
Governing Document will contain provisions and procedures designed to assure
that, in general, only domestic C corporations or other FASITs may acquire
high-yield interests. There is an exception allowing non-corporate taxpayers
that hold high-yield interest exclusively for sale to customers in the ordinary
course of business to do so, subject to an excise tax imposed at the corporate
income tax rate if the holder ceases to be a dealer or begins to hold the
high-yield interest for investment. Unless otherwise specified in the prospectus
supplement, the related Governing Document will also allow such holders to hold
high-yield interests.
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To prevent the avoidance of these rules through tiered arrangements, an
excise tax is imposed on any pass-through entity, such as a partnership, REIT,
regulated investment company, grantor trust or, under the FASIT proposed
regulations, REMIC, that holds any FASIT regular interest, whether or not that
FASIT regular interest is a high-yield interest, and issues a debt or equity
interest that is (i) supported by that FASIT regular interest and (ii) has a
yield, higher than the yield on that FASIT regular interest, that would cause
such debt or equity interest to be a high yield interest if it had been issued
by a FASIT. Under the statute, the amount of that tax, which is imposed on the
pass-through entity, is the highest corporate income tax rate applied to the
income of the holder of the debt or equity interest properly attributable to the
FASIT regular interest that supports it. The proposed FASIT regulations provide
that the tax is an excise tax that must be paid on or before the due date of the
pass-through entity's tax return for the taxable year in which it issues such a
debt or equity interest. This appears to contemplate a one-time payment on all
future income from the FASIT regular interest that is projected to be properly
attributable to the debt or equity interest it supports. It is not clear how
this amount is to be determined.
Prohibited Transactions and Other Taxes. Income or gain from certain
"prohibited transactions" by a FASIT are taxable to the holder of the ownership
interest in that FASIT at a 100% rate. Prohibited transactions generally
include, under the FASIT statutory provisions and proposed FASIT regulations:
o the receipt of income from other than permitted assets;
o the receipt of compensation for services;
o the receipt of any income derived from a loan originated by
the FASIT; or
o the disposition of a permitted asset (including disposition
pursuant to a cessation of FASIT status) other than for--
1. foreclosure, default, or imminent default of a
qualified mortgage,
2. bankruptcy or insolvency of the FASIT,
3. substitution for another permitted debt instrument or
distribution of the debt instrument to the holder of
the ownership interest to reduce
overcollateralization, but only if a principal
purpose of acquiring the debt instrument which is
disposed of was not the recognition of gain (or the
reduction of a loss) on the withdrawn asset as a
result of an increase in the market value of the
asset after its acquisition by the FASIT, or
4. the retirement of a class of FASIT regular interests.
The proposed regulations presume that certain transactions will be loan
originations, but also provide certain safe harbors for loans originated by the
FASIT. The proposed safe harbors apply in the following circumstances:
o if the FASIT acquires the loan from an established
securities market as described in Treasury regulation Sections
1.1273-2(f)(2) through (4),
o if the FASIT acquires the loan more than one year after
the loan was issued,
o if the FASIT acquires the loan from a person that regularly
originates similar loans in the ordinary course of business,
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o if the FASIT receives any new loan from the same obligor in
exchange for the obligor's original loan in the context of a
work out, and
o when the FASIT makes a loan pursuant to a contract or
agreement in the nature of a line of credit the FASIT is
permitted to hold.
The FASIT provisions generally exclude from prohibited transactions the
substitution of a debt instruments for another debt instrument which is a
permitted asset and the distribution of a debt instrument contributed by the
holder of the ownership interest to that holder in order to reduce
over-collateralization of the FASIT. In addition, the FASIT proposed regulations
also exclude transactions involving the disposition of hedges from the category
of prohibited transactions. However, the proposed regulations deem a
distribution of debt to be carried out principally to recognize gain, and to be
a prohibited transaction, if the owner (or related person) sells the substituted
or distributed debt instrument at a gain within 180 days of the substitution or
distribution. It is unclear the extent to which tax on those transactions could
be collected from the FASIT directly under the applicable statutes rather than
from the holder of the ownership interest. However, under the related Governing
Document, any such prohibited transactions tax that is not payable by a party
thereto as a result of its own actions will be paid by the FASIT. It is not
anticipated that the FASIT will engage in any prohibited transactions.
The Clinton Administration recently proposed in its budget certain
amendments to the FASIT provisions designed to ensure that income taxes imposed
on the holder of a FASIT ownership interest are paid when due. Such provisions
would impose secondary liability on the FASIT itself for any tax required to be
paid with respect to the income allocated to the FASIT ownership interest if
that holder does not pay its taxes on that income when they are due. If adopted,
the amendments would be effective for FASITs created after the date of
enactment. It is not possible to predict whether the legislation will be adopted
or, if so, in what form.
Taxation of Certain Foreign Investors. The federal income tax treatment
of non-U.S. persons who own FASIT regular certificates that are not "high-yield
interests" is the same as that described above under "--REMICs--Foreign
Investors in REMIC Regular Certificates." However, if you are a non-U.S. person,
you should note that under the FASIT proposed regulations certain interest paid
or accrued on a debt instrument held by the FASIT, if you hold a regular
interest (either directly or indirectly) in the FASIT, is treated as being
received by you directly from a conduit debtor for purposes of Subtitle A of the
Code and the regulations thereunder if:
o you are a 10% shareholder of an obligor on a debt instrument
held by the FASIT;
o you are a controlled foreign corporation to which an obligor
on a debt instrument held by the FASIT is a related person; or
o you are related to such an obligor that is a corporation or
partnership, in general, having common ownership to a greater
than 50% extent.
If you believe you may be in one of these categories, you should
consult with your tax advisors, in particular concerning the possible imposition
of United States withholding taxes at a 30% rate on interest paid with respect
to a FASIT regular interest under these circumstances.
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High-yield FASIT regular certificates may not be sold to or
beneficially owned by non-U.S. persons. Any such purported transfer will be null
and void and, upon the related trustee's discovery of any purported transfer in
violation of this requirement, the last preceding owner of those FASIT regular
certificates will be restored to ownership thereof as completely as possible.
The last preceding owner will, in any event, be taxable on all income with
respect to those FASIT regular certificates for federal income tax purposes. The
related Governing Document will provide that, as a condition to transfer of a
high-yield FASIT regular certificate, the proposed transferee must furnish an
affidavit as to its status as a U.S. person and otherwise as a permitted
transferee.
Backup Withholding. Payments made on the FASIT regular certificates,
and proceeds from the sale of the FASIT regular certificates to or through
certain brokers, may be subject to a "backup" withholding tax under Section 3406
of the Code in the same manner as described above under "--REMICs--Backup
Withholding with Respect to REMIC Certificates."
Reporting Requirements. Reports of accrued interest, OID, if any, and
information necessary to compute the accrual of any market discount on the FASIT
regular certificates will be made annually to the IRS and to investors in the
same manner as described above under "--REMICs--Reporting and Other
Administrative Matters".
Grantor Trusts
Classification of Grantor Trusts. With respect to each series of
grantor trust certificates, our counsel will deliver its opinion to the effect
that, assuming compliance with all provisions of the related Governing Document,
the related trust, or relevant portion thereof, will be classified as a grantor
trust under subpart E, part I of subchapter J of the Code and not as a
partnership or an association taxable as a corporation.
For purposes of the following discussion:
o A grantor trust certificate representing an undivided
equitable ownership interest in the principal of the mortgage
loans constituting the related grantor trust, together with
interest thereon at a pass-through rate, will be referred to
as a "grantor trust fractional interest certificate."
o A grantor trust certificate representing ownership of all or a
portion of the difference between--
(i) interest paid on the mortgage loans constituting the
related grantor trust, minus
(ii) the sum of :
(a) normal administration fees, and
(b) interest paid to the holders of grantor
trust fractional interest certificates
issued with respect to that grantor trust
will be referred to as a "grantor trust strip certificate." A
grantor trust strip certificate may also evidence a nominal
ownership interest in the principal of the mortgage loans
constituting the related grantor trust.
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Characterization of Investments in Grantor Trust Certificates.
Grantor Trust Fractional Interest Certificates. Unless we otherwise
disclose in the related prospectus supplement, any offered certificates that are
grantor trust fractional interest certificates will generally represent
interests in:
o "loans . . . secured by an interest in real property" within
the meaning of Section 7701(a)(19)(C)(v) of the Code, but only
to the extent that the underlying mortgage loans have been
made with respect to property that is used for residential or
certain other prescribed purposes;
o "obligation[s] (including any participation or certificate of
beneficial ownership therein) which . . . [are] principally
secured by an interest in real property" within the meaning of
Section 860G(a)(3) of the Code;
o "permitted assets" within the meaning of Section 860L(a)(1)(C)
of the Code; and
o "real estate assets" within the meaning of Section
856(c)(5)(B) of the Code.
In addition, interest on offered certificates that are grantor trust
fractional interest certificates will, to the same extent, be considered
"interest on obligations secured by mortgages on real property or on interests
in real property" within the meaning of Section 856(c)(3)(B) of the Code.
Grantor Trust Strip Certificates. Even if grantor trust strip
certificates evidence an interest in a grantor trust--
o consisting of mortgage loans that are "loans . . . secured by
an interest in real property" within the meaning of Section
7701(a)(19)(C)(v) of the Code,
o consisting of mortgage loans that are "real estate assets"
within the meaning of Section 856(c)(5)(B) of the Code, and
o the interest on which is "interest on obligations secured by
mortgages on real property" within the meaning of Section
856(c)(3)(A) of the Code,
it is unclear whether the grantor trust strip certificates, and the income
therefrom, will be so characterized. We recommend that prospective purchasers to
which the characterization of an investment in grantor trust strip certificates
is material consult their tax advisors regarding whether the grantor trust strip
certificates, and the income therefrom, will be so characterized.
The grantor trust strip certificates will be:
o "obligation[s] (including any participation or certificate of
beneficial ownership therein) which . . . [are] principally
secured by an interest in real property" within the meaning of
Section 860G(a)(3)(A) of the Code, and
o in general, "permitted assets" within the meaning of Section
860L(a)(1)(C) of the Code.
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Taxation of Owners of Grantor Trust Fractional Interest Certificates
General. Holders of a particular series of grantor trust fractional
interest certificates generally:
o will be required to report on their federal income tax returns
their shares of the entire income from the underlying mortgage
loans, including amounts used to pay reasonable servicing fees
and other expenses, and
o will be entitled to deduct their shares of any reasonable
servicing fees and other expenses.
Because of stripped interests, market or original issue discount, or
premium, the amount includible in income on account of a grantor trust
fractional interest certificate may differ significantly from interest paid or
accrued on the underlying mortgage loans.
Section 67 of the Code allows an individual, estate or trust holding a
grantor trust fractional interest certificate directly or through certain
pass-through entities a deduction for any reasonable servicing fees and expenses
only to the extent that the aggregate of the holder's miscellaneous itemized
deductions exceeds two percent of the holder's adjusted gross income.
Section 68 of the Code reduces the amount of itemized deductions
otherwise allowable for an individual whose adjusted gross income exceeds a
specified amount by the lesser of:
o 3% of the excess of the individual's adjusted gross income
over that amount, and
o 80% of the amount of itemized deductions otherwise
allowable for the taxable year.
The amount of additional taxable income reportable by holders of
grantor trust fractional interest certificates who are subject to the
limitations of either Section 67 or Section 68 of the Code may be substantial.
Further, certificateholders, other than corporations, subject to the alternative
minimum tax may not deduct miscellaneous itemized deductions in determining
their alternative minimum taxable income.
Although it is not entirely clear, it appears that in transactions in
which multiple classes of grantor trust certificates, including grantor trust
strip certificates, are issued, any fees and expenses should be allocated among
those classes of grantor trust certificates. The method of this allocation
should recognize that each class benefits from the related services. In the
absence of statutory or administrative clarification as to the method to be
used, we currently expect that information returns or reports to the IRS and
certificateholders will be based on a method that allocates these fees and
expenses among classes of grantor trust certificates with respect to each period
based on the payments made to each class during that period.
The federal income tax treatment of grantor trust fractional interest
certificates of any series will depend on whether they are subject to the
"stripped bond" rules of Section 1286 of the Code. Grantor trust fractional
interest certificates may be subject to those rules if:
o a class of grantor trust strip certificates is issued as part
of the same series, or
o we or any of our affiliates retain, for our or its own account
or for purposes of resale, a right to receive a specified
portion of the interest payable on an underlying mortgage
loan.
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Further, the IRS has ruled that an unreasonably high servicing fee
retained by a seller or servicer will be treated as a retained ownership
interest in mortgage loans that constitutes a stripped coupon. We will include
in the related prospectus supplement information regarding servicing fees paid
out of the assets of the related trust to:
o a master servicer,
o a special servicer,
o any sub-servicer, or
o their respective affiliates.
If Stripped Bond Rules Apply. If the stripped bond rules apply, each
grantor trust fractional interest certificate will be treated as having been
issued with "original issue discount" within the meaning of Section 1273(a) of
the Code. This is subject, however, to the discussion below regarding:
o the treatment of certain stripped bonds as market discount
bonds, and
o de minimis market discount.
See "--Grantor Trust Funds--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--Market Discount" below.
Under the stripped bond rules, the holder of a grantor trust fractional
interest certificate, whether a cash or accrual method taxpayer, will be
required to report interest income from its grantor trust fractional interest
certificate for each month. The amount of reportable interest income must equal
the income that accrues on the certificate in that month calculated under a
constant yield method, in accordance with the rules of the Code relating to
original issue discount.
The original issue discount on a grantor trust fractional interest
certificate will be the excess of the certificate's stated redemption price over
its issue price. The issue price of a grantor trust fractional interest
certificate as to any purchaser will be equal to the price paid by that
purchaser of the grantor trust fractional interest certificate. The stated
redemption price of a grantor trust fractional interest certificate will be:
o the sum of all payments to be made on that certificate,
o other than "qualified stated interest," if any, and
o the certificate's share of reasonable servicing fees and other
expenses.
See "--Grantor Trust Funds--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Do Not Apply" for a definition of
"qualified stated interest." In general, the amount of such income that accrues
in any month would equal the product of:
(i) the holder's adjusted basis in the grantor trust fractional
interest certificate at the beginning of the related month, as
defined in "--Grantor Trust Funds--Sales of Grantor Trust
Certificates," and
(ii) the yield of that grantor trust fractional interest
certificate to the holder.
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The yield would be computed as the rate, that, if used to discount the holder's
share of future payments on the related mortgage loans, would cause the present
value of those future payments to equal the price at which the holder purchased
the certificate. This rate is compounded based on the regular interval between
payment dates. In computing yield under the stripped bond rules, a
certificateholder's share of future payments on the related mortgage loans will
not include any payments made in respect of any ownership interest in those
mortgage loans retained by us, a master servicer, a special servicer, a
sub-servicer, or our or their respective affiliates, but will include the
certificateholder's share of any reasonable servicing fees and other expenses.
With respect to certain categories of debt instruments, Section
1272(a)(6) of the Code requires the use of a reasonable prepayment assumption in
accruing original issue discount, and adjustments in the accrual of original
issue discount when prepayments do not conform to the prepayment assumption.
Legislation enacted in 1997 extended the scope of that section to any pool of
debt instruments the yield on which may be affected by reason of prepayments,
effective for taxable years beginning after enactment. The precise application
of this legislation is unclear in certain respects. For example, it is uncertain
whether a prepayment assumption will be applied collectively to all a taxpayer's
investments in pools of debt instruments, or on an investment-by-investment
basis. Similarly, it is not clear whether the assumed prepayment rate, as to
investments in grantor trust fractional interest certificates, is to be
determined based on conditions at the time of the first sale of the certificate
or, with respect to any holder, at the time of purchase of the certificate by
that holder.
We recommend that certificateholders consult their tax advisors
concerning reporting original issue discount with respect to grantor trust
fractional interest certificates.
In the case of a grantor trust fractional interest certificate acquired
at a price equal to the principal amount of the related mortgage loans allocable
to that certificate, the use of a prepayment assumption generally would not have
any significant effect on the yield used in calculating accruals of interest
income. In the case, however, of a grantor trust fractional interest certificate
acquired at a price less than or greater than the principal amount,
respectively, the use of a reasonable prepayment assumption would increase or
decrease the yield. Therefore, the use of this prepayment assumption would
accelerate or decelerate, respectively, the reporting of income.
In the absence of statutory or administrative clarification, we
currently expect that information reports or returns to the IRS and
certificateholders will be based on:
o a prepayment assumption determined when certificates are
offered and sold hereunder, which we will disclose in the
related prospectus supplement, and
o a constant yield computed using a representative initial
offering price for each class of certificates.
However, neither we nor any other person will make any representation
that--
o the mortgage loans in any of our trusts will in fact prepay at
a rate conforming to the prepayment assumption used or any
other rate, or
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o the prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports that we send, even if otherwise accepted as accurate by the IRS, will in
any event be accurate only as to the initial certificateholders of each series
who bought at that price.
Under Treasury Regulation Section 1.1286-1, certain stripped bonds are
to be treated as market discount bonds. Accordingly, any purchaser of such a
bond is to account for any discount on the bond as market discount rather than
original issue discount. This treatment only applies, however, if immediately
after the most recent disposition of the bond by a person stripping one or more
coupons from the bond and disposing of the bond or coupon:
o there is no original issue discount or only a de minimis
amount of original issue discount, or
o the annual stated rate of interest payable on the original
bond is no more than one percentage point lower than the
gross interest rate payable on the related mortgage loans,
before subtracting any servicing fee or any stripped coupon.
If interest payable on a grantor trust fractional interest certificate
is more than one percentage point lower than the gross interest rate payable on
the related mortgage loans, we will disclose that fact in the related prospectus
supplement. If the original issue discount or market discount on a grantor trust
fractional interest certificate determined under the stripped bond rules is less
than the product of:
o 0.25% of the stated redemption price, and
o the weighted average maturity of the related mortgage loans,
then the original issue discount or market discount will be considered to be de
minimis. Original issue discount or market discount of only a de minimis amount
will be included in income in the same manner as de minimis original issue
discount and market discount described in "--Grantor Trust Funds--Taxation of
Owners of Grantor Trust Fractional Interest Certificates--If Stripped Bond Rules
Do Not Apply" and "--Market Discount" below.
If Stripped Bond Rules Do Not Apply. Subject to the discussion below on
original issue discount, if the stripped bond rules do not apply to a grantor
trust fractional interest certificate, the certificateholder will be required to
report its share of the interest income on the related mortgage loans in
accordance with the certificateholder's normal method of accounting. In that
case, the original issue discount rules will apply, even if the stripped bond
rules do not apply, to a grantor trust fractional interest certificate to the
extent it evidences an interest in mortgage loans issued with original issue
discount.
The original issue discount, if any, on mortgage loans will equal the
difference between:
(i) the stated redemption price of the mortgage loans, and
(ii) their issue price.
For a definition of "stated redemption price," see "--REMICs--Taxation
of Owners of REMIC Regular Certificates--Original Issue Discount" above. In
general, the issue price of a mortgage loan will be the amount received by the
borrower from the lender under the terms of the mortgage loan. If the borrower
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separately pays points to the lender that are not paid for services provided by
the lender, such as commitment fees or loan processing costs, the amount of
points paid reduces the issue price.
The stated redemption price of a mortgage loan will generally equal its
principal amount. The determination as to whether original issue discount will
be considered to be de minimis will be calculated using the same test as in the
REMIC discussion. See "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above.
In the case of mortgage loans bearing adjustable or variable interest
rates, we will describe in the related prospectus supplement the manner in which
these rules will be applied with respect to the mortgage loans by the related
trustee or master servicer, as applicable, in preparing information returns to
certificateholders and the IRS.
If original issue discount is in excess of a de minimis amount, all
original issue discount with respect to a mortgage loan will be required to be
accrued and reported in income each month, based on a constant yield. Under
legislation enacted in 1997, Section 1272(a)(6) of the Code requires that a
prepayment assumption be used in computing yield with respect to any pool of
debt instruments, the yield on which may be affected by prepayments. The precise
application of this legislation is unclear in certain respects. For example, it
is uncertain whether a prepayment assumption will be applied collectively to all
a taxpayer's investments in pools of debt instruments or will be applied on an
investment-by-investment basis.
Similarly, it is not clear, whether the assumed prepayment rate as to
investments in grantor trust fractional interest certificates is to be
determined based on conditions, at the time of the first sale of the certificate
or, with respect to any holder, at the time of purchase of the certificate by
that holder. We recommend that certificateholders consult their own tax advisors
concerning reporting original issue discount with respect to grantor trust
fractional interest certificates.
A purchaser of a grantor trust fractional interest certificate may
purchase the grantor trust fractional interest certificate at a cost less than
the certificate's allocable portion of the aggregate remaining stated redemption
price of the underlying mortgage loans. In that case, the purchaser will also be
required to include in gross income the certificate's daily portions of any
original issue discount with respect to those mortgage loans. However, each
daily portion will be reduced, if the cost of the grantor trust fractional
interest certificate to the purchaser is in excess of the certificate's
allocable portion of the aggregate "adjusted issue prices" of the underlying
mortgage loans. The reduction will be approximately in proportion to the ratio
that such excess bears to the certificate's allocable portion of the aggregate
original issue discount remaining to be accrued on those mortgage loans.
The adjusted issue price of a mortgage loan on any given day equals the
sum of:
(i) the adjusted issue price or the issue price, in the case of
the first accrual period, of the mortgage loan at the
beginning of the accrual period that includes that day, and
(ii) the daily portions of original issue discount for all days
during the accrual period prior to that day.
The adjusted issue price of a mortgage loan at the beginning of any
accrual period will equal:
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(i) the issue price of the mortgage loan, increased by
(ii) the aggregate amount of original issue discount with respect
to the mortgage loan that accrued in prior accrual periods,
and reduced by
(iii) the amount of any payments made on the mortgage loan in prior
accrual periods of amounts included in its stated redemption
price.
In the absence of statutory or administrative clarification, we
currently expect that information reports or returns to the IRS and
certificateholders will be based on:
o a prepayment assumption determined when the certificates are
offered and sold hereunder and disclosed in the related
prospectus supplement, and
o a constant yield computed using a representative initial
offering price for each class of certificates.
However, neither we nor any other person will make any representation
that--
o the mortgage loans will in fact prepay at a rate conforming to
the prepayment assumption or any other rate, or
o the prepayment assumption will not be challenged by the IRS on
audit.
Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Market Discount. If the stripped bond rules do not apply to a grantor
trust fractional interest certificate, a certificateholder may be subject to the
market discount rules of Sections 1276 through 1278 of the Code to the extent an
interest in a mortgage loan is considered to have been purchased at a "market
discount." A mortgage loan is considered to have been purchased at a "market
discount" if--
o in the case of a mortgage loan issued without original issue
discount, it is purchased at a price less than its remaining
stated redemption price, or
o in the case of a mortgage loan issued with original issue
discount, it is purchased at a price less than its adjusted
issue price.
If market discount is in excess of a de minimis amount, the holder
generally must include in income in each month the amount of the discount that
has accrued, under the rules described below, through that month that has not
previously been included in income. The inclusion will be limited, in the case
of the portion of the discount that is allocable to any mortgage loan, to the
payment of stated redemption price on the mortgage loan that is received by or,
for accrual method certificateholders, due to, the trust in that month. A
certificateholder may elect to include market discount in income currently as it
accrues, under a constant yield method based on the yield of the certificate to
the holder, rather than including it on a deferred basis
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in accordance with the foregoing under rules similar to those described in
"--REMICs--Taxation of Owners of REMIC Regular Interests--Market Discount"
above.
Section 1276(b)(3) of the Code authorizes the Treasury Department to
issue regulations providing for the method for accruing market discount on debt
instruments, the principal of which is payable in more than one installment.
Until the time that regulations are issued by the Treasury Department, certain
rules described in the Committee Report apply. Under those rules, in each
accrual period, you may accrue market discount on the underlying mortgage loans,
at your option:
o on the basis of a constant yield method,
o in the case of a mortgage loan issued without original issue
discount, in an amount that bears the same ratio to the total
remaining market discount as the stated interest paid in the
accrual period bears to the total stated interest remaining to
be paid on the mortgage loan as of the beginning of the
accrual period, or
o in the case of a mortgage loan issued with original issue
discount, in an amount that bears the same ratio to the total
remaining market discount as the original issue discount
accrued in the accrual period bears to the total original
issue discount remaining at the beginning of the accrual
period.
Under legislation enacted in 1997, Section 1272(a)(6) of the Code
requires that a prepayment assumption be used in computing the accrual of
original issue discount with respect to any pool of debt instruments, the yield
on which may be affected by prepayments. Because the mortgage loans will be a
pool described in that section, it appears that the prepayment assumption used,
or that would be used, in calculating the accrual of original issue discount, if
any, is also to be used in calculating the accrual of market discount. However,
the precise application of the new legislation is unclear in certain respects.
For example, it is uncertain whether a prepayment assumption will be applied
collectively to all of a taxpayer's investments in pools of debt instruments, or
on an investment-by-investment basis. Similarly, it is not clear whether the
assumed prepayment rate is to be determined at the time of the first sale of the
grantor trust fractional interest certificate, or with respect to any holder, at
the time of that holder's purchase of the grantor trust fractional interest
certificate.
We recommend that certificateholders consult their own tax advisors
concerning accrual of market discount with respect to grantor trust fractional
interest certificates. Certificateholders should also refer to the related
prospectus supplement to determine whether and in what manner the market
discount will apply to the underlying mortgage loans purchased at a market
discount.
To the extent that the underlying mortgage loans provide for periodic
payments of stated redemption price, you may be required to include market
discount in income at a rate that is not significantly slower than the rate at
which that discount would be included in income if it were original issue
discount.
Market discount with respect to mortgage loans may be considered to be
de minimis and, if so, will be includible in income under de minimis rules
similar to those described under "--REMICs--Taxation of Owners of REMIC Regular
Certificates--Original Issue Discount" above.
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Further, under the rules described under "--REMICs--Taxation of Owners
of REMIC Regular Certificates--Market Discount" above, any discount that is not
original issue discount and exceeds a de minimis amount may require the deferral
of interest expense deductions attributable to accrued market discount not yet
includible in income, unless an election has been made to report market discount
currently as it accrues. This rule applies without regard to the origination
dates of the underlying mortgage loans.
Premium. If a certificateholder is treated as acquiring the underlying
mortgage loans at a premium, which is a price in excess of their remaining
stated redemption price, the certificateholder may elect under Section 171 of
the Code to amortize the portion of that premium allocable to mortgage loans
originated after September 27, 1985 using a constant yield method. Amortizable
premium is treated as an offset to interest income on the related debt
instrument, rather than as a separate interest deduction. However, premium
allocable to mortgage loans originated before September 28, 1985 or to mortgage
loans for which an amortization election is not made, should:
o be allocated among the payments of stated redemption price on
the mortgage loan, and
o be allowed as a deduction as those payments are made or, for
an accrual method certificateholder, due.
It appears that a prepayment assumption should be used in computing
amortization of premium allowable under Section 171 of the Code similar to that
described for calculating the accrual of market discount of grantor trust
fractional interest certificates. See "--Grantor Trust Funds--Taxation of Owners
of Grantor Trust Fractional Interest Certificates--Market Discount" above.
Taxation of Owners of Grantor Trust Strip Certificates. The "stripped
coupon" rules of Section 1286 of the Code will apply to the grantor trust strip
certificates. Except as described above under "--Grantor Trust Funds--Taxation
of Owners of Grantor Trust Fractional Interest Certificates--If Stripped Bond
Rules Apply," no regulations or published rulings under Section 1286 of the Code
have been issued and some uncertainty exists as to how it will be applied to
securities, such as the grantor trust strip certificates. Accordingly, we
recommend that you consult your tax advisors concerning the method to be used in
reporting income or loss with respect to those certificates.
The Treasury regulations promulgated under the original discount rules
do not apply to "stripped coupons," although they provide general guidance as to
how the original issue discount sections of the Code will be applied.
Under the stripped coupon rules, it appears that original issue
discount will be required to be accrued in each month on the grantor trust strip
certificates based on a constant yield method. In effect, you would include as
interest income in each month an amount equal to the product of your adjusted
basis in the grantor trust strip certificate at the beginning of that month and
the yield of the grantor trust strip certificate to you. This yield would be
calculated based on:
o the price paid for that grantor trust strip certificate
by you, and
o the projected payments remaining to be made thereon at the
time of the purchase, plus
o an allocable portion of the projected servicing fees
and expenses to be paid with respect to
the underlying mortgage loans.
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See "--Grantor Trust Funds--Taxation of Owners of Grantor Trust Fractional
Interest Certificates--If Stripped Bond Rules Apply" above.
As noted above, Section 1272(a)(6) of the Code requires that a
prepayment assumption be used in computing the accrual of original issue
discount with respect to certain categories of debt instruments. The Code also
requires adjustments be made in the amount and rate of accrual of that discount
when prepayments do not conform to the prepayment assumption. It appears that
those provisions would apply to grantor trust strip certificates. It is
uncertain whether the assumed prepayment rate would be determined based on:
o conditions at the time of the first sale of the grantor trust
strip certificate or,
o with respect to any subsequent holder, at the time of purchase
of the grantor trust strip certificate by that holder.
If the method for computing original issue discount under Section
1272(a)(6) results in a negative amount of original issue discount as to any
accrual period with respect to a grantor trust strip certificate, the amount of
original issue discount allocable to that accrual period will be zero. That is,
no current deduction of the negative amount will be allowed to you. You will
instead only be permitted to offset that negative amount against future positive
original issue discount, if any, attributable to that certificate. Although not
free from doubt, it is possible that you may be permitted to deduct a loss to
the extent your basis in the certificate exceeds the maximum amount of payments
you could ever receive with respect to that certificate. However, any such loss
may be a capital loss, which is limited in its deductibility. The foregoing
considerations are particularly relevant to grantor trust certificates with no,
or disproportionately small, amounts of principal, which can have negative
yields under circumstances that are not default related. See "Risk Factors--The
Investment Performance of Your Certificates Depend Upon Payments, Defaults and
Losses on the Underlying Mortgage Loans" herein.
The accrual of income on the grantor trust strip certificates will be
significantly slower using a prepayment assumption than if yield is computed
assuming no prepayments. In the absence of statutory or administrative
clarification, we currently expect that information returns or reports to the
IRS and certificateholders will be based on:
o the prepayment assumption we will disclose in the related
prospectus supplement, and
o a constant yield computed using a representative initial
offering price for each class of certificates.
However, neither we nor any other person will make any representation
that--
o the mortgage loans in any of our trusts will in fact prepay at
a rate conforming to the prepayment assumption or at any other
rate or
o the prepayment assumption will not be challenged by the IRS on
audit.
We recommend that prospective purchasers of the grantor trust strip certificates
consult their tax advisors regarding the use of the prepayment assumption.
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Certificateholders also should bear in mind that the use of a
representative initial offering price will mean that the information returns or
reports, even if otherwise accepted as accurate by the IRS, will in any event be
accurate only as to the initial certificateholders of each series who bought at
that price.
Sales of Grantor Trust Certificates. Any gain or loss recognized on the
sale or exchange of a grantor trust certificate by an investor who holds that
certificate as a capital asset, will be capital gain or loss, except as
described below. The amount recognized equals the difference between:
o the amount realized on the sale or exchange of a grantor trust
certificate, and
o its adjusted basis.
The adjusted basis of a grantor trust certificate generally will equal:
o its cost, increased by
o any income reported by the seller, including original issue
discount and market discount income, and reduced, but not
below zero, by
o any and all--
(i) previously reported losses,
(ii) amortized premium, and
(iii) payments with respect to that grantor trust
certificate.
As of the date of this prospectus, the Code provides for lower rates as
to long-term capital gains, than those applicable to the short-term capital
gains and ordinary income realized or received by individuals. No such rate
differential exists for corporations. In addition, the distinction between a
capital gain or loss and ordinary income or loss remains relevant for other
purposes.
Gain or loss from the sale of a grantor trust certificate may be
partially or wholly ordinary and not capital in certain circumstances. Gain
attributable to accrued and unrecognized market discount will be treated as
ordinary income. Gain or loss recognized by banks and other financial
institutions subject to Section 582(c) of the Code will be treated as ordinary
income.
Furthermore, a portion of any gain that might otherwise be capital gain
may be treated as ordinary income to the extent that the grantor trust
certificate is held as part of a "conversion transaction" within the meaning of
Section 1258 of the Code. A conversion transaction generally is one in which the
taxpayer has taken two or more positions in the same or similar property that
reduce or eliminate market risk, if substantially all of the taxpayer's return
is attributable to the time value of the taxpayer's net investment in the
transaction. The amount of gain realized in a conversion transaction that is
recharacterized as ordinary income generally will not exceed the amount of
interest that would have accrued on the taxpayer's net investment at 120% of the
appropriate "applicable Federal rate" at the time the taxpayer enters into the
conversion transaction, subject to appropriate reduction for prior inclusion of
interest and other ordinary income items from the transaction.
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The Code requires the recognition of gain upon the "constructive sale
of an appreciated financial position." A constructive sale of an appreciated
financial position occurs if a taxpayer enters into certain transactions or
series of such transactions that have the effect of substantially eliminating
the taxpayer's risk of loss and opportunity for gain with respect to the
financial instrument. Debt instruments that--
o entitle the holder to a specified principal amount,
o pay interest at a fixed or variable rate, and
o are not convertible into the stock of the issuer or a related
party,
cannot be the subject of a constructive sale for this purpose. Because most
grantor trust certificates meet this exception, this Section will not apply to
most grantor trust certificates. However, certain grantor trust certificates
have no, or a disproportionately small, amount of principal and these
certificates can be the subject of a constructive sale.
Finally, a taxpayer may elect to have net capital gain taxed at
ordinary income rates rather than capital gains rates in order to include the
net capital gain in total net investment income for that taxable year. This
election would be done for purposes of the rule that limits the deduction of
interest on indebtedness incurred to purchase or carry property held for
investment to a taxpayer's net investment income.
Grantor Trust Reporting. Unless otherwise provided in the related
prospectus supplement, the related tax administrator will furnish or make
readily available through electronic means to each holder of a grantor trust
certificate with each payment a statement setting forth the amount of the
payment allocable to principal on the underlying mortgage loans and to interest
thereon at the related pass-through rate. In addition, the related tax
administrator will furnish, within a reasonable time after the end of each
calendar year, to each person or entity that was the holder of a grantor trust
certificate at any time during that year, information regarding:
o the amount of servicing compensation received by a master
servicer or special servicer, and
o all other customary factual information the reporting party
deems necessary or desirable to enable holders of the related
grantor trust certificates to prepare their tax returns.
The reporting party will furnish comparable information to the IRS as and when
required by law to do so.
Because the rules for accruing discount and amortizing premium with
respect to grantor trust certificates are uncertain in various respects, there
is no assurance the IRS will agree with the information reports of those items
of income and expense. Moreover, those information reports, even if otherwise
accepted as accurate by the IRS, will in any event be accurate only as to the
initial certificateholders that bought their certificates at the representative
initial offering price used in preparing the reports.
On August 13, 1998, the Service published proposed regulations, which
will, when effective, establish a reporting framework for interests in "widely
held fixed investment trusts" similar to that for regular interests in REMICs. A
widely-held fixed investment trust is defined as any entity classified as a
"trust" under Treasury Regulation Section 301.7701-4(c) in which any interest is
held by a middleman, which includes, but is not limited to:
o a custodian of a person's account,
o a nominee, and
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o a broker holding an interest for a customer in street name.
These regulations are proposed to be effective for calendar years beginning on
or after the date that the final regulations are published in the Federal
Register.
Backup Withholding. In general, the rules described under
"--REMICs--Backup Withholding with Respect to REMIC Certificates" above will
also apply to grantor trust certificates.
Foreign Investors. In general, the discussion with respect to REMIC
regular certificates under "--REMICs--Foreign Investors in REMIC Certificates"
above applies to grantor trust certificates. However, unless we otherwise
specify in the related prospectus supplement, grantor trust certificates will be
eligible for exemption from U.S. withholding tax, subject to the conditions
described in the discussion above, only to the extent the related mortgage loans
were originated after July 18, 1984.
To the extent that interest on a grantor trust certificate would be
exempt under Sections 871(h)(1) and 881(c) of the Code from United States
withholding tax, and the certificate is not held in connection with a
certificateholder's trade or business in the United States, the certificate will
not be subject to United States estate taxes in the estate of a nonresident
alien individual.
STATE AND OTHER TAX CONSEQUENCES
In addition to the federal income tax consequences described in
"Federal Income Tax Consequences," potential investors should consider the state
and local tax consequences concerning the offered certificates. State tax law
may differ substantially from the corresponding federal law, and the discussion
above does not purport to describe any aspect of the tax laws of any state or
other jurisdiction. Therefore, we recommend that prospective investors consult
their tax advisors with respect to the various tax consequences of investments
in the offered certificates.
ERISA CONSIDERATIONS
General
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Code of 1986 impose various requirements
on--
o employee benefit plans, and on certain other retirement plans,
arrangements and accounts, that are subject to the fiduciary
responsibility provisions of ERISA and Section 4975 of the
Internal Revenue Code of 1986 ("ERISA Plans"), and
o persons that are fiduciaries with respect to ERISA Plans
("Plan Fiduciaries"),
in connection with the investment of the assets of an ERISA Plan ("Plan
Assets"). For purposes of this discussion, ERISA Plans may include individual
retirement accounts and annuities, Keogh plans and collective investment funds
and separate accounts, including as applicable, insurance company general
accounts, in which other ERISA Plans are invested.
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Governmental plans and, if they have not made an election under Section
410(d) of the Internal Revenue Code of 1986, church plans are not subject to
ERISA requirements. Accordingly, assets of those plans may be invested in the
offered certificates without regard to the ERISA considerations described below,
subject to the provisions of other applicable federal and state law. Any such
plan which is qualified and exempt from taxation under Sections 401(a) and
501(a) of the Internal Revenue Code of 1986, however, is subject to the
prohibited transaction rules in Section 503 of that Code.
ERISA imposes certain general fiduciary requirements on Plan
Fiduciaries that are investing Plan Assets, including--
o investment prudence and diversification, and
o compliance with the investing ERISA Plan's governing the
documents.
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of
1986 also prohibit a broad range of transactions involving Plan Assets and a
Party in Interest, unless a statutory or administrative exemption exists. A
"Party in Interest" is any person that is a "party in interest" within the
meaning of ERISA or a "disqualified person" within the meaning of the Internal
Revenue Code of 1986.
The types of transactions between ERISA Plans and Parties in Interest that are
prohibited include:
o sales, exchanges or leases of property;
o loans or other extensions of credit; and
o the furnishing of goods and services.
Certain Parties in Interest that participate in a prohibited
transaction may be subject to an excise tax imposed under Section 4975 of the
Internal Revenue Code of 1986 or a penalty imposed under Section 502(i) of
ERISA, unless a statutory or administrative exemption is available. In addition,
the persons involved in the prohibited transaction may have to cancel the
transaction and pay an amount to the affected ERISA Plan for any losses realized
by that ERISA Plan or profits realized by those persons. In addition, individual
retirement accounts involved in the prohibited transaction may be disqualified
which would result in adverse tax consequences to the owner of the account.
Plan Asset Regulations
An ERISA Plan's investment in offered certificates may cause the
underlying mortgage assets and other assets of the related trust to be deemed
assets of that ERISA Plan. Section 2510.3-101 of the regulations of the U.S.
Department of Labor (those regulations, the "Plan Asset Regulations") provides
that when an ERISA Plan acquires an equity interest in an entity, the assets
that ERISA Plan or arrangement include both that equity interest and an
undivided interest in each of the underlying assets of the entity, unless an
exception applies. One such exemption is that the equity participation in the
entity by "benefit plan investors," which include both ERISA Plans and certain
employee benefit plans not subject to ERISA, is not "significant." The equity
participation by benefit plan investors will be "significant" on any date if 25%
or more of the value of any class of equity interests in the entity is held by
benefit plan investors. The
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percentage owned by benefit plan investors is determined by excluding the
investments of the following persons:
(i) those with discretionary authority or control over the assets
of the entity,
(ii) those who provide investment advice directly or indirectly for
a fee with respect to the assets of the entity, and
(iii) those who are affiliates of the persons described in the
preceding clauses (i) and (ii).
In the case of one of our trusts, investments by us, by the related trustee, the
related master servicer, the related special servicer, or any other party with
discretionary authority over the related trust assets, or by the affiliates of
these persons, will be excluded.
A fiduciary of an investing ERISA Plan is any person who--
o has discretionary authority or control over the management or
disposition of the assets of that ERISA Plan, or
o provides investment advice with respect to the assets of that
ERISA Plan for a fee.
If the mortgage and other assets included in one of our trusts are Plan Assets,
then any party exercising management or discretionary control regarding those
assets, such as the related trustee, master servicer or special servicer, or
affiliates of any of these parties, may be deemed to be a "fiduciary" with
respect to the investing ERISA Plan and, therefore, subject to the fiduciary
responsibility provisions of ERISA. In addition, if the mortgage and other
assets included in one of our trusts are Plan Assets, then the operation of that
trust may involve prohibited transactions under ERISA or the Internal Revenue
Code of 1986. For example, if a borrower with respect to a mortgage loan in that
trust is a Party in Interest to an investing ERISA Plan, then the purchase by
that ERISA Plan of offered certificates evidencing interests in that trust,
could be a prohibited loan between that ERISA Plan and the Party in Interest.
The Plan Asset Regulations provide that where an ERISA Plan purchases a
"guaranteed governmental mortgage pool certificate," the assets of that ERISA
Plan include the certificate but do not include any of the mortgages underlying
the certificate. The Plan Asset Regulations include in the definition of a
"guaranteed governmental mortgage pool certificate" certain certificates issued
and/or guaranteed by FHLMC, GNMA and FNMA, but do not include certificates
issued or guaranteed by FAMC. Accordingly, even if these types of
mortgaged-backed securities, other than the FAMC certificates, were deemed to be
Plan Assets, the underlying mortgages would not be treated as Plan Assets.
Private label mortgage participations, mortgage pass-through certificates, FAMC
certificates or other mortgage-backed securities are not "guaranteed
governmental mortgage pool certificates" within the meaning of the Plan Asset
Regulations.
In addition, the acquisition or holding of offered certificates by or
on behalf of an ERISA Plan could give rise to a prohibited transaction if we or
the related trustee, master servicer or special servicer or any related
underwriter, sub-servicer, tax administrator, manager, borrower or obligor under
any credit enhancement mechanism, or certain of their affiliates, is or becomes
a Party in Interest with respect to an investing ERISA Plan.
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If you are a Plan Fiduciary, you should consult your counsel and review
the ERISA discussion in the related prospectus supplement before purchasing any
offered certificates.
Prohibited Transaction Exemptions
If you are a Plan Fiduciary, then, in connection with your deciding
whether to purchase any of the offered certificates on behalf of an ERISA Plan,
you should consider the availability of one of the following prohibited
transaction class exemptions issued by the U.S. Department of Labor:
o Prohibited Transaction Class Exemption ("PTCE") 75-1, which
exempts certain transactions involving ERISA Plans and certain
broker-dealers, reporting dealers and banks;
o PTCE 90-1, which exempts certain transactions between
insurance company separate accounts and Parties in Interest;
o PTCE 91-38, which exempts certain transactions between bank
collective investment funds and Parties in Interest;
o PTCE 84-14, which exempts certain transactions effected on
behalf of an ERISA Plan by a "qualified professional asset
manager;"
o PTCE 95-60, which exempts certain transactions between
insurance company general accounts and Parties in Interest;
and
o PTCE 96-23, which exempts certain transactions effected on
behalf of an ERISA Plan by an "in-house asset manager."
We cannot provide any assurance that any of these class exemptions will
apply with respect to any particular investment by or on behalf of an ERISA Plan
in any class of offered certificates. Furthermore, even if any of them were
deemed to apply, that particular class exemption may not apply to all
transactions that could occur in connection with the investment. The prospectus
supplement with respect to the offered certificates of any series may contain
additional information regarding the availability of other exemptions, with
respect to those certificates.
[o Underwriter's Exemption
It is expected that ___________________________________________ will be
the sole, lead or co- lead underwriter in each underwritten offering of
certificates made pursuant to this prospectus. The U.S. Department of Labor has
issued an individual prohibited transaction exemption to_________________ which
generally exempts from the application of the prohibited transaction provisions
of ERISA and the Internal Revenue Code of 1986 certain transactions relating to,
among other things, the servicing and operation of certain mortgage assets
pools, such as the types of mortgage asset pools that will be included in our
trusts, and the purchase, sale and holding of certain certificates evidencing
interests in those pools that are underwritten by_________________ or any person
affiliated with_________________ , such as certain of the offered certificates.
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The related prospectus supplement will state whether PTCE ______ is or
may be available with respect to any offered certificates underwritten
by_________________ .]
Insurance Company General Accounts
The Small Business Job Protection Act of 1996 added a new Section
401(c) to ERISA, which provides relief from the fiduciary and prohibited
transaction provisions of ERISA and the Internal Revenue Code of 1986 for
transactions involving an insurance company general account. This exemption is
in addition to any exemption that may be available under prohibited transaction
class exemption 95-60 for the purchase and holding of offered certificates by an
insurance company general account.
Pursuant to Section 401(c) of ERISA, the U.S. Department of Labor
issued a final regulation on January 5, 2000, providing guidance for
determining, in cases where insurance policies supported by an insurer's general
account are issued to or for the benefit of an ERISA Plan on or before December
31, 1998, which general account assets are Plan Assets. That regulation
generally provides that, if certain specified requirements are satisfied with
respect to insurance policies issued on or before December 31, 1998, the assets
of an insurance company general account will not be Plan Assets.
Any assets of an insurance company general account which support
insurance policies issued to an ERISA Plan after December 31, 1998, or issued to
an ERISA Plan on or before December 31, 1998 for which the insurance company
does not comply with the requirements set forth in the final regulation under
Section 401(c) of ERISA, may be treated as Plan Assets. In addition, because
Section 401(c) of ERISA and the regulation issued under Section 401(c) of ERISA
do not relate to insurance company separate accounts, separate account assets
are still treated as Plan Assets, invested in the separate account. If you are
an insurance company are contemplating the investment of general account assets
in offered certificates, you should consult your legal counsel as to the
applicability of Section 401(c) of ERISA.
Consultation With Counsel
If you are a Plan Fiduciary which proposes to purchase offered
certificates on behalf of or with assets of an ERISA Plan, account or
arrangement, you should consider your general fiduciary obligations under ERISA
and you should consult with your legal counsel as to the potential applicability
of ERISA and the Internal Revenue Code of 1986 to that investment and the
availability of any prohibited transaction exemption in connection with that
investment.
Tax Exempt Investors
An ERISA Plan that is exempt from federal income taxation pursuant to
Section 501 of the Internal Revenue Code of 1986 will be subject to federal
income taxation to the extent that its income is "unrelated business taxable
income" within the meaning of Section 512 of the Internal Revenue Code of 1986.
All "excess inclusions" of a REMIC allocated to a REMIC residual certificate
held by a tax-exempt ERISA Plan will be considered "unrelated business taxable
income" and will be subject to federal income tax.
See "Federal Income Tax Consequences--REMICs--Taxation of Owners of
REMIC Residual Certificates-Excess Inclusions" in this prospectus.
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LEGAL INVESTMENT
If and to the extent specified in the related prospectus supplement,
the offered certificates of any series may constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984 ("SMMEA"). "Mortgage related securities" are legal investments for
entities--
o that are created or existing under the laws of the United
States or any state, including the District of Columbia and
Puerto Rico, and
o whose authorized investments are subject to state regulations,
to the same extent that, under applicable law, obligations issued by or
guaranteed as to principal and interest by the United States or any of its
agencies or instrumentalities are legal investments for those entities.
Prior to December 31, 1996, classes of offered certificates would be
"mortgage related securities" for purposes of SMMEA only if they:
o were rated in one of the two highest rating categories by at
least one nationally recognized statistical rating
organization; and
o evidenced interests in a trust consisting of loans directly
secured by a first lien on a single parcel of real estate upon
which is located a dwelling or mixed residential and
commercial structure, which loans had been originated by the
types of originators specified in SMMEA.
Further, under SMMEA as originally enacted, if a state enacted
legislation on or before October 3, 1991 that specifically limited the legal
investment authority of any entities referred to in the preceding paragraph with
respect to "mortgage related securities" under that definition, offered
certificates would constitute legal investments for entities subject to the
legislation only to the extent provided in that legislation.
Effective December 31, 1996, the definition of "mortgage related
securities" was modified to include among the types of loans to which the
securities may relate, loans secured by "one or more parcels of real estate upon
which is located one or more commercial structures." In addition, the related
legislative history states that this expanded definition includes multifamily
loans secured by more than one parcel of real estate upon which is located more
than one structure. Until September 23, 2001, any state may enact legislation
limiting the extent to which "mortgage related securities" under this expanded
definition would constitute legal investments under that state's laws.
SMMEA also amended the legal investment authority of federally
chartered depository institutions as follows:
o federal savings and loan associations and federal savings
banks may invest in, sell or otherwise deal with "mortgage
related securities" without limitation as to the percentage of
their assets represented by those securities; and
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o federal credit unions may invest in "mortgage related
securities" and national banks may purchase "mortgage related
securities" for their own account without regard to the
limitations generally applicable to investment securities
prescribed in 12 U.S.C. 24 (Seventh),
subject in each case to the regulations that the applicable federal regulatory
authority may prescribe.
Effective December 31, 1996, the Office of the Comptroller of the
Currency (the "OCC") amended 12 C.F.R. Part 1 to authorize national banks to
purchase and sell for their own account, without limitation as to a percentage
of the bank's capital and surplus, but subject to compliance with certain
general standards concerning "safety and soundness" and retention of credit
information in 12 C.F.R. ss. 1.5, certain "Type IV securities," which are
defined in 12 C.F.R. ss. 1.2(1) to include certain "commercial mortgage-related
securities" and "residential mortgage-related securities." As defined,
"commercial mortgage-related security" and "residential mortgage-related
security" mean, in relevant part, a "mortgage related security" within the
meaning of SMMEA, provided that, in the case of a "commercial mortgage-related
security," it "represents ownership of a promissory note or certificate of
interest or participation that is directly secured by a first lien on one or
more parcels of real estate upon which one or more commercial structures are
located and that is fully secured by interests in a pool of loans to numerous
obligors." In the absence of any rule or administrative interpretation by the
OCC defining the term "numerous obligors," we make no representation as to
whether any class of offered certificates will qualify as "commercial
mortgage-related securities," and thus as "Type IV securities," for investment
by national banks.
The National Credit Union Administration (the "NCUA") has adopted
rules, codified at 12 C.F.R. Part 703, which permit federal credit unions to
invest in "mortgage related securities" under certain limited circumstances,
other than stripped mortgage related securities, residual interests in mortgage
related securities and commercial mortgage related securities, unless the credit
union has obtained written approval from the NCUA to participate in the
"investment pilot program" described in 12 C.F.R. ss. 703.140.
The Office of Thrift Supervision (the "OTS") has issued Thrift Bulletin
13a (December 1, 1998), "Management of Interest Rate Risk, Investment
Securities, and Derivatives Activities," which thrift institutions subject to
the jurisdiction of the OTS should consider before investing in any of the
offered certificates.
All depository institutions considering an investment in the offered
certificates should review the "Supervisory Policy Statement on Investment
Securities and End-User Derivatives Activities" (the "1998 Policy Statement") of
the Federal Financial Institutions Examination Council, which has been adopted
by the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation (the "FDIC"), the OCC and the OTS effective May 26, 1998,
and by the NCUA effective October 1, 1998. The 1998 Policy Statement sets forth
general guidelines which depository institutions must follow in managing risks,
including market, credit, liquidity, operational (transaction), and legal risks,
applicable to all securities, including mortgage pass-through securities and
mortgage-derivative products used for investment purposes.
There may be other restrictions on your ability either to purchase
certain classes of offered certificates or to purchase offered certificates
representing more than a specified percentage of your assets. We make no
representations as to the proper characterization of any class of offered
certificates for legal investment or other purposes. Also, we make no
representations as to the ability of particular investors to purchase any class
of offered certificates under applicable legal investment restrictions. These
uncertainties may adversely affect the liquidity of any class of offered
certificates. Accordingly, if your investment activities are subject
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<PAGE>
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities, you should consult with your legal advisor in
determining whether and to what extent--
o the offered certificates of any class and series constitute
legal investments or are subject to investment, capital or
other restrictions; and
o if applicable, SMMEA has been overridden in your State.
USE OF PROCEEDS
Unless otherwise specified in the related prospectus supplement, the
net proceeds to be received from the sale of the offered certificates of any
series will be applied by us to the purchase of assets for the related trust or
will be used by us to cover expenses related to that purchase and the issuance
of those certificates. We expect to sell the offered certificates from time to
time, but the timing and amount of offerings of those certificates will depend
on a number of factors, including the volume of mortgage assets acquired by us,
prevailing interest rates, availability of funds and general market conditions.
METHOD OF DISTRIBUTION
The certificates offered by this prospectus and the related prospectus
supplements will be offered in series through one or more of the methods
described below. The prospectus supplement prepared for the offered certificates
of each series will describe the method of offering being utilized for those
certificates and will state the net proceeds to us from the sale of those
certificates.
We intend that offered certificates will be offered through the
following methods from time to time. We further intend that offerings may be
made concurrently through more than one of these methods or that an offering of
the offered certificates of a particular series may be made through a
combination of two or more of these methods. The methods are as follows:
1. by negotiated firm commitment or best efforts underwriting and
public offering by one or more underwriters specified in the
related prospectus supplement;
2. by placements by us with institutional investors through
dealers; and
3. by direct placements by us with institutional investors.
In addition, if specified in the related prospectus supplement, the offered
certificates of a series may be offered in whole or in part to the seller of the
mortgage assets that would back those certificates. Furthermore, the related
trust assets for any series of offered certificates may include other
securities, the offering of which was registered pursuant to the registration
statement of which this prospectus is a part.
If underwriters are used in a sale of any offered certificates, other
than in connection with an underwriting on a best efforts basis, the offered
certificates will be acquired by the underwriters for their own account. These
certificates may be resold from time to time in one or more transactions,
including negotiated transactions, at fixed public offering prices or at varying
prices to be determined at the time of sale or at the
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<PAGE>
time of commitment therefor. The managing underwriter or underwriters with
respect to the offer and sale of offered certificates of a particular series
will be described on the cover of the prospectus supplement relating to the
series and the members of the underwriting syndicate, if any, will be named in
the relevant prospectus supplement.
Underwriters may receive compensation from us or from purchasers of the
offered certificates in the form of discounts, concessions or commissions.
Underwriters and dealers participating in the payment of the offered
certificates may be deemed to be underwriters in connection with those
certificates. In addition, any discounts or commissions received by them from us
and any profit on the resale of those offered certificates by them may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933,
as amended.
It is anticipated that the underwriting agreement pertaining to the
sale of the offered certificates of any series will provide that--
o the obligations of the underwriters will be subject to certain
conditions precedent,
o the underwriters will be obligated to purchase all the
certificates if any are purchased, other than in connection
with an underwriting on a best efforts basis, and
o in limited circumstances, we will indemnify the several
underwriters and the underwriters will indemnify us against
certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended, or will contribute to
payments required to be made in respect of any liabilities.
The prospectus supplement with respect to any series offered by
placements through dealers will contain information regarding the nature of the
offering and any agreements to be entered into between us and purchasers of
offered certificates of that series.
We anticipate that the offered certificates will be sold primarily to
institutional investors. Purchasers of offered certificates, including dealers,
may, depending on the facts and circumstances of the purchases, be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended, in
connection with reoffers and sales by them of offered certificates. Holders of
offered certificates should consult with their legal advisors in this regard
prior to any reoffer or sale.
LEGAL MATTERS
Unless otherwise specified in the related prospectus supplement,
certain legal matters in connection with the certificates of each series,
including certain federal income tax consequences, will be passed upon for us by
Sidley & Austin, our counsel.
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<PAGE>
FINANCIAL INFORMATION
A new trust will be formed with respect to each series of offered
certificates. None of those trusts will engage in any business activities or
have any assets or obligations prior to the issuance of the related series of
offered certificates. Accordingly, no financial statements with respect to any
trust will be included in this prospectus or in the related prospectus
supplement. We have determined that our financial statements will not be
material to the offering of any offered certificates.
RATING
It is a condition to the issuance of any class of offered certificates
that, at the time of issuance, at least one nationally recognized statistical
rating organization has rated those certificates in one of its generic rating
categories which signifies investment grade. Typically, the four highest rating
categories, within which there may be sub-categories or gradations indicating
relative standing, signify investment grade.
Ratings on mortgage pass-through certificates address the likelihood of
receipt by the holders of all payments of interest and/or principal to which
they are entitled. These ratings address the structural, legal and
issuer-related aspects associated with the certificates, the nature of the
underlying mortgage assets and the credit quality of any third-party credit
enhancer. The rating(s) on a class of offered certificates will not represent
any assessment of--
o whether the price paid for those certificates is fair;
o whether those certificates are a suitable investment for any
particular investor;
o the tax attributes of those certificates or of the related
trust;
o the yield to maturity or, if they have principal balances, the
average life of those certificates;
o the likelihood or frequency of prepayments of principal on the
underlying mortgage loans;
o the degree to which the amount or frequency of prepayments on
the underlying mortgage loans might differ from those
originally anticipated;
o whether or to what extent the interest payable on those
certificates may be reduced in connection with interest
shortfalls resulting from the timing of voluntary prepayments;
o the likelihood that any amounts other than interest at the
related mortgage interest rates and principal will be received
with respect to the underlying mortgage loans; or
o if those certificates provide solely or primarily for payments
of interest, whether the holders, despite receiving all
payments of interest to which they are entitled, would
ultimately recover their initial investments in those
certificates.
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<PAGE>
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of any other security rating.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (ITEM 14 OF FORM S-3).
The expenses expected to be incurred in connection with the issuance
and distribution of the Certificates being registered, other than underwriting
compensation, are as set forth below.
Filing Fee for Registration Statement $264,000.00
-----------
Legal Fees and Expenses $900,000.00*
Accounting Fees and Expenses $350,000.00*
Trustee's Fees and Expenses
(including counsel fees) $100,000.00*
Blue Sky Fees and Expenses $25,000.00*
Printing and Engraving Fees $350,000.00*
Rating Agency Fees $5,000,000.00*
Miscellaneous $350,000.00*
Total $7,339,000.00
-------------
* Based on 3 offerings
INDEMNIFICATION OF DIRECTORS AND OFFICERS (ITEM 15 OF FORM S-3)
The Pooling Agreements will provide that no director, officer, employee
or agent of the Registrant is liable to the Trust Fund or the
Certificateholders, except for such person's own willful misfeasance, bad faith
or gross negligence in the performance of duties or reckless disregard of
obligations and duties. The Pooling Agreements will further provide that, with
the exceptions stated above, a director, officer, employee or agent of the
Registrant is entitled to be indemnified against any loss, liability or expense
incurred in connection with legal actions relating to such Pooling Agreements
and related Certificates other than such expenses related to particular Mortgage
Assets.
Any purchase agreement pursuant to which the Registrant acquires
Mortgage Assets for inclusion in a Trust Fund may provide under certain
circumstances that each director of the Registrant, each officer of the
Registrant that signed this Registration Statement or any amendment hereof, and
certain controlling persons of the Registrant, are entitled to be indemnified by
the seller of such Mortgage Assets or an affiliate against certain liabilities,
including liabilities under the Securities Act of 1933, relating to such
Mortgage Assets.
<PAGE>
Any underwriters who execute an Underwriting Agreement in the form
filed as Exhibit 1.1 to this Registration Statement will agree to indemnify the
Registrant's directors and its officers who signed this Registration Statement
against certain liabilities which might arise under the Securities Act of 1933
from certain information furnished to the Registrant by or on behalf of such
indemnifying party.
Subsection (a) of Section 145 of the General Corporation Law of
Delaware empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification may be made
in respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper.
Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) or in the
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that indemnification or advancement of expenses provided
for by Section 145 shall not be deemed exclusive of any other rights to which
the indemnified party may be entitled; and empowers the corporation to purchase
and maintain insurance on behalf of a director, officer, employee or agent of
the corporation against any liability asserted against him or incurred by him in
any such capacity or arising out of his status as such whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
The By-Laws of the Registrant provide, in effect, that to the extent
and under the circumstances permitted by subsections (a) and (b) of Section 145
of the General Corporation Law of the State of Delaware, the Registrant (i)
shall indemnify and hold harmless each person who was or is a party or is
threatened to be made a party to any action, suit or proceeding described in
subsections (a) and (b) by reason of the fact that he is or was a director or
officer, or his testator or intestate is or was a director or officer of the
Registrant, against expenses, judgments, fines and amounts paid in settlement,
and (ii) shall indemnify and hold harmless each person who was or is a party or
is threatened to be made a party to any such action, suit or proceeding if such
person is or was serving at the request of the Registrant as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
<PAGE>
EXHIBITS (ITEM 16 OF FORM S-3)
Exhibits--
1.1 -- Form of Underwriting Agreement.
4.1 -- Form of Pooling and Servicing Agreement.
5.1 -- Opinion of Sidley & Austin with respect to legality.
8.1 -- Opinion of Sidley & Austin with respect to certain tax
matters.
23.1 -- Consent of Sidley & Austin (included as part of Exhibit 5.1
and Exhibit 8.1).
24.1 -- Power of Attorney.
UNDERTAKINGS (ITEM 17 OF FORM S-3)
A. UNDERTAKINGS PURSUANT TO RULE 415
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales
are being made, a post- effective amendment to this Registration
Statement (i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, (ii) to reflect in the prospectus any facts
or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement, and (iii) to
include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
<PAGE>
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(f) To provide to the underwriter at the closing specified in
the underwriting agreements certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
B. UNDERTAKING IN RESPECT OF INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3, reasonably believes that the
security rating requirement contained in Transaction Requirement B.5. of Form
S-3 will be met by the time of the sale of the securities registered hereunder
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Greenwich, State of
Connecticut on the 27 day of April, 2000.
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
By: /s/ Mark Jarrell
-----------------------------
Name: Mark Jarrell
Title: Senior Vice President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Mark Jarrell, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent, full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents, and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Gregory Jacobs Co-President and Director April 27, 2000
- ---------------------------- ------------------------------------------------------ ---------
Gregory Jacobs (principal executive officer)
/s/ Paul Nidenberg Co-President and Director April 27, 2000
- ---------------------------- ------------------------------------------------------ ---------
Paul Nidenberg (principal executive officer)
/s/ John Ryan Chief Financial Officer April 27, 2000
- ---------------------------- ------------------------------------------------------ ---------
John Ryan (principal accounting officer)
/s/ P. Michael Florio Treasurer April 27, 2000
- ---------------------------- ------------------------------------------------------ ---------
P. Michael Florio (principal accounting officer)
/s/ Paul Stevelman Senior Vice President, Director and Secretary April 27, 2000
- ---------------------------- ------------------------------------------------------ ---------
Paul Stevelman
/s/ Mark Jarrell Senior Vice President and Director April 27, 2000
- ---------------------------- ------------------------------------------------------ ---------
Mark Jarrell
/s/ Robert Grier Director April 27, 2000
- ---------------------------- ------------------------------------------------------ ---------
Robert Grier
</TABLE>
<PAGE>
EXHIBIT INDEX
Page Number
1.1 -- Form of Underwriting Agreement.
4.1 -- Form of Pooling and Servicing Agreement.
5.1 -- Opinion of Sidley & Austin with respect to legality.
8.1 -- Opinion of Sidley & Austin with respect to certain tax
matters.
23.1 -- Consent of Sidley & Austin. (included as part of Exhibit 5.1
and Exhibit 8.1).
24.1 -- Power of Attorney (included in the signature page to this
Registration Statement.
<PAGE>
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.,
Commercial Mortgage Pass-Through Certificates
Series _____
UNDERWRITING AGREEMENT
[Date]
[Address of Underwriter]
Ladies and Gentlemen:
Greenwich Capital Commercial Funding Corp., a Delaware
corporation (the "Company"), proposes, subject to the terms and conditions
stated herein, to sell to the underwriters named in Schedule I hereto (the
"Underwriters"; provided, however, that if you are the only underwriter named in
Schedule I hereto, then the terms "Underwriter" and "Underwriters" shall refer
solely to you), for which you are acting as representative (in such capacity,
the "Representative"), those classes (each, a "Class") of the Company's
Commercial Mortgage Pass-Through Certificates, Series _______, specified in
Schedule II hereto (the "Offered Certificates"). The Offered Certificates,
together with the other commercial mortgage pass-through certificates of the
same series (the "Private Certificates"; and, collectively with the Offered
Certificates, the "Certificates"), will be issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement") to be dated as of
_________________ (the "Cut-off Date"), among the Company, as depositor,
______________________ as master servicer (the "Master Servicer"),
______________________ as special servicer (the "Special Servicer"), and
_________________________, as trustee (the "Trustee"). The Certificates will
evidence the entire beneficial ownership of a trust fund (the "Trust Fund") to
be established by the Company pursuant to the Pooling and Servicing Agreement.
The Trust Fund will consist primarily of a pool (the "Mortgage Pool") of
conventional, monthly pay, commercial and multifamily mortgage loans (the
"Mortgage Loans") transferred by the Company to the Trust Fund and listed in an
attachment to the Pooling and Servicing Agreement. Multiple real estate mortgage
investment conduit ("REMIC") elections are to be made with respect to the Trust
Fund with the resulting REMICs being referred to as "REMIC I", "REMIC II" and
"REMIC III", respectively. The Company acquired certain of the Mortgage Loans
from ___________________________ (the "Mortgage Loan Seller"), pursuant to a
Mortgage Loan Purchase and Sale Agreement (the "Mortgage Loan Purchase and Sale
Agreement") dated as of the date hereof, between the Company and the Mortgage
Loan Seller. The Offered Certificates and the Mortgage Loans are described more
fully in the Basic Prospectus and the Prospectus Supplement (each of which terms
is defined below) which the Company is furnishing to the Underwriters.
Capitalized terms used but not otherwise defined herein will have the respective
meanings assigned thereto in the Prospectus Supplement.
<PAGE>
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (No. 333-_____________)
on Form S-3 for the registration under the Securities Act of 1933, as amended
(the "Act"), of the offer and sale of the Offered Certificates, which
registration statement has become effective and copies of which have heretofore
been delivered to the Representative. Such registration statement meets the
requirements set forth in Rule 415(a)(1) under the Act and complies in all other
material respects with such Rule. The Company proposes to file with the
Commission pursuant to Rule 424 under the Act a supplement, dated the date
specified in Schedule II hereto, to the prospectus, dated the date specified in
Schedule II hereto, relating to the Offered Certificates and the method of
distribution thereof and has previously advised you of all further information
(financial and other) with respect to the Offered Certificates set forth
therein. Such registration statement, including the exhibits thereto, as amended
at the date hereof is hereinafter called the "Registration Statement"; such
prospectus, in the form in which it will be filed with the Commission pursuant
to Rule 424 under the Act, is hereinafter called the "Basic Prospectus"; such
supplement to the Basic Prospectus, in the form in which it will be filed with
the Commission pursuant to Rule 424 under the Act, is hereinafter called the
"Prospectus Supplement"; and the Basic Prospectus and the Prospectus Supplement
together are hereinafter called the "Prospectus". Any preliminary form of the
Prospectus Supplement which has heretofore been filed pursuant to Rule 402(a) or
Rule 424 under the Act is hereinafter called a "Preliminary Prospectus
Supplement"; and any such Preliminary Prospectus Supplement and the form of
prospectus that accompanied it are hereinafter together called a "Preliminary
Prospectus". References herein to the Prospectus or Prospectus Supplement shall
exclude information incorporated therein by reference pursuant to a filing made
in accordance with Section 9 hereof, but shall include any ABS Term Sheet (as
defined in Section 9) actually included therein other than by incorporation by
reference (and regardless of whether such ABS Term Sheet is also incorporated
therein by reference). The Company, as depositor with respect to the Trust Fund,
will file with the Commission within 15 days of the issuance of the Offered
Certificates a report on Form 8-K setting forth specific information concerning
the Offered Certificates.
(b) As of the date hereof, when the Registration Statement
became effective, when the Prospectus Supplement is first filed pursuant to Rule
424 under the Act, when, prior to the Closing Date (as defined in Section 3),
any other amendment to the Registration Statement becomes effective, when, prior
to the Closing Date, any supplement to the Prospectus Supplement is filed with
the Commission, and at the Closing Date, (i) the Registration Statement, as
amended as of any such time, and the Prospectus, as amended or supplemented as
of any such time, complied or will comply in all material respects with the
applicable requirements of the Act and the rules thereunder, (ii) the
Registration Statement, as amended as of any such time, did not and will not
contain any untrue statement of a material fact and did not and will not omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading and (iii) the Prospectus, as amended or
supplemented as of any such time, did not and will not contain an untrue
statement of a material fact and did not and will not omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, that the
Company makes no representations or warranties as to (A) the information
contained in or omitted from the Registration Statement or the Prospectus, or
any amendment thereof
-2-
<PAGE>
or supplement thereto, in reliance upon and in conformity with written
information furnished to the Company by any Underwriter, directly for use
therein, (B) the information contained in or omitted from the Prospectus, or any
amendment thereof or supplement thereto, in reliance upon and conformity with
(1) the Master Tape (it being acknowledged that the Master Tape was used to
prepare the Prospectus Supplement, including, without limitation, Exhibit A-1
and Exhibit A-2 to the Prospectus Supplement and the accompanying diskette), (2)
the representations and warranties of any Mortgage Loan Seller set forth in or
made pursuant to the related Mortgage Loan Purchase and Sale Agreement, or (3)
any other information concerning the characteristics of the Mortgage Loans, the
related borrowers (the "Borrowers") or the related mortgaged properties (the
"Mortgaged Properties") furnished to the Company or the Underwriters by any
Mortgage Loan Seller, (C) the information regarding the Mortgage Loans, the
related Borrowers and the related Mortgaged Properties contained in or omitted
from the Prospectus Supplement, or any amendment thereof or supplement thereto,
under the headings "Summary of the Prospectus Supplement--The Mortgage Loans and
the Underlying Real Properties", "Risk Factors" and "Description of the Mortgage
Pool" or on Exhibit A-1 or Exhibit A-2 thereto or on the accompanying diskette,
or (D) the information contained in or omitted from any Computational Materials
(as defined in Section 9 hereof) or ABS Term Sheets, or any amendment thereof or
supplement thereto, incorporated by reference in the Registration Statement, any
Preliminary Prospectus or the Prospectus (or any amendment thereof or supplement
thereto) by reason of a filing made in accordance with Section 9. The "Master
Tape" consists of the compilation of underlying information and data regarding
the Mortgage Loans covered by the Independent Accountants Report on Applying
Agreed Upon Procedures dated ________________, as supplemented to the Closing
Date, and rendered by ____________________.
(c) The Company is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
power and authority (corporate and other) to own its properties and conduct its
business, as described in the Prospectus, and to enter into and perform its
obligations under this Agreement and the Pooling and Servicing Agreement, and is
conducting its business so as to comply in all material respects with all
applicable statutes, ordinances, rules and regulations of the jurisdictions in
which it is conducting business.
(d) The Company is not aware of (i) any request by the
Commission for any further amendment of the Registration Statement or the
Prospectus or for any additional information, regarding the Offered Certificates
(ii) the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the institution or threatening of
any proceeding for that purpose or (iii) any notification with respect to the
suspension of the qualification of the Offered Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose.
(e) At or prior to the Closing Date, the Company will have
entered into the Pooling and Servicing Agreement; this Agreement has been duly
authorized, executed and delivered by the Company, and the Pooling and Servicing
Agreement, when delivered by the Company, will have been duly authorized,
executed and delivered by the Company; and this Agreement constitutes, and the
Pooling and Servicing Agreement, when delivered by the Company, will constitute,
valid and binding agreements of the Company, enforceable against the Company in
accordance with their respective terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, liquidation, moratorium, receivership,
reorganization or similar laws affecting the rights of creditors
-3-
<PAGE>
generally, (ii) general principles of equity, whether enforcement is sought in a
proceeding in equity or at law, and (iii) public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of any provisions of this Agreement or
the Pooling and Servicing Agreement which purport or are construed to provide
indemnification from securities law liabilities.
(f) The Offered Certificates and the Pooling and Servicing
Agreement conform in all material respects to the descriptions thereof contained
in the Prospectus; the issuance and sale of the Offered Certificates have been
duly and validly authorized by the Company, and such Certificates will, when
duly and validly executed and authenticated by the Trustee in accordance with
the Pooling and Servicing Agreement, be entitled to the benefits of the Pooling
and Servicing Agreement.
(g) Neither the sale of the Offered Certificates to the
Underwriters pursuant hereto, nor the consummation of any other of the
transactions contemplated herein, nor the fulfillment of any of the terms of the
Pooling and Servicing Agreement or this Agreement, will result in the breach of
any term or provision of the certificate of incorporation or by-laws of the
Company or conflict with, result in a material breach, violation or acceleration
of or constitute a default under, the terms of any indenture or other agreement
or instrument to which the Company or any of its subsidiaries is a party or by
which it is bound, or any statute, order or regulation applicable to the Company
or any of its subsidiaries of any court, regulatory body, administrative agency
or governmental body having jurisdiction over the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is a party to,
bound by or in breach or violation of any indenture or other agreement or
instrument, or subject to or in violation of any statute, order or regulation of
any court, regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects the ability of the
Company to perform its obligations under this Agreement and the Pooling and
Servicing Agreement.
(h) There are no actions or proceedings against, or
investigations of, the Company pending, or, to the knowledge of the Company,
threatened, before any court, administrative agency or other tribunal (i)
asserting the invalidity of this Agreement, the Pooling and Servicing Agreement
or the Offered Certificates, (ii) seeking to prevent the issuance of the Offered
Certificates or the consummation of any of the transactions contemplated by this
Agreement or the Pooling and Servicing Agreement, (iii) which might materially
and adversely affect the performance by the Company of its obligations under, or
the validity or enforceability of, this Agreement, the Pooling and Servicing
Agreement or the Offered Certificates or (iv) seeking to affect adversely the
federal income tax attributes of the Offered Certificates described in the
Prospectus.
(i) There has not been any material adverse change in the
business, operations, financial condition, properties or assets of the Company
since the date of its latest audited financial statements which would have a
material adverse effect on the ability of the Company to perform its obligations
under the Pooling and Servicing Agreement.
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(j) There are no contracts, indentures or other documents of a
character required by the Act or by the rules and regulations thereunder to be
described or referred to in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement which have not been so
described or referred to therein or so filed or incorporated by reference as
exhibits thereto.
(k) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the offering,
issuance or sale of the Offered Certificates pursuant to this Agreement and the
Pooling and Servicing Agreement, except such as have been, or as of the Closing
Date will have been, obtained or such as may otherwise be required under
applicable state securities laws in connection with the purchase and offer and
sale of the Offered Certificates by the Underwriters and any recordation of the
respective assignments of the Mortgage Loan documents to the Trustee pursuant to
the Pooling and Servicing Agreement, that have not been completed.
(l) The Company possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now operated by
it, and the Company has not received any notice of proceedings relating to the
revocation or modification of any such license, certificate, authority or permit
which, singly or in the aggregate, if the subject of any unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, business affairs or business prospects
of the Company.
(m) Any taxes, fees and other governmental charges payable by
the Company in connection with the execution and delivery of this Agreement and
the Pooling and Servicing Agreement or the issuance and sale of the Offered
Certificates (other than such federal, state and local taxes as may be payable
on the income or gain recognized therefrom) have been or will be paid at or
prior to the Closing Date.
(n) Immediately prior to the assignment of the Mortgage Loans
to the Trustee, the Company will have good title to, and will be the sole owner
of, each Mortgage Loan, free and clear of any pledge, mortgage, lien, security
interest or other encumbrance; provided that this representation and warranty is
made on the basis of the assumption that the Mortgage Loan Sellers delivered to
the Company good title to each Mortgage Loan, free and clear of any pledge,
mortgage, lien, security interest or other encumbrance.
(o) The transfer of the Mortgage Loans to the Trustee and the
sale of the Certificates by the Company, at the Closing Date, will be treated by
the Company for financial accounting and reporting purposes as a sale of assets
and not as a pledge of assets to secure debt.
2. Purchase and Sale. Subject to the terms and conditions and
in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, the principal or
notional amount of each Class of the Offered Certificates set forth opposite
each such Underwriter's name in Schedule I hereto..
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The purchase price for each Class of the Offered Certificates
as a percentage of the aggregate principal or notional amount thereof as of the
Closing Date is set forth in Schedule II hereto. There will be added to the
purchase price of the Offered Certificates interest in respect of each Class of
the Offered Certificates at the interest rate applicable to such Class from the
Cut-off Date to but not including the Closing Date.
3. Delivery and Payment. The closing for the purchase and sale
of the Offered Certificates contemplated hereby (the "Closing"), shall be made
at the date, location and time of delivery set forth in Schedule II hereto, or
such later date as shall be mutually acceptable to the Representative and the
Company (such date and time of purchase and sale of the Offered Certificates
being herein called the "Closing Date"). Delivery of the Offered Certificates
will be made in book- entry form through the facilities of The Depository Trust
Company ("DTC"). Each Class of Offered Certificates will be represented by one
or more definitive global Certificates to be deposited by or on behalf of the
Company with DTC. Delivery of the Offered Certificates shall be made to the
Underwriters against payment by the Underwriters of the purchase price thereof
to or upon the order of the Company by wire transfer of immediately available
funds or by such other method as may be acceptable to the Company.
The Company agrees to have the Offered Certificates available
for inspection, checking and packaging by the Underwriters in New York, New
York, not later than 1:00 p.m. on the business day prior to the Closing Date.
4. Offering by Underwriters. It is understood that each
Underwriter proposes to offer its allocable share of the Offered Certificates
for sale to the public as set forth in the Prospectus. It is further understood
that the Company in reliance upon Policy Statement 105, has not filed and will
not file an offering statement pursuant to Section 352-e of the General Business
Law of the State of New York with respect to the Offered Certificates. As
required by Policy Statement 105, each Underwriter therefore covenants and
agrees with the Company that sales of the Offered Certificates made by such
Underwriter in the State of New York will be made only to institutional
investors within the meaning of Policy Statement 105.
5. Agreements. The Company agrees with each Underwriter that:
(a) The Company will promptly advise the Underwriters (i)
when, during any period that a prospectus relating to the Offered Certificates
is required to be delivered under the Act, any amendment to the Registration
Statement affecting the Offered Certificates shall have become effective, (ii)
of any request by the Commission for any amendment to the Registration Statement
or the Prospectus, or for any additional information, affecting or in respect of
the Offered Certificates, (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement affecting the
Offered Certificates or the institution or threatening of any proceeding for
that purpose and (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Offered Certificates for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will not file any amendment to the Registration
Statement affecting the Offered Certificates or any supplement to the Prospectus
unless the Company has furnished the Underwriters with a copy for their review
prior to filing, and will not file any such proposed amendment or supplement to
which the Representative may
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<PAGE>
reasonably object, in any event until after the end of the period during which a
prospectus is required to be delivered to purchasers of the Offered Certificates
under the Act. Subject to the foregoing sentence, the Company will cause the
Prospectus Supplement to be transmitted to the Commission for filing pursuant to
Rule 424 under the Act by means reasonably calculated to result in filing with
the Commission pursuant to said Rule. The Company will use its best efforts to
prevent the issuance of any stop order suspending the effectiveness of the
Registration Statement affecting the Offered Certificates and, if issued, to
obtain as soon as possible the withdrawal thereof.
(b) The Company will cause any Computational Materials and
Structural Term Sheets (each as defined in Section 9 below) with respect to the
Offered Certificates that are delivered by an Underwriter to the Company
pursuant to Section 9 to be filed with the Commission on a Current Report on
Form 8-K (a "Current Report") pursuant to Rule 13a-11 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), on the business day
immediately following the later of (i) the day on which such Computational
Materials and Structural Term Sheets are delivered to counsel for the Company by
an Underwriter prior to 10:30 a.m. (New York City time) and (ii) the date on
which this Agreement is executed and delivered. The Company will cause one
Collateral Term Sheet (as defined in Section 9 below) with respect to the
Offered Certificates that is delivered by the Underwriters to the Company in
accordance with the provisions of Section 9 to be filed with the Commission on a
Current Report pursuant to Rule 13a-11 under the Exchange Act on the business
day immediately following the day on which such Collateral Term Sheet is
delivered to counsel for the Company by the Underwriters prior to 10:30 a.m.
(New York City time). In addition, if at any time prior to the availability of
the Prospectus Supplement, the Underwriters have delivered to any prospective
investor a subsequent Collateral Term Sheet that reflects, in the reasonable
judgment of the Representative and the Company, a material change in the
characteristics of the Mortgage Loans from those on which a Collateral Term
Sheet with respect to the Offered Certificates previously filed with the
Commission was based, the Company will cause any such Collateral Term Sheet that
is delivered by the Underwriters to the Company in accordance with the
provisions of Section 9 to be filed with the Commission on a Current Report on
the business day immediately following the day on which such Collateral Term
Sheet is delivered to counsel for the Company by the Underwriters prior to 10:30
a.m. (New York City time). In each case, the Company will promptly advise the
Underwriters when such Current Report has been so filed. Each such Current
Report shall be incorporated by reference in the Prospectus and the Registration
Statement. Notwithstanding the foregoing provisions of this Section 5(b), the
Company shall have no obligation to file any materials provided by any
Underwriter pursuant to Section 9 which, in the reasonable determination of the
Company, are not required to be filed pursuant to the Kidder Letters or the PSA
Letter (each as defined in Section 9 below), or contain erroneous information or
contain any untrue statement of a material fact or, when read in conjunction
with the Prospectus and Prospectus Supplement, omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; it being understood, however, that the Company shall have no
obligation to review or pass upon the accuracy or adequacy of, or to correct,
any Computational Materials or ABS Term Sheets provided by any Underwriter to
the Company pursuant to Section 9 hereof. The Company shall give notice to the
Underwriters of its determination not to file any materials pursuant to the
preceding sentence and agrees to file such materials if the Representative
reasonably object to such determination within one business day after receipt of
such notice.
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<PAGE>
(c) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, any event occurs as a
result of which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under which
they were made not misleading, or if it shall be necessary to amend or
supplement the Prospectus to comply with the Act or the rules under the Act, the
Company promptly will prepare and file with the Commission, subject to paragraph
(a) of this Section 5, an amendment or supplement that will correct such
statement or omission or an amendment that will effect such compliance and, if
such amendment or supplement is required to be contained in a post-effective
amendment to the Registration Statement, will use its best efforts to cause such
amendment of the Registration Statement to be made effective as soon as
possible; provided, however, that the Company will not be required to file any
such amendment or supplement with respect to any Computational Materials or ABS
Term Sheets incorporated by reference in the Prospectus other than any
amendments or supplements of such Computational Materials or ABS Term Sheets
that are furnished to the Company pursuant to Section 9 hereof which the Company
determines to file in accordance therewith.
(d) The Company will furnish to any Underwriter and counsel
for the Underwriters, without charge, for so long as delivery of a prospectus
relating to the Offered Certificates may be required by the Act, as many copies
of the Prospectus, the Preliminary Prospectus, if any, and any amendments and
supplements thereto as such Underwriter may reasonably request.
(e) The Company agrees that, so long as the Offered
Certificates shall be outstanding, it will deliver or cause to be delivered to
the Underwriters the annual statements as to compliance and the annual
statements of a firm of independent public accountants, furnished to the Trustee
by the Master Servicer and the Special Servicer pursuant to Sections 3.13 and
3.14 of the Pooling and Servicing Agreement, as soon as such statements are
furnished to the Company.
(f) The Company will furnish such information, execute such
instruments and take such action, if any, as may be required to qualify the
Offered Certificates for sale under the laws of such jurisdictions as the
Representative may designate and will maintain such qualification in effect so
long as required for the distribution of the Offered Certificates; provided,
however, that the Company shall not be required to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to general or unlimited service of process in any jurisdiction where
it is not now so subject.
(g) Whether or not the transactions contemplated in the
Pooling and Servicing Agreement are consummated or this Agreement is terminated,
the Company will pay or cause the payment of all expenses incident to the
performance of the obligations of the Company under this Agreement, including,
without limitation, (i) the fees, disbursements and expenses of the Company's
counsel in connection with the purchase of the Mortgage Loans and the issuance
and sale of the Offered Certificates, (ii) all fees and expenses incurred in
connection with the registration and delivery of the Offered Certificates under
the Act, and all other fees or expenses in connection with the preparation and
filing of the Registration Statement, any Preliminary Prospectus, the Prospectus
and amendments and supplements to any of the foregoing, including all printing
costs associated therewith, and the mailing and delivering of copies thereof to
the Underwriters and dealers, in the
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<PAGE>
quantities hereinabove specified, (iii) all costs and expenses related to the
transfer and delivery of the Offered Certificates to the Underwriters, including
any transfer or other taxes payable thereon, (iv) the costs of printing or
producing any "blue sky" memorandum in connection with the offer and sale of the
Offered Certificates under state securities laws and all expenses in connection
with the qualification of the Offered Certificates for the offer and sale under
state securities laws as provided in Section 5(f), including, without
limitation, filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection with such qualification and in connection with
the "blue sky" memorandum, (v) the cost of printing the Offered Certificates,
(vi) the costs and charges of any transfer agent, registrar or depository, (vii)
the fees and expenses of the Rating Agencies incurred in connection with the
issuance and sale of the Offered Certificates and (vii) all other costs and
expenses incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section.
The Company shall also be responsible for the payment of all
out-of-pocket costs and expenses incurred by the Underwriters, including,
without limitation, (i) the fees and disbursements of counsel for the
Underwriters and (ii) such additional costs arising out of any Computational
Materials and ABS Term Sheets prepared and/or distributed by the Underwriters,
in connection with the purchase and sale of the Offered Certificates; provided,
however, that if the Underwriters terminate this Agreement other than pursuant
to Section 7 or 10(b) hereof, the Underwriters shall be responsible for their
out-of-pocket costs and expenses.
(h) The Company shall deliver to each Underwriter a copy or
series of copies of the Prospectus (exclusive of information incorporated
therein and further exclusive of the exhibits and annexes to the Prospectus
Supplement) at or prior to the printing thereof, marked to show changes from the
Preliminary Prospectus.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Offered Certificates as provided
in this Agreement shall be subject to the accuracy in all material respects of
the representations and warranties on the part of the Company contained herein
as of the date hereof and as of the Closing Date, to the accuracy in all
material respects of the statements of the Company made in any certificates
delivered pursuant to the provisions hereof, to the performance in all material
respects by the Company of its obligations hereunder and to the following
additional conditions with respect to the Offered Certificates:
(a) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened; and the Prospectus Supplement
shall have been filed with the Commission within the time period prescribed by
the Commission.
(b) The Underwriters shall have received from the Company a
certificate, dated the Closing Date and executed by an executive officer of the
Company, to the effect that: (i) the representations and warranties of the
Company in this Agreement are true and correct in all material respects at and
as of the Closing Date with the same effect as if made on the Closing Date; and
(ii) the Company has in all material respects complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date.
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<PAGE>
(c) The Underwriters shall have received with respect to the
Company a good standing certificate from the Secretary of State of the State of
Delaware, dated not earlier than ten days prior to the Closing Date.
(d) The Underwriters shall have received from the Secretary or
an assistant secretary of the Company, in his individual capacity, a
certificate, dated the Closing Date, to the effect that: (i) each individual
who, as an officer or representative of the Company, signed this Agreement, the
Pooling and Servicing Agreement or any other document or certificate delivered
on or before the Closing Date in connection with the transactions contemplated
herein or in the Pooling and Servicing Agreement, was at the respective times of
such signing and delivery, and is as of the Closing Date, duly elected or
appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents and certificates are
their genuine signatures; and (ii) no event (including, without limitation, any
act or omission on the part of the Company) has occurred since the date of the
good standing certificate referred to in paragraph (c) above which has affected
the good standing of the Company under the laws of the State of Delaware. Such
certificate shall be accompanied by true and complete copies (certified as such
by the Secretary or an assistant secretary of the Company) of the certificate of
incorporation and by-laws of the Company, as in effect on the Closing Date, and
of the resolutions of the Company and any required shareholder consent relating
to the transactions contemplated in this Agreement and the Pooling and Servicing
Agreement.
(e) The Underwriters shall have received from Sidley & Austin,
counsel for the Company, a favorable opinion, dated the Closing Date and
reasonably satisfactory in form and substance to counsel for the Underwriters,
to the effect that:
(i) The Registration Statement has become effective under the
Act.
(ii) To such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or threatened.
(iii) The Registration Statement, the Basic Prospectus and the
Prospectus Supplement, as of their respective effective or issue dates
(other than the financial statements, schedules and other financial and
statistical information contained therein or omitted therefrom, as to
which such counsel need express no opinion), complied as to form in all
material respects with the applicable requirements of the Act and the
rules and regulations thereunder.
(iv) To such counsel's knowledge, there are no material
contracts, indentures or other documents relating to the Offered
Certificates of a character required to be described or referred to in
the Registration Statement or the Prospectus Supplement or to be filed
as exhibits to the Registration Statement, other than those described
or referred to therein or filed or incorporated by reference as
exhibits thereto.
(v) The Company is duly incorporated and validly existing as a
corporation in good standing under the laws of the State of Delaware
and has the requisite corporate power
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and authority to enter into and perform its obligations under this
Agreement and the Pooling and Servicing Agreement.
(vi) Each of this Agreement and the Pooling and Servicing
Agreement has been duly authorized, executed and delivered by the
Company.
(vii) Each of the Pooling and Servicing Agreement and this
Agreement constitutes a valid, legal and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
subject to (A) general principles of equity, including concepts of
materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance and injunctive relief,
regardless of whether considered in a proceeding in equity or at law,
(B) the effect of certain laws, regulations and judicial and other
decisions upon the availability and enforceability of certain remedies
including the remedies of specific performance and self-help and
provisions purporting to waive the obligation of good faith,
materiality, fair dealing, diligence, reasonableness or objection to
venue or forum, to confer subject matter jurisdiction on a federal
court located within the State of New York to adjudicate any
controversy in any situation in which such court would not have subject
matter jurisdiction, to waive the right to jury trial, to impose a
penalty or forfeiture, to release, exculpate or exempt a party from, or
indemnify that party for, liability for its own action or inaction to
the extent that the action or inaction includes negligence,
recklessness or willful or unlawful conduct, to sever any provision of
any agreement, to restrict access to legal or equitable remedies, to
establish evidentiary standards, to appoint any person or entity as the
attorney-in-fact of any other person or entity, to require that any
agreement may only be amended, modified or waived in writing, to
provide that all rights or remedies of any party are cumulative and may
be enforced in addition to any other right or remedy, to provide that
the election of a particular remedy does not preclude recourse to one
or more other remedies, to provide that the failure to exercise or the
delay in exercising rights or remedies will not operate as a waiver of
any such rights or remedies, to waive rights or remedies which can not
be waived as a matter of law, to provide for set-off unless there is
mutuality between the parties or to provide that any agreement is to be
governed by or construed in accordance with the laws of any
jurisdiction other than the State of New York, (C) bankruptcy,
insolvency, receivership, reorganization, liquidation, voidable
preference, fraudulent conveyance and transfer, moratorium and other
similar laws affecting the rights of creditors or secured parties and
(D) public policy considerations underlying the securities laws, to the
extent that such public policy considerations limit the enforceability
of any provision of any agreement which purports or is construed to
provide indemnification with respect to securities law violations.
(viii) The Offered Certificates, when duly and validly
executed, authenticated and delivered in accordance with the Pooling
and Servicing Agreement and paid for in accordance with this Agreement,
will be entitled to the benefits of the Pooling and Servicing
Agreement.
(ix) Neither the sale of the Offered Certificates to the
Underwriters pursuant to this Agreement nor the consummation of any of
the other transactions contemplated by, or the fulfillment by the
Company of the terms of, this Agreement and the Pooling and Servicing
Agreement, will conflict with or result in a breach or violation of any
term or provision of the certificate of incorporation or by-laws of the
Company or any federal or State of New York
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statute or regulation, except such counsel need express no opinion as
to compliance with the securities laws of the State of New York and
other particular States in connection with the purchase and the offer
and sale of the Offered Certificates by the Underwriters.
(x) No consent, approval, authorization or order of any
federal or State of New York court, agency or other governmental body
is required for the consummation by the Company of the transactions
contemplated by the terms of this Agreement and the Pooling and
Servicing Agreement, except such as may be required under the
securities laws of the State of New York and other particular States in
connection with the purchase and the offer and sale of the Offered
Certificates by the Underwriters as to which such counsel need express
no opinion, and except such as have been obtained.
(xi) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended. The Trust
Fund is not required to be registered under the Investment Company Act
of 1940, as amended.
(xii) The statements set forth in the Prospectus Supplement
under the headings "Description of the Offered Certificates" and
"Servicing of the Mortgage Loans" and in the Basic Prospectus under the
headings "Description of the Certificates" and "Description of the
Governing Documents", insofar as such statements purport to summarize
certain material provisions of the Offered Certificates and the Pooling
and Servicing Agreement, are accurate in all material respects.
(xiii) The statements set forth in the Prospectus Supplement
under the headings "Certain ERISA Considerations", "Federal Income Tax
Consequences" and "Legal Investment", and in the Basic Prospectus under
the headings "ERISA Considerations", "Federal Income Tax Consequences"
and "Legal Investment", to the extent that they purport to describe
certain matters of federal law or legal conclusions with respect
thereto, while not discussing all possible consequences of an
investment in the Offered Certificates to all investors, provide in all
material respects an accurate summary of such matters and conclusions
set forth under such headings.
(xiv) As described in the Prospectus Supplement, and assuming
compliance with all the provisions of the Pooling and Servicing
Agreement, (A) REMIC I will qualify as a REMIC within the meaning of
Sections 860A through 860G of the Internal Revenue Code of 1986 in
effect on the date hereof (the "REMIC Provisions") and the REMIC I
Regular Interests (as defined in the Pooling and Servicing Agreement)
will be "regular interests" and the Class R-I Certificates will
evidence the sole class of "residual interests" in REMIC I (as both
terms are defined in the REMIC Provisions in effect on the Closing
Date), (B) REMIC II will qualify as a REMIC within the meaning of the
REMIC Provisions, and the REMIC II Regular Interests (as defined in the
Pooling and Servicing Agreement) will be "regular interests" and the
Class R-II Certificates will evidence the sole class of "residual
interests" in REMIC II, and (C) REMIC III will qualify as a REMIC
within the meaning of the REMIC Provisions, and the Class S, Class A-1,
Class A-2, Class A-3, Class A-4, Class A-5, Class B- 1, Class B-2,
Class B-3, Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class
C and
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Class D Certificates will evidence "regular interests" and the Class
R-III Certificates will evidence the sole class of "residual interests"
in REMIC III.
(xv) The respective portions of the Trust Fund consisting of
Grantor Trust E and Grantor Trust R-I (each as defined in the Pooling
and Servicing Agreement) will each be classified as a grantor trust
under subpart E, part I of subchapter J of the Internal Revenue Code of
1986.
Such opinion (x) may express its reliance as to factual
matters on certificates of government and agency officials and the
representations and warranties made by, and on certificates or other documents
furnished by officers of, the parties to this Agreement and the Pooling and
Servicing Agreement, (y) may assume the due authorization, execution and
delivery of the instruments and documents referred to therein by the parties
thereto (other than the Company) and may otherwise be based on such assumptions
as may be reasonably acceptable to counsel for the Underwriters, and (z) may be
qualified as an opinion only on the law of the State of New York, the federal
laws of the United States of America and the General Corporation Law of the
State of Delaware.
Based on such counsel's participation in conferences with
officers and other representatives of the Company and of the Master Servicer,
the Special Servicer, the Trustee, the Underwriters, the Mortgage Loan Seller,
and their respective counsel, at which the contents of the Registration
Statement and the Prospectus were discussed and, although such counsel need not
pass upon or assume responsibility for the actual accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (except as stated in paragraphs (xii) and (xiii) above) and need not
make an independent check or verification thereof, on the basis of the
foregoing, such counsel shall also confirm that nothing has come to the
attention of such counsel that would lead such counsel to believe that the
Registration Statement (other than (x) financial statements, schedules and other
numerical, financial and statistical data included therein or omitted therefrom
and (y) the documents incorporated therein, as to which such counsel need
express no opinion), as of its effective date, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
Prospectus, as of the date of the Prospectus Supplement and at the Closing Date,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading (other than (x)
financial statements, schedules and other numerical, financial and statistical
data included therein or omitted therefrom and (y) the documents incorporated
therein, as to which such counsel need express no opinion).
(f) The Underwriters shall have received from counsel to each
Mortgage Loan Seller, a letter, dated the Closing Date, and reasonably
satisfactory in form and substance to counsel for the Underwriters, to the
effect that, based on such counsel's participation in conferences with officers
and other representatives of the Company, the Master Servicer, the Special
Servicer, the Trustee, the Underwriters, the Mortgage Loan Seller, and their
respective counsel, at which the contents of the Prospectus Supplement were
discussed and, although such counsel need not pass upon or assume responsibility
for the actual accuracy, completeness or fairness of the statements contained in
the Prospectus Supplement and need not make an independent check or verification
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<PAGE>
thereof, nothing has come to the attention of such counsel that would lead such
counsel to believe that the Prospectus Supplement, as of the date of the
Prospectus Supplement and at the Closing Date, insofar as it relates to the
characteristics of the Mortgage Loans sold by the Mortgage Loan Seller to the
Company, the related Mortgaged Properties and/or the related Borrowers,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading (other than
financial statements, schedules and other numerical, financial and statistical
data included therein or omitted therefrom and the documents incorporated
therein, as to which such counsel need express no opinion).
(g) The Underwriters shall have received from their counsel an
opinion, dated the Closing Date, in form and substance reasonably satisfactory
to the Representative.
(h) The Underwriters shall have received, with respect to each
of the Master Servicer, the Special Servicer and the Trustee, a favorable
opinion of counsel, dated the Closing Date and satisfactory to counsel for the
Underwriters, addressing the valid existence of such party under the laws of the
jurisdiction of its organization, the due authorization, execution and delivery
of the Pooling and Servicing Agreement by such party and, subject to the same
limitations as set forth in Section 6(e)(vii), the enforceability of the Pooling
and Servicing Agreement against such party. Such opinion may express its
reliance as to factual matters on representations and warranties made by, and on
certificates or other documents furnished by officers and/or authorized
representatives of parties to, this Agreement and the Pooling and Servicing
Agreement and on certificates furnished by public officials. Such opinion may
assume the due authorization, execution and delivery of the instruments and
documents referred to therein by the parties thereto other than the party on
behalf of which such opinion is being rendered and be based upon such other
assumptions as may be reasonably acceptable to counsel for the Underwriters.
Such opinion may be qualified as an opinion only on the laws of the jurisdiction
wherein the subject party is organized, the laws of the State of New York and
the federal laws of the United States of America.
(i) The Underwriters shall have received from
______________________, certified public accountants, letters dated the date of
the Preliminary Prospectus Supplement and the Prospectus Supplement,
respectively, and satisfactory in form and substance to the Representative and
counsel for the Underwriters, stating in effect that, using the assumptions and
methodology used by the Company, all of which shall be described in such
letters, they have recalculated such numbers and percentages set forth in the
Preliminary Prospectus Supplement and the Prospectus Supplement as the
Representative may reasonably request and as are agreed to by
______________________, compared the results of their calculations to the
corresponding items in the Preliminary Prospectus Supplement and the Prospectus
Supplement, respectively, and found each such number and percentage set forth in
the Preliminary Prospectus Supplement and the Prospectus Supplement,
respectively, to be in agreement with the results of such calculations.
(j) The Underwriters shall have received all opinions,
certificates and other documents required under the Mortgage Loan Sale and
Purchase Agreements to be delivered by the Mortgage Loan Seller and its counsel
in connection with the sale of the Mortgage Loans to the Company, and such
opinion shall be dated the Closing Date and addressed to the Underwriters.
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<PAGE>
(k) The Underwriters shall have received all opinions rendered
to the rating agency or agencies identified on Schedule II hereto, by counsel to
the Company and the Mortgage Loan Seller, and each such opinion shall be dated
the Closing Date and addressed to the Underwriters.
(l) The Offered Certificates listed on Schedule II hereto
shall have been rated as indicated on such Schedule by the rating agency or
agencies identified on such Schedule and such ratings shall not have been
rescinded.
(m) All proceedings in connection with the transactions
contemplated by this Agreement, and all documents incident hereto and thereto,
shall be reasonably satisfactory in form and substance to the Representative and
counsel for the Underwriters.
(n) Subsequent to the date hereof, there shall not have
occurred any change, or development including a prospective change, in or
affecting the business or properties of the Company which, in the judgment of
the Representative after consultation with the Company, materially impairs the
investment quality of the Offered Certificates so as to make it impractical or
inadvisable to proceed with the public offering or the delivery of the Offered
Certificates as contemplated in the Prospectus.
7. Cancellation for Failure to Perform. If any of the
conditions specified in Section 6 shall not have been fulfilled in all material
respects when and as provided by this Agreement, or if any of the opinions and
certificates mentioned in Section 6 or elsewhere in this Agreement shall not be
in all material respects reasonably satisfactory in form and substance to the
Representative and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be canceled at, or at any time
prior to, the Closing Date by the Representative. Notice of such cancellation
shall be given to the Company in writing, or by telephone or by either telegraph
or telecopier confirmed in writing.
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person who controls such Underwriter within the meaning of
the Act or the Exchange Act, against any and all losses, claims, damages,
liabilities, costs and expenses, joint or several, to which such Underwriter or
any such controlling person may become subject, under the Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities, costs and
expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or any
amendment of or supplement to any such document, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending against such loss, claim, damage, liability, cost, expense or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage, liability, cost or expense (A) arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus Supplement or
the Prospectus
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Supplement (or any amendment thereof or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by any
Underwriter specifically for use therein, (B) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus Supplement or the Prospectus Supplement (or
any amendment thereof or supplement thereto) in reliance upon and in conformity
with (1) the Master Tape (it being acknowledged that the Master Tape was used to
prepare any Preliminary Prospectus Supplement and the Prospectus Supplement,
including, without limitation, Exhibit A-1 and Exhibit A-2 thereto and the
accompanying diskette), (2) the representations and warranties of the Mortgage
Loan Seller set forth in or made pursuant to the Mortgage Loan Purchase and Sale
Agreement or (3) any other information concerning the characteristics of the
Mortgage Loans, the Mortgaged Properties or the Borrowers furnished to the
Company by the Mortgage Loan Seller, or (C) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus Supplement or the Prospectus Supplement (or
any amendment thereof or supplement thereto) with respect to the Mortgage Loans,
the Mortgaged Properties, the Borrowers and/or the Mortgage Loan Seller under
the headings "Summary of the Prospectus Supplement--The Mortgage Loans and the
Underlying Real Properties", "Risk Factors" and "Description of the Mortgage
Pool" therein or on Exhibit A-1 or Exhibit A-2 thereto or on the accompanying
diskette, or (D) arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Computational
Materials or ABS Term Sheets (or any amendments thereof or supplements thereto)
furnished to prospective investors and made a part of, or incorporated by
reference into, the Registration Statement or in any Preliminary Prospectus or
the Prospectus (or any amendment thereof or supplement thereto) by reason of a
filing made pursuant to Section 9 (it being understood and agreed that if any
ABS Term Sheet is both incorporated by reference into the Prospectus or any
Preliminary Prospectus and also actually included therein, this clause (D) is
intended solely to exclude the version of such ABS Term Sheet that is
incorporated by reference therein); and provided, further, that such indemnity
with respect to any Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or any person controlling an Underwriter) from whom the person
asserting any such loss, claim, damage, liability, cost or expense purchased the
Offered Certificates which are the subject thereof if (w) such Underwriter did
not deliver to such person a copy of the Prospectus (or the Prospectus as most
recently amended or supplemented) at or prior to the confirmation of the sale of
such Certificates to such person in any case where such delivery is required by
the Act, (x) the Company has previously furnished to such Underwriter copies
thereof in sufficient quantity, (y) the untrue statement or omission of a
material fact contained in such Preliminary Prospectus was corrected in the
Prospectus (or the Prospectus as most recently amended or supplemented) and (z)
such correction would have cured the defect giving rise to any such loss, claim,
damage, liability, cost or expense. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, against any
and all losses, claims, damages, liabilities, costs and expenses to which the
Company or any such director, officer or controlling person may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities, costs and expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in (i) any Preliminary Prospectus Supplement or the
Prospectus
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<PAGE>
Supplement (or any amendment thereof or supplement thereto), or (ii) any
Computational Materials or ABS Term Sheets (or amendments thereof or supplements
thereto) delivered to prospective investors by such Underwriter, which were also
furnished to the Company by such Underwriter pursuant to or as contemplated by
Section 9 and made a part of, or incorporated by reference in, the Registration
Statement or in any Preliminary Prospectus Supplement or the Prospectus (or any
amendment thereof or supplement thereto) by reason of a filing made pursuant to
Section 9, or arise out of or are based on the omission or alleged omission to
state in any such document a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made (and, in
the case of Computational Materials and ABS Term Sheets, when read in
conjunction with the Prospectus), not misleading; provided, however, that no
Underwriter shall be liable for any such loss, claim, damage, liability, cost or
expense that arises out of an untrue statement or alleged untrue statement or
omission or alleged omission in any Preliminary Prospectus Supplement or the
Prospectus Supplement (or any amendment thereof or supplement thereto),
including, without limitation, any ABS Term Sheet actually included therein,
except to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information relating to such Underwriter furnished to the Company by
such Underwriter specifically for use in such document; and provided, further,
that no Underwriter shall be liable to the extent that any loss, claim, damage,
liability, cost or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission in any Computational
Materials or ABS Term Sheets (or any amendment thereof or supplement thereto)
made in reliance upon and in conformity with (A) the Master Tape (it being
acknowledged that the Master Tape was used to prepare any Computational
Materials and ABS Term Sheets), (B) the representations and warranties of the
Mortgage Loan Seller set forth in or made pursuant to the Mortgage Loan Purchase
and Sale Agreement or (C) any other information concerning the characteristics
of the Mortgage Loans, the Mortgaged Properties or the Borrowers furnished to
the Underwriters by the Company or the Mortgage Loan Seller (the error in the
Master Tape or any such other information concerning the characteristics of the
Mortgage Loans, the Mortgaged Properties or the Borrowers or the breach in such
representations and warranties that gave rise to such untrue statement or
omission, a "Collateral Error"), except to the extent that the Mortgage Loan
Seller or the Company notified such Underwriter in writing of such Collateral
Error or provided in written or electronic form information superseding or
correcting such Collateral Error (in any case, a "Corrected Collateral Error")
prior to the time of confirmation of sale to the person that purchased the
Offered Certificates that are the subject of any such loss, claim, damage,
liability, cost or expense, or action in respect thereof, and such Underwriter
failed to deliver to such person corrected Computational Materials or ABS Term
Sheets (or, if the superseding or correcting information was contained in the
Prospectus, failed to deliver to such person the Prospectus as amended or
supplemented) at or prior to confirmation of such sale to such person. This
indemnity agreement will be in addition to any liability which any Underwriter
may otherwise have. For all purposes of this Agreement, the Company acknowledges
that the statements set forth in the ________ sentence of the ________ paragraph
of the cover page, and the ________ sentence of the ________ paragraph, the
________ sentence of the ________ paragraph and the ________ sentence of the
________ paragraph under the heading "Method of Distribution" in the Prospectus
Supplement and any Preliminary Prospectus Supplement constitute the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the documents referred to in the foregoing indemnity (other than
any Computational Materials or ABS Term Sheets (or amendments thereof or
supplements thereto) furnished to the Company by any Underwriter for filing
pursuant to Section 9, any such ABS Term Sheet to be treated
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<PAGE>
separately from any version thereof actually included in the Prospectus as
described in Section 1(a) hereof), and the Underwriters confirm that such
statements are correct. Any Computational Materials or ABS Term Sheets (or
amendments thereof or supplements thereto) so furnished to the Company by any
particular Underwriter shall relate exclusively to and be, to the extent
provided herein, the several responsibility of such Underwriter and no other
Underwriter.
(c) Promptly after receipt by an indemnified party under
paragraph (a) or (b) of this Section 8 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under paragraph (a) or (b) of this Section 8,
notify the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise than under
paragraph (a) or (b), as applicable, of this Section 8. In case any such action
is brought against any indemnified party, and it notifies the indemnifying party
of the commencement thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the consent
of the indemnified party, be counsel to the indemnifying party); provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or other
indemnified parties which are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel,
approved by the Representative in the case of paragraph (a) of this Section 8
and by the Company in the case of paragraph (b) of this Section 8, representing
the indemnified parties under such paragraph (a) or (b), as the case may be, who
are parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii). No indemnifying party shall, without
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 8 (whether or not the
indemnified parties are actual or potential parties thereto), unless such
settlement, compromise or consent (i) includes an unconditional release of each
indemnified party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
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<PAGE>
(d) If the indemnification provided for in this Section 8 is
unavailable or insufficient to hold harmless an indemnified party under
paragraph (a) or (b) above in respect of any losses, claims, damages,
liabilities, costs or expenses referred to in and intended to be covered under
such paragraph (a) or (b), as the case may be, above, then the indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities, costs or expenses as
follows:
(i) in the case of any such losses, claims, damages,
liabilities, costs and expenses (or actions in respect thereof)
referred to in and intended to be covered under paragraph (a) above, in
such proportion so that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount
bears to the sum of such discount and the purchase price of the Offered
Certificates specified in Schedule II hereto and the Company is
responsible for the balance (or, if such allocation is not permitted by
applicable law or if the indemnified party failed to give the notice
required in Section 8(c) or in the last paragraph of this Section 8(d),
in such proportion as would be determined pursuant to the immediately
following clause (ii)); provided, however, that in no case shall any
Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Offered Certificates) be
responsible under this subparagraph (i) for any amount in excess of the
underwriting discount applicable to the Offered Certificates purchased
by such Underwriter hereunder; and
(ii) in the case of any losses, claims, damages, liabilities,
costs and expenses (or actions in respect thereof) referred to in and
intended to be covered under paragraph (b) above, in such proportion as
is appropriate to reflect the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statement
or omissions which resulted in such losses, claims, damages,
liabilities, costs or expenses (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
or alleged omission to state a material fact that is the basis for such
loss, claim, damage, liability, cost or expense, results from
information prepared by the Company on the one hand or an Underwriter
on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
liabilities, costs or expenses (or actions in respect thereof) referred to above
in this Section 8 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim, which expenses the indemnifying party
shall pay as and when incurred, at the request of the indemnified party, to the
extent that the indemnifying party will be ultimately obligated to pay such
expenses. If any expenses so paid by the indemnifying party are subsequently
determined to not be required to be borne by the indemnifying party hereunder,
the indemnified party that received such payment shall promptly refund the
amount so paid to the indemnifying party.
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<PAGE>
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8(d), each person who controls an Underwriter within the meaning of
the Act or the Exchange Act shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
preceding sentence of this Section 8(d). Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section 8(d), notify such
party or parties from whom contribution may be sought, but the omission to so
notify such party or parties shall not relieve the party or parties from whom
contribution may be sought from any liability it or they may have otherwise than
under this Section 8(d).
9. Computational Materials and ABS Term Sheets. (a) Not later
than 10:30 a.m., New York City time, on the date hereof, the Underwriters shall
deliver to the Company and its counsel, as provided below, a complete copy of
all materials provided by the Underwriters to prospective investors in the
Offered Certificates which constitute either (i) "Computational Materials"
within the meaning of the no-action letter dated May 20, 1994 issued by the
Division of Corporation Finance of the Commission to Kidder, Peabody Acceptance
Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder Structured Asset
Corporation and the no-action letter dated May 27, 1994 issued by the Division
of Corporation Finance of the Commission to the Public Securities Association
(together, the "Kidder Letters") or (ii) "ABS Term Sheets" within the meaning of
the no-action letter dated February 17, 1995 issued by the Division of
Corporation Finance of the Commission to the Public Securities Association (the
"PSA Letter" and, together with the Kidder Letters, the "No- Action Letters"),
if the filing of such materials with the Commission is a condition of the relief
granted in such letters and, in the case of any such materials that constitute
"Collateral Term Sheets" within the meaning of the PSA Letter, such Collateral
Term Sheets have not previously been delivered to the Company as contemplated by
Section 9(b)(i) below. For purposes of this Agreement, "Structural Term Sheets"
shall have the meaning set forth in the PSA Letter. Each delivery of
Computational Materials and/or ABS Term Sheets to the Company and its counsel
pursuant to this paragraph (a) shall be made in paper form and, in the case of
ABS Term Sheets, electronic format suitable for filing with the Commission.
(b) Each Underwriter represents and warrants to and agrees
with the Company, as of the date hereof and as of the Closing Date, as
applicable, that:
(i) if such Underwriter has provided any Collateral Term
Sheets to potential investors in the Offered Certificates prior to the
date hereof and if the filing of such materials with the Commission is
a condition of the relief granted in the PSA Letter, then in each such
case such Underwriter delivered to the Company and its counsel, in the
manner contemplated by Section 9(a), a copy of such materials no later
than 10:30 a.m., New York City time, on the first business day
following the date on which such materials were initially provided to a
potential investor;
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(ii) the Computational Materials (either in original,
aggregated or consolidated form) and ABS Term Sheets furnished to the
Company pursuant to Section 9(a) or as contemplated in Section 9(b)(i)
constitute all of the materials relating to the Offered Certificates
furnished by such Underwriter (whether in written, electronic or other
format) to prospective investors in the Offered Certificates prior to
the date hereof, except for any Preliminary Prospectus and any
Computational Materials and ABS Term Sheets with respect to the Offered
Certificates which are not required to be filed with the Commission in
accordance with the No-Action Letters, and all Computational Materials
and ABS Term Sheets provided by such Underwriter to potential investors
in the Offered Certificates comply with the requirements of the
No-Action Letters;
(iii) on the respective dates any such Computational Materials
and/or ABS Term Sheets with respect to the Offered Certificates
referred to in Section 9(b)(ii) were last furnished by such Underwriter
to each prospective investor, on the date of delivery thereof to the
Company pursuant to or as contemplated by this Section 9 and on the
Closing Date, such Computational Materials and/or ABS Term Sheets did
not and will not include any untrue statement of a material fact or,
when read in conjunction with the Prospectus, omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(iv) at the time any Computational Materials or ABS Term
Sheets with respect to the Offered Certificates were furnished to a
prospective investor and on the date hereof, such Underwriter
possessed, and on the date of delivery of such materials to the Company
pursuant to or as contemplated by this Section 9 and on the Closing
Date, such Underwriter will possess, the capability, knowledge,
expertise, resources and systems of internal control necessary to
ensure that such Computational Materials and/or ABS Term Sheets conform
to the representations and warranties of such Underwriter contained in
subparagraphs (ii) and (iii) above of this Section 9(b);
(v) all Collateral Term Sheets with respect to the Offered
Certificates furnished by such Underwriter to prospective investors
contained and will contain a legend, prominently displayed on the first
page thereof, indicating that the information contained therein will be
superseded by the description of the Mortgage Loans contained in the
Prospectus and, except in the case of the initial Collateral Term
Sheet, that such information supersedes the information in all prior
Collateral Term Sheets;
(vi) all Computational Materials and ABS Term Sheets with
respect to the Offered Certificates furnished by such Underwriter to
prospective investors contained and will contain a legend generally to
the effect that the Company has not participated in the preparation of
or authorized the distribution of such Computational Materials or ABS
Term Sheets; and
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(vii) on and after the date hereof, such Underwriter shall not
deliver or authorize the delivery of any Computational Materials, ABS
Term Sheets or other materials relating to the Offered Certificates
(whether in written, electronic or other format) to any potential
investor unless such potential investor has received a Prospectus prior
to or at the same time as the delivery of such Computational Materials,
ABS Term Sheets or other materials;
provided that no Underwriter makes any representation or warranty as to whether
any Computational Materials or ABS Term Sheets with respect to the Offered
Certificates included or will include any untrue statement or omission resulting
directly from any Collateral Error (except any Corrected Collateral Error, with
respect to materials prepared after the receipt by the Underwriter from the
related Mortgage Loan Seller or the Company of notice of such Corrected
Collateral Error or materials superseding or correcting such Corrected
Collateral Error).
(c) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, it shall be necessary in
the opinion of the Representative or counsel for the Underwriters to amend or
supplement the Prospectus as a result of an untrue statement of a material fact
contained in any Computational Materials or ABS Term Sheets provided by any
Underwriter pursuant to or as contemplated by this Section 9 or the omission to
state a material fact necessary to make the statements therein, in the light of
the circumstances under which they were made (and when read in conjunction with
the Prospectus), not misleading, or if it shall be necessary to amend or
supplement any Current Report to comply with the Act or the Exchange Act or the
rules thereunder, the Underwriters, at their expense (or, if such amendment or
supplement is necessary in order for any Current Report to comply with the Act
or the Exchange Act or the rules thereunder, at the expense of the Company),
shall prepare and furnish to the Company for filing with the Commission an
amendment or supplement which will correct such statement or omission or an
amendment which will effect such compliance and shall distribute such amendment
or supplement to each prospective investor in the Offered Certificates that
received such information being amended or supplemented. The Company shall have
no obligation to file such amendment or supplement if the Company determines
that (i) such amendment or supplement contains any untrue statement of a
material fact or, when read in conjunction with the Prospectus, omits to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it being understood,
however, that the Company shall have no obligation to review or pass upon the
accuracy or adequacy of, or to correct, any such amendment or supplement
provided by the Underwriters to the Company pursuant to this paragraph (c)) or
(ii) such filing is not required under the Act. Each Underwriter represents and
warrants to the Company, as of the date of delivery of such amendment or
supplement to the Company, that such amendment or supplement will not include
any untrue statement of a material fact or, when read in conjunction with the
Prospectus, omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. Notwithstanding the foregoing, no Underwriter makes any
representation or warranty as to whether any such amendment or supplement of
Computational Materials or ABS Term Sheets with respect to the Offered
Certificates included or will include any untrue statement resulting directly
from any Collateral Error (except any Corrected Collateral Error, with respect
to materials prepared after the receipt by the Underwriter from the related
Mortgage Loan Seller or the Company of notice of such Corrected Collateral Error
or materials superseding or correcting such Corrected Collateral Error).
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(d) If, at any time when a prospectus relating to the Offered
Certificates is required to be delivered under the Act, it shall be necessary in
the opinion of the Company or its counsel to amend or supplement the Prospectus
as a result of an untrue statement of a material fact contained in any
Computational Materials or ABS Term Sheets provided by any Underwriter pursuant
to or as contemplated by this Section 9 or the omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they made (and when read in conjunction with the
Prospectus), not misleading, or if it shall be necessary to amend or supplement
any Current Report to comply with the Act or the Exchange Act or the rules
thereunder, the Company promptly will notify each Underwriter of the necessity
of such amendment or supplement, and the Underwriters, at their expense (or, if
such amendment or supplement is necessary in order for any Current Report to
comply with the Act or the Exchange Act or the rules thereunder, at the expense
of the Company), shall prepare and furnish to the Company for filing with the
Commission an amendment or supplement which will correct such statement or
omission or an amendment which will effect such compliance and shall distribute
such amendment or supplement to each prospective investor in the Offered
Certificates that received such information being amended or supplemented. Each
Underwriter represents and warrants to the Company, as of the date of delivery
of such amendment or supplement to the Company, that such amendment or
supplement will not include any untrue statement of a material fact or, when
read in conjunction with the Prospectus, omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. Notwithstanding the foregoing, no Underwriter
makes any representation or warranty as to whether any such amendment or
supplement of Computational Materials or ABS Term Sheets with respect to the
Offered Certificates included or will include any untrue statement resulting
directly from any Collateral Error (except any Corrected Collateral Error, with
respect to materials prepared after the receipt by the Underwriter from the
related Mortgage Loan Seller or the Company of notice of such Corrected
Collateral Error or materials superseding or correcting such Corrected
Collateral Error).
(e) The Underwriters further agree to provide to the Company,
at their own expense, any accountants' letters obtained relating to the
Computational Materials and/or ABS Term Sheets, which accountants' letters shall
be addressed to the Company or shall state that the Company may rely thereon;
provided that the Underwriters shall have no obligation to procure any such
letter.
10. Substitution of Underwriters.
(a) If any Underwriter shall fail to take up and pay for the
amount of the Offered Certificates agreed by such Underwriter to be purchased
under this Agreement, upon tender of such Offered Certificates in accordance
with the terms hereof, and the amount of the Offered Certificates not purchased
does not aggregate more than 10% of the total amount of the Offered Certificates
set forth in Schedule I hereof (based on aggregate purchase price), the
remaining Underwriters shall be obligated to take up and pay for the Offered
Certificates that the withdrawing or defaulting Underwriter agreed but failed to
purchase.
-23-
<PAGE>
(b) If any Underwriter shall fail to take up and pay for the
amount of the Offered Certificates agreed by such Underwriter to be purchased
under this Agreement (such Underwriter being a "Defaulting Underwriter"), upon
tender of such Offered Certificates in accordance with the terms hereof, and the
amount of the Offered Certificates not purchased aggregates more than 10% of the
total amount of the Offered Certificates set forth in Schedule I hereto (based
on aggregate price), and arrangements satisfactory to the remaining
Underwriter(s) and the Company for the purchase of such Certificates by other
persons are not made within 36 hours thereafter, this Agreement shall terminate.
In the event of any such termination, the Company shall not be under any
liability to any Underwriter (except to the extent provided in Section 5(g) and
Section 8 hereof) nor shall any Underwriter (other than an Underwriter who shall
have failed, otherwise than for some reason permitted under this Agreement, to
purchase the amount of the Offered Certificates such Underwriter agreed to
purchase hereunder) be under any liability to the Company (except to the extent
provided in Sections 8 and 9 hereof). Nothing herein shall be deemed to relieve
any Defaulting Underwriter from any liability it may have to the Company or to
the other Underwriter(s) by reason of its failure to take up and pay for Offered
Certificates as agreed by such Defaulting Underwriter.
11. Termination Upon the Occurrence of Certain Events. This
Agreement shall be subject to termination in the absolute discretion of the
Representative by notice given to the Company prior to delivery of and payment
for all Offered Certificates if prior to such time (i) trading in securities of
the Company or any affiliate on the New York Stock Exchange shall have been
suspended or limited, or minimum prices shall have been established on such
Exchange, (ii) a banking moratorium shall have been declared by either federal
or New York State authorities, or (iii) there shall have occurred any outbreak
or material escalation of hostilities or other calamity or crisis, the effect of
which on the financial markets of the United States is such as to make it, in
the judgment of the Representative, impractical to market the Offered
Certificates.
12. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Section 8 hereof,
and will survive delivery of and payment for the Offered Certificates. The
provisions of Sections 5(g), 7, 8 and 9 hereof shall survive the termination or
cancellation of this Agreement.
13. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to any Underwriter, will be mailed,
delivered or either telegraphed or transmitted by telecopier and confirmed to it
at its address set forth on Schedule I hereto (or, at such other address as may
be furnished by such Underwriter to the Company in accordance with this Section
13); or, if sent to the Company, will be mailed, delivered or either telegraphed
or transmitted by telecopier and confirmed to it at 600 Steamboat Road,
Greenwich, Connecticut, Attention: Paul Stevelman D., Esq. (or at such other
address as may be furnished by the Company to each Underwriter in accordance
with this Section 13); [or, if sent to the Additional Party, will be mailed,
delivered or either telegraphed or transmitted by telecopier and confirmed to it
at _____________________________________, Attention: _____________________ (or
at such other address as may be furnished by the Additional Party to each
Underwriter in accordance with this Section 13)].
-24-
<PAGE>
14. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in Section 8 hereof, and
their successors, heirs and legal representatives, and no other person will have
any right or obligation hereunder.
15. Miscellaneous. This Agreement will be governed by and
construed in accordance with the substantive laws of the State of New York
applicable to agreements made and to be performed entirely in said State. This
Agreement may be executed in any number of counterparts, each of which shall for
all purposes be deemed to be an original and all of which shall together
constitute but one and the same instrument. Neither this Agreement nor any term
hereof may be changed, waived, discharged or terminated except by a writing
signed by the party against whom enforcement of such change, waiver, discharge
or termination is sought.
[16. Obligations of the Additional Party. The Additional Party
agrees, in consideration of and as an inducement to the Underwriters' purchase
of the Offered Certificates from the Company, to indemnify and hold harmless
each Underwriter, and each person who controls each Underwriter within the
meaning of the Act or the Exchange Act, against any failure by the Company to
perform any of its obligations under Section 8 hereof (as they relate to the
indemnity agreement of the Company in Section 8(a) and the corresponding
contribution obligations in Section 8(d) (the "Covered Obligations")), promptly
after receipt from any Underwriter of written notice of any such failure. The
Additional Party hereby waives notice of acceptance of its obligations hereunder
and notice of any obligation or liability to which it may apply, and waives
presentment, demand for payment, protest, notice of dishonor or non-payment of
any such obligation or liability, suit or the taking of other action by any
party hereto against, and any other notice to, the Additional Party. The
Additional Party's obligations hereunder shall not be affected by any events,
occurrences or circumstances which might otherwise constitute a legal or
equitable discharge or defense of a guarantor or surety, and such obligations
will only be discharged by full, complete and final payment of the Covered
Obligations.]
[SIGNATURE PAGE FOLLOWS]
-25-
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the
Company, the Additional Party and the Underwriters.
Very truly yours,
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
By:
---------------------------------------
Name:
Title:
[ADDITIONAL PARTY]*
By:
---------------------------------------
Name:
Title:
Accepted at New York, New York,
as of the date first written
above, on behalf of each of the
underwriters identified on
Schedule I hereto.
[UNDERWRITER]
By:
-------------------------------
Name:
Title:
[* ________________________. is executing this Underwriting Agreement
solely with respect to its obligations set forth in Section 16 and with
respect to the matters set forth in Section 12, Section 13, Section 14
and Section 15.]
<PAGE>
SCHEDULE I
Principal or Notional
Amount of Relevant
Class of Offered
Underwriters (and addresses) Class Certificates to be Purchased
- ---------------------------- ----- ----------------------------
Class S $______________(1)
Class A-1 $______________
Class A-2 $______________
Class A-3 $______________
Class A-4 $______________
Class A-5 $______________
Class B-1 $______________
Class B-2 $______________
- -----
- ------------
(1) Notional Amount
<PAGE>
SCHEDULE II
Registration Statement No. 333-
--------
Basic Prospectus dated
Prospectus Supplement dated
Title of Offered Certificates: Commercial Mortgage Pass-Through
Certificates, Series ________, Class S,
Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class B-1 and
Class B-2
Cut-off Date: _____________________
Closing: _________ a.m. on ___________________
at the offices of
Sidley & Austin
875 Third Avenue
New York, New York 10022
<PAGE>
Schedule II (continued)
<TABLE>
<CAPTION>
Initial
Aggregate Certificate
Principal Balance
or Notional Initial
Class Designation Amount of Class(1) Pass-Through Rate Purchase Price(2) Rating (3)
- ----------------- ------------------ ----------------- ----------------- ----------
<S> <C> <C> <C> <C>
Class S $______________(4) ________% ________%
Class A-1 $______________ ________% ________%
Class A-2 $______________ ________% ________%
Class A-3 $______________ ________% ________%
Class A-4 $______________ ________% ________%
Class A-5 $______________ ________% ________%
Class B-1 $______________ ________% ________%
Class B-2 $______________ ________% ________%
</TABLE>
- ------------------
(1) Plus or minus a permitted variance of 5%.
(2) Expressed as a percentage of the aggregate stated or notional amount, as
applicable, of the relevant class of Offered Certificates to be purchased.
The purchase price for each class of the Offered Certificates will include
accrued interest at the initial Pass-Through Rate therefor on the aggregate
stated or notional amount, as applicable, thereof to be purchased from the
Cut-off Date to but not including the Closing Date.
(3) By .
-----------------------------------
(4) Aggregate Notional Amount.
<PAGE>
================================================================================
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
as Depositor,
-------------------------------------
as Master Servicer,
-------------------------------------
as Special Servicer,
and
-------------------------------------
as Trustee,
POOLING AND SERVICING AGREEMENT
Dated as of
------------------
------------------------------
$
Commercial Mortgage Pass-Through Certificates
Series
------------
================================================================================
<PAGE>
TABLE OF CONTENTS
---------------
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES;
CERTAIN CALCULATIONS IN RESPECT
OF THE MORTGAGE POOL
1.01. Defined Terms......................................................................................... 3
1.02. General Interpretive Principles....................................................................... 43
1.03. Certain Calculations in Respect of the Mortgage Pool.................................................. 43
1.04. Cross-Collateralized Mortgage Loans................................................................... 45
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES; ORIGINAL ISSUANCE OF REMIC I REGULAR INTERESTS,
REMIC II REGULAR INTERESTS,
CLASS S REMIC III REGULAR INTERESTS AND CERTIFICATES
2.01. Conveyance of Mortgage Loans.......................................................................... 46
2.02. Acceptance of Mortgage Assets by Trustee.............................................................. 48
2.03. Certain Repurchases and Substitutions of Mortgage Loans by the Originators............................ 50
2.04. Representations and Warranties of the Depositor....................................................... 53
2.05. Representations and Warranties of the Master Servicer................................................. 55
2.06. Representations and Warranties of the Special Servicer................................................ 56
2.07. Representations and Warranties of the Trustee......................................................... 58
2.08. Designation of the Certificates....................................................................... 59
2.09. Creation of REMIC I; Issuance of REMIC I Regular Interests and
REMIC I Residual Interest; Certain Matters Involving REMIC I...................................... 60
2.10. Conveyance of REMIC I Regular Interests; Acceptance of REMIC I
Regular Interests by Trustee...................................................................... 62
2.11. Creation of REMIC II; Issuance of REMIC II Regular Interests
and Class R-II Certificates; Certain Matters Involving REMIC II................................... 62
2.12. Conveyance of REMIC II Regular Interests; Acceptance of REMIC II
Regular Interests by Trustee...................................................................... 64
2.13. Creation of REMIC III; Issuance of REMIC III Certificates; Certain Matters
Involving REMIC III............................................................................... 64
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
2.14. Acceptance of Grantor Trusts by Trustee; Issuance of the Class E
and Class R-I Certificates........................................................................ 67
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
3.01. Administration of the Mortgage Loans.................................................................. 69
3.02. Collection of Mortgage Loan Payments.................................................................. 70
3.03. Collection of Taxes, Assessments and Similar Items; Servicing Accounts;
Reserve Accounts.................................................................................. 70
3.04. Collection Account, Distribution Account and Interest Reserve Account................................. 72
3.05. Permitted Withdrawals From the Collection Account, the Distribution Account
and the Interest Reserve Account.................................................................. 75
3.06. Investment of Funds in the Collection Account, Servicing Accounts, Reserve Accounts
and the REO Account............................................................................... 79
3.07. Maintenance of Insurance Policies; Errors and Omissions and Fidelity Coverage......................... 80
3.08. Enforcement of Alienation Clauses..................................................................... 83
3.09. Realization Upon Defaulted Mortgage Loans............................................................. 84
3.10. Trustee to Cooperate; Release of Mortgage Files....................................................... 87
3.11. Master Servicing and Special Servicing Compensation; Interest on and Reimbursement of
Servicing Advances; Payment of Certain Expenses; Obligations of the Trustee and any Fiscal
Agent regarding Back-up Servicing Advances............................................................ 88
3.12. Property Inspections; Collection of Financial Statements; Delivery of Certain Reports................. 92
3.13. Annual Statement as to Compliance..................................................................... 95
3.14. Reports by Independent Public Accountants............................................................. 95
3.15. Access to Certain Information......................................................................... 96
3.16. Title to REO Property; REO Account.................................................................... 96
3.17. Management of REO Property............................................................................ 97
3.18. Sale of Mortgage Loans and REO Properties............................................................. 100
3.19. Additional Obligations of Master Servicer............................................................. 103
3.20. Modifications, Waivers, Amendments and Consents....................................................... 106
3.21. Transfer of Servicing Between Master Servicer and Special Servicer; Record Keeping.................... 110
3.22. Sub-Servicing Agreements.............................................................................. 111
3.23. Controlling Class Representative...................................................................... 113
3.24. Certain Rights and Powers of the Controlling Class Representative..................................... 114
3.25. Alternate Special Servicer............................................................................ 116
</TABLE>
-ii-
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
4.01. Distributions......................................................................................... 118
4.02. Statements to Certificateholders; Certain Other Reports............................................... 127
4.03. P&I Advances; Advances relating to the Master Servicer Remittance Amount.............................. 130
4.04. Allocation of Realized Losses and Additional Trust Fund Expenses...................................... 131
4.05. Calculations.......................................................................................... 132
ARTICLE V
THE CERTIFICATES
5.01. The Certificates...................................................................................... 133
5.02. Registration of Transfer and Exchange of Certificates................................................. 133
5.03. Book-Entry Certificates............................................................................... 138
5.04. Mutilated, Destroyed, Lost or Stolen Certificates..................................................... 139
5.05. Persons Deemed Owners................................................................................. 140
5.06. Certification by Certificate Owners................................................................... 140
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER
AND THE SPECIAL SERVICER
6.01. Liability of the Depositor, the Master Servicer and the Special Servicer.............................. 141
6.02. Merger, Consolidation or Conversion of the Depositor, the Master Servicer
or the Special Servicer........................................................................... 141
6.03. Limitation on Liability of the Depositor, the Master Servicer, and the Special Servicer............... 141
6.04. Master Servicer and Special Servicer Not to Resign.................................................... 142
6.05. Rights of the Depositor and the Trustee in Respect of the Master Servicer and the Special
Servicer.......................................................................................... 143
6.06. Designation of Special Servicer by the Controlling Class.............................................. 144
6.07. Master Servicer or Special Servicer as Owner of a Certificate......................................... 145
</TABLE>
-iii-
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C> <C>
ARTICLE VII
DEFAULT
7.01. Events of Default..................................................................................... 146
7.02. Trustee to Act; Appointment of Successor.............................................................. 149
7.03. Notification to Certificateholders.................................................................... 150
7.04. Waiver of Events of Default........................................................................... 151
7.05. Additional Remedies of Trustee Upon Event of Default.................................................. 151
ARTICLE VIII
THE TRUSTEE
8.01. Duties of Trustee..................................................................................... 152
8.02. Certain Matters Affecting the Trustee................................................................. 153
8.03. Trustee and Fiscal Agent not Liable for Validity or Sufficiency of Certificates
or Mortgage Loans................................................................................. 155
8.04. Trustee and Fiscal Agent May Own Certificates......................................................... 155
8.05. Fees and Expenses of Trustee; Indemnification of and by Trustee and Fiscal Agent...................... 155
8.06. Eligibility Requirements for Trustee.................................................................. 156
8.07. Resignation and Removal of Trustee.................................................................... 157
8.08. Successor Trustee..................................................................................... 158
8.09. Merger or Consolidation of Trustee.................................................................... 159
8.10. Appointment of Co-Trustee or Separate Trustee......................................................... 159
8.11. Appointment of Custodians............................................................................. 160
8.12. Access to Certain Information......................................................................... 160
8.13. Appointment of Fiscal Agent........................................................................... 162
8.14. Advance Security Arrangement.......................................................................... 163
8.15. Filings with the Securities and Exchange Commission................................................... 163
ARTICLE IX
TERMINATION
9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans...................................... 166
9.02. Additional Termination Requirements................................................................... 168
</TABLE>
-iv-
<PAGE>
<TABLE>
<CAPTION>
Section Page
- ------- ----
ARTICLE X
ADDITIONAL TAX PROVISIONS
<S> <C> <C>
10.01. Tax Administration.................................................................................... 169
10.02. Depositor, Master Servicer, Special Servicer, Trustee and Fiscal
Agent to Cooperate with Tax Administrator............................................................. 172
10.03. Appointment of Tax Administrator...................................................................... 172
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Amendment............................................................................................. 173
11.02. Recordation of Agreement; Counterparts................................................................ 174
11.03. Limitation on Rights of Certificateholders............................................................ 174
11.04. Governing Law......................................................................................... 175
11.05. Notices............................................................................................... 175
11.06. Severability of Provisions............................................................................ 176
11.07. Successors and Assigns; Beneficiaries................................................................. 176
11.08. Article and Section Headings.......................................................................... 176
11.09. Notices to and from the Rating Agencies and the Depositor............................................. 176
11.10. Notices to Controlling Class Representative........................................................... 178
11.11. Complete Agreement.................................................................................... 178
</TABLE>
-v-
<PAGE>
EXHIBITS
EXHIBIT A-1 Form of Class S Certificates
EXHIBIT A-2 Form of Class A-1 Certificates
EXHIBIT A-3 Form of Class A-2, Class A-3, Class A-4, Class A-5,
Class B-1 and Class B-2 Certificates
EXHIBIT A-4 Form of Class B-3, Class B-4, Class B-5, Class B-6,
Class B-7, Class B-8, Class C and Class D Certificates
EXHIBIT A-5 Form of Class E Certificates
EXHIBIT A-6 Form of Class R-I, Class R-II and Class R-III Certificates
EXHIBIT B-1 Schedule of Mortgage Loans
EXHIBIT B-2 Schedule of Exceptions to Mortgage File Delivery
EXHIBIT B-3 Form of Custodial Certification
EXHIBIT C Letter of Representations among Depositor, Trustee and
initial Depository
EXHIBIT D-1 Form of Master Servicer Request for Release
EXHIBIT D-2 Form of Special Servicer Request for Release
EXHIBIT E-1 Form of Trustee Report
EXHIBIT E-2A Form of CMSA Loan Periodic Update File
EXHIBIT E-2B Form of CMSA Property File
EXHIBIT E-2C Form of CMSA Loan Set-up File
EXHIBIT E-3 Form of Comparative Financial Status Report
EXHIBIT E-4 Form of Delinquent Loan Status Report
EXHIBIT E-5 Form of Historical Loan Modification Report
EXHIBIT E-6 Form of Historical Loss Estimate Report
EXHIBIT E-7 Form of NOI Adjustment Worksheet
EXHIBIT E-8 Form of Operating Statement Analysis Report
EXHIBIT E-9 Form of REO Status Report
EXHIBIT E-10 Form of Watch List
EXHIBIT F-1A Form I of Transferor Certificate for Transfers of
Non-Registered Certificates
EXHIBIT F-1B Form II of Transferor Certificate for Transfers of
Non-Registered Certificates
EXHIBIT F-2A Form I of Transferee Certificate for Transfers of
Non-Registered Certificates
EXHIBIT F-2B Form II of Transferee Certificate for Transfers of
Non-Registered Certificates
EXHIBIT G Form of Transferee Certificate in Connection with ERISA
(Definitive Subordinated Certificates)
EXHIBIT H-1 Form of Transfer Affidavit and Agreement for Transfers of
Residual Interest Certificates
EXHIBIT H-2 Form of Transferor Certificate for Transfers of Residual
Interest Certificates
EXHIBIT I-1 Form of Notice and Acknowledgment Concerning Replacement of
Special Servicer
EXHIBIT I-2 Form of Acknowledgment of Proposed Special Servicer
EXHIBIT J Form of UCC-1 Financing Statement
EXHIBIT K Calculation of Net Operating Income
EXHIBIT L-1 Information Request from Certificateholder or Certificate
Owner
EXHIBIT L-2 Information Request from Prospective Investor
EXHIBIT M Form of Mortgage Loan Purchase and Sale Agreement
EXHIBIT N Schedule of Designated ARD Loans
EXHIBIT O Schedule of Designated Sub-Servicers
-vi-
<PAGE>
This Pooling and Servicing Agreement, is dated and effective
as of _______________, among GREENWICH CAPITAL COMMERCIAL FUNDING CORP. as
Depositor, _______________________ as Master Servicer, _______________________
as Special Servicer, and _______________________ as Trustee.
PRELIMINARY STATEMENT:
_______________________ (as defined herein) has sold to the
Depositor, pursuant to the Mortgage Loan Purchase and Sale Agreement dated as of
__________________ (as such may from time to time hereafter be amended, the
"Mortgage Loan Purchase and Sale Agreement"), between _______________________,
_______________________ and the Depositor, those Original Mortgage Loans (as
defined herein) identified as of the date hereof on the schedule attached hereto
as Exhibit B-1. A form of the Mortgage Loan Purchase and Sale Agreement is
attached hereto as Exhibit M.
The parties hereto desire to provide for, among other things,
(i) the creation of a common law trust, (ii) the transfer of the Original
Mortgage Loans, together with certain related rights, funds and property, by the
Depositor to the Trustee for the benefit of the Certificateholders (as defined
herein), (iii) the issuance of mortgage pass-through certificates in multiple
classes, which in the aggregate will evidence the entire beneficial ownership
interest in the trust fund to be created hereunder, and (iv) the servicing and
administration of the Mortgage Loans (as defined herein), including the Original
Mortgage Loans, and the other assets that from time to time shall constitute
part of the trust fund to be created hereunder.
In consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES;
CERTAIN CALCULATIONS IN RESPECT
OF THE MORTGAGE POOL
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including in the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Section 1.01, subject to
modification in accordance with Section 1.04.
"30/360 Basis": The accrual of interest calculated on the
basis of a 360-day year consisting of twelve 30-day months.
"30/360 Mortgage Loan": A Mortgage Loan that accrues interest
on a 30/360 Basis.
"Accrued Certificate Interest": The interest accrued from time
to time in respect of any Class of Regular Interest Certificates, calculated in
accordance with Section 2.13(g).
"Acquisition Date": With respect to any REO Property, the
first day on which such REO Property is considered to be acquired by the Trust
within the meaning of Treasury regulation Section 1.856- 6(b)(1), which is the
first day on which the Trust is treated as the owner of such REO Property for
federal income tax purposes.
"Actual/360 Basis": The accrual of interest calculated on the
basis of the actual number of days elapsed during any calendar month in a year
assumed to consist of 360 days.
"Actual/360 Mortgage Loan": A Mortgage Loan that accrues
interest on an Actual/360 Basis.
"Additional Collateral": Any non-real property (including any
Letter of Credit) pledged and/or delivered by the related Borrower and held by
the mortgagee to secure payment on any Mortgage Loan.
"Additional Interest": With respect to any ARD Loan after its
Anticipated Repayment Date, all interest accrued on the principal balance of
such ARD Loan at the Additional Interest Rate (the payment of which interest
shall, under the terms of such Mortgage Loan, be deferred until the principal
balance of such Mortgage Loan has been paid in full), together with all
interest, if any, accrued at the related Mortgage Rate on such deferred
interest.
"Additional Interest Rate": With respect to any ARD Loan after
its Anticipated Repayment Date, the incremental increase in the Mortgage Rate
for such Mortgage Loan resulting from the passage of such Anticipated Repayment
Date.
"Additional Master Servicing Compensation": As defined in
Section 3.11(b).
"Additional Special Servicing Compensation": As defined in
Section 3.11(d).
-2-
<PAGE>
"Additional Trust Fund Expense": Any expense experienced with
respect to the Trust Fund and not otherwise included in the calculation of a
Realized Loss that would result in the Regular Interest Certificateholders'
receiving less than the full amount of principal and/or Distributable
Certificate Interest to which they are entitled on any Distribution Date.
"Adjusted REMIC II Remittance Rate": [With respect to REMIC II
Regular Interest A-1, for any Interest Accrual Period, _______% per annum; with
respect to each of REMIC II Regular Interests B-1 and B-2, for any Interest
Accrual Period, a rate per annum equal to the related REMIC II Remittance Rate
for such Interest Accrual Period; and, with respect to each other REMIC II
Regular Interest, for any Interest Accrual Period, a rate per annum equal to the
lesser of (i) the related REMIC II Remittance Rate for such Interest Accrual
Period and (ii) the related "Fixed Cap Rate" specified below:
REMIC II Regular Interest Fixed Cap Rate
------------------------- --------------
A-2 ______% per annum
A-3 ______% per annum
A-4 ______% per annum
A-5 ______% per annum
B-3 ______% per annum
B-4 ______% per annum
B-5 ______% per annum
B-6 ______% per annum
B-7 ______% per annum
B-8 ______% per annum
C ______% per annum
D ______% per annum]
"Administrative Fee Rate": With respect to each Mortgage Loan
(and any successor REO Mortgage Loan), the sum of the related Master Servicing
Fee Rate, plus the Trustee Fee Rate.
"Advance": Any P&I Advance or Servicing Advance.
"Advance Interest": That certain interest accrued on any
Advance (and compounded monthly) at the Reimbursement Rate, which is payable to
the Master Servicer, the Special Servicer, the Trustee or any Fiscal Agent, as
the case may be, all in accordance with Section 3.11(g) or Section 4.03(d), as
applicable.
"Advance Security Arrangement": As defined in Section 8.14.
"Adverse Grantor Trust Event": Either (i) any impairment of
the status of either Grantor Trust Pool as a Grantor Trust or (ii) the
imposition of a tax upon either Grantor Trust Pool or any of its assets or
transactions.
"Adverse Rating Event": With respect to any Class of Rated
Certificates and each Rating Agency that has assigned a rating thereto, as of
any date of determination, the qualification, downgrade or withdrawal of (or the
placing of such Class of Rated Certificates on watch status in contemplation of
any such action with respect to) the rating then assigned to such Class of Rated
Certificates by such Rating Agency.
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"Adverse REMIC Event": Either (i) any impairment of the status
of any REMIC Pool as a REMIC or (ii) except as permitted by Section 3.17(a), the
imposition of a tax upon any REMIC Pool or any of its assets or transactions
(including the tax on prohibited transactions as defined in Section 860F(a)(2)
of the Code and the tax on prohibited contributions set forth in Section 860G(d)
of the Code).
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement together
with all amendments hereof and supplements hereto.
"Alternate Special Servicer": As defined in Section 3.25.
"A.M. Best": A.M. Best Company or its successor in interest.
"Annual Accountants' Report": As defined in Section 3.14.
"Annual Performance Certification": As defined in Section
3.13.
"Anticipated Repayment Date": With respect to any ARD Loan,
the date specified on the related Mortgage Note, as of which Additional Interest
shall begin to accrue on such Mortgage Loan, which date is prior to the Stated
Maturity Date for such Mortgage Loan.
"Appraisal": With respect to any Mortgaged Property or REO
Property as to which an appraisal is required to be performed pursuant to the
terms of this Agreement, a narrative appraisal complying with USPAP (or, in the
case of a Mortgage Loan or an REO Mortgage Loan with a Stated Principal Balance
as of the date of such appraisal of $1,000,000 or less, either a limited
appraisal and a summary report or an internal valuation prepared by the Special
Servicer) that (i) indicates the "market value" of the subject property (within
the meaning of 12 CFR ss. 225.62(g)) and (ii) is conducted by a Qualified
Appraiser (except that, in the case of a Mortgage Loan or an REO Mortgage Loan
with a Stated Principal Balance as of the date of such appraisal of $1,000,000
or less, the appraiser may be an employee of the Special Servicer).
"Appraisal Reduction Amount": With respect to any Required
Appraisal Loan, an amount (calculated as of the Determination Date immediately
following the later of (a) the date on which the most recent relevant Appraisal
acceptable for purposes of Section 3.19(c) hereof was obtained by the Special
Servicer pursuant to this Agreement and (b) the earliest of the relevant dates
in respect of such Required Appraisal Loan specified in the first sentence of
Section 3.19(c) hereof) equal to the excess, if any, of (x) the sum of (i) the
Stated Principal Balance of such Required Appraisal Loan, (ii) to the extent not
previously advanced by or on behalf of the Master Servicer, the Trustee or any
Fiscal Agent, all unpaid interest (net of Default Interest and, in the case of
an ARD Loan after its Anticipated Repayment Date, Additional Interest) accrued
on such Required Appraisal Loan through the most recent Due Date prior to such
Determination Date, (iii) all unpaid Special Servicing Fees accrued in respect
of such Required Appraisal Loan, (iv) all related unreimbursed Advances made by
or on behalf of the Master Servicer, the Special Servicer, the Trustee or any
Fiscal Agent in respect of such Required Appraisal Loan, together with all
unpaid Advance Interest
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accrued on such Advances, and (v) all currently due but unpaid real estate taxes
and assessments, insurance premiums and, if applicable, ground rents in respect
of the related Mortgaged Property or REO Property (net of any Escrow Payments or
other reserves held by the Master Servicer or the Special Servicer with respect
to (A) any such item, (B) tenant improvements and leasing commissions in respect
of the related Mortgaged Property or (C) debt service on such Required Appraisal
Loan), over (y) 90% of an amount equal to (i) the Appraised Value of the related
Mortgaged Property or REO Property, as applicable, as determined by the most
recent relevant Appraisal acceptable for purposes of Section 3.19(c) hereof, net
of (ii) the amount of any obligation(s) secured by any mortgage liens on such
Mortgaged Property or REO Property, as applicable, that are prior to the lien of
the Required Appraisal Loan. Notwithstanding the foregoing, if in the case of
any Required Appraisal Loan an Appraisal acceptable for purposes of Section
3.19(c) hereof is not obtained within 60 days following, and has not been
obtained within the 12-month period preceding, the earliest of the relevant
dates in respect of such Required Appraisal Loan specified in clauses (i) - (v)
of the first sentence of Section 3.19(c) hereof, then until such Appraisal is
obtained the Appraisal Reduction Amount shall equal 25% of the Stated Principal
Balance of such Required Appraisal Loan; provided, however, that upon receipt of
an Appraisal acceptable for purposes of Section 3.19(c) hereof, the Appraisal
Reduction Amount for such Required Appraisal Loan will be recalculated in
accordance with the preceding sentence.
"Appraised Value": With respect to each Mortgaged Property or
REO Property, the appraised value thereof (as is) based upon the most recent
Appraisal obtained pursuant to this Agreement; provided, however, that, for
purposes of this Agreement, no party hereto may rely on an Appraisal that is
more than 12 months old (it being understood and agreed that this provision is
not intended by itself to impose any separate obligation on any party hereto to
periodically update Appraisals).
"ARD Loan": A Mortgage Loan that provides for the accrual of
Additional Interest thereon if such Mortgage Loan is not paid in full on or
prior to its Anticipated Repayment Date.
"Assignment of Leases": With respect to any Mortgaged
Property, any assignment of leases, rents and profits or similar document or
instrument executed by the related Borrower in connection with the origination
of the related Mortgage Loan, as such assignment may be amended, modified,
renewed or extended through the date hereof and from time to time hereafter.
"Assumed Monthly Payment": With respect to any Balloon
Mortgage Loan delinquent in respect of its Balloon Payment, for each Due Date
coinciding with or following its Stated Maturity Date as of which such Mortgage
Loan remains outstanding and part of the Trust Fund (provided that such Mortgage
Loan was not paid in full, and no other Liquidation Event occurred in respect
thereof, before the end of the Collection Period in which such maturity date
occurs), the scheduled monthly payment of principal and/or interest deemed to be
due in respect of such Mortgage Loan on such Due Date equal to the amount that
would have been due in respect thereof on such Due Date (other than any Default
Interest) if such Mortgage Loan 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, such maturity date. With respect to any REO
Mortgage Loan, for any Due Date 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 the
preceding sentence of this definition, the Assumed Monthly Payment) that was due
(or deemed due) in respect of the related Mortgage Loan on the last Due Date
prior to its becoming an REO Mortgage Loan.
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"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to (a) the sum of (i) all amounts on deposit
in the Distribution Account as of 11:00 a.m., New York City time, on such
Distribution Date, (ii) to the extent not included in the amount described in
clause (a)(i) of this definition, any P&I Advances and/or Compensating Interest
Payments that were made in respect of such Distribution Date, (iii) to the
extent not included in the amount described in clause (a)(i) of this definition,
if such Distribution Date occurs during the month of March of any year, the
aggregate of the Interest Reserve Amounts with respect to the Interest Reserve
Loans transferred from the Interest Reserve Account to the Distribution Account
during such month of March for distribution on such Distribution Date, net of
(b) any portion of the amounts described in clause (a) of this definition that
represents one or more of the following: (i) collected Monthly Payments that are
due on a Due Date following the end of the related Collection Period, (ii) any
payments of principal (including Principal Prepayments) and interest,
Liquidation Proceeds and Insurance Proceeds received after the end of the
related Collection Period, (iii) any Prepayment Premiums, Yield Maintenance
Charges and/or Additional Interest; (iv) any amounts payable or reimbursable to
any Person from the Distribution Account pursuant to clauses (ii) through (v) of
Section 3.05(b), (v) if such Distribution Date occurs during the month of
February of any year or during the month of January of any year that is not a
leap year, the aggregate of the Interest Reserve Amounts with respect to the
Interest Reserve Loans to be withdrawn (pursuant to Section 3.04(c) and Section
3.05(b)(vi)) from the Distribution Account and deposited into the Interest
Reserve Account during such month of February or such month of January, as the
case may be, and held for future distribution, and (vi) any amounts deposited in
the Distribution Account in error; provided that the Available Distribution
Amount for the Final Distribution Date shall be calculated without regard to
clauses (b)(i), (b)(ii) and (b)(v) of this definition.
"Balloon Mortgage Loan": Any Mortgage Loan that by its
original terms or by virtue of any modification entered into as of the Closing
Date (or, in the case of a Replacement Mortgage Loan, as of the related date of
substitution) provides for an amortization schedule extending beyond its Stated
Maturity Date and as to which, in accordance with such terms, a Balloon Payment
is due on its Stated Maturity Date.
"Balloon Payment": Any Monthly Payment payable on a Mortgage
Loan at scheduled maturity that is at least twice as large as the normal Monthly
Payment due on such Mortgage Loan.
"Bankruptcy Code": The federal Bankruptcy Code, as amended
from time to time (Title 11 of the United States Code).
"Base Prospectus": That certain prospectus dated
_______________, relating to trust funds established by the Depositor and
publicly offered mortgage pass-through certificates evidencing interests
therein.
"Bid Allocation": With respect to the initial Master Servicer
and each Sub-Servicer (other than a Designated Sub-Servicer) and the proceeds of
any bid pursuant to Section 7.01(c), the amount of such proceeds (net of any
expenses incurred in connection with such bid, including, without limitation,
reasonable attorneys' fees, and out-of-pocket expenses incurred in connection
with transferring the servicing of the Mortgage Loans), multiplied by a fraction
equal to (i) the Servicer Fee Amount for the initial Master Servicer or such
Sub-Servicer, as the case may be, as of such date of determination, over (ii)
the aggregate of the Servicer Fee Amounts for the initial Master Servicer and
all of the Sub-Servicers (other than the Designated Sub-Servicers) as of such
date of determination.
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"Book-Entry Certificate": Any Certificate registered in the
name of the Depository or its nominee.
"Book-Entry Subordinated Certificate": Any Subordinated
Certificate that constitutes a Book-Entry Certificate.
"Borrower": The obligor or obligors on a Mortgage Note,
including any Person that has acquired the related Mortgaged Property and
assumed the obligations of the original obligor under the Mortgage Note.
"Breach": As defined in Section 2.03(a).
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York, Minneapolis, Minnesota,
the city or cities in which the Primary Servicing Offices of the Master Servicer
and the Special Servicer are located or the city in which the Corporate Trust
Office of the Trustee is located, are authorized or obligated by law or
executive order to remain closed.
"CERCLA": The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Certificate": Any one of the Depositor's Commercial Mortgage
Pass-Through Certificates, Series ________, as executed by the Trustee and
authenticated and delivered hereunder by the Certificate Registrar.
"Certificate Factor": With respect to any Class of Regular
Interest Certificates, as of any date of determination, a fraction, expressed as
a decimal carried to eight places, the numerator of which is the related Class
Principal Balance or Class Notional Amount, as the case may be, then
outstanding, and the denominator of which is the related Class Principal Balance
or Class Notional Amount, as the case may be, outstanding as of the Closing
Date.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, provided, however, that:
(i) neither a Disqualified Organization nor a Non-United States Person shall be
a "Holder" of, or a "Certificateholder" with respect to, a Residual Interest
Certificate for any purpose hereof; and (ii) solely for purposes of giving any
consent, approval, direction or waiver pursuant to this Agreement that
specifically relates to the rights, duties and/or obligations hereunder of any
of the Depositor, the Master Servicer, the Special Servicer, the Tax
Administrator, the Trustee or any Fiscal Agent in its respective capacity as
such (other than any consent, approval or waiver contemplated by any of Sections
3.23, 3.24 and 6.06), any Certificate registered in the name of such party or in
the name of any Affiliate thereof shall be deemed not to be outstanding, and the
Voting Rights to which it is entitled shall not be taken into account in
determining whether the requisite percentage of Voting Rights necessary to
effect any such consent, approval or waiver that specifically relates to such
party has been obtained. The Certificate Registrar shall be entitled to request
and conclusively rely upon a certificate of the Depositor, the Master Servicer
or the Special Servicer in determining whether a Certificate is registered in
the name of an Affiliate of such Person. All references herein to
"Certificateholders" or "Holders" shall reflect the rights of Certificate
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Owners only insofar as they may indirectly exercise such rights through the
Depository and the Depository Participants (except as otherwise specified
herein), it being herein acknowledged and agreed that the parties hereto shall
be required to recognize as a "Certificateholder" or "Holder" only the Person in
whose name a Certificate is registered in the Certificate Register.
"Certificateholder Reports": As defined in Section 4.02(a).
"Certificate Notional Amount": With respect to any Class S
Certificate, as of any date of determination, the then notional principal amount
on which such Certificate accrues interest, equal to the product of (a) the then
Certificate Factor for the Class S Certificates, multiplied by (b) the amount
specified on the face of such Certificate as the initial Certificate Notional
Amount thereof.
"Certificate Owner": With respect to any Book-Entry
Certificate, the Person who is the beneficial owner of such Certificate as
reflected on the books of the Depository or on the books of a Depository
Participant or on the books of an indirect participating brokerage firm for
which a Depository Participant acts as agent.
"Certificate Principal Balance": With respect to any Principal
Balance Certificate, as of any date of determination, the then outstanding
principal amount of such Certificate equal to the product of (a) the then
Certificate Factor for the Class of Principal Balance Certificates to which such
Certificate belongs, multiplied by (b) the amount specified on the face of such
Certificate as the initial Certificate Principal Balance thereof.
"Certificate Register" and "Certificate Registrar": The
register maintained and the registrar appointed pursuant to Section 5.02.
"Class": Collectively, all of the Certificates bearing the
same alphabetical and, if applicable, numerical class designation and having the
same payment terms. The respective Classes of Certificates are designated in
Section 2.08(a). Any reference in any other Section or Subsection of this
Agreement to any Certificate or Certificates preceded by a Class designation
shall be to a Certificate or Certificates of the Class so designated in Section
2.08(a).
"Class A Certificate": Any of the Certificates designated as
such in Section 2.08.
"Class B Certificate": Any of the Certificates designated as
such in Section 2.08.
"Class E Sub-Account": A sub-account of the Distribution
Account established pursuant to Section 3.04(b), which sub-account shall
constitute an asset of the Trust Fund and Grantor Trust E, but not an asset of
any REMIC Pool.
"Class Notional Amount": The aggregate hypothetical or
notional amount on which the Class S Certificates (as a collective whole) accrue
interest from time to time, as calculated in accordance with Section 2.13(d).
"Class Principal Balance": The aggregate principal balance
outstanding from time to time of any Class of Principal Balance Certificates, as
calculated in accordance with Section 2.13(e).
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"Class S Portion": When used with respect to the
Uncertificated Accrued Interest in respect of any REMIC II Regular Interest for
any Interest Accrual Period, the portion of such Uncertificated Accrued Interest
that is equal to the product of (a) the entire amount of such Uncertificated
Accrued Interest, multiplied by (b) a fraction (not less than zero or greater
than one), the numerator of which is the excess, if any, of the REMIC II
Remittance Rate in respect of such REMIC II Regular Interest for such Interest
Accrual Period, over the Adjusted REMIC II Remittance Rate in respect of such
REMIC II Regular Interest for such Interest Accrual Period, and the denominator
of which is the REMIC II Remittance Rate in respect of such REMIC II Regular
Interest for such Interest Accrual Period; provided that if the aggregate Class
S Portion of the Uncertificated Accrued Interest in respect of all the REMIC II
Regular Interests for any Interest Accrual Period, calculated without regard to
this proviso, would exceed an amount equal to the aggregate Accrued Certificate
Interest in respect of the Class S Certificates for such Interest Accrual
Period, then the Class S Portion of the Uncertificated Accrued Interest in
respect of each REMIC II Regular Interest for such Interest Accrual Period shall
be proportionately reduced until the aggregate Class S Portion of the
Uncertificated Accrued Interest in respect of all the REMIC II Regular Interests
for such Interest Accrual Period is equal to the aggregate Accrued Certificate
Interest in respect of the Class S Certificates for such Interest Accrual
Period. When used with respect to the Uncertificated Distributable Interest in
respect of any REMIC II Regular Interest for any Distribution Date, the portion
of such Uncertificated Distributable Interest that is equal to (a) the Class S
Portion of the Uncertificated Accrued Interest in respect of such REMIC II
Regular Interest for the related Interest Accrual Period, reduced (to not less
than zero) by (b) the product of (i) any portion of the Net Aggregate Prepayment
Interest Shortfall for such Distribution Date that is allocable to such REMIC II
Regular Interest in accordance with the definition of "Uncertificated
Distributable Interest", multiplied by (ii) a fraction, the numerator of which
is equal to the Class S Portion of the Uncertificated Accrued Interest in
respect of such REMIC II Regular Interest for the related Interest Accrual
Period, and the denominator of which is equal to the entire amount of the
Uncertificated Accrued Interest in respect of such REMIC II Regular Interest for
the related Interest Accrual Period.
"Closing Date": _______________.
"CMSA": The Commercial Mortgage Securities Association, or any
association or organization that is a successor thereto.
"CMSA Loan Periodic Update File": The report substantially in
the form and containing the information described in Exhibit E-2A attached
hereto.
"CMSA Loan Set-up File": The report substantially in the form
and containing the information described in Exhibit E-2C attached hereto.
"CMSA Property File": The report substantially in the form and
containing the information described in Exhibit E-2B hereto.
"Code": The Internal Revenue Code of 1986 and regulations
promulgated thereunder, including proposed regulations to the extent that, by
reason of their proposed effective date, could, as of the date of any
determination or opinion as to the tax consequences of any action or proposed
action or transaction, be applied to the Trust or the Certificates.
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"Collection Account": The segregated account or accounts
created and maintained by the Master Servicer pursuant to Section 3.04(a) in
trust for the Certificateholders, which shall be entitled
"_________________________ [or the name of any successor Master Servicer], as
Master Servicer, in trust for the registered holders of Greenwich Capital
Commercial Funding Corp., Commercial Mortgage Pass- Through Certificates, Series
____________".
"Collection Period": With respect to any Distribution Date,
the period commencing immediately following the Determination Date in the
calendar month preceding the month in which such Distribution Date occurs (or,
in the case of the initial Distribution Date, commencing immediately following
the Cut-off Date) and ending on and including the Determination Date in the
calendar month in which such Distribution Date occurs.
"Commission": The Securities and Exchange Commission or any
successor thereto.
"Comparative Financial Status Report": A report substantially
containing the information described in Exhibit E-3 attached hereto, including,
among other things, the occupancy and Debt Service Coverage Ratio for each
Mortgage Loan or the related Mortgaged Property, as applicable, as of the
Determination Date immediately preceding the preparation of such report and the
revenue and net operating income for each of the following three periods (to the
extent such information is available): (i) the most current available
year-to-date, (ii) the previous two full fiscal years, and (iii) the "base year"
(representing the original analysis of information used as of the Cut-off Date).
For the purposes of the production by the Master Servicer or the Special
Servicer of any such report that is required to state information for any period
prior to the Cut-off Date, the Master Servicer or the Special Servicer, as the
case may be, may conclusively rely (without independent verification), absent
manifest error, on information provided to it by the Mortgage Loan Seller, by
the related Borrower or (x) in the case of such a report produced by the Master
Servicer, by the Special Servicer (if other than the Master Servicer or an
Affiliate thereof) and (y) in the case of such a report produced by the Special
Servicer, by the Master Servicer (if other than the Special Servicer or an
Affiliate thereof).
"Compensating Interest Payment": With respect to any
Distribution Date, any payment made by the Master Servicer pursuant to Section
3.19(a) to cover Prepayment Interest Shortfalls incurred during the related
Collection Period.
"Controlling Class": As of any date of determination, the
Class of Principal Balance Certificates with the lowest payment priority
pursuant to Section 4.01(a), that has a then outstanding Class Principal Balance
that is not less than 25% of its initial Class Principal Balance; provided that,
if no Class of Principal Balance Certificates has a Class Principal Balance that
satisfies the foregoing requirement, then the Controlling Class shall be the
Class of Principal Balance Certificates with the lowest payment priority
pursuant to Section 4.01(a).
"Controlling Class Certificateholder": Any Holder of
Certificates of the Controlling Class.
"Controlling Class Representative": As defined in Section
3.23(a).
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"Corporate Trust Office": The principal corporate trust office
of the Trustee at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at _________________________________.
"Corrected Mortgage Loan": Any Mortgage Loan that had been a
Specially Serviced Mortgage Loan but has ceased to be such in accordance with
the definition of "Specially Serviced Mortgage Loan" (other than by reason of
(i) a Liquidation Event occurring in respect of such Mortgage Loan or (ii) the
related Mortgaged Property becoming an REO Property).
"Corresponding REMIC II Regular Interest": With respect to any
Class of Principal Balance Certificates, the REMIC II Regular Interest that has
an alphabetical and, if applicable, numerical designation that is the same as
the alphabetical and, if applicable, numerical Class designation for such Class
of Principal Balance Certificates.
"Cross-Collateralized Group": Any group of Mortgage Loans that
is cross-defaulted and cross-collateralized with each other.
"Cross-Collateralized Mortgage Loan": Any Mortgage Loan, that
is, by its terms, cross- defaulted and cross-collateralized with any other
Mortgage Loan.
"Custodian": A Person who is at any time appointed by the
Trustee pursuant to Section 8.11 as a document custodian for the Mortgage Files.
"Cut-off Date": ________________.
"Cut-off Date Balance": With respect to any Original Mortgage
Loan, the outstanding principal balance of such Mortgage Loan as of the Cut-off
Date, after application of all payments of principal due on or before such date,
whether or not received.
"Debt Service Coverage Ratio": With respect to any Mortgage
Loan, as of any date of determination, and without regard to the
cross-collateralization in the case of any Cross-Collateralized Mortgage Loan,
the ratio of (x) the Net Operating Income (before payment of any debt service on
such Mortgage Loan) generated by the related Mortgaged Property during the most
recent period of not more than 12 months or less than three-months for which Net
Operating Income can be calculated (annualized if such period is less than 12
months), to (y) twelve times the amount of the Monthly Payment in effect for
such Mortgage Loan as of such date of determination.
"Default Charges": Default Interest and/or late payment
charges that are paid or payable, as the context may require, in respect of any
Mortgage Loan or REO Mortgage Loan.
"Default Interest": With respect to any Mortgage Loan (or
successor REO Mortgage Loan), any amounts collected thereon, other than late
payment charges, Prepayment Premiums or Yield Maintenance Charges, that
represent interest (exclusive, if applicable, of Additional Interest) in excess
of interest accrued on the principal balance of such Mortgage Loan (or REO
Mortgage Loan) at the related Mortgage Rate, such excess interest arising out of
a default under such Mortgage Loan.
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"Defaulted Mortgage Loan": A Specially Serviced Mortgage Loan
(i) that is delinquent in an amount equal to at least two Monthly Payments (not
including the Balloon Payment, if any) or is delinquent 30 days or more in
respect of its Balloon Payment, in either case such delinquency to be determined
without giving effect to any grace period permitted by the related Mortgage or
Mortgage Note and without regard to any acceleration of payments under the
related Mortgage and Mortgage Note, or (ii) as to which the Special Servicer
has, by written notice to the related Borrower, accelerated the maturity of the
indebtedness evidenced by the related Mortgage Note.
"Defaulting Party": As defined in Section 7.01(b).
"Definitive Certificate": As defined in Section 5.03(a).
"Deleted Mortgage Loan": A Mortgage Loan which is repurchased
from the Trust or replaced with one or more Replacement Mortgage Loans, in
either case as contemplated by Section 2.03.
"Delinquent Loan Status Report": A report substantially in the
form and containing the information described in Exhibit E-4 attached hereto,
including, among other things, those Mortgage Loans which, as of the close of
business on the Determination Date immediately preceding the preparation of such
report, were (1) delinquent 30-59 days, (2) delinquent 60-89 days, (3)
delinquent 90 days or more, (4) current but specially serviced, or (5) in
foreclosure but as to which the related Mortgaged Property has not become an REO
Property, and those Mortgage Loans as to which the related Borrower is the
subject of a bankruptcy, insolvency or similar proceeding.
"Depositor": Greenwich Capital Commercial Funding Corp. or its
successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named as contemplated by Section 5.03(c). The nominee of
the initial Depository for purposes of registering those Certificates that are
to be Book-Entry Certificates, is Cede & Co. The Depository shall at all times
be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act.
"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Designated ARD Loan": Any ARD Loan set forth on Exhibit N
hereto.
"Designated Sub-Servicer": Any Sub-Servicer set forth on
Exhibit O hereto and any successor thereto under the related Sub-Servicing
Agreement.
"Designated Sub-Servicer Agreement": Any Sub-Servicing
Agreement between a Designated Sub-Servicer and the Master Servicer.
"Determination Date": With respect to any calendar month,
commencing in ________________, the fourth day of such month (or, if such fourth
day is not a Business Day, the immediately preceding Business Day). Each
Determination Date will relate to the Distribution Date in the same calendar
month.
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"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by the Trust other than
through an Independent Contractor; provided, however, that the Special Servicer
(or any Sub-Servicer on behalf of the Special Servicer) shall not be considered
to Directly Operate an REO Property solely because the Special Servicer (or any
Sub-Servicer on behalf of the Special Servicer) establishes rental terms,
chooses tenants, enters into or renews leases, deals with taxes and insurance,
or makes decisions as to repairs or capital expenditures with respect to such
REO Property.
"Discount Rate": As defined in Section 4.01(b).
"Disqualified Organization": Any of the following: (i) the
United States or a possession thereof, any State or any political subdivision
thereof, or any agency or instrumentality of any of the foregoing (other than an
instrumentality which is a corporation if all of its activities are subject to
tax and, except for FHLMC, a majority of its board of directors is not selected
by any such governmental unit), (ii) a foreign government, international
organization, or any agency or instrumentality of either of the foregoing, (iii)
any organization (except certain farmers' cooperatives described in Section 521
of the Code) which is exempt from the tax imposed by Chapter 1 of the Code
(unless such organization is subject to the tax imposed by Section 511 of the
Code on unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381 of the Code or (v) any other Person so
designated by the Tax Administrator based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Interest Certificate by such
Person may cause the Trust or any Person having an Ownership Interest in any
Class of Certificates, other than such Person, to incur a liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the Transfer of an Ownership Interest in a Residual Interest Certificate to such
Person. The terms "United States", "State" and "international organization"
shall have the meanings set forth in Section 7701 of the Code or successor
provisions.
"Distributable Certificate Interest": With respect to any
Class of Regular Interest Certificates, for any Distribution Date, an amount of
interest equal to all Accrued Certificate Interest in respect of such Class of
Certificates for the related Interest Accrual Period, reduced (to not less than
zero) by the product of (i) any Net Aggregate Prepayment Interest Shortfall for
such Distribution Date, multiplied by (ii) a fraction, expressed as a decimal,
the numerator of which is the Accrued Certificate Interest in respect of such
Class of Certificates for the related Interest Accrual Period, and the
denominator of which is the aggregate Accrued Certificate Interest in respect of
all the Classes of Regular Interest Certificates for the related Interest
Accrual Period.
"Distribution Account": The segregated account or accounts
created and maintained by the Trustee pursuant to Section 3.04(b) in trust for
the Certificateholders, which shall be entitled "___________________ [or the
name of any successor Trustee], as Trustee, in trust for the registered holders
of Greenwich Capital Commercial Funding Corp., Commercial Mortgage Pass-Through
Certificates, Series _______________".
"Distribution Date": With respect to any calendar month,
commencing in _____________, the later of (i) the tenth day of such month (or,
if such tenth day is not a Business Day, the Business Day immediately following)
and (ii) the fourth Business Day following the Determination Date occurring in
such month.
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"Document Defect": As defined in Section 2.02(e).
"Due Date": With respect to any Mortgage Loan (and any
successor REO Mortgage Loan), the day of the month set forth in the related
Mortgage Note on which each Monthly Payment on such Mortgage Loan is scheduled
to be first due.
"EDGAR": The Electronic Data Gathering, Analysis, and
Retrieval System of the Commission, the computer system for the receipt,
acceptance, review and dissemination of documents submitted to the Commission in
electronic format.
"Eligible Account": Any of (i) an account maintained with a
federal or state chartered depository institution or trust company, the
long-term deposit or long-term unsecured debt obligations of which (or of such
institution's parent holding company) are rated no less than ["_____" by
________________] and, if then rated thereby, ["_____" by ________________](if
the deposits are to be held in the account for more than 30 days), or the
short-term deposit or short-term unsecured debt obligations of which (or of such
institution's parent holding company) are rated no less than ["_____" by
________________] and, if then rated thereby, ["_____" by ________________](if
the deposits are to be held in the account for 30 days or less), in any event at
any time funds are on deposit therein, or (ii) a segregated trust account
maintained with a federal or state chartered depository institution or trust
company acting in its fiduciary capacity, which, in the case of a state
chartered depository institution or trust company is subject to regulations
regarding fiduciary funds on deposit therein substantially similar to 12 CFR ss.
9.10(b), and which, in either case, has a combined capital and surplus of at
least $50,000,000 and is subject to supervision or examination by federal or
state authority, or (iii) any other account that is acceptable to the Rating
Agencies (as evidenced by written confirmation to the Trustee from each Rating
Agency that the use of such account would not, in and of itself, result in an
Adverse Rating Event with respect to any Class of Rated Certificates), or (iv)
an account maintained with ____________________, if (A) the long term unsecured
debt obligations thereof are rated no less than ["_____" by ________________]
and ["_____" by ________________] and (B) the short term unsecured debt
obligations thereof are rated no less than ["_____" by ________________] and
["_____" by ________________].
"Environmental Insurance Policy": With respect to any
Mortgaged Property or REO Property, any insurance policy covering pollution
conditions and/or other environmental conditions that is maintained from time to
time in respect of such Mortgaged Property or REO Property, as the case may be,
for the benefit of, among others, the Trustee on behalf of the
Certificateholders.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Payment": Any payment received by the Master Servicer
or the Special Servicer for the account of any Borrower for application toward
the payment of real estate taxes, assessments, insurance premiums (including
with respect to any Environmental Insurance Policy), ground rents (if
applicable) and similar items in respect of the related Mortgaged Property.
"Event of Default": Any of the events described in Section
7.01(a).
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"FDIC": The Federal Deposit Insurance Corporation or any
successor.
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"FHLMC": The Federal Home Loan Mortgage Corporation or any
successor.
"Final Distribution Date": The final Distribution Date on
which any distributions are to be made on the Certificates as contemplated by
Section 9.01.
"Final Recovery Determination": A determination made by the
Special Servicer, in its reasonable, good faith judgment, with respect to any
Mortgage Loan or REO Property (other than a Mortgage Loan that is paid in full
and other than a Mortgage Loan or REO Property, as the case may be, that is
repurchased or replaced by the Mortgage Loan Seller pursuant to the Mortgage
Loan Purchase and Sale Agreement or purchased by the Master Servicer, the
Special Servicer or any Controlling Class Certificateholder(s) pursuant to
Section 9.01), that there has been a recovery of all related Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries that will ultimately be
recoverable.
"Fiscal Agent": A Person who is at any time appointed by the
Trustee pursuant to Section 8.13 to act as fiscal agent hereunder.
"Fiscal Agent Agreement": As defined in Section 8.13.
"Fitch": Fitch IBCA, Inc. or its successor in interest. [If
neither such rating agency nor any successor remains in existence, "Fitch" shall
be deemed to refer to such other nationally recognized statistical rating agency
or other comparable Person designated by the Depositor, notice of which
designation shall be given to the other parties hereto, and specific ratings of
Fitch IBCA, Inc. herein referenced shall be deemed to refer to the equivalent
ratings of the party so designated. References herein to "applicable rating
category" (other than such references to "highest applicable rating category")
shall, in the case of Fitch, be deemed to refer to such applicable rating
category of Fitch, without regard to any plus or minus or other comparable
rating qualification.]
"FNMA": The Federal National Mortgage Association or any
successor.
"Grantor Trust": A grantor trust as defined under Subpart E of
Part 1 of Subchapter J of the Code.
"Grantor Trust E": The Grantor Trust designated as such in
Section 2.14(a).
"Grantor Trust R-I": The Grantor Trust designated as such in
Section 2.14(b).
"Grantor Trust Pool": Either of Grantor Trust E or Grantor
Trust R-I.
"Ground Lease": The ground lease pursuant to which any
Borrower holds a leasehold interest in the related Mortgaged Property.
"Group Environmental Insurance Policy": The Environmental
Insurance Policy that is maintained from time to time in respect of more than
one Mortgaged Property or REO Property.
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"Hazardous Materials": Any dangerous, toxic or hazardous
pollutants, chemicals, wastes, or substances, including those so identified
pursuant to CERCLA or any other federal, state or local environmental related
laws and regulations now existing or hereafter enacted, and specifically
including asbestos and asbestos-containing materials, polychlorinated biphenyls
("PCBs"), radon gas, petroleum and petroleum products, urea formaldehyde and any
substances classified as being "in inventory", "usable work in process" or
similar classification which would, if classified as unusable, be included in
the foregoing definition.
"Historical Loan Modification Report": A report substantially
in the form and containing the information described in Exhibit E-5 attached
hereto, and setting forth, among other things, those Mortgage Loans which, as of
the close of business on the Determination Date immediately preceding the
preparation of such report, have been modified pursuant to this Agreement (i)
during the related Collection Period and (ii) since the Cut-off Date, showing
the original and the revised terms thereof.
"Historical Loss Estimate Report": A report substantially in
the form and containing the information described in Exhibit E-6 attached
hereto, and setting forth, among other things, as of the close of business on
the Determination Date immediately preceding the preparation of such report, (i)
the aggregate amount of Liquidation Proceeds and expenses relating to each Final
Recovery Determination made, both during the related Collection Period and
historically, and (ii) the amount of Realized Losses occurring during the
related Collection Period and historically, set forth on a Mortgage
Loan-by-Mortgage Loan basis.
"Independent": When used with respect to any specified Person,
any such Person who (i) is in fact independent of the Depositor, the Mortgage
Loan Seller, the Master Servicer, the Special Servicer, the Tax Administrator,
the Trustee, any Fiscal Agent and any and all Affiliates thereof, (ii) does not
have any direct financial interest in or any material indirect financial
interest in any of the Depositor, the Mortgage Loan Seller, the Master Servicer,
the Special Servicer, the Tax Administrator, the Trustee, any Fiscal Agent or
any Affiliate thereof, and (iii) is not connected with the Depositor, the
Mortgage Loan Seller, the Master Servicer, the Special Servicer, the Tax
Administrator, the Trustee, any Fiscal Agent or any Affiliate thereof as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail to
be Independent of the Depositor, the Mortgage Loan Seller, the Master Servicer,
the Special Servicer, the Tax Administrator, the Trustee, any Fiscal Agent or
any Affiliate thereof merely because such Person is the beneficial owner of 1%
or less of any class of securities issued by the Depositor, the Mortgage Loan
Seller, the Master Servicer, the Special Servicer, the Tax Administrator, the
Trustee, such Fiscal Agent or any Affiliate thereof, as the case may be.
"Independent Contractor": Any Person that would be an
"independent contractor" with respect to REMIC I (or, solely for purposes of a
Mortgage Loan in a __________, the related _________) within the meaning of
Section 856(d)(3) of the Code if REMIC I were a real estate investment trust
(except that the ownership test set forth in that section shall be considered to
be met by any Person that owns, directly or indirectly, 35% or more of any Class
of Certificates, or such other interest in any Class of Certificates as is set
forth in an Opinion of Counsel, which shall be at no expense to the Trustee, the
Tax Administrator or the Trust, delivered to the Trustee and the Tax
Administrator), so long as the Trust does not receive or derive any income from
such Person and provided that the relationship between such Person and the Trust
is at arm's length, all within the meaning of Treasury regulation Section
1.856-4(b)(5), or any other Person upon receipt by the Trustee and the Tax
Administrator of an Opinion of Counsel, which shall be at no expense to the
Trustee, the Tax Administrator or the Trust, 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
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to be taken by an Independent Contractor will not cause such REO Property to
cease to qualify as "foreclosure property" within the meaning of Section
860G(a)(8) of the Code, or cause any income realized in respect of such REO
Property to fail to qualify as Rents from Real Property.
"Initial Pool Balance": The aggregate Cut-off Date Balance of
all the Original Mortgage Loans.
"Institutional Accredited Investor": An "accredited investor"
as defined in any of paragraphs (1), (2), (3) and (7) of Rule 501(a) under the
Securities Act or any entity in which all of the equity owners come within such
paragraphs.
"Insurance Policy": With respect to any Mortgage Loan or REO
Property, any hazard insurance policy, flood insurance policy, title insurance
policy, earthquake insurance policy, Environmental Insurance Policy, or other
insurance policy that is maintained from time to time in respect of such
Mortgage Loan (or the related Mortgaged Property) or such REO Property, as the
case may be.
"Insurance Proceeds": Proceeds paid under any Insurance
Policy, to the extent such proceeds are not applied to the restoration of the
related Mortgaged Property or REO Property or released to the related Borrower,
in any case, in accordance with the Servicing Standard.
"Insured Environmental Event": As defined in Section 3.07(c).
"Interest Accrual Basis": The basis on which interest accrues
in respect of any Mortgage Loan, any ________ Regular Interest, any REMIC I
Regular Interest, any REMIC II Regular Interest or any Class of Regular Interest
Certificates, consisting of one of the following: (i) a 30/360 Basis; or (ii) an
Actual/360 Basis.
"Interest Accrual Period": With respect to any REMIC I Regular
Interest, any REMIC II Regular Interest or any Class of Regular Interest
Certificates, for any Distribution Date, the calendar month immediately
preceding the month in which such Distribution Date occurs.
"Interest Reserve Account": The segregated account created and
maintained by the Trustee pursuant to Section 3.04(c) in trust for the
Certificateholders, which shall be entitled "______________________ [or the name
of any successor Trustee], as Trustee, in trust for the registered holders of
Greenwich Capital Commercial Funding Corp., Commercial Mortgage Pass-Through
Certificates, Series _________________".
"Interest Reserve Amount": With respect to each Interest
Reserve Loan and each Distribution Date that occurs during February of each year
and during January of each year that is not a leap year, an amount equal to
one-day's interest at the related Mortgage Rate on the Stated Principal Balance
of such Interest Reserve Loan as of the Due Date in the month in which such
Distribution Date occurs (but prior to the application of any amounts due on
such Due Date), to the extent that a Monthly Payment is received in respect
thereof for such Due Date on or before the related Master Servicer Remittance
Date or a P&I Advance is made in respect thereof for such Due Date on the
related P&I Advance Date.
"Interest Reserve Loan": Any Actual/360 Mortgage Loan (or
successor REO Mortgage Loan).
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"Interested Person": Any party hereto, the Mortgage Loan
Seller, any Certificateholder, or any Affiliate of any such Person.
"Investment Account": As defined in Section 3.06(a).
"Investment Company Act": The Investment Company Act of 1940,
as amended.
"IRS": The Internal Revenue Service or any successor.
"Issue Price": With respect to each Class of Certificates, the
"issue price" as defined in the Code and Treasury regulations promulgated
thereunder.
"Late Collections": With respect to any Mortgage Loan, all
amounts received thereon during any Collection Period, whether as payments,
Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
collections of the principal and/or interest portions of a Monthly Payment or an
Assumed Monthly Payment in respect of such Mortgage Loan due or deemed due on a
Due Date in a previous Collection Period, or on a Due Date coinciding with or
preceding the Cut-off Date, and not previously recovered. With respect to any
REO Mortgage Loan, all amounts received in connection with the related REO
Property during any Collection Period, whether as Insurance Proceeds,
Liquidation Proceeds, REO Revenues or otherwise, which represent late
collections of the principal and/or interest portions of a Monthly Payment or an
Assumed Monthly Payment in respect of the predecessor Mortgage Loan or late
collections of the principal and/or interest portions of an Assumed Monthly
Payment in respect of such REO Mortgage Loan due or deemed due on a Due Date in
a previous Collection Period and not previously recovered.
"Latest Possible Maturity Date": With respect to any
____________ Regular Interest, any REMIC I Regular Interest, REMIC II Regular
Interest or Class of Principal Balance Certificates, the date designated as the
"latest possible maturity date" thereof solely for purposes of satisfying
Treasury Regulation Section 1.860G-1(a)(4)(iii).
"Letter of Credit": With respect to any Mortgage Loan, any
third-party letter of credit delivered by or at the direction of the Borrower
pursuant to the terms of such Mortgage Loan in lieu of the establishment of, or
deposit otherwise required to be made into, a Reserve Fund.
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made with respect to such Mortgage Loan; (iii) such
Mortgage Loan is repurchased or replaced by the Mortgage Loan Seller pursuant to
the Mortgage Loan Purchase and Sale Agreement, in each case as contemplated by
Section 2.03; or (iv) such Mortgage Loan is purchased by the Master Servicer,
the Special Servicer or any Controlling Class Certificateholder(s) pursuant to
Section 3.18 or Section 9.01. 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; or (ii) such REO
Property is purchased by the Master Servicer, the Special Servicer or any
Controlling Class Certificateholder(s) pursuant to Section 3.18 or Section 9.01.
"Liquidation Expenses": All customary, reasonable and
necessary "out-of-pocket" costs and expenses due and owing (but not otherwise
covered by Servicing Advances) in connection with the liquidation of any
Specially Serviced Mortgage Loan or REO Property pursuant to Section 3.09 or
3.18
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(including legal fees and expenses, committee or referee fees and, if
applicable, brokerage commissions and conveyance taxes).
"Liquidation Fee": With respect to each Specially Serviced
Mortgage Loan or REO Property (other than any Specially Serviced Mortgage Loan
or REO Property that is purchased by the Master Servicer, the Special Servicer
or any Controlling Class Certificateholder(s) pursuant to Section 3.18 or
Section 9.01 or that is repurchased or replaced by the Mortgage Loan Seller
pursuant to the Mortgage Loan Purchase and Sale Agreement), the fee designated
as such and payable to the Special Servicer pursuant to the third paragraph of
Section 3.11(c).
"Liquidation Fee Rate": With respect to each Specially
Serviced Mortgage Loan or REO Property as to which a Liquidation Fee is payable,
1.0%.
"Liquidation Proceeds": All cash amounts (other than Insurance
Proceeds and REO Revenues) received by the Master Servicer or the Special
Servicer in connection with: (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation, exclusive
of any portion thereof required to be released to the related Borrower in
accordance with applicable law and/or the terms and conditions of the related
Mortgage Note and Mortgage; (ii) the liquidation of a Mortgaged Property or
other collateral constituting security for a defaulted Mortgage Loan, through
trustee's sale, foreclosure sale, REO Disposition or otherwise, exclusive of any
portion thereof required to be released to the related Borrower in accordance
with applicable law and/or the terms and conditions of the related Mortgage Note
and Mortgage; (iii) the realization upon any deficiency judgment obtained
against a Borrower; (iv) the purchase of a Defaulted Mortgage Loan by any
Controlling Class Certificateholder(s) pursuant to Section 3.18(b) or by the
Master Servicer or the Special Servicer pursuant to Section 3.18(c) or any other
sale thereof pursuant to Section 3.18(d); (v) the repurchase of a Mortgage Loan
by the Mortgage Loan Seller pursuant to the Mortgage Loan Purchase and Sale
Agreement; (vi) the substitution of one or more Replacement Mortgage Loans for a
Deleted Mortgage Loan by the Mortgage Loan Seller pursuant to the Mortgage Loan
Purchase and Sale Agreement (such cash amounts being any Substitution Shortfall
Amounts); or (vii) the purchase of a Mortgage Loan or REO Property by the Master
Servicer, the Special Servicer or any Controlling Class Certificateholder(s)
pursuant to Section 9.01.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, as
of any date of determination, and without regard to the cross-collateralization
in the case of any Cross-Collateralized Mortgage Loan, a fraction, expressed as
a percentage, the numerator of which is the then current principal amount of
such Mortgage Loan, and the denominator of which is the Appraised Value of the
related Mortgaged Property.
"Majority Controlling Class Certificateholder": As of any date
of determination, any single Holder or group of Holders of Certificates
representing a majority of the Voting Rights allocated to the Class or Classes
of Principal Balance Certificates that constitute(s) the Controlling Class as of
such date of determination.
"Master Servicer": _______________________, or its successor
in interest, in its capacity as master servicer hereunder, or any successor
master servicer appointed as herein provided.
"Master Servicer Remittance Amount": With respect to any
Master Servicer Remittance Date, an amount equal to (a) all amounts on deposit
in the Collection Account as of the commencement of business on such Master
Servicer Remittance Date, net of (b) any portion of the amounts described in
clause
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(a) of this definition that represents one or more of the following: (i)
collected Monthly Payments that are due on a Due Date following the end of the
related Collection Period, (ii) any payments of principal (including Principal
Prepayments) and interest (including Additional Interest), Liquidation Proceeds
and Insurance Proceeds received after the end of the related Collection Period,
(iii) any Prepayment Premiums and/or Yield Maintenance Charges received after
the end of the related Collection Period, (iv) any amounts payable or
reimbursable to any Person from the Collection Account pursuant to clauses (ii)
through (xix) of Section 3.05(a), and (v) any amounts deposited in the
Collection Account in error; provided that the Master Servicer Remittance Amount
for the Master Servicer Remittance Date that occurs in the same calendar month
as the anticipated Final Distribution Date shall be calculated without regard to
clauses (b)(i), (b)(ii) and (b)(iii) of this definition.
"Master Servicer Remittance Date": The Business Day preceding
each Distribution Date.
"Master Servicing Fee": With respect to each Mortgage Loan and
REO Mortgage Loan, the fee designated as such and payable to the Master Servicer
pursuant to Section 3.11(a) and from which any ________________ are payable.
"Master Servicing Fee Rate": With respect to each Mortgage
Loan and REO Mortgage Loan, ______% per annum.
"Maturity Assumptions": Collectively, the assumptions
identified as the "Maturity Assumptions" in the Prospectus Supplement.
"Memorandum": The final Private Placement Memorandum dated
__________________, relating to the Non-Registered Certificates delivered by the
Depositor to the Underwriter as of the Closing Date.
"Modified Mortgage Loan": Any Mortgage Loan as to which any
Servicing Transfer Event has occurred and which has been modified by the Special
Servicer pursuant to Section 3.20 in a manner that:
(A) affects the amount or timing of any payment of
principal or interest due thereon (other than, or in
addition to, bringing current Monthly Payments with
respect to such Mortgage Loan);
(B) except as expressly contemplated by the related loan
documents, results in a release of the lien of the
Mortgage on any material portion of the related
Mortgaged Property without a corresponding Principal
Prepayment in an amount not less than the fair market
value (as is) of the property to be released, as
determined by an Appraisal delivered to the Special
Servicer (at the expense of the related Borrower and
upon which the Special Servicer may conclusively
rely); or
(C) in the reasonable, good faith judgment of the Special
Servicer, otherwise materially impairs the security
for such Mortgage Loan or reduces the likelihood of
timely payment of amounts due thereon.
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"Monthly Payment": With respect to any Mortgage Loan as of any
Due Date, the scheduled monthly payment (or, in the case of an ARD Loan after
its Anticipated Repayment Date, the minimum required monthly payment) of
principal and/or interest on such Mortgage Loan, including any Balloon Payment,
that is actually payable by the related Borrower from time to time under the
terms of the related Mortgage Note (as such terms may be changed or modified in
connection with a bankruptcy or similar proceeding involving the related
Borrower or by reason of a modification, waiver or amendment granted or agreed
to by the Special Servicer pursuant to Section 3.20); provided that the Monthly
Payment due in respect of any ARD Loan after its Anticipated Repayment Date
shall not include Additional Interest.
"Moody's": Moody's Investors Service, Inc. or its successor in
interest. [If neither such rating agency nor any successor remains in existence,
"Moody's" shall be deemed to refer to such other nationally recognized
statistical rating agency or other comparable Person designated by the
Depositor, notice of which designation shall be given to the other parties
hereto, and specific ratings of Moody's Investors Service, Inc. herein
referenced shall be deemed to refer to the equivalent ratings of the party so
designated. References herein to "applicable rating category" (other than such
references to "highest applicable rating category") shall, in the case of
Moody's, be deemed to refer to such applicable rating category of Moody's,
without regard to any plus or minus or other comparable rating qualification.]
"Mortgage": A mortgage, deed of trust, deed to secure debt or
similar document that secures a Mortgage Note and creates a lien on a Mortgaged
Property.
"Mortgage File": With respect to any Mortgage Loan, subject to
Sections 1.04 and 2.01, collectively the following documents:
(i) the original executed Mortgage Note, endorsed (either
on the face thereof or pursuant to a separate
allonge) "Pay to the order of
___________________________, as trustee for the
registered holders of Greenwich Capital Commercial
Funding Corp., Commercial Mortgage Pass-Through
Certificates, Series _______________, without
recourse";
(ii) an original or a copy of the Mortgage and of any
intervening assignments thereof that precede the
assignment referred to in clause (iv) of this
definition, in each case with evidence of recording
indicated thereon;
(iii) an original or a copy of any related Assignment of
Leases (if such item is a document separate from the
Mortgage) and of any intervening assignments thereof
that precede the assignment referred to in clause (v)
of this definition, in each case with evidence of
recording indicated thereon;
(iv) an original executed assignment of the Mortgage, in
favor of ________________________, as trustee for the
registered holders of Greenwich Capital Commercial
Funding Corp., Commercial Mortgage Pass-Through
Certificates, Series _______________, in recordable
form;
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(v) an original executed assignment of any related
Assignment of Leases (if such item is a document
separate from the Mortgage), in favor of
________________________, as trustee for the
registered holders of Greenwich Capital Commercial
Funding Corp., Commercial Mortgage Pass-Through
Certificates, Series _______________, in recordable
form;
(vi) originals or copies of any written assumption,
modification, written assurance and substitution
agreements in those instances where the terms or
provisions of the Mortgage or Mortgage Note have been
modified or the Mortgage Loan has been assumed;
(vii) the original or a copy of the policy of lender's
title insurance;
(viii) filed copies of any prior UCC Financing Statements in
favor of the originator of such Mortgage Loan or in
favor of any assignee prior to the Trustee (but only
to the extent the Mortgage Loan Seller had possession
of such UCC Financing Statements prior to the Closing
Date) and, if there is an effective UCC Financing
Statement in favor of the Mortgage Loan Seller on
record with the applicable public office for UCC
Financing Statements, an original UCC-2 or UCC-3, as
appropriate, in favor of ________________________, as
trustee for the registered holders of Greenwich
Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________;
(ix) any environmental indemnity agreement and the
original or a copy of any Environmental Insurance
Policy relating solely to such Mortgage Loan;
(x) power of attorney, guaranty, property management
agreement, Ground Lease, intercreditor agreement,
cash management agreement and lock-box agreement,
relating to such Mortgage Loan;
(xi) any original documents (including any security
agreements and any Letters of Credit and related
letter of credit reimbursement agreements) relating
to, evidencing or constituting Additional Collateral;
and
(xii) any insurance certificates relating to hazard
insurance policies maintained by the Borrower with
respect to the related Mortgaged Property that are in
the possession of the Mortgage Loan Seller;
provided that the evidence of recording referred to in clauses (ii) and (iii)
above shall not be required prior to the second anniversary of the Closing Date
if the subject document has not been returned from the applicable recording
office; and provided, further, that whenever the term "Mortgage File" is used to
refer to documents actually received by the Trustee or by a Custodian on its
behalf such term shall not be deemed to include such documents and instruments
required to be included therein unless they are actually so received.
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"Mortgage Loan": Any of the Mortgage Loans sold by
_______________ to the Depositor pursuant to the Mortgage Loan Purchase and Sale
Agreement, which Mortgage Loans are identified on Exhibit B-1.
"Mortgage Loan Purchase and Sale Agreement": As defined in the
Preliminary Statement.
"Mortgage Loan Schedule": The list of Mortgage Loans attached
hereto as Exhibit B-1, as such list may be amended from time to time in
accordance with this Agreement. Such list shall set forth the following
information with respect to each Mortgage Loan:
(i) the Mortgage Loan number;
(ii) the street address (including city, state and zip
code) of the related Mortgaged Property;
(iii) the (A) original principal balance and (B) Cut-off
Date Balance;
(iv) the amount of the Monthly Payment due on the first
Due Date following the Closing Date;
(v) the Mortgage Rate as of the Cut-off Date;
(vi) the (A) original and remaining term to stated
maturity and (B) Stated Maturity Date;
(vii) in the case of a Balloon Mortgage Loan, the original
and remaining amortization term;
(viii) whether the Mortgage Loan is a Cross-Collateralized
Mortgage Loan and, if so, the other Mortgage Loans
contained in the related Cross-Collateralized Group;
(ix) whether the Mortgage Loan is an ARD Loan and, if so,
the Anticipated Repayment Date;
(x) whether such Mortgage Loan provides for defeasance
and, if so, the period during which defeasance may
occur;
(xi) whether the Mortgage Loan is secured by a fee simple
interest in the Mortgaged Property; by the Borrower's
leasehold interest, and a fee simple interest, in the
Mortgaged Property; or solely by a leasehold interest
in the Mortgaged Property;
(xii) the name of the originator of the Mortgage Loan; and
(xiii) the Interest Accrual Basis.
"Mortgage Loan Seller": _______________.
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"Mortgage Note": The original executed note evidencing the
indebtedness of a Borrower under a Mortgage Loan, together with any rider,
addendum or amendment thereto, or any renewal, substitution or replacement of
such note.
"Mortgage Pool": Collectively, all of the Mortgage Loans and
any successor REO Mortgage Loans as of any particular date of determination.
"Mortgage Rate": With respect to any Mortgage Loan (and any
successor REO Mortgage Loan), the annualized rate at which interest is scheduled
(in the absence of a default) to accrue on such Mortgage Loan from time to time
in accordance with the related Mortgage Note and applicable law, as such rate
may be modified in accordance with Section 3.20 or in connection with a
bankruptcy, insolvency or similar proceeding involving the related Borrower. In
the case of each of the ARD Loans, the related Mortgage Rate will be subject to
increase in accordance with the related Mortgage Note if the particular Mortgage
Loan is not paid in full by its Anticipated Repayment Date.
"Mortgaged Property": The real property (together with all
improvements and fixtures thereon) subject to the lien of a Mortgage and
constituting collateral for a Mortgage Loan.
"Net Aggregate Prepayment Interest Shortfall": With respect to
any Distribution Date, the amount, if any, by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred in connection with the receipt of
Principal Prepayments on the Mortgage Loans during the related Collection
Period, exceeds (b) the aggregate amount of the Compensating Interest Payment
remitted by the Master Servicer pursuant to Section 3.19(a) on the Master
Servicer Remittance Date related to such Distribution Date.
"Net Assumption Application Fee": As defined in Section 3.08.
"Net Assumption Fee": As defined in Section 3.08.
"Net Default Charges": With respect to any Mortgage Loan, any
Default Charges actually collected from the related Borrower or out of other
collections thereon (based on the allocations specified in Section 1.03), net of
any and all Advance Interest accrued on Advances made in respect of such
Mortgage Loan and payable from such Default Charges in accordance with this
Agreement.
"Net Investment Earnings": With respect to any Investment
Account for any Collection Period, the amount, if any, by which the aggregate of
all interest and other income realized during such Collection Period on funds
held in such Investment Account, exceeds the aggregate of all losses, if any,
incurred during such Collection Period in connection with the investment of such
funds in accordance with Section 3.06 (other than losses of what would otherwise
have constituted interest or other income earned on such funds).
"Net Investment Loss": With respect to any Investment Account
for any Collection Period, the amount by which the aggregate of all losses, if
any, incurred during such Collection Period in connection with the investment of
funds held in such Investment Account in accordance with Section 3.06 (other
than losses of what would otherwise have constituted interest or other income
earned on such funds), exceeds the aggregate of all interest and other income
realized during such Collection Period on such funds; provided that, in the case
of any Investment Account and any particular investment of funds in such
Investment Account, Net Investment Loss shall not include any loss with respect
to such investment which is incurred
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solely as a result of the insolvency of the federal or state chartered
depository institution or trust company that holds such Investment Account, so
long as such depository institution or trust company satisfied the
qualifications set forth in the definition of Eligible Account at the time such
investment was made.
"Net Operating Income": With respect to any Mortgaged
Property, the net operating income derived from such Mortgaged Property for any
specified period, calculated in accordance with Exhibit K.
"NOI Adjustment Worksheet": A report prepared by the Special
Servicer with respect to Specially Serviced Mortgaged Loans and REO Mortgage
Loans, and by the Master Servicer with respect to all other Mortgage Loans,
substantially in the form and containing the information described in Exhibit
E-7 attached hereto, presenting the computations made in accordance with the
methodology described in such Exhibit to "normalize" the full year net operating
income and debt service coverage numbers used in the other reports required by
this Agreement.
"Nonrecoverable Advance": Any Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance.
"Nonrecoverable P&I Advance": As evidenced by the Officer's
Certificate and supporting documentation contemplated by Section 4.03(c), any
P&I Advance previously made or to be made in respect of any Mortgage Loan or any
REO Mortgage Loan that, as determined by the Master Servicer or, if applicable,
the Trustee or any Fiscal Agent, in its reasonable, good faith judgment, will
not be ultimately recoverable from late payments, Insurance Proceeds,
Liquidation Proceeds or any other recovery on or in respect of such Mortgage
Loan.
"Nonrecoverable Servicing Advance": As evidenced by the
Officer's Certificate and supporting documentation contemplated by Section
3.11(h), any Servicing Advance previously made or to be made in respect of a
Mortgage Loan or REO Property that, as determined by the Master Servicer, the
Special Servicer or, if applicable, the Trustee or any Fiscal Agent, in its
reasonable, good faith judgment, will not be ultimately recoverable from late
payments, Insurance Proceeds, Liquidation Proceeds or any other recovery on or
in respect of such Mortgage Loan or REO Property.
"Non-Registered Certificate": Any Certificate that has not
been registered under the Securities Act. As of the Closing Date, the Class B-3,
Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class C, Class D, Class
E, Class R-I, Class R-II and Class R-III Certificates will constitute
Non-Registered Certificates.
"Non-United States Person": Any Person other than a United
States Person.
"Officer's Certificate": A certificate signed by a Servicing
Officer of the Master Servicer or the Special Servicer or a Responsible Officer
of the Trustee or any Fiscal Agent, as the case may be.
"Operating Statement Analysis Report": As defined in Section
3.12(b).
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"Opinion of Counsel": A written opinion of counsel (which
counsel, in the case of any such opinion of counsel relating to the taxation of
the Trust Fund or any portion thereof or the status of any REMIC Pool as a REMIC
or the status of either Grantor Trust Pool as a Grantor Trust for taxation
purposes, shall be Independent of the Depositor, the Mortgage Loan Seller, the
Master Servicer, the Special Servicer, the Trustee, any Fiscal Agent and the Tax
Administrator, but which may act as counsel to such Person) acceptable to and
delivered to the addressee(s) thereof and which Opinion of Counsel, except as
provided herein, shall not be at the expense of the Trustee or the Tax
Administrator.
"Original Mortgage Loans": Collectively, those Mortgage Loans
identified on the Mortgage Loan Schedule as being included in the Trust Fund as
of the Closing Date.
"OTS": The Office of Thrift Supervision or any successor
thereto.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate as the Holder thereof and any other
interest therein, whether direct or indirect, legal or beneficial, as owner or
as pledgee.
"P&I Advance": As to any Mortgage Loan or REO Mortgage Loan,
any advance made by the Master Servicer, the Trustee or any Fiscal Agent
pursuant to Section 4.03.
"P&I Advance Date": The Business Day preceding each
Distribution Date.
"Pass-Through Rate": The per annum rate at which interest
accrues in respect of any Class of Regular Interest Certificates during any
Interest Accrual Period, as set forth in or otherwise calculated in accordance
with Section 2.13(f).
"Percentage Interest": With respect to any Regular Interest
Certificate, the portion of the relevant Class evidenced by such Certificate,
expressed as a percentage, the numerator of which is the Certificate Principal
Balance or Certificate Notional Amount, as the case may be, of such Certificate
as of the Closing Date, as specified on the face thereof, and the denominator of
which is the Class Principal Balance or Class Notional Amount, as the case may
be, of the relevant Class as of the Closing Date. With respect to a Class E
Certificate or Residual Interest Certificate, the percentage interest in
distributions to be made with respect to the relevant Class, as stated on the
face of such Certificate.
"Performing Mortgage Loan": Any Corrected Mortgage Loan and
any Mortgage Loan as to which a Servicing Transfer Event has not occurred.
"Permitted Investments": Any one or more of the following
obligations or securities:
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and
interest by, the United States or any agency or
instrumentality thereof, provided that each such
obligation is backed by the full faith and credit of
the United States;
(ii) repurchase agreements on obligations specified in
clause (i), provided that the short- term unsecured
debt obligations of the party agreeing to repurchase
such obligations are at the time of investment rated
in the highest short-term debt rating category of
each of _____________ and, if rated thereby,
_______________ (or, in the case of
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either Rating Agency, have such lower rating as will
not result in an Adverse Rating Event with respect to
any Class of Rated Certificates, as confirmed in
writing to the Trustee by such Rating Agency);
(iii) federal funds, uncertificated certificates of
deposit, time deposits and bankers' acceptances of
any bank or trust company organized under the laws of
the United States or any state thereof, provided that
the short-term unsecured debt obligations of
such bank or trust company are at the time of
investment rated in the highest short-term debt
rating category of each of _____________ and, if
rated thereby, _______________ (or, in the case of
either Rating Agency, have such lower rating as will
not result in an Adverse Rating Event with respect to
any Class of Rated Certificates, as confirmed in
writing to the Trustee by such Rating Agency);
(iv) commercial paper of any corporation incorporated
under the laws of the United States or any state
thereof (or of any corporation not so incorporated,
provided that the -------- commercial paper is United
States Dollar denominated and amounts payable
thereunder are not subject to any withholding imposed
by any non-United States jurisdiction), provided that
such commercial paper is rated in the highest
short-term debt rating category of each of
_____________ and, if rated thereby, _______________
(or, in the case of either Rating Agency, has such
lower rating as will not result in an Adverse Rating
Event with respect to any Class of Rated
Certificates, as confirmed in writing to the Trustee
by such Rating Agency);
(v) units of money market funds which maintain a constant
net asset value, provided that such units of money
market funds are rated in the highest applicable
rating category of each of _____________ and, if
rated thereby, _______________ (or, in the case of
either Rating Agency, have such lower rating as will
not result in an Adverse Rating Event with respect to
any Class of Rated Certificates, as confirmed in
writing to the Trustee by such Rating Agency); or
(vi) any other obligation or security that is acceptable
to the Rating Agencies and will not result in an
Adverse Rating Event with respect to any Class of
Rated Certificates (as confirmed in writing to the
Trustee by each Rating Agency);
provided that (A) no investment described hereunder shall evidence either the
right to receive (1) only interest with respect to such investment or (2) a
yield to maturity greater than 120% of the yield to maturity at par of the
underlying obligations, (B) no investment described hereunder may be purchased
at a price greater than par if such investment may be prepaid or called at a
price less than its purchase price prior to stated maturity, (C) no investment
described hereunder may be sold prior to stated maturity if such sale would
result in a loss of principal on the instrument or a tax on "prohibited
transactions" under Section 860F of the Code and (D) no investment described
hereunder may have a "r" highlighter or other comparable qualifier attached to
its rating; provided, further, that each investment described hereunder must
have (X) a predetermined fixed amount of principal due at maturity (that cannot
vary or change), (Y) an original maturity of not more than 365 days and a
remaining maturity of not more than 30 days and (Z) except in the case of a
Permitted Investment described in clause (v) above, a fixed interest rate or an
interest rate that is tied to a single interest rate index plus a single fixed
spread; and provided, further, that each investment described hereunder must be
a "cash flow investment" (within the meaning of the REMIC Provisions).
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"Permitted Transferee": Any Transferee of a Residual Interest
Certificate other than either a Disqualified Organization or a Non-United States
Person; provided that if a Transferee is classified as a partnership under the
Code, such Transferee shall only be a Permitted Transferee if all of its
beneficial owners are United States Persons.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Phase I Environmental Assessment": A "Phase I assessment" as
described in and meeting the criteria of Chapter 5 of Part II of the FNMA
Multifamily Guide, as amended from time to time.
"Plan": As defined in Section 5.02(c).
"Plurality Residual Interest Certificateholder": As to any
taxable year of any REMIC Pool, the Holder of Certificates evidencing the
largest Percentage Interest in the Class of Residual Interest Certificates
constituting the sole class of "residual interests" in respect of such REMIC
Pool.
"Prepayment Assumption": For purposes of determining the
accrual of original issue discount, market discount and premium, if any, on the
Mortgage Loans, the Regular Interests, the REMIC I Regular Interests, the REMIC
II Regular Interests and the Certificates for federal income tax purposes, the
assumptions that each ARD Loan is paid in its entirety on its Anticipated
Prepayment Date and that no Mortgage Loan is otherwise voluntarily prepaid prior
to its Stated Maturity Date.
"Prepayment Interest Excess": With respect to any Mortgage
Loan that was subject to a Principal Prepayment in full or in part made after
its Due Date in any Collection Period, any payment of interest (net of related
Master Servicing Fees and, further, net of any portion of such interest that
represents Default Interest or Additional Interest) actually collected from the
related Borrower and intended to cover the period from and after such Due Date
to, but not including, the date of prepayment (exclusive, however, of any
related Prepayment Premium or Yield Maintenance Charge that may have been
collected).
"Prepayment Interest Shortfall": With respect to any Mortgage
Loan that was subject to a Principal Prepayment in full or in part made prior to
its Due Date in any Collection Period, the amount of interest, to the extent not
collected from the related Borrower (without regard to any Prepayment Premium or
Yield Maintenance Charge that may have been collected), that would have accrued
on the amount of such Principal Prepayment during the period from the date of
prepayment to, but not including, such Due Date (less the amount of related
Master Servicing Fees and, if applicable, exclusive of Default Interest and
Additional Interest).
"Prepayment Premium": With respect to any Mortgage Loan, any
premium, penalty or fee paid or payable, as the context requires, by a Borrower
in connection with a Principal Prepayment on, or other early collection of
principal of, a Mortgage Loan or any successor REO Mortgage Loan, to the extent
such premium, penalty or fee is calculated as a percentage of the principal
amount being prepaid or as a specified amount.
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"Primary Servicing Office": The office of the Master Servicer
or the Special Servicer, as the context may require, that is primarily
responsible for such party's servicing obligations hereunder.
"Prime Rate": The "prime rate" published in the "Money Rates"
section of The Wall Street Journal, as such "prime rate" may change from time to
time. If The Wall Street Journal ceases to publish the "prime rate", then the
Trustee, in its sole discretion, shall select an equivalent publication that
publishes such "prime rate"; and if such "prime rate" is no longer generally
published or is limited, regulated or administered by a governmental or quasi-
governmental body, then the Trustee shall select a comparable interest rate
index. In either case, such selection shall be made by the Trustee in its sole
discretion and the Trustee shall notify the Master Servicer and the Special
Servicer in writing of its selection.
"Principal Balance Certificate": Any of the Certificates
designated as such in Section 2.08.
"Principal Balance Reduction": Any reduction made in the Class
Principal Balance of any Class of Principal Balance Certificates pursuant to
Section 4.04(a), the Uncertificated Principal Balance of any REMIC II Regular
Interest pursuant to Section 4.04(b) or the Uncertificated Principal Balance of
any REMIC I Regular Interest pursuant to Section 4.04(c).
"Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the aggregate (without duplication) of the
following:
(a) all payments of principal (other than Principal
Prepayments) received on the Mortgage Loans during the related Collection
Period, in each case net of any portion of the particular payment that
represents a Late Collection of principal for which a P&I Advance was previously
made for a prior Distribution Date or that represents the principal portion of a
Monthly Payment due on or before the Cut-off Date or on a Due Date subsequent to
the related Collection Period;
(b) all scheduled payments of principal due in respect of the
Mortgage Loans for their respective Due Dates occurring during the related
Collection Period that were received (other than as part of a Principal
Prepayment) prior to the related Collection Period;
(c) all Principal Prepayments received on any of the Mortgage
Loans during the related Collection Period;
(d) all Liquidation Proceeds and Insurance Proceeds received
on any of the Mortgage Loans during the related Collection Period that were
identified and applied by the Master Servicer as recoveries of principal of such
Mortgage Loans in accordance with Section 1.03, in each case net of any portion
of such proceeds that represents a Late Collection of principal due on or before
the Cut-off Date or for which a P&I Advance was previously made for a prior
Distribution Date;
(e) all Liquidation Proceeds, Insurance Proceeds and REO
Revenues received in respect of any REO Properties during the related Collection
Period that were identified and applied by the Master Servicer as recoveries of
principal of the related REO Mortgage Loans in accordance with Section 1.03, in
each case net of any portion of such proceeds and/or revenues that represents a
Late Collection of principal due on or before the Cut-off Date or for which a
P&I Advance was previously made for a prior Distribution Date; and
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(f) the respective principal portions of all P&I Advances made
in respect of the Mortgage Loans and any REO Mortgage Loans with respect to such
Distribution Date.
"Principal Prepayment": Any voluntary payment of principal
made by the Borrower on a Mortgage Loan that is received in advance of its
scheduled Due Date, that is not accompanied by an amount of interest (without
regard to any Prepayment Premium, Yield Maintenance Charge and/or Additional
Interest that may have been collected) representing scheduled interest due on
any date or dates in any month or months subsequent to the month of prepayment.
"Proposed Plan": As defined in Section 3.17(a).
"Prospectus": The Base Prospectus and the Prospectus
Supplement, together.
"Prospectus Supplement": That certain prospectus supplement
dated _____________, relating to the Registered Certificates, that is a
supplement to the Base Prospectus.
"Purchase Price": With respect to any Mortgage Loan (or REO
Property), a cash price equal to the aggregate of (a) the outstanding principal
balance of such Mortgage Loan (or the related REO Mortgage Loan) as of the date
of purchase, (b) all accrued and unpaid interest on such Mortgage Loan (or the
related REO Mortgage Loan) at the related Mortgage Rate to, but not including,
the Due Date occurring in the Collection Period during which the applicable
purchase or repurchase occurs, (c) all related unreimbursed Servicing Advances,
and (d) solely in the case of a purchase by the Mortgage Loan Seller pursuant to
the Mortgage Loan Purchase and Sale Agreement, (i) all accrued and unpaid
Advance Interest in respect of related Advances, (ii) all related Special
Servicing Fees, whether paid or then owing, and (iii) to the extent not
otherwise included in the amount described in the preceding clause (c), any
costs and expenses incurred by the Master Servicer or the Trustee (on behalf of
the Trust) in enforcing the obligation of the Mortgage Loan Seller to purchase
such Mortgage Loan.
"Qualified Appraiser": In connection with the appraisal of any
Mortgaged Property or REO Property, an Independent MAI-designated appraiser with
at least five years of experience in respect of the relevant geographic location
and property type.
"Qualified Bidder": As defined in Section 7.01(c).
"Qualified Institutional Buyer": A "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act.
"Qualified Insurer": An insurance company or security or
bonding company qualified to write the related Insurance Policy in the relevant
jurisdiction.
"Qualifying Substitute Mortgage Loan": In connection with the
replacement of a Deleted Mortgage Loan as contemplated by Section 2.03, any
other mortgage loan which, on the date of substitution, (i) has a principal
balance, after deduction of the principal portion of any unpaid Monthly Payment
due on or before the date of substitution, not in excess of the Stated Principal
Balance of the Deleted Mortgage Loan; (ii) is accruing interest at a fixed rate
of interest at least equal to that of the Deleted Mortgage Loan; (iii) has the
same Due Date as, and a grace period for delinquent Monthly Payments that is no
longer than, the Due Date and grace period, respectively, of the Deleted
Mortgage Loan; (iv) is accruing interest on the
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same Interest Accrual Basis as the Deleted Mortgage Loan; (v) has a remaining
term to stated maturity not greater than, and not more than two years less than,
that of the Deleted Mortgage Loan and, in any event, has a Stated Maturity Date
not later than two years prior to the Rated Final Distribution Date; (vi) has a
then current Loan-to-Value Ratio not higher than, and a then current Debt
Service Coverage Ratio not lower than, the Loan-to-Value Ratio and Debt Service
Coverage Ratio, respectively, of the Deleted Mortgage Loan as of the Closing
Date; (vii) has comparable prepayment restrictions to those of the Deleted
Mortgage Loan, (viii) will comply (except in a manner that would not be adverse
to the interests of the Certificateholders (as a collective whole) in or with
respect to such mortgage loan), as of the date of substitution, with all of the
representations relating to the Deleted Mortgage Loan set forth in or made
pursuant to the Mortgage Loan Purchase and Sale Agreement; (ix) has a Phase I
Environmental Assessment relating to the related Mortgaged Property in its
Servicing File, which Phase I Environmental Assessment will evidence that there
is no material adverse environmental condition or circumstance at the related
Mortgaged Property for which further remedial action may be required under
applicable law; and (x) constitutes a "qualified replacement mortgage" within
the meaning of Section 860G(a)(4) of the Code; provided, however, that if more
than one mortgage loan is to be substituted for any Deleted Mortgage Loan, then
all such proposed Replacement Mortgage Loans shall, in the aggregate, satisfy
the requirement specified in clause (i) of this definition and each such
proposed Replacement Mortgage Loan shall, individually, satisfy each of the
requirements specified in clauses (ii) through (x) of this definition; and
provided, further, that no mortgage loan shall be substituted for a Deleted
Mortgage Loan unless (x) such prospective Replacement Mortgage Loan shall be
acceptable to the Controlling Class Representative (or, if there is no
Controlling Class Representative then serving, to the Holders of Certificates
representing a majority of the Voting Rights allocated to the Controlling
Class), in its (or their) sole discretion, and (y) each Rating Agency shall have
confirmed in writing to the Trustee that such substitution will not in and of
itself result in an Adverse Rating Event with respect to any Class of Rated
Certificates (such written confirmation to be obtained by the party (i.e., or )
effecting the substitution). It is understood and agreed that the Controlling
Class Representative (or, if no Controlling Class Representative is then
serving, the Holders of Certificates representing a majority of the Voting
Rights assigned to the Controlling Class) could find a prospective Replacement
Mortgage Loan unacceptable for any reason or no reason whatsoever.
"Rated Certificate": Any of the Certificates to which a rating
has been assigned by either Rating Agency at the request of the Depositor.
"Rated Final Distribution Date": The Distribution Date in
_______________.
"Rating Agency": _______________________.
"Realized Loss": With respect to: (1) each defaulted Mortgage
Loan as to which a Final Recovery Determination has been made, or with respect
to any successor REO 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 (a) the unpaid principal balance of such Mortgage Loan or REO Mortgage
Loan, as the case may be, as of the commencement of the Collection Period in
which the Final Recovery Determination was made, plus (b) without taking into
account the amount described in subclause (1)(c) of this definition, all unpaid
interest accrued in respect of such Mortgage Loan or REO Mortgage Loan, as the
case may be, to but not including the related Due Date in the Collection Period
in which the Final Recovery Determination was made (exclusive, however, of any
portion of such unpaid interest that constitutes Default Interest or, in the
case of an ARD Loan after its Anticipated Repayment Date, Additional Interest),
minus (c) all payments and proceeds, if any, received in respect of such
Mortgage Loan or REO Mortgage Loan, as the case may
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be, during the Collection Period in which such Final Recovery Determination was
made (net of any related Servicing Advances reimbursed therefrom and any related
Liquidation Expenses paid therefrom); (2) each defaulted Mortgage Loan as to
which any portion of the principal or past due interest payable thereunder was
canceled in connection with a bankruptcy, insolvency or similar proceeding
involving the related Borrower or a modification, waiver or amendment of such
Mortgage Loan granted or agreed to by the Master Servicer or the Special
Servicer pursuant to Section 3.20, the amount of such principal or past due
interest (other than any Default Interest and, in the case of an ARD Loan after
its Anticipated Repayment Date, Additional Interest) so canceled; and (3) each
defaulted Mortgage Loan as to which the Mortgage Rate thereon has been
permanently reduced and not recaptured for any period in connection with a
bankruptcy, insolvency or similar proceeding involving the related Borrower or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Master Servicer or the Special Servicer pursuant to Section 3.20, the amount
of any consequent reduction in the interest portion of each successive Monthly
Payment due thereon (each such Realized Loss to be deemed to have been incurred
on the Due Date for each affected Monthly Payment).
"Record Date": With respect to any Distribution Date, the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"Registered Certificate": Any Certificate that has been
registered under the Securities Act. As of the Closing Date, the Class S, Class
A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class B-1 and Class B-2
Certificates constitute Registered Certificates.
"Regular Interest Certificate": Any of the Certificates
designated as such in Section 2.08.
"Reimbursement Rate": The rate per annum applicable to the
accrual and monthly compounding of Advance Interest, which rate per annum is
equal to the Prime Rate.
"REMIC": A "real estate mortgage investment conduit" as
defined in Section 860D of the Code.
"REMIC I": The segregated pool of assets designated as such in
Section 2.09(a)
"REMIC I Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and,
in each such case, designated as a "regular interest" in REMIC I. The REMIC I
Regular Interests have the designations and terms provided for in Section 2.09.
"REMIC I Remittance Rate": The per annum rate at which
interest accrues in respect of any REMIC I Regular Interest during any Interest
Accrual Period, as set forth in or otherwise calculated in accordance with
Section 2.09(f).
"REMIC I Residual Interest": The sole uncertificated "residual
interest", within the meaning of Section 860G(a)(2) of the Code, in REMIC I
issued pursuant to this Agreement.
"REMIC II": The segregated pool of assets designated as such
in Section 2.11(a).
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"REMIC II Regular Interest": Any of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder
and, in each such case, designated as a "regular interest" in REMIC II. The
REMIC II Regular Interests have the designations and terms provided for in
Section 2.11.
"REMIC II Remittance Rate": The per annum rate at which
interest accrues in respect of any REMIC II Regular Interest during any Interest
Accrual Period, as set forth in or otherwise calculated in accordance with
Section 2.11(f).
"REMIC III": The segregated pool of assets designated as such
in Section 2.13(a).
"REMIC III Certificate": Any of the Certificates designated as
such in Section 2.08.
"REMIC Pool": Any of REMIC I, REMIC II and REMIC III.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and proposed, temporary and final Treasury regulations and any
published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.
"REMIC Sub-Account": A sub-account of the Distribution Account
established pursuant to Section 3.04(b), which sub-account shall constitute an
asset of the Trust Fund and REMIC I, but not an asset of either Grantor Trust
Pool.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code.
"REO Account": A segregated custodial account or accounts
created and maintained by the Special Servicer pursuant to Section 3.16(b) on
behalf of the Trustee in trust for the Certificateholders, which shall be
entitled "________________________ [or the name of any successor Special
Servicer], as Special Servicer, in trust for the registered holders of Greenwich
Capital Commercial Funding Corp., Commercial Mortgage Pass-Through Certificates,
Series _______________".
"REO Acquisition": The acquisition of any REO Property
pursuant to Section 3.09.
"REO Disposition": The sale or other disposition of any REO
Property pursuant to Section 3.18(d).
"REO Extension": As defined in Section 3.16(a).
"REO Mortgage Loan": The mortgage loan deemed for purposes
hereof to be outstanding with respect to each REO Property. Each REO Mortgage
Loan shall be deemed to provide for monthly payments of principal and/or
interest equal to its Assumed Monthly Payment and otherwise to have the same
terms and conditions as its predecessor Mortgage Loan (such terms and conditions
to be applied without regard to the default on such predecessor Mortgage Loan or
the Trust's acquisition of the subject REO Property). Each REO Mortgage Loan
shall be deemed to have an initial unpaid principal balance and Stated Principal
Balance equal to the unpaid principal balance and Stated Principal Balance,
respectively, of its
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predecessor Mortgage Loan as of the date of the related REO Acquisition. All
Monthly Payments (other than any Balloon Payment), Assumed Monthly Payments (in
the case of a Balloon Mortgage Loan delinquent in respect of its Balloon
Payment) and other amounts due and owing, or deemed to be due and owing, in
respect of the predecessor Mortgage Loan as of the date of the related REO
Acquisition, shall be deemed to continue to be due and owing in respect of an
REO Mortgage Loan. In addition, all amounts payable or reimbursable to the
Master Servicer, the Special Servicer, the Trustee or any Fiscal Agent in
respect of the predecessor Mortgage Loan as of the date of the related REO
Acquisition, including any unpaid or unreimbursed Servicing Fees and Advances
(together with any related unpaid Advance Interest), shall continue to be
payable or reimbursable in the same priority and manner pursuant to Section
3.05(a) to the Master Servicer, the Special Servicer, the Trustee or any Fiscal
Agent, as the case may be, in respect of an REO Mortgage Loan.
"REO Property": A Mortgaged Property acquired by the Special
Servicer on behalf of the Trust for the benefit of the Certificateholders
through foreclosure, acceptance of a deed in lieu of foreclosure or otherwise in
accordance with applicable law in connection with the default or imminent
default of a Mortgage Loan.
"REO Revenues": All income, rents, profits and proceeds
derived from the ownership, operation or leasing of any REO Property.
"REO Status Report": A report substantially in the form and
containing the information described in Exhibit E-9 attached hereto, including,
with respect to each REO Property that was included in the Trust Fund as of the
close of business on the Determination Date immediately preceding the
preparation of such report, among other things, (i) the Acquisition Date of such
REO Property, (ii) the amount of income collected with respect to such REO
Property (net of related expenses) and other amounts, if any, received on such
REO Property during the related Collection Period and (iii) the value of the REO
Property based on the most recent appraisal or other valuation thereof available
to the Special Servicer as of such Determination Date (including any valuation
prepared internally by the Special Servicer).
"REO Tax": As defined in Section 3.17(a).
"Replacement Mortgage Loan": Any mortgage loan that is
substituted by the Mortgage Loan Seller for a Deleted Mortgage Loan as
contemplated by Section 2.03.
"Request for Release": A request signed by a Servicing Officer
of, as applicable, the Master Servicer in the form of Exhibit D-1 attached
hereto or the Special Servicer in the form of Exhibit D-2 attached hereto.
"Required Appraisal Loan": As defined in Section 3.19(c).
"Reserve Account": Any of the accounts established and
maintained pursuant to Section 3.03(d).
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"Reserve Funds": With respect to any Mortgage Loan, any
amounts delivered by the related Borrower to be held in escrow by or on behalf
of the mortgagee representing: (i) reserves for repairs, replacements, capital
improvements and/or environmental testing and remediation with respect to the
related Mortgaged Property; (ii) reserves for tenant improvements and leasing
commissions; (iii) reserves for debt service; or (iv) amounts to be applied as a
Principal Prepayment on such Mortgage Loan or held as Additional Collateral in
the event that certain leasing or other economic criteria in respect of the
related Mortgaged Property are not met.
"Residual Interest Certificate": Any of the Certificates
designated as such in Section 2.08.
"Responsible Officer": When used with respect to the Trustee,
the President, the Treasurer, the Secretary, any Vice President, any Assistant
Vice President, any Trust Officer, any Assistant Secretary or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and having direct responsibility for the
administration of this Agreement. When used with respect to any Fiscal Agent or
any Certificate Registrar (other than the Trustee), any officer or assistant
officer thereof.
"Restricted Servicer Reports": Each of the Watch List, the
Operating Statement Analysis Report, the NOI Adjustment Worksheet and the
Comparative Financial Status Report.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Certificate": Any of the Certificates designated as
such in Section 2.08.
"Senior Principal Distribution Cross-Over Date": The first
Distribution Date as of which the Class Principal Balance of the Class A-1
Certificates outstanding immediately prior thereto equals or exceeds the sum of
(a) the aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following such Distribution Date, plus (b) the lesser of
(i) the Principal Distribution Amount for such Distribution Date and (ii) the
portion of the Available Distribution Amount for such Distribution Date that
will remain after all distributions of Distributable Certificate Interest to be
made on the Senior Certificates on such Distribution Date have been so made.
"Servicer Fee Amount": With respect to each Sub-Servicer and
any date of determination, the aggregate of the products obtained by
multiplying, for each Mortgage Loan serviced by such Sub- Servicer, (a) the
principal balance of such Mortgage Loan as of the end of the immediately
preceding Collection Period and (b) the per annum servicing fee rate specified
in the related Sub-Servicing Agreement for such Mortgage Loan. With respect to
the initial Master Servicer and any date of determination, the aggregate of the
products obtained by multiplying, for each Mortgage Loan, (a) the principal
balance of such Mortgage Loan as of the end of the immediately preceding
Collection Period and (b) the excess, if any, of the Master Servicing Fee Rate
for such Mortgage Loan over the per annum servicing fee rate (if any) applicable
to such Mortgage Loan as specified in any Sub-Servicing Agreement related to
such Mortgage Loan.
"Servicing Account": Any of the accounts established and
maintained pursuant to Section 3.03(a).
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"Servicing Advances": All customary, reasonable and necessary
"out-of-pocket" costs and expenses paid or to be paid, as the context requires,
out of its own funds, by the Master Servicer or the Special Servicer (or, if
applicable, the Trustee or any Fiscal Agent) in connection with the servicing of
a Mortgage Loan after a default, delinquency or other unanticipated event, or in
connection with the administration of any REO Property, including (1) any such
costs and expenses associated with (a) compliance with the obligations of the
Master Servicer and/or the Special Servicer set forth in Sections 2.02(e),
2.03(b), 2.03(c), 3.03(c) and 3.09, (b) the preservation, insurance,
restoration, protection and management of a Mortgaged Property, including the
cost of any "force placed" insurance policy purchased by the Master Servicer or
the Special Servicer to the extent such cost is allocable to a particular
Mortgaged Property that the Master Servicer or the Special Servicer is required
to cause to be insured pursuant to Section 3.07(a), (c) obtaining any
Liquidation Proceeds or Insurance Proceeds in respect of any such Mortgage Loan
or any REO Property, (d) any enforcement or judicial proceedings with respect to
any such Mortgage Loan, including foreclosures and similar proceedings, (e) the
operation, management, maintenance and liquidation of any REO Property, (f)
obtaining any Appraisal required to be obtained hereunder, and (g) UCC filings
(to the extent that the costs thereof are not reimbursed by the related
Borrower), (2) the reasonable and direct out-of-pocket travel expenses incurred
by the Special Servicer in connection with performing inspections pursuant to
Section 3.12(a), (3) the cost of any Opinion of Counsel expressly required to be
obtained hereunder in connection with the servicing of any particular Mortgage
Loan, to the extent that the related Borrower fails to pay the costs thereof,
and (4) any other expenditure which is expressly designated as a Servicing
Advance herein; provided that notwithstanding anything to the contrary,
"Servicing Advances" shall not include (A) allocable overhead of the Master
Servicer or the Special Servicer, such as costs for office space, office
equipment, supplies and related expenses, employee salaries and related expenses
and similar internal costs and expenses, or (B) costs incurred by either such
party or any Affiliate thereof in connection with its purchase of any Mortgage
Loan or REO Property pursuant to any provision of this Agreement.
"Servicing Fees": With respect to any Mortgage Loan, the
Master Servicing Fee and the Special Servicing Fee.
"Servicing File": Any documents (other than documents required
to be part of the related Mortgage File, but including any correspondence file)
in the possession of the Master Servicer or the Special Servicer and relating to
the origination and servicing of any Mortgage Loan or the administration of any
REO Property.
"Servicing Officer": Any officer or employee of the Master
Servicer or the Special Servicer involved in, or responsible for, the
administration and servicing of the Mortgage Loans, whose name and specimen
signature appear on a list of servicing officers furnished by such party to the
Trustee and the Depositor on the Closing Date, as such list may be amended from
time to time by the Master Servicer or the Special Servicer, as applicable.
"Servicing Released Bid": As defined in Section 7.01(c).
"Servicing Retained Bid": As defined in Section 7.01(c).
"Servicing Return Date": With respect to any Corrected
Mortgage Loan, the date that servicing thereof is returned by the Special
Servicer to the Master Servicer pursuant to Section 3.21(a).
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"Servicing Standard": With respect to each of the Master
Servicer and the Special Servicer, subject to applicable law and the express
terms of the relevant Mortgage Loans, to service and administer the Mortgage
Loans and REO Properties for which it is responsible hereunder: (a) with the
same care, skill and diligence as is normal and usual in its general mortgage
servicing and REO property management activities on behalf of third parties or
on behalf of itself, whichever is higher, with respect to mortgage loans and REO
properties that are comparable to those for which it is responsible hereunder;
(b) with a view to the timely collection of all scheduled payments of principal
and interest under the Mortgage Loans, the full collection of all Prepayment
Premiums and Yield Maintenance Charges that may become payable under the
Mortgage Loans and, in the case of the Special Servicer, if a Mortgage Loan
comes into and continues in default and if, in the good faith and reasonable
judgment of the Special Servicer, no satisfactory arrangements can be made for
the collection of the delinquent payments (including payments of Prepayment
Premiums and Yield Maintenance Charges), the maximization of the recovery on
such Mortgage Loan to the Certificateholders (as a collective whole) on a
present value basis (the relevant discounting of anticipated collections that
will be distributable to Certificateholders to be performed at the related
Mortgage Rate); and (c) without regard to: (i) any known relationship that the
Master Servicer (or any Affiliate thereof) or the Special Servicer (or any
Affiliate thereof), as the case may be, may have with the related Borrower or
with any other party to this Agreement; (ii) the ownership of any Certificate by
the Master Servicer (or any Affiliate thereof) or the Special Servicer (or any
Affiliate thereof), as the case may be; (iii) any obligation of the Master
Servicer or the Special Servicer, as the case may be, to make Advances; (iv) the
right of the Master Servicer (or any Affiliate thereof) or the Special Servicer
(or any Affiliate thereof), as the case may be, to receive reimbursement of
costs, or the sufficiency of any compensation payable to it, hereunder or with
respect to any particular transaction; (v) any ownership by the Master Servicer
(or any Affiliate thereof) or the Special Servicer (or any Affiliate thereof),
as the case may be, of any other mortgage loans or real property or of the right
to service or manage for others any other mortgage loans or real property; and
(vi) any obligation of the Master Servicer (or any Affiliate thereof) or, if
ever applicable, the Special Servicer (or any Affiliate thereof), as the case
may be, as the Mortgage Loan Seller, to pay any indemnity or cure any Document
Defect or Breach with respect to, or to repurchase or replace, any Mortgage
Loan.
"Servicing Transfer Event": With respect to any Mortgage Loan,
the occurrence of any of the events described in clauses (a) through (i) of the
definition of "Specially Serviced Mortgage Loan".
"Specially Serviced Mortgage Loan": Any Mortgage Loan as to
which any of the following events has occurred:
(a) the related Borrower has failed to make when due any
Monthly Payment (including a Balloon Payment) or any
other payment required under the related Mortgage
Note or the related Mortgage(s), which failure
continues, or the Master Servicer determines, in its
reasonable, good faith judgment, will continue,
unremedied for 60 days; or
(b) if the Master Servicer or any of its Affiliates then
owns a material economic interest in the related
Borrower, the related Borrower has failed to make
when due any Monthly Payment (including a Balloon
Payment), which failure continues unremedied as of
the P&I Advance Date for the Distribution Date
related to the Collection Period in which such
Monthly Payment was due; or
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(c) the Master Servicer has determined, in its
reasonable, good faith judgment, that a default in
making a Monthly Payment (including a Balloon
Payment) or any other material payment required under
the related Mortgage Note or the related Mortgage(s)
is likely to occur within 30 days and either (i) the
related Borrower has requested a material
modification of the related Mortgage Loan (other than
a waiver of a "due-on-sale" clause permitted under
Section 3.08) or (ii) such default is likely to
remain unremedied for at least 60 days; or
(d) the Master Servicer has determined, in its
reasonable, good faith judgment, that a default,
other than as described in clause (a) or (b) above,
has occurred that may materially impair the value of
the related Mortgaged Property as security for the
Mortgage Loan, which default has continued unremedied
for the applicable cure period under the terms of the
Mortgage Loan (or, if no cure period is specified,
for 60 days); or
(e) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an
involuntary action against the related Borrower under
any present or future federal or state bankruptcy,
insolvency or similar law or 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 related Borrower and
such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(f) the related Borrower shall have consented to the
appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings of or relating to such Borrower or of or
relating to all or substantially all of its property;
or
(g) the related Borrower shall have admitted in writing
its inability to pay its debts generally as they
become due, filed a petition to take advantage of any
applicable insolvency or reorganization statute, made
an assignment for the benefit of its creditors, or
voluntarily suspended payment of its obligations; or
(h) the Master Servicer shall have received notice of the
commencement of foreclosure or similar proceedings
with respect to the related Mortgaged Property or
Properties;
provided, however, that a Mortgage Loan shall cease to be a Specially Serviced
Mortgage Loan, when a Liquidation Event has occurred in respect of such Mortgage
Loan, when the related Mortgaged Property has become an REO Property or, so long
as at such time no circumstance identified in clauses (a) through (i) above
exists that would cause the Mortgage Loan to continue to be characterized as a
Specially Serviced Mortgage Loan:
(w) with respect to the circumstances described in
clauses (a) and (b) above, if and when the related
Borrower has made three consecutive full and timely
Monthly Payments under the terms of such Mortgage
Loan (as such terms may be changed or modified in
connection with a bankruptcy or similar proceeding
involving the related Borrower
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or by reason of a modification, waiver or amendment
granted or agreed to by the Master Servicer or the
Special Servicer pursuant to Section 3.20);
(x) with respect to the circumstances described in
clauses (c), (e), (f) and (g) above, if and when such
circumstances cease to exist in the reasonable, good
faith judgment of the Special Servicer;
(y) with respect to the circumstances described in
clauses (d) and (i) above, if and when such default
is cured in the reasonable, good faith judgment of
the Special Servicer; and
(z) with respect to the circumstances described in clause
(h) above, if and when such proceedings are
terminated.
"Special Servicer": ____________________________ or its
successor in interest, in its capacity as special servicer hereunder, or any
successor Special Servicer appointed as herein provided.
"Special Servicing Fee": With respect to each Specially
Serviced Mortgage Loan and each REO Mortgage Loan, the fee designated as such
and payable to the Special Servicer pursuant to the first paragraph of Section
3.11(c).
"Special Servicing Fee Rate": With respect to each Specially
Serviced Mortgage Loan and each REO Mortgage Loan, _____% per annum.
"Startup Day": With respect to each REMIC Pool, the day
designated as such in Section 2.09(a) (in the case of REMIC I), Section 2.11(a)
(in the case of REMIC II) or Section 2.13(a) (in the case of REMIC III), as
applicable.
"Stated Maturity Date": With respect to any Mortgage Loan, the
Due Date specified in the related Mortgage Note (as in effect on the Closing
Date or, in the case of a Replacement Mortgage Loan, on the related date of
substitution) on which the last payment of principal is due and payable under
the terms of such Mortgage Note, without regard to any change in or modification
of such terms in connection with a bankruptcy or similar proceeding involving
the related Borrower or a modification, waiver or amendment of such Mortgage
Loan granted or agreed to by the Special Servicer pursuant to Section 3.20 and,
in the case of an ARD Loan, without regard to its Anticipated Repayment Date.
"Stated Principal Balance": With respect to any Mortgage Loan
(and any successor REO Mortgage Loan), a principal balance which (a) initially
shall equal the Cut-off Date Balance of such Mortgage Loan (or, in the case of
any Replacement Mortgage Loan, the unpaid principal balance thereof as of the
related date of substitution, after application of all payments of principal due
thereon on or before such date, whether or not received), and (b) shall be
permanently reduced on each subsequent Distribution Date (to not less than zero)
by (i) that portion, if any, of the Principal Distribution Amount for such
Distribution Date allocable to such Mortgage Loan (or successor REO Mortgage
Loan), and (ii) the principal portion of any
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Realized Loss incurred in respect of such Mortgage Loan (or successor REO
Mortgage Loan) during the related Collection Period; provided that, if a
Liquidation Event occurs in respect of any Mortgage Loan or REO Property, then
the "Stated Principal Balance" of such Mortgage Loan or of the related REO
Mortgage Loan, as the case may be, shall be zero commencing as of the
Distribution Date in the Collection Period next following the Collection Period
in which such Liquidation Event occurred.
"Subordinated Certificate": Any of the Certificates designated
as such in Section 2.08.
"Sub-Servicer": Any Person with which the Master Servicer or
the Special Servicer has entered into a Sub-Servicing Agreement.
"Sub-Servicing Agreement": The written contract between the
Master Servicer or the Special Servicer, on the one hand, and any Sub-Servicer,
on the other hand, relating to servicing and administration of Mortgage Loans as
provided in Section 3.22.
"Substitution Shortfall Amount": In connection with the
substitution of one or more Replacement Mortgage Loans for any Deleted Mortgage
Loan, the amount, if any, by which the Purchase Price for such Deleted Mortgage
Loan (calculated as if it were to be repurchased, instead of replaced, on the
relevant date of substitution), exceeds the initial Stated Principal Balance or
the initial aggregate Stated Principal Balance, as the case may be, of such
Replacement Mortgage Loan(s).
"Successful Bidder": As defined in Section 7.01(c).
"Tax Administrator": Any tax administrator appointed pursuant
to Section 10.03 (or, in the absence of any such appointment, the Trustee).
"Tax Matters Person": With respect to any REMIC Pool, the
Person designated as the "tax matters person" of such REMIC Pool in the manner
provided under Treasury regulation section 1.860F-4(d) and temporary Treasury
regulation section 301.6231(a)(7)-1T, which Person shall, pursuant to Section
10.01(b), be the Plurality Residual Interest Certificateholder in respect of the
related class of Residual Interest Certificates.
"Tax Returns": The federal income tax return on IRS Form 1066,
U.S. Real Estate Mortgage Investment Conduit Income (REMIC) Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holder of
REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be filed
on behalf of each REMIC Pool due to its classification as a REMIC under the
REMIC Provisions, together with any and all other information, reports or
returns that may be required to be furnished to the Certificateholders or filed
with the IRS under any applicable provisions of federal tax law or any other
governmental taxing authority under applicable state or local tax laws.
"Termination Price": As defined in Section 9.01.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit and Agreement": As defined in Section
5.02(d).
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"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer any
Ownership Interest in a Certificate.
"Treasury Rate": As defined in Section 4.01(b).
"Trust": The trust created hereby.
"Trustee": _______________________ or its successor in
interest, in its capacity as trustee hereunder, or any successor trustee
appointed as herein provided.
"Trustee Report": As defined in Section 4.02(a).
"Trustee's Fee": With respect to any Mortgage Loan or REO
Mortgage Loan, the fee designated as such and payable to the Trustee pursuant to
Section 8.05(a).
"Trustee's Fee Rate": _____% per annum.
"Trust Fund": Collectively, all of the assets of all the REMIC
Pools and Grantor Trust Pools.
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
"UCC Financing Statement": A financing statement executed and
filed pursuant to the Uniform Commercial Code, as in effect in any relevant
jurisdiction.
"Uncertificated Accrued Interest": The interest accrued from
time to time in respect of any REMIC I Regular Interest (calculated in
accordance with Section 2.09(g) hereof) or any REMIC II Regular Interest
(calculated in accordance with Section 2.11(g) hereof).
"Uncertificated Distributable Interest": With respect to any
REMIC I Regular Interest, for any Distribution Date, an amount of interest equal
to all Uncertificated Accrued Interest in respect of such REMIC I Regular
Interest for the related Interest Accrual Period, reduced (to not less than
zero) by that portion, if any, of any Net Aggregate Prepayment Interest
Shortfall for such Distribution Date that is allocable to the related Mortgage
Loan; and, with respect to any REMIC II Regular Interest, for any Distribution
Date, an amount of interest equal to all Uncertificated Accrued Interest in
respect of such REMIC II Regular Interest for the related Interest Accrual
Period, reduced (to not less than zero) by the product of (i) any Net Aggregate
Prepayment Interest Shortfall for such Distribution Date, multiplied by (ii) a
fraction, expressed as a decimal, the numerator of which is the Uncertificated
Accrued Interest in respect of such REMIC II Regular Interest for the related
Interest Accrual Period, and the denominator of which is the aggregate
Uncertificated Accrued Interest in respect of all the REMIC II Regular Interests
for the related Interest Accrual Period.
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"Uncertificated Principal Balance": The principal balance
outstanding from time to time of any REMIC I Regular Interest (calculated in
accordance with Section 2.09(e) hereof) or any REMIC II Regular Interest
(calculated in accordance with Section 2.11(e) hereof).
"Underwriter": ______________________.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate whose income from sources without the United States is includible in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust
(or, to the extent provided in the Treasury regulations, a trust if it was in
existence on August 20, 1996 and it elected to be treated as a United States
Person), all within the meaning of Section 7701(a)(30) of the Code.
"Unreimbursed Principal Balance Reduction": Any Principal
Balance Reduction made with respect to a Class of Principal Balance
Certificates, a REMIC II Regular Interest or a REMIC I Regular Interest for
which no distribution or deemed distribution of reimbursement has been made
pursuant to Section 4.01(a), Section 4.01(i) or Section 4.01(j), as applicable.
"Unrestricted Servicer Reports": Each of the Delinquent Loan
Status Report, the Historical Loan Modification Report, the Historical Loss
Estimate Report, the REO Status Report, the CMSA Loan Periodic Update File, the
CMSA Property File and the CMSA Loan Set-Up File.
"USAP": The Uniform Single Attestation Program for Mortgage
Bankers.
"USPAP": The Uniform Standards of Professional Appraisal
Practices.
"Voting Rights": The voting rights evidenced by the respective
Certificates. At all times during the term of this Agreement, 99.0% of the
Voting Rights shall be allocated among all the Classes of Principal Balance
Certificates in proportion to their respective Class Principal Balances, and
1.0% of the Voting Rights shall be allocated to the Class S Certificates. Voting
Rights allocated to a particular Class of Certificates shall be allocated among
such Certificates in proportion to the respective Percentage Interests evidenced
thereby.
"Warranting Party": As defined in Section 2.03(a).
"Watch List": For any Determination Date, a report
(substantially in the form of Exhibit E-10) of all Mortgage Loans that
constitute one of the following types of Mortgage Loans as of such Determination
Date (the "Watch List"): (i) a Mortgage Loan that has a then current Debt
Service Coverage Ratio that is less than 1.10x; (ii) a Mortgage Loan as to which
any required inspection of the related Mortgaged Property conducted by the
Master Servicer indicates a problem that the Master Servicer determines can
reasonably be expected to materially adversely affect the cash flow generated by
such Mortgaged Property; (iii) a Mortgage Loan as to which the Master Servicer
has actual knowledge of material damage or waste at the related Mortgaged
Property; (iv) a Mortgage Loan as to which it has come to the Master Servicer's
attention in the performance of its duties under this Agreement (without any
expansion of such duties by reason
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thereof) that any tenant occupying 25% or more of the space in the related
Mortgaged Property (A) has vacated such space (without being replaced by a
comparable tenant and lease) or (B) has declared bankruptcy; (v) a Mortgage Loan
that is at least 30 days delinquent in payment; and (vi) a Mortgage Loan that is
within 60 days of maturity. No later than one Business Day after each
Determination Date, the Special Servicer shall provide the Master Servicer with
any information in its possession regarding the Specially Serviced Mortgage
Loans necessary for preparation of the Watch List that is not in the possession
of the Master Servicer.
"Workout Fee": With respect to each Corrected Mortgage Loan,
the fee designated as such and payable to the Special Servicer pursuant to the
second paragraph of Section 3.11(c).
"Workout Fee Rate": With respect to each Corrected Mortgage
Loan, 1.0%.
"Yield Maintenance Certificates": The Class A-1, Class A-2,
Class A-3, Class A-4, Class A-5, Class B-1 and Class B-2 Certificates.
"Yield Maintenance Charge": With respect to any Mortgage Loan,
any premium, penalty or fee paid or payable, as the context requires, by a
Borrower in connection with a Principal Prepayment on, or other early collection
of principal of, a Mortgage Loan, other than any Prepayment Premium.
SECTION 1.02. General Interpretive Principles.
For purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(i) the terms defined in this Agreement have the meanings
assigned to them in this Agreement and include the plural as well as
the singular, and the use of any gender herein shall be deemed to
include the other gender;
(ii) accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with United States generally
accepted accounting principles as in effect from time to time;
(iii) references herein to "Articles", "Sections",
"Subsections", "Paragraphs" and other subdivisions without reference to
a document are to designated Articles, Sections, Subsections,
Paragraphs and other subdivisions of this Agreement;
(iv) a reference to a Subsection without further reference to
a Section is a reference to such Subsection as contained in the same
Section in which the reference appears, and this rule shall also apply
to Paragraphs and other subdivisions;
(v) the words "herein", "hereof", "hereunder", "hereto",
"hereby" and other words of similar import refer to this Agreement as a
whole and not to any particular provision;
(vi) "or" is not exclusive; and
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(vii) the terms "include" and "including" shall mean without
limitation by reason of enumeration.
SECTION 1.03. Certain Calculations in Respect of the Mortgage
Pool.
(a) All amounts collected in respect of any
Cross-Collateralized Group in the form of payments from Borrowers, Insurance
Proceeds and Liquidation Proceeds, shall be applied by the Master Servicer among
the Mortgage Loans constituting such Cross-Collateralized Group in accordance
with the express provisions of the related loan documents and, in the absence of
such express provisions, on a pro rata basis in accordance with the respective
amounts then "due and owing" as to each such Mortgage Loan. All amounts
collected in respect of or allocable to any particular Mortgage Loan (whether or
not such Mortgage Loan constitutes part of a Cross-Collateralized Group) in the
form of payments from Borrowers, Liquidation Proceeds or Insurance Proceeds
shall be applied to amounts due and owing under the related Mortgage Note and
Mortgage (including for principal and accrued and unpaid interest) in accordance
with the express provisions of the related Mortgage Note and Mortgage and, in
the absence of such express provisions or if and to the extent that such terms
authorize the lender to use its discretion, shall be applied for purposes of
this Agreement: first, as a recovery of any related and unreimbursed Servicing
Advances and, if applicable, unpaid Liquidation Expenses; second, as a recovery
of accrued and unpaid interest on such Mortgage Loan to, but not including, the
date of receipt (or, in the case of a full Monthly Payment from any Borrower,
through the related Due Date), exclusive, however, of any portion of such
accrued and unpaid interest that constitutes Default Interest or, in the case of
an ARD Loan after its Anticipated Repayment Date, that constitutes Additional
Interest; third, as a recovery of principal of such Mortgage Loan then due and
owing, including by reason of acceleration of the Mortgage Loan following a
default thereunder (or, if a Liquidation Event has occurred in respect of such
Mortgage Loan, as a recovery of principal to the extent of its entire remaining
unpaid principal balance); fourth, unless a Liquidation Event has occurred in
respect of such Mortgage Loan, as a recovery of amounts to be currently applied
to the payment of, or escrowed for the future payment of, real estate taxes,
assessments, insurance premiums, ground rents (if applicable) and similar items;
fifth, unless a Liquidation Event has occurred in respect of such Mortgage Loan,
as a recovery of Reserve Funds to the extent then required to be held in escrow;
sixth, as a recovery of any Prepayment Premium or Yield Maintenance Charge then
due and owing under such Mortgage Loan; seventh, as a recovery of any Default
Charges then due and owing under such Mortgage Loan; eighth, as a recovery of
any assumption fees and modification fees then due and owing under such Mortgage
Loan; ninth, as a recovery of any other amounts then due and owing under such
Mortgage Loan other than remaining unpaid principal and, in the case of an ARD
Loan after its Anticipated Repayment Date, other than Additional Interest;
tenth, as a recovery of any remaining principal of such Mortgage Loan to the
extent of its entire remaining unpaid principal balance; and, eleventh, in the
case of an ARD Loan after its Anticipated Repayment Date, as a recovery of
accrued and unpaid Additional Interest on such ARD Loan to but not including the
date of receipt.
(b) Collections in respect of each REO Property (exclusive of
amounts to be applied to the payment of the costs of operating, managing,
maintaining and disposing of such REO Property) shall be treated: first, as a
recovery of any related and unreimbursed Servicing Advances and, if applicable,
unpaid Liquidation Expenses; second, as a recovery of accrued and unpaid
interest on the related REO Mortgage Loan to, but not including, the Due Date in
the Collection Period of receipt, exclusive, however, of any portion of such
accrued and unpaid interest that constitutes Default Interest or, in the case of
an REO Mortgage Loan that relates to an ARD Loan after its Anticipated Repayment
Date, that constitutes Additional Interest; third, as a recovery of principal of
the related REO Mortgage Loan to the extent of its
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entire unpaid principal balance; fourth, as a recovery of any Prepayment Premium
or Yield Maintenance Charge deemed to be due and owing in respect of the related
REO Mortgage Loan; fifth, as a recovery of any other amounts deemed to be due
and owing in respect of the related REO Mortgage Loan (other than, in the case
of an REO Mortgage Loan that relates to an ARD Loan after its Anticipated
Repayment Date, accrued and unpaid Additional Interest); and sixth, in the case
of an REO Mortgage Loan that relates to an ARD Loan after its Anticipated
Repayment Date, any accrued and unpaid Additional Interest.
(c) For the purposes of this Agreement, Additional Interest on
an ARD Loan or a successor REO Mortgage Loan shall be deemed not to constitute
principal or any portion thereof and shall not be added to the unpaid principal
balance or Stated Principal Balance of such ARD Loan or successor REO Mortgage
Loan, notwithstanding that the terms of the related loan documents so permit. To
the extent any Additional Interest is not paid on a current basis, it shall be
deemed to be deferred interest.
(d) Insofar as amounts received in respect of any Mortgage
Loan or REO Property and allocable to fees and charges owing in respect of such
Mortgage Loan or the related REO Mortgage Loan, as the case may be, that
constitute Additional Master Servicing Compensation payable to the Master
Servicer and/or Additional Special Servicing Compensation payable to the Special
Servicer, are insufficient to cover the full amount of such fees and charges,
such amounts shall be allocated between such of those fees and charges as are
payable to the Master Servicer, on the one hand, and such of those fees and
charges as are payable to the Special Servicer, on the other, pro rata in
accordance with their respective entitlements.
(e) The foregoing applications of amounts received in respect
of any Mortgage Loan or REO Property shall be determined by the Master Servicer
and reflected in the appropriate monthly report from the Master Servicer and in
the appropriate monthly Trustee Report as provided in Section 4.02.
SECTION 1.04. Cross-Collateralized Mortgage Loans.
Notwithstanding anything herein to the contrary, it is hereby
acknowledged that the groups of Mortgage Loans identified on the Mortgage Loan
Schedule as being cross-collateralized with each other are, in the case of each
such particular group of Mortgage Loans, by their terms, cross-defaulted and
cross- collateralized with each other. For purposes of reference only in this
Agreement, and without in any way limiting the servicing rights and powers of
the Master Servicer and/or the Special Servicer, with respect to any
Cross-Collateralized Mortgage Loan (or successor REO Mortgage Loan), the
Mortgaged Property (or REO Property) that relates or corresponds thereto shall
be the property identified in the Mortgage Loan Schedule as corresponding
thereto. The provisions of this Agreement, including each of the defined terms
set forth in Section 1.01, shall be interpreted in a manner consistent with this
Section 1.04; provided that, if there exists with respect to any
Cross-Collateralized Group only one original of any document referred to in the
definition of "Mortgage File" covering all the Mortgage Loans in such
Cross-Collateralized Group, then the inclusion of the original of such document
in the Mortgage File for any of the Mortgage Loans constituting such
Cross-Collateralized Group shall be deemed an inclusion of such original in the
Mortgage File for each such Mortgage Loan.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES; ORIGINAL ISSUANCE OF REMIC I REGULAR INTERESTS,
REMIC II REGULAR INTERESTS,
CLASS S REMIC III REGULAR INTERESTS AND CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) It is the intention of the parties hereto that a common
law trust be established pursuant to this Agreement and, further, that such
trust be designated as "Greenwich Capital Commercial Funding Mortgage Trust
______________. __________________________ is hereby appointed, and does hereby
agree, to act as Trustee hereunder and, in such capacity, to hold the Trust Fund
in trust for the exclusive use and benefit of all present and future
Certificateholders. It is not intended that this Agreement create a partnership
or a joint-stock association.
(b) The Depositor, concurrently with the execution and
delivery hereof, does hereby sell, assign, transfer and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders, all the
right, title and interest of the Depositor in, to and under (i) the Original
Mortgage Loans, and all payments under and proceeds of such Mortgage Loans
received after the Closing Date (other than scheduled payments of interest and
principal due on or before the Cut-off Date), together with all documents
included in the related Mortgage Files and any related Additional Collateral;
(ii) any REO Property acquired in respect of any such Mortgage Loan; (iii) such
funds or assets as from time to time are deposited in the Collection Account,
the Distribution Account, the Interest Reserve Account and, if established, the
REO Account; (iv) Sections 2, 3(a), 3(b), 3(d), 4 and 12 (and, to the extent
related to the foregoing and applicable, under Sections 9, 10, 13, 14, 15, 16,
17 and 19) of the Mortgage Loan Purchase and Sale Agreement; and (v) all other
assets included or to be included in the Trust Fund. This conveyance is subject
to the right of the Designated Sub-Servicers to primary service certain of the
Original Mortgage Loans pursuant to the Designated Sub-Servicer Agreements.
(c) The conveyance of the Mortgage Loans and the related
rights and property accomplished hereby is absolute and is intended by the
parties hereto to constitute an absolute transfer of such Mortgage Loans, such
Interests and such other related rights and property by the Depositor to the
Trustee for the benefit of the Certificateholders. Furthermore, it is not
intended that such conveyance be deemed a pledge of security for a loan. If such
conveyance is deemed to be a pledge of security for a loan, however, the
Depositor intends that the rights and obligations of the parties to such loan
shall be established pursuant to the terms of this Agreement. The Depositor also
intends and agrees that, in such event, (i) this Agreement shall constitute a
security agreement under applicable law, (ii) the Depositor shall be deemed to
have granted to the Trustee (in such capacity) a first priority security
interest in all of the Depositor's right, title and interest in and to the
assets constituting the Trust Fund, including the Mortgage Loans subject hereto
from time to time, all principal and interest received on or with respect to
such Mortgage Loans after the Closing Date (other than scheduled payments of
interest and principal due and payable on such Mortgage Loans on or prior to the
Cut-off Date or, in the case of a Replacement Mortgage Loan, on or prior to the
related date of substitution), all amounts held from time to time in the
Collection Account, the Distribution Account, the Interest Reserve Account and,
if established, the REO Account and all reinvestment earnings on such amounts,
and all of the Depositor's right, title and interest under Sections 2, 3(a),
3(b), 3(d), 4 and
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12 (and, to the extent related to the foregoing, under Sections 9, 10, 13, 14,
15, 16, 17 and 19) of the Mortgage Loan Purchase Agreement, (iii) the possession
by the Trustee or its agent of the Mortgage Notes with respect to the Mortgage
Loans subject hereto from time to time and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" or possession by a purchaser or
person designated by such secured party for the purpose of perfecting such
security interest under applicable law, and (iv) notifications to, and
acknowledgments, receipts or confirmations from, Persons holding such property,
shall be deemed to be notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. The Depositor shall file or cause to be filed, as a
precautionary filing, a Form UCC-1 substantially in the form attached as Exhibit
J hereto in all appropriate locations in the State of New York promptly
following the initial issuance of the Certificates, and the Master Servicer
shall prepare and file at each such office, and the Trustee shall execute,
continuation statements with respect thereto, in each case within six months
prior to the fifth anniversary of the immediately preceding filing. The
Depositor shall cooperate in a reasonable manner with the Trustee and the Master
Servicer in preparing and filing such continuation statements. This Section
2.01(c) shall constitute notice to the Trustee pursuant to any requirements of
the UCC in effect in New York.
(d) In connection with the Depositor's assignment pursuant to
Section 2.01(b) above, the Depositor hereby represents and warrants that it has
requested the Mortgage Loan Seller, pursuant to the Mortgage Loan Purchase
Agreement, to deliver to and deposit with, or cause to be delivered to and
deposited with, the Trustee or a Custodian appointed thereby, on or before the
Closing Date, the Mortgage File and any Additional Collateral (other than
Reserve Funds) for each Original Mortgage Loan so assigned; provided that if, as
to any Mortgage Loan, there shall not have been delivered the original or a copy
of the related lender's title insurance policy referred to in the definition of
"Mortgage File" solely because such policy has not yet been issued, the delivery
obligations of the Mortgage Loan Seller as contemplated by this Article shall be
deemed to be satisfied as to such missing item, and such missing item shall be
deemed to have been included in the related Mortgage File, so long as (i) the
Mortgage Loan Seller shall have delivered to the Trustee on or before the
Closing Date a pro forma title policy or a commitment for title insurance
"marked-up" at the closing of such Mortgage Loan, and (ii) as of the date that
is 180 days following the Closing Date, the Mortgage Loan Seller has delivered
to the Trustee or a Custodian appointed thereby the original related lender's
title insurance policy. The Depositor shall deliver to the Trustee on or before
the Closing Date a fully executed counterpart of the Mortgage Loan Purchase and
Sale Agreement.
(e) As soon as reasonably possible, and in any event within 45
days after the later of (i) the Closing Date (or, in the case of a Replacement
Mortgage Loan substituted as contemplated by Section 2.03, after the related
date of substitution) and (ii) the date on which all recording information
necessary to complete the subject document is received by the Trustee, the
Trustee shall complete (to the extent necessary) and cause to be submitted for
recording or filing, as the case may be, in the appropriate office for real
property records or UCC Financing Statements, as applicable, each assignment of
Mortgage and assignment of Assignment of Leases in favor of the Trustee referred
to in clauses (iv) and (v) of the definition of "Mortgage File" that has been
received by the Trustee or a Custodian on its behalf and each UCC-2 and UCC-3 in
favor of the Trustee referred to in clause (viii) of the definition of "Mortgage
File" that has been received by the Trustee or a Custodian on its behalf. Each
such assignment shall reflect that it should be returned by the public recording
office to the Trustee following recording, and each such UCC-2 and UCC-3 shall
reflect that the file copy thereof should be returned to the Trustee following
filing; provided that in those instances where the public recording office
retains the original assignment of Mortgage or assignment of Assignment of
Leases the Trustee shall obtain therefrom a certified copy of the recorded
original. If any such
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document or instrument is lost or returned unrecorded or unfiled, as the case
may be, because of a defect therein, the Trustee shall direct the Mortgage Loan
Seller to prepare or cause to be prepared promptly, pursuant to the Mortgage
Loan Purchase and Sale Agreement, a substitute therefor or cure such defect, as
the case may be, and thereafter the Trustee shall, upon receipt thereof, cause
the same to be duly recorded or filed, as appropriate. The Depositor shall be
responsible for paying the fees and expenses of the Trustee in connection with
the foregoing, as more particularly provided for in that separate letter
agreement dated ____________________, between the Depositor and the Trustee.
(f) In connection with the Depositor's assignment pursuant to
Section 2.01(b) above, the Depositor hereby represents and warrants that it has
requested the Mortgage Loan Seller, pursuant to the Mortgage Loan Purchase
Agreement, to deliver to and deposit with, or cause to be delivered to and
deposited with, the Master Servicer, on or before the Closing Date, the
following items: (i) originals or copies of all financial statements,
appraisals, environmental/engineering reports, leases, rent rolls and tenant
estoppels in the possession or under the control of the Mortgage Loan Seller
that relate to the Original Mortgage Loans and, to the extent they are not
required to be a part of a Mortgage File in accordance with the definition
thereof, originals or copies of all documents, certificates and opinions in the
possession or under the control of the Mortgage Loan Seller that were delivered
by or on behalf of the related Borrowers in connection with the origination of
the Original Mortgage Loans; and (ii) all unapplied Reserve Funds and Escrow
Payments in respect of the Original Mortgage Loans. The Master Servicer shall
hold all such documents, records and funds on behalf of the Trustee in trust for
the benefit of the Certificateholders.
Also in connection with the Depositor's assignment pursuant to
Section 2.01(b) above, the Depositor shall deliver to and deposit with, or cause
to be delivered to and deposited with, the Master Servicer, on or before the
Closing Date, the original or a copy of any Group Environmental Insurance
Policy.
SECTION 2.02. Acceptance of Mortgage Assets by Trustee.
(a) Subject to the other provisions in this Section 2.02, the
Trustee, by its execution and delivery of this Agreement, hereby accepts
receipt, directly or through a Custodian on its behalf, of (i) the Original
Mortgage Loans and all documents delivered to it that constitute portions of the
related Mortgage Files, and (ii) all other assets delivered to it and included
in the Trust Fund, in good faith and without notice of any adverse claim, and
declares that it or a Custodian on its behalf holds and will hold such documents
and any other documents received by it that constitute portions of the Mortgage
Files, and that it holds and will hold the Original Mortgage Loans and such
other assets, together with any other Mortgage Loans and assets subsequently
delivered to it that are to be included in the Trust Fund, in trust for the
exclusive use and benefit of all present and future Certificateholders. The
Trustee or such Custodian shall hold any Letter of Credit in a custodial
capacity only and shall have no obligation to maintain, extend the term of,
enforce or otherwise pursue any rights under such Letter of Credit. In
connection with the foregoing, the Trustee hereby certifies to each of the other
parties hereto, the Mortgage Loan Seller and the Underwriter that, as to each
Original Mortgage Loan, except as specifically identified in the Schedule of
Exceptions to Mortgage File Delivery attached hereto as Exhibit B-2, (i) the
original Mortgage Note specified in clause (i) of the definition of "Mortgage
File" and all allonges thereto, if any, are in its possession or the possession
of a Custodian on its behalf, and (ii) such Mortgage Note has been reviewed by
it or by such Custodian on its behalf and (A) appears regular on its face
(handwritten additions, changes or corrections shall not constitute
irregularities if initialed by the Borrower), (B) appears to have been executed
and (C) purports to relate to such Mortgage Loan.
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(b) On or about the 45th day following the Closing Date (and,
if any exceptions are noted or if the recordation/filing contemplated by Section
2.01(e) has not been completed (based solely on receipt by the Trustee of the
particular documents showing evidence of the recordation/filing), every 90 days
thereafter until the earliest of (i) the date on which such exceptions are
eliminated, (ii) the date on which all the affected Mortgage Loans are removed
from the Trust Fund and (iii) the second anniversary of the Closing Date), the
Trustee or a Custodian on its behalf shall review the documents delivered to it
or such Custodian with respect to each Original Mortgage Loan, and the Trustee
shall, subject to Sections 1.04, 2.01(d), 2.02(c) and 2.02(d), certify in
writing (substantially in the form of Exhibit B-3) to each of the other parties
hereto, the Mortgage Loan Seller and the Underwriter that, as to each Original
Mortgage Loan then subject to this Agreement (except as specifically identified
in any exception report annexed to such certification): (i) the original
Mortgage Note specified in clause (i) of the definition of "Mortgage File" (or,
if such original Mortgage Note has been lost, a copy of such Mortgage Note,
together with a "lost note affidavit" certifying that the original of such
Mortgage Note has been lost), the original or copy of each recorded document
specified in clauses (ii) through (v) of the definition of "Mortgage File", and
the original or copy of the policy of title insurance specified in clause (vii)
of the definition of "Mortgage File" and each document specified in clause
(viii) of the definition of "Mortgage File" (without regard to the
parenthetical), is in its possession or the possession of a Custodian on its
behalf; (ii) if such report is due after _______________, the recordation/filing
contemplated by Section 2.01(e) has been completed (based solely on receipt by
the Trustee of the particular recorded/filed documents); (iii) all documents
received by it or any Custodian with respect to such Mortgage Loan have been
reviewed by it or by such Custodian on its behalf and (A) appear regular on
their face (handwritten additions, changes or corrections shall not constitute
irregularities if initialed by the Borrower), (B) appear to have been executed
and (C) purport to relate to such Mortgage Loan; and (iv) based on the
examinations referred to in Section 2.02(a) above and this Section 2.02(b) and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule with respect to the items specified in clauses (ii) (other than
the zip code) and (vi)(B) of the definition of "Mortgage Loan Schedule"
accurately reflects the information set forth in the Mortgage File. If the
Mortgage Loan Seller substitutes a Replacement Mortgage Loan for any Deleted
Mortgage Loan as contemplated by Section 2.03, the Trustee or a Custodian on its
behalf shall review the documents delivered to it or such Custodian with respect
to such Replacement Mortgage Loan, and the Trustee shall deliver a comparable
certification in respect of such Replacement Mortgage Loan, on or about the 30th
day following the related date of substitution (and, if any exceptions are
noted, every 90 days thereafter for so long as any exceptions remain or until
such Replacement Mortgage Loan is removed from the Trust Fund).
(c) None of the Trustee, the Master Servicer, the Special
Servicer or any Custodian is under any duty or obligation to inspect, review or
examine any of the documents, instruments, certificates or other papers relating
to the Mortgage Loans delivered to it to determine that the same are valid,
legal, effective, genuine, binding, enforceable, sufficient or appropriate for
the represented purpose or that they are other than what they purport to be on
their face. Furthermore, none of the Trustee, the Master Servicer, the Special
Servicer or any Custodian shall have any responsibility for determining whether
the text of any assignment or endorsement is in proper or recordable form,
whether the requisite recording of any document is in accordance with the
requirements of any applicable jurisdiction, or whether a blanket assignment is
permitted in any applicable jurisdiction.
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(d) In performing the reviews contemplated by subsections (a)
and (b) above, the Trustee may conclusively rely on the related Mortgage Loan
Seller as to the purported genuineness of any such document and any signature
thereon. It is understood that the scope of the Trustee's review of the Mortgage
Files is limited solely to confirming that the documents specified in clauses
(i) through (v), (vii) and (viii) of the definition of "Mortgage File" have been
received and such additional information as will be necessary for delivering the
certifications required by subsections (a) and (b) above.
(e) If any party hereto discovers, or receives notice from a
non-party, that any document constituting a part of a Mortgage File has not been
properly executed, is missing, contains information that does not conform in any
material respect with the corresponding information set forth in the Mortgage
Loan Schedule (and the terms of such document have not been modified by written
instrument contained in the Mortgage File), or does not appear to be regular on
its face (each, a "Document Defect"), then such party shall give prompt written
notice thereof to the other parties hereto, including (unless it is the party
that discovered the Document Defect) the Trustee. Upon the Trustee's discovery
or receipt of notice of any such Document Defect, the Trustee shall notify the
Master Servicer, the Controlling Class Representative, the Underwriter and the
Mortgage Loan Seller. If such Document Defect materially and adversely affects
the value of any Mortgage Loan or the interests of the Certificateholders
therein (in which case such Document Defect shall constitute a "Material
Document Defect"), the Master Servicer [(or, if the Mortgage Loan Seller of the
affected Mortgage Loan is an Affiliate of the Master Servicer, subject to
Section 8.02, the Trustee)] shall, on behalf of the Trust, exercise such rights
and remedies as the Trust may have under the Mortgage Loan Purchase and Sale
Agreement with respect to such Document Defect in such manner as it determines,
in its good faith and reasonable judgment, is in the best interests of the
Certificateholders (taken as a collective whole), including those contemplated
by Section 2.03. A Material Document Defect shall constitute a Material Breach
of the representation and warranty set forth in Paragraph 39 of Exhibit C to the
Mortgage Loan Purchase and Sale Agreement. Any and all reasonable out-of-pocket
expenses incurred by the Master Servicer (or, if applicable, the Trustee)
(including, without limitation, reasonable attorney fees and expenses) with
respect to the foregoing, together with any additional out-of-pocket expenses
reasonably incurred by the Master Servicer or Special Servicer in performing
their respective servicing functions as a result of a Document Defect, shall
constitute Servicing Advances in respect of the affected Mortgage Loan. Without
limiting any of the foregoing, the absence of an original Mortgage Note, an
original or a copy of a Mortgage (with or without evidence of recording thereon)
or an original or a copy of a lender's title insurance policy from a Mortgage
File or any material nonconformity to the Mortgage Loan Schedule of any such
document or any material irregularity on the face thereof (without the presence
of any factor, such as the presence of a lost note affidavit with an indemnity
in the case of a missing Mortgage Note or the presence of a pro forma title
policy or a commitment for title insurance "marked-up" at the closing of the
subject Mortgage Loan, that in the Trustee's reasonable discretion reasonably
mitigates such absence, non-conformity or irregularity) shall be a Material
Document Defect. Furthermore, if either an original or a copy of any of the
documents referred to in clauses (ii) - (v) of the definition of "Mortgage
File", with evidence of recording indicated thereon, has not been delivered to
the Trustee or a Custodian on its behalf with respect to any Mortgage Loan on or
before the second anniversary of the Closing Date, such failure shall constitute
a Material Document Defect.
SECTION 2.03. Certain Repurchases and Substitutions of
Mortgage Loans by the Originators.
(a) If any party hereto or any Certificateholder discovers or,
other than pursuant to this Section 2.03(a), receives notice of a breach of any
representation or warranty relating to any Mortgage Loan set forth in or made
pursuant to the Mortgage Loan Purchase and Sale Agreement (a "Breach"), the
party
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or Certificateholder discovering or receiving such notice of such Breach shall
(without making any determination of the materiality or adverseness thereof)
give prompt written notice thereof to the other parties hereto, including
(unless it is the party that discovered the Breach) the Trustee, and the Trustee
shall in turn (without making any determination of the materiality or
adverseness thereof) notify the Controlling Class Representative. If such Breach
materially and adversely affects the value of such Mortgage Loan or the
interests of the Certificateholders therein, then promptly upon its becoming
aware thereof the Master Servicer [(or, if the Mortgage Loan Seller of the
affected Mortgage Loan is an Affiliate of the Master Servicer, subject to
Section 8.02, the Trustee)] shall require that Mortgage Loan Seller (in any
event, for purposes of this Section 2.03, the "Warranting Party"), not later
than 90 days (or such other period as is provided in the Mortgage Loan Purchase
and Sale Agreement) from the receipt by such Warranting Party of such notice,
cure such Breach in all material respects or repurchase the affected Mortgage
Loan (as, if and to the extent required by the Mortgage Loan Purchase and Sale
Agreement) at the applicable Purchase Price; provided that if (i) such Breach
does not relate to whether the affected Mortgage Loan is a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code, (ii) such Breach is
capable of being cured but not within such 90-day (or other) period, (iii) such
Warranting Party has commenced and is diligently proceeding with the cure of
such Breach within such 90-day (or other) period, and (iv) such Warranting Party
shall have delivered to the Trustee a certification executed on behalf of such
Warranting Party by an officer thereof setting forth the reason that such Breach
is not capable of being cured within an initial 90-day (or other) period,
specifying what actions such Warranting Party is pursuing in connection with the
cure thereof and stating that such Warranting Party anticipates that such Breach
will be cured within an additional period not to exceed 90 more days (a copy of
which certification shall be delivered by the Trustee to the Master Servicer,
the Special Servicer and the Controlling Class Representative), then such
Warranting Party shall have an additional 90 days to complete such cure (or, if
it fails to complete such cure, to repurchase the affected Mortgage Loan); and
provided, further, that, in lieu of effecting any such repurchase (but, in any
event, no later than such repurchase would have to have been completed), such
Warranting Party shall be permitted, during the three-month period following the
Startup Day for the REMIC Pool that holds the affected Mortgage Loan (or during
the two-year period following such Startup Day if the affected Mortgage Loan is
a "defective obligation" within the meaning of Section 860G(a)(4)(B)(ii) of the
Code and Treasury regulation section 1.860G-2(f)), to replace the affected
Mortgage Loan with one or more Qualifying Substitute Mortgage Loans and to pay a
cash amount equal to the applicable Substitution Shortfall Amount, subject to
any other applicable terms and conditions of the Mortgage Loan Purchase and Sale
Agreement and this Agreement. If any substitution for a Deleted Mortgage Loan is
not completed in all respects by the end of the three-month (or, if applicable,
the two-year) period contemplated by the preceding sentence, the Warranting
Party that desired to effect such substitution shall be barred from doing so
(and, accordingly, will be limited to the cure/repurchase remedies contemplated
hereby), and no party hereto shall be liable thereto for any loss, liability or
expense resulting from the expiration of such period. If any Mortgage Loan is to
be repurchased or replaced as contemplated by this Section 2.03, the Master
Servicer [(or, if the Mortgage Loan Seller of the affected Mortgage Loan is an
Affiliate of the Master Servicer, subject to Section 8.02, the Trustee)] shall
designate the Collection Account as the account to which funds in the amount of
the applicable Purchase Price or Substitution Shortfall Amount (as the case may
be) are to be wired, and the Master Servicer shall promptly notify the Trustee
when such deposit is made. Any such repurchase or replacement of a Mortgage Loan
shall be on a whole loan, servicing released basis (subject to any rights of a
Designated Sub-Servicer to continue to sub-service the related Mortgage Loans as
set forth in the related Designated Sub-Servicer Agreement). It is hereby
acknowledged and agreed that if any Breach or Document Defect arises out of a
failure to deliver a Mortgage Note for any Mortgage Loan, such Breach or
Document Defect, as the case may be, shall be cured for purposes of this
Agreement if the related Warranting Party
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delivers a copy of such Mortgage Note, together with a "lost note affidavit"
certifying that the original of such Mortgage Note has been lost.
If one or more (but not all) of the Mortgage Loans
constituting a Cross-Collateralized Group are to be repurchased or replaced by
the Mortgage Loan Seller as contemplated by this Section 2.03, then, prior to
the subject repurchase or substitution, the Master Servicer shall use its best
efforts, subject to the terms of the related Mortgage Loans, to prepare and, to
the extent necessary and appropriate, have executed by the related Borrower and
record, such documentation as may be necessary to terminate the cross-
collateralization between the Mortgage Loans in such Cross-Collateralized Group
that are to be repurchased or replaced, on the one hand, and the remaining
Mortgage Loans therein, on the other hand, such that those two groups of
Mortgage Loans are each secured only by the Mortgaged Properties identified in
the Mortgage Loan Schedule as directly corresponding thereto; provided that no
such termination shall be effected unless and until the Master Servicer and the
Trustee have received from the Depositor or the Mortgage Loan Seller (i) an
Opinion of Counsel to the effect that such termination will not cause an Adverse
REMIC Event to occur with respect to any REMIC Pool or an Adverse Grantor Trust
Event with respect to either Grantor Trust Pool and (ii) written confirmation
from each Rating Agency that such termination will not cause an Adverse Rating
Event to occur with respect to any Class of Rated Certificates. To the extent
necessary and appropriate, the Trustee shall execute (or, subject to Section
3.10, provide the Master Servicer with a limited power of attorney that enables
the Master Servicer to execute) the documentation referred to in the prior
sentence; provided that the Trustee shall not be liable for any misuse of any
such power of attorney by the Master Servicer. The Master Servicer shall advance
all costs and expenses incurred by the Trustee and the Master Servicer pursuant
to this paragraph, and such advances shall constitute and be reimbursable as
Servicing Advances. Neither the Master Servicer nor the Special Servicer shall
be liable to any Certificateholder or any other party hereto if the
cross-collateralization of any Cross-Collateralized Group cannot be terminated
as contemplated by this paragraph for any reason beyond the control of the
Master Servicer or Special Servicer, as the case may be.
Whenever one or more mortgage loans are substituted for a
Deleted Mortgage Loan as contemplated by this Section 2.03, the Master Servicer
[(or, if the Mortgage Loan Seller of the Deleted Mortgage Loan is an Affiliate
of the Master Servicer, subject to Section 8.02, the Trustee)] shall direct the
Warranting Party effecting the substitution to deliver the related Mortgage File
to the Trustee and to certify that such substitute mortgage loan satisfies or
such substitute mortgage loans satisfy, as the case may be, all of the
requirements of the definition of "Qualifying Substitute Mortgage Loan" and to
send such certification to the Trustee. No mortgage loan may be substituted for
a Deleted Mortgage Loan as contemplated by this Section 2.03 if the Mortgage
Loan to be replaced was itself a Replacement Mortgage Loan, in which case,
absent a cure of the relevant Breach or Document Defect, the affected Mortgage
Loan will be required to be repurchased as contemplated hereby. Monthly Payments
due with respect to each Replacement Mortgage Loan (if any) after the related
date of substitution, and Monthly Payments due with respect to each Deleted
Mortgage Loan (if any) after the Cut-off Date and on or prior to the related
date of substitution, shall be part of the Trust Fund. Monthly Payments due with
respect to each Replacement Mortgage Loan (if any) on or prior to the related
date of substitution, and Monthly Payments due with respect to each Deleted
Mortgage Loan (if any) after the related date of substitution, shall not be part
of the Trust Fund and are to be remitted by the Master Servicer to the
Warranting Party effecting the related substitution promptly following receipt.
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If any Mortgage Loan is to be repurchased or replaced as
contemplated by this Section 2.03, the Master Servicer (or, if the Mortgage Loan
Seller of the Deleted Mortgage Loan is an Affiliate of the Master Servicer, the
Trustee) shall direct the related Mortgage Loan Seller to amend the Mortgage
Loan Schedule to reflect the removal of any Deleted Mortgage Loan and, if
applicable, the substitution of the related Replacement Mortgage Loan(s); and,
upon its receipt of such amended Mortgage Loan Schedule, the Master Servicer
shall deliver or cause the delivery of such amended Mortgage Loan Schedule to
the other parties hereto. Upon any substitution of one or more Replacement
Mortgage Loans for a Deleted Mortgage Loan, such Replacement Mortgage Loan(s)
shall become part of the Trust Fund and be subject to the terms of this
Agreement in all respects. The reasonable "out-of-pocket" costs and expenses
incurred by the Master Servicer and/or the Trustee pursuant to this Section 2.03
(including, without limitation, reasonable attorney fees and expenses) shall
constitute Servicing Advances.
(b) Upon receipt of an Officer's Certificate from the Master
Servicer to the effect that the full amount of the Purchase Price or
Substitution Shortfall Amount (as the case may be) for any Mortgage Loan
repurchased or replaced by the Mortgage Loan Seller as contemplated by this
Section 2.03 has been deposited in the Collection Account, and further, if
applicable, upon receipt of the Mortgage File for each Replacement Mortgage Loan
(if any) to be substituted for a Deleted Mortgage Loan, together with the
certification referred to in the penultimate paragraph of Section 2.03(a) from
the Warranting Party effecting the substitution, if any, the Trustee shall (i)
release or cause the release of the Mortgage File for the Deleted Mortgage Loan
to the Person effecting the repurchase/substitution or its designee and (ii)
execute and deliver such instruments of release, transfer and/or assignment, in
each case without recourse, as shall be provided to it and are reasonably
necessary to vest in the Person effecting the repurchase/substitution or its
designee the ownership of the Deleted Mortgage Loan, and the Master Servicer
shall notify the applicable Borrowers of the transfers of the Deleted Mortgage
Loan(s) and any Replacement Mortgage Loan(s). In connection with any such
repurchase or substitution by the Mortgage Loan Seller, each of the Master
Servicer and the Special Servicer shall deliver to the Mortgage Loan Seller or
its designee any portion of the related Servicing File, together with any Escrow
Payments, Reserve Funds and Additional Collateral, held by or on behalf of the
Master Servicer or the Special Servicer, as the case may be, with respect to the
Deleted Mortgage Loan, in each case at the expense of the Mortgage Loan Seller.
The costs and expenses incurred by the Master Servicer, the Special Servicer
and/or the Trustee pursuant to this Section 2.03(b) shall be reimbursable to
each of them as Servicing Advances in respect of the affected Mortgage Loan.
(c) The Mortgage Loan Purchase and Sale Agreement provides the
sole remedies available to the Certificateholders, or the Trustee on their
behalf, respecting any Breach. If the Mortgage Loan Seller defaults on its
obligations to repurchase or replace any Mortgage Loan as contemplated by this
Section 2.03, the Master Servicer shall promptly notify the Trustee and the
Certificateholders [(or, if the Mortgage Loan Seller of the affected Mortgage
Loan is an Affiliate of the Master Servicer, the Trustee shall notify the
Certificateholders)]. Thereafter, the Master Servicer [(or, if the Mortgage Loan
Seller of the affected Mortgage Loan is an Affiliate of the Master Servicer,
subject to Section 8.02, the Trustee)] shall take such actions on behalf of the
Trust with respect to the enforcement of such repurchase/substitution
obligations, including the institution and prosecution of appropriate legal
proceedings, as the Master Servicer (or, if applicable and subject to Section
8.02, the Trustee) shall determine are in the best interests of the
Certificateholders (taken as a collective whole). Any and all reasonable
out-of-pocket expenses incurred by the Master Servicer (or, if applicable, the
Trustee) (including, without limitation, reasonable attorney fees and expenses)
with respect to the foregoing shall constitute Servicing Advances in respect of
the affected Mortgage Loan.
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SECTION 2.04. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to each of
the other parties hereto and for the benefit of the Certificateholders, as of
the Closing Date, that:
(i) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
(ii) The Depositor's execution and delivery of, performance
under, and compliance with this Agreement, will not violate the
Depositor's organizational documents or constitute a default (or an
event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material agreement or
other material instrument to which it is a party or by which it is
bound, which breach or default, in the good faith and reasonable
judgment of the Depositor, is likely to affect materially and adversely
either the ability of the Depositor to perform its obligations under
this Agreement or the financial condition of the Depositor.
(iii) The Depositor has the full power and authority to own
its properties, to conduct its business as presently conducted by it
and to enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and performance
of this Agreement, and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Depositor, enforceable against the
Depositor in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally, and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(v) The Depositor is not in violation of, and its execution
and delivery of, performance under and compliance with this Agreement
will not constitute a violation of, any law, any order or decree of any
court or arbiter, or any order, regulation or demand of any federal,
state or local governmental or regulatory authority, which violation,
in the Depositor's good faith and reasonable judgment, is likely to
affect materially and adversely either the ability of the Depositor to
perform its obligations under this Agreement or the financial condition
of the Depositor.
(vi) No consent, approval, authorization or order of any state
or federal court or governmental agency or body is required for the
consummation by the Depositor of the transactions contemplated herein,
except (A) for those consents, approvals, authorizations or orders that
previously have been obtained, (B) such as may be required under the
blue sky laws of any jurisdiction in connection with the purchase and
sale of the Certificates by the Underwriter, and (C) any recordation of
the assignments of Mortgage Loan documents to the Trustee pursuant to
Section 2.01(e), which has not yet been completed.
(vii) The transfer of the Mortgage Loans to the Trustee as
contemplated herein requires no regulatory approval, other than any
such approvals as have been obtained, and is not subject to any bulk
transfer or similar law in effect in any applicable jurisdiction.
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(viii) No litigation is pending or, to the best of the
Depositor's knowledge, threatened against the Depositor that, if
determined adversely to the Depositor, would prohibit the Depositor
from entering into this Agreement or that, in the Depositor's good
faith and reasonable judgment, is likely to materially and adversely
affect either the ability of the Depositor to perform its obligations
under this Agreement or the financial condition of the Depositor.
(ix) Assuming the accuracy of the representations and
warranties of the Mortgage Loan Seller set forth in the Mortgage Loan
Purchase and Sale Agreement, immediately prior to the transfer of the
Original Mortgage Loans to the Trustee for the benefit of the
Certificateholders pursuant to this Agreement, the Depositor had good
and marketable title to, and was the sole owner and holder of, each
such Mortgage Loan, and the Depositor has full right and authority to
sell, assign and transfer the Original Mortgage Loans.
(x) The Depositor is transferring the Original Mortgage Loans
to the Trustee for the benefit of the Certificateholders free and clear
of any and all liens, pledges, charges and security interests created
by or through the Depositor.
(b) The representations and warranties of the Depositor set
forth in Section 2.04(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made for so long as the Trust remains in existence. Upon discovery by any
party hereto of any breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
thereof to the other parties hereto.
SECTION 2.05. Representations and Warranties of the Master
Servicer.
(a) The Master Servicer hereby represents and warrants to each
of the other parties hereto and for the benefit of the Certificateholders, as of
the Closing Date, that:
(i) The Master Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
_______________ and is in compliance with the laws of each State in
which any Mortgaged Property is located to the extent necessary to
ensure the enforceability of each Mortgage Loan and to perform its
obligations under this Agreement.
(ii) The Master Servicer's execution and delivery of,
performance under and compliance with this Agreement, will not violate
the Master Servicer's organizational documents or constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
agreement or other material instrument to which it is a party or by
which it is bound, which breach or default, in the good faith and
reasonable judgment of the Master Servicer, is likely to affect
materially and adversely either the ability of the Master Servicer to
perform its obligations under this Agreement or the financial condition
of the Master Servicer.
(iii) The Master Servicer has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and performance
of this Agreement, and has duly executed and delivered this Agreement.
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(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Master Servicer, enforceable
against the Master Servicer in accordance with the terms hereof,
subject to (A) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights generally, and (B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at
law.
(v) The Master Servicer is not in violation of, and its
execution and delivery of, performance under and compliance with this
Agreement will not constitute a violation of, any law, any order or
decree of any court or arbiter, or any order, regulation or demand of
any federal, state or local governmental or regulatory authority, which
violation, in the Master Servicer's good faith and reasonable judgment,
is likely to affect materially and adversely either the ability of the
Master Servicer to perform its obligations under this Agreement or the
financial condition of the Master Servicer.
(vi) No consent, approval, authorization or order of any state
or federal court or governmental agency or body is required for the
consummation by the Master Servicer of the transactions contemplated
herein, except for those consents, approvals, authorizations or orders
that previously have been obtained.
(vii) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer that, if
determined adversely to the Master Servicer, would prohibit the Master
Servicer from entering into this Agreement or that, in the Master
Servicer's good faith and reasonable judgment, is likely to materially
and adversely affect either the ability of the Master Servicer to
perform its obligations under this Agreement or the financial condition
of the Master Servicer.
(viii) Each officer, director or employee of the Master
Servicer with responsibilities concerning the servicing and
administration of any Mortgage Loan is covered by errors and omissions
insurance in the amounts and with the coverage required by Section
3.07(d).
(ix) There is no event, condition or circumstance in existence
that constitutes (or, with notice or lapse of time, or both, would
constitute) an Event of Default on the part of the Master Servicer.
(x) The Master Servicer has examined each of the Sub-Servicing
Agreements entered into by the Master Servicer that will be in effect
as of the Closing Date with respect to the Mortgage Loans, and each
such Sub-Servicing Agreement complies with the requirements of Section
3.22(a) in all material respects.
(b) The representations and warranties of the Master Servicer
set forth in Section 2.05(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made for so long as the Trust remains in existence. Upon discovery by any
party hereto of a breach of such foregoing representations and warranties, the
party discovering such breach shall give prompt written notice thereof to the
other parties hereto.
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(c) Any successor Master Servicer shall be deemed to have
made, as of the date of its succession, each of the representations and
warranties set forth in Section 2.05(a), subject to such appropriate
modifications to the representation and warranty set forth in Section 2.05(a)(i)
to accurately reflect such successor's jurisdiction of organization and whether
it is a corporation, partnership, bank, association or other type of
organization.
SECTION 2.06. Representations and Warranties of the Special
Servicer.
(a) The Special Servicer hereby represents and warrants to
each of the other parties hereto and for the benefit of the Certificateholders,
as of the Closing Date, that:
(i) The Special Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
________________, and the Special Servicer is in compliance with the
laws of each State in which any Mortgaged Property is located to the
extent necessary to ensure the enforceability of each Mortgage Loan and
to perform its obligations under this Agreement.
(ii) The Special Servicer's execution and delivery of,
performance under and compliance with this Agreement will not violate
the Special Servicer's organizational documents or constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material
agreement or other instrument to which it is a party or which is
applicable to it or any of its assets, which default, in the good faith
and reasonable judgment of the Special Servicer, is likely to affect
materially and adversely either the ability of the Special Servicer to
perform its obligations under this Agreement or the financial condition
of the Special Servicer.
(iii) The Special Servicer has the full power and authority to
enter into and consummate all transactions involving the Special
Servicer contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement, and has duly
executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Special Servicer, enforceable
against the Special Servicer in accordance with the terms hereof,
subject to (A) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights generally, and (B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at
law.
(v) The Special Servicer is not in violation of, and its
execution and delivery of, performance under and compliance with the
terms of this Agreement will not constitute a violation of, any law,
any order or decree of any court or arbiter, or any order, regulation
or demand of any federal, state or local governmental or regulatory
authority, which violation, in the Special Servicer's good faith and
reasonable judgment, is likely to affect materially and adversely
either the ability of the Special Servicer to perform its obligations
under this Agreement or the financial condition of the Special
Servicer.
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(vi) No litigation is pending or, to the best of the Special
Servicer's knowledge, threatened against the Special Servicer, the
outcome of which, in the Special Servicer's good faith and reasonable
judgement, would prohibit the Special Servicer from entering into this
Agreement or, in the Special Servicer's good faith and reasonable
judgment, could reasonably be expected to materially and adversely
affect either the ability of the Special Servicer to perform its
obligations under this Agreement or the financial condition of the
Special Servicer.
(vii) The Special Servicer has errors and omissions insurance
in the amounts and with the coverage required by Section 3.07(d).
(viii) No consent, approval, authorization or order of any
state or federal court or governmental agency or body is required for
the consummation by the Special Servicer of the transactions
contemplated herein, expect for those consents, approvals,
authorizations or orders that previously have been obtained and where
the lack of such consent, approval, authorization or order would not
have a material adverse effect on the ability of the Special Servicer
to perform its obligations under this Agreement.
(b) The representations and warranties of the Special Servicer
set forth in Section 2.06(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made for so long as the Trust remains in existence. Upon discovery by any
party hereto of a breach of any of such representations and warranties which
materially and adversely affects the interests of the Certificateholders or any
party hereto, the party discovering such breach shall give prompt written notice
to each of the other parties hereto.
(c) Any successor Special Servicer shall be deemed to have
made, as of the date of its succession, each of the representations and
warranties set forth in Section 2.06(a), subject to such appropriate
modifications to the representation and warranty set forth in Section 2.06(a)(i)
to accurately reflect such successor's jurisdiction of organization and whether
it is a corporation, partnership, bank, association or other type of
organization.
SECTION 2.07. Representations and Warranties of the Trustee.
(a) The Trustee hereby represents and warrants to, and
covenants with, each of the other parties hereto and for the benefit of the
Certificateholders, as of the Closing Date, that:
(i) The Trustee is duly organized and validly existing as a
_____________________ under the laws of ___________________ and is,
shall be or, if necessary, shall appoint a co-trustee that is, in
compliance with the laws of each State in which any Mortgaged Property
is located to the extent necessary to ensure the enforceability of each
Mortgage Loan (insofar as such enforceability is dependent upon
compliance by the Trustee with such laws) and to perform its
obligations under this Agreement.
(ii) The Trustee's execution and delivery of, performance
under and compliance with this Agreement, will not violate the
Trustee's organizational documents or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a
default) under, or result in a material breach of, any material
agreement or other material instrument to which it is a party or by
which it is bound, which breach or default, in the good faith and
reasonable judgment of the Trustee
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is likely to affect materially and adversely either the ability of the
Trustee to perform its obligations under this Agreement or the
financial condition of the Trustee.
(iii) The Trustee has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement,
has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Trustee, enforceable against the
Trustee in accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting the enforcement of creditors' rights generally and the rights
of creditors of banks, and (B) general principles of equity, regardless
of whether such enforcement is considered in a proceeding in equity or
at law.
(v) The Trustee is not in violation of, and its execution and
delivery of, performance under and compliance with this Agreement will
not constitute a violation of, any law, any order or decree of any
court or arbiter, or any order, regulation or demand of any federal,
state or local governmental or regulatory authority, which violation,
in the Trustee's good faith and reasonable judgment, is likely to
affect materially and adversely either the ability of the Trustee to
perform its obligations under this Agreement or the financial condition
of the Trustee.
(vi) No consent, approval, authorization or order of any state
or federal court or governmental agency or body is required for the
consummation by the Trustee of the transactions contemplated herein,
except for those consents, approvals, authorizations or orders that
previously have been obtained.
(vii) No litigation is pending or, to the best of the
Trustee's knowledge, threatened against the Trustee that, if determined
adversely to the Trustee, would prohibit the Trustee from entering into
this Agreement or that, in the Trustee's good faith and reasonable
judgment, is likely to materially and adversely affect either the
ability of the Trustee to perform its obligations under this Agreement
or the financial condition of the Trustee.
(viii) The Trustee is eligible to act as trustee hereunder in
accordance with Section 8.06.
(b) The representations and warranties of the Trustee set
forth in Section 2.07(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made for so long as the Trust remains in existence. Upon discovery by any
party hereto of a breach of any such representations and warranties, the party
discovering such breach shall give prompt written notice thereof to the other
parties hereto.
(c) Any successor Trustee shall be deemed to have made, as of
the date of its succession, each of the representations and warranties set forth
in Section 2.07(a), subject to such appropriate modifications to the
representation and warranty set forth in Section 2.07(a)(i) to accurately
reflect such successor's jurisdiction of organization and whether it is a
corporation, partnership, bank, association or other type of organization.
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SECTION 2.08. Designation of the Certificates.
(a) The Certificates shall consist of ______ Classes hereby
designated as the "Class S Certificates", the "Class A-1 Certificates", the
"Class A-2 Certificates", the "Class A-3 Certificates", the "Class A-4
Certificates", the "Class A-5 Certificates", the "Class B-1 Certificates", the
"Class B-2 Certificates", the "Class B-3 Certificates", the "Class B-4
Certificates", the "Class B-5 Certificates", the "Class B-6 Certificates", the
"Class B-7 Certificates, the "Class B-8 Certificates", the "Class C
Certificates", the "Class D Certificates, the "Class E Certificates", the "Class
R-I Certificates", the "Class R-II Certificates" and the "Class R-III
Certificates", respectively.
(b) The Class A-1, Class A-2, Class A-3, Class A-4 and Class
A-5 Certificates are collectively designated as the "Class A Certificates".
(c) The Class B-1, Class B-2, Class B-3, Class B-4, Class B-5,
Class B-6, Class B-7 and Class B-8 Certificates are collectively designated as
the "Class B Certificates".
(d) The Class S and Class A-1 Certificates are collectively
designated as the "Senior Certificates".
(e) The Class A-2, Class A-3, Class A-4, Class A-5, Class B,
Class C, Class D, Class R-I, Class R-II and Class R-III Certificates are
collectively designated as the "Subordinated Certificates".
(f) The Class A, Class B, Class C and Class D Certificates are
collectively designated as the "Principal Balance Certificates".
(g) The Class S Certificates are also designated as the
"Interest Only Certificates".
(h) The Interest Only Certificates and the Principal Balance
Certificates are collectively designated as the "Regular Interest Certificates".
(i) The Class R-I, Class R-II and Class R-III Certificates are
collectively designated as the "Residual Interest Certificates".
(j) The Regular Interest Certificates and the Class R-III
Certificates are collectively designated as the "REMIC III Certificates".
SECTION 2.09. Creation of REMIC I; Issuance of REMIC I Regular
Interests and REMIC I Residual Interest; Certain
Matters Involving REMIC I.
(a) It is the intention of the parties hereto that the
following segregated pool of assets constitute a REMIC for federal income tax
purposes and, further, that such segregated pool of assets be designated as
"REMIC I": (i) the Mortgage Loans that are from time to time subject to this
Agreement and all payments under and proceeds of such Mortgage Loans received
after the Closing Date or, in the case of any such Mortgage Loan that is a
Replacement Mortgage Loan, after the related date of substitution (other than
scheduled payments of interest and principal due on or before the Cut-off Date
or, in the case of any such Mortgage Loan that is Replacement Mortgage Loan, on
or before the related date of substitution, and other than Additional Interest
collected in respect of the ARD Loans after their respective Anticipated
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Repayment Dates), together with all documents included in the related Mortgage
Files and Servicing Files and any related Additional Collateral; (ii) any REO
Property acquired in respect of any Mortgage Loan; (iii) such funds and assets
as from time to time are deposited in the Collection Account, the Distribution
Account, the Interest Reserve Account, and, if established, the REO Account
(exclusive of any amounts that constitute Additional Interest collected in
respect of the ARD Loans after their respective Anticipated Repayment Dates);
(iv) the rights of the Depositor under Sections 2, 3(a), 3(b), 3(d), 4 and 12
(and, to the extent related to the foregoing and applicable, under Sections 9,
10, 13, 14, 15, 16, 17 and 19) of the Mortgage Loan Purchase and Sale Agreement;
and (v) the rights of the Trustee and the Certificateholders as third party
beneficiaries under the Mortgage Loan Purchase and Sale Agreement (as and to the
extent provided under Section 11 thereof); and (vi) the Regular Interests and
all payments under and proceeds of such Regular Interests received after the
Closing Date. The Closing Date is hereby designated as the "Startup Day" of
REMIC I within the meaning of Section 860G(a)(9) of the Code.
(b) Concurrently with the assignment of the Original Mortgage
Loans and certain related assets to the Trustee pursuant to Section 2.01(b) and
in exchange therefor, the REMIC I Regular Interests and the REMIC I Residual
Interest shall be issued. A separate REMIC I Regular Interest shall be issued
with respect to each Original Mortgage Loan and Regular Interest that is an
asset of REMIC I. For purposes of this Agreement, each REMIC I Regular Interest
shall relate to the Original Mortgage Loan in respect of which it was issued
(or, if applicable, to the Regular Interest in respect of which it was issued
and also to the corresponding Original Mortgage Loan), to each Replacement
Mortgage Loan (if any) substituted for such Original Mortgage Loan, and to each
REO Mortgage Loan deemed outstanding with respect to an REO Property (if any)
acquired in respect of any such Original Mortgage Loan or any such Replacement
Mortgage Loan. None of the REMIC I Regular Interests shall be certificated. The
REMIC I Residual Interest, together with the REMIC I Regular Interests, shall
constitute the entire beneficial ownership of REMIC I.
(c) The REMIC I Regular Interests shall constitute the
"regular interests" (within the meaning of Section 860G(a)(1) of the Code), and
the REMIC I Residual Interest shall constitute the sole "residual interest"
(within the meaning of Section 860G(a)(2) of the Code), in REMIC I. None of the
parties hereto, to the extent it is within the control thereof, shall create or
permit the creation of any other "interests" in REMIC I (within the meaning of
Treasury regulation section 1.860D-1(b)(1)).
(d) The designation for each REMIC I Regular Interest shall be
the identification number for the related Original Mortgage Loan set forth in
the Mortgage Loan Schedule.
(e) Each REMIC I Regular Interest shall have an Uncertificated
Principal Balance. As of the Closing Date, the Uncertificated Principal Balance
of each REMIC I Regular Interest shall equal the Cut-off Date Balance of the
related Original Mortgage Loan (as specified in the Mortgage Loan Schedule). On
each Distribution Date, the Uncertificated Principal Balance of each REMIC I
Regular Interest shall be permanently reduced by any distributions of principal
deemed made in respect of such REMIC I Regular Interest on such Distribution
Date pursuant to Section 4.01(j) and, further, by any Principal Balance
Reduction made with respect to such REMIC I Regular Interest on such
Distribution Date pursuant to Section 4.04(c). Except as provided in the
preceding sentence, the Uncertificated Principal Balance of each REMIC I Regular
Interest shall not otherwise be increased or reduced. Deemed distributions to
REMIC II in reimbursement of Unreimbursed Principal Balance Reductions in
respect of a REMIC I Regular Interest shall not constitute deemed distributions
of principal and shall not result in any reduction of the Uncertificated
Principal Balance of such REMIC I Regular Interest.
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(f) Each REMIC I Regular Interest shall have a REMIC I
Remittance Rate. The REMIC I Remittance Rate in respect of any particular REMIC
I Regular Interest for any Interest Accrual Period shall be calculated as
follows: (i) if, as of the Closing Date, the related Original Mortgage Loan
bears interest calculated on a 30/360 Basis, then the REMIC I Remittance Rate in
respect of the subject REMIC I Regular Interest for any Interest Accrual Period
shall equal the Mortgage Rate in effect for the related Original Mortgage Loan
as of the Closing Date, minus the applicable Administrative Fee Rate; and (ii)
if, as of the Closing Date, the related Original Mortgage Loan bears interest
calculated on an Actual/360 Basis, then the REMIC I Remittance Rate in respect
of the subject REMIC I Regular Interest for any Interest Accrual Period shall
equal (A) a fraction (expressed as a percentage), the numerator of which is
(subject to adjustment as provided below) the product of twelve times the
aggregate amount of interest that would accrue during such Interest Accrual
Period on the Uncertificated Principal Balance of such REMIC I Regular Interest
outstanding immediately prior to the related Distribution Date if such interest
were to be calculated on an Actual/360 Basis and were to accrue at the Mortgage
Rate in effect for the related Original Mortgage Loan as of the Closing Date,
and the denominator of which is the Uncertificated Principal Balance of such
REMIC I Regular Interest outstanding immediately prior to the related
Distribution Date, minus (B) the applicable Administrative Fee Rate; provided
that, in the case of a REMIC I Regular Interest that corresponds to an Interest
Reserve Loan, if the subject Interest Accrual Period occurs during January of
any year or during December of any year that does not immediately precede a leap
year, the amount of the numerator for the fraction described in clause (ii)(A)
above shall be reduced by the related Interest Reserve Amount that is to be
transferred from the Distribution Account to the Interest Reserve Account in the
following calendar month in accordance with Section 3.04(c) and, if the subject
Interest Accrual Period occurs during February of any year, the amount of the
numerator for the fraction described in clause (ii)(A) above shall be increased
by any related Interest Reserve Amount(s) to be transferred from the Interest
Reserve Account to the Distribution Account pursuant to Section 3.05(c) for
distribution on the Distribution Date in March of such year; and provided,
further, that, in the case of a REMIC I Regular Interest that corresponds to a
Mortgage Loan with a Stated Maturity Date that occurs during any calendar month
after the Determination Date in such month, the REMIC I Remittance Rate in
respect of such REMIC I Regular Interest for the Interest Accrual Period in
which such Stated Maturity Date occurs shall equal the product of (s) the REMIC
I Remittance Rate that would otherwise have been in effect for such REMIC I
Regular Interest for such Interest Accrual Period without regard to this
proviso, multiplied by (t) a fraction (expressed as a percentage), the numerator
of which shall be the number of days in such Interest Accrual Period up to but
not including such Stated Maturity Date, and the denominator of which shall be
30.
(g) Each REMIC I Regular Interest shall bear interest. The
Uncertificated Accrued Interest in respect of each REMIC I Regular Interest
shall commence accruing on the Cut-off Date and, during each Interest Accrual
Period, shall accrue at the applicable REMIC I Remittance Rate on the
Uncertificated Principal Balance of such REMIC I Regular Interest outstanding
immediately prior to the related Distribution Date. The Uncertificated Accrued
Interest in respect of each REMIC I Regular Interest shall be calculated on a
30/360 Basis. Notwithstanding the foregoing, the portion of the Uncertificated
Accrued Interest in respect of any REMIC I Regular Interest for any Interest
Accrual Period that may be deemed distributable to REMIC II with respect to such
REMIC I Regular Interest pursuant to Section 4.01(j) shall not exceed the
Uncertificated Distributable Interest in respect of such REMIC I Regular
Interest for the related Distribution Date.
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(h) Solely for purposes of satisfying Treasury regulation
section 1.860G-1(a)(4)(iii), the Latest Possible Maturity Date for each REMIC I
Regular Interest shall be the first Distribution Date that follows the Stated
Maturity Date for the related Original Mortgage Loan. The Latest Possible
Maturity Date for each Regular Interest shall be the Stated Maturity Date for
the related Original Mortgage Loan.
(i) The REMIC I Residual Interest shall not have a principal
balance and shall not bear interest.
SECTION 2.10. Conveyance of REMIC I Regular Interests;
Acceptance of REMIC I Regular Interests by
Trustee.
The Depositor, as of the Closing Date, and concurrently with
the execution and delivery of this Agreement, does hereby assign without
recourse all the right, title and interest of the Depositor in and to the REMIC
I Regular Interests to the Trustee for the benefit of the Holders of the Class
R-II and REMIC III Certificates. The Trustee acknowledges the assignment to it
of the REMIC I Regular Interests and declares that it holds and will hold the
same in trust for the exclusive use and benefit of all present and future
Holders of the Class R-II and REMIC III Certificates.
SECTION 2.11. Creation of REMIC II; Issuance of REMIC II
Regular Interests and Class R-II Certificates;
Certain Matters Involving REMIC II.
(a) It is the intention of the parties hereto that the
segregated pool of assets consisting of the REMIC I Regular Interests constitute
a REMIC for federal income tax purposes and, further, that such segregated pool
of assets be designated as "REMIC II". The Closing Date is hereby designated as
the "Startup Day" of REMIC II within the meaning of Section 860G(a)(9) of the
Code.
(b) Concurrently with the assignment of the REMIC I Regular
Interests to the Trustee pursuant to Section 2.11 and in exchange therefor, the
REMIC II Regular Interests shall be issued, and the Trustee, pursuant to the
written request of the Depositor executed by an officer of the Depositor, shall
execute, authenticate and deliver to or upon the order of the Depositor, the
Class R-II Certificates in authorized denominations. There shall be ___________
separate REMIC II Regular Interests. None of the REMIC II Regular Interests
shall be certificated. The interests evidenced by the Class R-II Certificates,
together with the REMIC II Regular Interests, shall constitute the entire
beneficial ownership of REMIC II.
(c) The REMIC II Regular Interests shall constitute the
"regular interests" (within the meaning of Section 860G(a)(1) of the Code), and
the Class R-II Certificates shall constitute the sole class of "residual
interests" (within the meaning of Section 860G(a)(2) of the Code), in REMIC II.
None of the parties hereto, to the extent it is within the control thereof,
shall create or permit the creation of any other "interests" in REMIC II (within
the meaning of Treasury regulation section 1.860D-1(b)(1)).
(d) The REMIC II Regular Interests are hereby designated as
"REMIC II Regular Interest A-1", "REMIC II Regular Interest A-2", "REMIC II
Regular Interest A-3", "REMIC II Regular Interest A- 4", "REMIC II Regular
Interest A-5", "REMIC II Regular Interest B-1", "REMIC II Regular Interest B-2",
"REMIC II Regular Interest B-3", "REMIC II Regular Interest B-4", "REMIC II
Regular Interest B-5", "REMIC II Regular Interest B-6", "REMIC II Regular
Interest B-7", "REMIC II Regular Interest B-8", "REMIC II Regular Interest C"
and "REMIC II Regular Interest D", respectively.
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(e) Each REMIC II Regular Interest shall have an
Uncertificated Principal Balance. The following table sets forth for each REMIC
II Regular Interest the initial Uncertificated Principal Balance thereof and the
calendar month in which the Latest Possible Maturity Date thereof occurs
(calculated based on the Maturity Assumptions):
Designation of Initial Uncertificated Latest Possible
REMIC II Regular Interest Principal Balance Maturity Date(1)
------------------------- ----------------- -------------
A-1 $_____________
A-2 $_____________
A-3 $_____________
A-4 $_____________
A-5 $_____________
B-1 $_____________
B-2 $_____________
B-3 $_____________
B-4 $_____________
B-5 $_____________
B-6 $_____________
B-7 $_____________
B-8 $_____________
C $_____________
D $_____________
------------------
(1) Solely for purposes of satisfying Treasury Regulation
Section 1.860G-1(a)(4)(iii), the Latest Possible
Maturity Date for each REMIC II Regular Interest will
be the Distribution Date in the calendar month
specified in the foregoing table with respect to such
REMIC II Regular Interest.
On each Distribution Date, the Uncertificated Principal
Balance of each REMIC II Regular Interest shall be permanently reduced by any
distributions of principal deemed made in respect of such REMIC II Regular
Interest on such Distribution Date pursuant to Section 4.01(i) and, further, by
any Principal Balance Reduction made with respect to such REMIC II Regular
Interest on such Distribution Date pursuant to Section 4.04(b). Except as
provided in the preceding sentence, the Uncertificated Principal Balance of each
REMIC II Regular Interest shall not otherwise be increased or decreased. Deemed
distributions to REMIC III in reimbursement of Unreimbursed Principal Balance
Reductions in respect of a REMIC II Regular Interest, shall not constitute
deemed distributions of principal and shall not result in any reduction of the
Uncertificated Principal Balance of such REMIC II Regular Interest.
(f) Each REMIC II Regular Interest shall have a REMIC II
Remittance Rate that, with respect to any Interest Accrual Period, shall equal
the weighted average, expressed as a percentage and rounded to eight decimal
places, of the respective REMIC I Remittance Rates in effect for all the REMIC I
Regular Interests for such Interest Accrual Period, weighted on the basis of the
respective Uncertificated Principal Balances of such REMIC I Regular Interests
outstanding immediately prior to the related Distribution Date.
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(g) Each REMIC II Regular Interest shall bear interest. The
Uncertificated Accrued Interest in respect of each REMIC II Regular Interest
shall commence accruing on the Cut-off Date and, during each Interest Accrual
Period, shall accrue at the applicable REMIC II Remittance Rate on the
Uncertificated Principal Balance of such REMIC II Regular Interest outstanding
immediately prior to the related Distribution Date. The Uncertificated Accrued
Interest in respect of each REMIC II Regular Interest shall be calculated on a
30/360 Basis. Notwithstanding the foregoing, the portion of the Uncertificated
Accrued Interest in respect of any REMIC II Regular Interest for any Interest
Accrual Period that may be deemed distributable to REMIC III with respect to
such REMIC II Regular Interest pursuant to Section 4.01(i) shall not exceed the
Uncertificated Distributable Interest in respect of such REMIC II Regular
Interest for the related Distribution Date.
(h) The Class R-II Certificates shall not have principal
balances and shall not bear interest.
SECTION 2.12. Conveyance of REMIC II Regular Interests;
Acceptance of REMIC II Regular Interests by
Trustee.
The Depositor, as of the Closing Date, and concurrently with
the execution and delivery of this Agreement, does hereby assign without
recourse all the right, title and interest of the Depositor in and to the REMIC
II Regular Interests to the Trustee for the benefit of the Holders of the REMIC
III Certificates. The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and declares that it holds and will hold the same in trust for
the exclusive use and benefit of all present and future Holders of the REMIC III
Certificates.
SECTION 2.13. Creation of REMIC III; Issuance of REMIC III
Certificates; Certain Matters Involving REMIC
III.
(a) It is the intention of the parties hereto that the
segregated pool of assets consisting of the REMIC II Regular Interests
constitute a REMIC for federal income tax purposes and, further, that such
segregated pool of assets be designated as "REMIC III". The Closing Date is
hereby designated as the "Startup Day" of REMIC III within the meaning of
Section 860G(a)(9) of the Code.
(b) Concurrently with the assignment of the REMIC II Regular
Interests to the Trustee pursuant to Section 2.13 and in exchange therefor, the
Trustee shall execute, authenticate and deliver to or upon the order of the
Depositor, the REMIC III Certificates in authorized denominations evidencing the
entire beneficial ownership of REMIC III. There shall be _________ Classes of
REMIC III Certificates. The REMIC III Certificates shall evidence the entire
beneficial ownership of REMIC III.
(c) The respective Classes of the Regular Interest
Certificates shall constitute the "regular interests" (within the meaning of
Section 860G(a)(1) of the Code), and the Class R-III Certificates shall
constitute the sole class of "residual interests" (within the meaning of Section
860(G)(a)(2) of the Code), in REMIC III. None of the parties hereto, to the
extent it is within the control thereof, shall create or permit the creation of
any other "interests" in REMIC III (within the meaning of Treasury regulation
section 1.860D-1(b)(1)).
(d) The Class S Certificates shall not have principal
balances. For purposes of accruing interest, however, the Class S Certificates
shall have a Class Notional Amount that is, as of any date of
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determination, equal to the aggregate of the then Uncertificated Principal
Balances of all the REMIC II Regular Interests.
Solely for purposes of satisfying Treasury regulation section
1.860G-1(a)(4)(iii), the Latest Possible Maturity Date for the Class S
Certificates shall be the Distribution Date in September 2024.
(e) Each Class of Principal Balance Certificates shall have a
Class Principal Balance.
The following table sets forth for each Class of Principal
Balance Certificates the initial Class Principal Balance thereof and the
calendar month in which the Latest Possible Maturity Date thereof occurs
(calculated based on the Maturity Assumptions):
Class Initial Class Latest Possible
Designation Principal Balance Maturity Date(1)
----------- ----------------- -------------
Class A-1 $_____________
Class A-2 $_____________
Class A-3 $_____________
Class A-4 $_____________
Class A-5 $_____________
Class B-1 $_____________
Class B-2 $_____________
Class B-3 $_____________
Class B-4 $_____________
Class B-5 $_____________
Class B-6 $_____________
Class B-7 $_____________
Class B-8 $_____________
Class C $_____________
Class D $_____________
-------------------
(1) Solely for purposes of satisfying Treasury Regulation
Section 1.860G-1(a)(4)(iii), the Latest Possible
Maturity Date for each Class of Principal Balance
Certificates will be the Distribution Date in the
calendar month specified in the foregoing table with
respect to such Class of Principal Balance
Certificates.
On each Distribution Date, the Class Principal Balance of each
Class of Principal Balance Certificates shall be permanently reduced by any
distributions of principal made in respect of such Class of Certificates on such
Distribution Date pursuant to Section 4.01(a) and, further, by any Principal
Balance Reduction made with respect to such Class of Certificates on such
Distribution Date pursuant to Section 4.04(a). Except as provided in the
preceding sentence, the Class Principal Balance of each Class of Principal
Balance Certificates shall not otherwise be increased or reduced. Distributions
to the Holders of any such Class of Principal Balance Certificates in
reimbursement of any Unreimbursed Principal Balance Reductions in respect of
such Class of Certificates shall not constitute distributions of principal and
shall not result in any reduction of the related Class Principal Balance.
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(f) Each Class of Regular Interest Certificates shall have a
Pass-Through Rate.
With respect to the Class A-1 Certificates, the related
Pass-Through Rates for each Interest Accrual Period shall be fixed as set forth
below.
Class Fixed Pass-Through Rate
----- -----------------------
Class A-1 _______% per annum
[With respect to the Class A-2 Certificates, the related Pass-Through
Rate for each Interest Accrual Period shall equal the lesser of (i) the REMIC II
Remittance Rate in effect during such Interest Accrual Period in respect of the
Corresponding REMIC II Regular Interest for such Class of Certificates and (ii)
_____% per annum.]
[With respect to the Class A-3 Certificates, the related Pass-Through
Rate for each Interest Accrual Period shall equal the lesser of (i) the REMIC II
Remittance Rate in effect during such Interest Accrual Period in respect of the
Corresponding REMIC II Regular Interest for such Class of Certificates and (ii)
______% per annum].
[With respect to the Class A-4 Certificates, the related Pass-Through
Rate for each Interest Accrual Period shall equal the lesser of (i) the REMIC II
Remittance Rate in effect during such Interest Accrual Period in respect of the
Corresponding REMIC II Regular Interest for such Class of Certificates and (ii)
_____% per annum.]
[With respect to the Class A-5 Certificates, the related Pass-Through
Rate for each Interest Accrual Period shall equal the lesser of (i) the REMIC II
Remittance Rate in effect during such Interest Accrual Period in respect of the
Corresponding REMIC II Regular Interest for such Class of Certificates and (ii)
_____% per annum.]
[With respect to the Class B-1 and Class B-2 Certificates, the related
Pass-Through Rates for each Interest Accrual Period shall, in the case of each
of those Classes of Certificates, equal the REMIC II Remittance Rate in effect
during such Interest Accrual Period in respect of the Corresponding REMIC II
Regular Interest for such Class of Certificates.]
[With respect to the Class B-3, Class B-4, Class B-5, Class B-6, Class
B-7, Class B-8, Class C and Class D Certificates, the related Pass-Through Rate
for each Interest Accrual Period shall, in the case of each of those Classes of
Certificates, equal the lesser of (i) the REMIC II Remittance Rate in effect
during such Interest Accrual Period in respect of the Corresponding REMIC II
Regular Interest for such Class of Certificates and (ii) _____% per annum.]
With respect to the Class S Certificates, the related Pass-Through Rate
for each Interest Accrual Period shall equal the excess, if any, of (i) the
weighted average of the respective REMIC II Remittance Rates in effect during
such Interest Accrual Period in respect of all of the REMIC II Regular
Interests, over (ii) the weighted average of the respective Adjusted REMIC II
Remittance Rates in effect during such Interest Accrual Period in respect of all
of the REMIC II Regular Interests. For purposes of the foregoing, the relevant
weighting shall be based on the Uncertificated Principal Balance of each REMIC
II Regular Interest immediately prior to the related Distribution Date.
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(g) Each Class of Regular Interest Certificates shall bear
interest. Accrued Certificate Interest in respect of the Regular Interest
Certificates shall commence accruing on the Cut-off Date. With respect to each
Class of Regular Interest Certificates, the Accrued Certificate Interest shall
accrue during each Interest Accrual Period at the applicable Pass-Through Rate
on the Class Principal Balance (or, in the case of the Class S Certificates, the
Class Notional Amount) of such Class of Certificates outstanding immediately
prior to the related Distribution Date. The Accrued Certificate Interest in
respect of each Class of Regular Interest Certificates shall be calculated on a
30/360 Basis. Notwithstanding the foregoing, the portion of the Accrued
Certificate Interest in respect of any Class of Regular Interest Certificates
for any Interest Accrual Period that may be distributable to the Holders of such
Class of Certificates pursuant to Section 4.01(a) shall not exceed the
Distributable Certificate Interest in respect of such Class of Certificates for
the related Distribution Date.
(h) The Class R-III Certificates shall not have principal
balances and shall not bear interest.
SECTION 2.14. Acceptance of Grantor Trusts by Trustee;
Issuance of the Class E and Class R-I
Certificates.
(a) It is the intention of the parties hereto that the
segregated pool of assets consisting of any collections of Additional Interest
received on the ARD Loans constitute a Grantor Trust for federal income tax
purposes and, further, that such segregated pool of assets be designated as
"Grantor Trust E". The Trustee, by its execution and delivery hereof,
acknowledges the assignment to it of the assets of Grantor Trust E and declares
that it will hold such assets in trust for the exclusive use and benefit of all
present and future Holders of the Class E Certificates. Concurrently with the
assignment to it of the assets included in Grantor Trust E, the Trustee shall
execute, authenticate and deliver to or upon the order of the Depositor the
Class E Certificates in authorized denominations evidencing the entire
beneficial ownership of Grantor Trust E. The rights of the Holders of the Class
E Certificates to receive distributions from the proceeds of Grantor Trust E,
and all ownership interests of such Holders in and to such distributions, shall
be as set forth in this Agreement.
(b) The Depositor, as of the Closing Date, and concurrently
with the execution and delivery of this Agreement, does hereby assign without
recourse all right, title and interest of the Depositor in and to the REMIC I
Residual Interest to the Trustee for the benefit of the Holders of the Class R-I
Certificates. It is the intention of the parties hereto that the segregated pool
of assets consisting of the REMIC I Residual Interest constitute a Grantor Trust
for federal income tax purposes and, further, that such segregated pool of
assets be designated as "Grantor Trust R-I". The Trustee, by its execution and
delivery hereof, acknowledges the assignment to it of the assets of Grantor
Trust R-I and declares that it will hold such assets in trust for the exclusive
use and benefit of all present and future Holders of the Class R-I Certificates.
Concurrently with the assignment to it of the assets included in Grantor Trust
R-I, the Trustee shall execute, authenticate and deliver to or upon the order of
the Depositor the Class R-I Certificates in authorized denominations evidencing
the entire beneficial ownership of Grantor Trust R-I. The rights of the Holders
of the Class R-I Certificates to receive distributions from the proceeds of
Grantor Trust R-I, and all ownership interests of such Holders in and to such
distributions, shall be as set forth in this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Administration of the Mortgage Loans.
(a) Each of the Master Servicer and the Special Servicer shall
service and administer the Mortgage Loans and any REO Properties that it is
obligated to service and administer pursuant to this Agreement, for the benefit
of the Certificateholders (as a collective whole), in accordance with any and
all applicable laws, in accordance with the express terms of this Agreement and
the respective Mortgage Loans, and, to the extent consistent with the foregoing,
in accordance with the Servicing Standard. The Master Servicer or Special
Servicer, as applicable in accordance with this Agreement, shall service and
administer each Cross-Collateralized Group as a single Mortgage Loan as and when
necessary and appropriate consistent with the Servicing Standard. Without
limiting the foregoing, and subject to Section 3.21, (i) the Master Servicer
shall service and administer all Performing Mortgage Loans, and (ii) the Special
Servicer shall service and administer (x) each Mortgage Loan (other than a
Corrected Mortgage Loan) as to which a Servicing Transfer Event has occurred,
and (y) each REO Property; provided, however, that the Master Servicer shall
continue to collect information and prepare all reports to the Trustee required
hereunder with respect to any Specially Serviced Mortgage Loans and REO
Properties (and the related REO Mortgage Loans) and, further, to render such
incidental services with respect to any Specially Serviced Mortgage Loans and
REO Properties as are specifically provided for herein. The Master Servicer
shall not, on behalf of the Trust, obtain title to a Mortgaged Property.
(b) Subject to Section 3.01(a), the Master Servicer and the
Special Servicer shall each have full power and authority, acting alone or
through Sub-Servicers, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. Without limiting the generality of the foregoing, each of the Master
Servicer and the Special Servicer, in its own name, with respect to each of the
Mortgage Loans it is obligated to service hereunder, is hereby authorized and
empowered by the Trustee to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them: (i) any and all financing
statements, continuation statements and other documents or instruments necessary
to maintain the lien created by any Mortgage or other security document in the
related Mortgage File on the related Mortgaged Property and other related
collateral; and (ii) any and all instruments of satisfaction or cancellation, or
of partial or full release or discharge, and all other comparable instruments.
In addition, without limiting the generality of the foregoing, each of the
Master Servicer and Special Servicer is authorized and empowered by the Trustee
to execute and deliver, in accordance with the Servicing Standard and subject to
Sections 3.08 and 3.20, any and all assumptions, modifications, waivers,
amendments or consents to or with respect to any documents contained in the
related Mortgage File. Subject to Section 3.10, the Trustee shall, at the
written request of a Servicing Officer of the Master Servicer or the Special
Servicer, furnish, or cause to be so furnished, to the Master Servicer or the
Special Servicer, as appropriate, any limited powers of attorney and other
documents (each of which shall be prepared by the Master Servicer or Special
Servicer, as applicable) necessary or appropriate to enable it to carry out its
servicing and administrative duties hereunder; provided, however, that the
Trustee shall not be held liable for any misuse of any such power of attorney by
the Master Servicer or the Special Servicer.
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(c) The relationship of each of the Master Servicer and the
Special Servicer to the Trustee under this Agreement is intended by the parties
to be that of an independent contractor and not that of a joint venturer,
partner or agent.
SECTION 3.02. Collection of Mortgage Loan Payments.
(a) The Master Servicer and the Special Servicer shall each
undertake reasonable efforts to collect all payments called for under the terms
and provisions of the Mortgage Loans it is obligated to service hereunder and
shall follow such collection procedures as are consistent with the Servicing
Standard; provided, however, that neither the Master Servicer nor the Special
Servicer shall, with respect to any Designated ARD Loan after its Anticipated
Repayment Date, take any enforcement action with respect to the payment of
Additional Interest (other than the making of requests for its collection),
unless (i) the taking of an enforcement action with respect to the payment of
other amounts due under such Mortgage Loan is, in the good faith and reasonable
judgment of the Special Servicer, and without regard to such Additional
Interest, also necessary, appropriate and consistent with the Servicing Standard
or (ii) all other amounts due under such Mortgage Loan have been paid, the
payment of such Additional Interest has not been forgiven in accordance with
Section 3.20 and, in the good faith and reasonable judgment of the Special
Servicer, the Liquidation Proceeds expected to be recovered in connection with
such enforcement action will cover the anticipated costs of such enforcement
action and, if applicable, any associated Advance Interest. Consistent with the
foregoing, the Master Servicer (as to Performing Mortgage Loans) and the Special
Servicer (as to Specially Serviced Mortgage Loans) each may waive any Default
Charges in connection with any specific delinquent payment on a Mortgage Loan it
is obligated to service hereunder.
(b) Ninety days prior to the maturity date of each Balloon
Mortgage Loan, the Master Servicer shall send a notice to the related Borrower
of such maturity date (with a copy to be sent to the Special Servicer) and shall
request confirmation that the Balloon Payment will be paid by such date.
SECTION 3.03. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts; Reserve Accounts.
(a) The Master Servicer shall establish and maintain one or
more accounts (the "Servicing Accounts"), in which all Escrow Payments received
by it with respect to the Mortgage Loans shall be deposited and retained.
Subject to any terms of the related Mortgage Loan documents that specify the
nature of the account in which Escrow Payments shall be held, each Servicing
Account shall be an Eligible Account. Withdrawals of amounts so collected in
respect of any Mortgage Loan (and interest earned thereon) from a Servicing
Account may be made only: (i) to effect the payment of real estate taxes,
assessments, insurance premiums (including, without limitation, premiums on any
Environmental Insurance Policy), ground rents (if applicable) and comparable
items in respect of the related Mortgaged Property; (ii) to reimburse the Master
Servicer, the Special Servicer, the Trustee or any Fiscal Agent, as applicable,
for any unreimbursed Servicing Advances made thereby to cover any of the items
described in the immediately preceding clause (i); (iii) to refund to the
related Borrower any sums as may be determined to be overages; (iv) to pay
interest or other income, if required and as described below, to the related
Borrower on balances in the Servicing Account (or, if and to the extent not
payable to the related Borrower to pay such interest or other income (up to the
amount of any Net Investment Earnings in respect of such Servicing Account for
each Collection Period) to the Master Servicer); or (v) to clear and terminate
the Servicing Account at the termination of this Agreement in accordance with
Section 9.01. The Master Servicer shall pay or cause to be paid to the Borrowers
interest and other income, if any, earned on the investment of funds in
Servicing Accounts
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maintained thereby, if and to the extent required by law or the terms of the
related Mortgage Loan. If the Master Servicer shall deposit in a Servicing
Account any amount not required to be deposited therein, it may at any time
withdraw such amount from such Servicing Account, any provision herein to the
contrary notwithstanding. Promptly after any Escrow Payments are received by the
Special Servicer from any Borrower, and in any event within two Business Days
after any such receipt, the Special Servicer shall remit such Escrow Payments to
the Master Servicer for deposit in the applicable Servicing Account(s).
(b) The Master Servicer shall as to each Mortgage Loan
(including each Specially Serviced Mortgage Loan) (i) maintain accurate records
with respect to the related Mortgaged Property reflecting the status of real
estate taxes, assessments and other similar items that are or may become a lien
thereon and the status of insurance premiums and any ground rents payable in
respect thereof and (ii) use reasonable efforts consistent with the Servicing
Standard to obtain, from time to time, all bills for the payment of such items
(including renewal premiums) and effect payment thereof prior to the applicable
penalty or termination date. For purposes of effecting any such payment, the
Master Servicer shall apply Escrow Payments as allowed under the terms of the
related Mortgage Loan documents; provided, however, that if such Mortgage Loan
does not require the related Borrower to escrow for the payment of real estate
taxes, assessments, insurance premiums, ground rents (if applicable) and similar
items, each of the Master Servicer and the Special Servicer shall, as to those
Mortgage Loans it is obligated to service hereunder, and subject to and in
accordance with the Servicing Standard, enforce the requirement of the related
Mortgage that the Borrower make payments in respect of such items at the time
they first become due.
(c) In accordance with the Servicing Standard, the Master
Servicer shall advance with respect to each Mortgaged Property (including each
Mortgaged Property relating to a Specially Serviced Mortgage Loan) all such
funds as are necessary for the purpose of effecting the timely payment of (i)
real estate taxes, assessments and other similar items, (ii) ground rents (if
applicable), and (iii) premiums on Insurance Policies (including, without
limitation, premiums on any Environmental Insurance Policy), in each instance
prior to the applicable penalty or termination date if and to the extent that
(x) Escrow Payments (if any) collected from the related Borrower are
insufficient to pay such item when due, (y) the Master Servicer determines in
accordance with the Servicing Standard that the related Borrower has failed to
pay such item on a timely basis and (z) the particular Advance would not, if
made, constitute a Nonrecoverable Servicing Advance; provided that with respect
to any Mortgage Loan under which the related Borrower is not required to make
Escrow Payments for real estate taxes, the Master Servicer shall be required to
advance such real estate taxes only upon its determination, using efforts
consistent with the Servicing Standard, that such real estate taxes have not
been paid). All such Advances shall be reimbursable in the first instance from
related collections from the Borrowers and further as provided in Section
3.05(a). No costs incurred by the Master Servicer in effecting the payment of
real estate taxes, assessments and, if applicable, ground rents on or in respect
of such Mortgaged Properties shall, for purposes hereof, including calculating
monthly distributions to Certificateholders, be added to the respective unpaid
principal balances or Stated Principal Balances of the related Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit; provided,
however, that this sentence shall not be construed to limit the rights of the
Master Servicer on behalf of the Trust to enforce any obligations of the related
Borrower under such Mortgage Loan.
(d) The Master Servicer shall establish and maintain, as
applicable, one or more accounts (the "Reserve Accounts"), in which all Reserve
Funds, if any, shall be deposited and retained. As and to the extent consistent
with the Servicing Standard and the related Mortgage Loan documents, withdrawals
of amounts so deposited, and draws under any Letter of Credit delivered in lieu
of Reserve Funds, may be made to pay for, or to reimburse the related Borrower
in connection with, the costs associated with the related
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tenant improvements, leasing commissions, repairs, replacements, capital
improvements and/or environmental testing and remediation at or with respect to
the related Mortgaged Property for which such Reserve Funds were intended or
such Letter of Credit was delivered. In addition, as and to the extent
consistent with the Servicing Standard and the related Mortgage Loan documents,
withdrawals of amounts so deposited, and draws under any Letter of Credit so
delivered, may be made to prepay the Mortgage Loan in the event certain leasing
or other economic criteria are not satisfied at the related Mortgaged Property,
or to release such amounts to the related Borrower or otherwise apply such
amounts for any other appropriate purpose in the event that such criteria are
satisfied. Subject to the terms of the related Mortgage Loan documents, each
Reserve Account shall be an Eligible Account. Interest and other income, if any,
earned on funds on deposit in any Reserve Account held by the Master Servicer
(to the extent of any Net Investment Earnings with respect to such Reserve
Account for any Collection Period), shall be for the benefit of and payable to
the Master Servicer, unless otherwise required to be paid to the related
Borrower by law or the terms of the related Mortgage Loan. Any out-of-pocket
expenses incurred by the Master Servicer to enable the Master Servicer to make
any draw under any Letter of Credit shall constitute a Servicing Advance, and
the Master Servicer shall make reasonable efforts to recover such expenses from
the related Borrower to the extent the Borrower is required to pay such expenses
under the terms of the related Mortgage Loan. Except as otherwise provided in
any Letter of Credit or in the related Mortgage Loan documents, the Master
Servicer shall not release any Letter of Credit without the approval of the
Special Servicer.
(e) To the extent an operations and maintenance plan is
required to be established and executed pursuant to the terms of a Mortgage
Loan, the Master Servicer shall request from the Borrower written confirmation
thereof within a reasonable time after the later of the Closing Date and the
date as of which such plan is required to be established or completed. To the
extent any other action or remediation with respect to environmental matters is
required to have been taken or completed pursuant to the terms of the related
Mortgage Loan documents, the Master Servicer shall request from the Borrower
written confirmation of such action and remediations within a reasonable time
after the later of the Closing Date and the date as of which such action or
remediations are required to have been taken or completed. To the extent that a
Borrower shall fail to promptly respond to any inquiry described in this Section
3.03(e), the Master Servicer shall notify the Trustee, the Special Servicer and
the Controlling Class Representative. The Master Servicer shall promptly notify
the Trustee, the Special Servicer and the Controlling Class Representative if
the Master Servicer shall determine that any Borrower has failed to perform its
obligations under the related Mortgage Loan in respect of environmental matters.
(f) Subject to applicable law and the terms of the related
Mortgage Loan documents, funds in the Servicing Accounts and the Reserve
Accounts may be invested only in Permitted Investments in accordance with the
provisions of Section 3.06.
SECTION 3.04. Collection Account, Distribution Account and
Interest Reserve Account.
(a) The Master Servicer shall establish and maintain one or
more segregated accounts (collectively, the "Collection Account"), in which the
funds described below are to be deposited and held on behalf of the Trustee in
trust for the benefit of the Certificateholders. Each account that constitutes
the Collection Account shall be an Eligible Account. The Master Servicer shall
deposit or cause to be deposited in the Collection Account, within one Business
Day of receipt (in the case of payments by Borrowers or other collections on the
Mortgage Loans) or as otherwise required hereunder, the following payments and
collections received or made by or on behalf of the Master Servicer in respect
of the Mortgage Pool
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subsequent to the Closing Date (other than in respect of scheduled payments of
principal and interest due and payable on the Mortgage Loans on or before the
Cut-off Date (or, in the case of a Replacement Mortgage Loan, on or before the
related date of substitution), which payments shall be delivered promptly to the
related Mortgage Loan Seller or its designee, with negotiable instruments
endorsed as necessary and appropriate without recourse):
(i) all payments or transfers from a debt service reserve
account on account of principal of the Mortgage Loans, including
Principal Prepayments;
(ii) all payments or transfers from a debt service reserve
account on account of interest on the Mortgage Loans, including Default
Interest and Additional Interest;
(iii) all Prepayment Premiums, Yield Maintenance Charges and
late payment charges received in respect of the Mortgage Loans;
(iv) all Insurance Proceeds and Liquidation Proceeds received
in respect of the Mortgage Loans;
(v) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.06 in connection with losses incurred
with respect to Permitted Investments of funds held in the Collection
Account;
(vi) any amounts required to be deposited by the Master
Servicer or the Special Servicer pursuant to Section 3.07(b) in
connection with losses resulting from a deductible clause in a blanket
or master force place hazard policy;
(vii) any amounts required to be transferred from any REO
Account pursuant to Section 3.16(c); and
(viii) insofar as they do not constitute Escrow Payments, any
amounts paid by a Borrower specifically to cover items for which a
Servicing Advance has been made.
The foregoing requirements for deposit in the Collection
Account shall be exclusive. Without limiting the generality of the foregoing,
actual payments from Borrowers in the nature of Escrow Payments, assumption
fees, assumption application fees, extension fees, modification fees, charges
for beneficiary statements or demands and amounts collected for checks returned
for insufficient funds, need not be deposited by the Master Servicer in the
Collection Account. The Master Servicer shall promptly deliver to the Special
Servicer any of the foregoing items received by it, if and to the extent that
such items constitute Additional Special Servicing Compensation. If the Master
Servicer shall deposit in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the Collection
Account, any provision herein to the contrary notwithstanding.
Upon receipt of any of the amounts described in clauses (i)
through (iv) and (viii) of the first paragraph of this Section 3.04(a) with
respect to any Mortgage Loan, the Special Servicer shall promptly, but in no
event later than one Business Day after receipt, remit such amounts to the
Master Servicer for deposit into the Collection Account in accordance with the
second preceding paragraph, unless the Special Servicer determines, consistent
with the Servicing Standard, that a particular item should not be deposited
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because of a restrictive endorsement. With respect to any such amounts paid by
check to the order of the Special Servicer, the Special Servicer shall endorse
such check to the order of the Master Servicer (in its capacity as such for the
Trust), without recourse, representation or warranty, unless the Special
Servicer determines, consistent with the Servicing Standard, that a particular
item cannot be so endorsed and delivered because of a restrictive endorsement.
Any such amounts received by the Special Servicer with respect to an REO
Property shall be deposited by the Special Servicer into the REO Account and
remitted to the Master Servicer for deposit into the Collection Account pursuant
to Section 3.16(c).
(b) The Trustee shall establish and maintain one or more
segregated accounts (collectively, the "Distribution Account"), to be held in
trust for the benefit of the Certificateholders. Each account that constitutes
the Distribution Account shall be an Eligible Account. The Trustee shall, as a
bookkeeping matter, establish and maintain two sub-accounts of the Distribution
Account (i) one of which sub-accounts (such sub-account, the "REMIC
Sub-Account") shall be deemed to be held in trust for the benefit of the Holders
of the Regular Interest Certificates and the Residual Interest Certificates and
(ii) one of which sub- accounts (such sub-account, the "Class E Sub-Account")
shall be deemed to be held in trust for the benefit of the Holders of the Class
E Certificates. By 2:00 p.m. (New York City time) on each Master Servicer
Remittance Date, the Master Servicer shall deliver to the Trustee, for deposit
in the Distribution Account, an aggregate amount of immediately available funds
equal to the Master Servicer Remittance Amount for such Master Servicer
Remittance Date. Immediately upon deposit of the Master Servicer Remittance
Amount for any Master Servicer Remittance Date into the Distribution Account,
any portion thereof that represents any Additional Interest related to the ARD
Loans shall be deemed to have been deposited into the Class E Sub-Account, and
the remaining portion thereof shall be deemed to have been deposited into the
REMIC Sub-Account. In addition, the Master Servicer shall, as and when required
hereunder, deliver to the Trustee for deposit in the Distribution Account any
P&I Advances and Compensating Interest Payments required to be made by the
Master Servicer hereunder. Furthermore, any amounts paid by any party hereto to
indemnify the Trust Fund pursuant to any provision hereof shall be delivered to
the Trustee for deposit in the Distribution Account. The Trustee shall, upon
receipt, deposit in the Distribution Account any and all amounts received or,
pursuant to Section 4.03, advanced by the Trustee or any Fiscal Agent that are
required by the terms of this Agreement to be deposited therein. As and when
required pursuant to Section 3.05(c), the Trustee shall transfer Interest
Reserve Amounts in respect of the Interest Reserve Loans from the Interest
Reserve Account to the Distribution Account. If the Trustee shall deposit in the
Distribution Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Distribution Account, any provision
herein to the contrary notwithstanding.
(c) The Trustee shall establish and maintain one or more
accounts (collectively, the "Interest Reserve Account") to be held in trust for
the benefit of the Certificateholders. Each account that constitutes the
Interest Reserve Account shall be an Eligible Account. On the Distribution Date
in January (except during a leap year) and February of each calendar year,
commencing in 2000, prior to any distributions being made in respect of the
Certificates on such Distribution Date, the Trustee shall, with respect to each
Interest Reserve Loan, withdraw from the Distribution Account and deposit in the
Interest Reserve Account an amount equal to the Interest Reserve Amount, if any,
in respect of such Interest Reserve Loan for such Distribution Date; provided
that no such transfer of monies from the Distribution Account to the Interest
Reserve Account shall be made on the Final Distribution Date.
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(d) Funds in the Collection Account may be invested in
Permitted Investments in accordance with the provisions of Section 3.06. Funds
in the Distribution Account and the Interest Reserve Account shall remain
uninvested. The Master Servicer shall give notice to the other parties hereto of
the location of the Collection Account as of the Closing Date and of the new
location of the Collection Account prior to any change thereof. The Distribution
Account and the Interest Reserve Account shall each be established at the
Corporate Trust Office of the Trustee as of the Closing Date, and the Trustee
shall give notice to the other parties hereto of the new location of each of the
Distribution Account and the Interest Reserve Account prior to any change
thereof.
SECTION 3.05. Permitted Withdrawals From the Collection
Account, the Distribution Account and the
Interest Reserve Account.
(a) The Master Servicer may, from time to time, make
withdrawals from the Collection Account for any of the following purposes (the
order set forth below not constituting an order of priority for such
withdrawals):
(i) to remit to the Trustee for deposit in the Distribution
Account the Master Servicer Remittance Amount for each Master Servicer
Remittance Date and any amounts that may be applied to make P&I
Advances pursuant to Section 4.03(a);
(ii) to reimburse itself, the Trustee or any Fiscal Agent, as
applicable, for unreimbursed P&I Advances made thereby (in each case,
with its own funds), the Master Servicer's, the Trustee's and any
Fiscal Agent's, as the case may be, respective rights to reimbursement
pursuant to this clause (ii) with respect to any P&I Advance (other
than Nonrecoverable P&I Advances, which are reimbursable pursuant to
clause (vii) below) being limited to amounts that represent Late
Collections of interest and principal received in respect of the
particular Mortgage Loan or REO Mortgage Loan as to which such P&I
Advance was made (net of related Master Servicing Fees and/or Workout
Fees);
(iii) to pay to itself earned and unpaid Master Servicing Fees
in respect of each Mortgage Loan and REO Mortgage Loan, the Master
Servicer's right to payment pursuant to this clause (iii) with respect
to any Mortgage Loan or REO Mortgage Loan being limited to amounts
received on or in respect of such Mortgage Loan (whether in the form of
payments, Liquidation Proceeds or Insurance Proceeds) or such REO
Mortgage Loan (whether in the form of REO Revenues, Liquidation
Proceeds or Insurance Proceeds) that are allocable as interest thereon;
(iv) to pay to the Special Servicer, out of general
collections on the Mortgage Loans and any REO Properties, earned and
unpaid Special Servicing Fees in respect of each Specially Serviced
Mortgage Loan and REO Mortgage Loan;
(v) to pay the Special Servicer (or, if applicable, any
predecessor thereto) earned and unpaid Workout Fees and Liquidation
Fees to which it is entitled pursuant to, and from the sources
contemplated by, the second and third paragraphs of Section 3.11(c);
(vi) to reimburse itself, the Special Servicer, the Trustee or
any Fiscal Agent, as applicable, for any unreimbursed Servicing
Advances made thereby (in each case, with its own funds), the Master
Servicer's, the Special Servicer's, the Trustee's and any Fiscal
Agent's, as the case may be, respective
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rights to reimbursement pursuant to this clause (vi) with respect to
any Servicing Advance (other than Nonrecoverable Servicing Advances,
which are reimbursable pursuant to clause (vii) below) being limited to
(A) payments made by the related Borrower that are allocable to cover
the item in respect of which such Servicing Advance was made, and (B)
Liquidation Proceeds, Insurance Proceeds and, if applicable, REO
Revenues received in respect of the particular Mortgage Loan or REO
Property as to which such Servicing Advance was made;
(vii) to reimburse itself, the Special Servicer, the Trustee
or any Fiscal Agent, as applicable, out of general collections on the
Mortgage Loans and any REO Properties, for any unreimbursed Advances
made thereby that have been determined to be Nonrecoverable Advances;
(viii) to pay itself, the Special Servicer, the Trustee or any
Fiscal Agent, as applicable, any Advance Interest due and owing
thereto, the Master Servicer's, the Special Servicer's, the Trustee's
or any Fiscal Agent's, as the case may be, respective rights to payment
pursuant to this clause (viii) being limited to Default Charges
collected in respect of the Mortgage Loan or REO Mortgage Loan as to
which the related Advances were made;
(ix) to the extent that the Master Servicer has reimbursed or
is reimbursing itself, the Special Servicer, the Trustee or any Fiscal
Agent, as applicable, for any unreimbursed Advance pursuant to clause
(ii), (vi) or (vii) above or pursuant to Section 3.03(c), and insofar
as payment has not already been made, and the related Default Charges
then on deposit in the Collection Account are not sufficient to make
such payment pursuant to clause (viii) above, to pay itself, the
Special Servicer, the Trustee or such Fiscal Agent, as the case may be,
out of general collections on the Mortgage Loans and any REO
Properties, any related Advance Interest accrued and payable on the
portion of such Advance so reimbursed or being reimbursed;
(x) to pay itself any items of Additional Master Servicing
Compensation on deposit in the Collection Account from time to time;
(xi) to pay to the Special Servicer any items of Additional
Special Servicing Compensation on deposit in the Collection Account
from time to time;
(xii) to pay any unpaid Liquidation Expenses incurred with
respect to any Mortgage Loan or REO Property, such payments to be made
solely from Liquidation Proceeds, Insurance Proceeds and, if
applicable, REO Revenues received in respect of such Mortgage Loan or
REO Property, as the case may be;
(xiii) to pay, in accordance with Section 3.11(i), out of
general collections on the Mortgage Loans and any REO Properties,
certain servicing expenses that would, if advanced, constitute
Nonrecoverable Servicing Advances;
(xiv) to pay, out of general collections on the Mortgage Loans
and any REO Properties, for costs and expenses incurred by the Trust
Fund pursuant to Section 3.09(c) (other than the costs of environmental
testing, which are to be covered by, and reimbursable as, a Servicing
Advance);
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(xv) to pay itself, the Special Servicer, the Tax
Administrator, the Depositor, the Trustee, any Fiscal Agent, or any of
their respective directors, officers, members, managers, employees and
agents, as the case may be, out of general collections on the Mortgage
Loans and any REO Properties, any amounts payable to any such Person
pursuant to Section 6.03, Section 7.01(b), Section 8.05(b), Section
8.13 or Section 10.03, as applicable;
(xvi) to pay, out of general collections on the Mortgage Loans
and any REO Properties, for (A) the cost of the Opinion of Counsel
contemplated by Section 11.02(a), and (B) the cost of recording this
Agreement in accordance with Section 11.02(a);
(xvii) to pay, out of general collections on the Mortgage
Loans and any REO Properties, for any expense (including the reasonable
fees of tax accountants and attorneys) incurred by the Tax
Administrator pursuant to Section 3.17(a)(iii) in connection with
providing advice to the Special Servicer;
(xviii) to pay to the Master Servicer, the Special Servicer,
the Trustee, any Fiscal Agent, the Tax Administrator or the Depositor,
as the case may be, any amount specifically required to be paid to such
Person at the expense of the Trust Fund under any provision of this
Agreement to which reference is not made in any other clause of this
Section 3.05(a), it being acknowledged that this clause (xviii) shall
not be construed to modify any limitation otherwise set forth in this
Agreement on the time at which any Person is entitled to payment or
reimbursement of any amount or the funds from which any such payment or
reimbursement is permitted to be made;
(xix) to pay itself, the Special Servicer, the Mortgage Loan
Seller, a Controlling Class Certificateholder or any other particular
Person, as the case may be, with respect to each Mortgage Loan, if any,
previously purchased by such Person pursuant to this Agreement, all
amounts received thereon subsequent to the date of purchase; and
(xx) to clear and terminate the Collection Account at the
termination of this Agreement pursuant to Section 9.01.
If amounts on deposit in the Collection Account at any
particular time (after withdrawing any portion of such amounts deposited in the
Collection Account in error) are insufficient to satisfy all payments,
reimbursements and remittances to be made therefrom as set forth in clauses (ii)
through (xix), above, then the corresponding withdrawals from the Collection
Account shall be made in the following priority and subject to the following
rules: (y) if the payment, reimbursement or remittance is to be made from a
specific source of funds, then such payment, reimbursement or remittance shall
be made from that specific source of funds on a pro rata basis with any and all
other payments, reimbursements and remittances to be made from such specific
source of funds; and (z) if the payment, reimbursement or remittance can be made
from any funds on deposit in the Collection Account, then (following any
withdrawals made from the Collection Account in accordance with the immediately
preceding clause (y) above) such payment, reimbursement or remittance shall be
made from the general funds remaining on a pro rata basis with any and all other
payments, reimbursements or remittances to be made from such general funds;
provided that any reimbursements of Advances in respect of any particular
Mortgage Loan or REO Property out of the Collection Account pursuant to any of
clauses (ii), (vi) and (vii) above, and any payments of interest thereon out of
the Collection Account pursuant to either of clauses (viii) and (ix) above,
shall be made (to the extent
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of their respective entitlements to such reimbursements and/or payments): first,
to any Fiscal Agent; second, to the Trustee; and third, pro rata, to the Master
Servicer and Special Servicer.
The Master Servicer shall keep and maintain separate
accounting records, on a loan-by-loan and property-by-property basis when
appropriate, in connection with any withdrawal from the Collection Account
pursuant to any of clauses (ii) through (xix) above.
The Master Servicer shall pay to the Special Servicer (or to
third party contractors at the direction of the Special Servicer) from the
Collection Account amounts permitted to be paid to it (or to such third party
contractors) therefrom promptly upon receipt of a certificate of a Servicing
Officer of the Special Servicer describing the item and amount to which the
Special Servicer (or any such third party contractor) is entitled. The Master
Servicer may rely conclusively on any such certificate and shall have no duty to
re- calculate the amounts stated therein. The Special Servicer shall keep and
maintain separate accounting for each Specially Serviced Mortgage Loan and REO
Property, on a loan-by-loan and property-by-property basis, for the purpose of
justifying any request for withdrawal from the Collection Account.
(b) The Trustee shall, from time to time, make withdrawals
from the Distribution Account for each of the following purposes (the order set
forth below not constituting an order of priority for such withdrawals):
(i) to make distributions to Certificateholders on each
Distribution Date pursuant to Section 4.01;
(ii) to pay itself or any of its directors, officers,
employees and agents, as the case may be, any amounts payable or
reimbursable to any such Person pursuant to Section 8.05, including the
Trustee's Fee;
(iii) to pay the Tax Administrator, any Fiscal Agent or any of
their respective directors, officers, employees and agents, as the case
may be, any amounts payable or reimbursable to any such Person pursuant
to Sections 8.05(b), 8.13(a) and/or 10.03;
(iv) to pay for the cost of the Opinions of Counsel sought by
the Trustee as contemplated by Section 11.01(a) or 11.01(c) in
connection with any amendment to this Agreement requested by the
Trustee which amendment is in furtherance of the rights and interests
of Certificateholders;
(v) to pay any and all federal, state and local taxes imposed
on any REMIC Pool or on the assets or transactions of any REMIC Pool,
together with all incidental costs and expenses, and any and all
expenses relating to tax audits, if and to the extent that either (A)
none of the parties hereto are liable therefor pursuant to Section
10.01(b) and/or Section 10.01(f) or (B) any such Person that may be so
liable has failed to timely make the required payment;
(vi) to transfer Interest Reserve Amounts in respect of the
Interest Reserve Loans to the Interest Reserve Account as and when
required by Section 3.04(c); and
(vii) to clear and terminate the Distribution Account at the
termination of this Agreement pursuant to Section 9.01.
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(c) On the Master Servicer Remittance Date in March of each
year (commencing in March 2000), and in any event on the Master Servicer
Remittance Date that occurs in the same calendar month as the Final Distribution
Date, the Trustee shall withdraw from the Interest Reserve Account and deposit
in the Distribution Account all Interest Reserve Amounts in respect of the
Interest Reserve Loans then on deposit in the Interest Reserve Account.
(d) The Trustee, any Fiscal Agent, the Depositor, the Master
Servicer and the Special Servicer, as applicable, shall in all cases have a
right prior to the Certificateholders to any particular funds on deposit in the
Collection Account and the Distribution Account from time to time for the
reimbursement or payment of compensation, Advances (with interest thereon at the
Reimbursement Rate) and their respective expenses hereunder (or, in the case of
such expenses, to have such funds paid directly to third party contractors from
any invoices approved by the Trustee, any Fiscal Agent, the Depositor, the
Master Servicer or the Special Servicer, as applicable), but only if and to the
extent such compensation, Advances (with interest) and expenses are to be
reimbursed or paid from such particular funds on deposit in the Collection
Account or the Distribution Account pursuant to the express terms of this
Agreement.
SECTION 3.06. Investment of Funds in the Collection Account,
Servicing Accounts, Reserve Accounts and the REO
Account.
(a) The Master Servicer may direct (pursuant to a standing
order or otherwise) any depository institution (including the Trustee)
maintaining the Collection Account or any Servicing Account or Reserve Account
held by it, and the Special Servicer may direct (pursuant to a standing order or
otherwise) any depository institution maintaining the REO Account, to invest, or
if it is such depository institution, may itself invest, the funds held therein
(each such account, for purposes of this Section 3.06, an "Investment Account")
in (but only in) one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, no later than the Business Day
immediately preceding the next succeeding date on which such funds are required
to be withdrawn from such account pursuant to this Agreement or the related
Mortgage Loan documents, as applicable; provided that any such investment of
funds in any Servicing Account or Reserve Account shall be subject to applicable
law and the terms of the related Mortgage Loan documents; and provided, further,
that the funds in any Investment Account shall remain uninvested unless and
until the Master Servicer or Special Servicer, as applicable, gives timely
investment instructions with respect thereto pursuant to this Section 3.06. All
such Permitted Investments shall be held to maturity, unless payable on demand.
Any investment of funds in an Investment Account shall be made in the name of
the Trustee (in its capacity as such). The Master Servicer (with respect to
Permitted Investments of amounts in the Collection Account, the Servicing
Accounts and the Reserve Accounts) and the Special Servicer (with respect to
Permitted Investments of amounts in the REO Account), acting on behalf of the
Trustee, shall (and Trustee hereby designates the Master Servicer and the
Special Servicer, as applicable, as the Person that shall) (i) be the
"entitlement holder" of any Permitted Investment that is a "security
entitlement" and (ii) maintain "control" of any Permitted Investment that is
either a "certificated security" or an "uncertificated security". For purposes
of this Section 3.06(a), the terms "entitlement holder", "security entitlement",
"control", "certificated security" and "uncertificated security" shall have the
meanings given such terms in Revised Article 8 (1994 Revision) of the UCC, and
"control" of any Permitted Investment by the Master Servicer or the Special
Servicer shall constitute "control" by a Person designated by, and acting on
behalf of, the Trustee for purposes of Revised Article 8 (1994 Revision) of the
UCC. If amounts on deposit in an Investment Account are at any time invested in
a Permitted Investment payable on demand, the Master Servicer (in the case of
the Collection Account or any Servicing Account or Reserve Account) or the
Special Servicer (in the case of the REO Account) shall:
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(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 at least 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 the case may be, that such Permitted
Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Investment
Account.
(b) Whether or not the Master Servicer directs the investment
of funds in the Collection Account, interest and investment income realized on
funds deposited therein, to the extent of the Net Investment Earnings, if any,
for such Investment Account for each Collection Period, shall be for the sole
and exclusive benefit of the Master Servicer and shall be subject to its
withdrawal in accordance with Section 3.05(a). Whether or not the Master
Servicer directs the investment of funds in any Servicing Account or Reserve
Account, interest and investment income realized on funds deposited therein, to
the extent of the Net Investment Earnings, if any, for such Investment Account
for each Collection Period, shall be for the sole and exclusive benefit of the
Master Servicer and shall be subject to withdrawal from time to time in
accordance with Section 3.03, but only if and to the extent not required to be
paid to the related Borrower pursuant to applicable law or the terms of the
related Mortgage Loan. Whether or not the Special Servicer directs the
investment of funds in the REO Account, interest and investment income realized
on funds deposited therein, to the extent of the Net Investment Earnings, if
any, for such Investment Account for each Collection Period, shall be for the
sole and exclusive benefit of the Special Servicer and shall be subject to its
withdrawal in accordance with Section 3.16(b). If any loss shall be incurred in
respect of any Permitted Investment on deposit in any Investment Account (other
than a loss of what would otherwise have constituted investment earnings), the
Master Servicer (in the case of the Collection Account and any Servicing Account
or Reserve Account) and the Special Servicer (in the case of the REO Account)
shall promptly deposit therein from its own funds, without right of
reimbursement, no later than the end of the Collection Period during which such
loss was incurred, the amount of the Net Investment Loss, if any, in respect of
such Investment Account for such Collection Period (or, in the case of a
Servicing Account or Reserve Account, the entire amount of such loss).
(c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of any payment due (or in any other
performance required) under any Permitted Investment, and if the Master Servicer
(if such default is in respect of a Permitted Investment of funds in the
Collection Account or in any Reserve Account or Servicing Account) or the
Special Servicer (if such default is in respect of a Permitted Investment of
funds in the REO Account), as applicable, is in default of its obligations under
Section 3.06(b), the Trustee may, and, subject to Section 8.02, upon the request
of Holders of Certificates entitled to not less than 25% of the Voting Rights
allocated to any Class of Regular Interest Certificates, the Trustee shall, take
such action as may be appropriate to enforce such payment or performance,
including the institution and prosecution of appropriate legal proceedings. Any
costs incurred by the Trustee in taking any such action shall be reimbursed to
it by the Master Servicer if the default is in respect of a Permitted Investment
of funds in the Collection Account or in any Reserve Account or Servicing
Account or by the Special Servicer if the default is in respect of a Permitted
Investment of funds in the REO Account. This provision is in no way intended to
limit any actions that the Master Servicer or Special Servicer may take in this
regard at its own expense.
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(d) Amounts on deposit in the Distribution Account and the
Interest Reserve Account shall remain uninvested.
(e) Notwithstanding the investment of funds held in any
Investment Account, for purposes of the calculations hereunder, including the
calculation of the Available Distribution Amount and the Master Servicer
Remittance Amount, the amounts so invested shall be deemed to remain on deposit
in such Investment Account.
SECTION 3.07. Maintenance of Insurance Policies; Errors and
Omissions and Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each
Mortgaged Property (including each Mortgaged Property relating to any Specially
Serviced Mortgage Loan) all insurance coverage as is required under the related
Mortgage (to the extent consistent with applicable law); provided that if and to
the extent that any such Mortgage permits the holder thereof any discretion (by
way of consent, approval or otherwise) as to the insurance coverage that the
related Borrower is required to maintain, the Master Servicer shall exercise
such discretion in a manner consistent with the Servicing Standard, with a view
towards requiring insurance comparable to that required under other Mortgage
Loans with express provisions governing such matters; and provided, further,
that, if and to the extent that a Mortgage so permits, the related Borrower
shall be required to obtain the required insurance coverage from Qualified
Insurers that, in each case, have a financial strength or claims-paying rating
no lower than two rating categories below the highest rated Certificates
outstanding, and in any event no lower than "____" from __________ (if then
rated by _____________; and, if not then rated by _______________, "_____" or
better from ____________) and "____" from __________ (if then rated by
_____________; and, if not then rated by _______________, "_____" or better from
____________) (or in such other form and amount or issued by an insurer with
such other financial strength or claims-paying ability as would not, as
confirmed in writing by each Rating Agency, result in an Adverse Rating Event).
Subject to Section 3.17(b), the Special Servicer shall also cause to be
maintained for each REO Property no less insurance coverage than was previously
required of the Borrower under the related Mortgage and, at a minimum, (i)
hazard insurance with a replacement cost rider, (ii) business interruption or
rental loss insurance for at least 12 months, and (iii) commercial general
liability insurance, in each case, in an amount customary for the type and
geographic location of such REO Property and consistent with the Servicing
Standard; provided that all such insurance shall be obtained from Qualified
Insurers that, in each case, shall have a financial strength or claims-paying
rating no lower than two rating categories below the highest rated Certificates
outstanding, and in any event no lower than "____" from __________ (if then
rated by _____________; and, if not then rated by _______________, "_____" or
better from ____________) and "____" from __________ (if then rated by
_____________; and, if not then rated by _______________, "_____" or better from
____________) (or in such other form and amount or issued by an insurer with
such other financial strength or claims-paying ability as would not, as
confirmed in writing by each Rating Agency, result in an Adverse Rating Event).
All such insurance policies shall contain (if they insure against loss to
property) a "standard" mortgagee clause, with loss payable to the Master
Servicer on behalf of the Trustee (in the case of insurance maintained in
respect of Mortgage Loans), or shall name the Trustee as the insured, with loss
payable to the Special Servicer on behalf of the Trustee (in the case of
insurance maintained in respect of REO Properties), and shall be issued by an
insurer authorized under applicable law to issue such insurance. Any amounts
collected by the Master Servicer or the Special Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the related
Mortgaged Property or REO Property or amounts to be released to the related
Borrower, in each case in accordance with the Servicing Standard) shall be
deposited in the Collection Account, subject to withdrawal
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pursuant to Section 3.05(a), in the case of amounts received in respect of a
Mortgage Loan, or in the REO Account, subject to withdrawal pursuant to Section
3.16(c), in the case of amounts received in respect of an REO Property. Any cost
incurred by the Master Servicer or the Special Servicer in maintaining any such
insurance shall not, for purposes hereof, including calculating monthly
distributions to Certificateholders, be added to unpaid principal balance or
Stated Principal Balance of the related Mortgage Loan, notwithstanding that the
terms of such Mortgage Loan so permit; provided, however, that this sentence
shall not limit the rights of the Master Servicer on behalf of the Trust to
enforce any obligations of the related Borrower under such Mortgage Loan.
(b) If the Master Servicer or the Special Servicer shall
obtain and maintain, or cause to be obtained and maintained, a blanket policy or
master force place policy insuring against hazard losses on all of the Mortgage
Loans or REO Properties, as applicable, that it is required to service and
administer, then, to the extent such policy (i) is obtained from a Qualified
Insurer having a financial strength or claims-paying rating no lower than "____"
from __________ and "_____" from ____________ (if then rated by _____________;
and, if not then rated by _______________, "_____" or better from ____________)
or having such other financial strength or claims-paying ability rating as would
not, as confirmed in writing by each Rating Agency, result in an Adverse Rating
Event, and (ii) provides protection equivalent to the individual policies
otherwise required, the Master Servicer or the Special Servicer, as the case may
be, shall conclusively be deemed to have satisfied its obligation to cause
hazard insurance to be maintained on the related Mortgaged Properties or REO
Properties, as applicable. Such policy may contain a deductible clause (not in
excess of a customary amount), in which case the Master Servicer or the Special
Servicer, as appropriate, shall, if there shall not have been maintained on the
related Mortgaged Property or REO Property a hazard insurance policy complying
with the requirements of Section 3.07(a), and there shall have been one or more
losses that would have been covered by such an individual policy, promptly
deposit into the Collection Account from its own funds the amount not otherwise
payable under the blanket or master force place policy in connection with such
loss or losses 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 any such deductible limitation, the
deductible limitation for an individual policy which is consistent with the
Servicing Standard). The Master Servicer or the Special Servicer, as
appropriate, shall prepare and present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket or master force place policy
in a timely fashion in accordance with the terms of such policy.
(c) On or before the Closing Date, with respect to each of the
Mortgage Loans, the Depositor shall notify the insurer under the related
Environmental Insurance Policy and take all other action necessary for the
Trustee, on behalf of the Certificateholders, to be an insured (and for the
Master Servicer, on behalf of the Trust, to make claims) under such
Environmental Insurance Policy. In the event that the Master Servicer has actual
knowledge of any event (an "Insured Environmental Event") giving rise to a claim
under any Environmental Insurance Policy in respect of any Mortgage Loan, the
Master Servicer shall, in accordance with the terms of such Environmental
Insurance Policy and the Servicing Standard, timely make a claim thereunder with
the appropriate insurer and shall take such other actions in accordance with the
Servicing Standard which are necessary under such Environmental Insurance Policy
in order to realize the full value thereof for the benefit of the
Certificateholders. With respect to each Environmental Insurance Policy in
respect of a Mortgage Loan, the Master Servicer shall review and familiarize
itself with the terms and conditions relating to enforcement of claims and shall
monitor the dates by which any claim must be made or any action must be taken
under such policy to realize the full value thereof for the benefit of the
Certificateholders in the event the Master Servicer has actual knowledge of an
Insured Environmental Event giving rise to a claim under such policy.
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In the event that the Master Servicer receives notice of any
termination of any Environmental Insurance Policy with respect to a Mortgage
Loan, the Master Servicer shall, within five Business Days after receipt of such
notice, notify the Special Servicer, the Controlling Class Representative, the
Rating Agencies and the Trustee of such termination in writing. Upon receipt of
such notice, the Master Servicer shall address such termination in accordance
with Section 3.07(a). Any legal fees, premiums or other out-of-pocket costs
incurred in accordance with the Servicing Standard in connection with a
resolution of such termination of an Environmental Insurance Policy shall be
paid by the Master Servicer and shall be reimbursable to it as a Servicing
Advance.
(d) Each of the Master Servicer and the Special Servicer shall
at all times during the term of this Agreement (or, in the case of the Special
Servicer, at all times during the term of this Agreement during which Specially
Serviced Mortgage Loans or REO Properties exist as part of the Trust Fund) keep
in force with a Qualified Insurer having a financial strength or claims-paying
rating no lower than two rating categories below the highest rated Certificates
outstanding, and in any event no lower than "____" from __________ and "_____"
from ____________ (if then rated by _____________; and, if not then rated by
_______________, "_____" or better from ____________), a fidelity bond in such
form and amount as would permit it to be a qualified FNMA seller-servicer of
multifamily mortgage loans (or in such other form and amount or issued by an
insurer with such other financial strength or claims-paying ability rating as
would not result in an Adverse Rating Event with respect to any Class of Rated
Certificates (as confirmed in writing to the Trustee by each Rating Agency)).
Each of the Master Servicer and the Special Servicer shall be deemed to have
complied with the foregoing provision if an Affiliate thereof has such fidelity
bond coverage and, by the terms of such fidelity bond, the coverage afforded
thereunder extends to the Master Servicer or the Special Servicer, as the case
may be. Such fidelity bond shall provide that it may not be canceled without ten
days' prior written notice to the Trustee.
Each of the Master Servicer and the Special Servicer shall at
all times during the term of this Agreement (or, in the case of the Special
Servicer, at all times during the term of this Agreement during which Specially
Serviced Mortgage Loans and/or REO Properties exist as part of the Trust Fund)
also keep in force with a Qualified Insurer having a financial strength or
claims-paying rating no lower than two rating categories below the highest rated
Certificates outstanding, and in any event no lower than "____" from __________
and "_____" from ____________ (if then rated by _____________; and, if not then
rated by _______________, "_____" or better from ____________), a policy or
policies of insurance covering loss occasioned by the errors and omissions of
its officers, employees and agents in connection with its servicing obligations
hereunder, which policy or policies shall be in such form and amount as would
permit it to be a qualified FNMA seller-servicer of multifamily mortgage loans
(or in such other form and amount or issued by an insurer with such other
financial strength or claims-paying rating as would not result in an Adverse
Rating Event with respect to any Class of Rated Certificates (as confirmed in
writing to the Trustee by each Rating Agency)). Each of the Master Servicer and
the Special Servicer shall be deemed to have complied with the foregoing
provisions if an Affiliate thereof has such insurance and, by the terms of such
policy or policies, the coverage afforded thereunder extends to the Master
Servicer or the Special Servicer, as the case may be. Any such errors and
omissions policy shall provide that it may not be canceled without ten days'
prior written notice to the Trustee.
[For so long as the long-term debt obligations of the initial
Master Servicer (or its direct or indirect parent) are rated at least "_____" or
the equivalent by each of the Rating Agencies, the initial Master Servicer may
self-insure with respect to the risks described in this Section 3.07(d).]
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SECTION 3.08. Enforcement of Alienation Clauses.
The Master Servicer (with respect to Mortgage Loans other than
Specially Serviced Mortgage Loans) and the Special Servicer (with respect to
Specially Serviced Mortgage Loans), on behalf of the Trustee as the mortgagee of
record, shall evaluate any right to transfer and, subject to Section 3.24, shall
enforce the restrictions contained in any Mortgage on transfers or further
encumbrances of the related Mortgaged Property and on transfers of interests in
the related Borrower, unless the Master Servicer or the Special Servicer, as
appropriate, has determined, in its reasonable, good faith judgment, that waiver
of such restrictions would be in accordance with the Servicing Standard;
provided that the Master Servicer shall not waive any right it has, or grant any
consent it is otherwise entitled to withhold, under any related "due-on- sale"
or "due-on-encumbrance" clause unless and until (i) it has so notified the
Special Servicer in writing and provided the Special Servicer with any written
or electronic information in the Master Servicer's possession regarding the
affected Mortgage Loan that the Special Servicer may reasonably request within
five Business Days of receiving such written notice and (ii) the Special
Servicer has consented to such action (such consent to be given or withheld in
accordance with the Servicing Standard and to be deemed given if the Special
Servicer does not object to such action within ten Business Days after receiving
such additional information from the Master Servicer (or, if it did not request
additional information, within ten Business Days after receiving such written
notice)); and provided, further, that neither the Master Servicer nor the
Special Servicer shall waive any right it has, or grant any consent it is
otherwise entitled to withhold, under any related "due-on-encumbrance" clause
(or, if it involves any Mortgage Loan that, individually or together with all
other Mortgage Loans, if any, that are in the same Cross-Collateralized Group as
such Mortgage Loan or have the same Borrower as such Mortgage Loan or have
Borrowers that are known to be affiliated with the Borrower under such Mortgage
Loan, either (i) represents one of the ten largest Mortgage Loans/groups of
related Mortgage Loans or (ii) has an unpaid principal balance at least equal to
the lesser of (A) $15,000,000 and (B) 2% of the then aggregate principal balance
of the Mortgage Pool, under any related "due-on-sale" clause) until it has
received written confirmation from each Rating Agency that such action would not
result in an Adverse Rating Event with respect to any Class of Rated
Certificates; and provided, further, that neither the Master Servicer nor the
Special Servicer shall (to the extent that it is within the control thereof to
prohibit such event) consent to the transfer of any Mortgaged Property which
secures a Cross-Collateralized Group unless all of the Mortgaged Properties
securing such Cross-Collateralized Group are transferred simultaneously by the
respective Borrower. After having made any determination to waive the Trust's
rights under a "due-on-sale" or "due-on encumbrance" clause, the Master Servicer
or the Special Servicer, as appropriate, shall deliver to the Trustee, each
Rating Agency and the other such party an Officer's Certificate setting forth
the basis for such determination. The Master Servicer and the Special Servicer
shall each provide the other with all such information as each may reasonably
request in order to make such determination.
If the Master Servicer or the Special Servicer collects an
assumption fee or an assumption application fee in connection with any transfer
or proposed transfer of any interest in a Borrower or a Mortgaged Property, then
the Master Servicer or the Special Servicer, as applicable, will apply that fee
to cover the costs and expenses associated with that transfer or proposed
transfer that would otherwise be payable or reimbursable out of the Trust Fund.
Any remaining portion of such assumption fee (such remaining portion, a "Net
Assumption Fee") or of such assumption application fee (such remaining portion,
a "New Assumption Application Fee") will be applied as additional compensation
to the Master Servicer or the Special Servicer in accordance with Section 3.11.
Neither the Master Servicer nor the Special Servicer shall waive any assumption
fee or assumption application fee, to the extent it would constitute additional
compensation for the other such party, without the consent of such other party.
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SECTION 3.09. Realization Upon Defaulted Mortgage Loans.
(a) The Special Servicer shall, subject to Sections 3.09(b),
3.09(c), 3.09(d) and 3.24, exercise reasonable efforts, consistent with the
Servicing Standard, to foreclose upon or otherwise comparably convert the
ownership of properties and other collateral securing such of the Mortgage Loans
as come into and continue in default and as to which no satisfactory
arrangements can be made for collection of delinquent payments, including
pursuant to Section 3.20; provided that neither the Master Servicer nor the
Special Servicer shall, with respect to any Designated ARD Loan after its
Anticipated Repayment Date, take any enforcement action with respect to the
payment of Additional Interest (other than the making of requests for its
collection) unless (i) the taking of an enforcement action with respect to the
payment of other amounts due under such Mortgage Loan is, in the good faith and
reasonable judgment of the Special Servicer, and without regard to such
Additional Interest, also necessary, appropriate and consistent with the
Servicing Standard or (ii) all other amounts due under such Mortgage Loan have
been paid, the payment of such Additional Interest has not been forgiven in
accordance with Section 3.20 and, in the good faith and reasonable judgment of
the Special Servicer, the Liquidation Proceeds expected to be recovered in
connection with such enforcement action will cover the anticipated costs of such
enforcement action and, if applicable, any associated Advance Interest. In
connection with the foregoing, in the event of a default under any Mortgage Loan
or Cross-Collateralized Group that is secured by real properties located in
multiple states, and such states include California or another state with a
statute, rule or regulation comparable to California's "one action rule", then
the Special Servicer shall consult Independent counsel regarding the order and
manner in which the Special Servicer should foreclose upon or comparably proceed
against such properties. The reasonable costs of such consultation shall be paid
by, and reimbursable to, the Special Servicer as a Servicing Advance. In
addition, all costs and expenses incurred in any such proceedings shall be paid
by, and reimbursable to, the Special Servicer as a Servicing Advance. Nothing
contained in this Section 3.09 shall be construed so as to require the Special
Servicer, on behalf of the Trust, to make a bid on any Mortgaged Property at a
foreclosure sale or similar proceeding that is in excess of the fair market
value of such property, as determined by the Special Servicer taking into
account the factors described in Section 3.18(e) and the results of any
appraisal obtained pursuant to the following sentence or otherwise, all such
bids to be made in a manner consistent with the Servicing Standard. If and when
the Special Servicer deems it necessary in accordance with the Servicing
Standard for purposes of establishing the fair market value of any Mortgaged
Property securing a defaulted Mortgage Loan, whether for purposes of bidding at
foreclosure or otherwise, the Special Servicer is authorized to have an
Appraisal completed with respect to such property (the cost of which appraisal
shall be covered by, and be reimbursable as, a Servicing Advance).
(b) Notwithstanding any other provision of this Agreement, no
Mortgaged Property shall be acquired by the Special Servicer on behalf of the
Trust under such circumstances, in such manner or pursuant to such terms as
would (i) cause such Mortgaged Property to fail to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (unless the
portion of such REO Property that is not treated as "foreclosure property" and
that is held by REMIC I at any given time constitutes not more than a de minimis
amount of the assets of REMIC I within the meaning of Treasury regulation
Section 1.860D-1(b)(3)(i) and (ii)), or (ii) except as permitted by Section
3.17(a), subject the Trust to the imposition of any federal income taxes under
the Code. In addition, the Special Servicer shall not acquire any personal
property on behalf of the Trust pursuant to this Section 3.09 unless either:
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(i) such personal property is incident to real property
(within the meaning of Section 856(e)(1) of the Code) so acquired by
the Special Servicer; or
(ii) the Special Servicer shall have obtained an Opinion of
Counsel (the cost of which shall be covered by, and reimbursable as, a
Servicing Advance) to the effect that the holding of such personal
property as part of the Trust Fund will not result in an Adverse REMIC
Event with respect to any REMIC Pool.
(c) Notwithstanding the foregoing provisions of this Section
3.09, neither the Master Servicer nor the Special Servicer shall, on behalf of
the Trust, obtain title to a Mortgaged Property by foreclosure, deed in lieu of
foreclosure or otherwise, or take any other action with respect to any Mortgaged
Property, if, as a result of any such action, the Trustee, on behalf of the
Certificateholders, could, in the reasonable, good faith judgment of the Special
Servicer, exercised in accordance with the Servicing Standard, be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of CERCLA or any
comparable law, unless:
(i) the Special Servicer has previously determined in
accordance with the Servicing Standard, based on a Phase I
Environmental Assessment (and any additional environmental testing that
the Special Servicer deems necessary and prudent) of such Mortgaged
Property conducted by an Independent Person who regularly conducts
Phase I Environmental Assessments and performed during the 12-month
period preceding any such acquisition of title or other action, that
the Mortgaged Property is in compliance with applicable environmental
laws and regulations and there are no circumstances or conditions
present at the Mortgaged Property relating to the use, management or
disposal of Hazardous Materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required
under any applicable environmental laws and regulations; or
(ii) in the event that the determination described in clause
(c)(i) above cannot be made, the Special Servicer has previously
determined in accordance with the Servicing Standard, on the same basis
as described in clause (c)(i) above, and taking into account the
coverage provided under the related Environmental Insurance Policy,
that it would maximize the recovery to the Certificateholders on a
present value basis (the relevant discounting of anticipated
collections that will be distributable to Certificateholders to be
performed at the related Mortgage Rate) to acquire title to or
possession of the Mortgaged Property and to take such remedial,
corrective and/or other further actions as are necessary to bring the
Mortgaged Property into compliance with applicable environmental laws
and regulations and to appropriately address any of the circumstances
and conditions referred to in clause (c)(i) above.
Any such determination by the Special Servicer contemplated by
clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an
Officer's Certificate to such effect delivered to the Trustee, the Master
Servicer and the Controlling Class Representative, specifying all of the bases
for such determination, such Officer's Certificate to be accompanied by all
related environmental reports. The cost of such Phase I Environmental Assessment
and any such additional environmental testing shall be advanced by the Master
Servicer at the direction of the Special Servicer given in accordance with the
Servicing Standard; provided, however, that the Master Servicer shall not be
obligated in connection therewith to advance any funds which, if so advanced,
would constitute a Nonrecoverable Servicing Advance. Amounts so advanced shall
be subject to reimbursement as Servicing Advances in accordance with Section
3.05(a).
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The cost of any remedial, corrective or other further action contemplated by
clause (ii) of the preceding paragraph shall be payable out of the Collection
Account pursuant to Section 3.05.
(d) If neither of the conditions set forth in clauses (i) and
(ii) of the first sentence of Section 3.09(c) has been satisfied with respect to
any Mortgaged Property securing a defaulted Mortgage Loan, the Special Servicer
shall take such action as is in accordance with the Servicing Standard (other
than proceeding against the Mortgaged Property) and, at such time as it deems
appropriate, may, on behalf of the Trust, release all or a portion of such
Mortgaged Property from the lien of the related Mortgage.
(e) The Special Servicer shall report to the Trustee, the
Master Servicer and the Controlling Class Representative monthly in writing as
to any actions taken by the Special Servicer with respect to any Mortgaged
Property as to which neither of the conditions set forth in clauses (i) and (ii)
of the first sentence of Section 3.09(c) has been satisfied, in each case until
the earliest to occur of satisfaction of either of such conditions, release of
the lien of the related Mortgage on such Mortgaged Property and the related
Mortgage Loan's becoming a Corrected Mortgaged Loan.
(f) The Special Servicer shall have the right to determine, in
accordance with the Servicing Standard, the advisability of seeking to obtain a
deficiency judgment if the state in which the Mortgaged Property is located and
the terms of the Mortgage Loan permit such an action and shall, in accordance
with the Servicing Standard, seek such deficiency judgment if it deems
advisable.
(g) The Special Servicer, with the assistance of the Master
Servicer, shall prepare and file the information returns with respect to the
receipt of any mortgage interest received in a trade or business from
individuals, the reports of foreclosures and abandonments of any Mortgaged
Property and the information returns relating to cancellation of indebtedness
income with respect to any Mortgaged Property required by Section 6050H, 6050J
and 6050P of the Code and shall deliver to the Trustee and the Tax Administrator
an Officer's Certificate stating that such reports have been filed. Such
information returns and reports shall be in form and substance sufficient to
meet the reporting requirements imposed by Sections 6050H, 6050J and 6050P of
the Code. The Master Servicer shall promptly provide to the Special Servicer on
a timely basis all information in the Master Servicer's possession to be
included in such reports and information returns.
(h) As soon as the Special Servicer makes a Final Recovery
Determination with respect to any Mortgage Loan or REO Property, it shall
promptly notify the Trustee, the Master Servicer and the Controlling Class
Representative. The Special Servicer shall maintain accurate records, prepared
by a Servicing Officer, of each such Final Recovery Determination (if any) and
the basis thereof. Each such Final Recovery Determination (if any) shall be
evidenced by an Officer's Certificate delivered to the Trustee and the Master
Servicer no later than the third Business Day following such Final Recovery
Determination.
SECTION 3.10. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in full shall be
escrowed in a manner customary for such purposes, the Master Servicer shall
promptly so notify the Trustee and request delivery to it or its designee of the
related Mortgage File (such notice and request to be effected by delivering to
the Trustee a Request for Release in the form of Exhibit D-1 attached hereto,
which Request for Release shall be accompanied by the form of any release or
discharge to be executed by the Trustee and shall include a statement to the
effect that all amounts
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received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 3.04(a) have been or
will be so deposited). Upon receipt of such Request for Release, the Trustee
shall promptly release, or cause any related Custodian to release, the related
Mortgage File to the Master Servicer or its designee and shall deliver to the
Master Servicer or its designee such accompanying release or discharge, duly
executed. No expenses incurred in connection with any instrument of satisfaction
or deed of reconveyance shall be chargeable to the Collection Account or the
Distribution Account.
(b) If from time to time, and as appropriate for servicing or
foreclosure of any Mortgage Loan, the Master Servicer or the Special Servicer
shall otherwise require any Mortgage File (or any portion thereof), then, upon
request of the Master Servicer and receipt from the Master Servicer of a Request
for Release in the form of Exhibit D-1 attached hereto signed by a Servicing
Officer thereof, or upon request of the Special Servicer and receipt from the
Special Servicer of a Request for Release in the form of Exhibit D-2 attached
hereto, the Trustee shall release, or cause any related Custodian to release,
such Mortgage File (or portion thereof) to the Master Servicer or the Special
Servicer, as the case may be, or its designee. Upon return of such Mortgage File
(or portion thereof) to the Trustee or the related Custodian, or upon the
Special Servicer's delivery to the Trustee of an Officer's Certificate stating
that (i) such Mortgage Loan was liquidated and all amounts received or to be
received in connection with such liquidation that are required to be deposited
into the Collection Account pursuant to Section 3.04(a) have been or will be so
deposited or (ii) such Mortgage Loan has become an REO Property, a copy of the
Request for Release shall be returned by the Trustee to the Master Servicer or
the Special Servicer, as applicable.
(c) Within five Business Days of the Special Servicer's
request therefor (or, if the Special Servicer notifies the Trustee of an
exigency, within such shorter period as is reasonable under the circumstances),
the Trustee shall execute and deliver to the Special Servicer, in the form
supplied to the Trustee by the Special Servicer, any court pleadings, requests
for trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Borrower on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity or to defend any legal action or counterclaim filed against the Trust,
the Master Servicer or the Special Servicer; provided that the Trustee may
alternatively execute and deliver to the Special Servicer, in the form supplied
to the Trustee by the Special Servicer, a limited power of attorney issued in
favor of the Special Servicer and empowering the Special Servicer to execute and
deliver any or all of such pleadings or documents on behalf of the Trustee
(however, the Trustee shall not be liable for any misuse of such power of
attorney by the Special Servicer). Together with such pleadings or documents (or
such power of attorney empowering the Special Servicer to execute the same on
behalf of the Trustee), the Special Servicer shall deliver to the Trustee an
Officer's Certificate requesting that such pleadings or documents (or such power
of attorney empowering the Special Servicer to execute the same on behalf of the
Trustee) be executed by the Trustee and certifying as to the reason such
pleadings or documents are required and that the execution and delivery thereof
by the Trustee (or by the Special Servicer on behalf of the Trustee) will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
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SECTION 3.11. Master Servicing and Special Servicing
Compensation; Interest on and Reimbursement of
Servicing Advances; Payment of Certain Expenses;
Obligations of the Trustee and any Fiscal Agent
regarding Back-up Servicing Advances.
(a) As compensation for its activities hereunder, the Master
Servicer shall be entitled to receive the Master Servicing Fee with respect to
each Mortgage Loan (including each Specially Serviced Mortgage Loan) and each
REO Mortgage Loan. As to each such Mortgage Loan and REO Mortgage Loan, for each
calendar month (commencing with _______________) or any applicable portion
thereof, the Servicing Fee shall accrue (on a 30/360 Basis) at the related
Master Servicing Fee Rate on the same principal amount as interest accrues from
time to time during such calendar month (or portion thereof) on such Mortgage
Loan or is deemed to accrue from time to time during such calendar month (or
portion thereof) on such REO Mortgage Loan, as the case may be. The Master
Servicing Fee with respect to any Mortgage Loan or REO Mortgage Loan shall cease
to accrue if a Liquidation Event occurs in respect thereof. Master Servicing
Fees earned with respect to any Mortgage Loan or REO Mortgage Loan shall be
payable monthly from payments of interest on such Mortgage Loan and REO Revenues
allocable as interest on such REO Mortgage Loan, as the case may be. The Master
Servicer shall be entitled to recover unpaid Master Servicing Fees in respect of
any Mortgage Loan or REO Mortgage Loan out of the portion any related Insurance
Proceeds or Liquidation Proceeds allocable as interest on such Mortgage Loan or
REO Mortgage Loan, as the case may be. The right to receive the Master Servicing
Fee may not be transferred in whole or in part except in connection with the
transfer of all of the Master Servicer's responsibilities and obligations under
this Agreement.
(b) The Master Servicer shall be entitled to receive the
following items as additional servicing compensation (the following items,
collectively, "Additional Master Servicing Compensation"):
(i) to the extent allocable to any Mortgage Loan for a period
that it is or was a Performing Mortgage Loan, any Net Default Charges
collected on such Mortgage Loan;
(ii) 50% of any and all Net Assumption Fees, modification fees
and extension fees actually paid by a Borrower with respect to a
Performing Mortgage Loan;
(iii) 100% of any and all charges for beneficiary statements
or demands, amounts collected for checks returned for insufficient
funds and other loan processing fees actually paid by a Borrower with
respect to a Performing Mortgage Loan;
(iv) 50% (or, if the Master Servicer rejects the proposed
assumption without involvement of the Special Servicer, 100%) of any
and all Net Assumption Application Fees actually paid by a Borrower
with respect to a Performing Mortgage Loan;
(v) any Prepayment Interest Excesses collected on the Mortgage
Loans; and
(vi) interest or other income earned on deposits in the
Investment Accounts maintained by the Master Servicer, in accordance
with Section 3.06(b) (but only to the extent of the Net Investment
Earnings, if any, with respect to any such Investment Account for each
Collection Period and, further, in the case of a Servicing Account or
Reserve Account, only to the extent such interest
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or other income is not required to be paid to any Borrower under
applicable law or under the related Mortgage).
To the extent that amounts described in clauses (ii), (iii)
and (iv) of the preceding paragraph are collected by the Special Servicer with
respect to Performing Mortgage Loans, the Special Servicer shall promptly pay
such amounts to the Master Servicer.
(c) As compensation for its activities hereunder, the Special
Servicer shall be entitled to receive monthly the Special Servicing Fee with
respect to each Specially Serviced Mortgage Loan and each REO Mortgage Loan. As
to each Specially Serviced Mortgage Loan and REO Mortgage Loan, for any
particular calendar month or applicable portion thereof, the Special Servicing
Fee shall accrue (on a 30/360 Basis) at the Special Servicing Fee Rate on the
same principal amount as interest accrues from time to time during such calendar
month (or portion thereof) on such Specially Serviced Mortgage Loan or is deemed
to accrue from time to time during such calendar month (or portion thereof) on
such REO Mortgage Loan, as the case may be. The Special Servicing Fee with
respect to any Specially Serviced Mortgage Loan or REO Mortgage Loan shall cease
to accrue as of the date a Liquidation Event occurs in respect thereof or, in
the case of a Specially Serviced Mortgage Loan, as of the date it becomes a
Corrected Mortgage Loan. Earned but unpaid Special Servicing Fees shall be
payable monthly out of general collections on the Mortgage Loans and any REO
Properties on deposit in the Collection Account pursuant to Section 3.05(a).
As further compensation for its activities hereunder, the
Special Servicer shall be entitled to receive the Workout Fee with respect to
each Corrected Mortgage Loan. As to each Corrected Mortgage Loan, the Workout
Fee shall be payable out of, and shall be calculated by application of the
Workout Fee Rate to, each collection of interest (other than Additional Interest
and Default Interest) and principal received on such Mortgage Loan for so long
as it remains a Corrected Mortgage Loan. The Workout Fee with respect to any
Corrected Mortgage Loan will cease to be payable if a Servicing Transfer Event
occurs with respect thereto or if the related Mortgaged Property becomes an REO
Property; provided that a new Workout Fee would become payable if and when such
Mortgage Loan again became a Corrected Mortgage Loan. If the Special Servicer is
terminated (other than for cause), including pursuant to Section 6.06, or
resigns in accordance with Section 6.04, it shall retain the right to receive
any and all Workout Fees payable in respect of Mortgage Loans that became
Corrected Mortgage Loans during the period that it acted as Special Servicer and
that were still Corrected Mortgage Loans at the time of such termination or
resignation (and the successor Special Servicer shall not be entitled to any
portion of such Workout Fees), in each case until the Workout Fee for any such
loan ceases to be payable in accordance with the preceding sentence.
As further compensation for its activities hereunder, the
Special Servicer shall also be entitled to receive a Liquidation Fee with
respect to each Specially Serviced Mortgage Loan or REO Property as to which it
receives any full or discounted payoff from the related Borrower or any
Liquidation Proceeds or Insurance Proceeds (other than in connection with the
purchase of any such Specially Serviced Mortgage Loan or REO Property by the
Master Servicer, the Special Servicer or a Controlling Class Certificateholder
pursuant to Section 3.18 or Section 9.01, or the purchase or replacement thereof
by ________ pursuant to the Agreement or the purchase or replacement thereof by
the Mortgage Loan Seller pursuant to the related Mortgage Loan Purchase and Sale
Agreement). As to each such Specially Serviced Mortgage Loan or REO Property,
the Liquidation Fee shall be payable out of, and shall be calculated by
application of the Liquidation Fee Rate to, any such full or discounted payoff,
Liquidation Proceeds and/or Insurance Proceeds received or collected in respect
thereof (other than any portion of such payment or proceeds that represents
Additional Interest, Default Interest, a Prepayment Premium or a Yield
Maintenance Charge). The Liquidation Fee with
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respect to any such Specially Serviced Mortgage Loan will not be payable if such
Mortgage Loan becomes a Corrected Mortgage Loan. Notwithstanding anything herein
to the contrary, no Liquidation Fee will be payable in connection with the
receipt of, or out of, Liquidation Proceeds collected as a result of the
purchase or substitution of any Specially Serviced Mortgage Loan or REO Property
described in the parenthetical to the first sentence of this paragraph.
The Special Servicer's right to receive the Special Servicing
Fee, the Workout Fee and/or the Liquidation Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Special
Servicer's responsibilities and obligations under this Agreement.
(d) The Special Servicer shall be entitled to receive the
following items as additional special servicing compensation (the following
items, collectively, the "Additional Special Servicing Compensation"):
(i) to the extent allocable to any Mortgage Loan for the
period that it is or was a Specially Serviced Mortgage Loan or
allocable to any REO Mortgage Loan, any Net Default Charges collected
on such Mortgage Loan or REO Mortgage Loan;
(ii) any Net Assumption Fees, Net Assumption Application Fees,
modification fees, extension fees, charges for beneficiary statements
or demands and amounts collected for checks returned for insufficient
funds that are actually received on or with respect to Specially
Serviced Mortgage Loans or REO Mortgage Loans;
(iii) 50% of any Net Assumption Fees, modification fees and
extension fees that are actually paid by a Borrower with respect to a
Performing Mortgage Loan;
(iv) if the related assumption has been submitted to the
Special Servicer for review, 50% of any Net Assumption Application Fees
that are actually paid by a Borrower with respect to a Performing
Mortgage Loan; and
(v) interest or other income earned on deposits in the REO
Account, if established, in accordance with Section 3.06(b) (but only
to the extent of the Net Investment Earnings, if any, with respect to
the REO Account for each Collection Period).
To the extent that amounts described in clause (i) or (ii) of
the preceding paragraph are collected by the Master Servicer with respect to
Specially Serviced Mortgage Loans, the Master Servicer shall promptly pay such
amounts to the Special Servicer and shall not be required to deposit such
amounts in the Collection Account pursuant to Section 3.04(a).
(e) The Master Servicer and the Special Servicer shall each be
required (subject to Section 3.11(h) below) to pay out of its own funds all
expenses incurred by it in connection with its servicing activities hereunder
(including, without limitation, payment of any amounts due and owing to any of
Sub- Servicers retained by it and the premiums for any blanket policy or the
standby fee or similar premium for any master force place policy obtained by it
insuring against hazard losses pursuant to Section 3.07(b)), if and to the
extent such expenses are not payable directly out of the Collection Account, the
Servicing Accounts, the Reserve Accounts or the REO Account, and neither the
Master Servicer nor the Special Servicer shall be entitled to reimbursement for
any such expense incurred by it except as expressly provided
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in this Agreement. If the Master Servicer is required to make any Servicing
Advance hereunder at the discretion of the Special Servicer in accordance with
Section 3.19 or otherwise, the Special Servicer shall promptly provide the
Master Servicer with such documentation regarding the subject Servicing Advance
as the Master Servicer may reasonably request.
(f) If the Master Servicer or Special Servicer is required
under this Agreement to make a Servicing Advance, but neither does so within ten
days after such Advance is required to be made, the Trustee shall, if it has
actual knowledge of such failure on the part of the Master Servicer or Special
Servicer, as the case may be, give notice of such failure, as applicable, to the
Master Servicer and the Special Servicer. If such Advance is not made by the
Master Servicer or the Special Servicer within three Business Days after such
notice, then (subject to Section 3.11(h) below) the Trustee or a Fiscal Agent
appointed thereby shall make such Advance. If any Fiscal Agent makes any such
Servicing Advance, the Trustee shall be deemed not to be in default under this
Agreement for failing to do so.
(g) The Master Servicer, the Special Servicer, the Trustee and
any Fiscal Agent shall each be entitled to receive interest at the Reimbursement
Rate in effect from time to time, accrued on the amount of each Servicing
Advance made thereby (with its own funds), and compounded monthly, for so long
as such Servicing Advance is outstanding. Such compound interest shall be
payable: (i) at any time, out of Default Charges collected on or in respect of
the particular Mortgage Loan or REO Property as to which such Servicing Advance
relates; and (ii) to the extent that such Default Charges are insufficient, but
only with respect to that portion of the related Servicing Advance that has been
or is being reimbursed pursuant to this Agreement, out of general collections on
the Mortgage Loans and REO Properties on deposit in the Collection Account. The
Master Servicer shall reimburse itself, the Special Servicer, the Trustee or any
Fiscal Agent, as appropriate, for any Servicing Advance made by any such Person
as soon as practicable after funds available for such purpose are deposited in
the Collection Account.
(h) Notwithstanding anything to the contrary set forth herein,
none of the Master Servicer, the Special Servicer, the Trustee or any Fiscal
Agent shall be required to make any Servicing Advance that it determines in its
reasonable, good faith judgment would constitute a Nonrecoverable Servicing
Advance. The determination by any Person with an obligation hereunder to make
Servicing Advances that it has made a Nonrecoverable Servicing Advance or that
any proposed Servicing Advance, if made, would constitute a Nonrecoverable
Servicing Advance, shall be made by such Person in its reasonable, good faith
judgment and shall be evidenced by an Officer's Certificate delivered promptly
to the Depositor and the Trustee (unless it is the Person making such
determination), which shall provide a copy thereof to the Controlling Class
Representative, setting forth the basis for such determination, accompanied by a
copy of an Appraisal of the related Mortgaged Property or REO Property performed
within the 12 months preceding such determination, and further accompanied by
any other information, including engineers' reports, environmental surveys or
similar reports, that such Person may have obtained and that support such
determination. Notwithstanding the foregoing, the Trustee and any Fiscal Agent
shall be entitled to conclusively rely on any determination of nonrecoverability
that may have been made by the Master Servicer or the Special Servicer with
respect to a particular Servicing Advance, and the Master Servicer and the
Special Servicer shall each be entitled to conclusively rely on any
determination of nonrecoverability that may have been made by the other such
party with respect to a particular Servicing Advance. A copy of any such
Officer's Certificate (and accompanying
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information) of the Master Servicer shall also be delivered promptly to the
Special Servicer, a copy of any such Officer's Certificate (and accompanying
information) of the Special Servicer shall also be promptly delivered to the
Master Servicer, and a copy of any such Officer's Certificates (and accompanying
information) of the Trustee or the Fiscal Agent shall also be promptly delivered
to the Master Servicer and the Special Servicer.
(i) Notwithstanding anything to the contrary set forth herein,
the Master Servicer shall (at the direction of the Special Servicer if a
Specially Serviced Mortgage Loan or an REO Property is involved) pay directly
out of the Collection Account any servicing expense that, if paid by the Master
Servicer or the Special Servicer, would constitute a Nonrecoverable Servicing
Advance; provided that the Master Servicer (or the Special Servicer, if a
Specially Serviced Mortgage Loan or an REO Property is involved) has determined
in accordance with the Servicing Standard that making such payment is in the
best interests of the Certificateholders (as a collective whole), as evidenced
by an Officer's Certificates delivered promptly to the Depositor and the
Trustee, which shall provide a copy thereof to the Controlling Class
Representative, setting forth the basis for such determination and accompanied
by any information that such Person may have obtained that supports such
determination. A copy of any such Officer's Certificate (and accompanying
information) of the Master Servicer shall also be delivered promptly to the
Special Servicer, and a copy of any such Officer's Certificate (and accompanying
information) of the Special Servicer shall also be promptly delivered to the
Master Servicer.
SECTION 3.12. Property Inspections; Collection of Financial
Statements; Delivery of Certain Reports.
(a) The Special Servicer shall perform or cause to be
performed a physical inspection of a Mortgaged Property as soon as practicable
(but in any event not later than 60 days) after the related Mortgage Loan
becomes a Specially Serviced Mortgage Loan and at least once per calendar year
thereafter for so long as such Mortgage Loan remains a Specially Serviced
Mortgage Loan or if such Mortgaged Property becomes an REO Property; provided
that the Special Servicer shall be entitled to reimbursement of the reasonable
and direct out-of-pocket expenses incurred by it in connection therewith as
Servicing Advances. Beginning in 2000, the Master Servicer shall at its expense
perform or cause to be performed an inspection of each Mortgaged Property at
least once per calendar year and each Mortgage Loan with an unpaid principal
balance of under $2,000,000, once every two years), if the Special Servicer has
not already done so during that period pursuant to the preceding sentence. The
Master Servicer and the Special Servicer shall each prepare a written report of
each such inspection performed by it or on its behalf that sets forth in detail
the condition of the Mortgaged Property and that specifies the occurrence or
existence of: (i) any sale, transfer or abandonment of the Mortgaged Property of
which the Master Servicer or Special Servicer, as applicable, is aware, (ii) any
change in the condition, occupancy or value of the Mortgaged Property that the
Master Servicer or the Special Servicer, as applicable, in accordance with the
Servicing Standard, considers material, or (iii) any waste committed on the
Mortgaged Property that the Master Servicer or the Special Servicer, as the case
may be, in accordance with the Servicing Standard, considers material. The
Master Servicer and the Special Servicer shall each deliver to the Trustee, the
Depositor and each other a copy (or image in suitable electronic media) of each
such written report prepared by it within 60 days of completion of the related
inspection. The Trustee shall, upon request and to the extent such items have
been delivered to the Trustee by the Master Servicer, deliver to the
Underwriter, the related Mortgage Loan Seller, the Controlling Class
Representative, any Certificateholder or, to the extent the Trustee has in
accordance with Section 5.06(b) confirmed the Ownership Interest in Certificates
held thereby, any Certificate Owner, a copy
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(or image in suitable electronic media) of each such written report prepared by
the Master Servicer or the Special Servicer.
(b) The Special Servicer, in the case of any Specially
Serviced Mortgage Loan, and the Master Servicer, in the case of each Performing
Mortgage Loan, shall make reasonable efforts to collect promptly from each
related Borrower quarterly and annual operating statements, budgets and rent
rolls of the related Mortgaged Property, and financial statements of such
Borrower, whether or not delivery of such items is required pursuant to the
terms of the related Mortgage. In addition, the Special Servicer shall cause
quarterly and annual operating statements, budgets and rent rolls to be
regularly prepared in respect of each REO Property and shall collect all such
items promptly following their preparation. The Master Servicer and the Special
Servicer shall each deliver copies of all of the foregoing items so collected
thereby to the Trustee, the Depositor and each other, in each case within 60
days of its receipt thereof. The Trustee shall, upon request, deliver copies of
the foregoing items to the Underwriter, the Controlling Class Representative,
the related Mortgage Loan Seller and any Certificateholder or, to the extent the
Trustee has in accordance with Section 5.06(b) confirmed the Ownership Interest
in Certificates held thereby, any Certificate Owner, a copy (or image in
suitable electronic media) of each such written report prepared by the Master
Servicer or the Special Servicer.
Within 45 days after receipt by the Master Servicer, as to
Performing Mortgage Loans, and within 20 days after receipt by the Special
Servicer, as to Specially Serviced Mortgage Loans, of any annual operating
statements or rent rolls with respect to any Mortgaged Property or REO Property,
the Master Servicer or the Special Servicer, as applicable, shall, based upon
such operating statements or rent rolls, prepare (or, if previously prepared,
update) the written analysis of operations (the "Operating Statement Analysis
Report"), and the Special Servicer shall remit each Operating Statement Analysis
Report prepared by it, together with the underlying operating statements and
rent rolls, to the Master Servicer in a format reasonably acceptable to the
Master Servicer. All Operating Statement Analysis Reports shall be maintained by
the Master Servicer with respect to each Mortgaged Property and REO Property,
and the Master Servicer shall forward copies thereof (in each case, promptly
following the initial preparation and each material revision thereof) to the
Trustee and the Special Servicer, together with the related operating statements
or rent rolls. The Trustee shall, upon request and to the extent such items have
been delivered to the Trustee by the Master Servicer, deliver to the
Underwriter, the related Mortgage Loan Seller, the Controlling Class
Representative, any Certificateholder or, to the extent the Trustee has in
accordance with Section 5.06(b) confirmed the Ownership Interest in the
Certificates held thereby, any Certificate Owner, a copy of such Operating
Statement Analysis (or update thereof) and the related operating statement or
rent rolls. The Master Servicer shall maintain an Operating Statement Analysis
Report with respect to each Mortgaged Property and REO Property. Each such
Operating Statement Analysis Report shall be substantially in the form of
Exhibit E-8 attached hereto (or, at the discretion of the Master Servicer,
provided that no less information is provided than is set forth in Exhibit E-8,
in a CMSA format).
Within 45 days after receipt by the Master Servicer or 20 days
after receipt by the Special Servicer of any annual operating statements with
respect to any Mortgaged Property or REO Property, as applicable, each of the
Master Servicer and the Special Servicer shall prepare or update (and, in the
case of the Special Servicer, forward within such 20-day period to the Master
Servicer in an electronic format reasonably acceptable to the Master Servicer)
an NOI Adjustment Worksheet for such Mortgaged Property or REO Property (with
the annual operating statements attached thereto as an exhibit).
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(c) Not later than 12:00 p.m. (New York City time) on the
first Business Day following each Determination Date, the Special Servicer shall
prepare and deliver or cause to be delivered to the Master Servicer and the
Controlling Class Representative the following reports (or data files relating
to reports of the Master Servicer) with respect to the Specially Serviced
Mortgage Loans and any REO Properties, providing the required information as of
such Determination Date: (i) a CMSA Property File; and (ii) a CMSA Loan Periodic
Update File. At or before 12:00 p.m. (New York City time) on the first Business
Day following each Determination Date, the Special Servicer shall prepare and
deliver or cause to be delivered to the Master Servicer the following reports
with respect to the Specially Serviced Mortgage Loans and any REO Properties,
providing the information required of the Special Servicer in an electronic
format reasonably acceptable to the Master Servicer as of such Determination
Date: (i) a Delinquent Loan Status Report; (ii) a Comparative Financial Status
Report; (iii) an Historical Loss Estimate Report; (iv) an Historical Loan
Modification Report; and (v) an REO Status Report.
(d) Not later than 3:30 p.m. (New York City time) on the
second Business Day after each Determination Date, the Master Servicer shall
prepare (if and to the extent necessary) and deliver or cause to be delivered to
the Trustee data files relating to the following reports: (i) to the extent
received at the time required, the most recent Delinquent Loan Status Report,
Historical Loss Estimate Report, Historical Loan Modification Report and REO
Status Report received from the Special Servicer pursuant to Section 3.12(c);
(ii) the most recent CMSA Property File, CMSA Loan Periodic Update File and
Comparative Financial Status Report (in each case combining the reports prepared
by the Special Servicer and the Master Servicer); and (iii) a Watch List Report
with information that is current as of such Determination Date.
(e) The Special Servicer shall deliver to the Master Servicer
the reports set forth in Section 3.12(b) and Section 3.12(c), and the Master
Servicer shall deliver to the Trustee the reports set forth in Section 3.12(d),
in an electronic format reasonably acceptable to the Special Servicer, the
Master Servicer and the Trustee. The Master Servicer may, absent manifest error,
conclusively rely on the reports to be provided by the Special Servicer pursuant
to Section 3.12(b) and Section 3.12(c). The Trustee may, absent manifest error,
conclusively rely on the reports to be provided by the Master Servicer pursuant
to Section 3.12(d). In the case of information or reports to be furnished by the
Master Servicer to the Trustee pursuant to Section 3.12(d), to the extent that
such information or reports are, in turn, based on information or reports to be
provided by the Special Servicer pursuant to Section 3.12(b) or Section 3.12(c)
and to the extent that such reports are to be prepared and delivered by the
Special Servicer pursuant to Section 3.12(b) or Section 3.12(c), the Master
Servicer shall have no obligation to provide such information or reports to the
Trustee until it has received the requisite information or reports from the
Special Servicer, and the Master Servicer shall not be in default hereunder due
to a delay in providing the reports required by Section 3.12(d) caused by the
Special Servicer's failure to timely provide any information or report required
under Section 3.12(b) or Section 3.12(c) of this Agreement.
(f) Notwithstanding the foregoing, however, the failure of the
Master Servicer or Special Servicer to disclose any information otherwise
required to be disclosed by this Section 3.12 shall not constitute a breach of
this Section 3.12 to the extent the Master Servicer or Special Servicer so fails
because such disclosure, in the reasonable belief of the Master Servicer or the
Special Servicer as the case may be, would violate any applicable law or any
provision of a Mortgage Loan document prohibiting disclosure of information with
respect to the Mortgage Loans or Mortgaged Properties or would constitute a
waiver of
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the attorney-client privilege on behalf of the Trust. The Master Servicer and
Special Servicer may disclose any such information or any additional information
to any Person so long as such disclosure is consistent with applicable law and
the Servicing Standard. The Master Servicer or the Special Servicer may affix to
any information provided by it any disclaimer it deems appropriate in its
reasonable discretion (without suggesting liability on the part of any other
party hereto).
(g) The Depositor shall provide to the Master Servicer and the
Trustee the initial data (as of the Cut-Off Date or the most recent earlier date
for which such data is available) contemplated by the CMSA Loan Set-up File, the
CMSA Loan Periodic Update File, the Operating Statement Analysis Report and the
CMSA Property File.
SECTION 3.13. Annual Statement as to Compliance.
Each of the Master Servicer and the Special Servicer shall
deliver to the Trustee, the Depositor, the Underwriter, the Controlling Class
Representative and each other, on or before March 15 of each year, beginning in
_______, an Officer's Certificate (the "Annual Performance Certification")
stating, as to the signer thereof, that (i) a review of the activities of the
Master Servicer or the Special Servicer, as the case may be, during the
preceding calendar year and of its performance under this Agreement has been
made under such officer's supervision, (ii) to the best of such officer's
knowledge, based on such review, the Master Servicer or the Special Servicer, as
the case may be, has fulfilled all of its obligations under this Agreement in
all material respects throughout such year (or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof), and (iii) the Master Servicer
or the Special Servicer, as the case may be, has received no notice regarding
the qualification, or challenging the status, of any REMIC Pool as a REMIC or
either Grantor Trust Pool as a Grantor Trust from the IRS or any other
governmental agency or body (or, if it has received any such notice, specifying
the details thereof); provided that neither the Master Servicer nor the Special
Servicer shall be required to deliver its Annual Performance Certification until
April 30 in any given year after _______ unless it has received written
confirmation from the Depositor by January 31 of that year that a Report on Form
10-K is required to be filed in respect of the Trust for the preceding calendar
year (a copy of which written confirmation shall be forwarded concurrently by
the Depositor to the Trustee).
SECTION 3.14. Reports by Independent Public Accountants.
On or before March 15 of each year, beginning in _______, each
of the Master Servicer and the Special Servicer at its expense shall cause a
firm of independent public accountants that is a member of the American
Institute of Certified Public Accountants to furnish a statement (the "Annual
Accountants' Report") to the Trustee, the Depositor, the Underwriter and each
other, to the effect that such firm has examined the servicing operations of the
Master Servicer or the Special Servicer, as the case may be, for the previous
calendar year and that, on the basis of such examination, conducted
substantially in compliance with USAP, such firm confirms that the Master
Servicer or the Special Servicer, as the case may be, has complied during such
previous calendar year with the minimum servicing standards identified in USAP
in all material respects, except for such significant exceptions or errors in
records that, in the opinion of such firm, USAP requires it to report; provided
that neither the Master Servicer nor the Special Servicer shall be required to
cause the delivery of its Annual Accountants' Report until April 30 in any given
year after _______ unless it has received written confirmation from the
Depositor by January 31 of that year that a Report on Form 10-K is required to
be filed in respect of the Trust for the preceding calendar year (a copy of
which written confirmation shall be forwarded concurrently by the Depositor to
the Trustee). In rendering its report such
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firm may rely, as to matters relating to the direct servicing of securitized
commercial and multifamily mortgage loans by sub-servicers, upon comparable
reports of firms of independent certified public accountants rendered on the
basis of examinations conducted in accordance with the same standards (rendered
within one year of such report) with respect to those sub-servicers.
The Master Servicer and the Special Servicer will each
reasonably cooperate with the Depositor in providing any other form of
accountants' reports as may be required by the Commission in connection with the
Commission's issuance of a no-action letter relating to the Depositor's
reporting requirements in respect of the Trust pursuant to the Exchange Act, and
the reasonable additional costs of providing such other forms of accountants'
reports shall be borne by the Depositor.
SECTION 3.15. Access to Certain Information.
Each of the Master Servicer and the Special Servicer shall
afford to the Trustee, any Fiscal Agent, the Depositor, the Underwriter, the
Mortgage Loan Seller, each Rating Agency and the Controlling Class
Representative, and to the OTS, the FDIC and any other banking or insurance
regulatory authority that may exercise authority over any Certificateholder or
Certificate Owner, access to any records regarding the Mortgage Loans and the
servicing thereof within its control, except to the extent it is prohibited from
doing so by applicable law, the terms of the Mortgage Loan documents or contract
entered into prior to the Closing Date or to the extent such information is
subject to a privilege under applicable law to be asserted on behalf of the
Certificateholders. Such access shall be afforded without charge but only upon
reasonable prior written request and during normal business hours at the offices
of the Master Servicer or the Special Servicer, as the case may be, designated
by it. The Master Servicer and the Special Servicer shall each be entitled to
affix a reasonable disclaimer to any information provided by it for which it is
not the original source (without suggesting liability on the part of any other
party hereto).
SECTION 3.16. Title to REO Property; REO Account.
(a) If title to any REO Property is acquired, the deed or
certificate of sale shall be issued to the Trustee or its nominee, on behalf of
the Certificateholders. The Special Servicer, on behalf of the Trust, shall sell
any REO Property by the end of the third calendar year following the year in
which the Trust acquires ownership of such REO Property for purposes of Section
860G(a)(8) of the Code, unless the Special Servicer either (i) applies, more
than 60 days prior to the expiration of such liquidation period, and is granted
an extension of time (an "REO Extension") by the IRS to sell such REO Property
or (ii) obtains for the Trustee and the Tax Administrator an Opinion of Counsel,
addressed to the Trustee and the Tax Administrator, to the effect that the
holding by the Trust of such REO Property subsequent to the end of the third
calendar year following the year in which such acquisition occurred will not
result in an Adverse REMIC Event with respect to any REMIC Pool. Regardless of
whether the Special Servicer applies for or is granted the REO Extension
contemplated by clause (i) of the immediately preceding sentence or obtains the
Opinion of Counsel referred to in clause (ii) of such sentence, the Special
Servicer shall act in accordance with the Servicing Standard to liquidate such
REO Property on a timely basis. If the Special Servicer is granted such REO
Extension or obtains such Opinion of Counsel, the Special Servicer shall sell
such REO Property within such extended period as is permitted by such REO
Extension or contemplated by such Opinion of Counsel, as the case may be. Any
expense incurred by the Special Servicer in connection with its applying for and
being granted the REO Extension contemplated by clause (i) of the third
preceding sentence or its obtaining the Opinion of Counsel contemplated by
clause (ii) of the third preceding sentence, shall be covered by, and be
reimbursable as, a Servicing Advance.
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(b) The Special Servicer shall segregate and hold all funds
collected and received in connection with any REO Property separate and apart
from its own funds and general assets. If an REO Acquisition shall occur, the
Special Servicer shall establish and maintain one or more accounts
(collectively, the "REO Account"), to be held on behalf of the Trustee in trust
for the benefit of the Certificateholders, for the retention of revenues and
other proceeds derived from each REO Property. Each account that constitutes the
REO Account shall be an Eligible Account. The Special Servicer shall deposit, or
cause to be deposited, in the REO Account, upon receipt, all REO Revenues,
Insurance Proceeds and Liquidation Proceeds received in respect of an REO
Property. Funds in the REO Account may be invested in Permitted Investments in
accordance with Section 3.06. The Special Servicer shall be entitled to make
withdrawals from the REO Account to pay itself, as Additional Special Servicing
Compensation, interest and investment income earned in respect of amounts held
in the REO Account as provided in Section 3.06(b) (but only to the extent of the
Net Investment Earnings, if any, with respect to the REO Account for any
Collection Period). The Special Servicer shall give notice to the other parties
hereto of the location of the REO Account when first established and of the new
location of the REO Account prior to any change thereof.
(c) The Special Servicer shall withdraw from the REO Account
funds necessary for the proper operation, management, leasing, maintenance and
disposition of any REO Property, but only to the extent of amounts on deposit in
the REO Account relating to such REO Property. Within two Business Days
following the end of each Collection Period, the Special Servicer shall withdraw
from the REO Account and deposit into the Collection Account or deliver to the
Master Servicer (which shall deposit such amounts into the Collection Account)
the aggregate of all amounts received in respect of each REO Property during
such Collection Period, net of any withdrawals made out of such amounts pursuant
to the preceding sentence; provided that the Special Servicer may retain in the
REO Account such portion of such proceeds and collections as may be necessary to
maintain a reserve of sufficient funds for the proper operation, management,
leasing, maintenance and disposition of the related REO Property (including the
creation of a reasonable reserve for repairs, replacements, necessary capital
improvements and other related expenses), such reserve not to exceed an amount
sufficient to cover such items reasonably expected to be incurred during the
following 12-month period.
(d) The Special Servicer shall keep and maintain separate
records, on a property-by-property basis, for the purpose of accounting for all
deposits to, and withdrawals from, the REO Account pursuant to Section 3.16(b)
or (c).
SECTION 3.17. Management of REO Property.
(a) Prior to the acquisition of title to any Mortgaged
Property securing a defaulted Mortgage Loan, the Special Servicer shall review
the operation of such Mortgaged Property and determine the nature of the income
that would be derived from such property if it were acquired by the Trust. If
the Special Servicer determines from such review that:
(i) None of the income from Directly Operating such Mortgaged
Property would be subject to tax as "net income from foreclosure
property" within the meaning of the REMIC Provisions or to the tax
imposed on "prohibited transactions" under Section 860F of the Code
(either such tax referred to herein as an "REO Tax"), such Mortgaged
Property may be Directly Operated by the Special Servicer as REO
Property;
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(ii) Directly Operating such Mortgaged Property as an REO
Property could result in income from such property that would be
subject to an REO Tax, but that a lease of such property to another
party to operate such property, or the performance of some services by
an Independent Contractor with respect to such property, or another
method of operating such property would not result in income subject to
an REO Tax, then the Special Servicer may (provided that in the
judgment of the Special Servicer, exercised in accordance with the
Servicing Standard, it is commercially reasonable) so lease or
otherwise operate such REO Property; or
(iii) It is reasonable to believe that Directly Operating such
property as REO Property could result in income subject to an REO Tax
and that no commercially reasonable means exists to operate such
property as REO Property without the Trust incurring or possibly
incurring an REO Tax on income from such property, the Special Servicer
shall deliver to the Tax Administrator, in writing, a proposed plan
(the "Proposed Plan") to manage such property as REO Property. Such
plan shall include potential sources of income and good faith estimates
of the amount of income from each such source. Within a reasonable
period of time after receipt of such plan, the Tax Administrator shall
consult with the Special Servicer and shall advise the Special Servicer
of the Trust's federal income tax reporting position with respect to
the various sources of income that the Trust would derive under the
Proposed Plan. In addition, the Tax Administrator shall (to the maximum
extent reasonably possible) advise the Special Servicer of the
estimated amount of taxes that the Trust would be required to pay with
respect to each such source of income. After receiving the information
described in the two preceding sentences from the Tax Administrator,
the Special Servicer shall either (A) implement the Proposed Plan
(after acquiring the respective Mortgaged Property as REO Property) or
(B) manage and operate such property in a manner that would not result
in the imposition of an REO Tax on the income derived from such
property.
The Special Servicer's decision as to how each REO Property
shall be managed and operated shall be in accordance with the Servicing
Standard. Neither the Special Servicer nor the REMIC Administrator shall be
liable to the Certificateholders, the Trust, the other parties hereto or each
other for errors in judgment made in good faith in the exercise of their
discretion while performing their respective responsibilities under this Section
3.17(a). Nothing in this Section 3.17(a) is intended to prevent the sale of a
Defaulted Mortgage Loan or REO Property pursuant to the terms and subject to the
conditions of Section 3.18.
(b) If title to any REO Property is acquired, the Special
Servicer shall manage, conserve, protect and operate such REO Property for the
benefit of the Certificateholders solely for the purpose of its disposition and
sale in a manner that does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or,
except as contemplated by Section 3.17(a), result in the receipt by any REMIC
Pool of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or in an Adverse REMIC Event with respect to any REMIC
Pool. Except as contemplated by Section 3.17(a), the Special Servicer shall not
enter into any lease, contract or other agreement that causes the Trust to
receive, and (unless required to do so under any lease, contract or agreement to
which the Special Servicer or the Trust may become a party or successor to a
party due to a foreclosure, deed-in-lieu of foreclosure or other similar
exercise of a creditor's rights or remedies with respect to a Mortgage Loan)
shall not cause or allow the Trust to receive, any "net income from foreclosure
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property" that is subject to taxation under the REMIC Provisions. Subject to the
foregoing, however, the Special Servicer shall have full power and authority to
do any and all things in connection therewith as are consistent with the
Servicing Standard and, consistent therewith, shall withdraw from the REO
Account, to the extent of amounts on deposit therein with respect to any REO
Property, funds necessary for the proper operation, management, maintenance and
disposition of such REO Property, including:
(i) all insurance premiums due and payable in respect of such
REO Property;
(ii) all real estate taxes and assessments in respect of such
REO Property that may result in the imposition of a lien thereon;
(iii) any ground rents in respect of such REO Property; and
(iv) all other costs and expenses necessary to maintain,
lease, sell, protect, manage, operate and restore such REO Property.
To the extent that amounts on deposit in the REO Account in respect of any REO
Property are insufficient for the purposes contemplated by the preceding
sentence with respect to such REO Property, the Master Servicer shall, at the
direction of the Special Servicer, advance such amounts as are necessary for
such purposes unless the Master Servicer or the Special Servicer determines, in
its reasonable, good faith judgment, that such advances would, if made, be
Nonrecoverable Servicing Advances; provided, however, that the Master Servicer
may in its sole discretion make any such Servicing Advance without regard to
recoverability if it is a necessary fee or expense incurred in connection with
the defense or prosecution of legal proceedings.
(c) The Special Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract may not be
inconsistent herewith and shall reflect an agreement reached at arm's
length;
(ii) the fees of such Independent Contractor (which shall be
expenses of the Trust) shall be reasonable and customary in
consideration of the nature and locality of the REO Property;
(iii) any such contract shall require, or shall be
administered to require, that the Independent Contractor, in a timely
manner, (A) pay all costs and expenses incurred in connection with the
operation and management of such REO Property, including those listed
in Section 3.17(b) above, and (B) remit all related revenues collected
(net of its fees and such costs and expenses) to the Special Servicer
upon receipt;
(iv) none of the provisions of this Section 3.17(c) relating
to any such contract or to actions taken through any such Independent
Contractor shall be deemed to relieve the Special Servicer of any of
its duties and obligations hereunder with respect to the operation and
management of any such REO Property; and
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(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. To the extent the costs of any contract with any
Independent Contractor for the operation and management of any REO Property are
greater that the revenues available from such property, such excess costs shall
be covered by, and be reimbursable as, a Servicing Advance.
SECTION 3.18. Sale of Mortgage Loans and REO Properties.
(a) The parties hereto may sell or purchase, or permit the
sale or purchase of, a Mortgage Loan or REO Property only on the terms and
subject to the conditions set forth in this Section 3.18 or as otherwise
expressly provided in or contemplated by Sections 2.02, 2.03 and 9.01.
(b) If the Special Servicer has determined, in its reasonable,
good faith judgment, that any Defaulted Mortgage Loan will become subject to
foreclosure proceedings and that the sale of such Mortgage Loan under the
circumstances provided in this Section 3.18 is in accordance with the Servicing
Standard, then the Special Servicer shall promptly so notify in writing the
Trustee and the Master Servicer, and the Trustee shall, within five days after
receipt of such notice, so notify all the Controlling Class Certificateholders.
Any single Controlling Class Certificateholder or group of Controlling Class
Certificateholders may, at its or their option, within ten days after receipt of
such notice, purchase any Defaulted Mortgage Loan out of the Trust Fund at a
cash price equal to the applicable Purchase Price; provided that, if more than
one Controlling Class Certificateholder or group of Controlling Class
Certificateholders desire to purchase such Defaulted Mortgage Loan, preference
shall be given to the Controlling Class Certificateholder or group of
Controlling Class Certificateholders with the largest Percentage Interest in the
Controlling Class. The Purchase Price for any Defaulted Mortgage Loan 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 Certificateholder(s) effecting such purchase (or to its or their
designee) the related Mortgage File, and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be provided to it and are reasonably necessary to vest in such
Certificateholder(s) ownership of such Mortgage Loan (subject to any rights of
the applicable Designated Sub-Servicer to sub-service such Mortgage Loan as set
forth under the related Designated Sub-Servicer Agreement). In connection with
any such purchase, the Special Servicer shall deliver the related Servicing File
to the Certificateholder(s) effecting such purchase (or to its or their
designee).
(c) If none of the Controlling Class Certificateholders has
purchased any Defaulted Mortgage Loan described in the first sentence of Section
3.18(b) within ten days of such Holders' having received notice in respect
thereof pursuant to Section 3.18(b) above, then the Trustee shall within five
days of the end of such ten-day period send notice to the Master Servicer and
the Special Servicer that such Mortgage Loan was not purchased by such
Certificateholder(s), and either the Special Servicer or the Master Servicer (in
that order of priority) may, at its option, within ten days after receipt of
such notice, purchase (or designate an Affiliate thereof to purchase) such
Mortgage Loan out of the Trust Fund at a cash price equal to the Purchase Price.
The Purchase Price for any such Mortgage Loan purchased under this Section
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3.18(c) shall be deposited into the Collection Account, and the Trustee, upon
receipt of an Officer's Certificate from the Master Servicer to the effect that
such deposit has been made, shall release or cause to be released to the Master
Servicer or the Special Servicer (or the designated Affiliate thereof), as
applicable, the related Mortgage File, and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be provided to it and are reasonably necessary to vest in the Master Servicer or
the Special Servicer (or the designated Affiliate thereof), as applicable, the
ownership of such Mortgage Loan (subject to any rights of the applicable
Designated Sub-Servicer to sub-service such Mortgage Loan as set forth under the
related Designated Sub-Servicer Agreement). In connection with any such purchase
by the Master Servicer (or any designated Affiliate thereof), the Special
Servicer shall deliver the related Servicing File to the Master Servicer (or any
designated Affiliate thereof). For purposes of the other sections of this
Agreement, any purchase of a Defaulted Mortgage Loan by a designated Affiliate
of the Master Servicer or Special Servicer pursuant to this Section 3.18(c)
shall be deemed a purchase of such Defaulted Mortgage Loan by the Master
Servicer or the Special Servicer, as applicable.
(d) Subject to Section 3.24, the Special Servicer may offer to
sell any Defaulted Mortgage Loan not otherwise purchased pursuant to Section
3.18(b) or Section 3.18(c) above, if and when the Special Servicer determines,
consistent with the Servicing Standard, that such a sale would be in the best
economic interests of the Certificateholders (as a collective whole). Such offer
shall be made in a commercially reasonable manner (which, for purposes hereof,
includes an offer to sell without representation or warranty other than
customary warranties of title and condition, if liability for breach thereof is
limited to recourse against the Trust) for a period of not less than ten days.
Subject to Section 3.18(h) and Section 3.24, the Special Servicer shall accept
the highest cash bid received from any Person that constitutes a fair price for
such Mortgage Loan. In the absence of any bid determined as provided below to be
fair, the Special Servicer shall proceed with respect to such Defaulted Mortgage
Loan in accordance with Section 3.09.
The Special Servicer shall use its best efforts to solicit
bids for each REO Property in such manner as will be reasonably likely to
realize a fair price within the time period provided for by Section 3.16(a).
Subject to Section 3.18(h) and Section 3.24, the Special Servicer shall accept
the first (and, if multiple bids are received by a specified bid date, the
highest) cash bid received from any Person that constitutes a fair price
(determined pursuant to Section 3.18(e) below) for such REO Property. If the
Special Servicer reasonably believes that it will be unable to realize a fair
price (determined pursuant to Section 3.18(e) below) for any REO Property within
the time constraints imposed by Section 3.16(a), the Special Servicer shall
dispose of such REO Property upon such terms and conditions as the Special
Servicer shall deem necessary and desirable to maximize the recovery thereon
under the circumstances.
The Special Servicer shall give the Trustee, the Master
Servicer and the Controlling Class Representative not less than five Business
Days' prior written notice of its intention to sell any Defaulted Mortgage Loan
or REO Property pursuant to this Section 3.18(d). No Interested Person shall be
obligated to submit a bid to purchase any such Mortgage Loan or REO Property,
and notwithstanding anything to the contrary herein, neither the Trustee, in its
individual capacity, nor any of its Affiliates may bid for or purchase any
Defaulted Mortgage Loan or REO Property pursuant hereto.
(e) Whether any cash bid constitutes a fair price for any
Defaulted Mortgage Loan or REO Property, as the case may be, for purposes of
Section 3.18(d), shall be determined by the Special Servicer or, if such cash
bid is from the Special Servicer or an Affiliate thereof, by the Trustee. In
determining whether any bid received from the Special Servicer or an Affiliate
thereof represents a fair price for any such Mortgage Loan or REO Property, the
Trustee shall be supplied with and shall be entitled to rely on the most
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recent Appraisal in the related Servicing File conducted in accordance with this
Agreement within the preceding 12-month period (or, in the absence of any such
Appraisal or if there has been a material change at the subject property since
any such Appraisal, on a new Appraisal to be obtained by the Special Servicer
(the cost of which shall be covered by, and be reimbursable as, a Servicing
Advance)). The appraiser conducting any such new Appraisal shall be a Qualified
Appraiser that is (i) selected by the Special Servicer if neither the Special
Servicer nor any Affiliate thereof is bidding with respect to a Defaulted
Mortgage Loan or REO Property and (ii) selected by the Trustee if either the
Special Servicer or any Affiliate thereof is so bidding. Where any Interested
Person is among those bidding with respect to a Defaulted Mortgage Loan or REO
Property, the Special Servicer shall require that all bids be submitted to it
(or, if the Special Servicer or an Affiliate thereof is bidding, shall be
submitted by it to the Trustee) in writing and be accompanied by a refundable
deposit of cash in an amount equal to 5% of the bid amount. In determining
whether any bid from a Person other than the Special Servicer or an Affiliate
thereof constitutes a fair price for any such Mortgage Loan or REO Property, the
Special Servicer shall take into account the results of any Appraisal or updated
Appraisal that it or the Master Servicer may have obtained in accordance with
this Agreement within the preceding 12-month period, and any Qualified Appraiser
shall be instructed to take into account, as applicable, among other factors,
the period and amount of any delinquency on the affected Mortgage Loan, the
occupancy level and physical condition of the Mortgaged Property or REO
Property, the state of the local economy and the obligation to dispose of any
REO Property within the time period specified in Section 3.16(a). The Purchase
Price for any such Mortgage Loan or REO Property shall in all cases be deemed a
fair price. Notwithstanding the other provisions of this Section 3.18, no cash
bid from the Special Servicer or any Affiliate thereof shall constitute a fair
price for any Defaulted Mortgage Loan or REO Property unless such bid is the
highest cash bid received and at least two independent bids (not including the
bid of the Special Servicer or any Affiliate) have been received. In the event
the bid of the Special Servicer or any Affiliate thereof is the only bid
received or is the higher of only two bids received, then additional bids shall
be solicited. If an additional bid or bids, as the case may be, are received and
the original bid of the Special Servicer or any Affiliate thereof is the highest
of all cash bids received, then the bid of the Special Servicer or such
Affiliate shall be accepted, provided that the Trustee has otherwise determined,
as provided above in this Section 3.18(e), that such bid constitutes a fair
price for any Defaulted Mortgage Loan or REO Property. Any bid by the Special
Servicer shall be unconditional; and, if accepted, the Defaulted Mortgage Loan
or REO Property shall be transferred to the Special Servicer without recourse,
representation or warranty other than customary representations as to title
given in connection with the sale of a mortgage loan or real property.
(f) Subject to Sections 3.18(a) through 3.18(e) above, the
Special Servicer shall act on behalf of the Trustee in negotiating with
independent third parties and taking any other action necessary or appropriate
in connection with the sale of any Defaulted Mortgage Loan or REO Property, and
the collection of all amounts payable in connection therewith. In connection
therewith, the Special Servicer may charge prospective bidders, and may retain,
fees that approximate the Special Servicer's actual costs in the preparation and
delivery of information pertaining to such sales or evaluating bids without
obligation to deposit such amounts into the Collection Account. Any sale of a
Defaulted Mortgage Loan or any REO Property shall be final and without recourse
(except for warranties of title and condition contemplated by Section 3.18(d))
to the Trustee or the Trust, and if such sale is consummated in accordance with
the terms of this Agreement, neither the Special Servicer nor the Trustee shall
have any liability to any Certificateholder with respect to the purchase price
therefor accepted by the Special Servicer or the Trustee.
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(g) Any sale of a Defaulted Mortgage Loan or any REO Property
shall be for cash only.
(h) Notwithstanding any of the foregoing paragraphs of this
Section 3.18, but subject to Section 3.24, the Special Servicer shall not be
obligated to accept the highest cash bid if the Special Servicer determines, in
accordance with the Servicing Standard, that rejection of such bid would be in
the best interests of the Certificateholders (as a collective whole), and the
Special Servicer may accept a lower cash bid (from any Person other than itself
or an Affiliate) if it determines, in accordance with the Servicing Standard,
that acceptance of such bid would be in the best interests of the
Certificateholders (as a collective whole) (for example, if the prospective
buyer making the lower bid is more likely to perform its obligations or the
terms (other than price) offered by the prospective buyer making the lower bid
are more favorable).
SECTION 3.19. Additional Obligations of Master Servicer.
(a) The Master Servicer shall deliver to the Trustee for
deposit in the Distribution Account by 2:00 p.m. (New York City time) on each
Master Servicer Remittance Date, without any right of reimbursement therefor, an
amount (a "Compensating Interest Payment") equal to the lesser of (i) the
aggregate amount of Prepayment Interest Shortfalls incurred in connection with
Principal Prepayments received in respect of the Mortgage Pool during the most
recently ended Collection Period, and (ii) the aggregate of (A) that portion of
its Master Servicing Fees for the related Collection Period that is, in the case
of each and every Mortgage Loan and REO Mortgage Loan for which such Master
Servicing Fees are being paid in such Collection Period, calculated at ______%
per annum, and (B) all Prepayment Interest Excesses received by the Master
Servicer during the most recently ended Collection Period.
(b) No more frequently than once per calendar month, the
Special Servicer may require the Master Servicer, and the Master Servicer shall
be obligated, out of the Master Servicer's own funds, to reimburse the Special
Servicer for any Servicing Advances (other than Nonrecoverable Servicing
Advances) made by but not previously reimbursed to the Special Servicer,
together with interest thereon at the Reimbursement Rate from the date made to,
but not including, the date of reimbursement. Such reimbursement and any
accompanying payment of interest shall be made within ten days of the request
therefor by wire transfer of immediately available funds to an account
designated by the Special Servicer. Upon the Master Servicer's reimbursement to
the Special Servicer of any Servicing Advance and payment to the Special
Servicer of interest thereon, all in accordance with this Section 3.19(b), the
Master Servicer shall for all purposes of this Agreement be deemed to have made
such Servicing Advance at the same time as the Special Servicer actually made
such Servicing Advance, and accordingly, the Master Servicer shall be entitled
to reimbursement for such Servicing Advance, together with interest thereon in
accordance with Sections 3.05(a) and 3.11(g), at the same time, in the same
manner and to the same extent as the Master Servicer would otherwise have been
entitled if it had actually made such Servicing Advance at the time the Special
Servicer did.
Notwithstanding anything to the contrary contained in any
other Section of this Agreement, if the Special Servicer is required under this
Agreement (but subject to the following paragraph), to make any Servicing
Advance but does not desire to do so, the Special Servicer may, in its sole
discretion, request that the Master Servicer make such Servicing Advance. Any
such request shall be made, in writing, in a timely manner that does not
adversely affect the interests of any Certificateholder (and, in any event, to
the extent reasonably practicable, at least five Business Days in advance of the
date on which the subject Servicing Advance is to be made) and shall be
accompanied by such information and documentation regarding the subject
Servicing Advance as the Master Servicer may reasonably request; provided,
however, that the
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Special Servicer shall not be entitled to make such a request (other than for
emergency advances) more frequently than once per calendar month (although such
request may relate to more than one Servicing Advance). The Master Servicer
shall have the obligation to make any such Servicing Advance (other than a
Nonrecoverable Servicing Advance) that it is so requested by the Special
Servicer to make, within five Business Days of the Master Servicer's receipt of
such request. If the request is timely and properly made, the Special Servicer
shall be relieved of any obligations with respect to a Servicing Advance that it
so requests the Master Servicer to make (regardless of whether or not the Master
Servicer shall make such Servicing Advance). The Master Servicer shall be
entitled to reimbursement for any Servicing Advance made by it at the direction
of the Special Servicer, together with interest thereon in accordance with
Sections 3.05(a) and 3.11(g), at the same time, in the same manner and to the
same extent as the Master Servicer is entitled with respect to any other
Servicing Advances made thereby.
Notwithstanding the foregoing provisions of this Section
3.19(b), the Master Servicer shall not be required to reimburse the Special
Servicer for, or to make at the direction of the Special Servicer, any Servicing
Advance if the Master Servicer determines in its reasonable, good faith judgment
that such Servicing Advance, although not characterized by the Special Servicer
as a Nonrecoverable Servicing Advance, is in fact a Nonrecoverable Servicing
Advance. The Master Servicer shall notify the Special Servicer in writing of
such determination and, if applicable, such Nonrecoverable Servicing Advance
shall be reimbursed to the Special Servicer pursuant to Section 3.05(a).
(c) Promptly following the earliest of (i) the date on which
any Mortgage Loan becomes a Modified Mortgage Loan, (ii) the date on which the
Borrower under any Mortgage Loan becomes the subject of bankruptcy, insolvency
or similar proceedings, (iii) the 60th day following the occurrence of any
uncured delinquency in Monthly Payments with respect to any Mortgage Loan, (iv)
the date on which a receiver is appointed and continues in such capacity in
respect of the Mortgaged Property securing any Mortgage Loan, and (v) the date
on which the Mortgaged Property securing any Mortgage Loan becomes an REO
Property (each such Mortgage Loan, until it ceases to be such in accordance with
the following paragraph, a "Required Appraisal Loan"), the Special Servicer
shall obtain an Appraisal of the related Mortgaged Property, unless an Appraisal
thereof had previously been obtained within the preceding 12-month period, and
shall deliver a copy thereof to the Trustee, the Master Servicer and the
Controlling Class Representative. The cost of such Appraisal shall be covered
by, and be reimbursable as, a Servicing Advance. Based on such Appraisal, the
Special Servicer shall determine and report to the Trustee the then applicable
Appraisal Reduction Amount, if any, with respect to the subject Required
Appraisal Loan.
For so long as any Mortgage Loan or REO Mortgage Loan remains
a Required Appraisal Loan, the Special Servicer shall, within 30 days of each
anniversary of such loan's having become a Required Appraisal Loan, obtain or
conduct an update of the prior Appraisal (the cost of which will be covered by,
and be reimbursable as, a Servicing Advance); and, upon receipt, based upon such
update, the Special Servicer shall redetermine and report to the Trustee the
then applicable Appraisal Reduction Amount, if any, with respect to the subject
Required Appraisal Loan. A Mortgage Loan will cease to be a Required Appraisal
Loan if and when such Mortgage Loan has become a Corrected Mortgage Loan and has
remained current for at least three consecutive Monthly Payments, and no other
Servicing Transfer Event has occurred with respect thereto during the preceding
three months.
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At any time that any Appraisal Reduction Amount exists with
respect to any Required Appraisal Loan, the Controlling Class Representative
may, at its own expense, obtain and deliver to the Master Servicer, the Special
Servicer and the Trustee an Appraisal of the related Mortgaged Property or REO
Property, as the case may be. Upon the written request of the Controlling Class
Representative, the Special Servicer shall recalculate the Appraisal Reduction
Amount in respect of such Required Appraisal Loan based on the Appraisal
delivered by the Controlling Class Representative and notify the Trustee, the
Master Servicer and the Controlling Class Representative of such recalculated
Appraisal Reduction Amount.
(d) The Master Servicer shall pay, without any right of
reimbursement therefor, the post-Closing Date fees of the Rating Agencies for
ongoing surveillance of the Rated Certificates, but shall not be required to pay
without reimbursement the fees charged by any Rating Agency for a (i)
confirmation as to the lack of an Adverse Rating Event with respect to any Class
of Rated Certificates or (ii) in connection with any other particular matter.
(e) In connection with each prepayment of principal received
hereunder, the Master Servicer shall calculate any applicable Prepayment Premium
or Yield Maintenance Charge, as the case may be, payable under the terms of the
related Mortgage Note. Upon written request of any Certificateholder, the Master
Servicer shall disclose to such Certificateholder its calculation of any such
Prepayment Premium or Yield Maintenance Charge.
(f) The Master Servicer shall not permit defeasance of any
Mortgage Loan (x) on or before the earliest date on which defeasance is
permitted under the terms of such Mortgage Loan, or (y) to the extent consistent
with the terms of such Mortgage Loan, unless (i) the defeasance collateral
consists of U.S. Treasury obligations, (ii) the Master Servicer has determined
that the defeasance will not result in an Adverse REMIC Event in respect of any
REMIC Pool, (iii) the Master Servicer has notified the Rating Agencies, (iv) the
Master Servicer has confirmed that such defeasance will not result in an Adverse
Rating Event with respect to any Class of Rated Certificates (provided that the
requirement to obtain such confirmation will be a precondition to the defeasance
only if the Master Servicer is able under the related Mortgage Loan documents
and applicable law to prevent the defeasance if such confirmation is not
obtained and the subject Mortgage Loan represents at least 2.0% of the then
aggregate Stated Principal Balance of the Mortgage Pool), and (v) the Master
Servicer has requested and received from the related Borrower (A) an Opinion of
Counsel generally to the effect that the Trustee will have a perfected, first
priority security interest in such defeasance collateral and (B) written
confirmation from a firm of Independent accountants stating that payments made
on such defeasance collateral in accordance with the terms thereof will be
sufficient to pay the subject Mortgage Loan in full on or before its Stated
Maturity Date (or, in the case of an ARD Loan, on or before its Anticipated
Repayment Date) and to timely pay each Monthly Payment scheduled to be due prior
thereto but after the defeasance; provided that, if under the terms of the
related Mortgage Loan documents, the related Borrower delivers cash to purchase
the defeasance collateral rather than the defeasance collateral itself, the
Master Servicer shall purchase the U.S. Treasury obligations contemplated by the
related Mortgage Loan documents. Subsequent to the second anniversary of the
Startup Day for the REMIC Pool that holds the subject Mortgage Loan, to the
extent that the Master Servicer can, in accordance with the related Mortgage
Loan documents, require defeasance of any Mortgage Loan in lieu of accepting a
prepayment of principal thereunder, including a prepayment of principal
accompanied by a Prepayment Premium or Yield Maintenance Charge, the Master
Servicer shall, to the extent it is consistent with the Servicing Standard,
require such defeasance, provided that the conditions set forth in clauses (i)
through (v) of the preceding sentence have been satisfied. Any reasonable
out-of-pocket expense incurred by the Master Servicer pursuant to this Section
3.19(f) shall be paid by the Borrower of the defeased
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Mortgage Loan pursuant to the related Mortgage, Mortgage Note or other pertinent
document, if so allowed by the terms of such documents (and, if the Master
Servicer reasonably determines that it cannot recover such expenses from the
Borrower, it shall notify the other parties hereto and the Rating Agencies and
such expenses shall constitute a Servicing Advance). Notwithstanding the
foregoing, if at any time, a court with jurisdiction in the matter shall hold
that the related Borrower may obtain a release of the subject Mortgaged Property
but is not obligated to deliver the full amount of the defeasance collateral
contemplated by the related Mortgage Loan documents (or cash sufficient to
purchase such defeasance collateral), then the Master Servicer shall (i) if
consistent with such court holding and the related Mortgage Loan documents,
refuse to allow the defeasance of the Mortgage Loan or (ii) if the Master
Servicer cannot so refuse and if the related Borrower has delivered cash to
purchase the defeasance collateral, the Master Servicer shall either (A) buy
such defeasance collateral or (B) prepay the Mortgage Loan, in either case, in
accordance with the Servicing Standard.
(g) The Master Servicer shall, as to each Mortgage Loan which
is secured by the interest of the related Borrower under a Ground Lease,
promptly (and in any event within 45 days of the Closing Date) notify the
related ground lessor of the transfer of such Mortgage Loan to the Trust
pursuant to this Agreement and inform such ground lessor that any notices of
default under the related Ground Lease should thereafter be forwarded to the
Master Servicer.
(h) With respect to each Designated ARD Loan, to the extent
that the related Mortgage Loan Seller has not on or before the Closing Date
delivered to the related Borrower a waiver of the accrual of Additional Interest
to the extent accrued at an Additional Interest Rate in excess of 2.0% per
annum, the Master Servicer shall deliver, on or before the 90th day following
the Closing Date, such a waiver on behalf of the Trust Fund as the holder of
such Designated ARD Loan.
SECTION 3.20. Modifications, Waivers, Amendments and Consents.
(a) The Special Servicer (as to Specially Serviced Mortgage
Loans) and, to the limited extent permitted below, the Master Servicer (as to
Performing Mortgage Loans) each may (consistent with the Servicing Standard)
agree to any modification, waiver or amendment of any term of, extend the
maturity of, defer or forgive interest (including Default Interest and
Additional Interest) on and principal of, defer or forgive late payment charges,
Prepayment Premiums and Yield Maintenance Charges on, permit the release,
addition or substitution of collateral securing, and/or permit the release,
addition or substitution of the Borrower on or any guarantor of, any Mortgage
Loan it is required to service and administer hereunder, subject, however, to
Sections 3.08 and 3.24 and, further to each of the following limitations,
conditions and restrictions:
(i) other than as provided in Sections 2.03(a), 3.02, 3.08,
3.19(h) and 3.20(g), the Master Servicer shall not agree to any
modification, waiver or amendment of any term of, or take any of the
other acts referenced in this Section 3.20(a) with respect to, any
Mortgage Loan without the consent of the Special Servicer (it being
understood and agreed that (A) the Master Servicer shall promptly
provide the Special Servicer with all information that the Special
Servicer may reasonably request in order to withhold or grant any such
consent, (B) the Special Servicer (for no additional compensation)
shall decide whether to withhold or grant such consent in accordance
with the Servicing Standard and (C) if any such consent has not been
expressly denied within ten Business Days of the Special Servicer's
receipt from the Master Servicer of all information reasonably
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requested thereby in order to make an informed decision, such consent
shall be deemed to have been granted);
(ii) other than as provided in Sections 3.02, 3.08 and
3.20(f), the Special Servicer shall not, in the case of any Specially
Serviced Mortgage Loan, agree to (or, in the case of any Performing
Mortgage Loan, consent to the Master Servicer's agreeing to) any
modification, waiver or amendment of any term of, or, in the case of
any Specially Serviced Mortgage Loan, take (or, in the case of any
Performing Mortgage Loan, consent to the Master Servicer's taking) any
of the other acts referenced in this Section 3.20(a) with respect to,
any Mortgage Loan that would affect the amount or timing of any related
payment of principal, interest or other amount payable thereunder or,
in the Special Servicer's reasonable, good faith judgment, would
materially impair the security for such Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon, unless a material
default on such Mortgage Loan has occurred or, in the Special
Servicer's reasonable, good faith judgment, a default in respect of
payment on such Mortgage Loan is reasonably foreseeable, and such
modification, waiver, amendment or other action is reasonably likely to
produce a greater recovery to Certificateholders (as a collective
whole) on a present value basis (the relevant discounting of
anticipated collections that will be distributable to
Certificateholders to be done at the related Mortgage Rate), than would
liquidation;
(iii) the Special Servicer shall not, in the case of any
Specially Serviced Mortgage Loan, extend (or, in the case of any
Performing Mortgage Loan, consent to the Master Servicer's extending)
the date on which any Balloon Payment is scheduled to be due on any
Mortgage Loan to a date beyond the earliest of (A) the fifth
anniversary of such Mortgage Loan's Stated Maturity Date, (B) two years
prior to the Rated Final Distribution Date and (C) if such Mortgage
Loan is secured by a Mortgage solely or primarily on the related
Borrower's leasehold interest in the related Mortgaged Property, ten
years prior to the end of the then current term of the related Ground
Lease (plus any unilateral options to extend); and, furthermore, the
Special Servicer shall not, in the case of any Specially Serviced
Mortgage Loan, grant (or, in the case of any Performing Mortgage Loan,
consent to the Master Servicer's granting) any such extension unless
the related Borrower agrees to deliver to the Special Servicer, the
Trustee and the Controlling Class Representative quarterly operating
statements with respect to the related Mortgaged Property (the Special
Servicer (or, if applicable, the Master Servicer at the direction of
the Special Servicer) to request that such statements be audited,
provided that the Special Servicer may waive such condition relating to
such statements being audited, in its sole discretion);
(iv) neither the Master Servicer nor the Special Servicer
shall make or permit any modification, waiver or amendment of any term
of, or take any of the other acts referenced in this Section 3.20(a)
with respect to, any Mortgage Loan that would result in an Adverse
REMIC Event with respect to any REMIC Pool or an Adverse Grantor Trust
Event with respect to either Grantor Trust Pool;
(v) the Special Servicer shall not, in the case of any
Specially Serviced Mortgage Loan, permit (or, in the case of any
Performing Mortgage Loan, consent to the Master Servicer's permitting)
any Borrower to add or substitute any real estate collateral for its
Mortgage Loan unless the Special Servicer shall have first (A)
determined in its reasonable, good faith judgment, based upon a Phase I
Environmental Assessment (and any additional environmental testing that
the Special Servicer deems necessary and prudent) conducted by an
Independent Person who regularly conducts
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Phase I Environmental Assessments, at the expense of the Borrower, that
such additional or substitute collateral is in compliance with
applicable environmental laws and regulations and that there are no
circumstances or conditions present with respect to such new collateral
relating to the use, management or disposal of any Hazardous Materials
for which investigation, testing, monitoring, containment, clean-up or
remediation would be required under any then applicable environmental
laws or regulations and (B) received written confirmation from each
Rating Agency that such addition or substitution of collateral will
not, in and of itself, result in an Adverse Rating Event with respect
to any Class of Rated Certificates; and
(vi) the Special Servicer shall not, in the case of any
Specially Serviced Mortgage Loan, release (or, in the case of any
Performing Mortgage Loan, consent to the Master Servicer's releasing),
including in connection with a substitution contemplated by clause (v)
above, any collateral securing an outstanding Mortgage Loan except as
provided in Section 3.09(d), or except as provided in Section 3.20(g),
or except where a Mortgage Loan (or, in the case of a
Cross-Collateralized Group, where such entire Cross-Collateralized
Group) is satisfied, or except in the case of a release where (A)
either (1) the use of the collateral to be released will not, in the
Special Servicer's good faith and reasonable judgment, materially and
adversely affect the Net Operating Income being generated by or the use
of the related Mortgaged Property, or (2) there is a corresponding
principal pay down of such Mortgage Loan in an amount at least equal to
the appraised value of the collateral to be released (or substitute
collateral with an appraised value at least equal to that of the
collateral to be released, is delivered), (B) the remaining Mortgaged
Property (together with any substitute collateral) is, in the Special
Servicer's good faith and reasonable judgment, adequate security for
the remaining Mortgage Loan and (C) such release would not, in and of
itself, result in an Adverse Rating Event with respect to any Class of
Rated Certificates (as confirmed in writing to the Trustee by each
Rating Agency);
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (vi) above shall not apply to any of the acts referenced in
this Section 3.20(a) with respect to any Mortgage Loan that is required under
the terms of such Mortgage Loan in effect on the Closing Date (or, in the case
of a Replacement Mortgage Loan, on the related date of substitution) or that is
solely within the control of the related Borrower, and (y) notwithstanding
clauses (i) through (vi) above, neither the Master Servicer nor the Special
Servicer shall be required to oppose the confirmation of a plan in any
bankruptcy or similar proceeding involving a Borrower if in its reasonable, good
faith judgment such opposition would not ultimately prevent the confirmation of
such plan or one substantially similar.
(b) The Special Servicer shall have no liability to the Trust,
the Certificateholders or any other Person if the Special Servicer's analysis
and determination that the modification, waiver, amendment or other action
contemplated by Section 3.20(a) is reasonably likely to produce a greater
recovery to Certificateholders on a present value basis than would liquidation,
should prove to be wrong or incorrect, so long as the analysis and determination
were made on a reasonable basis in good faith by the Special Servicer and in
accordance with the Servicing Standard.
(c) Any payment of interest, which is deferred pursuant to
Section 3.20(a), shall not, for purposes of calculating monthly distributions
and reporting information to Certificateholders, be added to the unpaid
principal balance or Stated Principal Balance of the related Mortgage Loan,
notwithstanding that the terms of such Mortgage Loan so permit or that such
interest may actually be capitalized; provided, however, that this sentence
shall not limit the rights of the Master Servicer or the Special Servicer on
behalf of the Trust to enforce any obligations of the related Borrower under
such Mortgage Loan.
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(d) Each of the Master Servicer and the Special Servicer may,
as a condition to its granting any request by a Borrower for consent,
modification, waiver or indulgence or any other matter or thing, the granting of
which is within the Master Servicer's or the Special Servicer's, as the case may
be, discretion pursuant to the terms of the instruments evidencing or securing
the related Mortgage Loan and is permitted by the terms of this Agreement,
require that such Borrower pay to it a reasonable or customary fee (which shall
in no event exceed 1.0% of the unpaid principal balance of the related Mortgage
Loan) for the additional services performed in connection with such request,
together with any related costs and expenses incurred by it. All such fees
collected by the Master Servicer and/or the Special Servicer shall be allocable
between such parties, as Additional Master Servicing Compensation and Additional
Special Servicing Compensation, respectively, as provided in Section 3.11.
(e) All modifications, waivers, amendments and other actions
entered into or taken in respect of the Mortgage Loans pursuant to this Section
3.20 shall be in writing. Each of the Special Servicer and the Master Servicer
shall notify the other such party, each Rating Agency and the Trustee, in
writing, of any modification, waiver, amendment or other action entered into or
taken thereby in respect of any Mortgage Loan pursuant to this Section 3.20 and
the date thereof, and shall deliver to the Trustee or the related Custodian for
deposit in the related Mortgage File (with a copy to the other such party), an
original counterpart of the agreement relating to such modification, waiver,
amendment or other action, promptly (and in any event within ten Business Days)
following the execution thereof. In addition, following the execution of any
modification, waiver or amendment agreed to by the Special Servicer pursuant to
Section 3.20(a) above, the Special Servicer shall deliver to the Master
Servicer, the Trustee and the Rating Agencies an Officer's Certificate
certifying that all of the requirements of Section 3.20(a) have been met and
setting forth in reasonable detail the basis of the determination made by it
pursuant to Section 3.20(a)(ii); provided that, if such modification, waiver or
amendment involves an extension of the maturity of any Mortgage Loan, such
Officer's Certificate shall be delivered to the Master Servicer, the Trustee and
the Rating Agencies before the modification, waiver or amendment is agreed to.
(f) With respect to any Designated ARD Loan after its
Anticipated Repayment Date, the Master Servicer shall be permitted, in its
discretion, to waive (such waiver to be in writing addressed to the related
Borrower, with a copy to the Trustee) all or any portion of the accrued
Additional Interest in respect of such ARD Loan if, prior to the related
maturity date, the related Borrower has requested the right to prepay such ARD
Loan in full together with all payments required by the related Mortgage Loan
documents in connection with such prepayment except for such accrued Additional
Interest, provided that (i) the Master Servicer has obtained the consent of the
Special Servicer (such consent to be given or withheld in accordance with the
Servicing Standard) and (ii) the Master Servicer has determined, in its
reasonable, good faith judgment, that the waiver of the Trust's right to receive
such accrued Additional Interest is in accordance with the Servicing Standard.
(g) The Master Servicer shall not be required to seek the
consent of the Special Servicer or any Certificateholder or obtain any
confirmation of the Certificate ratings from the Rating Agencies in order to
approve the following modifications, waivers or amendments of the Mortgage
Loans: (i) waivers of minor covenant defaults (other than financial covenants),
including late financial statements; (ii) releases of non-material parcels of a
Mortgaged Property (provided that releases as to which the related Mortgage Loan
documents expressly require the mortgagee thereunder to make such releases upon
the satisfaction of certain conditions shall be made as required by the Mortgage
Loan documents); and (iii) grants of easements that do not materially affect the
use or value of a Mortgaged Property or the Borrower's ability to make any
payments with respect to the related Mortgage Loan; provided that any such
modification, waiver or
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amendment (w) would not in any way affect a payment term of the Certificates,
(x) would not constitute a "significant modification" of such Mortgage Loan
pursuant to Treasury Regulations Section 1.860G-2(b) and would not otherwise
constitute an Adverse REMIC Event with respect to any REMIC Pool or an Adverse
Grantor Trust Event with respect to either Grantor Trust Pool, (y) agreeing to
such modification, waiver or amendment would be consistent with the Servicing
Standard, and (z) agreeing to such modification, waiver or amendment shall not
violate the terms, provisions or limitations of this Agreement or any other
document contemplated hereby.
(h) The Master Servicer shall not terminate or consent to the
termination any property manager with respect to any Mortgaged Property without
the consent of the Special Servicer (it being understood and agreed that (A) the
Master Servicer shall promptly provide the Special Servicer with all information
that the Special Servicer may reasonably request and which information is in the
possession of the Master Servicer, in order to withhold or grant any such
consent, (B) the Special Servicer (for no additional compensation) shall decide
whether to withhold or grant such consent in accordance with the Servicing
Standard and (C) if any such consent has not been expressly denied within ten
Business Days of the Special Servicer's receipt from the Master Servicer of all
information reasonably requested thereby in order to make an informed decision,
such consent shall be deemed to have been granted).
SECTION 3.21. Transfer of Servicing Between Master Servicer
and Special Servicer; Record Keeping.
(a) Upon determining that a Servicing Transfer Event has
occurred with respect to any Mortgage Loan and if the Master Servicer is not
also the Special Servicer, the Master Servicer shall immediately give notice
thereof, and shall deliver the related Servicing File, to the Special Servicer
and shall use its best efforts to provide the Special Servicer with all
information, documents (or copies thereof) and records (including records stored
electronically on computer tapes, magnetic discs and the like) relating to the
Mortgage Loan and reasonably requested by the Special Servicer to enable it to
assume its functions hereunder with respect thereto without acting through a
Sub-Servicer. To the extent such is in the possession of the Master Servicer or
any Sub-Servicer thereof, the information, documents and records to be delivered
by the Master Servicer to the Special Servicer pursuant to the prior sentence
shall include, but not be limited to, financial statements, appraisals,
environmental/engineering reports, leases, rent rolls, title insurance policies,
UCC's and tenant estoppels. The Master Servicer shall use its best efforts to
comply with the preceding two sentences within five Business Days of the
occurrence of each related Servicing Transfer Event. The Special Servicer may,
as to any delinquent Mortgage Loan, prior to the occurrence of a Servicing
Transfer Event with respect thereto, request and obtain the foregoing documents
and information in order to perform its duties described in Section 3.02.
Upon determining that a Specially Serviced Mortgage Loan has
become a Corrected Mortgage Loan and if the Master Servicer is not also the
Special Servicer, the Special Servicer shall immediately give notice thereof,
and shall return the related Servicing File within five Business Days, to the
Master Servicer; and, upon giving such notice and returning such Servicing File
to the Master Servicer, the Special Servicer's obligation to service such
Mortgage Loan, and the Special Servicer's right to receive the Special Servicing
Fee with respect to such Mortgage Loan, shall terminate, and the obligations of
the Master Servicer to service and administer such Mortgage Loan shall resume.
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Notwithstanding anything herein to the contrary, in connection
with the transfer to the Special Servicer of the servicing of a
Cross-Collateralized Mortgage Loan as a result of a Servicing Transfer Event or
the re-assumption of servicing responsibilities by the Master Servicer with
respect to any such Mortgage Loan upon its becoming a Corrected Mortgage Loan,
the Master Servicer and the Special Servicer shall each transfer to the other,
as and when applicable, the servicing of all other Cross-Collateralized Mortgage
Loans constituting part of the same Cross-Collateralized Group; provided that no
Cross-Collateralized Mortgage Loan may become a Corrected Mortgage Loan at
anytime that a continuing Servicing Transfer Event exists with respect to
another Cross-Collateralized Mortgage Loan in the same Cross-Collateralized
Group.
(b) In servicing any Specially Serviced Mortgage Loans, the
Special Servicer shall provide to the Trustee originals of documents
contemplated by the definition of "Mortgage File" and generated while such
Mortgage Loan is a Specially Serviced Mortgage Loan, for inclusion in the
related Mortgage File (with a copy of each such original to the Master
Servicer), and copies of any additional related Mortgage Loan information,
including correspondence with the related Borrower generated while such Mortgage
Loan is a Specially Serviced Mortgage Loan.
(c) The Master Servicer and Special Servicer shall each
furnish to the other, upon reasonable request, such reports, documents,
certifications and information in its possession, and access to such books and
records maintained thereby, as may relate to the Mortgage Loans and any REO
Properties and as shall be reasonably required by the requesting party in order
to perform its duties hereunder.
(d) In connection with the performance of its obligations
hereunder, each of the Master Servicer and the Special Servicer shall be
entitled to rely upon written information provided to it by the other.
SECTION 3.22. Sub-Servicing Agreements.
(a) The Master Servicer and, subject to Section 3.22(f), the
Special Servicer may enter into Sub-Servicing Agreements to provide for the
performance by third parties of any or all of their respective obligations
hereunder, provided that, in each case, the Sub-Servicing Agreement, including
any amendments thereto and modifications thereof: (i) insofar as it affects the
Trust, is consistent with this Agreement, including Section 7.01(a), in all
material respects and requires the Sub-Servicer to comply in all material
respects with all of the applicable conditions of this Agreement; (ii) provides
that if the Master Servicer or the Special Servicer, as the case may be, shall
for any reason no longer act in such capacity hereunder (including by reason of
an Event of Default), the Trustee or its designee or any other successor to the
Master Servicer or the Special Servicer, as the case may be, may thereupon
assume all of the rights and, except to the extent they arose prior to the date
of assumption, obligations of the Master Servicer or the Special Servicer, as
the case may be, under such agreement or, alternatively, may terminate such
Sub-Servicing Agreement without cause and without payment of any penalty or
termination fee (provided, however, that each Designated Sub-Servicer Agreement
may require a termination fee in connection with any termination of the
applicable Designated Sub-Servicer without cause); (iii) provides that the
Trustee, for the benefit of the Certificateholders, shall be a third party
beneficiary under such agreement, but that (except to the extent the Trustee or
its designee assumes the obligations of the Master Servicer or the Special
Servicer, as the case may be, thereunder as contemplated by the immediately
preceding clause (ii) and except with respect to the obligations of any
successor Master Servicer under the Designated Sub-Servicer Agreements) none of
the Trustee, any successor Master Servicer or Special Servicer, as the case may
be, or any Certificateholder shall have any duties under such agreement or any
liabilities arising therefrom except as explicitly set forth herein; (iv)
permits any purchaser of a Mortgage Loan pursuant to this Agreement to terminate
such agreement with
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respect to such purchased Mortgage Loan at its option and without penalty except
with respect to the Designated Sub-Servicer Agreements; (v) does not permit the
Sub-Servicer to enter into or consent to any modification, waiver or amendment
or otherwise take any action on behalf of the Master Servicer or Special
Servicer, as the case may be, contemplated by Section 3.20 hereof without the
consent of the Master Servicer or Special Servicer, as the case may be; and (vi)
does not permit the Sub-Servicer any greater rights of indemnification out of
the Trust Fund than those that the Master Servicer or the Special Servicer, as
the case may be, have pursuant to Section 6.03; provided that the appointment by
the Master Servicer or Special Servicer of a third-party contractor for the
purpose of performing discrete, ministerial functions shall not be subject to
this Section 3.22 (except that the Master Servicer or the Special Servicer, as
the case may be, shall remain responsible for the actions of such third-party
contractors and shall pay all fees and expenses of such third-party contractors,
unless otherwise expressly provided herein). In addition, each Sub-Servicing
Agreement entered into by the Master Servicer shall provide that such agreement
shall, with respect to any Mortgage Loan serviced thereunder, terminate at the
time such Mortgage Loan becomes a Specially Serviced Mortgage Loan (or,
alternatively, be suspended for so long as such Mortgage Loan continues to be a
Specially Serviced Mortgage Loan), and each Sub-Servicing Agreement entered into
by the Special Servicer shall relate only to Specially Serviced Mortgage Loans
and REO Property and shall terminate with respect to any such Mortgage Loan
which ceases to be a Specially Serviced Mortgage Loan. The Master Servicer and
the Special Servicer shall each notify the other, the Trustee and the Depositor
in writing promptly of the appointment by it of any Sub-Servicer. The Master
Servicer and the Special Servicer shall each deliver to the Trustee copies of
all Sub-Servicing Agreements, and any amendments thereto and modifications
thereof, entered into by it promptly upon its execution and delivery of such
documents. References in this Agreement to actions taken or to be taken by the
Master Servicer or the Special Servicer include actions taken or to be taken by
a Sub-Servicer on behalf of the Master Servicer or the Special Servicer, as the
case may be; and, in connection therewith, all amounts advanced by any
Sub-Servicer to satisfy the obligations of the Master Servicer or the Special
Servicer hereunder to make Advances shall be deemed to have been advanced by the
Master Servicer or the Special Servicer, as the case may be, out of its own
funds and, accordingly, such Advances shall be recoverable by such Sub-Servicer
in the same manner and out of the same funds as if such Sub-Servicer were the
Master Servicer or the Special Servicer, as the case may be. Such Advances shall
accrue interest in accordance with Sections 3.11(g) and/or 4.03(d), such
interest to be allocable between the Master Servicer or the Special Servicer, as
the case may be, and such Sub-Servicer as they may agree. For purposes of this
Agreement, the Master Servicer and the Special Servicer shall each be deemed to
have received any payment when a Sub-Servicer retained by it receives such
payment.
(b) Each Sub-Servicer shall be authorized to transact business
in the state or states in which the related Mortgaged Properties it is to
service are situated, if and to the extent required by applicable law.
(c) The Master Servicer and the Special Servicer, for the
benefit of the Trustee and the Certificateholders, shall (at no expense to the
other such party or to the Trustee, the Certificateholders or the Trust) monitor
the performance and enforce the obligations of their respective Sub-Servicers
under the related Sub-Servicing Agreements. Such enforcement, including the
legal prosecution of claims, termination of Sub-Servicing Agreements in
accordance with their respective terms and the pursuit of other appropriate
remedies, shall be in such form and carried out to such an extent and at such
time as the Master Servicer or the Special Servicer, as applicable, in its good
faith and reasonable judgment, would require were it the owner of the Mortgage
Loans. Subject to the terms of the related Sub-Servicing Agreement, the Master
Servicer and the Special Servicer shall each have the right to remove a
Sub-Servicer retained by it at any time it considers such removal to be in the
best interests of Certificateholders.
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(d) If the Master Servicer or the Special Servicer ceases to
serve as such under this Agreement for any reason (including by reason of an
Event of Default), then the Trustee or other successor Master Servicer or
Special Servicer, as the case may be, shall succeed to the rights and assume the
obligations of the Master Servicer or the Special Servicer under any
Sub-Servicing Agreement unless the Trustee or other successor Master Servicer or
Special Servicer elects to terminate any such Sub-Servicing Agreement in
accordance with its terms and Section 3.22(a)(ii) hereof; provided that a
Designated Sub-Servicer Agreement may not be so terminated except for cause or
upon payment of a termination fee as provided in such Designated Sub-Servicer
Agreement. In any event, if a Sub-Servicing Agreement is to be assumed by the
Trustee or other successor Master Servicer or Special Servicer, then the Master
Servicer or the Special Servicer, as applicable, at its expense shall, upon
request of the Trustee, deliver to the assuming party all documents and records
relating to such Sub-Servicing Agreement and the Mortgage Loans then being
serviced thereunder and an accounting of amounts collected and held on behalf of
it thereunder, and otherwise use its best efforts to effect the orderly and
efficient transfer of the Sub-Servicing Agreement to the assuming party.
(e) Notwithstanding any Sub-Servicing Agreement, the Master
Servicer and the Special Servicer shall remain obligated and liable to the
Trustee and the Certificateholders for the performance of their respective
obligations and duties under this Agreement in accordance with the provisions
hereof to the same extent and under the same terms and conditions as if each
alone were servicing and administering the Mortgage Loans or REO Properties for
which it is responsible. No appointment of a Sub-Servicer shall result in any
additional expense to the Trustee, the Certificateholders or the Trust other
than those contemplated herein.
(f) The Special Servicer shall not enter into any
Sub-Servicing Agreement unless either: (i) the Rating Agencies have confirmed in
writing that entering into such agreement will not result in an Adverse Rating
Event; or (ii) such agreement relates to one or more Mortgage Loans (including
any such Mortgage Loan(s) previously sub-serviced in accordance with this
Section 3.22) that together represent less than 25% of the aggregate outstanding
principal balance of all Specially Serviced Mortgage Loans.
(g) Each successor Master Servicer hereunder shall, except as
provided in Section 7.01(c), agree to assume the responsibilities and
obligations of the Master Servicer under the applicable Designated Sub-Servicer
Agreement.
SECTION 3.23. Controlling Class Representative.
(a) The Holders (or, in the case of Book-Entry Certificates,
the Certificate Owners) of Certificates representing more than 50% of the Class
Principal Balance of the Controlling Class shall be entitled in accordance with
this Section 3.23 to select a representative (the "Controlling Class
Representative") having the rights and powers specified in this Agreement
(including those specified in Section 3.24) or to replace an existing
Controlling Class Representative. Upon (i) the receipt by the Trustee of written
requests for the selection of a Controlling Class Representative from the
Holders (or, in the case of Book-Entry Certificates, the Certificate Owners) of
Certificates representing more than 50% of the Class Principal Balance of the
Controlling Class, (ii) the resignation or removal of the Person acting as
Controlling Class Representative or (iii) a determination by the Trustee that
the Controlling Class has changed, the Trustee shall promptly notify the
Depositor and the Holders (and, in the case of Book-Entry Certificates, to the
extent actually known to a Responsible Officer of the Trustee or identified
thereto by the Depository or the Depository Participants, the Certificate
Owners) of the Controlling Class that they may select a
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Controlling Class Representative. Such notice shall set forth the process
established by the Trustee for selecting a Controlling Class Representative,
which process may include the designation of the Controlling Class
Representative by the Majority Controlling Class Certificateholder by a writing
delivered to the Trustee. No appointment of any Person as a Controlling Class
Representative shall be effective until such Person provides the Trustee with
written confirmation of its acceptance of such appointment, an address and
telecopy number for the delivery of notices and other correspondence and a list
of officers or employees of such Person with whom the parties to this Agreement
may deal (including their names, titles, work addresses and telecopy numbers).
(b) Within ten Business Days (or as soon thereafter as
practicable if the Controlling Class consists of Book-Entry Certificates) of any
change in the identity of the Controlling Class Representative of which a
Responsible Officer of the Trustee has actual knowledge or of receiving a
request therefor from the Master Servicer or Special Servicer, the Trustee shall
deliver to the requesting party the identity of the Controlling Class
Representative and a list of each Holder (or, in the case of Book-Entry
Certificates, to the extent actually known to a Responsible Officer of the
Trustee or identified thereto by the Depository or the Depository Participants,
each Certificate Owner) of the Controlling Class, including, in each case, names
and addresses. With respect to such information, the Trustee shall be entitled
to conclusively rely on information provided to it by the Holders (or, in the
case of Book-Entry Certificates, subject to Section 5.06, by the Depository or
the Certificate Owners) of such Certificates, and the Master Servicer and the
Special Servicer shall be entitled to rely on such information provided by the
Trustee with respect to any obligation or right hereunder that the Master
Servicer and the Special Servicer may have to deliver information or otherwise
communicate with the Controlling Class Representative or any of the Holders (or,
if applicable, Certificate Owners) of the Controlling Class. In addition to the
foregoing, within two Business Days of the selection, resignation or removal of
a Controlling Class Representative, the Trustee shall notify the other parties
to this Agreement of such event.
(c) A Controlling Class Representative may at any time resign
as such by giving written notice to the Trustee and to each Holder (or, in the
case of Book-Entry Certificates, Certificate Owner) of the Controlling Class.
The Holders (or, in the case of Book-Entry Certificates, the Certificate Owners)
of Certificates representing more than 50% of the Class Principal Balance of the
Controlling Class shall be entitled to remove any existing Controlling Class
Representative by giving written notice to the Trustee and to such existing
Controlling Class Representative.
(d) Once a Controlling Class Representative has been selected
pursuant to this Section 3.23, each of the parties to this Agreement and each
Certificateholder (or Certificate Owner, if applicable) shall be entitled to
rely on such selection unless a majority of the Holders (or, in the case of
Book-Entry Certificates, the Certificate Owners) of the Controlling Class, by
aggregate Certificate Principal Balance, or such Controlling Class
Representative, as applicable, shall have notified the Trustee and each other
party to this Agreement and each Holder (or, in the case of Book-Entry
Certificates, Certificate Owner) of the Controlling Class, in writing, of the
resignation or removal of such Controlling Class Representative.
(e) Any and all expenses of the Controlling Class
Representative shall be borne by the Holders (or, if applicable, the Certificate
Owners) of Certificates of the Controlling Class, pro rata according to their
respective Percentage Interests in such Class, and not by the Trust.
Notwithstanding the foregoing, if a claim is made against the Controlling Class
Representative by a Borrower with respect to this Agreement or any particular
Mortgage Loan, the Controlling Class Representative shall immediately notify the
Trustee, the Master Servicer and the Special Servicer, whereupon (if the Special
Servicer or the Trust are also named
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parties to the same action and, in the sole judgment of the Special Servicer,
(i) the Controlling Class Representative had acted in good faith, without
negligence or willful misfeasance with regard to the particular matter, and (ii)
there is no potential for the Special Servicer or the Trust to be an adverse
party in such action as regards the Controlling Class Representative) the
Special Servicer on behalf of the Trust shall, subject to Section 6.03, assume
the defense of any such claim against the Controlling Class Representative. This
provision shall survive the termination of this Agreement and the termination or
resignation of the Controlling Class Representative.
SECTION 3.24. Certain Rights and Powers of the Controlling
Class Representative.
(a) The Controlling Class Representative will be entitled to
advise the Special Servicer with respect to the following actions of the Special
Servicer, and notwithstanding anything in any other Section of this Agreement to
the contrary, but in all cases subject to Section 3.24(b), the Special Servicer
will not be permitted to take any of the following actions unless and until it
has notified the Controlling Class Representative in writing and the Controlling
Class Representative has not objected in writing within ten Business Days of
having been notified thereof in writing 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 ten
Business Day period, then the Controlling Class Representative's approval will
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 modification, amendment or waiver of a monetary term
(including the timing of payments) or any material non-monetary term of
a 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) for less than the Purchase Price;
(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 for a Mortgage Loan (other than
in accordance with the terms of, or upon satisfaction of, such Mortgage
Loan);
(vii) any acceptance of substitute or additional collateral
for a Mortgage Loan (other than in accordance with the terms of such
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;
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provided that, in the event that the Special Servicer determines that immediate
action is necessary to protect the interests of the Certificateholders (as a
collective whole), the Special Servicer may take any such action without waiting
for the Controlling Class Representative's response.
In addition, the Controlling Class Representative may direct the Special
Servicer to take, or to refrain from taking, such actions as the Controlling
Class Representative may deem advisable or as to which provision is otherwise
made herein subject to Section 3.24(b). Upon reasonable request, the Special
Servicer shall provide the Controlling Class Representative with any information
in the Special Servicer's possession with respect to such matters, including,
without limitation, its reasons for determining to take a proposed action;
provided that such information shall also be provided, in a written format, to
the Trustee, who shall make it available for review pursuant to Section 8.12(b).
Each of the Master Servicer and the Special Servicer shall
notify the Controlling Class Representative of any release or substitution of
collateral for a Mortgage Loan even if such release or substitution is in
accordance with such Mortgage Loan.
(b) Notwithstanding anything herein to the contrary, (i) the
Special Servicer shall not have any right or obligation to consult with or to
seek and/or obtain consent or approval from any Controlling Class Representative
prior to acting, and provisions of this Agreement requiring such shall be of no
effect, during the period prior to the initial selection of a Controlling Class
Representative and, if any Controlling Class Representative resigns or is
removed, during the period following such resignation or removal until a
replacement is selected and (ii) no advice, direction or objection from or by
the Controlling Class Representative, as contemplated by Section 3.24(a), may
(and the Special Servicer shall ignore and act without regard to any such
advice, direction or objection that the Special Servicer has determined, in its
reasonable, good faith judgment, would) (A) require or cause the Special
Servicer to violate applicable law, the terms of any Mortgage Loan, any
provision of this Agreement or the REMIC Provisions, including the Special
Servicer's obligation to act in accordance with the Servicing Standard, (B)
result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse
Grantor Trust Event with respect to either Grantor Trust Pool, (C) expose the
Trust. the Depositor, the Master Servicer, the Special Servicer, any Fiscal
Agent, the Tax Administrator or the Trustee, or any of their respective
Affiliates, officers, directors, employees or agents, to any material claim,
suit or liability, or (D) materially expand the scope of the Special Servicer's
responsibilities under this Agreement.
Furthermore, the Special Servicer shall not be obligated to
obtain the approval of the Controlling Class Representative for any actions to
be taken by the Special Servicer with respect to any particular Mortgage Loan if
(i) the Special Servicer has, in accordance with Section 3.24(a), notified the
Controlling Class Representative in writing of the various actions that the
Special Servicer proposes to take with respect to the work-out or liquidation of
such Mortgage Loan and (ii) for 60 days following the first such notice, the
Controlling Class Representative has objected to all of those proposed actions
and has failed to suggest any alternative actions that the Special Servicer
considers to be consistent with the Servicing Standard.
(c) Each Certificateholder acknowledges and agrees, by its
acceptance of its Certificates, that the Controlling Class Representative may
have special relationships and interests that conflict with those of Holders of
one or more Classes of Certificates, that the Controlling Class Representative
may act solely in the interests of the Holders of the Controlling Class, that
the Controlling Class Representative does not have any duties to the Holders of
any Class of Certificates other than the Controlling Class, that the
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Controlling Class Representative may take actions that favor interests of the
Holders of the Controlling Class over the interests of the Holders of one or
more other Classes of Certificates, and that the Controlling Class
Representative shall have no liability whatsoever for having so acted, and no
Certificateholder may take any action whatsoever against the Controlling Class
Representative or any director, officer, employee, agent or principal thereof
for having so acted.
SECTION 3.25. Alternate Special Servicer.
If (i) to the knowledge of any Servicing Officer, the Special
Servicer or any of its direct or indirect, wholly-owned subsidiaries acquires or
holds an equity interest in, or debt secured by an equity interest in, any
Borrower and (ii) the related Mortgage Loan is or becomes a Specially Serviced
Mortgage Loan, then the Special Servicer shall promptly so notify the Trustee
and each Rating Agency and shall, solely with respect to such Mortgage Loan,
within 30 days after the satisfaction of both of the conditions set forth in
clauses (i) and (ii) of this sentence, designate an experienced servicing
institution to act as an alternative special servicer (the "Alternate Special
Servicer"). Promptly following such designation, the Special Servicer shall
notify the Trustee and each Rating Agency of the Person proposed to act as the
Alternate Special Servicer with respect to such Mortgage Loan. The designated
Person shall become the Alternate Special Servicer with respect to such Mortgage
Loan on the date as of which the Trustee shall have received: (i) written
confirmation from each of the Rating Agencies that the appointment of such
Person as Alternate Special Servicer for such Mortgage Loan will not result in
an Adverse Rating Event with respect to any Class of Rated Certificates; (ii) a
written assumption of all of the Special Servicer's duties with respect to such
Mortgage Loan, executed by the designated Person; and (iii) an Opinion of
Counsel (which shall not be an expense of the Trust or the Trustee)
substantially to the effect that (A) the designation of such Person to serve as
Alternate Special Servicer with respect to such Mortgage Loan is in compliance
with this Section 3.25, (B) the designated Person is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (C) the written assumption contemplated by clause (ii) of this
sentence has been duly authorized, executed and delivered by the designated
Person and (D) upon the execution and delivery of the written assumption
contemplated by clause (ii) of this sentence, the designated Person shall be
bound by the terms of this Agreement and, subject to customary bankruptcy and
insolvency exceptions, that this Agreement shall be enforceable against the
designated Person in accordance with its terms, in any event, insofar as this
Agreement relates to the obligations of the Special Servicer with respect to
such Mortgage Loan; provided that no rating confirmation pursuant to clause (i)
of this sentence shall be necessary from Fitch if the designated Person has a
special servicing rating of at least "_____" from _____; and provided, further,
that if no Person designated by the Special Servicer has become the Alternate
Special Servicer with respect to such Mortgage Loan within 40 days after the
satisfaction of both of the conditions set forth in clauses (i) and (ii) of the
first sentence of this Section 3.25, the Master Servicer (or, in the case of the
initial Master Servicer, an Affiliate thereof rated as a special servicer by
Fitch) shall act as such Alternate Special Servicer. Once a Person becomes the
Alternate Special Servicer with respect to such Mortgage Loan in accordance with
the preceding sentence, such Person, rather than the Special Servicer, shall be
obligated to perform all of the obligations of the Special Servicer, and shall
be entitled to all of the Special Servicing Fees, Workout Fees, Liquidation Fees
and Additional Special Servicing Compensation payable, with respect to such
Mortgage Loan, and all references herein to "Special Servicer" shall, in the
case of such Mortgage Loan, mean the Alternate Special Servicer. The Special
Servicer shall be responsible for the servicing and administration of such
Mortgage Loan until an Alternate Special Servicer has assumed responsibility for
such Mortgage Loan; provided that the Special Servicer may not agree to any
waiver, modification or amendment of the terms of such Mortgage Loan; and
provided, further, that the Special Servicer shall not be responsible for its
failure to take any action with respect to a Specially Serviced
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Mortgage Loan subject to this Section 3.25 so long as the Special Servicer has
complied with its requirements and otherwise acted in accordance with the
Servicing Standard. The Special Servicer shall not be obligated to compensate
any Alternate Special Servicer in addition to what such Alternate Special
Servicer is otherwise entitled to hereunder. If the Special Servicer or its
direct or indirect, wholly-owned subsidiary, as the case may be, disposes of its
equity interest in, and any debt secured by an equity interest in, a Borrower,
the Special Servicer may terminate the related Alternate Special Servicer and
shall, thereupon, resume acting as Special Servicer with respect to such
Borrower's Mortgage Loan; provided that if the initial Master Servicer or an
Affiliate thereof is the Alternate Special Servicer, it shall retain the right
to receive any Liquidation Fees or Workout Fees earned (including after such
termination) with respect to such Borrower's Mortgage Loan.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) On each Distribution Date, the Trustee shall apply amounts
on deposit in the Distribution Account for the following purposes and in the
following order of priority, in each case to the extent of the remaining portion
of the Available Distribution Amount for such Distribution Date:
(i) to make distributions of interest to the Holders of
the respective Classes of Senior Certificates, pro rata based on
entitlement, up to an amount equal to all Distributable Certificate
Interest in respect of each such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(ii) to make distributions of principal to the Holders
of the Class A-1 Certificates, up to an amount equal to the lesser of
(A) the aggregate of the then outstanding Class Principal Balances of
the Class A-1 Certificates and (B) the Principal Distribution Amount
for such Distribution Date;
(iii) to reimburse the Holders of the Class A-1
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(iv) to make distributions of interest to the Holders of
the Class A-2 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(v) after the Class Principal Balances of the Class A-1
Certificates have been reduced to zero, to make distributions of
principal to the Holders of the Class A-2 Certificates, up to an amount
equal to the lesser of (A) the then outstanding Class Principal Balance
of the Class A-2 Certificates and (B) the excess, if any, of the
Principal Distribution Amount for such Distribution Date over the
amounts, if any, distributed on such Distribution Date pursuant to
clause (ii) above;
(vi) to reimburse the Holders of the Class A-2
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(vii) to make distributions of interest to the Holders of
the Class A-3 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(viii) after the Class Principal Balances of the Class A-1
and Class A-2 Certificates have been reduced to zero, to make
distributions of principal to the Holders of the Class A-3
Certificates, up to an amount equal to the lesser of (A) the then
outstanding Class Principal Balance of the Class A-3 Certificates and
(B) the excess, if any, of the Principal Distribution Amount for such
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Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii) and (v) above;
(ix) to reimburse the Holders of the Class A-3
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(x) to make distributions of interest to the Holders of
the Class A-4 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xi) after the Class Principal Balances of the Class
A-1, Class A-2 and Class A-3 Certificates have been reduced to zero, to
make distributions of principal to the Holders of the Class A-4
Certificates, up to an amount equal to the lesser of (A) the then
outstanding Class Principal Balance of the Class A-4 Certificates and
(B) the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v) and (viii) above;
(xii) to reimburse the Holders of the Class A-4
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xiii) to make distributions of interest to the Holders of
the Class A-5 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xiv) after the Class Principal Balances of the Class
A-1, Class A-2, Class A-3 and Class A-4 Certificates have been reduced
to zero, to make distributions of principal to the Holders of the Class
A-5 Certificates, up to an amount equal to the lesser of (A) the then
outstanding Class Principal Balance of the Class A-5 Certificates and
(B) the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii) and (xi) above;
(xv) to reimburse the Holders of the Class A-5
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xvi) to make distributions of interest to the Holders of
the Class B-1 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xvii) after the Class Principal Balances of the Class A
Certificates have been reduced to zero, to make distributions of
principal to the Holders of the Class B-1 Certificates, up to an amount
equal to the lesser of (A) the then outstanding Class Principal Balance
of the Class B-1 Certificates and (B) the excess, if any, of the
Principal Distribution Amount for such Distribution Date over the
amounts, if any, distributed on such Distribution Date pursuant to
clauses (ii), (v), (viii), (xi), and (xiv) above;
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(xviii) to reimburse the Holders of the Class B-1
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xix) to make distributions of interest to the Holders of
the Class B-2 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xx) after the Class Principal Balances of the Class A
and Class B-1 Certificates have been reduced to zero, to make
distributions of principal to the Holders of the Class B-2
Certificates, up to an amount equal to the lesser of (A) the then
outstanding Class Principal Balance of the Class B-2 Certificates and
(B) the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii), (xi), (xiv),
and (xvii) above;
(xxi) to reimburse the Holders of the Class B-2
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xxii) to make distributions of interest to the Holders of
the Class B-3 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xxiii) after the Class Principal Balances of the Class A,
Class B-1 and Class B-2 Certificates have been reduced to zero, to make
distributions of principal to the Holders of the Class B-3
Certificates, up to an amount equal to the lesser of (A) the then
outstanding Class Principal Balance of the Class B-3 Certificates and
(B) the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii), (xi), (xiv),
(xvii) and (xx) above;
(xxiv) to reimburse the Holders of the Class B-3
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xxv) to make distributions of interest to the Holders of
the Class B-4 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xxvi) after the Class Principal Balances of the Class A,
Class B-1, Class B-2 and Class B-3 Certificates have been reduced to
zero, to make distributions of principal to the Holders of the Class
B-4 Certificates, up to an amount equal to the lesser of (A) the then
outstanding Class Principal Balance of the Class B-4 Certificates and
(B) the excess, if any, of the Principal Distribution Amount for such
Distribution Date over the amounts, if any, distributed on such
Distribution Date pursuant to clauses (ii), (v), (viii), (xi), (xiv),
(xvii), (xx) and (xxiii) above;
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(xxvii) to reimburse the Holders of the Class B-4
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xxviii) to make distributions of interest to the Holders of
the Class B-5 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xxix) after the Class Principal Balances of the Class A,
Class B-1, Class B-2, Class B-3 and Class B-4 Certificates have been
reduced to zero, to make distributions of principal to the Holders of
the Class B-5 Certificates, up to an amount equal to the lesser of (A)
the then outstanding Class Principal Balance of the Class B-5
Certificates and (B) the excess, if any, of the Principal Distribution
Amount for such Distribution Date over the amounts, if any, distributed
on such Distribution Date pursuant to clauses (ii), (v), (viii), (xi),
(xiv), (xvii), (xx), (xxiii), and (xxvi) above;
(xxx) to reimburse the Holders of the Class B-5
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xxxi) to make distributions of interest to the Holders of
the Class B-6 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xxxii) after the Class Principal Balances of the Class A,
Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates
have been reduced to zero, to make distributions of principal to the
Holders of the Class B-6 Certificates, up to an amount equal to the
lesser of (A) the then outstanding Class Principal Balance of the Class
B-6 Certificates and (B) the excess, if any, of the Principal
Distribution Amount for such Distribution Date over the amounts, if
any, distributed on such Distribution Date pursuant to clauses (ii),
(v), (viii), (xi), (xiv), (xvii), (xx), (xxiii), (xxvi) and (xxix)
above;
(xxxiii) to reimburse the Holders of the Class B-6
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xxxiv) to make distributions of interest to the Holders of
the Class B-7 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xxxv) after the Class Principal Balances of the Class A,
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5 and Class B-6
Certificates have been reduced to zero, to make distributions of
principal to the Holders of the Class B-7 Certificates, up to an amount
equal to the lesser of (A) the then outstanding Class Principal Balance
of the Class B-7 Certificates and (B) the excess, if any, of the
Principal Distribution Amount for such Distribution Date over the
amounts, if any, distributed on such Distribution Date pursuant to
clauses (ii), (v), (viii), (xi), (xiv), (xvii), (xx), (xxiii), (xxvi),
(xxix), and (xxxii) above;
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(xxxvi) to reimburse the Holders of the Class B-7
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xxxvii) to make distributions of interest to the Holders of
the Class B-8 Certificates, up to an amount equal to all Distributable
Certificate Interest in respect of such Class of Certificates for such
Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(xxxviii) after the Class Principal Balances of the Class A,
Class B-1, Class B-2, Class B-3, Class B-4, Class B-5, Class B-6 and
Class B-7 Certificates have been reduced to zero, to make distributions
of principal to the Holders of the Class B-8 Certificates, up to an
amount equal to the lesser of (A) the then outstanding Class Principal
Balance of the Class B-8 Certificates and (B) the excess, if any, of
the Principal Distribution Amount for such Distribution Date over the
amounts, if any, distributed on such Distribution Date pursuant to
clauses (ii), (v), (viii), (xi), (xiv), (xvii), (xx), (xxiii), (xxvi),
(xxix), (xxxii), and (xxxv) above;
(xxxix) to reimburse the Holders of the Class B-8
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xl) to make distributions of 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 and, to the extent not previously paid, for all prior
Distribution Dates;
(xli) after the Class Principal Balances of the Class A
and Class B Certificates have been reduced to zero, to make
distributions of principal to the Holders of the Class C Certificates,
up to an amount equal to the lesser of (A) the then outstanding Class
Principal Balance of the Class C Certificates and (B) the excess, if
any, of the Principal Distribution Amount for such Distribution Date
over the amounts, if any, distributed on such Distribution Date
pursuant to clauses (ii), (v), (viii), (xi), (xiv), (xvii), (xx),
(xxiii), (xxvi), (xxix), (xxxii), (xxxv) and (xxxviii) above;
(xlii) to reimburse the Holders of the Class C
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xliii) to make distributions of 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 and, to the extent not previously paid, for all prior
Distribution Dates;
(xliv) after the Class Principal Balances of the Class A,
Class B and Class C Certificates have been reduced to zero, to make
distributions of principal to the Holders of the Class D Certificates
up to an amount equal to the lesser of (A) the then outstanding Class D
Certificates and (B) the excess, if any, of the Principal Distribution
Amount for such Distribution Date over the amounts, if any, distributed
on such Distribution Date pursuant to clauses (ii),(v), (viii), (xi),
(xiv), (xvii), (xx), (xxiii), (xxvi), (xxix), (xxxii), (xxxv) and
(xxxviii), above;
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(xlv) to reimburse the Holders of the Class D
Certificates, up to an amount equal to all Unreimbursed Principal
Balance Reductions, if any, previously incurred with respect to such
Class of Certificates;
(xlvi) to make distributions to the Holders of the Class
R-III Certificates, up to an amount equal to the excess, if any, of (A)
the aggregate distributions deemed made in respect of the REMIC II
Regular Interests on such Distribution Date pursuant to Section
4.01(i), over (B) the aggregate distributions made in respect of the
Regular Interest Certificates on such Distribution Date pursuant to
clauses (i) through (xlv) above;
(xlvii) to make distributions to the Holders of the Class
R-II Certificates, up to an amount equal to the excess, if any, of (A)
the aggregate distributions deemed made in respect of the REMIC I
Regular Interests on such Distribution Date pursuant to Section
4.01(j), over (B) the aggregate distributions deemed made in respect of
the REMIC II Regular Interests on such Distribution Date pursuant to
Section 4.01(i); and
(xlviii) to make distributions to the Holders of the Class
R-I Certificates, up to an amount equal to the excess, if any, of (A)
the Available Distribution Amount for such Distribution Date, over (B)
the aggregate distributions made in respect of the other Classes of
Certificates on such Distribution Date pursuant to clauses (i) through
(xlviii) above;
provided, that, on the Final Distribution Date, the distributions of principal
to be made pursuant to clauses (ii), (v), (viii), (xi), (xiv), (xvii), (xx),
(xxiii), (xxvi), (xxix), (xxxii), (xxxv), (xxxviii), (xli) and (xliv) above
shall, in each such case, subject to the then remaining portion of the Available
Distribution Amount for such date, be made to the Holders of the relevant Class
or Classes of Principal Balance Certificates otherwise entitled to distributions
of principal pursuant to such clause in an amount equal to the entire then
remaining Class Principal Balance (or, in the case of clause (ii) above, if
applicable, the entire aggregate of the then remaining Class Principal Balances)
of such Class or Classes of Certificates outstanding immediately prior to such
Final Distribution Date.
(b) If a Yield Maintenance Charge is collected with respect to
any Mortgage Loan during any particular Collection Period, then the Trustee
shall, on the Distribution Date corresponding to such Collection Period,
withdraw from the Distribution Account and distribute among the Holders of the
Class S Certificates and the respective Classes of the Yield Maintenance
Certificates in the proportions set forth below the entire amount of such Yield
Maintenance Charge as additional interest:
(i) The Holders of each Class, if any, of the Yield
Maintenance Certificates then entitled to distributions of principal on
such Distribution Date shall be entitled to an amount equal to the
product of (A) the amount of such Yield Maintenance Charge that is so
distributable, multiplied by (B) a fraction (not greater than one or
less than zero), the numerator of which is equal to the excess, if any,
of the Pass-Through Rate applicable to such Class of Yield Maintenance
Certificates for the corresponding Interest Accrual Period, over the
relevant Discount Rate, and the denominator of which is equal to the
excess, if any, of the Mortgage Rate for the Mortgage Loan in respect
of which such Yield Maintenance Charge was received, over the relevant
Discount Rate, multiplied by (C) a fraction (not greater than one or
less than zero), the numerator of which is equal to the aggregate
distributions of principal payable to the Holders of such Class of
Yield Maintenance Certificates on
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such Distribution Date, and the denominator of which is equal to the
Principal Distribution Amount for such Distribution Date.
(ii) Any portion of such Yield Maintenance Premium that may
remain after such distributions on the Principal Balance Certificates
will be distributed to the Holders of the Class S Certificates.
For purposes of the foregoing paragraph, the "Discount Rate"
shall be the rate which, when compounded monthly, is equivalent to the Treasury
Rate when compounded semi-annually (e.g., a __% per annum Treasury Rate would
equate to a ______% per annum Discount Rate). 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 Stated Maturity Date (or, in the case of any Mortgage
Loan that is an ARD Loan, the Anticipated Repayment Date) of the prepaid
Mortgage Loan.]
If a Prepayment Premium is collected with respect to any
Mortgage Loan during any particular Collection Period, then the Trustee shall,
on the Distribution Date corresponding to such Collection Period, withdraw from
the Distribution Account and distribute to the Holders of the Class S
Certificates the entire amount of such Prepayment Premium as additional
interest.
(c) On each Distribution Date, the Trustee shall withdraw from
the Distribution Account any amounts then on deposit in the Class E Sub-Account
of the Distribution Account that represent Additional Interest collected during
or prior to the related Collection Period in respect of the ARD Loans and shall
distribute such amounts to the Holders of the Class E Certificates.
(d) All distributions made with respect to each Class of
Certificates on each Distribution Date shall be allocated pro rata among such
Certificates based on their respective Percentage Interests. Except as otherwise
provided below, all such distributions made with respect to each Class of
Certificates on each Distribution Date shall be made to the Holders of such
Certificates of record at the close of business on the related Record Date and,
in the case of each such Holder, shall be made by wire transfer of immediately
available funds to the account thereof at a bank or other entity having
appropriate facilities therefor, if such Holder shall have provided the Trustee
with wiring instructions no later than the related Record Date (which wiring
instructions may be in the form of a standing order applicable to all subsequent
Distribution Dates), and otherwise shall be made by check mailed to the address
of such Holder as it appears in the Certificate Register. The final distribution
on each Certificate (determined, in the case of a Principal Balance Certificate,
without regard to any possible future reimbursement of any portion of a
previously incurred Unreimbursed Principal Balance Reduction allocable to such
Certificate) will be made in like manner, but only upon presentation and
surrender of such Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to Certificateholders of such final
distribution. Any distribution that is to be made with respect to a Principal
Balance Certificate in reimbursement of any portion of an Unreimbursed Principal
Balance Reduction allocable to such Certificate, 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 Holder that surrendered
such Certificate at the last address set forth for such Holder in the
Certificate Register or at any other address of which the Trustee was
subsequently notified in writing.
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(e) Each distribution with respect to a Book-Entry Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the related Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the related Certificate Owners that it represents. None of
the parties hereto shall have any responsibility therefor except as otherwise
provided by this Agreement or applicable law. The Trustee and the Depositor
shall perform their respective obligations under the Letter of Representations
among the Depositor, the Trustee and the initial Depository, a copy of which
Letter of Representations is attached hereto as Exhibit C.
(f) The rights of the Certificateholders to receive
distributions from the proceeds of the Trust Fund in respect of their
Certificates, and all rights and interests of the Certificateholders in and to
such distributions, shall be as set forth in this Agreement. Neither the Holders
of any Class of Certificates nor any party hereto shall in any way be
responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.
(g) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates will be made on the next Distribution Date (such final distribution
to be determined, in the case of a Class of Principal Balance Certificates,
without regard to any possible future reimbursement of any portion of a
previously incurred Unreimbursed Principal Balance Reduction in respect of such
Class), the Trustee shall, as promptly as possible (and, in any event, no later
than five days) after the related Determination Date, mail to each Holder of
record on such date of such Class of Certificates a notice to the effect that:
(i) the Trustee expects that the final distribution with
respect to such Class of Certificates will be made on such Distribution
Date but only upon presentation and surrender of such Certificates at
the office of the Certificate Registrar or at such other location
therein specified, and
(ii) no interest shall accrue on such Certificates from and
after the end of the Interest Accrual Period for such Distribution
Date.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held uninvested
in trust and credited to the account or accounts of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(g) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, then the Trustee, directly or through an agent, shall take such
steps to contact the remaining non-tendering Certificateholders concerning the
surrender of their Certificates as it shall deem appropriate. The costs and
expenses of holding such funds in trust and of contacting such
Certificateholders following the first anniversary of the delivery of such
second notice to the non-tendering Certificateholders shall be paid out of such
funds. No interest shall accrue or be payable to any former Holder on any amount
held in trust pursuant to this paragraph. If all of the Certificates shall not
have been surrendered for cancellation by the second anniversary of the
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delivery of the second notice, then, subject to applicable escheat laws, the
Trustee shall distribute to the Class R-III Certificateholders all unclaimed
funds.
(h) Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. If the Trustee
does withhold any amount from payments of interest or original issue discount to
any Certificateholder pursuant to federal withholding requirements, the Trustee
shall indicate the amount withheld to such Certificateholder.
(i) All distributions of Distributable Certificate Interest
made in respect of the Class S Certificates on each Distribution Date pursuant
to Section 4.01(a) shall be deemed to have first been distributed from REMIC II
to REMIC III in respect of the respective REMIC II Regular Interests, up to an
amount equal to, and pro rata in accordance with, the Class S Portion of the
Uncertificated Distributable Interest for each such REMIC II Regular Interest
for such Distribution Date and, to the extent not previously deemed distributed
pursuant to this sentence, for all prior Distribution Dates, if any. In
addition, all distributions of Prepayment Premiums and Yield Maintenance Charges
made in respect of the Class S Certificates on each Distribution Date pursuant
to Section 4.01(b) shall be deemed to have first been distributed from REMIC II
to REMIC III in respect of the respective REMIC II Regular Interests, pro rata
based upon the amount of principal deemed distributed in respect of each such
REMIC II Regular Interest for such Distribution Date as provided below in this
Section 4.01(i). Furthermore, all distributions made in respect of each Class of
Principal Balance Certificates on each Distribution Date pursuant to Section
4.01(a) or 4.01(b) shall be deemed to have first been distributed from REMIC II
to REMIC III in respect of the Corresponding REMIC II Regular Interest for such
Class of Principal Balance Certificates. In each case, if such distribution on
any such Class of Certificates was a distribution of interest, of principal, of
additional interest (in the form of Prepayment Premiums or Yield Maintenance
Charges) or in reimbursement of any related Unreimbursed Principal Balance
Reductions in respect of such Class of Certificates, then the corresponding
distribution deemed to be made on a REMIC II Regular Interest pursuant to the
preceding sentence shall be deemed also to be a distribution of interest, of
principal, of additional interest (in the form of Prepayment Premiums or Yield
Maintenance Charges) or in reimbursement of any related Unreimbursed Principal
Balance Reductions in respect of such REMIC II Regular Interest. The actual
distributions made by the Trustee on each Distribution Date in respect of the
REMIC III Certificates pursuant to Section 4.01(a) or 4.01(b), as applicable,
shall be deemed to have been so made from the amounts deemed distributed in
respect of the REMIC II Regular Interests on such Distribution Date pursuant to
this Section 4.01(i). Notwithstanding the deemed distributions on the REMIC II
Regular Interests described in this Section 4.01(i), actual distributions of
funds from the Distribution Account shall be made only in accordance with
Section 4.01(a), 4.01(b) or 4.01(c), as applicable.
(j) On each Distribution Date, immediately prior to making any
actual distributions on the REMIC III Certificates pursuant to Section 4.01(a)
or the corresponding deemed distributions on the REMIC II Regular Interests
pursuant to Section 4.01(i), the Trustee shall be deemed to have made out of the
Available Distribution Amount for such Distribution Date, the following
distributions in the following order of priority, in each case to the extent of
the remaining portion of such Available Distribution Amount:
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first, distributions of interest to REMIC II in respect of all
the REMIC I Regular Interests, up to an amount equal to, and
pro rata among the REMIC I Regular Interests in accordance
with, all Uncertificated Distributable Interest in respect of
each REMIC I Regular Interest for such Distribution Date and,
to the extent not previously deemed paid pursuant to this
Section 4.01(j), for all prior Distribution Dates;
second, distributions of principal to REMIC II in respect of
all the REMIC I Regular Interests, up to an amount equal to,
and pro rata among the REMIC I Regular Interests in accordance
with, that portion, if any, of the Principal Distribution
Amount attributable to each and every Mortgage Loan and/or REO
Mortgage Loan, as the case may be, that relates to each REMIC
I Regular Interest; and
third, distributions to REMIC II in respect of all the REMIC I
Regular Interests (including any REMIC I Regular Interests
whose Uncertificated Principal Balances have previously been
reduced to zero), up to an amount equal to, in reimbursement
of, and pro rata in accordance with, all Unreimbursed
Principal Balance Reductions, if any, previously incurred in
respect of each REMIC I Regular Interest.
In addition, on each Distribution Date, immediately prior to
making any actual distributions on the REMIC III Certificates pursuant to
Section 4.01(b) or the corresponding deemed distributions on the REMIC II
Regular Interests pursuant to Section 4.01(i), the Trustee shall be deemed to
have distributed to REMIC II each Prepayment Premium and Yield Maintenance
Charge then on deposit in the Distribution Account that was received on any
Mortgage Loan or REO Mortgage Loan during or prior to the related Collection
Period, such distribution to be deemed made in respect of the REMIC I Regular
Interest that relates to such Mortgage Loan or REO Mortgage Loan, as the case
may be.
The distributions deemed made by the Trustee on each
Distribution Date in respect of the REMIC II Regular Interests pursuant to
Section 4.01(i), as well as the distributions actually made by the Trustee on
each Distribution Date in respect of the Class R-II and REMIC III Certificates
pursuant to Section 4.01(a) and/or Section 4.01(b), shall be deemed to have been
so made or deemed made, as the case may be, from the amounts deemed distributed
in respect of the REMIC I Regular Interests on such Distribution Date pursuant
to this Section 4.01(j). Notwithstanding the deemed distributions on the REMIC I
Regular Interests described in this Section 4.01(j), actual distributions of
funds from the Distribution Account shall be made only in accordance with
Section 4.01(a), 4.01(b) or 4.01(c), as applicable.
SECTION 4.02. Statements to Certificateholders; Certain Other
Reports.
(a) Based solely on information provided to the Trustee by the
Master Servicer and the Special Servicer pursuant to Sections 3.12, 4.02(b) and
4.02(c), the Trustee shall prepare (or cause to be prepared) and, on each
Distribution Date, provide or make available electronically (or, upon request,
by first class mail) to the Depositor, the Master Servicer, the Special
Servicer, the Mortgage Loan Seller, the Underwriter, the Rating Agencies, the
Controlling Class Representative, each Certificateholder and, to the extent that
the Trustee has in accordance with Section 5.06(b) confirmed the Ownership
Interest in the Certificates held thereby, each Certificate Owner a statement
substantially in the form of, and containing the information set forth in,
Exhibit E-1 hereto (the "Trustee Report"), detailing the distributions on such
Distribution Date and the performance, both in the aggregate and individually to
the extent available, of the Mortgage Loans and the Mortgaged Properties;
provided that the Trustee need not deliver to the Depositor,
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the Master Servicer, the Special Servicer, the Mortgage Loan Seller, the
Underwriter, the Rating Agencies or the Controlling Class Representative any
Trustee Report that has been made available via the Trustee's Internet Website
as provided below; and provided, further, that the Trustee has no affirmative
obligation to discover the identities of Certificate Owners and need only react
to Persons claiming to be Certificate Owners in accordance with Section 5.06.
On each Distribution Date, the Trustee shall provide or make
available electronically (or, upon request, by first class mail) to the
Depositor, the Mortgage Loan Seller, the Underwriter, the Master Servicer, the
Special Servicer, the Rating Agencies, the Controlling Class Representative,
each Certificateholder and each Certificate Owner to which a Trustee Report was
forwarded on such Distribution Date, a copy of the following reports delivered
to it by the Master Servicer pursuant to Section 3.12(d) since the preceding
Distribution Date (or, in the case of the initial Distribution Date, since the
Closing Date): (i) the Delinquent Loan Status Report; (ii) the Historical Loss
Estimate Report; (iii) the Historical Loan Modification Report; (iv) the REO
Status Report; (v) the Watch List Report; and (vi) the Comparative Financial
Status Report. The Trustee shall provide or make available electronically on
each Distribution Date (or, upon request, by first class mail) to the Depositor,
the Master Servicer, the Special Servicer, the Rating Agencies, the Controlling
Class Representative, each Certificateholder and each Certificate Owner to which
a Trustee Report was forwarded on such Distribution Date a copy of the CMSA Loan
Periodic Update File containing information regarding each Mortgage Loan and the
CMSA Property File containing information regarding each Mortgaged Property and
REO Property as of the end of the related Collection Period. The Trustee shall
have no obligation to provide the information or reports described in this
Section 4.02(a) until it has received the requisite information or reports from
the Master Servicer, and the Trustee shall not be in default hereunder due to a
delay in providing the Certificateholder Reports caused by the Master Servicer's
failure to timely deliver any information or reports hereunder. The Trustee
Report, the CMSA Loan Periodic Update File, the CMSA Property File and the
reports referred to in the first sentence of this paragraph collectively
constitute the "Certificateholder Reports". None of the Master Servicer, the
Special Servicer or the Trustee shall be responsible for the accuracy or
completeness of any information supplied to it by a Borrower or third party, and
accepted by it in good faith, that is included in any reports, statements,
materials or information prepared or provided by the Master Servicer, the
Special Servicer or the Trustee, as applicable. None of the Trustee, the Master
Servicer or the Special Servicer shall have any obligation to verify the
accuracy or completeness of any information provided by a Borrower, a third
party or each other.
The Trustee shall make available each month, to
Certificateholders, Certificate Owners, prospective investors and any other
interested party, via the Trustee's Internet Website, in a downloadable format,
all Trustee Reports and Unrestricted Servicer Reports and, with the consent or
at the direction of the Depositor, such other information regarding the
Certificates and/or the Mortgage Loans as the Trustee may have in its
possession; provided that, unless (i) the particular report or information has
been filed with the Commission pursuant to Section 8.15 or (ii) the Depositor
has notified the Trustee that _______ has sold the Non-Registered Certificates
to unaffiliated third parties, access to such reports and information on the
Trustee's Internet Website will be password protected to the same extent, and
limited to the same Persons, as the Restricted Servicer Reports. After the
Trustee shall have received the notice from the Depositor regarding the sale of
the Non-Registered Certificates, as described in the preceding sentence, the
Trustee shall make the Distribution Date Statement available to any interested
party via the electronic bulletin board and the fax-on-demand service. The
Trustee shall make the Restricted Servicer Reports available each month, via the
Trustee's Internet Website, to any Certificateholder, Certificate Owner, any
Person identified by any Certificateholder or Certificate Owner as a prospective
transferee of a Certificate or interest therein, the Underwriter, any Rating
Agency, the Master Servicer, the Special Servicer, the Controlling Class
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Representative or any party hereto, with the use of a password provided by the
Trustee to such person upon receipt by the Trustee from such Person of a
certification substantially in the form of Exhibit L-1 or Exhibit L-2, as
applicable; provided, however, that the Trustee shall provide such password to
each party hereto, the Controlling Class Representative, the Master Servicer,
the Special Servicer and each Rating Agency without requiring such
certification. In addition, the Trustee is hereby directed and authorized to
make available, as a convenience to interested parties (and not in furtherance
of the distribution of the Prospectus or the Prospectus Supplement under the
securities laws), this Agreement, the Prospectus and the Prospectus Supplement
via the Trustee's Internet Website. The Trustee will make no representations or
warranties as to the accuracy or completeness of such documents and will assume
no responsibility therefor.
The Trustee's Internet Website shall be located at
"____________________" or at such other address as shall be specified by the
Trustee from time to time in the Trustee Report and in one or more written
notices delivered to the other parties hereto, the Controlling Class
Representative (if any), the Certificateholders and the Rating Agencies. In
connection with providing access to the Trustee's Internet Website and
electronic bulletin board, the Trustee may require registration and the
acceptance of a disclaimer. The Trustee shall not be liable for the
dissemination of information in accordance with this Agreement.
The Trustee shall be entitled to rely on but shall not be
responsible for the content or accuracy of any information provided by third
parties for purposes of preparing the Trustee Report and may affix thereto any
disclaimer it deems appropriate in its reasonable discretion (without suggesting
liability on the part of any other party hereto).
(b) By 3:30 p.m. New York City time on the second Business Day
after each Determination Date, the Master Servicer shall deliver to the Trustee
the CMSA Loan Periodic Update File, reflecting information as of the close of
business on the last day of the Collection Period, in a mutually agreeable
electronic format. Such CMSA Loan Periodic Update File and any written
information supplemental thereto shall include such information with respect to
the Mortgage Loans that is required by the Trustee for purposes of making the
calculations and preparing the reports for which the Trustee is responsible
pursuant to Section 4.01, this Section 4.02, Section 4.05 or any other section
of this Agreement, as set forth in written specifications or guidelines issued
by the Trustee from time to time. Such information may be delivered by the
Master Servicer to the Trustee by telecopy or in such electronic or other form
as may be reasonably acceptable to the Trustee and the Master Servicer. The
Special Servicer shall from time to time (and, in any event, as may be
reasonably required by the Master Servicer) provide the Master Servicer with
such information in its possession regarding the Specially Serviced Mortgage
Loans and REO Properties as may be necessary for the Master Servicer to prepare
each report and any supplemental information to be provided by the Master
Servicer to the Trustee.
Notwithstanding the foregoing, the failure of the Master
Servicer or Special Servicer to disclose any information otherwise required to
be disclosed pursuant to this Section 4.02(b) or Section 4.02(c) shall not
constitute a breach of this Section 4.02(b) or of Section 4.02(c) to the extent
the Master Servicer or the Special Servicer so fails because such disclosure, in
the reasonable belief of the Master Servicer or the Special Servicer, as the
case may be, would violate any applicable law or any provision of a Mortgage
Loan document prohibiting disclosure of information with respect to the Mortgage
Loans or the Mortgaged Properties. The Master Servicer or the Special Servicer
may affix to any information provided by it any disclaimer it deems appropriate
in its reasonable discretion (without suggesting liability on the part of any
other party hereto).
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(c) Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare, or cause to be prepared, and mail to
each Person who at any time during the calendar year was a Certificateholder (i)
a statement containing the aggregate information set forth on page 2 of Exhibit
E-1 hereto for such calendar year or applicable portion thereof during which
such person was a Certificateholder and (ii) such other customary information as
the Trustee deems necessary or desirable for Certificateholders to prepare their
federal, state and local income tax returns, including the amount of original
issue discount accrued on the Certificates, if applicable. The obligations of
the Trustee in the immediately preceding sentence shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code. As soon as
practicable following the request of any Certificateholder in writing, the
Trustee shall furnish to such Certificateholder such information regarding the
Mortgage Loans and the Mortgaged Properties as such Certificateholder may
reasonably request and, as has been furnished to, or may otherwise be in the
possession of, the Trustee. The Master Servicer and the Special Servicer shall
promptly provide to the Depositor, the Tax Administrator and the Trustee such
information regarding the Mortgage Loans and the Mortgaged Properties as such
party may reasonably request and that has been furnished to, or may otherwise be
in the possession of, the Master Servicer or the Special Servicer, as the case
may be.
SECTION 4.03. P&I Advances; Advances relating to the Master
Servicer Remittance Amount.
(a) On or before 2:00 p.m., New York City time, on each P&I
Advance Date, the Master Servicer shall, subject Section 4.03(c), either (i)
remit from its own funds to the Trustee for deposit into the Distribution
Account an amount equal to the aggregate amount of P&I Advances, if any, to be
made in respect of the related Distribution Date, (ii) apply amounts held in the
Collection Account for future distribution to Certificateholders in subsequent
months in discharge of any such obligation to make P&I Advances, or (iii) make
P&I Advances in the form of any combination of (i) and (ii) aggregating the
total amount of P&I Advances to be made. Any amounts held in the Collection
Account for future distribution and so used to make P&I Advances shall be
appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account prior to the next
succeeding Master Servicer Remittance Date (to the extent not previously
replaced through the deposit of Late Collections of the delinquent principal and
interest in respect of which such P&I Advances were made). If, as of 3:30 p.m.,
New York City time, on any P&I Advance Date, the Master Servicer shall not have
made any P&I Advance required to be made on such date pursuant to this Section
4.03(a) (and shall not have delivered to the Trustee the Officer's Certificate
and other documentation related to a determination of nonrecoverability of a P&I
Advance pursuant to Section 4.03(c)) or shall not have remitted any portion of
the Master Servicer Remittance Amount required to be remitted on such date, then
the Trustee shall provide notice of such failure to the Master Servicer by
facsimile transmission as soon as possible, but in any event before 4:30 p.m.,
New York City time, on such P&I Advance Date. If after such notice the Trustee
does not receive the full amount of such P&I Advances by 6:00 p.m., New York
City time, on such P&I Advance Date, then the Trustee shall (not later than
11:00 a.m., New York City time, on the related Distribution Date) make, and if
the Trustee fails to do so, any Fiscal Agent shall (not later than 12:00 noon,
New York City time, on the related Distribution Date) make, the portion of such
P&I Advances that was required to be, but was not, made or remitted, as the case
may be, by the Master Servicer with respect to the related Distribution Date.
(b) The aggregate amount of P&I Advances to be made by the
Master Servicer in respect of any Distribution Date, subject to Section 4.03(c)
below, shall equal the aggregate of all Monthly Payments (other than Balloon
Payments) and any Assumed Monthly Payments, in each case net of any related
Master
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Servicing Fees and Workout Fees, due or deemed due, as the case may be, in
respect of the Mortgage Loans (including Balloon Mortgage Loans delinquent as to
their respective Balloon Payments) and any REO Mortgage Loans on their
respective Due Dates during the related Collection Period, in each case to the
extent such amount was not paid by or on behalf of the related Borrower or
otherwise collected as of the close of business on the related Determination
Date; provided that, if an Appraisal Reduction Amount exists with respect to any
Required Appraisal Loan, then the interest portion of any P&I Advance required
to be made in respect of such Required Appraisal Loan for the related
Distribution Date shall be reduced (it being herein acknowledged that there
shall be no reduction in the principal portion of such P&I Advance) to equal the
product of (i) the amount of the interest portion of such P&I Advance that would
otherwise be required to be made in respect of such Required Appraisal Loan for
such Distribution Date without regard to this proviso, multiplied by (ii) a
fraction, expressed as a percentage, the numerator of which shall equal the
Stated Principal Balance of such Required Appraisal Loan immediately prior to
such Distribution Date, net of the related Appraisal Reduction Amount, and the
denominator of which shall equal the Stated Principal Balance of such Required
Appraisal Loan immediately prior to such Distribution Date.
(c) Notwithstanding anything herein to the contrary, no P&I
Advance shall be required to be made hereunder if such P&I Advance would, if
made, constitute a Nonrecoverable P&I Advance. The determination by the Master
Servicer (or, if applicable, the Trustee or any Fiscal Agent) that it has made a
Nonrecoverable P&I Advance or that any proposed P&I Advance, if made, would
constitute a Nonrecoverable P&I Advance, shall be made by such Person in its
reasonable, good faith judgment and shall be evidenced by an Officer's
Certificate delivered to the Depositor, to the Special Servicer, to the
Controlling Class Representative and, if made by the Master Servicer, to the
Trustee (on or before the related P&I Advance Date in the case of a proposed P&I
Advance), setting forth the basis for such determination, accompanied by a copy
of an Appraisal of the related Mortgaged Property or REO Property performed
within the 12 months preceding such determination by a Qualified Appraiser, and
further accompanied by any other information, including engineers' reports,
environmental surveys or similar reports, that the Person making such
determination may have obtained and that support such determination. The Trustee
and any Fiscal Agent shall be entitled to conclusively rely on any
nonrecoverability determination made by the Master Servicer with respect to a
particular P&I Advance. The Special Servicer shall promptly furnish any party
required to make P&I Advances hereunder with any information in its possession
regarding the Specially Serviced Mortgage Loans and REO Properties as such party
required to make P&I Advances may reasonably request.
(d) The Master Servicer, the Trustee and any Fiscal Agent
shall each be entitled to receive interest at the Reimbursement Rate in effect
from time to time, accrued on the amount of each P&I Advance made thereby (with
its own funds), and compounded monthly, for so long as such P&I Advance is
outstanding (or, if such P&I Advance was made prior to the end of any grace
period applicable to the subject delinquent Monthly Payment, for so long as such
P&I Advance is outstanding following the end of such grace period). Such
compound interest shall be payable: (i) at any time, out of Default Charges
collected on the particular Mortgage Loan or REO Mortgage Loan as to which such
P&I Advance relates; and (ii) to the extent that such Default Charges are
insufficient, but only with respect to that portion of such P&I Advance that has
been or is being reimbursed pursuant to this Agreement, out of general
collections on the Mortgage Loans and REO Properties on deposit in the
Collection Account. The Master Servicer shall reimburse itself, the Trustee or
any Fiscal Agent, as applicable, for any outstanding P&I Advance made thereby as
soon as practicable after funds available for such purpose are deposited in the
Collection Account, and in no event shall interest accrue in accordance with
this Section 4.03(d) on any P&I Advance as to which the corresponding Late
Collection was received as of the related P&I Advance Date.
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SECTION 4.04. Allocation of Realized Losses and Additional
Trust Fund Expenses.
(a) On each Distribution Date, following the distributions to
Certificateholders to be made on such date pursuant to Section 4.01(a), the
Trustee shall determine the amount, if any, by which (i) the then aggregate of
the Class Principal Balances of all the Classes of 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 Class Principal Balances of the Class
D, Class C, Class B-8, Class B-7, Class B-6, Class B-5, Class B-4, Class B-3,
Class B-2, Class B-1, Class A-5, Class A-4, Class A-3 and Class A-2 Certificates
shall be reduced sequentially, in that order, until such excess is reduced to
zero; provided that, no such Class of Certificates shall have its Class
Principal Balance reduced unless and until the Class Principal Balance of each
other Class of Certificates, if any, listed in front of it has been reduced to
zero; and provided, further, that if after the foregoing reductions, the amount
described in clause (i) of the preceding sentence still exceeds the amount
described in clause (ii) of such sentence, then the Class Principal Balance of
the Class A-1 Certificates shall be reduced until any such remaining excess is
reduced to zero. All such reductions in the Class Principal Balances of the
respective Classes of the Principal Balance Certificates shall constitute
allocations of Realized Losses and Additional Trust Fund Expenses.
(b) On each Distribution Date, following the deemed
distributions to be made in respect of the REMIC II Regular Interests on such
date pursuant to Section 4.01(i), the Trustee shall determine the amount, if
any, by which (i) the then aggregate Uncertificated Principal Balance of the
REMIC II Regular Interests, exceeds (ii) the aggregate Stated Principal Balance
of the Mortgage Pool that will be outstanding immediately following such
Distribution Date. If such excess does exist, then the Uncertificated Principal
Balances of REMIC II Regular Interest D, REMIC II Regular Interest C, REMIC II
Regular Interest B-8, REMIC II Regular Interest B-7, REMIC II Regular Interest
B-6, REMIC II Regular Interest B-5, REMIC II Regular Interest B-4, REMIC II
Regular Interest B-3, REMIC II Regular Interest B-2, REMIC II Regular Interest
B-1, REMIC II Regular Interest A-5, REMIC II Regular Interest A-4, REMIC II
Regular Interest A-3 and REMIC II Regular Interest A-2 shall be reduced
sequentially, in that order, until such excess is reduced to zero; provided
that, no such REMIC II Regular Interest shall have its Uncertificated Principal
Balance reduced unless and until the Uncertificated Principal Balance of each
other REMIC II Regular Interest, if any, listed in front of it has been reduced
to zero; and provided, further, that if after the foregoing reductions, the
amount described in clause (i) of the preceding sentence still exceeds the
amount described in clause (ii) of such sentence, then the Uncertificated
Principal Balance of REMIC II Regular Interest A-1 shall be reduced, until any
such remaining excess is reduced to zero. All such reductions in the
Uncertificated Principal Balances of the respective REMIC II Regular Interests
shall be deemed to constitute allocations of Realized Losses and Additional
Trust Fund Expenses.
(c) On each Distribution Date, following the deemed
distributions to be made in respect of the REMIC I Regular Interests pursuant to
Section 4.01(j), the Uncertificated Principal Balance of each REMIC I Regular
Interest (after taking account of such deemed distributions) shall be reduced to
the extent necessary to equal the Stated Principal Balance of the related
Mortgage Loan or REO Mortgage Loan, as the case may be (or, if applicable in
cases involving the substitution of multiple Replacement Mortgage Loans, the
aggregate Stated Principal Balance of each and every related Mortgage Loan
and/or REO Mortgage Loan, as the case may be), that will be outstanding
immediately following such Distribution Date. All such reductions in the
Uncertificated Principal Balances of the respective REMIC I Regular Interests
shall be deemed to constitute allocations of Realized Losses and Additional
Trust Fund Expenses.
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SECTION 4.05. Calculations.
The Trustee shall, provided it receives the necessary
information from the Master Servicer and/or Special Servicer, be responsible for
performing all calculations necessary in connection with the actual and deemed
distributions to be made pursuant to Section 4.01, the preparation of the
Trustee Reports pursuant to Section 4.02(a) and the actual and deemed
allocations of Realized Losses and Additional Trust Fund Expenses to be made
pursuant to Section 4.04. The Trustee shall calculate the Available Distribution
Amount for each Distribution Date and shall allocate such amount among
Certificateholders in accordance with this Agreement. Absent actual knowledge of
an error therein, the Trustee shall have no obligation to recompute, recalculate
or otherwise verify any information provided to it by the Master Servicer. The
calculations by the Trustee contemplated by this Section 4.05 shall, in the
absence of manifest error, be presumptively deemed to be correct for all
purposes hereunder.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates will be substantially in the respective
forms attached hereto as Exhibits A-1 through A-6; provided, however, that any
of the Certificates may be issued with appropriate insertions, omissions,
substitutions and variations, and may have imprinted or otherwise reproduced
thereon such legend or legends, not inconsistent with the provisions of this
Agreement, as may be required to comply with any law or with rules or
regulations pursuant thereto, or with the rules of any securities market in
which the Certificates are admitted to trading, or to conform to general usage.
The Certificates will be issuable in registered form only; provided, however,
that in accordance with Section 5.03 beneficial ownership interests in the Class
S, Class A, Class B-1 and Class B-2 Certificates shall initially be held and
transferred through the book-entry facilities of the Depository. The Class S,
Class A-1, Class A-2, Class A-3, Class A-4, Class A-5, Class B-1 and Class B-2
Certificates will be issuable only in denominations corresponding to initial
Certificate Principal Balances (or, in the case of the Class S Certificates,
initial Certificate Notional Amounts) as of the Closing Date of not less than
$10,000 and in any whole dollar denomination in excess thereof. The other
Regular Interest Certificates will be issuable only in denominations
corresponding to initial Certificate Principal Balances as of the Closing Date
of not less than $100,000 and in any whole dollar denomination in excess
thereof. The Residual Interest Certificates and the Class E Certificates will be
issuable only in denominations representing Percentage Interests in the related
Class of not less than 10.0%.
(b) The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee in its capacity as trustee hereunder by an
authorized officer. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the authorized officers of the Trustee shall be
entitled to all benefits under this Agreement, subject to the following
sentence, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, however, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by the
Certificate Registrar by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
(a) At all times during the term of this Agreement, there
shall be maintained at the office of the Certificate Registrar a Certificate
Register in which, subject to such reasonable regulations as the Certificate
Registrar (located as of the Closing Date at __________________________) may
prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
The Trustee is hereby initially appointed (and hereby agrees to act in
accordance with the terms hereof) as Certificate Registrar for the purpose of
registering Certificates and transfers and exchanges of Certificates as herein
provided. The Trustee may appoint, by a written instrument delivered to the
other parties hereto, any other bank or trust company to act as Certificate
Registrar under such conditions as the Trustee may prescribe, provided that the
Trustee shall not be relieved of any of its duties or responsibilities hereunder
as Certificate Registrar by reason of such appointment. If the Trustee
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resigns or is removed in accordance with the terms hereof, the successor trustee
shall immediately succeed to its predecessor's duties as Certificate Registrar.
The Depositor, the Master Servicer, the Special Servicer and the Tax
Administrator shall have the right to inspect the Certificate Register or to
obtain a copy thereof at all reasonable times, and to rely conclusively upon a
certificate of the Certificate Registrar as to the information set forth in the
Certificate Register.
If three or more Holders make written request to the Trustee,
and such request states that such Holders desire to communicate with other
Holders with respect to their rights under this Agreement or under the
Certificates and is accompanied by a copy of the communication which such
Holders propose to transmit, then the Trustee shall, within 30 days after the
receipt of such request, afford (or cause any other Certificate Registrar to
afford) the requesting Holders access during normal business hours to, or
deliver to the requesting Holders a copy of, the most recent list of
Certificateholders held by the Certificate Registrar (which list shall be
current as of a date no earlier than 30 days prior to the Trustee's receipt of
such request). Every Certificateholder, by receiving such access, acknowledges
that neither the Certificate Registrar nor the Trustee will be held accountable
in any way by reason of the disclosure of any information as to the names and
addresses of any Certificateholder regardless of the source from which such
information was derived.
(b) No transfer, sale, pledge or other disposition of any
Non-Registered Certificate or interest therein shall be made unless that
transfer, sale, pledge or other disposition is exempt from the registration
and/or qualification requirements of the Securities Act and any applicable state
securities laws, or is otherwise made in accordance with the Securities Act and
such state securities laws. If a transfer of any Non-Registered Certificate is
to be made without registration under the Securities Act (other than in
connection with the initial issuance of the Certificates or a transfer of any
Non-Registered Certificate by the Depositor), then the Certificate Registrar
shall refuse to register such transfer unless it receives (and, upon receipt,
may conclusively rely upon) either: (i) a certificate from the Certificateholder
desiring to effect such transfer substantially in the form attached hereto as
Exhibit F-1A; or (ii) a certificate from the Certificateholder desiring to
effect such transfer substantially in the form attached hereto as Exhibit F-1B
and a certificate from such Certificateholder's prospective Transferee
substantially in the form attached hereto either as Exhibit F-2A or as Exhibit
F-2B; or (iii) an Opinion of Counsel satisfactory to the Trustee to the effect
that such transfer may be made without registration under the Securities Act
(which Opinion of Counsel shall not be an expense of the Trust or of the
Depositor, the Master Servicer, the Special Servicer, the Tax Administrator, the
Trustee, any Fiscal Agent or the Certificate Registrar in their respective
capacities as such), together with the written certification(s) as to the facts
surrounding such transfer from the Certificateholder desiring to effect such
transfer and/or such Certificateholder's prospective Transferee on which such
Opinion of Counsel is based. None of the Depositor, the Trustee or the
Certificate Registrar is obligated to register or qualify any Class of
Non-Registered Certificates under the Securities Act or any other securities law
or to take any action not otherwise required under this Agreement to permit the
transfer of any Non-Registered Certificate or interest therein without
registration or qualification. Any Certificateholder desiring to effect a
transfer, sale, pledge or other disposition of any Non-Registered Certificate or
interest therein shall, and does hereby agree to, indemnify the Depositor, the
Trustee, any Fiscal Agent, the Master Servicer, the Special Servicer, the Tax
Administrator and the Certificate Registrar against any liability that may
result if such transfer, sale, pledge or other disposition is not exempt from
the registration and/or qualification requirements of the Securities Act and any
applicable state securities laws or is not made in accordance with such federal
and state laws.
(c) No transfer of a Subordinated Certificate or any interest
therein shall be made (A) to any retirement plan or other employee benefit plan,
including individual retirement accounts and annuities,
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Keogh plans and collective investment funds and separate accounts in which such
plans, accounts or arrangements are invested, including insurance company
general accounts, that is subject to ERISA or the Code (each, a "Plan"), or (B)
to any Person who is directly or indirectly purchasing such Certificate on
behalf of, as named fiduciary of, as trustee of, or with assets of a Plan, if
the purchase and holding of such Certificate or interest therein by the
prospective Transferee would result in a violation of Section 406 of ERISA or
Section 4975 of the Code or would result in the imposition of an excise tax
under Section 4975 of the Code. Except in connection with the initial issuance
of the Subordinated Certificates or any transfer of a Subordinated Certificate
by the Depositor or, in the case of a Book-Entry Subordinated Certificate, any
transfer of such Certificate to a successor Depository or to the applicable
Certificate Owner in accordance with Section 5.03(c), the Certificate Registrar
shall refuse to register the transfer of a Subordinated Certificate unless it
has received from the prospective Transferee, either (i) a certification to the
effect that such prospective Transferee is not a Plan and is not directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) a
certification to the effect that the purchase and continued holding of such
Certificate by such prospective Transferee is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code
under Sections I and III of Prohibited Transaction Class Exemption 95-60; or
(iii) a certification of facts and an Opinion of Counsel (which Opinion of
Counsel shall not be an expense of the Trustee, the Certificate Registrar or the
Trust) which otherwise establish to the reasonable satisfaction of the Trustee
that such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or result in the imposition of an excise tax under
Section 4975 of the Code. It is hereby acknowledged that the form of
certification attached hereto as Exhibit G is acceptable for purposes of the
preceding sentence. Each Transferee of an interest in any Book-Entry
Subordinated Certificate shall be deemed to have represented and warranted that
either: (i) such Transferee is not a Plan and is not directly or indirectly
purchasing such Certificate or interest therein on behalf of, as named fiduciary
of, as trustee of, or with assets of a Plan; or (ii) the purchase and continued
holding of such Certificate or interest therein by such Transferee is exempt
from the prohibited transaction provisions of Section 406 of ERISA and Section
4975 of the Code under Sections I and III of Prohibited Transactions Class
Exemption 95-60.
(d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Interest Certificate shall be deemed by the
acceptance or acquisition of such Ownership Interest to have agreed to
be bound by the following provisions and to have irrevocably authorized
the Trustee under clause (ii)(A) below to deliver payments to a Person
other than such Person and to have irrevocably authorized the Trustee
under clause (ii)(B) below to negotiate the terms of any mandatory
disposition and to execute all instruments of Transfer and to do all
other things necessary in connection with any such disposition. The
rights of each Person acquiring any Ownership Interest in a Residual
Interest Certificate are expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership
Interest in a Residual Interest Certificate shall be a
Permitted Transferee and shall promptly notify the Tax
Administrator and the Trustee of any change or impending
change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Residual Interest Certificate, the
Certificate Registrar shall require delivery to it, and shall
not register the Transfer of any Residual Interest Certificate
until its receipt, of an affidavit and agreement substantially
in the form attached hereto as Exhibit H-1 (a "Transfer
Affidavit and Agreement"), from the proposed Transferee,
representing and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not acquiring
its Ownership
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Interest in the Residual Interest Certificate that is the
subject of the proposed Transfer as a nominee, trustee or
agent for any Person that is not a Permitted Transferee, that
for so long as it retains its Ownership Interest in a Residual
Interest Certificate it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions of this
Section 5.02(d) and agrees to be bound by them.
(C) Notwithstanding the delivery of a Transfer
Affidavit and Agreement by a proposed Transferee under clause
(B) above, if a Responsible Officer of either the Trustee or
the Certificate Registrar has actual knowledge that the
proposed Transferee is not a Permitted Transferee, no Transfer
of an Ownership Interest in a Residual Interest Certificate to
such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership
Interest in a Residual Interest Certificate shall agree (1) to
require a Transfer Affidavit and Agreement from any
prospective Transferee to whom such Person attempts to
transfer its Ownership Interest in such Residual Interest
Certificate and (2) not to transfer its Ownership Interest in
such Residual Interest Certificate unless it provides to the
Certificate Registrar and the Trustee a certificate
substantially in the form attached hereto as Exhibit H-2
stating that, among other things, it has no actual knowledge
that such prospective Transferee is not a Permitted
Transferee.
(E) Each Person holding or acquiring an Ownership
Interest in a Residual Interest Certificate, by purchasing
such Ownership Interest, agrees to give the Tax Administrator
and the Trustee written notice that it is a "pass-through
interest holder" within the meaning of temporary Treasury
regulation Section 1.67-3T(a)(2)(i)(A) immediately upon
acquiring an Ownership Interest in a Residual Interest
Certificate if it is, or is holding an Ownership Interest in a
Residual Interest Certificate on behalf of, a "pass-through
interest holder".
(ii) (A) If any purported Transferee shall become a
Holder of a Residual Interest Certificate in violation of the
provisions of this Section 5.02(d), then the last preceding
Holder of such Residual Interest Certificate that was in
compliance with the provisions of this Section 5.02(d) shall
be restored, to the extent permitted by law, to all rights as
Holder thereof retroactive to the date of registration of such
Transfer of such Residual Interest Certificate. None of the
Depositor, the Trustee or the Certificate Registrar, shall be
under any liability to any Person for any registration of
Transfer of a Residual Interest Certificate that is in fact
not permitted by this Section 5.02(d) or for making any
payments due on such Certificate to the Holder thereof or for
taking any other action with respect to such Holder under the
provisions of this Agreement.
(B) If any purported Transferee shall become a Holder
of a Residual Interest Certificate in violation of the
restrictions in this Section 5.02(d), then, to the extent that
retroactive restoration of the rights of the preceding Holder
of such Residual Interest Certificate as described in clause
(ii) (A) above shall be invalid, illegal or unenforceable, the
Trustee shall have the right but not the obligation, to cause
the transfer of such Residual Interest Certificate to a
Permitted Transferee selected by the Trustee on such terms as
the Trustee may choose, and the Trustee shall not be liable to
any Person having an Ownership Interest in such Residual
Interest Certificate or any other Person as a result of its
exercise of such discretion. Such purported Transferee shall
promptly endorse and deliver such Residual
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Interest Certificate in accordance with the instructions of
the Trustee. Such Permitted Transferee may be the Trustee
itself or any Affiliate of the Trustee.
(iii) The Tax Administrator shall make available to the IRS
and to those Persons specified by the REMIC Provisions all information
furnished to it by the other parties hereto necessary to compute any
tax imposed (A) as a result of the Transfer of an Ownership Interest in
a Residual Interest Certificate to any Person who is a Disqualified
Organization, including the information described in Treasury
regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5) with respect to
the "excess inclusions" of such Residual Interest Certificate and (B)
as a result of any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate or organization
described in Section 1381 of the Code that holds an Ownership Interest
in a Residual Interest Certificate having as among its record holders
at any time any Person which is a Disqualified Organization, and each
of the other parties hereto shall furnish to the Tax Administrator all
information in its possession necessary for the Tax Administrator to
discharge such obligation. The Person holding such Ownership Interest
shall be responsible for the reasonable compensation of the Tax
Administrator for providing such information.
(iv) The provisions of this Section 5.02(d) set forth prior to
this clause (iv) may be modified, added to or eliminated, provided that
there shall have been delivered to the Trustee and the Tax
Administrator the following:
(A) written confirmation from each Rating Agency to
the effect that the modification of, addition to or
elimination of such provisions will not result in an Adverse
Rating Event with respect to any Class of Rated Certificates;
and
(B) an Opinion of Counsel, in form and substance
satisfactory to the Trustee and the Tax Administrator,
obtained at the expense of the party seeking such modification
of, addition to or elimination of such provisions (but in no
event at the expense of the Trustee, the Tax Administrator or
the Trust), to the effect that doing so will not (1) cause any
REMIC Pool to cease to qualify as a REMIC or be subject to an
entity-level tax caused by the Transfer of any Residual
Interest Certificate to a Person which is not a Permitted
Transferee or (2) cause a Person other than the prospective
Transferee to be subject to a REMIC-related tax caused by the
Transfer of a Residual Interest Certificate to a Person that
is not a Permitted Transferee.
(e) The Trust has not been registered as an investment company
under the Investment Company Act. Accordingly, no transfer of any Class B-3,
Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class C, Class D or Class
E Certificate shall be made to any Person other than an Institutional Accredited
Investor or a Qualified Institutional Buyer, and no transfer of any Residual
Interest Certificate shall be made to any Person other than a Qualified
Institutional Buyer. If a transfer of any such Certificate is to be made, then
the Trustee shall require, in order to assure compliance with the foregoing,
that the prospective transferee of such Certificate (or the transferor on its
behalf) certify in writing that the prospective transferee is a Qualified
Institutional Buyer or, alternatively, but solely in the case of a Class B-3,
Class B-4, Class B-5, Class B-6, Class B-7, Class B-8, Class C, Class D or Class
E Certificate, an Institutional Accredited Investor.
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(f) If a Person is acquiring any Non-Registered Certificate,
Subordinated Certificate or Residual Interest Certificate as a fiduciary or
agent for one or more accounts, such Person shall be required to deliver to the
Certificate Registrar a certification to the effect that, and such other
evidence as may be reasonably required by the Trustee to confirm that, it has
(i) sole investment discretion with respect to each such account and (ii) full
power to make the applicable foregoing acknowledgments, representations,
warranties, certifications and/or agreements with respect to each such account
as set forth in Subsections (b), (c), (d) and/or (e), as appropriate, of this
Section 5.02.
(g) Subject to the preceding provisions of this Section 5.02,
upon surrender for registration of transfer of any Certificate at the offices of
the Certificate Registrar maintained for such purpose, the Trustee shall execute
and the Certificate Registrar shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of authorized
denominations of the same Class evidencing a like aggregate Percentage Interest.
(h) At the option of any Holder, its Certificates may be
exchanged for other Certificates of authorized denominations of the same Class
evidencing a like aggregate Percentage Interest, upon surrender of the
Certificates to be exchanged at the offices of the Certificate Registrar
maintained for such purpose. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute and the Certificate Registrar shall
authenticate and deliver the Certificates which the Certificateholder making the
exchange is entitled to receive.
(i) Every Certificate presented or surrendered for transfer or
exchange shall (if so required by the Certificate Registrar) be duly endorsed
by, or be accompanied by a written instrument of transfer in the form
satisfactory to the Certificate Registrar duly executed by, the Holder thereof
or his attorney duly authorized in writing.
(j) No service charge shall be imposed for any transfer or
exchange of Certificates, but the Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
(k) All Certificates surrendered for transfer and exchange
shall be physically canceled by the Certificate Registrar, and the Certificate
Registrar shall dispose of such canceled Certificates in accordance with its
standard procedures.
(l) The Certificate Registrar or the Trustee shall provide to
each of the other parties hereto, upon reasonable written request and at the
expense of the requesting party, an updated copy of the Certificate Register.
SECTION 5.03. Book-Entry Certificates.
(a) The Class S, Class A, Class B-1 and Class B-2 Certificates
shall, in the case of each Class thereof, initially be issued as one or more
Certificates registered in the name of the Depository or its nominee and, except
as provided in Section 5.03(c), transfer of such Certificates may not be
registered by the Certificate Registrar unless such transfer is to a successor
Depository that agrees to hold such Certificates for the respective Certificate
Owners with Ownership Interests therein. Such Certificate Owners shall hold and,
subject to Section 5.02(c), transfer their respective Ownership Interests in and
to such Certificates through the book-entry facilities of the Depository and,
except as provided in Section 5.03(c) below, shall
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not be entitled to fully registered, physical Certificates ("Definitive
Certificates") in respect of such Ownership Interests. All transfers by
Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing each such Certificate
Owner. Each Depository Participant shall only transfer the Ownership Interests
in the Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) The Depositor, the Master Servicer, the Special Servicer,
the Tax Administrator, the Trustee, any Fiscal Agent and the Certificate
Registrar may for all purposes, including the making of payments due on the
Book-Entry Certificates, deal with the Depository as the authorized
representative of the Certificate Owners with respect to such Certificates for
the purposes of exercising the rights of Certificateholders hereunder. The
rights of Certificate Owners with respect to the Book-Entry Certificates shall
be limited to those established by law and agreements between such Certificate
Owners and the Depository Participants and brokerage firms representing such
Certificate Owners. Multiple requests and directions from, and votes of, the
Depository as Holder of the Book-Entry Certificates with respect to any
particular matter shall not be deemed inconsistent if they are made with respect
to different Certificate Owners. The Trustee may establish a reasonable record
date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
(c) If (i)(A) the Depositor advises the Trustee and the
Certificate Registrar in writing that the Depository is no longer willing or
able to discharge properly its responsibilities with respect to any Class of
Book-Entry Certificates, and (B) the Depositor is unable to locate a qualified
successor, or (ii) the Depositor at its option advises the Trustee and the
Certificate Registrar in writing that it elects to terminate the book-entry
system through the Depository with respect to any Class of Book-Entry
Certificates (or any portion of any Class thereof), the Certificate Registrar
shall notify all affected Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to such Certificate Owners requesting the same. Upon surrender to the
Certificate Registrar of any Class of Book-Entry Certificates (or any portion
of any Class thereof) by the Depository, accompanied by registration
instructions from the Depository for registration of transfer, the Trustee shall
execute, and the Certificate Registrar shall authenticate and deliver, the
Definitive Certificates in respect of such Class (or portion thereof) to the
Certificate Owners identified in such instructions. None of the Depositor, the
Master Servicer, the Special Servicer, the Tax Administrator, the Trustee or the
Certificate Registrar shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates for purposes of
evidencing ownership of any Book-Entry Certificates, the registered holders of
such Definitive Certificates shall be recognized as Certificateholders hereunder
and, accordingly, shall be entitled directly to receive payments on, to exercise
Voting Rights with respect to, and to transfer and exchange such Definitive
Certificates.
SECTION 5.04. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the
Certificate Registrar, or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Trustee and the Certificate Registrar such security or
indemnity as may be reasonably required by them to save each of them harmless,
then, in the absence of actual notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser, the
Trustee shall execute and the Certificate Registrar shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of the same Class and like Percentage
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Interest. Upon the issuance of any new Certificate under this Section, the
Trustee and the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other reasonable expenses (including the reasonable
fees and expenses of the Trustee and the Certificate Registrar) connected
therewith. Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership in the applicable
REMIC Pool, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
SECTION 5.05. Persons Deemed Owners.
Prior to due presentment for registration of transfer, the
Depositor, the Master Servicer, the Special Servicer, the Tax Administrator, the
Trustee, any Fiscal Agent, the Certificate Registrar and any agent of any of
them may treat the person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 4.01 and for all other purposes whatsoever, and none of the Depositor,
the Master Servicer, the Special Servicer, the Tax Administrator, the Trustee,
any Fiscal Agent, the Certificate Registrar or any agent of any of them shall be
affected by notice to the contrary.
SECTION 5.06. Certification by Certificate Owners.
(a) Each Certificate Owner is hereby deemed by virtue of its
acquisition of an Ownership Interest in the Book-Entry Certificates to agree to
comply with the transfer requirements of Section 5.02(c).
(b) To the extent that under the terms of this Agreement, it
is necessary to determine whether any Person is a Certificate Owner, the Trustee
shall make such determination based on a certificate of such Person which shall
be substantially in the form of paragraph 1 of Exhibit L-1 hereto (or such other
form as shall be reasonably acceptable to the Trustee) and shall specify the
Class and Certificate Principal Balance or Certificate Notional Amount, as the
case may be, of the Book-Entry Certificate beneficially owned; provided,
however, that the Trustee shall not knowingly recognize such Person as a
Certificate Owner if such Person, to the knowledge of a Responsible Officer of
the Trustee, acquired its Ownership Interest in a Book-Entry Certificate in
violation of Section 5.02(c), or if such Person's certification that it is a
Certificate Owner is in direct conflict with information obtained by the Trustee
from the Depository, Depository Participants and/or indirect participating
brokerage firms for which Depository Participants act as agents, with respect to
the identity of a Certificate Owner. The Trustee shall exercise its reasonable
discretion in making any determination under this Section 5.06(b) and shall
afford any Person providing information with respect to its beneficial ownership
of any Book-Entry Certificate an opportunity to resolve any discrepancies
between the information provided and any other information available to the
Trustee.
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ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER
AND THE SPECIAL SERVICER
SECTION 6.01. Liability of the Depositor, the Master Servicer
and the Special Servicer.
The Depositor, the Master Servicer and the Special Servicer
shall be liable in accordance herewith only to the extent of the respective
obligations specifically imposed upon and undertaken by the Depositor, the
Master Servicer and the Special Servicer.
SECTION 6.02. Merger, Consolidation or Conversion of the
Depositor, the Master Servicer or the Special
Servicer.
Subject to the following paragraph, each of the Depositor, the
Master Servicer and the Special Servicer shall each keep in full effect its
existence, rights and franchises as a corporation, bank, trust company,
partnership, limited liability company, association or other legal entity under
the laws of the jurisdiction wherein it was organized, and each shall obtain and
preserve its qualification to do business as a foreign entity in each
jurisdiction in which such qualification is or shall be necessary to protect the
validity and enforceability of this Agreement, the Certificates or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
Each of the Depositor, 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 the Depositor, the Master
Servicer or the Special Servicer shall be a party, or any Person succeeding to
the business of the Depositor, the Master Servicer or the Special Servicer,
shall be the successor of the Depositor, the Master Servicer or the Special
Servicer, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that no successor or
surviving Person shall succeed to the rights of the Master Servicer or the
Special Servicer unless such succession will not result in an Adverse Rating
Event with respect to any Class of Rated Certificates (as confirmed in writing
to the Trustee by each Rating Agency).
SECTION 6.03. Limitation on Liability of the Depositor, the
Master Servicer, and the Special Servicer.
None of the Depositor, the Master Servicer or the Special
Servicer shall be under any liability to the Trust, the Trustee or the
Certificateholders for any action taken or not taken in good faith pursuant to
this Agreement or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Master Servicer or the Special Servicer
against any liability to the Trust, the Trustee or the Certificateholders for
the breach of a representation or warranty made by such party herein, or against
any expense or liability specifically required to be borne by such party without
right of reimbursement pursuant to the terms hereof, or against any liability
which would otherwise be imposed by reason of misfeasance, bad faith or
negligence in the performance of, or reckless disregard of, such party's
obligations or duties hereunder. The Depositor, the Master Servicer, the Special
Servicer, and any director, member, manager,
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officer, employee or agent of any such party may rely in good faith on any
document of any kind which, prima facie, is properly executed and submitted by
any Person respecting any matters arising hereunder. The Depositor, the Master
Servicer, the Special Servicer, and any director, member, manager, officer,
employee or agent of any such party shall be indemnified and held harmless by
the Trust out of the Collection Account against any loss, liability, cost or
expense (including reasonable legal expenses) incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability, cost or expense: (i) specifically required to be borne thereby
pursuant to the terms hereof or otherwise incidental to the performance of
obligations and duties hereunder, including, in the case of the Master Servicer
or Special Servicer, the prosecution of an enforcement action in respect of any
specific Mortgage Loan or Mortgage Loans (except as any such loss, liability or
expense shall be otherwise reimbursable pursuant to this Agreement); or (ii)
incurred in connection with any legal action against such party resulting from
any breach of a representation or warranty made herein, any misfeasance, bad
faith or negligence in the performance of, or reckless disregard of, obligations
or duties hereunder or any willful or negligent violation of applicable law.
None of the Depositor, the Master Servicer or the Special Servicer shall be
under any obligation to appear in, prosecute or defend any legal action unless
such action is related to its respective duties under this Agreement and, except
in the case of a legal action the costs of which it is specifically required
hereunder to bear, in its opinion does not involve it in any ultimate expense or
liability; provided, however, that the Depositor, the Master Servicer or the
Special Servicer may in its discretion undertake any such action which it may
reasonably deem necessary or desirable with respect to the enforcement and/or
protection of the rights and duties of the parties hereto and the interests of
the Certificateholders hereunder. In such event, the legal expenses and costs of
such action, and any liability resulting therefrom, shall be expenses, costs and
liabilities of the Trust, 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 3.05(a).
In addition, neither the Master Servicer nor the Special
Servicer shall have any liability with respect to, and each shall be entitled to
rely as to the truth of the statements made and the correctness of the opinions
expressed therein on, any certificates or opinions furnished to the Master
Servicer or the Special Servicer, as the case may be, and conforming to the
requirements of this Agreement. Each of the Master Servicer and the Special
Servicer may rely in good faith on information provided to it by the other
(unless the Master Servicer and the Special Servicer are the same Person or
Affiliates) and by the Borrowers, and will have no duty to investigate or verify
the accuracy thereof.
(c) Neither the Master Servicer nor the Special Servicer shall
be obligated to commence any legal action to enforce any rights or remedies of
the Trust relating to or arising from, or otherwise incur any liabilities,
costs, changes, fees or other expenses relating to or arising from, any breach
by the Trustee, the Tax Administrator, any Fiscal Agent or the Depositor in this
Agreement.
SECTION 6.04. Master Servicer and Special Servicer Not to
Resign.
The Master Servicer and the Special Servicer may each resign
from the obligations and duties hereby imposed on it, upon a determination that
its duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it (the other activities of the Master Servicer or the Special Servicer,
as the case may be, so causing such a conflict being of a type and nature
carried on by the Master Servicer or the Special Servicer, as the case may be,
at the date of this Agreement). Any such determination requiring the resignation
of the Master Servicer or the Special Servicer, as applicable, shall be
evidenced by an Opinion of Counsel to such effect which shall be delivered to
the Trustee. Unless applicable law requires the Master Servicer's or the Special
Servicer's
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(as the case may be) resignation to be effective immediately, and the Opinion of
Counsel delivered pursuant to the prior sentence so states, no such resignation
shall become effective until the Trustee or other successor shall have assumed
the responsibilities and obligations of the resigning party in accordance with
Section 6.06 or Section 7.02 hereof; provided that, if no successor master
servicer or special servicer, as applicable, shall have been so appointed and
have accepted appointment within 90 days after the Master Servicer or Special
Servicer, as the case may be, has given notice of such resignation, the
resigning Master Servicer or Special Servicer, as applicable, may petition any
court of competent jurisdiction for the appointment of a successor master
servicer or special servicer, as applicable.
In addition, the Master Servicer and the Special Servicer
shall each have the right to resign at any other time provided that (i) a
willing successor thereto (including any such successor proposed by the
resigning party) acceptable to the Depositor has been found, (ii) each of the
Rating Agencies confirms in writing that the successor's appointment will not
result in an Adverse Rating Event with respect to any Class of Rated
Certificates, (iii) the resigning party pays all costs and expenses in
connection with such transfer, and (iv) the successor accepts appointment prior
to the effectiveness of such resignation.
Neither the Master Servicer nor the Special Servicer shall be
permitted to resign except as contemplated above in this Section 6.04.
Consistent with the foregoing, none of the Master Servicer or the Special
Servicer shall (except in connection with any resignation thereby permitted
pursuant to the prior paragraph or as otherwise expressly provided herein,
including the provisions of Section 3.22 and/or Section 6.02) assign or transfer
any of its rights, benefits or privileges hereunder to any other Person or
delegate to, subcontract with, or authorize or appoint any other Person to
perform any of the duties, covenants or obligations to be performed by it
hereunder. If, pursuant to any provision hereof, the duties of the Master
Servicer or the Special Servicer are transferred to a successor thereto, the
entire amount of compensation payable to the Master Servicer or the Special
Servicer as the case may be, that accrues pursuant hereto from and after the
date of such transfer shall be payable to such successor.
SECTION 6.05. Rights of the Depositor and the Trustee in
Respect of the Master Servicer and the Special
Servicer.
The Master Servicer and the Special Servicer shall each afford
the Depositor, the Trustee, the Controlling Class Representative and each Rating
Agency, upon reasonable notice, during normal business hours access to all
records maintained by it in respect of its rights and obligations hereunder and
access to such of its officers as are responsible for such obligations. Upon
reasonable request, the Master Servicer and the Special Servicer shall each
furnish the Depositor and the Trustee with its most recent publicly available
annual audited financial statements (or, if not available, the most recent
publicly available audited annual financial statements of its corporate parent,
on a consolidated basis) and such other information as is publicly available
regarding its business, affairs, property and condition, financial or otherwise;
provided that none of the Depositor or the Trustee may disclose the contents of
such financial statements or other information to non-affiliated third parties
(other than accountants, attorneys, financial advisors and other representatives
retained to help it evaluate such financial statements or other information),
unless it is required to do so under applicable securities laws or is otherwise
compelled to do so as a matter of law. The Master Servicer and the Special
Servicer may each affix to any such information described in this Section 6.05
provided by it any disclaimer it deems appropriate in its reasonable discretion.
The Depositor may, but is not obligated to, enforce the obligations of the
Master Servicer and the Special Servicer hereunder and may, but is not obligated
to, perform, or cause a designee to perform, any defaulted obligation of the
Master Servicer or the Special Servicer hereunder or exercise the rights of the
Master Servicer or the Special Servicer hereunder;
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provided, however, that none of the Master Servicer or the Special Servicer
shall be relieved of any of its obligations hereunder by virtue of such
performance by the Depositor or its designee. The Depositor shall not have any
responsibility or liability for any action or failure to act by the Master
Servicer or the Special Servicer and is not obligated to supervise the
performance of the Master Servicer or the Special Servicer under this Agreement
or otherwise.
SECTION 6.06. Designation of Special Servicer by the
Controlling Class.
The Holder or Holders of the Certificates representing more
than 50% of the Class Principal Balance of the Controlling Class may at any time
and from time to time designate a Person (other than the Trustee) to replace any
existing Special Servicer or any Special Servicer that has resigned or otherwise
ceased to serve as Special Servicer. Such Holder or Holders shall so designate a
Person to so serve as successor Special Servicer by the delivery to the Trustee,
the Master Servicer and the existing Special Servicer of a written notice
stating such designation. The Trustee shall, promptly after receiving any such
notice, deliver to the Rating Agencies an executed Notice and Acknowledgment in
the form attached hereto as Exhibit I-1. The designated Person shall become the
Special Servicer on the date as of which the Trustee shall have received: (i)
written confirmation from each of the Rating Agencies that the appointment of
such Person will not result in an Adverse Rating Event with respect to any Class
of Rated Certificates; (ii) an Acknowledgment of Proposed Special Servicer in
the form attached hereto as Exhibit I-2, executed by the designated Person; and
(iii) an Opinion of Counsel (which shall not be an expense of the Trustee or the
Trust) substantially to the effect that (A) the designation of such Person to
serve as Special Servicer is in compliance with this Section 6.06, (B) the
designated Person is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (C) the Acknowledgment of
Proposed Special Servicer has been duly authorized, executed and delivered by
the designated Person and (D) upon the execution and delivery of the
Acknowledgment of Proposed Special Servicer, the designated Person shall be
bound by the terms of this Agreement and, subject to customary bankruptcy and
insolvency exceptions, that this Agreement shall be enforceable against the
designated Person in accordance with its terms. Any existing Special Servicer
shall be deemed to have been terminated simultaneously with such designated
Person's becoming the Special Servicer hereunder; provided that (i) the
terminated Special Servicer shall be entitled to receive, in connection with its
termination, payment out of the Certificate Account of all of its accrued and
unpaid Special Servicing Fees and reimbursement from the successor Special
Servicer of all outstanding Servicing Advances made by the terminated Special
Servicer and all unpaid Advance Interest accrued on such outstanding Servicing
Advances (in which case the successor Special Servicer shall be deemed to have
made such Servicing Advances at the same time that the terminated Special
Servicer had actually made them), (ii) the resigning or terminated Special
Servicer shall be entitled to any Workout Fees thereafter received on any
Mortgage Loans that were Corrected Mortgage Loans at the time of the termination
(but only if and to the extent permitted by Section 3.11(c)) and (iii) such
Special Servicer shall continue to be entitled to the benefits of Section 6.03
notwithstanding any such resignation or termination; and provided, further, that
the terminated Special Servicer shall continue to be obligated to pay and
entitled to receive all other amounts accrued or owing by or to it under this
Agreement on or prior to the effective date of such termination. Such terminated
Special Servicer shall cooperate with the Trustee and the replacement Special
Servicer in effecting the transfer of the terminated Special Servicer's
responsibilities and rights hereunder to its successor, including the transfer
within two Business Days to the replacement Special Servicer for administration
by it of all cash amounts that at the time are or should have been credited by
the Special Servicer to the REO Account or any Servicing Account or should have
been delivered to the Master Servicer or that are thereafter received by or on
behalf of it with respect to any Mortgage Loan or REO Property. If the
termination of the Special Servicer was without cause, the reasonable
out-of-pocket costs and expenses of any such transfer shall in no
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event be paid out of the Trust Fund, and instead shall be paid by the successor
Special Servicer or the Holders of the Controlling Class that voted to remove
the Special Servicer, as such parties may agree. If the Controlling Class of
Certificates are Book-Entry Certificates, then the rights set forth in this
Section 6.06 with respect to replacing the Special Servicer may be exercised by
the related Certificate Owners holding beneficial ownership of Certificates
representing more than 50% of the Class Principal Balance of the Controlling
Class.
SECTION 6.07. Master Servicer or Special Servicer as Owner of
a Certificate.
The Master Servicer or an Affiliate of the Master Servicer or
the Special Servicer or an Affiliate of the Special Servicer may become the
Holder of (or, in the case of a Book-Entry Certificate, Certificate Owner with
respect to) any Certificate with (except as otherwise set forth in the
definition of "Certificateholder") the same rights it would have if it were not
the Master Servicer or the Special Servicer or an Affiliate thereof. If, at any
time during which the Master Servicer or the Special Servicer or an Affiliate of
the Master Servicer or the Special Servicer is the Holder of (or, in the case of
a Book-Entry Certificate, Certificate Owner with respect to) any Certificate,
the Master Servicer or the Special Servicer proposes to take any action
(including for this purpose, omitting to take a particular action) that is not
expressly prohibited by the terms hereof and would not, in the Master Servicer's
or the Special Servicer's reasonable, good faith judgment, violate the Servicing
Standard, but that, if taken, might nonetheless, in the Master Servicer's or the
Special Servicer's reasonable, good faith judgment, be considered by other
Persons to violate the Servicing Standard, then the Master Servicer or the
Special Servicer may (but need not) seek the approval of the Certificateholders
to such action by delivering to the Trustee a written notice that (a) states
that it is delivered pursuant to this Section 6.07, (b) identifies the
Percentage Interest in each Class of Certificates beneficially owned by the
Master Servicer or the Special Servicer, as the case may be, or by an Affiliate
thereof and (c) describes in reasonable detail the action that the Master
Servicer or the Special Servicer, as the case may be, proposes to take. The
Trustee, upon receipt of such notice, shall forward it to the Certificateholders
(other than the Master Servicer and its Affiliates or the Special Servicer and
its Affiliates, as appropriate), together with a request for approval by the
Certificateholders of each such proposed action. If at any time
Certificateholders holding greater than 50% of the Voting Rights of all
Certificateholders (calculated without regard to the Certificates beneficially
owned by the Master Servicer or its Affiliates or the Special Servicer or its
Affiliates, as the case may be) shall have consented in writing to the proposal
described in the written notice, and if the Master Servicer or the Special
Servicer, as the case may be, shall act as proposed in the written notice, such
action shall be deemed to comply with the Servicing Standard. The Trustee shall
be entitled to reimbursement from the Master Servicer or the Special Servicer,
as applicable, for the reasonable expenses of the Trustee incurred pursuant to
this paragraph. It is not the intent of the foregoing provision that the Master
Servicer or the Special Servicer be permitted to invoke the procedure set forth
herein with respect to routine servicing matters arising hereunder, but rather
in the case of unusual circumstances.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
(a) "Event of Default", wherever used herein, means any one of
the following events:
(i) any failure by the Master Servicer to deposit into the
Collection Account any amount required to be so deposited under this
Agreement, which failure continues unremedied for two Business Days
following the date on which such deposit was first required to be made;
or
(ii) any failure by the Special Servicer to deposit into the
REO Account or the Collection Account, or to remit to the Master
Servicer for deposit into the Collection Account, any amount required
to be so deposited or remitted under this Agreement, which failure
continues unremedied for two Business Days following the date on which
such deposit or remittance, as the case may be, was first required to
be made; or
(iii) any failure by the Master Servicer to remit to the
Trustee for deposit into the Distribution Account, on any P&I Advance
Date, the full amount of P&I Advances required to be made on such date
or, on any Master Servicer Remittance Date, the full amount of the
Master Servicer Remittance Amount required to be remitted on such date,
which failure continues unremedied until 5:00 p.m. (New York City time)
on such P&I Advance Date or Master Servicer Remittance Date, as the
case may be; provided however, that the failure to make a P&I Advance
one time in any 12-month period which is corrected by 10:00 a.m. (New
York City time) on the related Distribution Date shall not constitute
an Event of Default; or
(iv) any failure by the Master Servicer to timely make any
Servicing Advance required to be made by it hereunder, which Servicing
Advance remains unmade for a period of three Business Days following
the date on which notice shall have been given to the Master Servicer
by the Trustee as provided in Section 3.11(f); or
(v) any failure by the Special Servicer to timely make (or
request the Master Servicer to make) any Servicing Advance required to
be made by it hereunder, which Servicing Advance remains unmade for a
period of three Business Days following the date on which notice has
been given to the Special Servicer by the Trustee as provided in
Section 3.11(f); or
(vi) any failure on the part of the Master Servicer or the
Special Servicer duly to observe or perform in any material respect any
other of the covenants or agreements on the part of the Master Servicer
or the Special Servicer, as the case may be, contained in this
Agreement, which failure continues unremedied for a period of 30 days
(or, in the case of payment of insurance premiums, for a period of 15
days) after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to the Master Servicer
or the Special Servicer, as the case may be, by any other party hereto
or to the Master Servicer or the Special Servicer, as the case may be,
(with a copy to each other party hereto) by the Holders of Certificates
entitled to at least 25% of the Voting Rights, provided, however, that
with respect to any such breach which is not curable within such 30-
day period, the Master Servicer or the Special Servicer, as the case
may be, shall have an additional
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cure period of 30 days to effect such cure so long as the Master
Servicer or the Special Servicer, as the case may be, has commenced to
cure such failure within the initial 30-day period and has provided the
Trustee with an Officer's Certificate certifying that it has diligently
pursued, and is continuing to pursue, a full cure; or
(vii) any breach on the part of the Master Servicer or the
Special Servicer of any representation or warranty contained in this
Agreement that materially and adversely affects the interests of any
Class of Certificateholders and which continues unremedied for a period
of 60 days after the date on which notice of such breach, requiring the
same to be remedied, shall have been given to the Master Servicer or
the Special Servicer, as the case may be, by any other party hereto or
to the Master Servicer or the Special Servicer, as the case may be,
(with a copy to each other party hereto) by the Holders of Certificates
entitled to at least 25% of the Voting Rights; or
(viii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law for the appointment of a conservator, receiver, liquidator,
trustee or similar official in any bankruptcy, insolvency, readjustment
of debt, marshalling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Master Servicer or the Special Servicer and such
decree or order shall have remained in force undischarged or unstayed
for a period of 30 days; or
(ix) the Master Servicer or the Special Servicer shall consent
to the appointment of a conservator, receiver, liquidator, trustee or
similar official in any bankruptcy, insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to it or of or relating to all or substantially all of its
property; or
(x) the Master Servicer or the Special Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take any corporate action in furtherance of the
foregoing; or
(xi) either (A) the Trustee shall have received notice from
either of the Rating Agencies to the effect that, or the Trustee shall
otherwise have actual knowledge (based on a written publication or
notification by such Rating Agency) that, the continuation of the
Master Servicer or the Special Servicer in such capacity would result
in a qualification, downgrade or withdrawal of any rating assigned
thereby to any Class of Certificates or (B) one or more ratings
assigned by either Rating Agency to the Certificates shall have been
qualified as a result of the Master Servicer or Special Servicer, as
the case may be, acting in such capacity; or
(xii) one or more ratings assigned by either Rating Agency to
the Certificates shall have been downgraded or withdrawn as a result of
the Master Servicer or Special Servicer, as the case may be, acting in
such capacity.
When a single entity acts as Master Servicer and Special Servicer, or in any two
of the foregoing capacities, an Event of Default (other than an event described
in clauses (xi) and (xii) above) in one capacity shall constitute an Event of
Default in each such capacity.
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(b) If any Event of Default with respect to the Master
Servicer or the Special Servicer (in either case, for purposes of this Section
7.01(b), the "Defaulting Party") shall occur and be continuing, then, and in
each and every such case, so long as the Event of Default shall not have been
remedied, the Depositor and Trustee each may, and at the written direction of
the Holders of Certificates entitled to not less than 25% of the Voting Rights
or if the relevant Event of Default is one described in any of clauses (iii) and
(viii) through (xii) of Section 7.01(a), the Trustee shall (subject to
applicable bankruptcy or insolvency law in the case of clauses (viii) through
(x) of Section 7.01(a)), terminate, by notice in writing to the Defaulting Party
(with a copy of such notice to each other party hereto), all of the rights and
obligations (accruing from and after such notice) of the Defaulting Party under
this Agreement and in and to the Trust Fund (other than as a Holder of any
Certificate). From and after the receipt by the Defaulting Party of such written
notice, all authority and power of the Defaulting Party under this Agreement,
whether with respect to the Certificates (other than as a Holder of any
Certificate) or the Mortgage Loans or otherwise, shall pass to and be vested in
the Trustee pursuant to and under this Section, and, without limitation, the
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
and at the expense of the Defaulting Party, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Each of the Master
Servicer and the Special Servicer agrees that, if it is terminated pursuant to
this Section 7.01(b), it shall promptly (and in any event no later than ten
Business Days subsequent to its receipt of the notice of termination) provide
the Trustee with all documents and records requested thereby to enable the
Trustee to assume the Master Servicer's or Special Servicer's, as the case may
be, functions hereunder, and shall otherwise cooperate with the Trustee in
effecting the termination of the Master Servicer's or Special Servicer's, as the
case may be, responsibilities and rights hereunder, including the transfer
within two Business Days to the Trustee for administration by it of all cash
amounts that at the time are or should have been credited by the Master Servicer
to the Collection Account, the Distribution Account or any Servicing Account or
Reserve Account held by it (if it is the Defaulting Party) or by the Special
Servicer to the REO Account, the Collection Account or any Servicing Account or
Reserve Account held by it (if it is the Defaulting Party) or that are
thereafter received by or on behalf of it with respect to any Mortgage Loan or
REO Property (provided, however, that the Master Servicer and the Special
Servicer each shall, if terminated pursuant to this Section 7.01(b), continue to
be obligated to pay and entitled to receive all amounts accrued or owing by or
to it under this Agreement on or prior to the date of such termination, whether
in respect of Advances or otherwise, and it and its directors, officers,
employees and agents shall continue to be entitled to the benefits of Section
6.03 notwithstanding any such termination). Any costs or expenses (including
those of any other party hereto) incurred in connection with any actions to be
taken by the Master Servicer or Special Servicer pursuant to this paragraph
shall be borne by the Master Servicer or Special Servicer, as the case may be
(and, in the case of the Trustee's costs and expenses, if not paid within a
reasonable time, shall be borne by the Trust out of the Collection Account).
(c) In the event the initial Master Servicer is terminated
solely due to an Event of Default under Section 7.01(a)(xi), and if the
terminated initial Master Servicer delivers to the Trustee proposed bid
materials within five Business Days after such termination, the Trustee shall,
within the next five Business Days, using such bid materials, solicit good faith
bids for the rights to master service the Mortgage Loans under this Agreement
from three Qualified Bidders (as defined below) or, if three Qualified Bidders
cannot be located, then from as many Persons as the Trustee can determine are
Qualified Bidders. The Trustee shall have no obligation to review and shall have
no liability or responsibility for the information in the bid materials, and
shall be entitled to include a disclaimer to such effect with such bid
materials. The bid proposal shall require any Successful Bidder (as defined
below), as a condition of such bid, to enter into this
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Agreement as successor Master Servicer, and shall agree to be bound by the terms
hereof, within 30 days after the termination of the initial Master Servicer;
provided, however, that the initial Master Servicer may request and obtain an
additional 15 days for such sale and assumption to be completed so long as the
initial Master Servicer delivers to the Trustee an Officer's Certificate stating
that the sale and assumption of the rights to master service the Mortgage Loans
cannot be completed in the initial 30-day period and specifying the reasons. The
Trustee shall solicit bids (i) on the basis of such successor Master Servicer
retaining all Sub- Servicers to continue the primary servicing of the Mortgage
Loans pursuant to the terms of the respective Sub-Servicing Agreements and
entering into a Sub-Servicing Agreement with the terminated Master Servicer to
service each of the Mortgage Loans not subject to a Sub-Servicing Agreement at a
servicing fee rate of _____% per annum per Mortgage Loan serviced (each, a
"Servicing Retained Bid") and (ii) on the basis of terminating each Sub-Servicer
and Sub-Servicing Agreement (other than a Designated Sub-Servicer and its
Sub-Servicing Agreement) and having no obligation to enter into a Sub-Servicing
Agreement with the terminated Master Servicer (each, a "Servicing Released
Bid"). The Trustee shall select the Qualified Bidder with the highest cash
Servicing Retained Bid (or, if none, the highest cash Servicing Released Bid)
(the "Successful Bidder") to act as successor Master Servicer hereunder. The
Trustee shall direct the Successful Bidder to enter into this Agreement as
successor Master Servicer pursuant to the terms hereof (and, if the successful
bid was a Servicing Retained Bid, to enter into a Sub-Servicing Agreement with
the terminated Master Servicer as contemplated above), no later than 30 days
after the termination of the initial Master Servicer; provided, however, that
the initial Master Servicer may request and obtain an additional 15 days for
such sale and assumption to be completed so long as the initial Master Servicer
delivers to the Trustee an Officer's Certificate stating that the sale and
assumption of the rights to master service the Mortgage Loans cannot be
completed in the initial 30-day period and specifying the reasons.
Upon the assignment and acceptance of the master servicing
rights hereunder to and by the Successful Bidder, including the transfer of the
servicing of the Mortgage Loans, the Trustee shall remit or cause to be remitted
(i) if the successful bid was a Servicing Retained Bid, to the terminated
initial Master Servicer the amount of such cash bid received from the Successful
Bidder (net of expenses in connection with obtaining such bid, including,
without limitation, reasonable attorneys' fees, and out-of-pocket expenses
incurred in connection with transferring the servicing of the Mortgage Loans)
and (ii) if the successful bid was a Servicing Released Bid, to the terminated
initial Master Servicer and each terminated Sub-Servicer its respective Bid
Allocation.
If the Successful Bidder has not entered into this Agreement
as successor Master Servicer within 30 days (or, if the sale period has been
extended as contemplated above, within 45 days) after the termination of the
initial Master Servicer or no Successful Bidder was identified within such
period, the terminated initial Master Servicer shall reimburse the Trustee for
all out-of-pocket expenses incurred by the Trustee in connection with such bid
process, and the Trustee shall have no further obligations under this Section
7.01(c) and may select a successor Master Servicer of its choice and pursuant to
the terms hereof.
A "Qualified Bidder" will be any prospective Master Servicer
candidate reasonably acceptable to the Depositor, which candidate would be
eligible to act as Master Servicer hereunder without causing an Adverse Rating
Event.
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SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer or the Special
Servicer resigns pursuant to the first paragraph of Section 6.04 or receives a
notice of termination pursuant to Section 7.01, the Trustee shall be the
successor in all respects to the Master Servicer or the Special Servicer, as the
case may be, in its capacity as such under this Agreement and the transactions
set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising thereafter
placed on the Master Servicer or the Special Servicer, as the case may be, by
the terms and provisions hereof, including, if the Master Servicer is the
resigning or terminated party, the Master Servicer's obligation to make P&I
Advances; provided, however, that any failure to perform such duties or
responsibilities caused by the Master Servicer's or the Special Servicer's, as
the case may be, failure to cooperate or to provide information or monies as
required by Section 7.01 shall not be considered a default by the Trustee
hereunder; and provided, further, that, in the case of a resigning or terminated
Special Servicer, the Trustee shall cease to act as successor if an alternative
successor is appointed pursuant to Section 6.06; and, provided, further, that in
the case of a terminated Master Servicer, the Trustee shall cease to act as
successor if an alternative successor is appointed pursuant to Section 7.01(c).
Neither the Trustee nor any other successor shall be liable for any of the
representations and warranties of the resigning or terminated party or for any
losses incurred by the resigning or terminated party pursuant to Section 3.06
hereunder nor shall the Trustee nor any other successor be required to purchase
any Mortgage Loan hereunder. As compensation therefor, the Trustee shall be
entitled to all fees and other compensation which the resigning or terminated
party would have been entitled to for future services rendered if the resigning
or terminated party had continued to act hereunder. Notwithstanding the above,
if it is unwilling to so act, the Trustee may (and, if it is unable to so act,
or if the Master Servicer or the Special Servicer is the resigning or terminated
party and the Trustee is not approved as an acceptable master servicer or
special servicer, as the case may be, by each Rating Agency, or if the Holders
of Certificates entitled to a majority of all the Voting Rights so request in
writing, the Trustee shall, subject to Section 6.06 or Section 7.01(c), as
applicable, promptly appoint, or petition a court of competent jurisdiction to
appoint, any established and qualified institution as the successor to the
Master Servicer or the Special Servicer, as the case may be, hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Master Servicer or the Special Servicer, as the case may be, hereunder;
provided, however, that such appointment does not result in an Adverse Rating
Event with respect to any Class of Rated Certificates (as confirmed in writing
to the Trustee by each Rating Agency). No appointment of a successor to the
Master Servicer or the Special Servicer hereunder shall be effective until the
assumption by such successor of all its responsibilities, duties and liabilities
hereunder, and pending such appointment and assumption, the Trustee shall act in
such capacity as hereinabove provided. In connection with any such appointment
and assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on the Mortgage Loans or otherwise as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the resigning or terminated party hereunder. The
Depositor, the Trustee, such successor and each other party hereto shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any resignation of the Master Servicer or the Special
Servicer pursuant to Section 6.04, any termination of the Master Servicer or the
Special Servicer pursuant to Section 7.01, any appointment of a successor to the
Master Servicer or the Special Servicer pursuant to Section 6.04 or 7.02 or the
effectiveness of any designation of a new Special Servicer pursuant to Section
6.06, the Trustee shall
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give prompt written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register.
(b) Not later than the later of (i) 60 days after the
occurrence of any event which constitutes or, with notice or lapse of time or
both, would constitute an Event of Default and (ii) five days after a
Responsible Officer of the Trustee has actual knowledge of the occurrence of
such an event, the Trustee shall transmit by mail to the Depositor and all
Certificateholders notice of such occurrence, unless such default shall have
been cured.
SECTION 7.04. Waiver of Events of Default.
The Holders of Certificates representing at least 66-2/3% of
the Voting Rights allocated to each Class of Certificates affected by any Event
of Default hereunder may waive such Event of Default; provided, that an Event of
Default under clause (i), clause (ii), clause (iii), clause (xi) or clause (xii)
of Section 7.01(a) may be waived only by all of the Certificateholders of the
affected Classes; and provided, further, that if the Trustee was required to
expend any monies in connection with any Event of Default, then such Event of
Default may not be waived unless and until those monies have been reimbursed to
the Trustee (with interest) by the defaulting party. Upon any such waiver of an
Event of Default, such Event of Default shall cease to exist and shall be deemed
to have been remedied for every purpose hereunder. No such waiver shall extend
to any subsequent or other Event of Default or impair any right consequent
thereon except to the extent expressly so waived. Notwithstanding any other
provisions of this Agreement, for purposes of waiving any Event of Default
pursuant to this Section 7.04, Certificates registered in the name of the
Depositor or any Affiliate of the Depositor shall be entitled to the same Voting
Rights with respect to the matters described above as they would if registered
in the name of any other Person.
SECTION 7.05. Additional Remedies of Trustee Upon Event of
Default.
During the continuance of any Event of Default, so long as
such Event of Default shall not have been remedied, the Trustee, in addition to
the rights specified in Section 7.01, shall have the right (exercisable subject
to Section 8.01(a)), in its own name and as trustee of an express trust, to take
all actions now or hereafter existing at law, in equity or by statute to enforce
its rights and remedies and to protect the interests, and enforce the rights and
remedies, of the Certificateholders (including the institution and prosecution
of all judicial, administrative and other proceedings and the filings of proofs
of claim and debt in connection therewith). Except as otherwise expressly
provided in this Agreement, no remedy provided for by this Agreement shall be
exclusive of any other remedy, and each and every remedy shall be cumulative and
in addition to any other remedy, and no delay or omission to exercise any right
or remedy shall impair any such right or remedy or shall be deemed to be a
waiver of any Event of Default.
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ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiver of all Events of Default which may have
occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If an Event of Default occurs and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs. Any permissive right of the Trustee contained in
this Agreement shall not be construed as a duty.
(b) Upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement (other than the Mortgage Files, the review of which
is specifically governed by the terms of Article II), the Trustee shall examine
them to determine whether they conform to the requirements of this Agreement. If
any such instrument is found not to conform to the requirements of this
Agreement in a material manner, the Trustee shall take such action as it deems
appropriate to have the instrument corrected. The Trustee shall not be
responsible or liable for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Depositor, the Master Servicer, the Special Servicer, any
actual or prospective Certificateholder or Certificate Owner or either Rating
Agency, and accepted by the Trustee in good faith, pursuant to this Agreement.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing or waiver of all Events of Default which may have occurred,
the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement.
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates entitled to at
least 25% (or, as to any particular matter, any higher percentage as
may be specifically provided for hereunder) of the Voting Rights
relating to the time, method and place of conducting any
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proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under this Agreement.
(iv) The Trustee shall not be required to take action with
respect to, or be deemed to have notice or knowledge of, any default or
Event of Default (except an Event of Default under Section
7.01(a)(xi)(A) or the Master Servicer's failure to deliver any monies,
including P&I Advances, or to provide any report, certificate or
statement, to the Trustee when required pursuant to this Agreement)
unless a Responsible Officer of the Trustee shall have received written
notice or otherwise have actual knowledge thereof. Otherwise, the
Trustee may conclusively assume that there is no such default or Event
of Default.
(v) Subject to the other provisions of this Agreement and
without limiting the generality of this Section 8.01, the Trustee shall
have no duty, except as expressly provided in Section 2.01(c) or
Section 2.01(e) or in its capacity as successor Master Servicer or
successor Special Servicer, (A) to cause any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security
interest, or to cause the maintenance of any such recording or filing
or depositing or to any rerecording, refiling or redepositing of any
thereof, (B) to cause the maintenance of any insurance, and (C) to
confirm or verify the truth, accuracy or contents of any reports or
certificates of the Master Servicer, the Special Servicer, any actual
or prospective or any Certificateholder or Certificate Owner or either
Rating Agency, delivered to the Trustee pursuant to this Agreement
reasonably believed by the Trustee to be genuine and without error and
to have been signed or presented by the proper party or parties.
(vi) For as long as the Person that serves as Trustee
hereunder also serves as Custodian, Certificate Registrar and/or Tax
Administrator, the protections, immunities and indemnities afforded to
the Trustee hereunder shall also be afforded to such Person in its
capacity as Custodian, Certificate Registrar and/or Tax Administrator,
as the case may be.
SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) the Trustee may rely upon and shall be protected in acting
or refraining from acting upon any resolution, Officers' 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 without error and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full and
complete authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in accordance
therewith;
(iii) the Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders, unless (in the
Trustee's reasonable opinion) such Certificateholders shall have
offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities
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which may be incurred therein or thereby; the Trustee shall not be
required to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder,
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it; provided, however, that nothing contained herein shall
relieve the Trustee of the obligation, upon the occurrence of an Event
of Default which has not been waived or cured, to exercise such of the
rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own
affairs;
(iv) neither the Trustee nor any Fiscal Agent appointed
thereby shall be personally liable for any action reasonably taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(v) prior to the occurrence of an Event of Default and after
the waiver or curing of all Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so
by Holders of Certificates entitled to at least 25% of the Voting
Rights; provided, however, that if the payment within a reasonable time
to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition
to taking any such action;
(vi) except as contemplated by Section 8.06 and/or Section
8.14, the Trustee shall not be required to give any bond or surety in
respect of the execution of the trusts created hereby or the powers
granted hereunder;
(vii) the Trustee may execute any of the trusts or powers
vested in it by this Agreement or perform any of its duties hereunder
either directly or by or through agents or attorneys-in-fact, provided
that the use of agents or attorneys-in-fact shall not be deemed to
relieve the Trustee of any of its duties and obligations hereunder
(except as expressly set forth herein);
(viii) neither the Trustee nor any Fiscal Agent appointed
thereby shall be responsible for any act or omission of the Master
Servicer or the Special Servicer (unless the Trustee is acting as
Master Servicer or Special Servicer, as the case may be) or of the
Depositor.
(ix) neither the Trustee nor the Certificate Registrar shall
have any obligation or duty to monitor, determine or inquire as to
compliance with any restriction on transfer imposed under Article V
under this Agreement or under applicable law with respect to any
transfer of any Certificate or any interest therein, other than to
require delivery of the certification(s) and/or Opinions of Counsel
described in said Article applicable with respect to changes in
registration or record ownership of Certificates in the Certificate
Register and to examine the same to determine substantial compliance
with the express requirements of this Agreement; and the Trustee and
Certificate Registrar shall have no liability for transfers, including
transfers made through the book-entry facilities of the Depository or
between or among Depository Participants or beneficial owners of the
Certificates, made in
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violation of applicable restrictions except for its failure to perform
its express duties in connection with changes in registration or record
ownership in the Certificate Register.
SECTION 8.03. Trustee and Fiscal Agent not Liable for Validity
or Sufficiency of Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other
than the statements attributed to, and the representations and warranties of,
the Trustee and/or any Fiscal Agent in Article II, and the signature of the
Trustee set forth on each outstanding Certificate) shall not be taken as the
statements of the Trustee or any Fiscal Agent, and neither the Trustee nor any
Fiscal Agent assumes any responsibility for their correctness. Neither the
Trustee nor any Fiscal Agent makes any representation as to the validity or
sufficiency of this Agreement (except as regards the enforceability of this
Agreement against it) or of any Certificate (other than as to the signature of
the Trustee set forth thereon) or of any Mortgage Loan or related document.
Neither the Trustee nor any Fiscal Agent shall be accountable for the use or
application by the Depositor of any of the Certificates issued to it or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Depositor in respect of the assignment of the Mortgage Loans to the
Trust, or any funds deposited in or withdrawn from the Collection Account or any
other account by or on behalf of the Depositor, the Master Servicer or the
Special Servicer (in each case, unless the Trustee is acting in such capacity).
Neither the Trustee nor any Fiscal Agent shall be responsible for the legality
or validity of this Agreement (other than insofar as it relates to the
obligations of the Trustee or such Fiscal Agent, as the case may be, hereunder)
or the validity, priority, perfection or sufficiency of any security, lien or
security interest granted to it hereunder or the filing of any financing
statements or continuation statements, except to the extent set forth in Section
2.01(c) and Section 2.01(e) or to the extent the Trustee is acting as Master
Servicer or Special Servicer and the Master Servicer or Special Servicer, as the
case may be, would be so responsible hereunder. The Trustee shall not be
required to record this Agreement.
SECTION 8.04. Trustee and Fiscal Agent May Own Certificates.
The Trustee (in its individual or any other capacity), any
Fiscal Agent or any Affiliate of either of them may become the owner or pledgee
of Certificates with (except as otherwise provided in the definition of
"Certificateholder") the same rights it would have if it were not the Trustee,
such Fiscal Agent or an Affiliate of either of them, as the case may be.
SECTION 8.05. Fees and Expenses of Trustee; Indemnification of
and by Trustee and Fiscal Agent.
(a) On each Distribution Date, the Trustee shall withdraw from
the Distribution Account, prior to any distributions to be made therefrom to
Certificateholders on such date, and pay to itself all earned but unpaid
Trustee's Fees in respect of the Mortgage Loans and any REO Mortgage Loans
through the end of the most recently ended calendar month, as compensation for
all services rendered by the Trustee in the execution of the trusts hereby
created and in the exercise and performance of any of the powers and duties of
the Trustee hereunder. As to each Mortgage Loan and REO Mortgage Loan, the
Trustee's Fee shall accrue during each calendar month, commencing with
____________, at the Trustee's Fee Rate on a principal amount equal to the
Stated Principal Balance of such Mortgage Loan or REO Mortgage Loan immediately
following the Distribution Date in such calendar month (or, in the case of
____________, on a principal amount equal to the Cut-off Date Balance of the
particular Mortgage Loan), whether or not interest is actually collected on each
Mortgage Loan and REO Mortgage Loan. With respect to each Mortgage Loan
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and REO Mortgage Loan, the Trustee's Fee shall accrue from time to time on a
30/360 Basis. The Trustee's Fees (which shall not be limited by any provision of
law in regard to the compensation of a trustee of an express trust) shall
constitute the Trustee's sole compensation for such services to be rendered by
it.
(b) The Trustee and any director, officer, employee or agent
of the Trustee shall be entitled to be indemnified and held harmless out of
Trust Fund for and against any loss, liability, claim or expense (including
costs and expenses of litigation, and of investigation, counsel fees, damages,
judgments and amounts paid in settlement) arising out of, or incurred in
connection with, this Agreement, the Certificates, the Mortgage Loans (unless it
incurs any such expense or liability in the capacity of successor Master
Servicer or Special Servicer, in which case such expense or liability will be
reimbursable thereto in the same manner as it would be for any other Master
Servicer or Special Servicer, as the case may be) or any act or omission of the
Trustee relating to the exercise and performance of any of the powers and duties
of the Trustee hereunder, if (but only if) such loss, liability, claim or
expense constitutes an "unanticipated expense" within the meaning of Treasury
regulation Section 1.860G-1(b)(3)(ii); provided, however, that neither the
Trustee nor any of the other above specified Persons shall be entitled to
indemnification pursuant to this Section 8.05(b) for (1) allocable overhead,
such as costs for office space, office equipment, supplies and related expenses,
employee salaries and related expenses and similar internal costs and expenses,
(2) any expense or liability specifically required to be borne thereby pursuant
to the terms hereof or (3) any loss, liability, claim or expense incurred by
reason of any breach on the part of the Trustee of any of its representations,
warranties or covenants contained herein or any willful misfeasance, bad faith
or negligence in the performance of, or reckless disregard of, the Trustee's
obligations and duties hereunder.
(c) Each of the Master Servicer and the Special Servicer shall
indemnify the Trustee and any Fiscal Agent for and hold each of them harmless
against any loss, liability, claim or expense that is a result of the Master
Servicer's or the Special Servicer's, as the case may be, negligent acts or
omissions in connection with this Agreement, including the negligent use by the
Master Servicer or the Special Servicer, as the case may be, of any powers of
attorney delivered to it by the Trustee pursuant to the provisions hereof and
the Mortgage Loans serviced by the Master Servicer or the Special Servicer, as
the case may be; provided, however, that, if the Trustee has been reimbursed for
such loss, liability, claim or expense pursuant to Section 8.05(b), or any
Fiscal Agent has been reimbursed for such loss, liability, claim or expense
pursuant to Section 8.13, then the indemnity in favor of such Person provided
for in this Section 8.05(c) with respect to such loss, liability, claim or
expense shall be for the benefit of the Trust.
(d) Each of the Trustee and any Fiscal Agent shall indemnify
the Master Servicer and the Special Servicer for and hold each of them harmless
against any loss, liability, claim or expense that is a result of the Trustee's
or such Fiscal Agent's, as the case may be, negligent acts or omissions in
connection with this Agreement; provided, however, that if the Master Servicer
or the Special Servicer has been reimbursed for such loss, liability, claim or
expense pursuant to Section 6.03, then the indemnity in favor of such Person
provided for in this Section 8.05(d) with respect to such loss, liability, claim
or expense shall be for the benefit of the Trust.
(e) This Section 8.05 shall survive the termination of this
Agreement or the resignation or removal of the Trustee, any Fiscal Agent, the
Master Servicer and the Special Servicer as regards rights and obligations prior
to such termination, resignation or removal.
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SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation,
bank, trust company or association organized and doing business under the laws
of the United States of America or any State thereof or the District of
Columbia, authorized under such laws to exercise trust powers, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority. If such corporation, bank, trust
company or association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section the combined capital and
surplus of such corporation, bank, trust company or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
condition so published. In addition, the Trustee shall at all times meet the
requirements of Section 26(a)(1) of the Investment Company Act. Furthermore, the
Trustee shall at all times maintain a long-term unsecured debt rating of no less
than "____" from ___________ and "__" from _____ (or, in the case of either
Rating Agency, such lower rating as will not result in an Adverse Rating Event
with respect to any Class of Rated Certificates (as confirmed in writing to the
Trustee and the Depositor by such Rating Agency)); provided that the Trustee
shall not cease to be eligible to serve as such based on a failure to satisfy
such rating requirements so long as either: (i) the Trustee maintains a
long-term unsecured debt rating of no less than "____" from _______ and "___"
from _____ (or, in the case of either Rating Agency, such lower rating as will
not result in an Adverse Rating Event with respect to any Class of Rated
Certificates (as confirmed in writing to the Trustee and the Depositor by such
Rating Agency)) and a Fiscal Agent meeting the requirements of Section 8.13 has
been appointed by the Trustee and is then currently serving in such capacity; or
(ii) the Trustee maintains a long-term unsecured debt rating of no less than
"__" from _______ and "__" from _____ (or, in the case of either Rating Agency,
such lower rating as will not result in an Adverse Rating Event with respect to
any Class of Rated Certificates (as confirmed in writing to the Trustee and the
Depositor by such Rating Agency)) and an Advance Security Arrangement meeting
the requirements of Section 8.14 has been established by the Trustee and is then
currently being maintained. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 8.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
8.07. The corporation, bank, trust company or association serving as Trustee may
have normal banking and trust relationships with the Depositor, the Mortgage
Loan Seller, the Master Servicer, the Special Servicer and their respective
Affiliates; provided, however, that none of (i) the Depositor, (ii) any Person
involved in the organization or operation of the Depositor or the Trust, (iii)
any Mortgage Loan Seller or (iv) any Affiliate of any of them, may be the
Trustee hereunder.
SECTION 8.07. Resignation and Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from
the trusts hereby created by giving written notice thereof to the Depositor, the
Master Servicer, the Special Servicer and all the Certificateholders. Upon
receiving such notice of resignation, the Depositor shall promptly appoint a
successor trustee meeting the eligibility requirements of Section 8.06 by
written instrument, in duplicate, which instrument shall be delivered to the
resigning Trustee and to the successor trustee. A copy of such instrument shall
be delivered to other parties hereto and to the Certificateholders by the
Depositor. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
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(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor or the Master Servicer or if at any
time the Trustee shall become incapable of acting, or shall be adjudged bankrupt
or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, or if the Trustee's continuing to act in such capacity would (as
confirmed in writing to any party hereto by either Rating Agency) result in an
Adverse Rating Event with respect to any Class of Rated Certificates, then the
Depositor may (and, if it fails to do so within ten Business Days, the Master
Servicer shall as soon as practicable) remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the other parties hereto and to the
Certificateholders by the Depositor (or the Master Servicer, as the case may
be).
(c) The Holders of Certificates entitled to at least a
majority of the Voting Rights (or, if such removal is in connection with the
Trustee's and any Fiscal Agent's failure to make any required Advance, 25% of
the Voting Rights) may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Depositor, one complete set to the Trustee
so removed and one complete set to the successor so appointed. All expenses
incurred by the Trustee in connection with its transfer of the Mortgages Files
to a successor trustee following the removal of the Trustee without cause
pursuant to this Section 8.07(c), shall be reimbursed to the removed Trustee
within 30 days of demand therefor, such reimbursement to be made by the
Certificateholders that terminated the Trustee. A copy of such instrument shall
be delivered to the other parties hereto and to the remaining Certificateholders
by the successor so appointed.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 8.07
shall not become effective until (i) acceptance of appointment by the successor
trustee as provided in Section 8.08 and (ii) if neither the successor trustee
nor any Fiscal Agent appointed by it has a long-term unsecured debt rating of at
least "___" from _______ and "__" from _____, the Trustee and the Depositor have
received written confirmation from each Rating Agency that has not so assigned
such a rating, to the effect that the appointment of such successor trustee
shall not result in an Adverse Rating Event with respect to any Class of Rated
Certificates. Notwithstanding anything herein to the contrary, any resignation
or removal of any Trustee shall also result in the resignation or removal of the
Tax Administrator for such Trustee.
SECTION 8.08. Successor Trustee.
(a) Any successor trustee appointed as provided in Section
8.07 shall execute, acknowledge and deliver to the Depositor, the Master
Servicer, the Special Servicer and its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Mortgage Files and related
documents and statements held by it hereunder (other than any Mortgage Files at
the time held on its behalf by a Custodian, which Custodian shall become the
agent of the successor trustee), and the Depositor, the Master Servicer, the
Special Servicer and the predecessor trustee shall execute and deliver such
instruments and do such other things as may reasonably
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be required to more fully and certainly vest and confirm in the successor
trustee all such rights, powers, duties and obligations, and to enable the
successor trustee to perform its obligations hereunder.
(b) No successor trustee shall accept appointment as provided
in this Section 8.08 unless at the time of such acceptance such successor
trustee shall be eligible under the provisions of Section 8.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section 8.08, such successor trustee shall mail notice of the
succession of such trustee hereunder to the Depositor and the
Certificateholders.
SECTION 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted
or with which it may be consolidated or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such entity shall be eligible under
the provisions of Section 8.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing the same may at the time be
located, the Master Servicer and the Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity, such title
to the Trust Fund, or any part thereof, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in case an Event of Default in
respect of the Master Servicer shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.06, and no notice to Holders of Certificates
of the appointment of co-trustee(s) or separate trustee(s) shall be required
under Section 8.08.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly, except to the extent that under any law of any jurisdiction
in which any particular act or acts are to be performed (whether as Trustee
hereunder or when acting as Master Servicer, Special Servicer or Tax
Administrator hereunder), the Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Fund or any portion
thereof in any such jurisdiction) shall be exercised and performed by such
separate trustee or co- trustee at the direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every
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instrument appointing any separate trustee or co-trustee shall refer to this
Agreement and the conditions of this Article VIII. Each separate trustee and
co-trustee, upon its acceptance of the trusts conferred, shall be vested with
the estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject to
all the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.
(d) Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
(e) The appointment of a co-trustee or separate trustee under
this Section 8.10 shall not relieve the Trustee of its duties and
responsibilities hereunder.
SECTION 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Master Servicer,
appoint at the Trustee's own expense one or more Custodians to hold all or a
portion of the Mortgage Files as agent for the Trustee; provided that if the
Custodian is an Affiliate of the Trustee such consent of the Master Servicer
need not be obtained and the Trustee shall inform the Master Servicer of such
appointment. Each Custodian shall be a depository institution supervised and
regulated by a federal or state banking authority, shall have combined capital
and surplus of at least $10,000,000, shall be qualified to do business in the
jurisdiction in which it holds any Mortgage File, shall not be the Depositor,
the Mortgage Loan Seller or any Affiliate of the Depositor or the Mortgage Loan
Seller, and shall have in place a fidelity bond and errors and omissions policy,
each in such form and amount as is customarily required of custodians acting on
behalf of FHLMC or FNMA. Each Custodian shall be subject to the same
obligations, standard of care, protection and indemnities as would be imposed
on, or would protect, the Trustee hereunder in connection with the retention of
Mortgage Files directly by the Trustee. The appointment of one or more
Custodians shall not relieve the Trustee from any of its obligations hereunder,
and the Trustee shall remain responsible for all acts and omissions of any
Custodian.
SECTION 8.12. Access to Certain Information.
(a) The Trustee shall afford to the Depositor, the
Underwriter, the Master Servicer, the Special Servicer, the Controlling Class
Representative and each Rating Agency and to the OTS, the FDIC and any other
banking or insurance regulatory authority that may exercise authority over any
Certificateholder or Certificate Owner, access to any documentation regarding
the Mortgage Loans or the other assets of the Trust Fund that are in its
possession or within its control. Such access shall be afforded without charge
but only upon reasonable prior written request and during normal business hours
at the offices of the Trustee designated by it.
(b) The Trustee shall maintain at its offices and, upon
reasonable prior written request and during normal business hours, shall make
available for review by the Depositor, the Underwriter, the Mortgage Loan
Seller, the Rating Agencies, the Controlling Class Representative and, subject
to the
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succeeding paragraph, any Certificateholder, Certificate Owner or Person
identified to the Trustee as a prospective Transferee of a Certificate or an
interest therein, originals and/or copies of the following items (to the extent
such items were prepared by or delivered to the Trustee): (i) the Prospectus,
the Memorandum and any other disclosure document relating to the Certificates,
in the form most recently provided to the Trustee by the Depositor or by any
Person designated by the Depositor; (ii) this Agreement, each Sub-Servicing
Agreement delivered to the Trustee since the Closing Date and any amendments and
exhibits hereto or thereto; (iii) all Trustee Reports and other
Certificateholder Reports delivered to Certificateholders pursuant to Section
4.02(a) since the Closing Date; (iv) all Annual Performance Certifications
delivered by the Master Servicer and the Special Servicer, respectively, to the
Trustee since the Closing Date; (v) all Annual Accountants' Reports caused to be
delivered by the Master Servicer and the Special Servicer, respectively, to the
Trustee since the Closing Date; (vi) the most recent inspection report prepared
by the Master Servicer or the Special Servicer and delivered to the Trustee in
respect of each Mortgaged Property pursuant to Section 3.12(a); (vii) the most
recent quarterly and annual operating statement and rent roll of each related
Mortgaged Property and financial statements of the related Borrower collected by
the Master Servicer or the Special Servicer and delivered to the Trustee
pursuant to Section 3.12(b); (viii) any and all notices and reports delivered to
the Trustee with respect to any Mortgaged Property as to which the environmental
testing contemplated by Section 3.09(c) revealed that neither of the conditions
set forth in clauses (i) and (ii) of the first sentence thereof was satisfied;
(ix) all Unrestricted Servicer Reports and Restricted Servicer Reports delivered
to the Trustee since the Closing Date pursuant to Sections 4.02(b); (x) each of
the Mortgage Files, including any and all modifications, waivers and amendments
of the terms of a Mortgage Loan entered into or consented to by the Master
Servicer or the Special Servicer and delivered to the Trustee pursuant to
Section 3.20; (xi) the most recent Appraisal for each Mortgage Loan and REO
Property that has been delivered to the Trustee (all Appraisals of Mortgaged
Properties and/or REO Properties shall be delivered to the Trustee by the Master
Servicer or Special Servicer, as applicable, promptly following their having
been obtained or formulated); (xii) any Asset Status Reports delivered to the
Trustee pursuant to Section 3.24 since the Closing Date; (xiii) any and all
Officer's Certificates and other evidence delivered to or by the Trustee to
support its, the Master Servicer's, the Special Servicer's or any Fiscal
Agent's, as the case may be, determination that any Advance was (or, if made,
would be) a Nonrecoverable Advance; and (xiv) any other information that may be
necessary to satisfy the requirements of subsection (d)(4)(i) of Rule 144A under
the Securities Act. The Trustee shall provide copies of any and all of the
foregoing items upon request of any of the parties set forth in the previous
sentence; however, except in the case of the Rating Agencies, the Trustee shall
be permitted to require payment of a sum sufficient to cover the reasonable
costs and expenses of providing such copies.
In connection with providing access to or copies of the items
described in the preceding paragraph pursuant to this Section 8.12(b), the
Trustee shall require: (a) in the case of Certificate Owners, a written
confirmation executed by the requesting Person substantially in the form of
Exhibit L-1 hereto (or such other form as may be reasonably acceptable to the
Trustee) generally to the effect that such Person is a beneficial holder of
Book-Entry Certificates and, subject to the last sentence of this paragraph,
will keep such information confidential (except that such Certificate Owner may
provide such information to its auditors, legal counsel and regulators and to
any other Person that holds or is contemplating the purchase of any Certificate
or interest therein (provided that such other Person confirms in writing such
ownership interest or prospective ownership interest and agrees to keep such
information confidential)); and (b) in the case of a prospective purchaser of a
Certificate or an interest therein, confirmation executed by the requesting
Person substantially in the form of Exhibit L-2 hereto (or such other form as
may be reasonably acceptable to the Trustee) generally to the effect that such
Person is a prospective purchaser of a Certificate or an interest therein, is
requesting the information for use in evaluating a possible investment in
Certificates and,
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subject to the last sentence of this paragraph, will otherwise keep such
information confidential. The Holders of the Certificates, by their acceptance
thereof, will be deemed to have agreed, subject to the last sentence of this
paragraph, to keep such information confidential (except that any Holder may
provide any such information obtained by it to its auditors, legal counsel and
regulators and to any other Person that holds or is contemplating the purchase
of any Certificate or interest therein (provided that such other Person confirms
in writing such ownership interest or prospective ownership interest and agrees
to keep such information confidential)). Notwithstanding the foregoing, no
Certificateholder, Certificate Owner or prospective Certificateholder or
Certificate Owner need keep confidential any information received from the
Trustee pursuant to this Section 8.12(b) that has previously been filed with the
Commission, and the Trustee shall not require either of the certifications
contemplated by the second preceding sentence in connection with providing any
information pursuant to this Section 8.12(b) that has previously been filed with
the Commission.
(c) Neither the Trustee nor the Master Servicer shall be
liable for providing or disseminating information in accordance with the terms
of this Agreement.
SECTION 8.13. Appointment of Fiscal Agent.
(a) Insofar as the Trustee would not otherwise satisfy the
rating requirements of Section 8.06, the Trustee may appoint, at the Trustee's
own expense, a Fiscal Agent for purposes of making Advances hereunder that are
otherwise required to be made by the Trustee. Any Fiscal Agent shall at all
times maintain a long-term unsecured debt rating of no less than "___" from
_______ and "__" from _____ (or, in the case of either Rating Agency, such lower
rating as will not result in an Adverse Rating Event with respect to any Class
of Rated Certificates (as confirmed in writing to the Trustee and the Depositor
by such Rating Agency)). Any Person so appointed by the Trustee pursuant to this
Section 8.13(a) shall become the Fiscal Agent on the date as of which the
Trustee and the Depositor have received: (i) if the long-term unsecured debt of
the designated Person is not rated as least "___" from _______ and "__" from
_____, written confirmation from each Rating Agency that the appointment of such
designated Person will not result in an Adverse Rating Event with respect to any
Class of Rated Certificates; (ii) a written agreement whereby the designated
Person is appointed as, and agrees to assume and perform the duties of, Fiscal
Agent hereunder, executed by such designated Person and the Trustee (such
agreement, the "Fiscal Agent Agreement"); and (iii) an Opinion of Counsel (which
shall be paid for by the designated Person or the Trustee) substantially to the
effect that (A) the appointment of the designated Person to serve as Fiscal
Agent is in compliance with this Section 8.13, (B) the designated Person is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (C) the related Fiscal Agent Agreement has
been duly authorized, executed and delivered by the designated Person and (D)
upon execution and delivery of the related Fiscal Agent Agreement, the
designated Person shall be bound by the terms of this Agreement and, subject to
customary bankruptcy and insolvency exceptions, that this Agreement shall be
enforceable against the designated Person in accordance with its terms. Any
Person that acts as Fiscal Agent shall, for so long as it so acts, be deemed a
party to this Agreement for all purposes hereof. Pursuant to the related Fiscal
Agent Agreement, each Fiscal Agent, if any, shall make representations and
warranties with respect to itself that are comparable to those made by the
Trustee pursuant to Section 2.07. Notwithstanding anything contained in this
Agreement to the contrary, any Fiscal Agent shall be entitled to all limitations
on liability, rights of reimbursement and indemnities to which the Trustee is
entitled hereunder (including pursuant to Sections 8.05(b) and 8.05(c)) as if it
were the Trustee.
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(b) To the extent that the Trustee is required, pursuant to
the terms of this Agreement, to make any Advance, whether as successor Master
Servicer or otherwise, and has failed to do so in accordance with the terms
hereof, the Fiscal Agent (if any) shall make such Advance when and as required
by the terms of this Agreement on behalf the Trustee as if such Fiscal Agent
were the Trustee hereunder. To the extent that the Fiscal Agent (if any) makes
an Advance pursuant to this Section 8.13 or otherwise pursuant to this
Agreement, the obligations of the Trustee under this Agreement in respect of
such Advance shall be satisfied.
(c) Notwithstanding anything contained in this Agreement to
the contrary, any Fiscal Agent shall be entitled to all limitations on
liability, rights of reimbursement and indemnities to which the Trustee is
entitled hereunder (including pursuant to Sections 8.05(b) and 8.05(c)) as if it
were the Trustee, except that all fees and expenses of any Fiscal Agent (other
than interest owed to such Fiscal Agent in respect of unreimbursed Advances)
incurred by such Fiscal Agent in connection with the transactions contemplated
by this Agreement shall be borne by the Trustee, and neither the Trustee nor
such Fiscal Agent shall be entitled to reimbursement therefor from any of the
Trust, the Depositor, the Master Servicer or the Special Servicer.
(d) The obligations of any Fiscal Agent set forth in this
Section 8.13 or otherwise pursuant to this Agreement shall exist only for so
long as the Trustee that appointed it shall act as Trustee hereunder. Any Fiscal
Agent may resign or be removed by the Trustee only if and when the existence of
such Fiscal Agent is no longer necessary for such Trustee to satisfy the
eligibility requirements of Section 8.06; provided that any Fiscal Agent shall
be deemed to have resigned at such time as the Trustee that appointed it resigns
or is removed as Trustee hereunder (in which case the responsibility for
appointing a successor Fiscal Agent in accordance with this Section 8.13(a)
shall belong to the successor Trustee insofar as such appointment is necessary
for such successor Trustee to satisfy the eligibility requirements of Section
8.06).
(e) The Trustee shall promptly notify the other parties hereto
and the Certificateholders in writing of the appointment, resignation or removal
of any Fiscal Agent.
SECTION 8.14. Advance Security Arrangement.
Insofar as the Trustee would not otherwise satisfy the rating
requirements of Section 8.06, the Trustee may, at is own expense with the
approval of the Depositor, arrange for the pledging of collateral, the
establishment of a reserve fund or the delivery of a letter of credit, surety
bond or other comparable instrument or for any other security or financial
arrangement (any or all of the foregoing, individually and collectively, an
"Advance Security Arrangement") for purposes of supporting its back-up advancing
obligations hereunder; provided that any Advance Security Arrangement shall be
in such form and amount, and shall be maintained in such manner, as (i) would
permit the Trustee to act in such capacity without an Adverse Rating Event in
respect of any Class of Rated Certificates (as confirmed in writing to the
Trustee and the Depositor by each Rating Agency) and (ii) would not result in an
Adverse REMIC Event (as evidenced by an Opinion of Counsel addressed and
delivered to the Trustee, the Depositor and the Tax Administrator). The Trustee
may terminate any Advance Security Arrangement established by it only if and
when (i) the existence of such Advance Security Arrangement is no longer
necessary for the Trustee to satisfy the eligibility requirements of Section
8.06 or (ii) when such Trustee resigns or is removed as Trustee hereunder.
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SECTION 8.15. Filings with the Securities and Exchange
Commission.
(a) With respect to the Trust's fiscal year ______ (and, if as
of the beginning of any other fiscal year for the Trust, the Registered
Certificates are held (directly or, in the case of Registered Certificates held
in book-entry form, through the Depository) by at least 300 Holders and/or
Depository Participants having accounts with the Depository), the Trustee shall:
(i) during such fiscal year, in accordance with the Exchange
Act, the rules and regulations promulgated thereunder and applicable
"no-action letters" issued by the Commission, prepare for filing,
execute and properly file with the Commission monthly, with respect to
the Trust, a Current Report on Form 8-K with copies of the Trustee
Reports and the Unrestricted Servicer Reports attached as exhibits;
(ii) during such fiscal year, (A) monitor for and promptly
notify the Depositor of the occurrence or existence of any of the
matters identified in Section 11.09(a) and/or Section 8.15(b) (in each
case to the extent that a Responsible Officer of the Trustee has actual
knowledge thereof), (B) cooperate with the Depositor in obtaining all
necessary information in order to enable the Depositor to prepare a
Current Report on Form 8-K reporting any such matter in accordance with
the Exchange Act, the rules and regulations promulgated thereunder and
applicable "no-action letters" issued by the Commission, and (C)
execute and promptly file with the Commission any such Current Report
on Form 8-K prepared by or on behalf of the Depositor and delivered to
the Trustee; and
(iii) within 90 days following the end of such fiscal year,
prepare, execute and properly file with the Commission, with respect to
the Trust, an Annual Report on Form 10-K which complies in all material
respects with the requirements of the Exchange Act, the rules and
regulations promulgated thereunder and applicable "no-action letters"
issued by the Commission;
provided that (x) the Trustee shall not have any responsibility to file any
items (other than those generated by it) that have not been received in a format
suitable for electronic filing via the EDGAR system and shall not have any
responsibility to convert any such items (other than those generated by it) to
such format and (y) the Depositor shall be responsible for preparing, executing
and filing (via the EDGAR system within 15 days following the Closing Date) a
Current Report on Form 8-K reporting the establishment of the Trust and whereby
this Agreement is filed as an exhibit. Each of the other parties to this
Agreement shall deliver to the Trustee in the format required for electronic
filing via the EDGAR system any and all items (including, in the case of the
Master Servicer and the Special Servicer, Unrestricted Servicer Reports)
contemplated to be filed with the Commission pursuant to this Section 8.15(a).
(b) At all times during the Trust's fiscal year ____ (and, if
as of the beginning of any other fiscal year for the Trust, the Registered
Certificates are held (directly or, in the case of Registered Certificates held
in book-entry form, through the Depository) by at least 300 Holders and/or
Depository Participants having accounts with the Depository, at all times during
such other fiscal year), the Trustee shall monitor for and promptly notify the
Depositor of the occurrence or existence of any of the following matters of
which a Responsible Officer of the Trustee has actual knowledge:
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(i) any failure of the Trustee to make any monthly
distributions to the Holders of any Class of Certificates, which
failure is not otherwise reflected in the Certificateholder Reports
filed with the Commission or has not otherwise been reported to the
Depositor pursuant to any other Section of this Agreement;
(ii) any acquisition or disposition by the Trust of a Mortgage
Loan or an REO Property, which acquisition or disposition has not
otherwise been reflected in the Certificateholder Reports filed with
the Commission or has not otherwise been reported to the Depositor
pursuant to any other Section of this Agreement;
(iii) any other acquisition or disposition by the Trust of a
significant amount of assets (other than Permitted Investments,
Mortgage Loans and REO Properties), other than in the normal course of
business;
(iv) any change in the fiscal year of the Trust;
(v) any material legal proceedings, other than ordinary
routine litigation incidental to the business of the Trust, to which
the Trust (or any party to this Agreement on behalf of the Trust) is a
party or of which any property included in the Trust Fund is subject,
or any threat by a governmental authority to bring any such legal
proceedings;
(vi) any event of bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings in
respect of or pertaining to the Trust or any party to this Agreement,
or any actions by or on behalf of the Trust or any party to this
Agreement indicating its bankruptcy, insolvency or inability to pay its
obligations; and
(vii) any change in the rating or ratings assigned to any
Class of Certificates not otherwise reflected in the Certificateholder
Reports filed with the Commission;
provided that (x) the actual knowledge of a Responsible Officer of the Trustee
of any material legal proceedings of which property included in the Trust Fund
is subject or of any material legal proceedings threatened by a governmental
authority is limited to circumstances where it would be reasonable for the
Trustee to identify such property as an asset of, or as securing an asset of,
the Trust or such threatened proceedings as concerning the Trust and (y) no
Responsible Officer of the Trustee shall be deemed to have actual knowledge of
the matters described in clauses (vi) and (vii) of this Section 8.15(b) unless
such Responsible Officer was notified in writing.
(c) If as of the beginning of any fiscal year for the Trust
(other than fiscal year ____), the Registered Certificates are held (directly
or, in the case of Registered Certificates held in book-entry form, through the
Depository) by less than 300 Holders and/or Depository Participants having
accounts with the Depository, the Trustee shall, in accordance with the Exchange
Act and the rules and regulations promulgated thereunder, timely file a Form 15
with respect to the Trust.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of
All Mortgage Loans.
Subject to Section 9.02, the Trust and the respective
obligations and responsibilities under this Agreement of the parties hereto
(other than the obligations of the Trustee to provide for and make payments to
Certificateholders as hereafter set forth) shall terminate upon payment (or
provision for payment) to the Certificateholders of all amounts held by or on
behalf of the Trustee and required hereunder to be so paid on the Distribution
Date following the earlier to occur of: (i) the purchase by the Master Servicer,
the Special Servicer or any single Controlling Class Certificateholder or group
of Controlling Class Certificateholders of all Mortgage Loans and each REO
Property remaining in the Trust Fund at a price (the "Termination Price") equal
to (A) the aggregate Purchase Price of all the Mortgage Loans remaining in the
Trust Fund (exclusive of any REO Mortgage Loan(s)), plus (B) the appraised value
of each REO Property, if any, included in the Trust Fund, such appraisal to be
conducted by a Qualified Appraiser selected by the Special Servicer and approved
by the Trustee and the Master Servicer, minus (C) if the purchaser is the Master
Servicer or the Special Servicer, the aggregate amount of unreimbursed Advances
made by such Person, together with any unpaid Advance Interest in respect of
such unreimbursed Advances and any unpaid servicing compensation payable to such
Person (which items shall be deemed to have been paid or reimbursed to the
Master Servicer or the Special Servicer, as the case may be, in connection with
such purchase); provided however, that any such purchase shall be subject to the
rights of any affected Designated Sub-Servicer to continue to sub-service the
Mortgage Loans covered by the applicable Designated Sub-Servicer Agreement, and
(ii) the final payment or other liquidation (or any advance with respect
thereto) of the last Mortgage Loan or REO Property remaining in the Trust Fund;
provided, however, that in no event shall the Trust continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Joseph P. Kennedy, the late ambassador of the United States to the Court of St.
James, living on the date hereof.
The Master Servicer, the Special Servicer or any single
Controlling Class Certificateholder or group of Controlling Class
Certificateholders, in that order of preference, may at its option elect to
purchase all the Mortgage Loans and each REO Property remaining in the Trust
Fund as contemplated by clause (i) of the preceding paragraph by giving written
notice to the other parties hereto (and, in the case of an election by the
Master Servicer or Special Servicer, to the Holders of the Controlling Class) no
later than 60 days prior to the anticipated date of purchase; provided, however,
that the aggregate Stated Principal Balance of the Mortgage Pool at the time of
such election is less than 1.0% of the Initial Pool Balance; and provided,
further, that within 30 days after written notice of such election is so given,
no Person with a higher right of priority to make such an election does so. No
Prepayment Premiums or Yield Maintenance Charges will be payable in connection
with such a purchase; and provided, further, that if more than one Controlling
Class Certificateholder or group of Controlling Class Certificateholders desire
to purchase all of the Mortgage Loans and any REO Properties, preference shall
be given to the Controlling Class Certificateholder or group of Controlling
Class Certificateholders with the largest Percentage Interest in the Controlling
Class. If the Trust is to be terminated in connection with the purchase of all
the Mortgage Loans and each REO Property remaining in the Trust Fund by the
Master Servicer, the Special Servicer or any Controlling Class
Certificateholder(s), such Person(s) shall deliver to the Master Servicer for
deposit (or, if the Master Servicer is the purchaser, it shall deposit) in the
Collection Account (after the Determination Date, and prior to the Master
Servicer Remittance Date, relating to the anticipated Final Distribution Date)
an amount in
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immediately available funds equal to the Termination Price and shall reimburse
all of the parties hereto (other than itself, if applicable) for all reasonable
out-of-pocket costs and expenses incurred by such parties in connection with
such purchase. On the Master Servicer Remittance Date for the Final Distribution
Date, the Master Servicer shall transfer to the Distribution Account all amounts
required to be transferred thereto on such Master Servicer Remittance Date from
the Collection Account pursuant to the first paragraph of Section 3.04(b),
together with any other amounts on deposit in the Collection Account that would
otherwise be held for future distribution. Upon confirmation that the deposit of
the Termination Price has been made to the Collection Account and the
reimbursement contemplated by the second preceding sentence has been made to the
parties hereto, the Trustee shall release or cause to be released to the
purchasing party (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 purchasing party as shall be necessary to effectuate
transfer of the Mortgage Loans and REO Properties to the purchasing party (or
its designee).
Notice of any termination shall be given promptly by the
Trustee by letter to Certificateholders mailed (x) if such notice is given in
connection with the purchase of all the Mortgage Loans and each REO Property
remaining in the Trust Fund by the Master Servicer, the Special Servicer or any
Controlling Class Certificateholder(s), not earlier than the 15th day and not
later than the 25th day of the month next preceding the month of the final
distribution on the Certificates and (y) otherwise during the month of such
final distribution on or before the Master Servicer Remittance Date in such
month, in any event specifying (i) the Distribution Date upon which the Trust
Fund will terminate and final payment on the Certificates will be made, (ii) the
amount of any such final payment in respect of each Class of Certificates and
(iii) that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein designated. The
Trustee shall give such notice to the other parties hereto at the time such
notice is given to Certificateholders.
Upon presentation and surrender of the Certificates by the
Certificateholders on the Final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates such
Certificateholder's Percentage Interest of that portion of the amounts on
deposit in the Distribution Account that is allocable to payments on the
relevant Class in accordance with Sections 4.01(a), 4.01(b) and/or 4.01(c).
Any funds not distributed to any Holder or Holders of
Certificates of any Class on the Final Distribution Date because of the failure
of such Holder or Holders to tender their Certificates shall, on such date, be
set aside and held uninvested in trust and credited to the account or accounts
of the appropriate non-tendering Holder or Holders. If any Certificates as to
which notice has been given pursuant to this Section 9.01 shall not have been
surrendered for cancellation within six months after the time specified in such
notice, the Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee, directly or through an agent, shall take such
reasonable steps to contact the remaining non-tendering Certificateholders
concerning the surrender of their Certificates as it shall deem appropriate. The
costs and expenses of holding such funds in trust and of contacting such
Certificateholders following the first anniversary of the delivery of such
second notice to the non-tendering Certificateholders shall be paid out of such
funds. No interest shall accrue or be payable to any former Holder on any amount
held in trust hereunder. If by the second anniversary of the delivery of such
second notice, all of the Certificates shall not have been surrendered for
cancellation, then, subject to applicable escheat laws, the Trustee shall
distribute to the Class R-III Certificateholders all unclaimed funds and other
assets which remain subject hereto.
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SECTION 9.02. Additional Termination Requirements.
(a) If the Master Servicer, the Special Servicer or a
Controlling Class Certificateholder purchases all the Mortgage Loans and each
REO Property remaining in the Trust Fund as provided in Section 9.01, the Trust
and each REMIC Pool shall be terminated in accordance with the following
additional requirements, unless the purchasing party obtains at its own expense
and delivers to the Trustee and the Tax Administrator an Opinion of Counsel,
addressed to the Trustee and the Tax Administrator, to the effect that the
failure of the Trust to comply with the requirements of this Section 9.02 will
not result in an Adverse REMIC Event with respect to any REMIC Pool:
(i) the Tax Administrator shall specify the first day in 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 and shall satisfy all requirements of a qualified liquidation
under Section 860F of the Code and any regulations thereunder (as
evidenced by an Opinion of Counsel to such effect delivered on behalf
and at the expense of the purchasing party);
(ii) during such 90-day liquidation period and at or prior to
the time of making the final payment on the Certificates, the Trustee
shall sell all the Mortgage Loans and each REO Property to the Master
Servicer, the Special Servicer or the applicable Controlling Class
Certificateholder(s), as the case may be, for cash in accordance with
Section 9.01; and
(iii) immediately following the making of the final payment on
the Certificates, the Trustee shall distribute or credit, or cause to
be distributed or credited, to the Holders of the applicable Class of
Residual Interest Certificates all remaining cash on hand (other than
cash retained to meet claims), and each REMIC Pool shall terminate at
that time.
(b) By their acceptance of Certificates, the Holders hereby
authorize the Tax Administrator to prepare and adopt, on behalf of the Trust, a
plan of complete liquidation of each REMIC Pool in accordance with the terms and
conditions of this Agreement, which authorization shall be binding upon all
successor Certificateholders.
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ARTICLE X
ADDITIONAL TAX PROVISIONS
SECTION 10.01. Tax Administration.
(a) The Tax Administrator shall elect to treat each REMIC Pool
as a REMIC under the Code and, if necessary, under applicable state law. Each
such election will be made on Form 1066 or other appropriate federal tax or
information return or any appropriate state Tax Returns for the taxable year
ending on the last day of the calendar year in which the Certificates are
issued.
(b) The applicable Plurality Residual Interest
Certificateholder is hereby designated as the Tax Matters Person of each REMIC
Pool and, in such capacity, shall be responsible to act on behalf of such REMIC
Pool in relation to any tax matter or controversy, to represent such REMIC Pool
in any administrative or judicial proceeding relating to an examination or audit
by any governmental taxing authority, to request an administrative adjustment as
to any taxable year of such REMIC Pool, to enter into settlement agreements with
any governmental taxing agency with respect to such REMIC Pool, to extend any
statute of limitations relating to any tax item of such REMIC Pool and otherwise
to act on behalf of such REMIC Pool in relation to any tax matter or controversy
involving such REMIC Pool; provided that the Tax Administrator is hereby
irrevocably appointed and agrees to act (in consultation with the Tax Matters
Person for each REMIC Pool) as agent and attorney-in-fact for the Tax Matters
Person for each REMIC Pool in the performance of its duties as such. The legal
expenses and costs of any action described in this Section 10.01(b) and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust payable out of amounts on deposit in the Distribution Account as provided
by Section 3.05(b) unless such legal expenses and costs are incurred by reason
of a Tax Matters Person's or the Tax Administrator's misfeasance, bad faith or
negligence in the performance of, or such Person's reckless disregard of, its
obligations or are expressly provided by this Agreement to be borne by any party
hereto.
(c) The Tax Administrator shall prepare or cause to be
prepared and file, and the Trustee shall sign, all of the Tax Returns in respect
of each REMIC Pool (other than Tax Returns required to be filed by the Master
Servicer and/or the Special Servicer pursuant to Section 3.09(g)) and all of the
applicable income tax and other information returns for each Grantor Trust Pool.
The expenses of preparing and filing such returns shall be borne by the Tax
Administrator without any right of reimbursement therefor.
(d) The Tax Administrator shall perform on behalf of each
REMIC Pool all reporting and other tax compliance duties that are the
responsibility of such REMIC Pool under the Code, the REMIC Provisions or other
compliance guidance issued by the IRS or any state or local taxing authority.
Included among such duties, the Tax Administrator shall provide: (i) to any
Transferor of a Residual Interest Certificate, such information as is necessary
for the application of any tax relating to the transfer of a Residual Interest
Certificate to any Person who is not a Permitted Transferee; (ii) to the
Certificateholders, such information or reports as are required by the Code or
the REMIC Provisions, including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption as
required); and (iii) to the IRS, the name, title, address and telephone number
of the Person who will serve as the representative of each REMIC Pool.
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(e) The Tax Administrator shall take such action and shall
cause each REMIC Pool to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the other
parties hereto shall assist it, to the extent reasonably requested by the Tax
Administrator) to the extent that the Tax Administrator has actual knowledge
that any particular action is required; provided that the Tax Administrator
shall be deemed to have knowledge of relevant tax laws. The Tax Administrator
shall not knowingly take or fail to take any action, or cause any REMIC Pool to
take or fail to take any action, that under the REMIC Provisions, if taken or
not taken, as the case may be, could result in an Adverse REMIC Event in respect
of any REMIC Pool, unless the Tax Administrator has received an Opinion of
Counsel to the effect that the contemplated action or non-action, as the case
may be, will not result in an Adverse REMIC Event. None of the other parties
hereto shall take or fail to take any action (whether or not authorized
hereunder) as to which the Tax Administrator has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action. In addition, prior to taking any action
with respect to any REMIC Pool or the assets thereof, or causing any REMIC Pool
to take any action, which is not contemplated by the terms of this Agreement,
each of the other parties hereto will consult with the Tax Administrator, in
writing, with respect to whether such action could cause an Adverse REMIC Event
to occur, and no such other party shall take any such action or cause any REMIC
Pool to take any such action as to which the Tax Administrator has advised it in
writing that an Adverse REMIC Event could occur. The Tax Administrator may
consult with counsel to make such written advice, and the cost of same shall be
borne by the party seeking to take the action not permitted by this Agreement.
(f) If any tax is imposed on any REMIC Pool, including
"prohibited transactions" taxes as defined in Section 860F(a)(2) of the Code,
any tax on "net income from foreclosure property" as defined in Section 860G(c)
of the Code, any taxes on contributions to any REMIC Pool after the Startup Day
pursuant to Section 860G(d) of the Code, and any other tax imposed by the Code
or any applicable provisions of state or local tax laws (other than any tax
permitted to be incurred by the Special Servicer on behalf of the Trust pursuant
to Section 3.17(a)), such tax, together with all incidental costs and expenses
(including penalties and reasonable attorneys' fees), shall be charged to and
paid by: (i) the Tax Administrator, if such tax arises out of or results from a
breach of any of its obligations under this Article X; (ii) the Trustee, if such
tax arises out of or results from a breach of any of its obligations under
Article IV, Article VIII or this Article X; (iii) any Fiscal Agent, if such tax
arises out of or results from a breach of any of its obligations under Article
IV or this Article X; (iv) the Master Servicer, if such tax arises out of or
results from a breach by the Master Servicer of any of its obligations under
Article III or this Article X; (v) the Special Servicer, if such tax arises out
of or results from a breach by the Special Servicer of any of its obligations
under Article III or this Article X; or (vi) the Trust, out of the Trust Fund
(exclusive of the Grantor Trust Pools), in all other instances. If any tax is
imposed on either Grantor Trust Pool, such tax, together with all incidental
costs and expenses (including, without limitation, penalties and reasonable
attorneys' fees), shall be charged to and paid by: (i) the Tax Administrator, if
such tax arises out of or results from a breach by the Tax Administrator of any
of its obligations under this Article X; (ii) the Special Servicer, if such tax
arises out of or results from a breach by the Special Servicer of any of its
obligations under Article III or this Article X; (iii) the Master Servicer, if
such tax arises out of or results from a breach by the Master Servicer of any of
its obligations under Article III or this Article X; (iv) the Trustee, if such
tax arises out of or results from a breach by the Trustee of any of its
obligations under Article IV, Article VIII or this Article X; or (v) the Trust,
out of the portion of the Trust Fund constituting such Grantor Trust Pool, in
all other instances. Any tax permitted to be incurred by the Special Servicer
pursuant to Section 3.17(a) shall be charged to and paid by the Trust. Any such
amounts payable by the Trust in respect of taxes shall be paid by the Trustee at
the direction of the Tax Administrator out of amounts on deposit in the
Distribution Account.
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(g) The Tax Administrator and, to the extent that records are
maintained thereby in the normal course of its business, each of the other
parties hereto shall, for federal income tax purposes, maintain books and
records with respect to each REMIC Pool and each Grantor Trust Pool on a
calendar year and an accrual basis.
(h) Following the Startup Day for each REMIC Pool, the Trustee
shall not (except as contemplated by Section 2.03) accept any contributions of
assets to any REMIC Pool unless it shall have received an Opinion of Counsel (at
the expense of the party seeking to cause such contribution) to the effect that
the inclusion of such assets in such REMIC Pool will not result in an Adverse
REMIC Event in respect of such REMIC Pool.
(i) None of the Tax Administrator, the Master Servicer, the
Special Servicer, the Trustee or any Fiscal Agent shall consent to or, to the
extent it is within the control of such Person, permit: (i) the sale or
disposition of any Mortgage Loan (except in connection with (A) a breach of any
representation or warranty regarding any Mortgage Loan set forth in or made
pursuant to the Mortgage Loan Purchase and Sale Agreement or as otherwise
contemplated by Section 2.02(e), (B) the foreclosure, default or reasonably
foreseeable material default of a Mortgage Loan, including the sale or other
disposition of a Mortgaged Property acquired by foreclosure, deed in lieu of
foreclosure or otherwise, (C) the bankruptcy of any REMIC Pool, or (D) the
termination of the Trust pursuant to Article IX of this Agreement); (ii) the
sale or disposition of any investments in the Collection Account or the REO
Account for gain; or (iii) the acquisition of any assets for the Trust (other
than a Mortgaged Property acquired through foreclosure, deed in lieu of
foreclosure or otherwise in respect of a defaulted Mortgage Loan, other than a
Replacement Mortgage Loan substituted for a Deleted Mortgage Loan and other than
Permitted Investments acquired in connection with the investment of funds in the
Collection Account or the REO Account); in any event unless it has received an
Opinion of Counsel (at the expense of the party seeking to cause such sale,
disposition, or acquisition) to the effect that such sale, disposition, or
acquisition will not result in an Adverse REMIC Event in respect of any REMIC
Pool.
(j) Except as otherwise permitted by Section 3.17(a), none of
the Tax Administrator, the Master Servicer, the Special Servicer or the Trustee
shall enter into any arrangement by which any REMIC Pool will receive a fee or
other compensation for services or, to the extent it is within the control of
such Person, permit any REMIC Pool to receive any income from assets other than
"qualified mortgages" as defined in Section 860G(a)(3) of the Code or "permitted
investments" as defined in Section 860G(a)(5) of the Code. At all times as may
be required by the Code, each of the respective parties hereto (to the extent it
is within its control) shall ensure that substantially all of the assets of each
REMIC Pool will consist of "qualified mortgages" as defined in Section
860G(a)(3) of the Code and "permitted investments" as defined in Section
860G(a)(5) of the Code.
(k) Within 30 days after the related Startup Day, the Tax
Administrator shall prepare and file with the IRS, with respect to each REMIC
Pool, Form 8811 "Information Return for Real Estate Mortgage Investment Conduits
(REMICs) and Issuers of Collateralized Debt Obligations".
(l) On or before April 15 of each calendar year, commencing
April 15, ____, unless the Tax Administrator and the Trustee are the same
Person, the Tax Administrator shall deliver to the Trustee an Officer's
Certificate from a Responsible Officer of the Tax Administrator confirming the
Tax Administrator's compliance with its obligations under this Agreement during
the prior calendar year.
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(m) The parties intend that the portion of the Trust Fund
consisting of Additional Interest on the ARD Loans and the Class E Sub-Account
and shall constitute, and that the affairs of such portion of the Trust Fund
shall be conducted so as to qualify as, a "grantor trust" under the Code, and
the provisions hereof shall be interpreted consistently with this intention. In
addition, the parties intend that the portion of the Trust Fund consisting of
the REMIC I Residual Interest shall constitute, and that the affairs of such
portion of the Trust Fund shall be conducted so as to qualify as, a "Grantor
Trust" under the Code, and the provisions hereof shall be interpreted
consistently with this intention. The Tax Administrator shall also perform on
behalf of each Grantor Trust Pool all reporting and other tax compliance duties
that are the responsibility of such Grantor Trust under the Code or any
compliance guidance issued by the IRS or any state or local taxing authorities.
The expenses of preparing and filing such returns shall be borne by the Tax
Administrator.
SECTION 10.02. Depositor, Master Servicer, Special Servicer,
Trustee and Fiscal Agent to Cooperate with Tax
Administrator.
(a) The Depositor shall provide or cause to be provided to the
Tax Administrator, within 10 days after the Closing Date, all information or
data that the Tax Administrator reasonably determines to be relevant for tax
purposes as to the valuations and issue prices of the Certificates, including
the price, yield, prepayment assumption and projected cash flow of the
Certificates.
(b) Each of the Master Servicer, the Special Servicer, the
Trustee and any Fiscal Agent shall furnish such reports, certifications and
information in its possession, and access to such books and records maintained
thereby, as may relate to the Certificates or the Trust Fund and as shall be
reasonably requested by the Tax Administrator in order to enable it to perform
its duties hereunder.
SECTION 10.03. Appointment of Tax Administrator.
The Trustee may, at its own expense, appoint any Person with
appropriate tax-related experience to act as Tax Administrator hereunder;
provided that, in the absence of any other Person appointed in accordance
herewith acting as Tax Administrator, the Trustee agrees to act in such capacity
in accordance with the terms hereof. The appointment of a Tax Administrator
shall not relieve the Trustee from any of its obligations hereunder, and the
Trustee shall remain responsible for all acts and omissions of the Tax
Administrator. The Trustee shall cause any such Tax Administrator appointed by
it to execute and deliver to the Trustee an instrument in which such Tax
Administrator shall agree to act in such capacity in accordance with the
obligations and responsibilities provided for herein. The Tax Administrator
shall be subject to the same standards of care, limitations on liability and
rights to indemnity as the Trustee, and the provisions of Sections 8.01, 8.02,
8.03, 8.04, 8.05(b), 8.05(c) and 8.05(e) shall apply to the Tax Administrator to
the same extent that they apply to the Trustee. Any Tax Administrator appointed
in accordance with this Section 10.03 may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee, the Master
Servicer, the Special Servicer and the Depositor. The Trustee may at any time
terminate the agency of any Tax Administrator appointed in accordance with this
Section 10.03 by giving written notice of termination to such Tax Administrator,
the Master Servicer, and the Depositor.
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<PAGE>
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
(a) This Agreement may be amended from time to time by the
mutual agreement of the parties hereto, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct, modify or
supplement any provision herein which may be inconsistent with any other
provision herein or to correct any error, (iii) to add any other provisions with
respect to matters or questions arising hereunder which shall not be
inconsistent with the provisions hereof, (iv) to relax or eliminate any
requirement hereunder imposed by (A) the REMIC Provisions (if the REMIC
Provisions are amended or clarified such that any such requirement may be
relaxed or eliminated) or (B) the Securities Act or the rules thereunder (if the
Securities Act or such rules are amended or clarified such that any such
requirement may be relaxed or eliminated), (v) as evidenced by an Opinion of
Counsel delivered to the Trustee and the Tax Administrator, either (X) to comply
with any requirements imposed by the Code or any successor or amendatory statute
or any temporary or final regulation, revenue ruling, revenue procedure or other
written official announcement or interpretation relating to federal income tax
laws or any such proposed action which, if made effective, would apply
retroactively to any REMIC Pool or either Grantor Trust Pool at least from the
effective date of such amendment, or (Y) to avoid the occurrence of a prohibited
transaction or to reduce the incidence of any tax that would arise from any
actions taken with respect to the operation of any REMIC Pool or either Grantor
Trust Pool, (vi) as provided in Section 5.02(d)(iv), to modify, add to or
eliminate any of the provisions of Section 5.02(d)(i), (ii) or (iii); or (vii)
for any other purpose; provided that such amendment (other than any amendment
for any of the specific purposes described in clauses (v) and (vi) above) shall
not adversely affect in any material respect the interests of any
Certificateholder or Designated Sub-Servicer, as evidenced by an Opinion of
Counsel obtained by or delivered to the Trustee to such effect; and provided,
further, that any such amendment covered solely by clause (vii) above shall not
(as confirmed in writing to the Trustee by each Rating Agency) result in an
Adverse Rating Event with respect to any Class of Rated Certificates.
(b) This Agreement may also be amended from time to time by
the mutual agreement of the parties hereto, with the consent of the Holders of
Certificates entitled to not less than 66 2/3% of the Voting Rights allocated to
all of the affected Classes, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments received or advanced on Mortgage Loans and/or REO
Properties which are required to be distributed on any Certificate without the
consent of the Holder of such Certificate, (ii) adversely affect in any material
respect the interests of the Holders of any Class of Certificates in a manner
other than as described in clause (i) above without the consent of the Holders
of all Certificates of such Class, (iii) modify the provisions of this Section
11.01 without the consent of the Holders of all Certificates then outstanding or
(iv) adversely affect in any material respect the interests of any Designated
Sub-Servicer as provided herein without the consent of such Designated
Sub-Servicer. Notwithstanding any other provision of this Agreement, for
purposes of the giving or withholding of consents pursuant to this Section
11.01, Certificates registered in the name of the Depositor or any Affiliate of
the Depositor shall be entitled to the same Voting Rights with respect to the
matters described above as they would if registered in the name of any other
Person.
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<PAGE>
(c) Notwithstanding any contrary provision of this Agreement,
neither the Trustee nor the Tax Administrator shall consent to any amendment to
this Agreement unless it shall first have obtained or been furnished with an
Opinion of Counsel to the effect that such amendment or the exercise of any
power granted to any party hereto in accordance with such amendment will not
result in an Adverse REMIC Event with respect to any REMIC Pool or an Adverse
Grantor Trust Event with respect to either Grantor Trust Pool.
(d) Promptly after the execution and delivery of any amendment
by all parties thereto, the Trustee shall send a copy thereof to each
Certificateholder and to each Rating Agency.
(e) It shall not be necessary for the consent of
Certificateholders under this Section 11.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization, execution and delivery thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
(f) The Trustee may but shall not be obligated to enter into
any amendment pursuant to this Section 11.01 that affects its rights, duties and
immunities under this Agreement or otherwise.
(g) The cost of any Opinion of Counsel to be delivered
pursuant to Section 11.01(a) or (c) shall be borne by the Person seeking the
related amendment, except that if the Trustee requests any amendment of this
Agreement that it reasonably believes protects or is in furtherance of the
rights and interests of Certificateholders, the cost of any Opinion of Counsel
required in connection therewith pursuant to Section 11.01(a) or (c) shall be
payable out of the Distribution Account.
SECTION 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement
is subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Trust (payable out of the
Collection Account), but only upon written direction of the Depositor
accompanied by an Opinion of Counsel (the cost of which may be paid out of the
Collection Account) to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, 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, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
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<PAGE>
(b) No Certificateholder shall have any right to vote (except
as expressly provided for herein) or in any manner otherwise control the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third party by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement or any Mortgage
Loan, unless, with respect to any suit, action or proceeding upon or under or
with respect to this Agreement, such Holder previously shall have given to the
Trustee a written notice of default hereunder, and of the continuance thereof,
as hereinbefore provided, and unless also (except in the case of a default by
the Trustee) the Holders of Certificates entitled to at least 25% of the Voting
Rights shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding. It is understood and intended, and expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates shall have any right in any manner
whatsoever by virtue of any provision of this Agreement to affect, disturb or
prejudice the rights of any other Holders of Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder (which priority
or preference is not otherwise provided for herein), or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 11.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 11.04. Governing Law.
This Agreement and the Certificates shall be construed in
accordance with the substantive laws of the State of New York applicable to
agreements made and to be performed entirely in said State, and the obligations,
rights and remedies of the parties hereunder shall be determined in accordance
with such laws. The parties hereto intend that the provisions of Section 5-1401
of the New York General Obligations Law shall apply to this Agreement.
SECTION 11.05. Notices.
Any communications provided for or permitted hereunder shall
be in writing (including by telecopy) and, unless otherwise expressly provided
herein, shall be deemed to have been duly given when delivered to or, in the
case of telecopy notice, when received: (i) in the case of the Depositor,
_____________________________________________, telecopy number: (___) ___-____;
(ii) in the case of the Master Servicer,
________________________________________________, telecopy number (___)
___-____; (iii) in the case of the Special Servicer,
____________________________________________, telecopy number (___) ___-____;
(iv) in the case of the Trustee, _______________________________, telecopy
number: (___) ___-____; (v) in the case of the Rating Agencies, (A)
________________________, telecopy number; and (B) in the case of
__________________; (vi) in the case of _____________________; and (vii) in the
case of ______________________________; or as to each such Person such other
address
-178-
<PAGE>
and/or telecopy number as may hereafter be furnished by such Person to the
parties hereto in writing. Any communication required or permitted to be
delivered to a Certificateholder shall be deemed to have been duly given when
mailed first class, postage prepaid, to the address of such Holder as shown in
the Certificate Register.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenant(s), agreement(s), provision(s) or term(s) 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 11.07. Successors and Assigns; Beneficiaries.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto, their respective successors and
assigns and, as third party beneficiaries (with all right to enforce the
obligations hereunder intended for their benefit as if a party hereto), the
Underwriter and the non-parties referred to in Sections 6.03, 8.05 and 3.22(g),
and all such provisions shall inure to the benefit of the Certificateholders. No
other person, including any Borrower, shall be entitled to any benefit or
equitable right, remedy or claim under this Agreement.
SECTION 11.08. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
SECTION 11.09. Notices to and from the Rating Agencies and the
Depositor.
(a) The Trustee shall promptly provide notice to each Rating
Agency and the Depositor with respect to each of the following of which a
Responsible Officer of the Trustee has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default that has not been
cured;
(iii) the resignation, termination, merger or consolidation of
the Master Servicer, the Special Servicer or the Tax Administrator and
the appointment of a successor;
(iv) the appointment, resignation or removal of a Fiscal
Agent;
(v) any change in the location of the Distribution Account or
the Interest Reserve Account;
(vi) any repurchase or substitution of a Mortgage Loan by the
Mortgage Loan Seller as contemplated by Section 2.03; and
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<PAGE>
(vii) the final payment to any Class of Certificateholders.
(b) The Master Servicer shall promptly provide notice to each
Rating Agency and the Depositor with respect to each of the following of which
it has actual knowledge:
(i) the resignation or removal of the Trustee and the
appointment of a successor; and
(ii) any change in the location of the Collection Account.
(c) Each of the Master Servicer and the Special Servicer, as
the case may be, shall furnish each Rating Agency such information with respect
to the Mortgage Loans as such Rating Agency shall reasonably request and which
the Master Servicer or the Special Servicer, as the case may be, can reasonably
provide to the extent consistent with applicable law and the related Mortgage
Loan documents. In any event, the Master Servicer and the Special Servicer shall
notify each Rating Agency with respect to each of the following of which it has
actual knowledge:
(i) any change in the lien priority of the Mortgage securing
any Mortgage Loan;
(ii) any change in the identity of the anchor tenant (i.e., a
tenant representing more than 20% of the total net rentable square feet
of space) at any Mortgaged Property used for retail purposes or any
change in the term of the lease for an anchor tenant at any such
Mortgaged Property; and
(iii) any assumption of, or release or substitution of
collateral for, a Mortgage Loan that represents greater than 2% of the
then aggregate Stated Principal Balance of the Mortgage Pool;
(iv) any defeasance of or material damage to a Mortgaged
Property.
(d) Each of the Master Servicer and the Special Servicer, as
the case may be, shall promptly furnish to each Rating Agency copies of the
following items (in each case, at or about the same time that it delivers or
causes the delivery of such item to the Trustee):
(i) each of its Annual Performance Certifications;
(ii) each of its Annual Accountants' Reports; and
(iii) each report prepared pursuant to Section 3.09(e) and
Section 3.12.
(e) The Trustee shall promptly deliver to each Rating Agency
(in hard copy format or through use of the Trustee's Internet Website for
_____________) a copy of each Trustee Report, Unrestricted Servicer Report and
Restricted Servicer Report forwarded to the Holders of the Certificates (in each
case, at or about the same time that it delivers such Certificateholder Report
to such Holders). Any Restricted Servicer Reports delivered electronically as
aforesaid shall be accessible on the Trustee's Internet Website only with the
use of a password, which shall be provided by the Trustee to each Rating Agency.
(f) The parties intend that each Rating Agency provide to the
Trustee, upon request, a listing of the then-current rating (if any) assigned by
such Rating Agency to each Class of Certificates then outstanding.
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<PAGE>
SECTION 11.10. Notices to Controlling Class Representative.
The Trustee, the Master Servicer or the Special Servicer, as
the case may be, shall deliver to the Controlling Class Representative a copy of
each notice or other item of information such Person is required to deliver to
the Rating Agencies pursuant to Section 11.09, in each case simultaneously with
the delivery thereof to the Rating Agencies.
SECTION 11.11. Complete Agreement.
This Agreement embodies the complete agreement among the
parties and may not be varied or terminated except by a written agreement
conforming to the provisions of Section 11.01. All prior negotiations or
representations of the parties are merged into this Agreement and shall have no
force or effect unless expressly stated herein.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed hereto by their respective officers thereunto duly authorized, in
each case as of the day and year first above written.
Greenwich Capital Commercial Funding Corp.
Depositor
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
Master Servicer
By:
Name:
Title:
--------------------------------------------
Special Servicer
By:
-----------------------------------------
Name:
Title:
--------------------------------------------
Trustee
By:
-----------------------------------------
Name:
Title:
<PAGE>
STATE OF )
------------------ ) ss.:
COUNTY OF )
------------------
On the ______ day of ____________, before me, a notary public
in and for said State, personally appeared ________________, personally known to
me to be the ________________________ of ______________________________, one of
the entities that executed the within instrument, and also known to me to be the
person who executed it on behalf of such entity, and acknowledged to me that
such entity executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
------------------ ) ss.:
COUNTY OF )
------------------
On the ______ day of _________, before me, a notary public in
and for said State, personally appeared ______________________________,
personally known to me to be the ______________________________ of
____________________________________________, one of the entities that executed
the within instrument, and also known to me to be the person who executed it on
behalf of such entity, and acknowledged to me that such entity executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
------------------ ) ss.:
COUNTY OF )
------------------
On the ______ day of _________, before me, a notary public in
and for said State, personally appeared ______________________________,
personally known to me to be the ______________________________ of
____________________________________________, one of the entities that executed
the within instrument, and also known to me to be the person who executed it on
behalf of such entity, and acknowledged to me that such entity executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF )
------------------ ) ss.:
COUNTY OF )
------------------
On the ______ day of _________, before me, a notary public in
and for said State, personally appeared ______________________________,
personally known to me to be a ______________________________ of
____________________________________________, one of the entities that executed
the within instrument, and also known to me to be the person who executed it on
behalf of such entity, and acknowledged to me that such entity executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
-----------------------------------
Notary Public
[Notarial Seal]
<PAGE>
EXHIBIT A-1
FORM OF CLASS S CERTIFICATES
CLASS S COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES _______________
This is one of a series of commercial mortgage pass-through certificates
(collectively, the "Certificates"), issued in multiple classes (each, a
"Class"), which series of Certificates evidences the entire beneficial ownership
interest in a trust fund (the "Trust Fund") consisting primarily of a pool of
multifamily and commercial mortgage loans (the "Mortgage Loans"), such pool
being formed and sold by
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
<TABLE>
<S> <C>
Pass-Through Rate: Class Notional Amount of the Class S
_______________ Certificates as of the Closing Date:
$_________________________________
Cut-off Date: _______________ Initial Certificate Notional Amount of this
Certificate as of the Closing Date:
Closing Date: _______________ $_________________________________
First Distribution Date: Aggregate Stated Principal Balance of the
_______________ Mortgage Loans as of the Closing Date
("Initial Pool Balance"): $_______________
Master Servicer: Trustee:
_______________ _______________
Special Servicer:
_______________
Certificate No. S-___ CUSIP No.: ________________
</TABLE>
A-1-1
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GREENWICH
CAPITAL COMMERCIAL FUNDING CORP., __________________________________________ ,
OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR ANY OF THE
UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OR ANY OTHER PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS _____________________.
ASSUMING THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT OF PRINCIPAL (EXCEPT THAT THE ARD LOANS ARE ASSUMED TO BE PAID IN
FULL ON THEIR RESPECTIVE ANTICIPATED REPAYMENT DATES), THIS CERTIFICATE HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $100,000 OF INITIAL CERTIFICATE
NOTIONAL AMOUNT, THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID
ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $100,000 OF
INITIAL CERTIFICATE NOTIONAL AMOUNT, COMPUTED UNDER A CONSTANT YIELD METHOD WITH
DAILY COMPOUNDING. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL NOT
PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR RATE.
A-1-2
<PAGE>
THE OUTSTANDING CERTIFICATE NOTIONAL AMOUNT HEREOF AT ANY TIME MAY BE LESS THAN
THE AMOUNT SHOWN ABOVE. THIS CERTIFICATE DOES NOT HAVE A CERTIFICATE PRINCIPAL
BALANCE AND WILL NOT ENTITLE THE HOLDER HEREOF TO DISTRIBUTIONS OF PRINCIPAL.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
notional amount of this Certificate (its "Certificate Notional Amount") as of
the Closing Date by the aggregate notional amount of all the Class S
Certificates (their "Class Notional Amount") as of the Closing Date) in that
certain beneficial ownership interest in the Trust Fund evidenced by all the
Class S Certificates. The Trust Fund was created and the Certificates were
issued pursuant to a Pooling and Servicing Agreement, dated as of the Cut-off
Date specified above (the "Agreement"), among Greenwich Capital Commercial
Funding Corp. as depositor (the "Depositor", which term includes any successor
entity under the Agreement), ________________________ as master servicer (the
"Master Servicer," which term includes any successor entity under the
Agreement), ______________________ as special servicer (the "Special Servicer,"
which term includes any successor entity under the Agreement) and
_______________________ as trustee (the "Trustee", which term includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, beginning on the First
Distribution Date specified above, distributions will be made on that date (the
"Distribution Date") each month that is the later of (i) the tenth day of such
month (or, if such tenth day is not a Business Day, on the next succeeding
Business Day) and (ii) the fourth Business Day following the Determination Date
(as defined below) in such month, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class S Certificates on the applicable Distribution Date pursuant to the
Agreement. The "Determination Date" in each month, commencing in
_____________________, will be the fourth day of such month or, if such fourth
day is not a Business Day, then the immediately preceding Business Day. All
distributions made under the Agreement on this Certificate will be made by the
Trustee by wire transfer of immediately available funds to the account of the
Person entitled thereto at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided the Trustee with wiring
instructions no later than the related Record Date (which wiring instructions
may be in the form of a standing order applicable to all subsequent
distributions), or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate Register. Notwithstanding the
foregoing, the final distribution on this Certificate will be made in like
manner, but only upon presentation and surrender of this Certificate at the
offices of the Certificate Registrar or such other location specified in the
notice to the Holder hereof of such final distribution.
A-1-3
<PAGE>
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
This Certificate is issuable in fully registered form only
without coupons. As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
No service charge will be imposed for any registration of
transfer or exchange of this Certificate, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC, and accordingly, this
Certificate shall constitute a Book-Entry Certificate.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, any Fiscal Agent, the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
Subject to certain terms and conditions set forth in the
Agreement, the Trust Fund and the obligations created by the Agreement shall
terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Special Servicer
or any single Controlling Class Certificateholder or group of Controlling Class
Certificateholders, at a price
A-1-4
<PAGE>
determined as provided in the Agreement, of all the Mortgage Loans and each REO
Property remaining in the Trust Fund. The Agreement permits, but does not
require, the Master Servicer, the Special Servicer or any single Controlling
Class Certificateholder or group of Controlling Class Certificateholders to
purchase from the Trust Fund all the Mortgage Loans and each REO Property
remaining therein. The exercise of such right may effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
1.0% of the Initial Pool Balance.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Special Servicer, the
Trustee and any Fiscal Agent and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Trustee and any Fiscal Agent with the consent of the Holders of
Certificates entitled to not less than 66 2/3% of the Voting Rights allocated to
all of the affected Classes. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of any REMIC Pool as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
substantive laws of the State of New York applicable to agreements made and to
be performed entirely in said State, and the obligations, rights and remedies of
the Holder hereof shall be determined in accordance with such laws.
A-1-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
______________________________
as Trustee
By:___________________________
Authorized Representative
CERTIFICATE OF AUTHENTICATION
This is one of the Class S Certificates referred to in the
within-mentioned Agreement.
Dated:
_________________________________
as Certificate Registrar
By:___________________________
Authorized Representative
A-1-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
Dated:
-------------------------------------
Signature by or on behalf of Assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of
distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
----------------------------------
- --------------------------------------------------------------------------------
for the account of
------------------------------------------------------------.
Distributions made by check (such check to be made payable to
) and all applicable statements and notices should be
- -------------------------
mailed to
---------------------------------------------------------------------.
This information is provided by , the
------------------------
Assignee named above, or , as its agent.
--------------------
A-1-7
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-1 CERTIFICATES
CLASS [A-1] COMMERCIAL MORTGAGE PASS-THROUGH
CERTIFICATE, SERIES _______________
This is one of a series of commercial mortgage pass-through certificates
(collectively, the "Certificates"), issued in multiple classes (each, a
"Class"), which series of Certificates evidences the entire beneficial ownership
interest in a trust fund (the "Trust Fund") consisting primarily of a pool of
multifamily and commercial mortgage loans (the "Mortgage Loans"), such pool
being formed and sold by
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
<TABLE>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class [A-1]
_____________________ Certificates as of the Closing Date:
$_________________________________
Cut-off Date: _________________ Initial Certificate Principal Balance of
this Certificate as of the Closing Date:
Closing Date: _________________ $_________________________________
First Distribution Date: Aggregate Stated Principal Balance of the
______________________ Mortgage Loans as of the Closing Date
("Initial Pool Balance"):
$__________________
Master Servicer: Trustee:
_____________________ ______________
Special Servicer:
_____________________
Certificate No. [A-1]-___ CUSIP No.:________________
</TABLE>
A-2-1
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GREENWICH
CAPITAL COMMERCIAL FUNDING CORP.,
----------------------------------------------,
OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR ANY OF THE
UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OR ANY OTHER PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE").
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
A-2-2
<PAGE>
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
principal amount of this Certificate (its "Certificate Principal Balance") as of
the Closing Date by the aggregate principal amount of all the Class [A-1]
Certificates (their "Class Principal Balance") as of the Closing Date) in that
certain beneficial ownership interest in the Trust Fund evidenced by all the
Class [A-1] Certificates. The Trust Fund was created and the Certificates were
issued pursuant to a Pooling and Servicing Agreement, dated as of the Cut-off
Date specified above (the "Agreement"), among Greenwich Capital Commercial
Funding Corp. as depositor (the "Depositor", which term includes any successor
entity under the Agreement), __________________________ as master servicer (the
"Master Servicer," which term includes any successor entity under the
Agreement), ___________________________ as the special servicer (the "Special
Servicer", which term includes any successor entity under the Agreement) and
________________________________ as trustee (the "Trustee", which term includes
any successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, beginning on the First
Distribution Date specified above, distributions will be made on that date (the
"Distribution Date") each month that is the later of (i) the tenth day of such
month (or, if such tenth day is not a Business Day, on the next succeeding
Business Day) and (ii) the fourth Business Day following the Determination Date
(as defined below) in such month, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class [A-1] Certificates on the applicable Distribution Date pursuant to the
Agreement. The "Determination Date" in each month, commencing in
_____________________, will be the fourth day of such month or, if such fourth
day is not a Business Day, then the immediately preceding Business Day. All
distributions made under the Agreement on this Certificate will be made by the
Trustee by wire transfer of immediately available funds to the account of the
Person entitled thereto at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided the Trustee with wiring
instructions no later than the related Record Date (which wiring instructions
may be in the form of a standing order applicable to all subsequent
distributions), or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate Register. Notwithstanding the
foregoing, the final distribution on this Certificate (determined without regard
to any possible future reimbursement of any portion of an Unreimbursed Principal
Balance Reduction in respect of this Certificate) will be made in like manner,
but only upon presentation and surrender of this Certificate at the offices of
the Certificate Registrar or such other location specified in the notice to the
Holder hereof of such final distribution.
A-2-3
<PAGE>
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
This Certificate is issuable in fully registered form only
without coupons. As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
No service charge will be imposed for any registration of
transfer or exchange of this Certificate, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC, and accordingly, this
Certificate shall constitute a Book-Entry Certificate.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, any Fiscal Agent, the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
A-2-4
<PAGE>
Subject to certain terms and conditions set forth in the
Agreement, the Trust Fund and the obligations created by the Agreement shall
terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Special Servicer
or any single Controlling Class Certificateholder or group of Controlling Class
Certificateholders, at a price determined as provided in the Agreement, of all
the Mortgage Loans and each REO Property remaining in the Trust Fund. The
Agreement permits, but does not require, the Master Servicer, the Special
Servicer or any single Controlling Class Certificateholder or group of
Controlling Class Certificateholders to purchase from the Trust Fund all the
Mortgage Loans and each REO Property remaining therein. The exercise of such
right may effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1.0% of the Initial Pool Balance.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Special Servicer, the
Trustee and any Fiscal Agent and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Trustee and any Fiscal Agent with the consent of the Holders of
Certificates entitled to not less than 662/3% of the Voting Rights allocated to
all of the affected Classes. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of any REMIC Pool as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
substantive laws of the State of New York applicable to agreements made and to
be performed entirely in said State, and the obligations, rights and remedies of
the Holder hereof shall be determined in accordance with such laws.
A-2-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
______________________________
as Trustee
By:___________________________
Authorized Representative
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A-1] Certificates referred to in the
within-mentioned Agreement.
Dated:
_________________________________
as Certificate Registrar
By:___________________________
Authorized Representative
A-2-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
(please print or typewrite name and address including
postal zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
Dated:
-------------------------------------
Signature by or on behalf of Assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of
distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
----------------------------------
- --------------------------------------------------------------------------------
for the account of
------------------------------------------------------------.
Distributions made by check (such check to be made payable to
) and all applicable statements and notices should be
- -------------------------
mailed to
---------------------------------------------------------------------.
This information is provided by , the
------------------------
Assignee named above, or , as its agent.
--------------------
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-2, CLASS A-3, CLASS A-4, CLASS A-5,
CLASS B-1 AND B-2 CERTIFICATES
CLASS [A-2] [A-3] [A-4] [A-5] [B-1] [B-2] COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATE, SERIES _______________
This is one of a series of commercial mortgage pass-through certificates
(collectively, the "Certificates"), issued in multiple classes (each, a
"Class"), which series of Certificates evidences the entire beneficial ownership
interest in a trust fund (the "Trust Fund") consisting primarily of a pool of
multifamily and commercial mortgage loans (the "Mortgage Loans"), such pool
being formed and sold by
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
<TABLE>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class
_______________________________ [A-2] [A-3] [A-4] [A-5] [B-1] [B-2]
Certificates as of the Closing Date:
$_________________________________
Cut-off Date:_______________ Initial Certificate Principal Balance of this
Certificate as of the Closing Date:
Closing Date:_______________ $_________________________________
First Distribution Date: Aggregate Stated Principal Balance of the
_______________ Mortgage Loans as of the Closing Date
("Initial Pool Balance"): $______________
Master Servicer: Trustee:
_______________ _______________
Special Servicer:
_______________
Certificate No. [A-2] [A-3] [A-4] [A-5] CUSIP No.: _________________
[B-1] [B-2]-___
</TABLE>
A-3-1
<PAGE>
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR
ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY
RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT THAT IS SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF ANY SUCH RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GREENWICH
CAPITAL COMMERCIAL FUNDING CORP., _____________________________________________
_______________________________________________________________________________,
OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR ANY OF THE
UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO ONE OR MORE CLASSES OF CERTIFICATES OF THE
SAME SERIES AS AND TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ___________________. ASSUMING
THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT OF PRINCIPAL
A-3-2
<PAGE>
(EXCEPT THAT THE ARD LOANS ARE ASSUMED TO BE PAID IN FULL ON THEIR RESPECTIVE
ANTICIPATED REPAYMENT DATES), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN
$______ OF OID PER $1,000 OF INITIAL CERTIFICATE PRINCIPAL BALANCE, THE YIELD TO
MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL
ACCRUAL PERIOD IS NO MORE THAN $_____ PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, COMPUTED UNDER A CONSTANT YIELD METHOD WITH DAILY
COMPOUNDING. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL NOT PREPAY
OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR RATE.]
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
This certifies that CEDE & CO. is the registered owner of the
Percentage Interest evidenced by this Certificate (obtained by dividing the
principal amount of this Certificate (its "Certificate Principal Balance") as of
the Closing Date by the aggregate principal amount of all the Class [A-2] [A-3]
[A-4] [A-5] [B-1] [B-2] Certificates (their "Class Principal Balance") as of the
Closing Date) in that certain beneficial ownership interest in the Trust Fund
evidenced by all the Class [A-2] [A-3] [A-4] [A-5] [B-1] [B-2] Certificates. The
Trust Fund was created and the Certificates were issued pursuant to a Pooling
and Servicing Agreement, dated as of the Cut-off Date specified above (the
"Agreement"), among Greenwich Capital Commercial Funding Corp. as depositor (the
"Depositor", which term includes any successor entity under the Agreement),
____________________ as master servicer (the "Master Servicer," which term
includes any successor entity under the Agreement), __________________________
as special servicer (the "Special Servicer," which term includes any successor
entity under the Agreement) and ______________________________ as trustee (the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, capitalized terms used herein have the
respective meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of its acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, beginning on the First
Distribution Date specified above, distributions will be made on that date (the
"Distribution Date") each month that is the later of (i) the tenth day of such
month (or, if such tenth day is not a Business Day, on the next succeeding
Business Day) and (ii) the fourth Business Day following the Determination Date
(as defined below) in such month, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class [A-2] [A-3] [A-4] [A-5] [B-1] [B-2] Certificates on the applicable
Distribution Date pursuant to the Agreement. The "Determination Date" in each
month, commencing in _______________, will be the fourth day of such month or,
if such fourth day is not a Business Day, then the immediately preceding
Business Day. All distributions made under the Agreement on this Certificate
will be made by the
A-3-3
<PAGE>
Trustee by wire transfer of immediately available funds to the account of the
Person entitled thereto at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided the Trustee with wiring
instructions no later than the related Record Date (which wiring instructions
may be in the form of a standing order applicable to all subsequent
distributions), or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate Register. Notwithstanding the
foregoing, the final distribution on this Certificate (determined without regard
to any possible future reimbursement of any portion of an Unreimbursed Principal
Balance Reduction in respect of this Certificate) will be made in like manner,
but only upon presentation and surrender of this Certificate at the offices of
the Certificate Registrar or such other location specified in the notice to the
Holder hereof of such final distribution.
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
This Certificate is issuable in fully registered form only
without coupons. As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No transfer of this Certificate or any interest herein shall
be made (A) to any retirement plan or other employee benefit plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to ERISA or Section 4975 of the Code (each, a "Plan"),
or (B) to any Person who is directly or indirectly purchasing this Certificate
or any interest herein on behalf of, as named fiduciary of, as trustee of, or
with assets of a Plan, if the purchase and holding of this Certificate or such
interest herein by the prospective Transferee would result in a violation of
Section 406 of ERISA or Section 4975 of the Code or would result in the
imposition of an excise tax under Section 4975 of the Code. Except in limited
circumstances, the Certificate Registrar shall refuse to register the transfer
of this Certificate unless it has received from the prospective Transferee
either (i) a certification to the effect that such prospective Transferee is not
a Plan and is not directly or indirectly purchasing this Certificate on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan; or (ii) a
certification to the effect that the purchase and holding of this Certificate by
such prospective Transferee is exempt from the prohibited transaction provisions
of Section 406 of ERISA and Section 4975 of the Code under Sections I and III of
Prohibited Transaction Class Exemption 95-60; or (iii)
A-3-4
<PAGE>
a certification of facts and an Opinion of Counsel which otherwise establish to
the reasonable satisfaction of the Trustee that such transfer will not result in
a violation of Section 406 of ERISA or Section 4975 of the Code or result in the
imposition of an excise tax under Section 4975 of the Code. For so long as this
Certificate constitutes a Book-Entry Certificate, each such Transferee shall be
deemed to have represented and warranted that either: (i) such Transferee is not
a Plan and is not directly or indirectly purchasing this Certificate or such
interest herein on behalf of, as named fiduciary of, as trustee of, or with
assets of a Plan; or (ii) the purchase and holding of this Certificate or such
interest herein by such Transferee is exempt from the prohibited transaction
provisions of Section 406 of ERISA and Section 4975 of the Code under Sections I
and III of Prohibited Transactions Class Exemption 95-60.
If a Person is acquiring this Certificate as a fiduciary or
agent for one or more accounts, such Person shall be required to deliver to the
Certificate Registrar a certification to the effect that, and such other
evidence as may be reasonably required by the Trustee to confirm that, it has
(i) sole investment discretion with respect to each such account and (ii) full
power to make the foregoing acknowledgments, representations, warranties,
certifications and/or agreements with respect to each such account as described
in the preceding paragraph.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
No service charge will be imposed for any registration of
transfer or exchange of this Certificate, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC, and accordingly, this
Certificate shall constitute a Book-Entry Certificate.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, any Fiscal Agent, the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
Subject to certain terms and conditions set forth in the
Agreement, the Trust Fund and the obligations created by the Agreement shall
terminate upon distribution (or provision for
A-3-5
<PAGE>
distribution) to the Certificateholders of all amounts held by or on behalf of
the Trustee and required to be distributed to them pursuant to the Agreement
following the earlier of (i) the final payment or other liquidation (or any
advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in the Trust Fund, and (ii) the purchase by the Master Servicer, the
Special Servicer or any single Controlling Class Certificateholder or group of
Controlling Class Certificateholders, at a price determined as provided in the
Agreement, of all the Mortgage Loans and each REO Property remaining in the
Trust Fund. The Agreement permits, but does not require, the Master Servicer,
the Special Servicer or any single Controlling Class Certificateholder or group
of Controlling Class Certificateholders to purchase from the Trust Fund all the
Mortgage Loans and each REO Property remaining therein. The exercise of such
right may effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1.0% of the Initial Pool Balance.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Special Servicer, the
Trustee and any Fiscal Agent and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Trustee and any Fiscal Agent with the consent of the Holders of
Certificates entitled to not less than 66 2/3% of the Voting Rights allocated to
all of the affected Classes. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of any REMIC Pool as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
substantive laws of the State of New York applicable to agreements made and to
be performed entirely in said State, and the obligations, rights and remedies of
the Holder hereof shall be determined in accordance with such laws.
A-3-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
------------------------------
as Trustee
By: --------------------------
Authorized Representative
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A-2] [A-3] [A-4] [A-5] [B-1] [B-2]
Certificates referred to in the within-mentioned Agreement.
Dated:
------------------------------
as Certificate Registrar
By: --------------------------
Authorized Representative
A-3-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
(please print or typewrite name and address including postal
zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
Dated:
-------------------------------------
Signature by or on behalf of Assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of
distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
----------------------------------
- --------------------------------------------------------------------------------
for the account of
------------------------------------------------------------.
Distributions made by check (such check to be made payable to
) and all applicable statements and notices should be
- -------------------------
mailed to
---------------------------------------------------------------------.
This information is provided by , the
------------------------
Assignee named above, or , as its agent.
--------------------
A-3-8
<PAGE>
EXHIBIT A-4
FORM OF CLASS B-3, CLASS B-4, CLASS B-5, CLASS B-6,
CLASS B-7, CLASS B-8, CLASS C AND CLASS D CERTIFICATES
CLASS [B-3] [B-4] [B-5] [B-6] [B-7] [B-8] [C] [D] [E] COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATE, SERIES _______________
This is one of a series of commercial mortgage pass-through certificates
(collectively, the "Certificates"), issued in multiple classes (each, a
"Class"), which series of Certificates evidences the entire beneficial ownership
interest in a trust fund (the "Trust Fund") consisting primarily of a pool of
multifamily and commercial mortgage loans (the "Mortgage Loans"), such pool
being formed and sold by
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
<TABLE>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class [B-3]
_______________ [B-4] [B-5] [B-6] [B-7] [B-8] [C] [D]
Certificates as of the Closing Date:
$_________________________________
Cut-off Date: _______________ Initial Certificate Principal Balance of this
Certificate as of the Closing Date:
Closing Date:_______________ $_________________________________
First Distribution Date: Aggregate Stated Principal Balance of the
_______________ Mortgage Loans as of the Closing Date
("Initial Pool Balance"):
$_________________________________
Master Servicer: Trustee:
_______________ _______________
Special Servicer:
_______________
Certificate No.[B-3] [B-4] [B-5] [B-6] [B-7] CUSIP No.: ___________
[B-8] [C] [D] - ________________
</TABLE>
A-4-1
<PAGE>
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE OR ANY
INTEREST HEREIN WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH
IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY
RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT THAT IS SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR (B)
TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR SUCH
INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF ANY SUCH RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THE TRUST FUND IN WHICH THIS CERTIFICATE EVIDENCES AN INTEREST HAS NOT BEEN
REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE "INVESTMENT COMPANY ACT"). ACCORDINGLY, THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A
"QUALIFIED INSTITUTIONAL BUYER") OR (2) AN ACCREDITED INVESTOR WITHIN THE
MEANING OF PARAGRAPH (1), (2), (3) OR (7) OF RULE 501(a) OF REGULATION D UNDER
THE SECURITIES ACT OR AN ENTITY IN WHICH ALL THE EQUITY OWNERS ARE DESCRIBED BY
SUCH PARAGRAPHS (AN "INSTITUTIONAL ACCREDITED INVESTOR").
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GREENWICH
CAPITAL COMMERCIAL FUNDING CORP.,
---------------------------------------------,
OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR ANY OF THE
UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO ONE OR MORE CLASSES OF CERTIFICATES OF THE
SAME SERIES AS AND TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
A-4-2
<PAGE>
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING THE
U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. THE ISSUE DATE OF THIS CERTIFICATE IS ____________________.
ASSUMING THAT THE MORTGAGE LOANS ARE NOT SUBJECT TO ANY VOLUNTARY OR INVOLUNTARY
PREPAYMENT OF PRINCIPAL (EXCEPT THAT THE ARD LOANS ARE ASSUMED TO BE PAID IN
FULL ON THEIR RESPECTIVE ANTICIPATED REPAYMENT DATES), THIS CERTIFICATE HAS BEEN
ISSUED WITH NO MORE THAN $______ OF OID PER $1,000 OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, THE YIELD TO MATURITY IS ____% PER ANNUM, AND THE AMOUNT OF
OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD IS NO MORE THAN $____ PER $1,000
OF INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED UNDER A CONSTANT YIELD METHOD
WITH DAILY COMPOUNDING. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS WILL
NOT PREPAY OR, IF THEY DO PREPAY, THAT THEY WILL PREPAY AT ANY PARTICULAR RATE.]
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
This certifies that __________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (obtained by dividing
the principal amount of this Certificate (its "Certificate Principal Balance")
as of the Closing Date by the aggregate principal amount of all the Class [B-3]
[B-4] [B-5] [B-6] [B-7] [B-8] [C] [D] Certificates (their "Class Principal
Balance") as of the Closing Date) in that certain beneficial ownership interest
in the Trust Fund evidenced by all the Class [B-3] [B-4] [B-5] [B-6] [B-7] [B-8]
[C] [D] Certificates. The Trust Fund was created and the Certificates were
issued pursuant to a Pooling and Servicing Agreement, dated as of the Cut- off
Date specified above (the "Agreement"), among Greenwich Capital Commercial
Funding Corp. as depositor (the "Depositor", which term includes any successor
entity under the Agreement),______________________________ as master servicer
(the "Master Servicer", which term includes any successor entity under the
Agreement), ___________________________ as special servicer (the "Special
Servicer", which term includes any successor entity under the Agreement) and
_____________________________ as trustee (the "Trustee", which term includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
A-4-3
<PAGE>
Pursuant to the terms of the Agreement, beginning on the First
Distribution Date specified above, distributions will be made on that date (the
"Distribution Date") each month that is the later of (i) the tenth day of such
month (or, if such tenth day is not a Business Day, on the next succeeding
Business Day) and (ii) the fourth Business Day following the Determination Date
(as defined below) in such month, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class [B-3] [B-4] [B-5] [B-6] [B-7] [B-8] [C] [D] Certificates on the applicable
Distribution Date pursuant to the Agreement. The "Determination Date" in each
month, commencing in ________________, will be the fourth day of such month or,
if such fourth day is not a Business Day, then the immediately preceding
Business Day. All distributions made under the Agreement on this Certificate
will be made by the Trustee by wire transfer of immediately available funds to
the account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have provided
the Trustee with wiring instructions no later than the related Record Date
(which wiring instructions may be in the form of a standing order applicable to
all subsequent distributions), or otherwise by check mailed to the address of
such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any portion
of an Unreimbursed Principal Balance Reduction in respect of this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to the Holder hereof of such final distribution.
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
This Certificate is issuable in fully registered form only
without coupons. As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
A-4-4
<PAGE>
No transfer, sale, pledge or other disposition of this
Certificate or any interest herein shall be made unless that transfer, sale,
pledge or other disposition is exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws, or
is otherwise made in accordance with the Securities Act and such state
securities laws. If a transfer of this Certificate is to be made without
registration under the Securities Act (other than in connection with the initial
issuance of the Certificates or a transfer of this Certificate by the Depositor,
then the Certificate Registrar shall refuse to register such transfer unless it
receives (and, upon receipt, may conclusively rely upon) either: (i) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit F-1A to the Agreement; or (ii) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit F-1B to the Agreement and a
certificate from such Certificateholder's prospective Transferee substantially
in the form attached either as Exhibit F-2A or as Exhibit F-2B to the Agreement;
or (iii) an Opinion of Counsel satisfactory to the Trustee to the effect that
such transfer may be made without registration under the Securities Act (which
Opinion of Counsel shall not be an expense of the Trust or of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, any Fiscal Agent or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. Any Certificateholder desiring to effect a transfer, sale, pledge or
other disposition of this Certificate or any interest herein shall, and does
hereby agree to, indemnify the Depositor, the Underwriter, the Trustee, any
Fiscal Agent, the Master Servicer, the Special Servicer and the Certificate
Registrar against any liability that may result if such transfer, sale, pledge
or other disposition is not exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws or
is not made in accordance with such federal and state laws.
No transfer of this Certificate or any interest herein shall
be made except to a Qualified Institutional Buyer or an Institutional Accredited
Investor. The Certificate Registrar shall refuse to register the transfer of
this Certificate unless it has received from the prospective Transferee a
certification, substantially in the form attached as Annex 1 or Annex 2 to
Exhibit F-2A to the Agreement, to the effect that such prospective Transferee is
a Qualified Institutional Buyer or a certification from the prospective
Transferee to the effect that such prospective Transferee is an Institutional
Accredited Investor.
No transfer of this Certificate or any interest herein shall
be made (A) to any retirement plan or other employee benefit plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to ERISA or Section 4975 of the Code (each, a "Plan"),
or (B) to any Person who is directly or indirectly purchasing this Certificate
or any interest herein on behalf of, as named fiduciary of, as trustee of, or
with assets of a Plan, if the purchase and holding of this Certificate or such
interest herein by the prospective Transferee would result in a violation of
Section 406 of ERISA or Section 4975 of the Code or would result in the
imposition of an excise tax under Section 4975 of the Code. Except in limited
circumstances, the Certificate Registrar shall refuse to register the transfer
of this Certificate unless it has received from the prospective Transferee
either (i) a certification to the effect that such prospective Transferee is not
a Plan and is not directly or indirectly
A-4-5
<PAGE>
purchasing this Certificate on behalf of, as named fiduciary of, as trustee of,
or with assets of a Plan; or (ii) a certification to the effect that the
purchase and holding of this Certificate by such prospective Transferee is
exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60; or (iii) a certification of facts and an Opinion of
Counsel which otherwise establish to the reasonable satisfaction of the Trustee
that such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or result in the imposition of an excise tax under
Section 4975 of the Code.
If a Person is acquiring this Certificate as a fiduciary or
agent for one or more accounts, such Person shall be required to deliver to the
Certificate Registrar a certification to the effect that, and such other
evidence as may be reasonably required by the Trustee to confirm that, it has
(i) sole investment discretion with respect to each such account and (ii) full
power to make the foregoing acknowledgments, representations, warranties,
certifications and/or agreements with respect to each such account as described
in the two preceding paragraphs.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
No service charge will be imposed for any registration of
transfer or exchange of this Certificate, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, any Fiscal Agent, the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
Subject to certain terms and conditions set forth in the
Agreement, the Trust Fund and the obligations created by the Agreement shall
terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Special Servicer
or any single Controlling Class Certificateholder or group of Controlling Class
Certificateholders, at a price determined as provided in the Agreement, of all
the Mortgage Loans and each REO Property remaining in the Trust Fund. The
Agreement permits, but does not require, the Master Servicer, the
A-4-6
<PAGE>
Special Servicer or the any single Controlling Class Certificateholder or group
of Controlling Class Certificateholders to purchase from the Trust Fund all the
Mortgage Loans and each REO Property remaining therein. The exercise of such
right may effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1.0% of the Initial Pool Balance.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Special Servicer, the
Trustee and any Fiscal Agent and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Trustee and any Fiscal Agent with the consent of the Holders of
Certificates entitled to not less than 662/3% of the Voting Rights allocated to
all of the affected Classes. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of any REMIC Pool as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
substantive laws of the State of New York applicable to agreements made and to
be performed entirely in said State, and the obligations, rights and remedies of
the Holder hereof shall be determined in accordance with such laws.
A-4-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
------------------------------
as Trustee
By: --------------------------
Authorized Representative
CERTIFICATE OF AUTHENTICATION
This is one of the Class [B-3] [B-4] [B-5] [B-6] [B-7] [B-8]
[C] [D] Certificates referred to in the within-mentioned Agreement.
Dated:
------------------------------
as Certificate Registrar
By: --------------------------
Authorized Representative
A-4-8
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
(please print or typewrite name and address including postal
zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
Dated:
-------------------------------------
Signature by or on behalf of Assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of
distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
----------------------------------
- --------------------------------------------------------------------------------
for the account of
------------------------------------------------------------.
Distributions made by check (such check to be made payable to
) and all applicable statements and notices should be
- -------------------------
mailed to
---------------------------------------------------------------------.
This information is provided by , the
------------------------
Assignee named above, or , as its agent.
--------------------
A-4-9
<PAGE>
EXHIBIT A-5
FORM OF CLASS [E] CERTIFICATES
CLASS [E] COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATE, SERIES _______________
This is one of a series of commercial mortgage pass-through certificates
(collectively, the "Certificates"), issued in multiple classes (each, a
"Class"), which series of Certificates evidences the entire beneficial ownership
interest in a trust fund (the "Trust Fund") consisting primarily of a pool of
multifamily and commercial mortgage loans (the "Mortgage Loans"), such pool
being formed and sold by
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
<TABLE>
<S> <C>
Cut-off Date:_______________ Percentage Interest evidenced by this Class
E Certificate: ______%
Closing Date:_______________
First Distribution Date: Aggregate Stated Principal Balance of the
_______________ Mortgage Loans as of the Closing Date
("Initial Pool
Balance"):$__________________________
Master Servicer: Trustee:
_______________ _______________
Special Servicer:
_______________
Certificate No. E-___
</TABLE>
A-5-1
<PAGE>
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE OR ANY
INTEREST HEREIN WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH
IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY
RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT THAT IS SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) TO ANY PERSON
WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR SUCH INTEREST
HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY
SUCH RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT, EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THE TRUST FUND IN WHICH THIS CERTIFICATE EVIDENCES AN INTEREST HAS NOT BEEN
REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE "INVESTMENT COMPANY ACT"). ACCORDINGLY, THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A
"QUALIFIED INSTITUTIONAL BUYER") OR (2) AN ACCREDITED INVESTOR WITHIN THE
MEANING OF PARAGRAPH (1), (2), (3) OR (7) OF RULE 501(a) OF REGULATION D UNDER
THE SECURITIES ACT OR AN ENTITY IN WHICH ALL THE EQUITY OWNERS ARE DESCRIBED BY
SUCH PARAGRAPHS (AN "INSTITUTIONAL ACCREDITED INVESTOR").
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GREENWICH
CAPITAL COMMERCIAL FUNDING CORP., ____________________________________, OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR ANY OF THE
UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS ENTITLED ONLY TO CERTAIN ADDITIONAL INTEREST (IF ANY)
RECEIVED IN RESPECT OF THE ARD LOANS, SUBJECT TO THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
A-5-2
<PAGE>
This certifies that __________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (as specified above) in
that certain beneficial ownership interest in the Trust Fund evidenced by
evidenced by all the Class E Certificates. The Trust Fund was created and the
Certificates were issued pursuant to a Pooling and Servicing Agreement, dated as
of the Cut-off Date specified above (the "Agreement"), among Greenwich Capital
Commercial Funding Corp. as depositor (the "Depositor", which term includes any
successor entity under the Agreement), _______________________ as master
servicer (the "Master Servicer", which term includes any successor entity under
the Agreement), ________________________ as special servicer (the "Special
Servicer", which term includes any successor entity under the Agreement) and
__________________________ as trustee (the "Trustee", which term includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of its acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, beginning on the First
Distribution Date specified above, distributions will be made on that date (the
"Distribution Date") each month that is the later of (i) the tenth day of such
month (or, if such tenth day is not a Business Day, on the next succeeding
Business Day) and (ii) the fourth Business Day following the Determination Date
(as defined below) in such month, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to all the Holders of the
Class E Certificates on the applicable Distribution Date pursuant to the
Agreement. The "Determination Date" in each month, commencing in
______________________, will be the fourth day of such month or, if such fourth
day is not a Business Day, then the immediately preceding Business Day. All
distributions made under the Agreement on this Certificate will be made by the
Trustee by wire transfer of immediately available funds to the account of the
Person entitled thereto at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided the Trustee with wiring
instructions no later than the related Record Date (which wiring instructions
may be in the form of a standing order applicable to all subsequent
distributions), or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate Register. Notwithstanding the
foregoing, the final distribution on this Certificate will be made in like
manner, but only upon presentation and surrender of this Certificate at the
offices of the Certificate Registrar or such other location specified in the
notice to the Holder hereof of such final distribution.
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
A-5-3
<PAGE>
This Certificate is issuable in fully registered form only
without coupons. As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No transfer, sale, pledge or other disposition of this
Certificate or any interest herein shall be made unless that transfer, sale,
pledge or other disposition is exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws, or
is otherwise made in accordance with the Securities Act and such state
securities laws. If a transfer of this Certificate is to be made without
registration under the Securities Act (other than in connection with the initial
issuance of the Certificates or a transfer of this Certificate by the Depositor,
then the Certificate Registrar shall refuse to register such transfer unless it
receives (and, upon receipt, may conclusively rely upon) either: (i) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit F-1A to the Agreement; or (ii) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit F-1B to the Agreement and a
certificate from such Certificateholder's prospective Transferee substantially
in the form attached either as Exhibit F-2A or as Exhibit F-2B to the Agreement;
or (iii) an Opinion of Counsel satisfactory to the Trustee to the effect that
such transfer may be made without registration under the Securities Act (which
Opinion of Counsel shall not be an expense of the Trust or of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, any Fiscal Agent or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective Transferee on which such Opinion of Counsel is
based. Any Certificateholder desiring to effect a transfer, sale, pledge or
other disposition of this Certificate or any interest herein shall, and does
hereby agree to, indemnify the Depositor, the Underwriter, the Trustee, any
Fiscal Agent, the Master Servicer, the Special Servicer and the Certificate
Registrar against any liability that may result if such transfer, sale, pledge
or other disposition is not exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws or
is not made in accordance with such federal and state laws.
No transfer of this Certificate or any interest herein shall
be made except to a Qualified Institutional Buyer or an Institutional Accredited
Investor. The Certificate Registrar shall refuse to register the transfer of
this Certificate unless it has received from the prospective Transferee a
certification, substantially in the form attached as Annex 1 or Annex 2 to
Exhibit F-2A to the Agreement, to the effect that such prospective Transferee is
a Qualified Institutional Buyer or a certification from the prospective
Transferee to the effect that such prospective Transferee is an Institutional
Accredited Investor.
No transfer of this Certificate or any interest herein shall
be made (A) to any retirement plan or other employee benefit plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to ERISA or Section 4975 of the Code (each, a "Plan"),
or (B) to any Person who is directly or indirectly purchasing this Certificate
or any interest herein on behalf of, as named fiduciary of, as trustee of, or
with assets of a Plan, if the purchase and holding of this Certificate or such
A-5-4
<PAGE>
interest herein by the prospective Transferee would result in a violation of
Section 406 of ERISA or Section 4975 of the Code or would result in the
imposition of an excise tax under Section 4975 of the Code. Except in limited
circumstances, the Certificate Registrar shall refuse to register the transfer
of this Certificate unless it has received from the prospective Transferee
either (i) a certification to the effect that such prospective Transferee is not
a Plan and is not directly or indirectly purchasing this Certificate on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan; or (ii) a
certification to the effect that the purchase and holding of this Certificate by
such prospective Transferee is exempt from the prohibited transaction provisions
of Section 406 of ERISA and Section 4975 of the Code under Sections I and III of
Prohibited Transaction Class Exemption 95-60; or (iii) a certification of facts
and an Opinion of Counsel which otherwise establish to the reasonable
satisfaction of the Trustee that such transfer will not result in a violation of
Section 406 of ERISA or Section 4975 of the Code or result in the imposition of
an excise tax under Section 4975 of the Code.
If a Person is acquiring this Certificate as a fiduciary or
agent for one or more accounts, such Person shall be required to deliver to the
Certificate Registrar a certification to the effect that, and such other
evidence as may be reasonably required by the Trustee to confirm that, it has
(i) sole investment discretion with respect to each such account and (ii) full
power to make the foregoing acknowledgments, representations, warranties,
certifications and/or agreements with respect to each such account as described
in the two preceding paragraphs.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
No service charge will be imposed for any registration of
transfer or exchange of this Certificate, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, any Fiscal Agent, the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
Subject to certain terms and conditions set forth in the
Agreement, the Trust Fund and the obligations created by the Agreement shall
terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or
A-5-5
<PAGE>
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan or REO Property remaining in the Trust Fund, and (ii) the purchase by the
Master Servicer, the Special Servicer or any single Controlling Class
Certificateholder or group of Controlling Class Certificateholders, at a price
determined as provided in the Agreement, of all the Mortgage Loans and each REO
Property remaining in the Trust Fund. The Agreement permits, but does not
require, the Master Servicer, the Special Servicer or any single Controlling
Class Certificateholder or group of Controlling Class Certificateholders to
purchase from the Trust Fund all the Mortgage Loans and each REO Property
remaining therein. The exercise of such right may effect early retirement of the
Certificates; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Pool at the time of purchase being less than
1.0% of the Initial Pool Balance.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Special Servicer, the
Trustee and any Fiscal Agent and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Trustee and any Fiscal Agent with the consent of the Holders of
Certificates entitled to not less than 662/3% of the Voting Rights allocated to
all of the affected Classes. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of any REMIC Pool as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
substantive laws of the State of New York applicable to agreements made and to
be performed entirely in said State, and the obligations, rights and remedies of
the Holder hereof shall be determined in accordance with such laws.
A-5-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
___________________________
as Trustee
By: ______________________________
Authorized Representative
CERTIFICATE OF AUTHENTICATION
This is one of the Class E Certificates referred to in the
within-mentioned Agreement.
Dated:
______________________________
as Certificate Registrar
By: ______________________________
Authorized Representative
A-5-7
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
(please print or typewrite name and address including postal
zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
Dated:
-------------------------------------
Signature by or on behalf of Assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of
distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
----------------------------------
- --------------------------------------------------------------------------------
for the account of
------------------------------------------------------------.
Distributions made by check (such check to be made payable to
) and all applicable statements and notices should be
- -------------------------
mailed to
---------------------------------------------------------------------.
This information is provided by , the
------------------------
Assignee named above, or , as its agent.
--------------------
A-5-8
<PAGE>
EXHIBIT A-6
FORM OF CLASS R-I, CLASS R-II, CLASS R-III CERTIFICATES
CLASS [R-I] [R-II] [R-III] COMMERCIAL MORTGAGE
PASS-THROUGH CERTIFICATE, SERIES _______________
This is one of a series of commercial mortgage pass-through certificates
(collectively, the "Certificates"), issued in multiple classes (each, a
"Class"), which series of Certificates evidences the entire beneficial ownership
interest in a trust fund (the "Trust Fund") consisting primarily of a pool of
multifamily and commercial mortgage loans (the "Mortgage Loans"), such pool
being formed and sold by
GREENWICH CAPITAL COMMERCIAL FUNDING CORP.
<TABLE>
<S> <C>
Cut-off Date:_______________ Percentage Interest evidenced by
this Class [R-I] [R-II] [R-III] Certificate:
___%
Closing Date:_______________ Aggregate Stated Principal Balance of the
Mortgage Loans as of the Closing Date
("Initial Pool Balance"): $________________
First Distribution Date: Trustee:
_______________ _______________
Master Servicer:
_______________
Special Servicer:
_______________
Certificate No.[R-I] [R-II] [R-III]-__
</TABLE>
A-6-1
<PAGE>
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, PLEDGE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE OR ANY
INTEREST HEREIN WITHOUT SUCH REGISTRATION OR QUALIFICATION MAY BE MADE ONLY IN A
TRANSACTION WHICH DOES NOT REQUIRE SUCH REGISTRATION OR QUALIFICATION AND WHICH
IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY
RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT THAT IS SUBJECT TO
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR (B) TO ANY PERSON
WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR SUCH INTEREST
HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY
SUCH RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT, EXCEPT IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THE TRUST FUND IN WHICH THIS CERTIFICATE EVIDENCES AN INTEREST HAS NOT BEEN
REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY ACT OF 1940,
AS AMENDED (THE "INVESTMENT COMPANY ACT"). ACCORDINGLY, THIS CERTIFICATE MAY NOT
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A "QUALIFIED
INSTITUTIONAL BUYER").
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GREENWICH
CAPTIAL COMERCIAL FUNDING CORP., ______________________________________________,
OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR ANY OF THE
UNDERLYING MORTGAGE LOANS IS GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE
UNITED STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO ONE OR MORE CLASSES OF CERTIFICATES OF THE
SAME SERIES AS AND TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE EVIDENCES
OWNERSHIP OF THE "RESIDUAL INTEREST" IN MULTIPLE "REAL ESTATE MORTGAGE
INVESTMENT CONDUITS" (EACH A "REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY,
IN SECTIONS 860G AND 860D OF THE CODE. CONSEQUENTLY, TRANSFER OF THIS
CERTIFICATE IS ALSO SUBJECT TO
A-6-2
<PAGE>
THE ADDITIONAL TAX RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON
BECOMES THE REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER OR UNDER THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS, IF ANY,
ON THIS CERTIFICATE.]
[SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER OR UNDER THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS, IF ANY,
ON THIS CERTIFICATE.]
This certifies that __________________ is the registered owner
of the Percentage Interest evidenced by this Certificate (as specified above) in
that certain beneficial ownership interest in the Trust Fund evidenced by all
the Class [R-I] [R-II] [R-III] Certificates. The Trust Fund was created and the
Certificates were issued pursuant to a Pooling and Servicing Agreement, dated as
of the Cut-off Date specified above (the "Agreement"), among Greenwich Capital
Commercial Funding Corp. as depositor (the "Depositor", which term includes any
successor entity under the Agreement), _____________________________ as master
servicer (the "Master Servicer", which term includes any successor entity under
the Agreement) and ____________________________ as special servicer (the
"Special Servicer", which term includes any successor entity under the
Agreement) and ________________________________ as trustee (the "Trustee", which
term includes any successor entity under the Agreement), a summary of certain of
the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, capitalized terms used herein have the respective meanings
assigned in the Agreement. This Certificate is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of its acceptance hereof assents and by
which such Holder is bound.
Pursuant to the terms of the Agreement, beginning on the First
Distribution Date specified above, distributions will be made on that date (the
"Distribution Date") each month that is the later of (i) the tenth day of such
month (or, if such tenth day is not a Business Day, on the next succeeding
Business Day) and (ii) the fourth Business Day following the Determination Date
(as defined below) in such month, to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), in an
amount equal to the product of the Percentage Interest
A-6-3
<PAGE>
evidenced by this Certificate and the amount required to be distributed to all
the Holders of the Class [R-I] [R-II] [R-III] Certificates on the applicable
Distribution Date pursuant to the Agreement. The "Determination Date" in each
month, commencing in ________________, will be the fourth day of such month or,
if such fourth day is not a Business Day, then the immediately preceding
Business Day. All distributions made under the Agreement on this Certificate
will be made by the Trustee by wire transfer of immediately available funds to
the account of the Person entitled thereto at a bank or other entity having
appropriate facilities therefor, if such Certificateholder shall have provided
the Trustee with wiring instructions no later than the related Record Date
(which wiring instructions may be in the form of a standing order applicable to
all subsequent distributions), or otherwise by check mailed to the address of
such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate will
be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to the Holder hereof of such final distribution.
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Distribution Account, the Collection Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
This Certificate is issuable in fully registered form only
without coupons. As provided in the Agreement and subject to certain limitations
therein set forth, this Certificate is exchangeable for new Certificates of the
same Class in authorized denominations evidencing the same aggregate Percentage
Interest, as requested by the Holder surrendering the same.
No transfer, sale, pledge or other disposition of this
Certificate or any interest herein shall be made unless that transfer, sale,
pledge or other disposition is exempt from the registration and/or qualification
requirements of the Securities Act and any applicable state securities laws, or
is otherwise made in accordance with the Securities Act and such state
securities laws. If a transfer of this Certificate is to be made without
registration under the Securities Act (other than in connection with the initial
issuance of the Certificates or a transfer of this Certificate by the Depositor,
then the Certificate Registrar shall refuse to register such transfer unless it
receives (and, upon receipt, may conclusively rely upon) either: (i) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit F-1A to the Agreement; or (ii) a
certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit F-1B to the Agreement and a
certificate from such Certificateholder's prospective Transferee substantially
in the form attached as Exhibit F-2A to the Agreement; or (iii) an Opinion of
Counsel satisfactory to the Trustee to the effect that such transfer may be made
without registration under the Securities Act (which Opinion of Counsel shall
not be an expense of the Trust or of the Depositor, the Master Servicer, the
Special Servicer, the Trustee, any Fiscal Agent or the Certificate Registrar in
their respective capacities as such), together with the written certification(s)
as to the facts surrounding such transfer from the Certificateholder desiring to
effect such transfer and/or such Certificateholder's prospective Transferee on
which such Opinion of Counsel is based. Any Certificateholder desiring
A-6-4
<PAGE>
to effect a transfer, sale, pledge or other disposition of this Certificate or
any interest herein shall, and does hereby agree to, indemnify the Depositor,
the Underwriter, the Trustee, any Fiscal Agent, the Master Servicer, the Special
Servicer and the Certificate Registrar against any liability that may result if
such transfer, sale, pledge or other disposition is not exempt from the
registration and/or qualification requirements of the Securities Act and any
applicable state securities laws or is not made in accordance with such federal
and state laws.
No transfer of this Certificate or any interest herein shall
be made except to a Qualified Institutional Buyer. The Certificate Registrar
shall refuse to register the transfer of this Certificate unless it has received
from the prospective Transferee a certification, substantially in the form
attached as Annex 1 or Annex 2 to Exhibit F-2A to the Agreement, to the effect
that such prospective Transferee is a Qualified Institutional Buyer.
No transfer of this Certificate or any interest herein shall
be made (A) to any retirement plan or other employee benefit plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to ERISA or Section 4975 of the Code (each, a "Plan"),
or (B) to any Person who is directly or indirectly purchasing this Certificate
or any interest herein on behalf of, as named fiduciary of, as trustee of, or
with assets of a Plan, if the purchase and holding of this Certificate or such
interest herein by the prospective Transferee would result in a violation of
Section 406 of ERISA or Section 4975 of the Code or would result in the
imposition of an excise tax under Section 4975 of the Code. Except in limited
circumstances, the Certificate Registrar shall refuse to register the transfer
of this Certificate unless it has received from the prospective Transferee
either: (i) a certification to the effect that such prospective Transferee is
not a Plan and is not directly or indirectly purchasing this Certificate on
behalf of, as named fiduciary of, as trustee of, or with assets of a Plan; or
(ii) a certification to the effect that the purchase and holding of this
Certificate by such prospective Transferee is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code
under Sections I and III of Prohibited Transaction Class Exemption 95-60; or
(iii) a certification of facts and an Opinion of Counsel which otherwise
establish to the reasonable satisfaction of the Trustee that such transfer will
not result in a violation of Section 406 of ERISA or Section 4975 of the Code or
result in the imposition of an excise tax under Section 4975 of the Code.
Each Person who has or who acquires any Ownership Interest in
this Certificate shall be deemed by its acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the provisions of Section
5.02(d) of the Agreement and, if any purported Transferee shall become a Holder
of this Certificate in violation of the provisions of such Section 5.02(d), to
have irrevocably authorized the Trustee under clause (ii)(A) of such Section
5.02(d) to deliver payments to a Person other than such Person and to have
irrevocably authorized the Trustee under clause (ii)(B) of such Section 5.02(d)
to negotiate the terms of any mandatory disposition and to execute all
instruments of Transfer and to do all other things necessary in connection with
any such disposition. Each Person holding or acquiring any Ownership Interest in
this Certificate must be a Permitted Transferee and shall promptly notify the
Trustee and the Tax Administrator of any change or impending change in its
status as a Permitted Transferee. In connection with any proposed Transfer of
any Ownership
A-6-5
<PAGE>
Interest in this Certificate, the Certificate Registrar shall require delivery
to it, and shall not register the Transfer of this Certificate until its receipt
of, an affidavit and agreement substantially in the form attached as Exhibit H-1
to the Agreement (a "Transfer Affidavit and Agreement") from the proposed
Transferee, representing and warranting, among other things, that such
Transferee is a Permitted Transferee, that it is not acquiring its Ownership
Interest in this Certificate as a nominee, trustee or agent for any Person that
is not a Permitted Transferee, that for so long as it retains its Ownership
Interest in this Certificate, it will endeavor to remain a Permitted Transferee,
and that it has reviewed the provisions of Section 5.02(d) of the Agreement and
agrees to be bound by them. Notwithstanding the delivery of a Transfer Affidavit
and Agreement by a proposed Transferee, if a Responsible Officer of either the
Certificate Registrar or Trustee has actual knowledge that the proposed
Transferee is not a Permitted Transferee, no Transfer of an Ownership Interest
in this Certificate to such proposed Transferee shall be effected. In connection
therewith, the Certificate Registrar shall not register the transfer of an
Ownership Interest in this Certificate to any entity classified as a partnership
under the Code unless at the time of transfer, all of its beneficial owners are
United States Persons.
Each Person holding or acquiring any Ownership Interest in
this Certificate shall agree (x) to require a Transfer Affidavit and Agreement
from any other Person to whom such Person attempts to transfer its Ownership
Interest herein and (y) not to transfer its Ownership Interest herein unless it
provides to the Certificate Registrar a certificate substantially in the form
attached as Exhibit H-2 to the Agreement stating that, among other things, it
has no actual knowledge that such other Person is not a Permitted Transferee.
Each Person holding or acquiring an Ownership Interest in this Certificate, by
purchasing such Ownership Interest herein, agrees to give the Trustee and the
Tax Administrator written notice that it is a "pass-through interest holder"
within the meaning of temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring such Ownership Interest, if it is, or is holding such
Ownership Interest on behalf of, a "pass-through interest holder".
If a Person is acquiring this Certificate as a fiduciary or
agent for one or more accounts, such Person shall be required to deliver to the
Certificate Registrar a certification to the effect that, and such other
evidence as may be reasonably required by the Trustee to confirm that, it has
(i) sole investment discretion with respect to each such account and (ii) full
power to make the foregoing acknowledgments, representations, warranties,
certifications and/or agreements with respect to each such account as described
in the five preceding paragraphs.
The provisions of Section 5.02(d) of the Agreement may be
modified, added to or eliminated, provided that there shall have been delivered
to the Trustee and the Tax Administrator the following: (a) written confirmation
from each Rating Agency to the effect that the modification of, addition to or
elimination of such provisions will not result in an Adverse Rating Event with
respect to any Class of Rated Certificates; and (b) an Opinion of Counsel, in
form and substance satisfactory to the Trustee and the Tax Administrator, to the
effect that such modification of, addition to or elimination of such provisions
will not cause any REMIC Pool to cease to qualify as a REMIC or be subject to an
entity-level tax caused by the Transfer of a Residual Interest Certificate to a
Person that is not a Permitted Transferee, or cause a Person other than the
prospective Transferee to be subject to a REMIC-related tax caused by the
Transfer of a Residual Interest Certificate to a Person that is not a Permitted
Transferee.
A-6-6
<PAGE>
A "Permitted Transferee" is any Transferee other than a
"Disqualified Organization" and a "Non-United States Person". In addition, if
such Transferee is classified as a partnership under the Code, such Transferee
can only be a "Permitted Transferee" if all of its beneficial owners are United
States Persons.
A "Disqualified Organization" is any of (i) the United States
or a possession thereof, any State or political subdivision thereof or any
agency or instrumentality of any of the foregoing (other than an instrumentality
which is a corporation if all of its activities are subject to tax and, except
for FHLMC, a majority of its board of directors is not selected by such
governmental unit), (ii) a foreign government, international organization, or
any agency or instrumentality of any of the foregoing, (iii) any organization
(other than certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code (unless such
organization is subject to the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381 of the Code and (v) any other Person so
designated by the REMIC Administrator based upon an Opinion of Counsel that the
holding of an Ownership Interest in a Residual Interest Certificate by such
Person may cause the Trust or any Person having an Ownership Interest in any
Class of Certificates (other than such Person) to incur a liability for any
federal tax imposed under the Code that would not otherwise be imposed but for
the Transfer of an Ownership Interest in a Residual Interest Certificate to such
Person. The terms "United States", "State" and "international organization"
shall have the meanings set forth in Section 7701 of the Code or successor
provisions.
A "Non-United States Person" is any Person other than a United
States Person. A "United States Person" is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate whose income from sources without the United States is includible in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, or
a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more United States
persons have the authority to control all substantial decisions of the trust or,
to the extent provided in the Treasury regulations, a trust if it was in
existence on August 20, 1996 and it elected to be treated as a United States
Person, all within the meaning of Section 7701(a)(30) of the Code.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class in authorized denominations evidencing the same aggregate Percentage
Interest will be issued to the designated transferee or transferees.
A-6-7
<PAGE>
No service charge will be imposed for any registration of
transfer or exchange of this Certificate, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of this Certificate.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, any Fiscal Agent, the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, any Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
Subject to certain terms and conditions set forth in the
Agreement, the Trust Fund and the obligations created by the Agreement shall
terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Special Servicer
or any single Controlling Class Certificateholder or group of Controlling Class
Certificateholders, at a price determined as provided in the Agreement, of all
the Mortgage Loans and each REO Property remaining in the Trust Fund. The
Agreement permits, but does not require, the Master Servicer, the Special
Servicer or any single Controlling Class Certificateholder or group of
Controlling Class Certificateholders to purchase from the Trust Fund all the
Mortgage Loans and each REO Property remaining therein. The exercise of such
right will effect early retirement of the Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1.0% of the Initial Pool Balance.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Special Servicer, the
Trustee and any Fiscal Agent and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Trustee and any Fiscal Agent with the consent of the Holders of
Certificates entitled to not less than 66 2/3% of the Voting Rights allocated to
all of the affected Classes. Any such consent by the Holder of this Certificate
shall be conclusive and binding on such Holder and upon all future Holders of
this Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of any REMIC Pool as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
A-6-8
<PAGE>
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
substantive laws of the State of New York applicable to agreements made and to
be performed entirely in said State, and the obligations, rights and remedies of
the Holder hereof shall be determined in accordance with such laws.
A-6-9
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
___________________________
as Trustee
By: ______________________________
Authorized Representative
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R-I] [R-II] [R-III] Certificates
referred to in the within- mentioned Agreement.
Dated:
_______________________________
as Certificate Registrar
By: ______________________________
Authorized Representative
A-6-10
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
(please print or typewrite name and address including postal
zip code of assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------.
Dated:
-------------------------------------
Signature by or on behalf of Assignor
-------------------------------------
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of
distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
----------------------------------
- --------------------------------------------------------------------------------
for the account of
------------------------------------------------------------.
Distributions made by check (such check to be made payable to
) and all applicable statements and notices should be
- -------------------------
mailed to
---------------------------------------------------------------------.
This information is provided by , the
------------------------
Assignee named above, or , as its agent.
--------------------
A-6-11
<PAGE>
EXHIBIT B-1
SCHEDULE OF MORTGAGE LOANS
B-1-1
<PAGE>
EXHIBIT B-2
SCHEDULE OF EXCEPTIONS TO MORTGAGE FILE DELIVERY
<TABLE>
<CAPTION>
Loan Property Document Code Exception Comment
ID Name
<S> <C> <C> <C> <C> <C>
</TABLE>
B-1-2
<PAGE>
EXHIBIT B-3
FORM OF CUSTODIAL CERTIFICATION
[date]
Greenwich Capital Commercial Funding
Corp.
[Address]
[MORTGAGE LOAN SELLER]
[UNDERWRITER]
Re: Greenwich Capital Commercial Funding Corp.,
Commercial Mortgage Pass-Through Certificates,
Series _________________
Ladies and Gentlemen:
Pursuant to Section 2.02(b) of the Pooling and Servicing
Agreement dated as of __________________ and related to the above-referenced
Certificates (the "Agreement"), __________________________, as trustee (the
"Trustee"), hereby certifies as to each Original Mortgage Loan subject to the
Agreement (except as identified in the exception report attached hereto) that:
(i) the original Mortgage Note specified in clause (i) of the definition of
"Mortgage File" in the Agreement or a lost note affidavit in lieu thereof, the
original or copy of each recorded document specified in clauses (ii) through (v)
of the definition of "Mortgage File" in the Agreement, the original or copy of
the policy of title insurance specified in clause (vii) of the definition of
"Mortgage File" in the Agreement and each document specified in clause (viii) of
the definition of "Mortgage File" in the Agreement (without regard to the
parenthetical in such clause (viii)), is in its possession or the possession of
a Custodian on its behalf; (ii) if the date of this report is after
_________________, the recordation/filing contemplated by Section 2.01(e) has
been completed (based solely on receipt by the Trustee of the particular
recorded/filed documents); (iii) all documents received by it or any Custodian
with respect to such Mortgage Loan have been reviewed by it or by such Custodian
on its behalf and (A) appear regular on their face (handwritten additions,
changes or corrections shall not constitute irregularities if initialed by the
Borrower), (B) appear to have been executed and (C) purport to relate to such
Mortgage Loan; and (iv) based on the examinations referred to in Section 2.02(a)
and Section 2.02(b) of the Agreement and only as to the foregoing
B-3-1
<PAGE>
documents, the information set forth in the Mortgage Loan Schedule with respect
to the items specified in clauses (ii) (other than the zip code) and (vi)(B) of
the definition of "Mortgage Loan Schedule" in the Agreement accurately reflects
the information set forth in the Mortgage File.
Pursuant to Section 2.02(c) of the Agreement, neither the
Trustee nor the Custodian is under any obligation to inspect, review or examine
any of the documents, instruments, certificates or other papers relating to the
Mortgage Loans delivered to it to determine that the same are valid, legal,
effective, genuine, binding, enforceable, sufficient or appropriate for the
represented purpose or that they are other than what they purport to be on their
face. Furthermore, neither the Trustee nor the Custodian shall have any
responsibility for determining whether the text of any assignment or endorsement
is in proper or recordable form, whether the requisite recording of any document
is in accordance with the requirements of any applicable jurisdiction, or
whether a blanket assignment is permitted in any applicable jurisdiction.
Capitalized terms used herein and not otherwise defined shall
have the respective meanings assigned to them in the Agreement.
Respectfully,
___________________________
as Trustee
By: __________________________
Name:
Title:
B-3-2
<PAGE>
EXHIBIT C
LETTER OF REPRESENTATIONS AMONG DEPOSITOR,
TRUSTEE AND INITIAL DEPOSITORY
C-1
<PAGE>
EXHIBIT D-1
FORM OF MASTER SERVICER REQUEST FOR RELEASE
[Date]
[TRUSTEE]
Re: Greenwich Capital Commercial Funding Corp.,
Commercial Mortgage Pass-Through
Certificates, Series _____________
In connection with the administration of the Mortgage Files
held by or on behalf of you as trustee under a certain Pooling and Servicing
Agreement, dated as of _______________ (the "Pooling and Servicing Agreement"),
among Greenwich Capital Commerical Funding Corp. as depositor, the undersigned
as master servicer (in such capacity, the "Master Servicer"), _________________
as special servicer and you as trustee (in such capacity, the "Trustee"), the
undersigned as Master Servicer hereby requests a release of the Mortgage File
(or the portion thereof specified below) held by or on behalf of you as Trustee
with respect to the following described Mortgage Loan for the reason indicated
below.
Property Name:
Address:
Prospectus No.:
If only particular documents in the Mortgage File are requested, please specify
which:
Reason for requesting Mortgage File (or portion thereof):
______ 1. Mortgage Loan paid in full.
The undersigned hereby certifies that all amounts
received in connection with the Mortgage Loan that
are required to be credited to the Collection Account
pursuant to the Pooling and Servicing Agreement, have
been or will be so credited.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage File (or
requested portion thereof) will be held by the undersigned in accordance with
the provisions of the Pooling and Servicing Agreement and will be returned to
you or your designee within ten days of our receipt
D-1-1
<PAGE>
thereof, unless the Mortgage Loan has been paid in full, in which case the
Mortgage File (or such portion thereof) will be retained by us permanently.
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
___________________________
as Master Servicer
By: ______________________________
Name:
Title:
D-1-2
<PAGE>
EXHIBIT D-2
FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
[Date]
[TRUSTEE]
Re: Greenwich Capital Commercial Funding Corp.,
Commercial Pass-Through Certificates, Series ______________
In connection with the administration of the Mortgage Files
held by or on behalf of you as trustee under a certain Pooling and Servicing
Agreement, dated as of _______________ (the "Pooling and Servicing Agreement"),
among Greenwich Capital Commercial Funding Corp. as depositor,
___________________ as master servicer, the undersigned as special servicer (the
"Special Servicer") and you as trustee (in such capacity, the "Trustee"), the
undersigned as Special Servicer hereby requests a release of the Mortgage File
(or the portion thereof specified below) held by or on behalf of you as Trustee
with respect to the following described Mortgage Loan for the reason indicated
below.
Property Name:
Address:
Prospectus No.:
If only particular documents in the Mortgage File are requested, please specify
which:
Reason for requesting Mortgage File (or portion thereof):
______ 1. The Mortgage Loan is being foreclosed.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage File (or
requested portion thereof) will be held by the undersigned in accordance with
the provisions of the Pooling and Servicing Agreement and will be returned to
you or your designee within ten days of our receipt thereof, unless the Mortgage
Loan is being foreclosed, in which case the Mortgage File (or such portion
thereof) will be returned when no longer required by us for such purpose.
D-2-1
<PAGE>
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
______________________________
as Special Servicer
By: _____________________________
Name:
Title:
D-2-2
<PAGE>
EXHIBIT E-1
FORM OF TRUSTEE REPORT
E-1-1
<PAGE>
EXHIBIT E-2A
FORM OF CMSA LOAN PERIODIC UPDATE FILE
E-2A-1
<PAGE>
EXHIBIT E-2B
FORM OF CMSA PROPERTY FILE
E-2B-1
<PAGE>
EXHIBIT E-2C
FORM OF CMSA LOAN SET-UP FILE
E-2B-2
<PAGE>
EXHIBIT E-3
FORM OF COMPARATIVE FINANCIAL STATUS REPORT
E-3-1
<PAGE>
EXHIBIT E-4
FORM OF DELINQUENT LOAN STATUS REPORT
E-4-1
<PAGE>
EXHIBIT E-5
FORM OF HISTORICAL LOAN MODIFICATION REPORT
E-5-1
<PAGE>
EXHIBIT E-6
FORM OF HISTORICAL LOSS ESTIMATE REPORT
E-6-1
<PAGE>
EXHIBIT E-7
FORM OF NOI ADJUSTMENT WORKSHEET
E-7-1
<PAGE>
EXHIBIT E-8
FORM OF OPERATING STATEMENT ANALYSIS REPORT
E-8-1
<PAGE>
EXHIBIT E-9
FORM OF REO STATUS REPORT
E-9-1
<PAGE>
EXHIBIT E-10
FORM OF WATCH LIST
E-10-1
<PAGE>
EXHIBIT F-1A
FORM I OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF NON-REGISTERED CERTIFICATES
[Date]
[TRUSTEE]
[OR OTHER CERTIFICATE REGISTRAR]
Re: Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, Class ______
Certificates [having an initial aggregate Certificate Principal
Balance as of ________________ (the "Closing Date") of ____________
$__________] [evidencing a ____% Percentage Interest in the related
Class] (the "Transferred Certificates")
Dear Sirs:
This letter is delivered to you in connection with the
transfer by _________________ (the "Transferor") to _________________ (the
"Transferee") of the captioned Certificates (the "Transferred Certificates")
pursuant to Section 5.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of _______________, among Greenwich Capital
Commercial Funding Corp., as Depositor, ____________________ as Master Servicer,
______________________, as Special Servicer, and __________________________, as
Trustee. All capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Pooling and Servicing Agreement. The
Transferor hereby certifies, represents and warrants to you, as Certificate
Registrar, that:
1. The Transferor is the lawful owner of the Transferred
Certificates with the full right to transfer such Certificates free from any and
all claims and encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has
(a) offered, transferred, pledged, sold or otherwise disposed of any Transferred
Certificate, any interest in a Transferred Certificate or any other similar
security to any person in any manner, (b) solicited any offer to buy or accept a
transfer, pledge or other disposition of any Transferred Certificate, any
interest in a Transferred Certificate or any other similar security from any
person in any manner, (c) otherwise approached or negotiated with respect to any
Transferred Certificate, any interest in a Transferred Certificate or any other
similar security with any person in any manner, (d) made any general
solicitation with respect to any Transferred Certificate, any interest in a
Transferred Certificate or any other similar security by means of general
advertising or in any other manner, or (e) taken any other action with respect
to any Transferred Certificate, any interest in a Transferred Certificate or any
other similar security, which (in the case of any of the acts described in
clauses (a) through (e) hereof) would constitute a distribution of the
Transferred Certificates under the Securities Act of 1933, as amended (the
"Securities Act"), or would render the disposition of the Transferred
F-1A-1
<PAGE>
Certificates a violation of Section 5 of the Securities Act or any state
securities laws, or would require registration or qualification of the
Transferred Certificates pursuant to the Securities Act or any state securities
laws.
3. The Transferor and any person acting on behalf of the
Transferor in this matter reasonably believe that the Transferee is a "qualified
institutional buyer" as that term is defined in Rule 144A ("Rule 144A") under
the Securities Act (a "Qualified Institutional Buyer") purchasing for its own
account or for the account of another person that is itself a Qualified
Institutional Buyer. In determining whether the Transferee is a Qualified
Institutional Buyer, the Transferor and any person acting on behalf of the
Transferor in this matter has relied upon the following method(s) of
establishing the Transferee's ownership and discretionary investments of
securities (check one or more):
___ (a) The Transferee's most recent publicly available financial
statements, which statements present the information as of a
date within 16 months preceding the date of sale of the
Transferred Certificates in the case of a U.S. purchaser and
within 18 months preceding such date of sale in the case of a
foreign purchaser; or
___ (b) The most recent publicly available information appearing
in documents filed by the Transferee with the Securities and
Exchange Commission or another United States federal, state,
or local governmental agency or self-regulatory organization,
or with a foreign governmental agency or self-regulatory
organization, which information is as of a date within 16
months preceding the date of sale of the Transferred
Certificates in the case of a U.S. purchaser and within 18
months preceding such date of sale in the case of a foreign
purchaser; or
___ (c) The most recent publicly available information appearing
in a recognized securities manual, which information is as of
a date within 16 months preceding the date of sale of the
Transferred Certificates in the case of a U.S. purchaser and
within 18 months preceding such date of sale in the case of a
foreign purchaser; or
___ (d) A certification by the chief financial officer, a person
fulfilling an equivalent function, or other executive officer
of the Transferee, specifying the amount of securities owned
and invested on a discretionary basis by the Transferee as of
a specific date on or since the close of the Transferee's most
recent fiscal year, or, in the case of a Transferee that is a
member of a "family of investment companies", as that term is
defined in Rule 144A, a certification by an executive officer
of the investment adviser specifying the amount of securities
owned by the "family of investment companies" as of a specific
date on or since the close of the Transferee's most recent
fiscal year.
F-1A-2
<PAGE>
___ (e) Other. (Please specify brief description of method)
4. The Transferor and any person acting on behalf of the
Transferor understand that in determining the aggregate amount of securities
owned and invested on a discretionary basis by an entity for purposes of
establishing whether such entity is a Qualified Institutional Buyer:
(a) the following instruments and interests shall be excluded:
securities of issuers that are affiliated with such entity; securities
that are part of an unsold allotment to or subscription by such entity,
if such entity is a dealer; securities of issuers that are part of such
entity's "family of investment companies", if such entity is a
registered investment company; bank deposit notes and certificates of
deposit; loan participations; repurchase agreements; securities owned
but subject to a repurchase agreement; and currency, interest rate and
commodity swaps;
(b) the aggregate value of the securities shall be the cost of such
securities, except where the entity reports its securities holdings in
its financial statements on the basis of their market value, and no
current information with respect to the cost of those securities has
been published, in which case the securities may be valued at market;
and
(c) securities owned by subsidiaries of the entity that are
consolidated with the entity in its financial statements prepared in
accordance with generally accepted accounting principles may be
included if the investments of such subsidiaries are managed under the
direction of the entity, except that, unless the entity is a reporting
company under Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, securities owned by such subsidiaries may not be
included if the entity itself is a majority-owned subsidiary that would
be included in the consolidated financial statements of another
enterprise.
5. The Transferor or a person acting on its behalf has taken
reasonable steps to ensure that the Transferee is aware that the Transferor is
relying on the exemption from the provisions of Section 5 of the Securities Act
provided by Rule 144A.
F-1A-3
<PAGE>
6. The Transferor or a person acting on its behalf has
furnished, or caused to be furnished, to the Transferee all information
regarding (a) the Depositor, (b) the Transferred Certificates and distributions
thereon, (c) the nature, performance and servicing of the Mortgage Loans, (d)
the Pooling and Servicing Agreement, and (e) all related matters, that the
Transferee has requested.
Very truly yours,
-----------------------
(Transferor)
By: _____________________
Name: ___________________
Title: __________________
F-1A-4
<PAGE>
EXHIBIT F-1B
FORM II OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF NON-REGISTERED CERTIFICATES
[Date]
[TRUSTEE]
[OR OTHER CERTIFICATE REGISTRAR]
Re: Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, Class ______
Certificates [having an initial aggregate Certificate Principal Balance
as of ______________ (the "Closing Date") of $__________] ____________
[evidencing a ____% Percentage Interest in the related Class] (the
"Transferred Certificates") ________________________
Dear Sirs:
This letter is delivered to you in connection with the
transfer by _________________ (the "Transferor") to _________________ (the
"Transferee") of the captioned Certificates, (the "Transferred Certificates"),
pursuant to Section 5.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of ____________________, among Greenwich
Capital Commercial Funding Corp., as Depositor, _________________, as Master
Servicer, __________________, as Special Servicer, and _______________________,
as Trustee. All capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
The Transferor hereby certifies, represents and warrants to you, as Certificate
Registrar, that:
1. The Transferor is the lawful owner of the Transferred
Certificates with the full right to transfer such Certificates free from any and
all claims and encumbrances whatsoever.
2. Neither the Transferor nor anyone acting on its behalf has
(a) offered, transferred, pledged, sold or otherwise disposed of any Transferred
Certificate, any interest in a Transferred Certificate or any other similar
security to any person in any manner, (b) solicited any offer to buy or accept a
transfer, pledge or other disposition of any Transferred Certificate, any
interest in a Transferred Certificate or any other similar security from any
person in any manner, (c) otherwise approached or negotiated with respect to any
Transferred Certificate, any interest in a Transferred Certificate or any other
similar security with any person in any manner, (d) made any general
solicitation with respect to any Transferred Certificate, any interest in a
Transferred
F-1B-1
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Certificate or any other similar security by means of general advertising or in
any other manner, or (e) taken any other action with respect to any Transferred
Certificate, any interest in a Transferred Certificate or any other similar
security, which (in the case of any of the acts described in clauses (a) through
(e) hereof) would constitute a distribution of the Transferred Certificates
under the Securities Act of 1933, as amended (the "Securities Act"), would
render the disposition of the Transferred Certificates a violation of Section 5
of the Securities Act or any state securities laws, or would require
registration or qualification of the Transferred Certificates pursuant to the
Securities Act or any state securities laws.
Very truly yours,
-----------------------
(Transferor)
By: _____________________
Name: ___________________
Title: __________________
F-1B-2
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EXHIBIT F-2A
FORM I OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF NON-REGISTERED CERTIFICATES
[Date]
[TRUSTEE]
Re: Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, Class ______
Certificates [having an initial aggregate Certificate Principal Balance
as of ________________ (the "Closing Date") of ____________
$__________] [evidencing a ____% Percentage Interest in the related
Class] (the "Transferred Certificates")
Dear Sirs:
This letter is delivered to you in connection with the
transfer by _________________ (the "Transferor") to _________________ (the
"Transferee") of the captioned Certificates (the "Transferred Certificates")
pursuant to Section 5.02 of the Pooling and Servicing Agreement (the "Pooling
and Servicing Agreement"), dated as of ________________, among Greenwich Capital
Commercial Funding Corp., as Depositor, ______________________, as Master
Servicer, __________________________, as Special Servicer, and
__________________________, as Trustee. All capitalized terms used herein and
not otherwise defined shall have the respective meanings set forth in the
Pooling and Servicing Agreement. The Transferor hereby certifies, represents and
warrants to you, as Certificate Registrar, that:
1. The Transferee is a "qualified institutional buyer" (a
"Qualified Institutional Buyer") as that term is defined in Rule 144A ("Rule
144A") under the Securities Act of 1933, as amended (the "Securities Act"), and
has completed one of the forms of certification to that effect attached hereto
as Annex 1 and Annex 2. The Transferee is aware that the sale to it is being
made in reliance on Rule 144A. The Transferee is acquiring the Transferred
Certificates for its own account or for the account of another Qualified
Institutional Buyer, and understands that such Trans ferred Certificates may be
resold, pledged or transferred only (a) to a person reasonably believed to be a
Qualified Institutional Buyer that purchases for its own account or for the
account of another Qualified Institutional Buyer and to whom notice is given
that the resale, pledge or transfer is being made in reliance on Rule 144A, or
(b) pursuant to another exemption from registration under the Securities Act.
F-2A-1
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2. The Transferee has been furnished with all information
regarding (a) the Depositor, (b) the Transferred Certificates and distributions
thereon, (c) the nature, performance and servicing of the Mortgage Loans, (d)
the Pooling and Servicing Agreement and the Trust Fund created pursuant thereto,
and (e) all related matters, that it has requested.
3. If the Transferee proposes that the Transferred
Certificates be registered in the name of a nominee, such nominee has completed
the Nominee Acknowledgment below.
Very truly yours,
-----------------------
(Transferee)
By: _____________________
Name: ___________________
Title: __________________
F-2A-2
<PAGE>
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Transferred Certificates being registered in its name, the sole beneficial owner
thereof is and shall be the Transferee identified above, for whom the
undersigned is acting as nominee.
------------------------
(Nominee)
By: ____________________
Name: __________________
Title: _________________
F-2A-1
<PAGE>
ANNEX 1 TO EXHIBIT F-2A
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and [name of Certificate Registrar], as
Certificate Registrar, with respect to the mortgage pass- through certificates
being transferred (the "Transferred Certificates") as described in the
Transferee certificate to which this certification relates and to which this
certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive officer
of the entity purchasing the Transferred Certificates (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A under the Securities Act of 1933, as amended ("Rule
144A") because (i) the Transferee [each of the Transferee's equity owners] owned
and/or invested on a discretionary basis $______________________(1) in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year (such amount being calculated in
accordance with Rule 144A) and (ii) the Transferee satisfies the criteria in the
category marked below.
___ Corporation, etc. The Transferee is a corporation (other than
a bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ Bank. The Transferee (a) is a national bank or a banking
institution organized under the laws of any state, U.S.
territory or the District of Columbia, the business of which
is substantially confined to banking and is supervised by the
state or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto, as of a date not more than 16 months
preceding the date of sale of the Transferred Certificates in
the case of a U.S. bank, and not more than 18 months preceding
such date of sale in the case of a foreign bank or equivalent
institution.
______
(1) Transferee or each of its equity owners must own and/or invest on a
discretionary basis at least $100,000,000 in securities unless Transferee or any
such equity owner, as the case may be, is a dealer, and, in that case,
Transferee or such equity owner, as the case may be, must own and/or invest on a
discretionary basis at least $10,000,000 in securities.
F-2A-2
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___ Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a state or federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto, as of a date not more than 16 months
preceding the date of sale of the Transferred Certificates in
the case of a U.S. savings and loan association, and not more
than 18 months preceding such date of sale in the case of a
foreign savings and loan association or equivalent
institution.
___ Broker-dealer. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934, as
amended.
___ Insurance Company. The Transferee is an insurance company
whose primary and predominant business activity is the writing
of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a
State, U.S. territory or the District of Columbia.
___ State or Local Plan. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA Plan. The Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ Investment Advisor. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940, as
amended.
___ QIB Subsidiary. All of the Transferee's equity owners are
"qualified institutional buyers" within the meaning of Rule
144A.
___ Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under
subsection (a)(1) of Rule 144A pursuant to which it qualifies.
Note that registered investment companies should complete
Annex 2 rather than this Annex 1.)
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F-2A-3
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3. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by any Person, the
Transferee did not include (i) securities of issuers that are affiliated with
such Person, (ii) securities that are part of an unsold allotment to or
subscription by such Person, if such Person is a dealer, (iii) bank deposit
notes and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase agreement and
(vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of
securities owned and/or invested on a discretionary basis by any Person, the
Transferee used the cost of such securities to such Person, unless such Person
reports its securities holdings in its financial statements on the basis of
their market value, and no current information with respect to the cost of those
securities has been published, in which case the securities were valued at
market. Further, in determining such aggregate amount, the Transferee may have
included securities owned by subsidiaries of such Person, but only if such
subsidiaries are consolidated with such Person in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under such Person's direction.
However, such securities were not included if such Person is a majority-owned,
consolidated subsidiary of another enterprise and such Person is not itself a
reporting company under the Securities Exchange Act of 1934, as amended.
5. The Transferee is familiar with Rule 144A and understands
that the Transferor and other parties related to the Transferred Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the
Yes No Transferred Certificates only for the
Transferee's own account?
6. If the answer to the foregoing question is "no", then in
each case where the Transferee is purchasing for an account other than its own,
such account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the Transferred
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties any updated annual financial statements that become available on or
before the date of such purchase, promptly after they become available.
F-2A-4
<PAGE>
8. Capitalized terms used but not defined herein have the
respective meanings ascribed thereto in the Pooling and Servicing Agreement
pursuant to which the Transferred Certificates were issued.
--------------------------------
Print Name of Transferee
By: ____________________________
Name: __________________________
Title: _________________________
Date: __________________________
F-2A-5
<PAGE>
ANNEX 2 TO EXHIBIT F-2A
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and [name of Certificate Registrar], as
Certificate Registrar, with respect to the mortgage pass-through certificates
(the "Transferred Certificates") described in the Transferee certificate to
which this certification relates and to which this certification is an Annex:
1. As indicated below, the undersigned is the chief financial
officer, a person fulfilling an equivalent function, or other executive officer
of the entity purchasing the Transferred Certificates (the "Transferee") or, if
the Transferee is a "qualified institutional buyer" as that term is defined in
Rule 144A under the Securities Act of 1933, as amended ("Rule 144A") because the
Transferee is part of a Family of Investment Companies (as defined below), is an
executive officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as
defined in Rule 144A because (i) the Transferee is an investment company
registered under the Investment Company Act of 1940, and (ii) as marked below,
the Transferee alone owned and/or invested on a discretionary basis, or the
Transferee's Family of Investment Companies owned, at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used, unless the
Transferee or any member of the Transferee's Family of Investment Companies, as
the case may be, reports its securities holdings in its financial statements on
the basis of their market value, and no current information with respect to the
cost of those securities has been published, in which case the securities of
such entity were valued at market.
____ The Transferee owned and/or invested on a discretionary basis
$___________________ in securities (other than the excluded
securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies
which owned in the aggregate $______________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
F-2A-6
<PAGE>
3. The term "Family of Investment Companies" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment Companies, (ii) bank deposit notes and
certificates of deposit, (iii) loan participations, (iv) repurchase agreements,
(v) securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps. For purposes of determining the aggregate
amount of securities owned and/or invested on a discretionary basis by the
Transferee, or owned by the Transferee's Family of Investment Companies, the
securities referred to in this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands
that the Transferor and other parties related to the Transferred Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Transferee will be in reliance on Rule 144A.
____ ____ Will the Transferee be purchasing
Yes No the Transferred Certificates only
for the Transferee's own account?
6. If the answer to the foregoing question is "no", then in
each case where the Transferee is purchasing for an account other than its own,
such account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The undersigned will notify the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Transferee's purchase of the Transferred Certificates
will constitute a reaffirmation of this certification by the undersigned as of
the date of such purchase.
F-2A-7
<PAGE>
8. Capitalized terms used but not defined herein have the
respective meanings ascribed thereto in the Pooling and Servicing Agreement
pursuant to which the Transferred Certificates were issued.
-----------------------------------
Print Name of Transferee or Adviser
By: _______________________________
Name: _____________________________
Title: ____________________________
IF AN ADVISER:
-----------------------------------
Print Name of Transferee
Date: _____________________________
F-2A-8
<PAGE>
EXHIBIT F-2B
FORM II OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF NON-REGISTERED CERTIFICATES
[Date]
[TRUSTEE]
Re: Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, Class ___
Certificates [having an initial aggregate Certificate Principal Balance
as of ______________ (the "Closing Date") of $__________] [evidencing
a ____% Percentage Interest in the related Class] (the "Transferred
Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _______________________ (the "Transferor") to
_______________________________ (the "Transferee") of the captioned Certificates
(the "Transferred Certificates") pursuant to Section 5.02 of the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
________________, among Greenwich Capital Commercial Funding Corp., as
Depositor, ________________________, as Master Servicer, _____________________,
as Special Servicer, and ________________________, as Trustee. All capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Pooling and Servicing Agreement. The Transferee hereby
certifies, represents and warrants to you, as Certificate Registrar, that:
1. Transferee is acquiring the Transferred Certificates for
its own account for investment and not with a view to or for sale or transfer in
connection with any distribution thereof, in whole or in part, in any manner
which would violate the Securities Act of 1933, as amended (the "Securities
Act"), or any applicable state securities laws.
2. Transferee understands that (a) the Transferred
Certificates have not been and will not be registered under the Securities Act
or registered or qualified under any applicable state securities laws, (b)
neither the Depositor nor the Trustee is obligated so to register or qualify the
Transferred Certificates, and (c) neither the Transferred Certificates nor any
security issued in exchange therefor or in lieu thereof may be resold or
transferred unless it is (i) registered pursuant to the Securities Act and
registered or qualified pursuant to any applicable state securities laws or (ii)
sold or transferred in a transaction which is exempt from such registration and
qualification and the Certificate Registrar has received (A) a certificate from
the prospective transferor substantially in the form attached as Exhibit F-1A to
the Pooling and Servicing Agreement; (B) a certificate from the prospective
transferor substantially in the form attached as Exhibit F-1B to the Pooling and
Servicing
F-2B-1
<PAGE>
Agreement and a certificate from the prospective transferee substantially in the
form attached either as Exhibit F-2A or as Exhibit F-2B to the Pooling and
Servicing Agreement; or (C) an Opinion of Counsel satisfactory to the
Certificate Registrar that the transfer may be made without registration under
the Securities Act, together with the written certification(s) as to the facts
surrounding the transfer from the prospective transferor and/or prospective
transferee upon which such Opinion of Counsel is based.
3. The Transferee understands that it may not sell or
otherwise transfer the Transferred Certificates, any security issued in exchange
therefor or in lieu thereof or any interest in the foregoing except in
compliance with the provisions of Section 5.02 of the Pooling and Servicing
Agreement, which provisions it has carefully reviewed, and that the Transferred
Certificates will bear legends substantially to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE
SECURITIES LAWS OF ANY STATE. ANY RESALE, PLEDGE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR
QUALIFICATION MAY BE MADE ONLY IN A TRANSACTION WHICH DOES NOT REQUIRE
SUCH REGISTRATION OR QUALIFICATION AND WHICH IS IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE TO
(A) ANY RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT
THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974,
AS AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE"), OR (B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY
PURCHASING THIS CERTIFICATE OR ANY INTEREST HEREIN ON BEHALF OF, AS
NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
RETIREMENT PLAN OR OTHER EMPLOYEE BENEFIT PLAN OR ARRANGEMENT, EXCEPT
IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
THE TRUST FUND IN WHICH THIS CERTIFICATE EVIDENCES AN INTEREST HAS NOT
BEEN REGISTERED AS AN "INVESTMENT COMPANY" UNDER THE INVESTMENT COMPANY
ACT OF 1940, AS AMENDED (THE "INVESTMENT COMPANY ACT"). ACCORDINGLY,
THIS CERTIFICATE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT TO (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT (A "QUALIFIED INSTITUTIONAL BUYER")
OR (2) AN ACCREDITED INVESTOR WITHIN THE MEANING OF PARAGRAPH (1), (2),
(3) OR (7) OF
F-2B-2
<PAGE>
RULE 501(a) OF REGULATION D UNDER THE SECURITIES ACT OR AN ENTITY
IN WHICH ALL THE EQUITY OWNERS CONSTITUTE ENTITIES DESCRIBED IN SUCH
PARAGRAPHS.
4. Neither the Transferee nor anyone acting on its behalf has
(a) offered, transferred, pledged, sold or otherwise disposed of any Transferred
Certificate, any interest in a Transferred Certificate or any other similar
security to any person in any manner, (b) solicited any offer to buy or accept a
transfer, pledge or other disposition of any Transferred Certificate, any
interest in a Transferred Certificate or any other similar security from any
person in any manner, (c) otherwise approached or negotiated with respect to any
Transferred Certificate, any interest in a Transferred Certificate or any other
similar security with any person in any manner, (d) made any general
solicitation by means of general advertising or in any other manner, or (e)
taken any other action, that (in the case of any of the acts described in
clauses (a) through (e) above) would constitute a distribution of the
Transferred Certificates under the Securities Act, would render the disposition
of the Transferred Certificates a violation of Section 5 of the Securities Act
or any state securities law or would require registration or qualification of
the Transferred Certificates pursuant thereto. The Transferee will not act, nor
has it authorized nor will it authorize any person to act, in any manner set
forth in the foregoing sentence with respect to the Transferred Certificates,
any interest in the Transferred Certificates or any other similar security.
5. The Transferee has been furnished with all information
regarding (a) the Depositor, (b) the Transferred Certificates and distributions
thereon, (c) nature, performance and servicing of the Mortgage Loans, (d) the
Pooling and Servicing Agreement and the Trust Fund created pursuant thereto and
(e) all related matters, that it has requested.
6. The Transferee is an "accredited investor" within the
meaning of paragraph (1), (2), (3) or (7) of Rule 501(a) under the Securities
Act or an entity in which all the equity owners come within such paragraphs and
has such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of an investment in the Transferred
Certificates; the Transferee has sought such accounting, legal and tax advice as
it has considered necessary to make an informed investment decision; and the
Transferee is able to bear the economic risks of such an investment and can
afford a complete loss of such investment.
7. If the Transferee proposes that the Transferred
Certificates be registered in the name of a nominee, such nominee has completed
the Nominee Acknowledgment below.
Very truly yours,
-----------------------
(Transferee)
By: _____________________
Name: ___________________
Title: __________________
Date: ___________________
F-2B-3
<PAGE>
Nominee Acknowledgment
The undersigned hereby acknowledges and agrees that as to the
Transferred Certificates being registered in its name, the sole beneficial owner
thereof is and shall be the Transferee identified above, for whom the
undersigned is acting as nominee.
-------------------------
(Nominee)
By: _____________________
Name: ___________________
Title: __________________
F-2B-4
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EXHIBIT G
FORM OF TRANSFEREE CERTIFICATE
IN CONNECTION WITH ERISA
(DEFINITIVE SUBORDINATED CERTIFICATES)
[Date]
[TRUSTEE]
Re: Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, Class ______
Certificates [having an initial Certificate Principal Balance as of
__________________ (the "Closing Date") of ____________ $________]
[evidencing a _____% Percentage Interest in the related Class] (the
"Transferred Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _________________ (the "Transferor") to _________________ (the
"Transferee") of the Transferred Certificates pursuant to Section 5.02 of the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as of ______________, among Greenwich Capital Commercial Funding Corp., as
Depositor, ___________________, as Master Servicer, ____________________, as
Special Servicer, and ___________________________, as Trustee. All capitalized
terms used but not otherwise defined herein shall have the respective meanings
set forth in the Pooling and Servicing Agreement. The Transferee hereby
certifies, represents and warrants to you as Certificate Registrar, as follows
(check the applicable paragraph):
___ The Transferee is neither (A) a retirement plan or other employee
benefit plan or arrangement, including an individual retirement account
or annuity, a Keogh plan or a collective investment fund or separate
account in which such plans, accounts or arrangements are invested,
including an insurance company general account, that is subject to
ERISA or Section 4975 of the Code (each, a "Plan"), nor (B) a Person
who is directly or indirectly purchasing the Transferred Certificates
on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan; or
G-1
<PAGE>
___ The Transferee is using funds from an insurance company general account
to acquire the Transferred Certificates, however, the purchase and
holding of such Certificates by such Person is exempt from the
prohibited transaction provisions of Section 406 of ERISA and Section
4975 of the Code under Sections I and III of Prohibited Transaction
Class Exemption 95-60.
Very truly yours,
-----------------------
(Transferee)
By: _____________________
Name: ___________________
Title: __________________
G-2
<PAGE>
EXHIBIT H-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
FOR TRANSFERS OF RESIDUAL INTEREST CERTIFICATES
STATE OF )
) ss:
COUNTY OF )
____________________, being first duly sworn, deposes and says that:
1. He/She is the ____________________ of ____________________
(the prospective transferee (the "Transferee") of Greenwich Capital Commercial
Funding Corp., Commercial Mortgage Pass-Through Certificates, Series
_______________, Class [R-I] [R-II] [R- III], evidencing a __% Percentage
Interest in such Class (the "Residual Interest Certificates")), a
_________________ duly organized and validly existing under the laws of
____________________, on behalf of which he/she makes this affidavit. All
capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement pursuant to
which the Residual Interest Certificates were issued (the "Pooling and Servicing
Agreement").
2. The Transferee (i) is, and as of the date of transfer will
be, a Permitted Transferee and will endeavor to remain a Permitted Transferee
for so long as it holds the Residual Interest Certificates, and (ii) is
acquiring the Residual Interest Certificates for its own account or for the
account of another prospective transferee from which it has received an
affidavit in substantially the same form as this affidavit. A "Permitted
Transferee" is any Person other than a "Disqualified Organization" or a
"non-United States Person", but in addition, if such Person is classified as a
partnership under the Code, such Person can only be a "Permitted Transferee" if
all of its beneficial owners are United States Persons. For this purpose, a
"Disqualified Organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality, all of the activities of which are subject to
tax and, except for the Federal Home Loan Mortgage Corporation, a majority of
whose board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income. A "non-United States Person" is
any Person other than a "United States Person". A "United States Person" is a
citizen or resident of the United States, a corporation, partnership or other
entity created or organized in, or under the laws of, the United States or any
political subdivision thereof, an estate whose income from sources without the
United States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States or a trust as to which (i) a court in the United States
is able to exercise primary supervision over the administration of the trust and
(ii) one or more United States fiduciaries have the right to control all
substantial decisions of the trust or, to the extent provided in
H-1-1
<PAGE>
the Treasury regulations, a trust if it was in existence on August 20, 1996 and
if elected to be treated as a United States Person).
3. The Transferee is aware (i) of the tax that would be
imposed under the Code on transfers of the Residual Interest Certificates to
non-Permitted Transferees; (ii) that such tax would be on the transferor or, if
such transfer is through an agent (which Person includes a broker, nominee or
middleman) for a non-Permitted Transferee, on the agent; (iii) that the Person
otherwise liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such Person an affidavit that the transferee is a
Permitted Transferee and, at the time of transfer, such Person does not have
actual knowledge that the affidavit is false; and (iv) that the Residual
Interest Certificates may be a "noneconomic residual interest" within the
meaning of Treasury regulation Section 1.860E-1(c) and that the transferor of a
noneconomic residual interest will remain liable for any taxes due with respect
to the income on such residual interest, unless no significant purpose of the
transfer is to enable the transferor to impede the assessment or collection of
tax.
4. The Transferee is aware of the tax imposed on a
"pass-through entity" holding the Residual Interest Certificates if at any time
during the taxable year of the pass-through entity a non-Permitted Transferee is
the record holder of an interest in such entity. (For this purpose, a "pass-
through entity" includes a regulated investment company, a real estate
investment trust or common trust fund, a partnership, trust or estate, and
certain cooperatives.)
5. The Transferee is aware that the Certificate Registrar will
not register any transfer of the Residual Interest Certificates by the
Transferee unless the Transferee's transferee, or such transferee's agent,
delivers to the Certificate Registrar, among other things, an affidavit and
agreement in substantially the same form as this affidavit and agreement. The
Transferee expressly agrees that it will not consummate any such transfer if it
knows or believes that any representation contained in such affidavit and
agreement is false. In addition, the Transferee is aware the Certificate
Registrar will not register any transfer of the Residual Interest Certificates
to an entity classified as a partnership under the Code unless at the time of
transfer, all of the beneficial owners of such entity are "United States
Persons".
6. The Transferee consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Residual Interest Certificates will
only be owned, directly or indirectly, by a Permitted Transferee.
7. The Transferee's taxpayer identification number is
_________________.
8. The Transferee has reviewed the provisions of Section
5.02(d) of the Pooling and Servicing Agreement, a description of which
provisions is set forth in the Residual Interest Certificates (in particular,
clause (ii)(A) of Section 5.02(d) which authorizes the Trustee to deliver
payments on the Residual Interest Certificates to a Person other than the
Transferee and clause (ii)(B) of Section 5.02(d) which authorizes the Trustee to
negotiate a mandatory sale of the Residual Interest Certificates, in either
case, in the event that the Transferee holds such Residual Interest Certificates
H-1-2
<PAGE>
in violation of Section 5.02(d)); and the Transferee expressly agrees to be
bound by and to comply with such provisions.
9. No purpose of the Transferee relating to its purchase or
any sale of the Residual Interest Certificates is or will be to impede the
assessment or collection of any tax.
10. The Transferee hereby represents to and for the benefit of
the transferor that the Transferee intends to pay any taxes associated with
holding the Residual Interest Certificates as they become due, fully
understanding that it may incur tax liabilities in excess of any cash flows
generated by the Residual Interest Certificates.
11. The Transferee will, in connection with any transfer that
it makes of the Residual Interest Certificates, deliver to the Certificate
Registrar a representation letter substantially in the form of Exhibit H-2 to
the Pooling and Servicing Agreement in which it will represent and warrant,
among other things, that it is not transferring the Residual Interest
Certificates to impede the assessment or collection of any tax and that it has
at the time of such transfer conducted a reasonable investigation of the
financial condition of the proposed Transferee (or its current beneficial owners
if such Transferee is classified as a partnership under the Code) as
contemplated by Treasury regulation Section 1.860E-1(c)(4)(i) and has satisfied
the requirements of such provision.
H-1-3
<PAGE>
IN WITNESS WHEREOF, the Transferee has caused this instrument
to be executed on its behalf, pursuant to the authority of its Board of
Directors, by its ____________________ and its corporate seal to be hereunto
attached, attested by its [Assistant] Secretary, this ______ day of
____________.
[NAME OF TRANSFEREE]
By: ________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
- ---------------------------
[Assistant] Secretary
Personally appeared before me the above-named
____________________, known or proved to me to be the same person who executed
the foregoing instrument and to be the ____________________ of the Transferee,
and acknowledged to me that he/she executed the same as his/her free act and
deed and the free act and deed of the Transferee
Subscribed and sworn before me this ______ day of
__________________, ______.
----------------------------------
NOTARY PUBLIC
COUNTY OF ________________________
STATE OF _________________________
My Commission expires the _________ day of
_________, ___.
H-1-4
<PAGE>
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE FOR TRANSFERS OF
RESIDUAL INTEREST CERTIFICATES
[Date]
[TRUSTEE]
Re: Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, Class [R-I] [R-II]
[R-III] Certificates, evidencing a ____% Percentage Interest in such
Class (the "Residual Interest Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the
transfer by _________________ (the "Transferor") to _________________ (the
"Transferee") of the Residual Interest Certificates, pursuant to the Pooling and
Servicing Agreement, dated as of _________________ (the "Pooling and Servicing
Agreement"), among Greenwich Capital Commercial Funding Corp., as Depositor,
___________________, as Master Servicer, ______________________, as Special
Servicer, and ______________________________, as Trustee. All capitalized terms
used but not otherwise defined herein shall have the respective meanings set
forth in the Pooling and Servicing Agreement. The Transferor hereby certifies,
represents and warrants to you, as Certificate Registrar, that:
1. No purpose of the Transferor relating to the transfer of
the Residual Interest Certificates by the Transferor to the Transferee is or
will be to impede the assessment or collection of any tax.
2. The Transferor understands that the Transferee has
delivered to you a Transfer Affidavit and Agreement in the form attached to the
Pooling and Servicing Agreement as Exhibit H-1. The Transferor does not know or
believe that any representation contained therein is false.
H-2-1
<PAGE>
3. The Transferor has at the time of this transfer conducted a
reasonable investigation of the financial condition of the Transferee (or the
beneficial owners of the Transferee if the Transferee is classified as a
partnership under the Code) as contemplated by Treasury regulation Section
1.860E-1(c)(4)(i) and, as a result of that investigation, the Transferor has
determined that the Transferee has historically paid its debts as they became
due and has found no significant evidence to indicate that the Transferee will
not continue to pay its debts as they become due in the future. The Transferor
understands that the transfer of the Residual Interest Certificates may not be
respected for United States income tax purposes (and the Transferor may continue
to be liable for United States income taxes associated therewith) unless the
Transferor has conducted such an investigation.
Very truly yours,
-----------------------
(Transferor)
By: _____________________
Name: ___________________
Title: __________________
H-2-2
<PAGE>
EXHIBIT I-1
FORM OF NOTICE AND ACKNOWLEDGMENT
CONCERNING REPLACEMENT OF SPECIAL SERVICER
[Date]
[RATING AGENCIES]
Re: Greenwich Capital Commercial Funding Corp., Commercial
Mortgage Pass-Through Certificates, Series _______________
Ladies and Gentlemen:
This notice is being delivered pursuant to Section 6.06 of the
Pooling and Servicing Agreement, dated as of _______________, and relating to
Greenwich Capital Commercial Funding Corp., Commercial Mortgage Pass-Through
Certificates, Series _______________ (the "Agreement"). Capitalized terms used
but not otherwise defined herein shall have respective meanings assigned to them
in the Agreement.
Notice is hereby given that the Holders of Certificates
evidencing a majority of the Voting Rights allocated to the Controlling Class
have designated __________________ to serve as the Special Servicer under the
Agreement.
The designation of ____________________ as Special Servicer
will become final if certain conditions are met and each Rating Agency delivers
to ____________________________, the trustee under the Agreement (the
"Trustee"), written confirmation that if the person designated to become the
Special Servicer were to serve as such, such event would not result in the
qualification, downgrade or withdrawal of the rating or ratings assigned to one
or more Classes of the Certificates. Accordingly, such confirmation is hereby
requested as soon as possible.
I-1-1
<PAGE>
Please acknowledge receipt of this notice by signing the
enclosed copy of this notice where indicated below and returning it to the
Trustee, in the enclosed stamped self-addressed envelope.
Very truly yours,
______________________________
as Trustee
By: __________________________
Name: ________________________
Title: _______________________
Receipt acknowledged:
[Rating Agency]
By: _________________________
Name: _______________________
Title: ______________________
Date: _______________________
[Rating Agency]
By: _________________________
Name: _______________________
Title: ______________________
Date: _______________________
I-1-2
<PAGE>
EXHIBIT I-2
FORM OF ACKNOWLEDGMENT OF PROPOSED SPECIAL SERVICER
[Date]
[TRUSTEE]
[MASTER SERVICER]
[SPECIAL SERVICER]
[DEPOSITOR]
Re: Greenwich Capital Commercial Funding Corporation, Commercial
Mortgage Pass-Through Certificates, Series _______________
Ladies and Gentlemen:
Pursuant to Section 6.06 of the Pooling and Servicing
Agreement, dated as of ___________________, relating to Greenwich Capital
Commercial Funding Corp., Commercial Mortgage Pass-Through Certificates, Series
_______________ (the "Agreement"), the undersigned hereby agrees with all the
other parties to the Agreement that the undersigned shall serve as Special
Servicer under, and as defined in, the Agreement. The undersigned hereby
acknowledges that, as of the date hereof, it is and shall be a party to the
Agreement and bound thereby to the full extent indicated therein in the capacity
of Special Servicer. The undersigned hereby makes, as of the date hereof, the
representations and warranties set forth in Section 2.06 of the Agreement, with
the following corrections with respect to type of entity and jurisdiction of
organization: ________________________.
By: _________________________
Name: _______________________
Title: ______________________
I-2-1
<PAGE>
EXHIBIT J
FORM OF UCC-1 FINANCING STATEMENT
Debtor:
Greenwich Capital Commercial Funding Corp.
[Address]
Secured Party:
[TRUSTEE]
[Address]
Text:
See Exhibit 1 Attached Hereto
J-1-1
<PAGE>
EXHIBIT 1 to EXHIBIT J
This Exhibit 1 is attached to and incorporated in a financing
statement pertaining to Greenwich Capital Commercial Funding Corp. as depositor
(referred to as the "Debtor" for the purpose of this financing statement only),
and ____________________________ as trustee for the holders of the Series
_______________ Certificates (referred to as the "Secured Party" for purposes of
this financing statement only), under that certain Pooling and Servicing
Agreement, dated as of _________________ (the "Pooling and Servicing
Agreement"), among the Debtor as depositor, the Secured Party as trustee,
____________________________, as master servicer (in such capacity, the "Master
Servicer") and ____________________________, as special servicer (in such
capacity, the "Special Servicer"), relating to the issuance of the Debtor's
Commercial Mortgage Pass-Through Certificates, Series _______________
(collectively, the "Series _______________ Certificates"). Capitalized terms
used herein and not defined shall have the respective meanings given to them in
the Pooling and Servicing Agreement. The attached financing statement covers all
of the Debtor's right (including the power to convey title thereto), title and
interest in and to the Trust Fund created pursuant to the Pooling and Servicing
Agreement, consisting of the following:
1. The mortgage notes or other evidence of indebtedness
of a borrower (the "Mortgage Notes") with respect to
the mortgage loans (the "Mortgage Loans") listed on
the Mortgage Loan Schedule to the Pooling and
Servicing Agreement, which Mortgage Loan Schedule is
attached hereto as Exhibit A;
2. The related mortgages, deeds of trust or other
similar instruments securing such Mortgage Notes (the
"Mortgages");
3. With respect to each Mortgage Note and each Mortgage,
each other legal, credit and servicing document
related to such Mortgage Note and Mortgage
(collectively, with such related Mortgage Note and
Mortgage, the "Mortgage Loan Documents");
4. (a) the Collection Account maintained by the Master
Servicer pursuant to the Pooling and Servicing
Agreement, (b) all funds from time to time on deposit
in the Collection Account, (c) the investments of any
such funds consisting of securities, instruments or
other obligations, and (d) the general intangibles
consisting of the contractual right to payment,
including, without limitation, the right to payments
of principal and interest and the right to enforce
the related payment obligations, arising from or
under any such investments;
5. All REO Property;
J-1-2
<PAGE>
6. (a) the REO Account required to be maintained by the
Special Servicer pursuant to the Pooling and
Servicing Agreement, (b) all funds from time to time
on deposit in the REO Account, (c) the investments of
any such funds consisting of securities, instruments
or other obligations, and (d) the general intangibles
consisting of the contractual right to payment,
including, without limitation, the right to payments
of principal and interest and the right to enforce
the related payment obligations, arising from or
under any such investments;
7. (a) the Servicing Account(s) and Reserve Account(s)
required to be maintained by the Master Servicer or
Special Servicer pursuant to the Pooling and
Servicing Agreement, and (b) all funds from time to
time on deposit in the Servicing Account(s) and
Reserve Account(s);
8. (a) the Distribution Account required to be
maintained by the Secured Party pursuant to the
Pooling and Servicing Agreement, (b) all funds from
time to time on deposit in the Distribution Account,
(c) the investments of any such funds consisting of
securities, instruments or other obligations, and (d)
the general intangibles consisting of the contractual
right to payment, including, without limitation, the
right to payments of principal and interest and the
right to enforce the related payment obligations,
arising from or under any such investments;
9. All insurance policies, including the right to
payments thereunder, with respect to the Mortgage
Loans required to be maintained pursuant to the
Mortgage Loan Documents and the Pooling and Servicing
Agreement, transferred to the Trust and to be
serviced by the Master Servicer or Special Servicer;
and
10. All income, payments, products and proceeds of any of
the foregoing, together with any additions thereto or
substitutions therefor.
THE DEBTOR AND THE SECURED PARTY INTEND THE TRANSACTIONS CONTEMPLATED BY THE
POOLING AND SERVICING AGREEMENT TO CONSTITUTE A SALE OF THE INTEREST IN THE
MORTGAGE NOTES, THE RELATED MORTGAGES AND THE OTHER MORTGAGE LOAN DOCUMENTS, AND
THIS FILING SHOULD NOT BE CONSTRUED AS A CONCLUSION THAT A SALE HAS NOT
OCCURRED. THE REFERENCES HEREIN TO MORTGAGE NOTES SHOULD NOT BE CONSTRUED AS A
CONCLUSION THAT ANY MORTGAGE NOTE IS NOT AN INSTRUMENT WITHIN THE MEANING OF THE
UNIFORM COMMERCIAL CODE OR THAT A FILING IS NECESSARY TO PERFECT THE OWNERSHIP
OR SECURITY INTEREST OF THE SECURED PARTY IN ANY MORTGAGE NOTE, MORTGAGE OR
OTHER MORTGAGE LOAN DOCUMENT. IN ADDITION, THE REFERENCES HEREIN TO SECURITIES,
INSTRUMENTS AND OTHER OBLIGATIONS SHOULD NOT BE CONSTRUED AS A CONCLUSION THAT
ANY SUCH SECURITY, INSTRUMENT OR OTHER OBLIGATION IS NOT AN INSTRUMENT, A
CERTIFICATED SECURITY OR AN UNCERTIFICATED SECURITY WITHIN THE
J-1-3
<PAGE>
MEANING OF THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY APPLICABLE
JURISDICTION, NOR SHOULD THIS FINANCING STATEMENT BE CONSTRUED AS A CONCLUSION
THAT A FILING IS NECESSARY TO PERFECT THE OWNERSHIP OR SECURITY INTEREST OF THE
SECURED PARTY IN THE CONTRACTUAL RIGHT TO PAYMENT, INCLUDING, WITHOUT
LIMITATION, THE RIGHT TO PAYMENTS OF PRINCIPAL AND INTEREST AND THE RIGHT TO
ENFORCE THE RELATED PAYMENT OBLIGATIONS, ARISING FROM OR UNDER ANY SUCH
SECURITY, INSTRUMENT OR OTHER OBLIGATION (INCLUDING, WITHOUT LIMITATION, ANY
PERMITTED INVESTMENT). WITH RESPECT TO THE FOREGOING, THIS FILING IS MADE ONLY
IN THE EVENT OF CONTRARY ASSERTIONS BY THIRD PARTIES.
J-1-4
<PAGE>
Exhibit A
MORTGAGE LOAN SCHEDULE
J-1-5
<PAGE>
EXHIBIT K
CALCULATION OF NET OPERATING INCOME
With respect to any Mortgaged Property, "Net Operating Income"
shall mean for each fiscal year or portion thereof, (i) the related Operating
Income allocable to such period, less (ii) the related Operating Expenses
allocable to such period, and less (iii) any Contractual Recurring Replacement
Reserve for such Mortgaged Property as indicated in the Prospectus Supplement
dated ___________________ relating to Greenwich Capital Commercial Funding
Corp., Commercial Mortgage Pass-Through Certificates, Series _______________
(the amounts described in this clause (iii) to be prorated if "Net Operating
Income" is being calculated for less than a full fiscal year).
With respect to any Mortgaged Property "Operating Income"
shall mean, for each fiscal year or portion thereof, all revenue derived by the
related Mortgagor arising from the Mortgaged Property, including, without
limitation, rental revenues (whether denominated as basic rent, additional rent,
percentage rent, escalation payments, electrical payments or otherwise) and
other fees and charges payable pursuant to leases or otherwise in connection
with the Mortgaged Property, and rent insurance proceeds. Operating Income shall
not include (a) insurance proceeds (other than proceeds of business interruption
or other similar insurance allocable to the applicable period) and condemnation
awards (other than awards arising from a temporary taking or the use and
occupancy of all or part of the applicable Mortgaged Property allocable to the
applicable period), or interest accrued on such proceeds or awards, (b) proceeds
of any financing, (c) proceeds of any sale, exchange or transfer of the
Mortgaged Property or any part thereof or interest therein, (d) capital
contributions or loans to the Mortgagor or an Affiliate of the Mortgagor, (e)
any item of income otherwise includible in Operating Income but paid directly by
any tenant to a Person other than the Mortgagor except for real estate taxes
paid directly to any taxing authority by any tenant, (f) any other
extraordinary, non-recurring revenues, (g) rent paid by or on behalf of any
lessee under space lease which is the subject of any proceeding or action
relating to its bankruptcy, reorganization or other arrangement pursuant to
federal bankruptcy law or any similar federal or state law or which has been
adjudicated a bankrupt or insolvent, unless such space lease has been affirmed
by the trustee in such proceeding or action, or (h) rent paid by or on behalf of
any lessee under a space lease the demised premises of which are not occupied
either by such lessee or by a sublessee thereof.
With respect to any Mortgaged Property "Operating Expenses"
shall mean, for each fiscal year or portion thereof, all expenses directly
attributable to the operation, repair and/or maintenance of the Mortgaged
Property, including, without limitation, impositions, insurance premiums,
management fees, payments to third party suppliers, and costs attributable to
the operation, repair and maintenance of the systems for heating, ventilating
and air conditioning, and actually paid for by the Mortgagor. Operating Expenses
shall not include interest, principal and premium, if any, due under the
Mortgage Note or otherwise in connection with any other secured indebtedness,
income taxes, extraordinary capital improvements costs, or any non-cash charge
or expense such as depreciation.
K-1
<PAGE>
EXHIBIT L-1
INFORMATION REQUEST FROM CERTIFICATEHOLDER
OR CERTIFICATE OWNER
[Date]
[TRUSTEE]
Re: Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________
In accordance with Section [4.02(a)] [8.12(b)] of the Pooling
and Servicing Agreement, dated as of _______________ (the "Pooling and Servicing
Agreement"), among Greenwich Capital Commercial Funding Corp., as depositor (the
"Depositor"), ____________________________, as master servicer,
____________________________, as special servicer, and
____________________________ as trustee (the "Trustee"), with respect to the
Greenwich Capital Commercial Funding Corp. Commercial Mortgage Pass-Through
Certificates, Series _______________ (the "Certificates"), the undersigned
hereby certifies and agrees as follows:
1. The undersigned is a beneficial holder of
$___________ aggregate [Certificate Principal
Balance/Certificate Notional Amount] of the Class
____ Certificates.
2. The undersigned is requesting access to the following
information (the "Information"):
___ The information on the Trustee's Internet
Website pursuant to Section 4.02(a) of the
Pooling and Servicing Agreement.
___ The information identified on the schedule
attached hereto pursuant to Section 8.12(b)
of the Pooling and Servicing Agreement.
3. In consideration of the Trustee's disclosure to the
undersigned of the Information, the undersigned will
keep the Information confidential (except from such
outside persons as are assisting it in evaluating the
Information), and such Information will not, without
the prior written consent of the Trustee, be
disclosed by the undersigned or by its officers,
directors, partners employees, agents or
representatives (collectively, the "Representatives")
in any manner whatsoever, in whole or in part;
provided that the undersigned may provide all or any
part of the Information to any other person or entity
that holds or is contemplating the purchase of any
Certificate or interest
L-1-1
<PAGE>
therein, but only if such person or entity
confirms in writing such ownership interest or
prospective ownership interest and agrees to keep it
confidential; and provided that the undersigned may
provide all or any part of the Information to its
auditors, legal counsel and regulators.
4. The undersigned will not use or disclose the
Information in any manner which could result in a
violation of any provision of the Securities Act of
1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended, or would
require registration of any Non-Registered
Certificate (as defined in the Pooling and Servicing
Agreement) pursuant to Section 5 of the Securities
Act.
IN WITNESS WHEREOF, the undersigned has caused its name to be
signed hereto by its duly authorized officer, as of the day and year written
above.
----------------------------------
[BENEFICIAL HOLDER OF A
CERTIFICATE]
By: ______________________________
Name: ____________________________
Title: ___________________________
Telephone No.: ___________________
L-1-2
<PAGE>
EXHIBIT L-2
INFORMATION REQUEST FROM PROSPECTIVE INVESTOR
[Date]
[TRUSTEE]
Re: Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________
In accordance with Section [4.02(a)] [8.12(b)] of the Pooling
and Servicing Agreement, dated as of _______________ (the "Pooling and Servicing
Agreement"), among Greenwich Capital Commercial Funding Corp., as depositor (the
"Depositor"), ____________________________, as master servicer,
____________________________, as special servicer, and
____________________________ as trustee (the "Trustee"), with respect to the
Greenwich Capital Commercial Funding Corp. Commercial Mortgage Pass-Through
Certificates, Series _______________ (the "Certificates"), the undersigned
hereby certifies and agrees as follows:
1. The undersigned is contemplating an investment in the
Class ____ Certificates.
2. The undersigned is requesting access to the following
information (the "Information") for use in evaluating
such possible investment:
___ The information on the Trustee's Internet
Website pursuant to Section 4.02(a) of the
Pooling and Servicing Agreement.
___ The information identified on the schedule
attached hereto pursuant to Section 8.12(b)
of the Pooling and Servicing Agreement.
3. In consideration of the Trustee's disclosure to the
undersigned of the Information, the undersigned will
keep the Information confidential (except from such
outside persons as are assisting it in making the
investment decision described in paragraphs 1 and 2),
and such Information will not, without the prior
written consent of the Trustee, be disclosed by the
undersigned or by its officers, directors, partners
employees, agents or representatives (collectively,
the "Representatives") in any manner whatsoever, in
whole or in part; provided that in the event the
undersigned purchases any Certificate or any interest
in any Certificate, the undersigned may provide all
or any part of the Information to any other person or
entity that holds or is contemplating the purchase of
any Certificate or interest therein, but only if such
person or entity
L-2-1
<PAGE>
confirms in writing such ownership interest or
prospective ownership interest and agrees to keep it
confidential; and provided that the undersigned may
provide all or any part of the Information to its
auditors, legal counsel and regulators.
4. The undersigned will not use or disclose the
Information in any manner which could result in a
violation of any provision of the Securities Act of
1933, as amended (the "Securities Act"), or the
Securities Exchange Act of 1934, as amended, or would
require registration of any Non-Registered
Certificate (as defined in the Pooling and Servicing
Agreement) pursuant to Section 5 of the Securities
Act.
IN WITNESS WHEREOF, the undersigned has caused its name to be
signed hereto by its duly authorized officer, as of the day and year written
above.
---------------------------------
[PROSPECTIVE PURCHASER]
By: ______________________________
Name: ____________________________
Title: ___________________________
Telephone No.: __________________
L-2-2
<PAGE>
EXHIBIT M
FORM OF MORTGAGE LOAN PURCHASE
AND SALE AGREEMENT
M-1-1
<PAGE>
MORTGAGE LOAN PURCHASE AND SALE AGREEMENT
This Mortgage Loan Purchase and Sale Agreement, dated as of
_______________ (this "Agreement"), is between Greenwich Capital Commercial
Funding Corp., a Delaware corporation (the "Purchaser"), and _______________, a
_________________ corporation (the "Seller").
The Seller intends to sell, assign, transfer, set over and
otherwise convey to the Purchaser, without recourse, subject to the terms and
conditions set forth below, certain multifamily and commercial mortgage loans
(collectively, the "Mortgage Loans") identified and more particularly described
on Schedule 1 attached hereto (the "Mortgage Loan Schedule"). Unless otherwise
indicated on the Mortgage Loan Schedule, the Mortgage Loans were originated by
the Seller. With respect to those Mortgage Loans, if any, identified on the
Mortgage Loan Schedule as having been originated by a party other than the
Seller (any such other party, a "Third Party Originator"; and any such Mortgage
Loan, a "Third Party Mortgage Loan"), the Seller is the beneficiary, either
directly or by way of assignment, of certain representations and warranties made
by each Third Party Originator with respect to each Third Party Mortgage Loan(s)
pursuant to the agreements identified on Schedule 2 hereto (each agreement so
identified, a "Third Party Originator Agreement"). The Seller also intends to
assign to the Purchaser all of its right, title and interest in, to and under
each Third Party Originator Agreement, as and to the extent set forth in Section
2 below.
Reference is made to the Pooling and Servicing Agreement,
dated as of _____________ (the "Pooling and Servicing Agreement"), among the
Purchaser, as depositor, ________________________, as master servicer (the
"Master Servicer"), ________________________, as special servicer (the "Special
Servicer"), and ________________________, as trustee (the "Trustee"), relating
to the issuance of the Purchaser's Commercial Mortgage Pass-Through
Certificates, Series _______________ (the "Certificates"). Capitalized terms
used without definition herein shall have the respective meanings assigned to
them in the Pooling and Servicing Agreement as in full force and effect on the
Closing Date (as defined below). The Seller acknowledges that the Purchaser
intends to transfer the Mortgage Loans, to the Trustee in exchange for the
Certificates. The Purchaser has entered into an Underwriting Agreement, dated
the date hereof (the "Underwriting Agreement"), with
____________________________, pursuant to which the Purchaser will sell to
__________ all of the Certificates that are to be registered under the
Securities Act of 1933, as amended (the "Securities Act"; and such Certificates,
the "Registered Certificates"). The Purchaser has also entered into a
Certificate Purchase Agreement, dated the date hereof (the "Certificate Purchase
Agreement"), with ___________, whereby the Purchaser will sell to _____________
all of the remaining Certificates (the "Non-Registered Certificates").
1. Agreement to Purchase. Subject to the terms and conditions
set forth herein, the Seller agrees to sell, assign, transfer, set over and
otherwise convey (without recourse), and the Purchaser agrees to purchase, the
Mortgage Loans. The purchase and sale of the Mortgage Loans
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shall take place on ______________ or such other date as shall be mutually
acceptable to the parties hereto (the "Closing Date"). The Mortgage Loans will
have an aggregate Cut-off Date Balance of approximately $_______________ (the
"Aggregate Cut-off Date Balance"). The purchase price for the Mortgage Loans
shall be equal to ______% of the Aggregate Cut-off Date Balance, plus accrued
interest thereon at the weighted average of the Mortgage Rates for the Mortgage
Loans from ____________ (the "Cut-off Date") to but not including the Closing
Date (net of related Master Servicing Fees and Trustee's Fees), and such
purchase price shall be paid to the Seller on the Closing Date by wire transfer
in immediately available funds or by such other method as shall be mutually
acceptable to the parties hereto.
2. Conveyance of the Mortgage Loans.
(a) Effective as of the Closing Date, subject only to receipt
of the purchase price referred to in Section 1 above, the Seller does hereby
sell, assign, transfer, set over and otherwise convey (without recourse) to the
Purchaser all the right, title and interest of the Seller in, to and under the
Mortgage Loans, and all interest, principal and other amounts received on or
with respect to the Mortgage Loans after the Cut-off Date (other than scheduled
payments of interest and principal due on or before the Cut-off Date), together
with all of the Seller's right, title and interest in and to the proceeds of (i)
any Insurance Policies, (ii) any Additional Collateral, Escrow Payments and
Reserve Funds held under the Mortgage Loans, (iii) all documents included in the
Mortgage Files (as defined below) and Servicing Files (as defined below) for the
Mortgage Loans; and (iv) all of the Seller's right, title and interest in, to
and under the Third Party Originator Agreements; provided, however, that the
Seller's rights under the Third Party Originator Agreements, as assignee, and
the rights the Seller is conveying hereunder, do not include any rights of its
assignor to indemnification under any such agreement. On the Closing Date, the
Seller shall transfer or cause to be transferred to the Master Servicer the
funds in such escrow, reserve or other comparable accounts related to the
Mortgage Loans, together with an amount equal to all collections on the Mortgage
Loans received prior to the Closing Date that represent scheduled payments of
principal and interest due and principal prepayments received after the Cut-off
Date.
(b) In connection with such transfer and assignment, the
Purchaser hereby directs the Seller to, and the Seller hereby agrees to, deliver
to, and deposit with, the Trustee (or a custodian appointed thereby (a
"Custodian")) the documents and/or instruments described on Exhibit A hereto
with respect to each Mortgage Loan (collectively as to each Mortgage Loan, the
"Mortgage File"); provided that if, as to any Mortgage Loan, the original or a
copy of related lender's title insurance policy has not yet been issued, the
delivery obligation of the Seller shall be deemed to be satisfied as to such
missing title insurance policy, and such missing title insurance policy shall be
deemed to have been included in the related Mortgage File, so long as (i) the
Seller delivers to the Trustee on or before the Closing Date a pro forma title
policy or a commitment for title insurance "marked-up" at the closing of such
Mortgage Loan, (ii) the Seller delivers to the Trustee, promptly following the
receipt thereof, the original related lender's title insurance policy (or a copy
thereof), and (iii) as of the date that is 180 days following the Closing Date,
the Seller has delivered to the Trustee the original related lender's title
insurance policy. In addition, the Purchaser hereby directs the Seller to, and
the Seller hereby agrees to, deliver to, and deposit with, the Master Servicer
all of the documents and other items referred to in Section 2.01(f) of the
Pooling and Servicing Agreement with respect
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to the Mortgage Loans (collectively as to each Mortgage Loan, the "Servicing
File"), together with any and all unapplied Reserve Funds and Escrow Payments in
respect of the Mortgage Loans.
If the Seller cannot deliver on the Closing Date any original
or certified recorded document or original policy of title insurance described
on Exhibit A solely because the Seller is delayed in making such delivery by
reason of the fact that such original or certified recorded document has not
been returned by the appropriate recording office or such original policy of
title insurance has not yet been issued, then the Seller shall notify the
Purchaser, the Trustee and, if applicable, the Custodian in writing of such
delay and shall deliver such documents to the Trustee or Custodian, as the case
may be, promptly upon the Seller's receipt thereof.
3. Representations and Warranties.
(a) The Seller hereby makes, as of the Closing Date, to and
for the benefit of the Purchaser and its successors and assigns (including,
without limitation, the Trustee for the benefit of the Certificateholders), each
of the representations and warranties set forth in Exhibit B.
(b) The Seller hereby makes, as of the Closing Date (or as of
such other date specifically provided in the particular representation or
warranty), to and for the benefit of the Purchaser and its successors and
assigns (including, without limitation, the Trustee for the benefit of the
Certificateholders), each of the representations and warranties set forth in
Exhibit C.
(c) The Seller hereby represents and warrants, as of the
Closing Date, to and for the benefit of the Purchaser only, that the Seller has
not dealt with any broker, investment banker, agent or other person (other than
the Purchaser and _______________) who may be entitled to any commission or
compensation in connection with the sale to the Purchaser of the Mortgage Loans.
(d) The Seller hereby agrees that it shall be deemed to make
to and for the benefit of the Purchaser and its successors and assigns
(including, without limitation, the Trustee for the benefit of the
Certificateholders), as of the date of substitution, with respect to any
replacement mortgage loan (a "Replacement Mortgage Loan") that is substituted
for a Defective Mortgage Loan (as defined in Section 4(a) hereof), whether by
the Seller pursuant to Section 4(a) or by a Third Party Originator pursuant to
the related Third Party Originator Agreement, each of the representations and
warranties set forth in Exhibit B and Exhibit C (other than, in the case of a
Replacement Mortgage Loan substituted by a Third Party Originator, the
representations and warranties set forth in Paragraph (d) of Exhibit B and
Paragraph 2 of Exhibit C). From and after the date of substitution, each
Replacement Mortgage Loan, if any, shall be deemed to constitute a "Mortgage
Loan" hereunder for all purposes.
4. Notice of Breach; Cure, Repurchase and Substitution.
(a) Within 90 days of the earlier of discovery or receipt of
notice by the Seller that there has been a breach of any of the representations
and warranties set forth in Exhibit B or Exhibit C and made by the Seller
pursuant to Section 3(a), Section 3(b) or Section 3(d), as the case may be,
which breach materially and adversely affects the value of any Mortgage Loan or
the interests of the
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legal and/or beneficial owner(s) thereof (any such breach, a "Material Breach"),
the Seller shall, subject to subsection (b) below, (i) cure such Material Breach
in all material respects or (ii) repurchase each affected Mortgage Loan (each, a
"Defective Mortgage Loan") at the related Purchase Price in accordance with the
directions of the owner(s) of such Defective Mortgage Loan(s); provided that if
(i) such Material Breach does not relate to whether the Defective Mortgage Loan
was, as of the Closing Date (or, in the case of a Replacement Mortgage Loan, as
of the related date of substitution), a "qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code (a "Qualified Mortgage"), (ii) such Material
Breach is capable of being cured but not within such 90- day period, (iii) the
Seller has commenced and is diligently proceeding with the cure of such Material
Breach within such 90-day period, and (iv) the Seller shall have delivered to
the owner(s) of the Defective Mortgage Loan a certification executed on behalf
of the Seller by an officer thereof setting forth the reason that such Material
Breach is not capable of being cured within the initial 90-day period and what
actions the Seller is pursuing in connection with the cure thereof and stating
that the Seller anticipates that such Material Breach will be cured within an
additional period not to exceed 90 more days, then the Seller (except with
respect to Third Party Mortgage Loans as provided in Section 4(b)) shall have up
to an additional 90 days to complete such cure or, failing such, to repurchase
the Defective Mortgage Loan; and provided, further, that if the Seller's
obligation to repurchase any Defective Mortgage Loan as a result of a Material
Breach arises within the three- month period commencing on the Closing Date (or
within the two-year period commencing on the Closing Date if the Defective
Mortgage Loan is a "defective obligation" within the meaning of Section
860G(a)(4)(B)(ii) of the Code and Treasury Regulation Section 1.860G-2(f)), the
Seller may, at its option, in lieu of repurchasing such Defective Mortgage Loan
(but, in any event, no later than such repurchase would have to have been
completed), (x) replace such Defective Mortgage Loan with one or more substitute
mortgage loans that individually and collectively satisfy the requirements of
the definition of "Qualifying Substitute Mortgage Loan" set forth in the Pooling
and Servicing Agreement, and (y) pay any corresponding Substitution Shortfall
Amount, such substitution and payment to be effected in accordance with the
terms of the Pooling and Servicing Agreement (or, if the Defective Mortgage Loan
is no longer subject thereto, in accordance with the reasonable instructions of
the owner(s) thereof). Any such repurchase or replacement of a Defective
Mortgage Loan shall be on a whole loan, servicing released basis (subject to any
right of a Designated Sub- Servicer to continue to sub-service such Defective
Mortgage Loan as set forth in the related Designated Sub-Servicer Agreement).
The Seller shall have no obligation to monitor the Mortgage Loans regarding the
existence of a Material Breach, but if the Seller discovers a Material Breach
with respect to a Mortgage Loan, it will notify the Purchaser.
Without limiting any of the foregoing, the absence of an
original Mortgage Note, an original or a copy of a Mortgage (with or without
evidence of recording thereon) or an original or a copy of a lender's title
insurance policy from a Mortgage File or any material nonconformity to the
Mortgage Loan Schedule of any such document or any material irregularity on the
face thereof (without the presence of any factor, such as the presence of a lost
note affidavit with an indemnity in the case of a missing Mortgage Note or the
presence of a pro forma title policy or a commitment for title insurance
"marked-up" at the closing of the subject Mortgage Loan, that in the reasonable
discretion of the owner(s) of the subject Mortgage Loan reasonably mitigates
such absence, non- conformity or irregularity) shall be deemed a Material Breach
of the representation and warranty set forth in Paragraph 39 of Exhibit C
hereto. Furthermore, if either an original or a copy of any of the
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<PAGE>
documents referred to in clauses (ii) - (v) of Exhibit A, with evidence of
recording indicated thereon, has not been delivered to the Trustee or a
Custodian on its behalf with respect to any Mortgage Loan on or before the
second anniversary of the Closing Date, such failure shall likewise be deemed a
Material Breach of the representation and warranty set forth in Paragraph 39 of
Exhibit C hereto.
Whenever one or more mortgage loans are substituted for a
Defective Mortgage Loan as contemplated by this Section 4(a), the Seller (i)
shall deliver the related Mortgage File for each such substitute mortgage loan
to the owner(s) of the Defective Mortgage Loan, (ii) certify that such
substitute mortgage loan satisfies or such substitute mortgage loans satisfy, as
the case may be, all of the requirements of the definition of "Qualifying
Substitute Mortgage Loan" set forth in the Pooling and Servicing Agreement and
(iii) send such certification to such owner(s). No mortgage loan may be
substituted for a Defective Mortgage Loan as contemplated by this Section 4(a)
if the Defective Mortgage Loan to be replaced was itself a Replacement Mortgage
Loan. Monthly Payments due with respect to each Replacement Mortgage Loan (if
any) after the related date of substitution, and Monthly Payments due with
respect to each Defective Mortgage Loan (if any) after the Cut-off Date (or, in
the case of a Replacement Mortgage Loan, the related date of substitution) and
on or prior to the related date of repurchase or replacement, shall belong to
the Purchaser and its successors and assigns. Monthly Payments due with respect
to each Replacement Mortgage Loan (if any) on or prior to the related date of
substitution, and Monthly Payments due with respect to each Defective Mortgage
Loan (if any) after the related date of repurchase or replacement, shall belong
to the Seller (or, in the case of a Defective Mortgage Loan that is repurchased
or replaced by a Third Party Originator, to such Third Party Originator).
If any Defective Mortgage Loan is to be repurchased or
replaced as contemplated by this Section 4(a), the Seller shall amend the
Mortgage Loan Schedule to reflect the removal of the Defective Mortgage Loan
and, if applicable, the substitution of the related Replacement Mortgage Loan(s)
and shall forward such amended schedule to the owner(s) of such Defective
Mortgage Loan.
Except as set forth in Section 8, it is understood and agreed
that the obligations of the Seller set forth in this Section 4(a) to cure a
Material Breach or repurchase or replace the related Defective Mortgage Loan(s),
constitute the sole remedies available to the Purchaser or any assignee
respecting a breach of the representations and warranties set forth on Exhibits
B and C and made by the Seller pursuant to Sections 3(a), 3(b) and 3(d),
respectively.
(b) It is hereby acknowledged that with respect to the Third
Party Mortgage Loans, if any, the rights of the Seller in respect of those
certain representations and warranties made by the Third Party Originators
pursuant to the Third Party Originator Agreements and assigned by the Seller to
the Purchaser pursuant hereto will, in turn, be assigned by the Purchaser to the
Trustee, as trustee under the Pooling and Servicing Agreement, for the benefit
of the Certificateholders. Accordingly, it is hereby agreed that if, with
respect to any such Third Party Mortgage Loan, there exists a breach of any of
the related Third Party Originator's representations and warranties for which
such Third Party Originator could be required to repurchase or (at its option,
to the extent of its substitution rights and subject to the Seller's right to
approve any Replacement Mortgage Loan delivered thereunder) replace such Third
Party Mortgage Loan, then notwithstanding that such Third Party Mortgage Loan
may also constitute a Defective Mortgage Loan for purposes of Section 4(a)
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<PAGE>
by reason of a Material Breach of any of the Seller's representations and
warranties set forth in Exhibits B and C made pursuant to Sections 3(a), 3(b)
and 3(d), respectively, the Seller shall be deemed not to have notice of such
Material Breach (and, correspondingly, not to be obligated to proceed with the
cure of such Material Breach or the repurchase or replacement of such Third
Party Mortgage Loan) unless and until the related Third Party Originator shall
have failed to cure such Material Breach or repurchase or replace such Third
Party Mortgage Loan during the cure period for the breach of its representations
and warranties set forth in the related Third Party Originator Agreement;
provided that this sentence shall not apply in the event of a Material Breach
that relates to whether the Defective Mortgage Loan was, as of the Closing Date
(or, in the case of a Replacement Mortgage Loan, the related date of
substitution), a Qualified Mortgage; and, provided, further, that, if, as a
result of the failure of a Third Party Originator to cure a Material Breach on
the part of the Seller with respect to a Third Party Mortgage Loan or repurchase
or replace such Third Party Mortgage Loan during the applicable cure period, the
Seller is obligated to cure such Material Breach on its part or repurchase or
replace such Third Party Mortgage Loan, the Seller shall be obligated to do so
within 90 days following the end of the cure/repurchase period for the related
Third Party Originator and the Seller shall not be entitled to the additional
90-day cure period that is provided for in Section 4(a) with respect to Mortgage
Loans other than the Third Party Mortgage Loans. In addition, if the price at
which any Third Party Mortgage Loan is required to be repurchased by the related
Third Party Originator, or the additional cash amount to be paid together with
the delivery of one or more Replacement Mortgage Loans substituted by the
related Third Party Originator for any Third Party Mortgage Loan, in either case
in connection with a breach of such Third Party Originator's representations and
warranties as contemplated above, is less than the applicable Purchase Price or
Substitution Shortfall Amount, as the case may be, the Seller shall make- up the
difference out of its own funds (payment of such difference to be made in
accordance with the directions of the owner(s) of such Third Party Mortgage Loan
at the time it is repurchased or replaced by such Third Party Originator).
(c) It shall be a condition to any repurchase or replacement
of a Defective Mortgage Loan by the Seller pursuant to Section 4(a) that the
Trustee as assignee of the Purchaser shall have executed and delivered such
instruments of transfer or assignment then presented to it by the Seller, in
each case without recourse, as shall be necessary to vest in the Seller (i) the
legal and beneficial ownership of such Defective Mortgage Loan (including any
property acquired in respect thereof or proceeds of any insurance policy with
respect thereto), to the extent that such ownership interest was transferred to
the Trustee under the Pooling and Servicing Agreement, and (ii) in the case of a
Third Party Mortgage Loan, the rights in respect of such Third Party Mortgage
Loan under the related Third Party Originator Agreement that were assigned to
the Trustee under the Pooling and Servicing Agreement.
(d) The Seller hereby acknowledges and consents to the
assignment by the Purchaser to the Trustee, as trustee under the Pooling and
Servicing Agreement, for the benefit of the Certificateholders, of (i) the
representations and warranties set forth in Exhibits B and C and made by the
Seller pursuant to Sections 3(a), 3(b) and 3(d), respectively, (ii) the
obligation of the Seller to repurchase or replace a Defective Mortgage Loan in
connection with a Material Breach pursuant to Section 4(a), and (iii) the
obligation of the Seller to deliver certain documentation, funds and other
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<PAGE>
assets relating to the Mortgage Loans pursuant to Section 2. The Trustee or its
designee may enforce such obligations as provided in Section 11(a) hereof or as
assignee.
5. Closing. The closing of the sale of the Mortgage Loans (the
"Closing") shall be held at the offices of Sidley & Austin, 875 Third Avenue,
New York, New York 10022 at _______, New York City time (or at such other place
and time as may be determined by the Purchaser), on the Closing Date.
The Closing shall be subject to each of the following
conditions:
(i) All of the representations and warranties of the Seller
made pursuant to Section 3 of this Agreement shall be true and correct
as of the Closing Date;
(ii) All documents specified in Section 6 of this Agreement
(the "Closing Documents"), in such forms as are agreed upon and
acceptable to the Purchaser, shall be duly executed and delivered by
all signatories as required pursuant to the respective terms thereof;
(iii) The Seller shall have delivered and released to the
Trustee or a Custodian and to the Master Servicer, respectively, all
documents, funds and other assets required to be delivered thereto
pursuant to Section 2 of this Agreement;
(iv) All other terms and conditions of this Agreement required
to be complied with on or before the Closing Date shall have been
complied with, and the Seller shall have the ability to comply with all
terms and conditions and perform all duties and obligations required to
be complied with or performed after the Closing Date; and
(v) The Seller shall have paid all fees and expenses payable
by it to the Purchaser or otherwise pursuant to this Agreement.
Both parties agree to use their best efforts to perform their
respective obligations hereunder in a manner that will enable the Purchaser to
purchase the Mortgage Loans on the Closing Date.
6. Closing Documents. The Closing Documents shall consist of
the following:
(i) This Agreement duly executed by the Purchaser and the
Seller;
(ii) An Officer's Certificate substantially in the form of
Exhibit D-1 hereto, executed by an executive officer of the Seller, in
his or her individual capacity, and dated the Closing Date, and upon
which the Purchaser, _______________, the Trustee and the
Certificateholders (collectively, for purposes of this Section 6, the
"Interested Parties") may rely, attaching thereto as exhibits (A) the
resolutions of the board of directors of the Seller authorizing the
Seller's entering into the transactions contemplated by this Agreement,
and (B) the certificate of incorporation and by-laws of the Seller;
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(iii) A certificate of good standing of the Seller issued by
the Secretary of State of the State of Delaware not earlier than ten
days prior to the Closing Date, and upon which the Interested Parties
may rely;
(iv) A Certificate of the Seller substantially in the form of
Exhibit D-2 hereto, executed by an executive officer of the Seller and
dated the Closing Date, and upon which the Interested Parties may rely;
(v) A written opinion of __________________, counsel for the
Seller, substantially in the form of Exhibit D-3 hereto, with any
modifications required by any rating agency (each, a "Rating Agency")
identified in the Prospectus Supplement or the Memorandum (each as
defined in Section 8), dated the Closing Date and addressed to the
Purchaser, _______________, the Trustee and, if requested thereby, each
Rating Agency, together with such other written opinions as may be
required by any Rating Agency; and
(vi) Such further certificates, opinions and documents as the
Purchaser may reasonably request.
7. Costs. Whether or not this Agreement is terminated, the
Purchaser will pay or cause the payment of all expenses incident to the
performance of the obligations of the Purchaser under this Agreement, including,
without limitation, (i) the fees, disbursements and expenses of the Purchaser's
counsel in connection with the purchase of the Mortgage Loans and (ii) all other
costs and expenses incident to the performance of the obligations of the
Purchaser hereunder.
The Purchaser shall also be responsible for the payment of all
out-of-pocket costs and expenses incurred by the Seller, including, without
limitation, the fees and disbursements of counsel for the Seller.
8. Indemnification.
(a) The Seller shall indemnify and hold harmless the
Purchaser, _______________, their respective officers and directors, and each
person, if any, who controls the Purchaser, or _____________ within the meaning
of either Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (the Purchaser,
______________, their respective officers and directors and any such controlling
persons, collectively, for purposes of this Section 8, the "Indemnified
Parties"), against any and all losses, claims, damages, liabilities, costs and
expenses, joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims,
damages, liabilities, costs or expenses (or actions in respect thereof) (i)
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in (A) the Prospectus Supplement (including,
without limitation, Exhibit A-1 and Exhibit A-2 thereto and the Diskette) or any
preliminary version thereof (any such preliminary version thereof, a
"Preliminary Prospectus Supplement"), the Memorandum (including, without
limitation, the Prospectus Supplement as attached as Exhibit A thereto) or,
insofar as they are required to be filed as part of the Registration Statement
pursuant to
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<PAGE>
the No-Action Letters, any Computational Materials or ABS Term Sheets with
respect to the Registered Certificates, or in any revision or amendment of or
supplement to any of the foregoing documents, or (B) any items similar to
Computational Materials and/or ABS Term Sheets forwarded to prospective
investors in the Non-Registered Certificates, or (ii) arise out of or are based
upon the omission or alleged omission (in the case of an omission or alleged
omission in the ABS Term Sheets and the Computational Materials relating to the
Registered Certificates, when read in conjunction with the Prospectus and, in
the case of an omission or alleged omission in items similar to Computational
Materials and ABS Term Sheets furnished to prospective investors in the Non-
Registered Certificates, when read in conjunction with the Memorandum and, in
the case of an omission or alleged omission in the Memorandum, when read
together with other information made available for review by investors in the
Non-Registered Certificates) to state in any of the printed materials described
in the immediately preceding clause (i) (collectively, the "Disclosure
Documents") a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; but, in
the case of clauses (i) and (ii), only if and to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission (I) arises
out of or is based upon an untrue statement or omission with respect to the
information regarding the Mortgage Loans, the related Borrowers or the related
Mortgaged Properties contained in the Master Tape (it being acknowledged that
the Master Tape was used to prepare the Prospectus Supplement (including,
without limitation, Exhibit A-1 and Exhibit A-2 thereto and the Diskette) and
any Preliminary Prospectus Supplement, the Memorandum, the Computational
Materials and ABS Term Sheets with respect to the Registered Certificates and
any items similar to Computational Materials and ABS Term Sheets forwarded to
prospective investors in the Non-Registered Certificates), (II) arises out of an
untrue statement or alleged untrue statement or omission or alleged omission
made in any of the Disclosure Documents in reliance upon and in conformity with
any other information concerning the characteristics of the Mortgage Loans, the
related Borrowers or the related Mortgaged Properties furnished to the
Purchaser, or _______________ by the Seller, (III) is contained in the
information regarding the Mortgage Loans, the related Borrowers, the related
Mortgaged Properties or the Seller set forth in the Prospectus Supplement, any
Preliminary Prospectus Supplement and the Memorandum under the headings "Summary
of Prospectus Supplement--The Mortgage Loans and the Underlying Real
Properties", "Risk Factors" and "Description of the Mortgage Pool" or on Exhibit
A-1 to the Prospectus Supplement or on the Diskette, or (IV) arises out of or is
based upon a breach of the representations and warranties of the Seller set
forth in or made pursuant to Section 3 (such representations and warranties,
together with the information described in the preceding clauses (I), (II) and
(III), the "Seller Information"); provided that the indemnification provided by
this Section 8 shall not apply to the extent that such untrue statement or
omission was made as a result of an error in (x) the manipulation of, or (y) any
calculations based upon, or (z) any aggregation (other than an aggregation made
in the Master Tape by the Seller) of, the information regarding the Mortgage
Loans, the related Borrowers, the related Mortgaged Properties or the Seller,
including without limitation the aggregation of such information with comparable
information relating to the Other Loans. Notwithstanding the foregoing, the
indemnity provided for in the preceding sentence with respect to any loss,
claim, damage, liability, cost or expense referred to therein and arising out of
or based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus Supplement, any
Computational Materials or ABS Term Sheets with respect to the Registered
Certificates or any items similar to Computational Materials or ABS Term Sheets
forwarded to prospective investors
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<PAGE>
in the Non-Registered Certificates, or any revision or amendment of or
supplement to any such document, shall not inure to the benefit of
_______________ (or any officer, director or controlling person in respect
thereof) from whom the person asserting such loss, claim, damage, liability,
cost or expense purchased the Certificates which are the subject thereof if: (i)
in the case of any Preliminary Prospectus Supplement (or any revision or
amendment thereof or supplement thereto), _______________ did not deliver to
such person a copy of the Prospectus Supplement (or the Prospectus Supplement as
most recently amended or supplemented) at or prior to the confirmation of the
sale of the subject Certificates to such person in any case where such delivery
is required by the Securities Act, the Purchaser has previously furnished to
_______________ copies thereof in sufficient quantity, the untrue statement or
alleged untrue statement or omission or alleged omission made in such
Preliminary Prospectus Supplement was corrected in the Prospectus Supplement (or
the Prospectus Supplement as most recently amended or supplemented) and such
correction would have cured the defect giving rise to any such loss, claim,
damage, liability, cost or expense; and (ii) in the case of any Computational
Materials or ABS Term Sheets with respect to the Registered Certificates or any
items similar to Computational Materials or ABS Term Sheets forwarded to
prospective investors in the Non-Registered Certificates (or any revision or
amendment of or supplement to any such document), the Seller notified
_______________, in writing of the Collateral Error that gave rise to the untrue
statement or alleged untrue statement or omission or alleged omission or
provided in written or electronic format information superseding or correcting
such Collateral Error prior to the time of confirmation of sale of the subject
Certificates to such person, and _______________ failed to deliver to such
person corrected materials (or, if the superseding or correcting information was
contained in the Prospectus Supplement or Memorandum, failed to deliver to such
person the Prospectus Supplement or Memorandum, as the case may be) at or prior
to confirmation of such sale to such person.
The Seller acknowledges that the Purchaser and _______________
will enter into the Underwriting Agreement and the Certificate Purchase
Agreement, in reliance upon the indemnity agreement of the Seller provided for
in the preceding paragraph. Such indemnity agreement will be in addition to any
liability which the Seller may otherwise have.
For purposes of this Agreement, "Registration Statement" shall
mean the registration statement No. __________________ filed by the Purchaser on
Form S-3, including, without limitation, all exhibits thereto and information
incorporated therein by reference; "Prospectus" shall mean the prospectus dated
_______________, as supplemented by the prospectus supplement dated
_______________ (the "Prospectus Supplement"), relating to the Registered
Certificates, including, without limitation, all annexes and exhibits thereto
and the Diskette; "Memorandum" shall mean the private placement memorandum dated
_______________, relating to certain classes of the Non-Registered
Certificates, including, without limitation, all annexes and exhibits thereto;
"Computational Materials" shall have the meaning assigned thereto in the
no-action letter dated May 20, 1994 issued by the Division of Corporation
Finance of the Securities and Exchange Commission (the "Commission") to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
Structured Asset Corporation and the no-action letter dated May 27, 1994 issued
by the Division of Corporation Finance of the Commission to the Public
Securities Association (together, the "Kidder Letters"); "ABS Term Sheets" shall
have the meaning assigned thereto in the no-action letter dated February 17,
1995 issued by the Division of Corporation Finance of the Commission to
M-1-11
<PAGE>
the Public Securities Association (the "PSA Letter" and, together with the
Kidder Letters, the "No-Action Letters"); "Diskette" shall mean the diskette
attached to the Prospectus Supplement, any Preliminary Prospectus Supplement and
the Memorandum; "Master Tape" shall mean the compilation of underlying
information and data regarding the Mortgage Loans and the Other Loans covered by
the Independent Accountants Report on Applying Agreed Upon Procedures dated
_______________, as supplemented to the Closing Date, and rendered by
________________; and "Collateral Error" shall mean any error in the information
regarding the Seller, the Mortgage Loans, the related Mortgaged Properties or
the related Borrowers contained in the Master Tape or any other information
supplied by the Seller to the Purchaser or _______________ or any breach of the
representations and warranties made by the Seller in or pursuant to Section 3.
(b) In case any proceeding (including any governmental
investigation) shall be instituted involving any Indemnified Party, the
Indemnified Party shall promptly notify the Seller in writing, and the Seller,
upon request of the Indemnified Party, shall retain counsel reasonably
satisfactory to the Indemnified Party to represent the Indemnified Party and any
other Indemnified Parties the Seller may designate in such proceeding and shall
pay the reasonable fees and disbursements of such counsel relating to such
proceeding. In any such proceeding, any Indemnified Party shall have the right
to select its own counsel, and the reasonable fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Seller and such
Indemnified Party shall have mutually agreed to the retention of such separate
counsel, (ii) the named parties to any such proceeding (including, without
limitation, any impleaded parties) include both the Seller and such Indemnified
Party, and representation of both such parties by the same counsel would be
inappropriate due to actual or potential differing interests or differing or
additional defenses between or among them, or (iii) the Seller shall have failed
within a reasonable period to retain counsel reasonably satisfactory to the
Indemnified Party in accordance with the preceding sentence. It is understood
that the Seller shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the legal fees and
disbursements of more than one legal counsel for all the Indemnified Parties.
The Seller may, at its option, at any time upon written notice to the
Indemnified Party assume the defense of any proceeding and may designate counsel
satisfactory to the Indemnified Party in connection therewith provided that the
counsel so designated would have no actual or potential conflict of interest in
connection with such representation. Unless it shall assume the defense of any
proceeding, the Seller shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Seller agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. If the Seller assumes the defense of any proceeding, the
Seller shall be entitled to settle such proceeding with the written consent of
the Indemnified Party in connection with all claims which have been asserted
against the Indemnified Party in such proceeding by the other parties to such
settlement, and the Seller shall be entitled to settle such proceeding without
the written consent of the Indemnified Party, provided that the Indemnified
Party receives a full and unconditional release of all claims asserted against
such Indemnified Party from all liability arising out of such litigation,
investigation, proceeding or claim and such release does not include a statement
as to or an admission of fault, culpability or a failure to act by or on behalf
of such Indemnified Party.
M-1-12
<PAGE>
(c) If the indemnification provided for in Section 8(a) is
unavailable to an Indemnified Party or insufficient to hold it harmless in
respect of any losses, claims, damages, liabilities, costs or expenses referred
to in and intended to be covered under Section 8(a), then the Seller shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities, costs or expenses, in such
proportion as is appropriate to reflect the relative fault of the Seller and the
Indemnified Party in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Indemnified Party and the
Seller 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 such
parties.
(d) The parties hereto agree that it would not be just and
equitable if contribution pursuant to Section 8(c) above were determined by pro
rata allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in Section 8(c) above. The amount
paid or payable by an Indemnified Party as a result of the losses, claims,
damages, liabilities, costs or expenses referred to above shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim (except where the Indemnified Party is
required to bear such expenses pursuant to this Section 8), which expenses the
Seller shall pay as and when incurred, at the request of the Indemnified Party,
and to the extent that the Seller will be ultimately obligated to pay such
expenses. If and to the extent that any expenses so paid by the Seller are
subsequently determined to not be required to be borne by the Seller hereunder,
the Indemnified Party which received such payment shall promptly refund the
amount so paid to the Seller. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnity and contribution agreements contained in
this Section 8 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any of the Indemnified Parties, and (iii) acceptance of and payment
for the Mortgage Loans.
9. Notices. All communications hereunder shall be in writing
and effective only upon receipt and, if sent to the Purchaser, will be
sent by regular prepaid U.S. Mail or prepaid reputable overnight courier or
delivered by hand and confirmed to it at __________________________,
Attention:__________________________, or such other address as may be designated
by the Purchaser to the Seller or, if sent to the Seller, will be sent by
regular prepaid U.S. Mail or prepaid reliable overnight courier or delivered by
hand and confirmed to it at __________________________,
Attention:__________________________, or such other address as may be designated
by the Seller to the Purchaser in writing.
M-1-13
<PAGE>
10. Miscellaneous. Neither this Agreement nor any term hereof
may be changed, waived, discharged or terminated except by a writing signed by
the party against whom enforcement of such change, waiver, discharge or
termination is sought. This Agreement may not be changed in any manner which
would have a material adverse effect on Holders of the Certificates without the
prior written consent of the Trustee. This Agreement also may not be changed in
any manner which would have a material adverse effect on any other third party
beneficiary hereof without the prior written consent of that person. This
Agreement may be executed in any number of counterparts, each of which shall for
all purposes be deemed to be an original and all of which shall together
constitute but one and the same instrument. This Agreement will inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns, and no other person will have any right or obligation
hereunder, other than as provided in Section 11 hereof.
11. Third Party Beneficiaries.
(a) The Trustee and the Certificateholders are intended third
party beneficiaries of the representations, warranties and covenants made by the
Seller in Sections 2, 3(a), 3(b), 3(d), 4 and 12 (and, to the extent relevant to
the foregoing, in Sections 9, 10, 13, 14, 15, 16, 17 and 19) of this Agreement.
It is acknowledged that such representations, warranties and covenants of the
Seller may be enforced by the Trustee against the Seller, on behalf of itself
and the Certificateholders, to the same extent as if they were parties hereto.
(b) _______________ is an intended third party beneficiary of
the representations, warranties and covenants of the Seller set forth in
Sections 3(a), 5, 6 and 8 of this Agreement. It is acknowledged and agreed that
such representations, warranties and covenants may be enforced by or on behalf
of _______________ against the Seller to the same extent as if it was a party
hereto.
12. Characterization. It is the express intent of the parties
hereto that the conveyance contemplated by this Agreement be, and be treated for
all purposes as, a sale by the Seller of all the Seller's right, title and
interest in and to the Mortgage Loans. Furthermore, it is not the intention of
the parties that such conveyance be deemed a pledge of the Mortgage Loans by the
Seller to secure a debt or other obligation of the Seller. However, in the event
that, notwithstanding the intent of the parties, the Mortgage Loans are held to
continue to be property of the Seller then: (a) this Agreement shall also be
deemed to be a security agreement under applicable law; (b) the transfer of the
Mortgage Loans provided for herein shall be deemed to be a grant by the Seller
to the Purchaser of a first priority security interest in all of the Seller's
right, title and interest in and to the Mortgage Loans and all amounts payable
to the holder(s) of the Mortgage Loans in accordance with the terms thereof
(other than scheduled payments of interest and principal due on or before the
Cut-off Date) and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property; (c) the
assignments by the Purchaser to the Trustee of its interests in the Mortgage
Loans as contemplated by Section 4(d) hereof shall be deemed to be an assignment
of any security interest created hereunder; (d) the possession by the Purchaser
or any successor thereto of the related Mortgage 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 Georgia
Uniform Commercial Code, the New York Uniform Commercial Code and the Uniform
M-1-14
<PAGE>
Commercial Code of any other applicable jurisdiction; and (e) notifications to,
and acknowledgments, receipts or confirmations from, persons or entities holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Purchaser or any successor thereto for the purpose of perfecting such
security interest under applicable law. The Seller and the Purchaser shall, to
the extent consistent with this Agreement, 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 and the Pooling and Servicing
Agreement.
13. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, incorporated herein by reference or contained in the certificates of
officers of the Seller delivered pursuant hereto, shall remain operative and in
full force and effect and shall survive delivery of the Mortgage Loans by the
Seller to the Purchaser (and by the Purchaser to the Trustee), notwithstanding
any restrictive or qualified endorsement or assignment in respect of any
Mortgage Loan.
14. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or is
held to be void or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof. Any part, provision, representation, warranty or covenant of this
Agreement that is prohibited or is held to be void or unenforceable in any
particular jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law,
the parties hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
15. Governing Law; Consent to Jurisdiction. This Agreement
will be governed by and construed in accordance with the substantive laws of the
State of New York, applicable to agreements made and to be performed entirely in
said state. To the fullest extent permitted under applicable law, the Seller
hereby irrevocably (i) submits to the jurisdiction of any New York State and
federal courts sitting in New York City with respect to matters arising out of
or relating to this Agreement; (ii) agrees that all claims with respect to such
action or proceeding may be heard and determined in such New York State or
federal courts; (iii) waives, to the fullest possible extent, the defense of an
inconvenient forum; and (iv) agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law.
16. Further Assurances. The Seller and the Purchaser agree to
execute and deliver such instruments and take such further actions as the other
party may, from time to time, reasonably request in order to effectuate the
purposes and to carry out the terms of this Agreement.
M-1-15
<PAGE>
17. Successors and Assigns. The rights and obligations of the
Seller under this Agreement shall not be assigned by the Seller without the
prior written consent of the Purchaser, except that any person into which the
Seller may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Seller is a party, or any
person succeeding to all or substantially all of the business of the Seller,
shall be the successor to the Seller hereunder. The Purchaser has the right to
assign its interest under this Agreement, in whole or in part, as contemplated
by Section 4(d) or as may otherwise be required to effect the purposes of the
Pooling and Servicing Agreement, and the assignee shall, to the extent of such
assignment, succeed to the rights and obligations hereunder of the Purchaser.
18. Information. The Seller shall provide the Purchaser with
such information about the Seller, the Mortgage Loans and the Seller's
underwriting and servicing procedures as is (i) customary in commercial mortgage
loan securitization transactions, (ii) required by a Rating Agency or a
governmental agency or body or (iii) reasonably requested by the Purchaser for
use in a public or private disclosure document.
19. Cross-Collateralized Mortgage Loans. Notwithstanding
anything herein to the contrary, it is hereby acknowledged that certain groups
of Mortgage Loans are, in the case of each such particular group of Mortgage
Loans (each, a "Cross-Collateralized Group"), by their terms, cross-defaulted
and cross-collateralized. Each Cross-Collateralized Group is identified on the
Mortgage Loan Schedule. For purposes of reference, the Mortgaged Property that
relates or corresponds to any of the Mortgage Loans referred to in this Section
19 shall be the property identified in the Mortgage Loan Schedule as
corresponding thereto. The provisions of this Agreement, including, without
limitation, each of the representations and warranties set forth in Exhibit C
hereto and each of the capitalized terms used herein but defined in the Pooling
and Servicing Agreement, shall be interpreted in a manner consistent with this
Section 19. In addition, if there exists with respect to any
Cross-Collateralized Group only one original of any document referred to in the
definition of "Mortgage File" and covering all the Mortgage Loans in such Cross-
Collateralized Group, the inclusion of the original of such document in the
Mortgage File for any of the Mortgage Loans constituting such
Cross-Collateralized Group shall be deemed an inclusion of such original in the
Mortgage File for each such Mortgage Loan.
M-1-16
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Seller have caused
this Agreement to be duly executed by their respective officers as of the day
and year first above written.
[SELLER]
By: _________________________
Name: _______________________
Title: ______________________
GREENWICH CAPITAL COMMERCIAL
FUNDING CORP.
By: ________________________
Name: ______________________
Title: _____________________
M-1-17
<PAGE>
Exhibit A
Certain Documents to be Delivered by the Seller with Respect
to the Mortgage Loans
The documents and instruments to be delivered to the Trustee (or a
Custodian on behalf of the Trustee) in respect of each Mortgage Loan pursuant to
Section 2(b) of this Agreement are, subject to Section 19, as follows:
(i) the original executed Mortgage Note, endorsed (either on the face
thereof or pursuant to a separate allonge) "Pay to the order of
________________________ as trustee for the registered holders of
Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, without recourse";
(ii) an original or a copy of the Mortgage and of any intervening
assignments thereof that precede the assignment referred to in clause
(iv) below, in each case with evidence of recording indicated thereon;
(iii) an original or a copy of any related Assignment of Leases (if
such item is a document separate from the Mortgage) and of any
intervening assignments thereof that precede the assignment referred to
in clause (v) below, in each case with evidence of recording indicated
thereon;
(iv) an original executed assignment of the Mortgage, in favor of
________________________, as trustee for the registered holders of
Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, in recordable form;
(v) an original executed assignment of any related Assignment of Leases
(if such item is a document separate from the Mortgage), in favor of
________________________, as trustee for the registered holders of
Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________, in recordable form;
(vi) originals or copies of any written assumption, modification,
written assurance and substitution agreements in those instances where
the terms or provisions of the Mortgage or Mortgage Note have been
modified or the Mortgage Loan has been assumed;
(vii) the original or a copy of the policy of lender's title insurance;
<PAGE>
(viii) filed copies of any prior UCC Financing Statements in favor of
the originator of such Mortgage Loan or in favor of any assignee prior
to the Trustee (but only to the extent the Seller had possession of
such UCC Financing Statements prior to the Closing Date) and, if there
is an effective UCC Financing Statement in favor of the Seller on
record with the applicable public office for UCC Financing Statements,
an original UCC-2 or UCC-3, as appropriate, in favor of
________________________, as trustee for the registered holders of
Greenwich Capital Commercial Funding Corp., Commercial Mortgage
Pass-Through Certificates, Series _______________;
(ix) any environmental indemnity agreement and the original or a copy
of any Environmental Insurance Policy relating solely to such Mortgage
Loan;
(x) power of attorney, guaranty, property management agreement, Ground
Lease, intercreditor agreement, cash management agreement and lock-box
agreement, relating to such Mortgage Loan;
(xi) any original documents (including any security agreements and any
Letters of Credit and related letter of credit reimbursement
agreements) relating to, evidencing or constituting Additional
Collateral; and
(xii) any insurance certificates relating to hazard insurance policies
maintained by the Borrower with respect to the related Mortgaged
Property that are in the possession of the Seller;
provided that the evidence of recording referred to in clauses (ii) and (iii)
shall not be required prior to the second anniversary of the Closing Date if the
subject document has not been returned from the applicable recording office.
M-1-2
<PAGE>
Exhibit B
Representations and Warranties with respect to the Seller
The Seller hereby represents and warrants that, as of the
Closing Date:
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware,
and is possessed of all licenses necessary to carry on its business and
is qualified and in good standing and in compliance with the laws of
each State in which any Mortgaged Property securing a Mortgage Loan is
located to the extent necessary to ensure the enforceability of such
Mortgage Loan as contemplated by the terms of this Agreement and the
Pooling and Servicing Agreement.
(b) The execution and delivery by the Seller of this
Agreement, the execution (including, without limitation, by facsimile
or machine signature) and delivery of any and all documents
contemplated by this Agreement, including, without limitation,
endorsements of Mortgage Notes, and the performance and compliance by
the Seller with the terms of this Agreement will not (i) violate the
Seller's organizational documents, (ii) violate any law or regulation
or any administrative decree or order to which the Seller is subject or
(iii) 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 indenture, agreement or other instrument to which the
Seller is a party or by which it is bound or which is applicable to it
or any of its assets.
(c) The Seller has full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(d) The Seller has the full right, power and authority to
sell, assign, transfer, set over and convey the Mortgage Loans (and, in
the event that the related transaction is deemed to constitute a loan
secured by all or part of the Mortgage Loans, to pledge the Mortgage
Loans) in accordance with, and under the conditions set forth in, this
Agreement.
(e) Assuming due authorization, execution and delivery hereof
by the Purchaser, this Agreement constitutes a valid, legal and binding
obligation of the Seller, enforceable against the Seller in accordance
with the terms hereof, subject to (i) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, (ii) general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law, and (iii) public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of this
Agreement which purport or are construed to provide indemnification
from liabilities under applicable securities laws.
M-1-1
<PAGE>
(f) The Seller is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms hereof will not constitute a violation of, any law, any order or
decree of any court or arbiter, or any order, regulation or demand of
any federal, state or local governmental or regulatory authority, which
violation, in the Seller's good faith and reasonable judgment, is
likely to affect materially and adversely either the ability of the
Seller to perform its obligations under this Agreement or the financial
condition of the Seller.
(g) No litigation is pending or, to the best of the Seller's
knowledge, threatened against the Seller which, if determined adversely
to the Seller, would prohibit the Seller from entering into this
Agreement or, in the Seller's good faith and reasonable judgment, is
likely to materially and adversely affect either the ability of the
Seller to perform its obligations hereunder or the financial condition
of the Seller.
(h) The transfer of the Mortgage Loans to the Purchaser as
contemplated herein is not subject to any bulk transfer or similar law
in effect in any applicable jurisdiction.
(i) The principal place of business and chief executive office
of the Seller is located in _______________________.
(j) The Seller is a wholly-owned subsidiary of
__________________________.
(k) The Seller is a mortgagee approved by the Secretary of
Housing and Urban Development pursuant to Sections 203 and 211 of the
National Housing Act.
M-1-2
<PAGE>
Exhibit C
Representations and Warranties with respect to the Mortgage Loans
For purposes of this Exhibit C, the phrase "the Seller's knowledge" and
other words and phrases of like import shall mean the actual state of knowledge
of the Seller regarding the matters referred to, in each case without having
conducted any independent inquiry into such matters and without any obligation
to have done so (except as expressly set forth herein).
The Seller hereby represents and warrants that, as of the date
hereinbelow specified or, if no such date is specified, as of the Closing Date,
and subject to Section 19 of this Agreement:
1. Mortgage Loan Schedule. The information set forth in the
Mortgage Loan Schedule with respect to the Mortgage Loans is true, complete (in
accordance with the requirements of the Pooling and Servicing Agreement) and
correct in all material respects as of the date of this Agreement and as of the
Cut-off Date.
2. Ownership of Mortgage Loans. Immediately prior to the
transfer to the Purchaser of the Mortgage Loans, the Seller had good title to,
and was the sole owner of, each Mortgage Loan. The Seller has full right, power
and authority to transfer and assign each Mortgage Loan to or at the direction
of the Purchaser free and clear of any and all pledges, liens, charges, security
interests and/or other encumbrances. Upon completion of the conveyance
contemplated hereby, the Seller will have validly and effectively conveyed to
the Purchaser all legal and beneficial interest in and to such Mortgage Loan
free and clear of any pledge, lien or security interest created by or through
the Seller. The sale of the Mortgage Loans to the Purchaser or its designee does
not require the Seller to obtain any governmental or regulatory approval or
consent that has not been obtained.
3. Payment Record. As of the Closing Date, no scheduled
payment of principal and interest under any Mortgage Loan was 30 days or more
past due, and no Mortgage Loan has been 30 days or more delinquent in the
twelve-month period immediately preceding the Closing Date.
4. Lien; Valid Assignment. The Mortgage related to and
delivered in connection with each Mortgage Loan constitutes a valid and, subject
to the exceptions set forth in Paragraph 13 below, enforceable first priority
lien upon the related Mortgaged Property, prior to all other liens and
encumbrances, except for (a) the lien for current real estate taxes and
assessments not yet due and payable, (b) covenants, conditions and restrictions,
rights of way, easements and other matters that are of public record and/or are
referred to in the related lender's title insurance policy (or, if not yet
issued, referred to in a pro forma title policy or a "marked-up" commitment),
none of which materially interferes with the security intended to be provided by
such Mortgage, the current use of the related Mortgaged Property or the current
ability of the related Mortgaged Property to generate income sufficient to
service the related Mortgage Loan, (c) exceptions and exclusions specifically
referred to in such lender's title insurance policy (or such pro forma title
policy or "marked-up" commitment), none of which materially interferes with the
security intended to be provided by such Mortgage, the current use of the
related Mortgaged Property or the current ability of the related Mortgaged
<PAGE>
Property to generate income sufficient to service the related Mortgage Loan, (d)
other matters to which like properties are commonly subject, none of which
materially interferes with the security intended to be provided by such
Mortgage, the use of the related Mortgaged Property or the current ability of
the related Mortgaged Property to generate income sufficient to service the
related Mortgage Loan, (e) the rights of tenants to remain (whether under ground
leases or space leases) at the Mortgaged Property following a foreclosure or
similar proceeding (provided that such tenants are performing under such leases)
and (f) if such Mortgage Loan constitutes a Cross-Collateralized Mortgage Loan,
the lien of the Mortgage for another Mortgage Loan contained in the same Cross-
Collateralized Group (the foregoing items (a) through (f) being herein referred
to as the "Permitted Encumbrances"). The related assignment of such Mortgage
executed and delivered in favor of the Trustee is in recordable form and
constitutes a legal, valid, binding and enforceable assignment thereof from the
relevant assignor to the Trustee (subject to the exceptions set forth in
Paragraph 13 below).
5. Assignment of Leases and Rents. The Assignment of Leases,
if any, related to and delivered in connection with each Mortgage Loan
establishes and creates a valid, subsisting and, subject to the exceptions set
forth in Paragraph 13 below, enforceable first priority lien on and security
interest in the property and rights described therein; and each assignor
thereunder has the full right to assign the same. The related assignment of such
Assignment of Leases executed and delivered in favor of the Trustee is in
recordable form and constitutes a legal, valid, binding and enforceable
assignment thereof from the relevant assignor to the Trustee (subject to the
exceptions set forth in Paragraph 13 below). No person owns any interest in any
payments due under the related leases that is superior to the lien created by
such Assignment of Leases, if any.
6. Mortgage Status; Waivers and Modifications. No Mortgage
related to a Mortgage Loan has been satisfied, canceled, rescinded or
subordinated in whole or in material part, and the related Mortgaged Property
has not been released from the lien of such Mortgage, in whole or in material
part, nor has any instrument been executed that would effect any such
satisfaction, cancellation, subordination, rescission or release. None of the
terms of any Mortgage Note, Mortgage or Assignment of Leases related to a
Mortgage Loan have been impaired, waived, altered or modified in any material
respect, except by written instruments, all of which are included in the related
Mortgage File.
7. Condition of Property; Condemnation. Each Mortgaged
Property securing a Mortgage Loan is, to the Seller's knowledge, free and clear
of any damage that would materially and adversely affect its value as security
for such Mortgage Loan (except in such case where an escrow of funds exists
sufficient to effect the necessary repairs and maintenance). The Seller has not
received notice (and is not otherwise aware) of any proceeding pending for the
total or partial condemnation of or affecting the Mortgaged Property securing
any Mortgage Loan. As of the date of the origination of each Mortgage Loan, all
of the material improvements on the related Mortgaged Property lay wholly within
the boundaries and, to the extent in effect at the time of construction,
building restriction lines of such property, except for encroachments that are
insured against by the lender's title insurance policy referred to herein or
that do not materially and adversely affect the value or marketability of such
Mortgaged Property, and no improvements on adjoining properties materially
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<PAGE>
encroached upon such Mortgaged Property so as to materially and adversely affect
the value or marketability of such Mortgaged Property.
8. Title Insurance. Each Mortgaged Property securing a
Mortgage Loan is covered by an American Land Title Association (or an equivalent
form of) lender's title insurance policy (the "Title Policy") in the original
principal amount of such Mortgage Loan after all advances of principal insuring
that the related Mortgage is a valid first priority lien on such Mortgaged
Property, subject only to the exceptions stated therein (or a pro forma title
policy or marked up title insurance commitment on which the required premium has
been paid exists which evidences that such Title Policy will be issued). Such
Title Policy (or, if it has yet to be issued, the coverage to be provided
thereby) is in full force and effect, all premiums thereon have been paid, and
no material claims have been made thereunder and no claims have been paid
thereunder (and the Seller has not received notice of any material claims having
been made or paid thereunder). No holder of the related Mortgage has done, by
act or omission, anything that would materially impair the coverage under such
Title Policy. Immediately following the transfer and assignment of the related
Mortgage Loan to the Trustee, such Title Policy (or, if it has yet to be issued,
the coverage to be provided thereby) will inure to the benefit of the Trustee
without the consent of or notice to the insurer. The insurer issuing such Title
Policy is qualified to do business in the jurisdiction in which the related
Mortgaged Property is located, and such Title Policy contains no exclusion for,
or it affirmatively insures (unless, in the case of clauses (b) and (c) below,
the related Mortgaged Property is located in a jurisdiction where such
affirmative insurance is not available), (a) access to a public road, (b) that
there are no material encroachments of any part of the improvements on the
related Mortgaged Property over easements, which encroachments could reasonably
be expected to materially interfere with the use of the related Mortgaged
Property and (c) that the area shown on the survey conducted in connection with
the origination of the related Mortgage Loan is the same as the property legally
described in the related Mortgage.
9. No Holdback. The proceeds of each Mortgage Loan have been
fully disbursed (except in those cases where the full amount of the Mortgage
Loan has been made but a portion thereof is being held back pending the
satisfaction of certain conditions relating to leasing, repairs or other matters
with respect to the related Mortgaged Property), and there is no obligation for
future advances with respect thereto.
10. Mortgage Provisions. The Mortgage Note or Mortgage for
each Mortgage Loan, together with applicable state law, contains customary and
enforceable provisions (subject to the exceptions set forth in Paragraph 13
below) such as to render the rights and remedies of the holder thereof adequate
for the practical realization against the related Mortgaged Property of the
principal benefits of the security intended to be provided thereby.
11. Trustee under Deed of Trust. If the Mortgage in respect of
any Mortgage Loan is a deed of trust, (a) a trustee, duly qualified under
applicable law to serve as such, is properly designated and serving under such
Mortgage, and (b) except in connection with a trustee's sale after default by
the related Borrower, no fees or expenses are payable to such trustee by the
Seller, the Purchaser or any transferee thereof.
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<PAGE>
12. Environmental Conditions. An environmental site assessment
was performed with respect to each Mortgaged Property in connection with the
origination of the related Mortgage Loan, a report of each such assessment (an
"Environmental Report") has been delivered to the Purchaser, and either (x) no
such Environmental Report reveals any known circumstances or conditions with
respect to the related Mortgaged Property that rendered such Mortgaged Property,
at the date of such Environmental Report, in material violation of any
applicable environmental laws or (y) if any such Environmental Report does
reveal any such circumstances or conditions with respect to the related
Mortgaged Property and the same have not been subsequently remediated in all
material respects, then either (i) the expenditure of funds necessary to effect
such remediation is not material in relation to the outstanding principal
balance of the related Mortgage Loan, or (ii) a sufficient escrow of funds
exists for purposes of effecting such remediation, or (iii) the related Borrower
or other responsible party is currently taking such actions, if any, with
respect to such circumstances or conditions as have been required by the
applicable governmental regulatory authority, or (iv) the related Mortgaged
Property is insured under a policy of insurance, subject to certain per
occurrence and aggregate limits and a deductible, against certain losses arising
from such circumstances and conditions. Each Mortgaged Property is covered under
an environmental insurance policy, generally as and to the extent described
under "Description of the Mortgaged Property--Certain Underwriting
Matters--Environmental Insurance" in the Prospectus Supplement. To the Seller's
knowledge, there are no circumstances or conditions with respect to any
Mortgaged Property not revealed in the related Environmental Report, if any,
that render such Mortgaged Property in material violation of any applicable
environmental laws. The Mortgage encumbering each Mortgaged Property requires
the related Borrower to comply with all applicable federal, state and local
environmental laws and regulations.
13. Loan Document Status. Each Mortgage Note, Mortgage, and
other agreement executed by or on behalf of the related Borrower with respect to
each Mortgage Loan is the legal, valid and binding obligation of the maker
thereof (subject to any non-recourse provisions contained in any of the
foregoing agreements and any applicable state anti-deficiency or market value
limit deficiency legislation), enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally, and
by general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), and there is no valid defense,
counterclaim or right of offset or rescission available to the related Borrower
with respect to such Mortgage Note, Mortgage or other agreements.
14. Insurance. All improvements upon each Mortgaged Property
securing a Mortgage Loan are insured against loss by hazards of extended
coverage in an amount at least equal to the lesser of the outstanding principal
balance of such Mortgage Loan and 100% of the full replacement cost of the
improvements located on the related Mortgaged Property, and if applicable, the
related hazard insurance policy contains appropriate endorsements to avoid the
application of co-insurance and does not permit reduction in insurance proceeds
for depreciation. Each Mortgaged Property securing a Mortgage Loan is the
subject of a business interruption insurance policy providing coverage for at
least six months (or a specified dollar amount which, in the reasonable
judgement of the Seller, will cover no less than six months of rental income).
If any portion of the improvements on a Mortgaged Property securing any Mortgage
Loan was, at the time of the
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<PAGE>
origination of such Mortgage Loan, in an area identified in the Federal Register
by the Flood Emergency Management Agency as having special flood hazards, and
flood insurance was available, a flood insurance policy meeting any requirements
of the then current guidelines of the Federal Insurance Administration is in
effect with a generally acceptable insurance carrier, in an amount representing
coverage not less than the least of (1) the outstanding principal balance of
such Mortgage Loan, (2) the full insurable value of such Mortgaged Property, and
(3) the maximum amount of insurance available under the National Flood Insurance
Act of 1968, as amended. All such hazard and flood insurance policies contain a
standard mortgagee clause for the benefit of the holder of the related Mortgage,
its successors and assigns, as mortgagee, and are not terminable (nor may the
amount of coverage provided thereunder be reduced) without ten days' prior
written notice to the mortgagee and all premiums payable thereon as of the
Closing Date, whether annual or otherwise, have been paid. Each Mortgaged
Property securing a Mortgage Loan is also covered by comprehensive general
liability insurance in an amount at least equal to $1 million per occurrence.
With respect to each Mortgage Loan, the related Mortgage requires that the
related Borrower maintain insurance as described above or permits the Mortgagee
to require insurance as described above. No notice of termination, cancellation
or reduction has been received by the Seller with respect to any such hazard,
flood or liability insurance policy. Except under circumstances that would be
reasonably acceptable to a prudent commercial mortgage lender or that would not
otherwise materially and adversely affect the security intended to be provided
by the related Mortgage, the Mortgage for each Mortgage Loan provides that
proceeds paid under any such casualty insurance policy will (or, at the lender's
option, will) be applied either to the repair or restoration of the related
Mortgaged Property or to the payment of amounts due under such Mortgage Loan;
provided that the related Mortgage may entitle the related Borrower to any
portion of such proceeds remaining after the repair or restoration of the
related Mortgaged Property and payment of amounts due under the Mortgage Loan;
and provided further that if the related Borrower holds a leasehold interest in
the related Mortgaged Property, the application of such proceeds will be subject
to the terms of the related Ground Lease (as defined in Paragraph 18 below).
15. Taxes and Assessments. To the Seller's knowledge, there
are no delinquent taxes or assessments or other outstanding charges affecting
any Mortgaged Property securing a Mortgage Loan which are a lien of priority
equal to or higher than the lien of the related Mortgage that are not otherwise
covered by an escrow of funds sufficient to pay such charge. For purposes of
this representation and warranty, real property taxes and assessments shall not
be considered unpaid until the date on which interest and/or penalties would be
payable thereon.
16. Borrower Bankruptcy. No Borrower under a Mortgage Loan is,
to the Seller's knowledge, a debtor in any state or federal bankruptcy or
insolvency proceeding.
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17. Local Law Compliance. To the Seller's knowledge, based on
due diligence customarily undertaken by prudent commercial mortgage lenders, the
improvements located on or forming part of each Mortgaged Property securing a
Mortgage Loan are in material compliance with applicable zoning laws and
ordinances, or constitute a legal non-conforming use or structure or, if any
such improvement does not so comply or does not constitute a legal
non-conforming use or structure, such non-compliance and failure does not
materially and adversely affect the value of the related Mortgaged Property.
18. Leasehold Estate Only. If a Mortgage Loan is secured by
the interest of a Borrower as a lessee under a ground lease of all or a material
portion of a Mortgaged Property (together with any and all written amendments
and modifications thereof and any and all estoppels from the ground lessor, a
"Ground Lease"), but not by the related fee interest in such Mortgaged Property
or such material portion thereof (the "Fee Interest"), then:
(a) Such Ground Lease or a memorandum thereof has been or
will be duly recorded; such Ground Lease permits the
interest of the lessee thereunder to be encumbered by
the related Mortgage; and there has been no material
change in the terms of such Ground Lease since its
recordation, with the exception of written
instruments which are a part of the related Mortgage
File;
(b) Such Ground Lease is not subject to any liens or
encumbrances superior to, or of equal priority with,
the related Mortgage, other than the related Fee
Interest and Permitted Encumbrances;
(c) The Borrower's interest in such Ground Lease is
assignable to the Purchaser and its successors and
assigns upon notice to, but without the consent of,
the lessor thereunder (or, if such consent is
required, it either has been obtained or cannot be
unreasonably withheld) and, in the event that it is
so assigned, is further assignable to the Purchaser
and its successors and assigns upon notice to, but
without the need to obtain the consent of, such
lessor;
(d) At the date of origination of the Mortgage Loan, such
Ground Lease was in full force and effect, and the
Seller has not received as of the Closing Date actual
notice that any material default has occurred under
such Ground Lease;
(e) Such Ground Lease requires the lessor thereunder to
give notice of any default by the lessee to the
mortgagee under such Mortgage Loan (provided that
such mortgagee has provided the lessor with notice of
its lien in accordance with the provisions of such
Ground Lease), and such Ground Lease further provides
that no notice of termination given under such Ground
Lease is effective against such mortgagee unless a
copy has been delivered to such mortgagee in the
manner described in such Ground Lease;
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<PAGE>
(f) Either (i) the related ground lessor has subordinated
its interest in the related Mortgaged Property to the
mortgagee under such Mortgage Loan or (ii) such
mortgagee is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain
possession of the interest of the lessee under such
Ground Lease) to cure any default under such Ground
Lease, which is curable after the receipt of notice
of any such default, before the lessor thereunder may
terminate such Ground Lease;
(g) Such Ground Lease either (i) has an original term
which extends not less than ten years beyond the
Stated Maturity Date of such Mortgage Loan or (ii)
has an original term which does not end prior to the
third anniversary of the Stated Maturity Date of such
Mortgage Loan and has extension options that, if
exercised, would cause the term of such Ground Lease
to extend not less than ten years beyond the Stated
Maturity Date of the related Mortgage Loan;
(h) Such Ground Lease requires the lessor to enter into a
new lease with the mortgagee under such Mortgage Loan
upon termination of such Ground Lease for any reason,
including rejection of such Ground Lease in a
bankruptcy proceeding;
(i) Under the terms of such Ground Lease and the related
Mortgage, taken together, any related insurance
proceeds (other than in respect of a total or
substantially total loss or taking) will be applied
either (i) to the repair or restoration of all or
part of the related Mortgaged Property, with the
mortgagee under such Mortgage Loan or a trustee
appointed by it having the right to hold and disburse
such proceeds as the repair or restoration progresses
(except in such cases where a provision entitling
another party to hold and disburse such proceeds
would not be viewed as commercially unreasonable by a
prudent commercial mortgage lender), or (ii) to the
payment of the outstanding principal balance of such
Mortgage Loan together with any accrued interest
thereon;
(j) Such Ground Lease does not impose any restrictions on
subletting which would be viewed as commercially
unreasonable by a prudent commercial mortgage lender;
and such Ground Lease contains a covenant that the
lessor thereunder is not permitted, in the absence of
an uncured default, to disturb the possession,
interest or quiet enjoyment of any lessee in the
relevant portion of the Mortgaged Property subject to
such Ground Lease for any reason, or in any manner,
which would materially adversely affect the security
provided by the related Mortgage;
(k) Such Ground Lease may not be amended or modified
without the prior consent of the mortgagee under such
Mortgage Loan, and any such action without such
consent is not binding on such mortgagee, its
successors or assigns;
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<PAGE>
(l) Unless otherwise set forth in such Ground Lease, such
Ground Lease does not permit any increase in the
amount of rent payable by the ground lessee
thereunder during the term of such Mortgage Loan; and
(m) The terms of such Ground Lease have not been waived,
modified, satisfied, impaired, canceled, subordinated
or rescinded in any manner which materially
interferes with the security intended to be provided
by the related Mortgage.
19. Leasehold Estate and Fee Interest. If any Mortgage Loan is
secured in whole or in part by the interest of the related Borrower under a
Ground Lease and by the related Fee Interest:
(a) Such Fee Interest is subject, and subordinated of
record, to the related Mortgage; and the related
Mortgage does not by its terms provide that it will
be subordinated to the lien of any other mortgage or
other lien upon such Fee Interest; and
(b) Upon occurrence of a default under the terms of the
related Mortgage by the Borrower, the mortgagee has
the right to foreclose upon or otherwise exercise its
rights with respect to such Fee Interest within a
period of time that would not have been viewed, as of
the date of origination, as commercially unreasonable
by a prudent commercial mortgage lender.
20. Escrow Deposits. With respect to escrow deposits and
payments relating to any Mortgage Loan, all such payments have been delivered or
will be delivered in accordance with the terms of the Pooling and Servicing
Agreement to the Master Servicer.
21. Qualified Mortgage. Such Mortgage Loan is a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code.
22. Advancement of Funds. No holder of a Mortgage Loan has
advanced funds or induced, solicited or knowingly received any advance of funds
from a party other than the owner of the related Mortgaged Property (other than
amounts paid by the tenant as specifically provided under related lease),
directly or indirectly, for the payment of any amount required by such Mortgage
Loan, except for interest accruing from the date of origination of such Mortgage
Loan or the date of disbursement of the Mortgage Loan proceeds, whichever is
later, to the date which preceded by 30 days the first due date under the
related Mortgage Note.
23. Equity Interest. No Mortgage Loan is automatically
convertible into an equity ownership interest in the related Mortgaged Property
or the related Borrower.
24. Legal Proceedings. To the Seller's knowledge, there are no
pending or threatened actions, suits or proceedings by or before any court or
governmental authority against or affecting the Borrower under any Mortgage Loan
or the related Mortgaged Property that, if determined adversely to such Borrower
or Mortgaged Property, would materially and adversely affect
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<PAGE>
the value of the Mortgaged Property or the ability of the Borrower to pay
principal, interest or any other amounts due under such Mortgage Loan.
25. Other Mortgage Liens. Except as otherwise described under
"Description of the Mortgage Pool--Additional Loan and Property
Information--Additional and Other Financing" in the Prospectus Supplement, none
of the Mortgage Loans permits the related Mortgaged Property to be encumbered by
any mortgage lien junior to or of equal priority with the lien of the related
Mortgage without the prior written consent of the holder thereof. To the
Seller's knowledge, except as otherwise specified under "Description of the
Mortgage Pool--Additional Loan and Property Information--Additional and Other
Financing" in the Prospectus Supplement, and except for cases involving other
Mortgage Loans, the Mortgaged Properties are not encumbered by any mortgage
liens junior to or of equal priority with the liens of the related Mortgages.
26. No Mechanics' Liens. To the Seller's knowledge, (a) each
Mortgaged Property securing a Mortgage Loan is free and clear of any and all
mechanics' and materialmen's liens that are not bonded or escrowed for or
affirmatively covered by title insurance, and (b) no rights are outstanding that
under law could give rise to any such lien that would be prior or equal to the
lien of the related Mortgage unless insured against under the related Title
Policy. The Seller has not received notice with respect to any Mortgage Loan
that any mechanics' and materialmen's liens have encumbered the related
Mortgaged Property since origination that have not been released, bonded or
escrowed for or affirmatively covered by title insurance.
27. Compliance with Usury Laws. Each Mortgage Loan complied
with all applicable usury laws in effect at its date of origination.
28. Licenses and Permits. To the Seller's knowledge, based on
due diligence customarily performed by commercially reasonable lenders in the
origination of comparable mortgage loans, as of the date of origination of each
Mortgage Loan, (i) the related Borrower was in possession of all material
licenses, permits and authorizations required by applicable law for the
ownership of the related Mortgaged Property and (ii) all such licenses, permits
and authorizations were valid and in full force and effect.
29. Servicing Practices. The servicing and collection
practices used with respect to the Mortgage Loans have in all material respects
been legal and met customary standards utilized by prudent institutional
commercial and multifamily mortgage loan servicers with respect to "whole
loans".
30. Cross-collateralization. No Mortgage Loan is
cross-collateralized with any loan which is outside the Mortgage Pool.
31. Releases of Mortgaged Property. No Mortgage Note or
Mortgage requires the mortgagee to release all or any material portion of the
related Mortgaged Property from the lien of the related Mortgage except upon (i)
payment in full of all amounts due under the related Mortgage Loan or (ii)
delivery of U.S. Treasury securities in connection with a defeasance of the
related Mortgage Loan; provided that the Mortgage Loans that are
Cross-Collateralized Mortgage
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<PAGE>
Loans, and the other individual Mortgage Loans secured by multiple parcels, may
require the respective mortgagee(s) to grant releases of portions of the related
Mortgaged Property or, in the case of a Cross-Collateralized Group, the release
of one or more related Mortgaged Properties upon (i) the satisfaction of certain
legal and underwriting requirements and (ii) the payment of a release price and
prepayment consideration in connection therewith; and provided, further, that
certain Cross- Collateralized Groups of Mortgage Loans may permit the related
Borrower to obtain the release of one or more of the related Mortgaged
Properties by substituting comparable real estate property, subject to, among
other conditions precedent, receipt of confirmation from each Rating Agency that
such release and substitution will not result in a qualification, downgrade or
withdrawal of any of its then-current ratings of the Certificates. Each Mortgage
loan that contains a provision for any defeasance of mortgage collateral permits
defeasance (i) no earlier than two years following the Closing Date, (ii) only
with substitute collateral constituting "government securities" within the
meaning of Treas. Reg. Section 1.860G-2(a)(8)(i) and (iii) to the Seller's
knowledge, only for the purpose of facilitating the disposition of mortgaged
real property and not as part of an arrangement to collateralize a REMIC
offering with obligations that are not real estate mortgages.
32. No Equity Participation or Contingent Interest. No
Mortgage Loan contains any equity participation by the lender or provides for
any contingent or additional interest in the form of participation in the cash
flow of the related Mortgaged Property, or provide for the negative amortization
of interest, except that, in the case of an ARD Loan, such Mortgage Loan
provides that during the period commencing on or about the Anticipated Repayment
Date and continuing until such Mortgage Loan is paid in full, (i) additional
interest shall accrue and may be compounded monthly and shall be payable only
after the outstanding principal of such Mortgage Loan is paid in full, and (ii)
a portion of the cash flow generated by such Mortgaged Property will be applied
each month to pay down the principal balance thereof in addition to the
principal portion of the related Monthly Payment.
33. Fixed Rate Loans. Each Mortgage Loan bears interest at a
rate that remains fixed throughout the remaining term of such Mortgage Loan,
except in the case of an ARD Loan after its Anticipated Repayment Date and
except for the imposition of a default rate.
34. Inspection. In connection with the origination of each
Mortgage Loan (other than the Third Party Mortgage Loans), the Seller inspected,
or caused the inspection of, the related Mortgaged Property.
35. No Material Default. To the Seller's knowledge, there
exists no material default, breach, violation or event of acceleration (and no
event which, with the passage of time or the giving of notice, or both, would
constitute any of the foregoing) under the Mortgage Note or Mortgage for any
Mortgage Loan, in any such case to the extent the same materially and adversely
affects the value of the Mortgage Loan and the related Mortgaged Property;
provided, however, that this representation and warranty does not cover any
default, breach, violation or event of acceleration that specifically pertains
to or arises out of the subject matter otherwise covered by any other
representation and warranty made by the Seller in this Exhibit C.
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<PAGE>
36. Due-on-Sale. Subject to exceptions set forth in the
related Mortgage, such Mortgage contains a "due-on-sale" clause that provides
for the acceleration of the payment of the unpaid principal balance of such
Mortgage Loan if, without the prior written consent of the holder, the Mortgaged
Property subject to such Mortgage, or any controlling interest in the related
Borrower, is directly or indirectly transferred or sold.
37. Single Purpose Entity. The Borrower on each Mortgage Loan
that, individually or together with the Mortgage Loans of affiliated Borrowers,
represented 5% or more of the Initial Pool Balance, was, as of the origination
of the Mortgage Loan, a Single Purpose Entity. For this purpose, a "Single
Purpose Entity" shall mean an entity, other than an individual, whose
organizational documents provide substantially to the effect that it was formed
or organized solely for the purpose of owning and operating one or more of the
Mortgaged Properties securing the Mortgage Loans and prohibit it from engaging
in any business unrelated to such Mortgaged Property or Properties, and whose
organizational documents further provide, or which entity represented in the
related Mortgage Loan documents, substantially to the effect that it does not
have any material assets other than those related to its interest in and
operation of such Mortgaged Property or Properties, or any indebtedness other
than as permitted by the related Mortgage(s) or the other related Mortgage Loan
documents, that it has its own books and records and accounts separate and apart
from any other person, and that it holds itself out as a legal entity, separate
and apart from any other person.
38. Delivery of Mortgage File. The Seller has delivered to the
Trustee or a Custodian appointed thereby, with respect to each Mortgage Loan, in
accordance with Section 2 of this Agreement, a complete Mortgage File.
39. Whole Loan. Each Mortgage loan is a whole loan and not a
participation interest in a mortgage loan.
40. No Waivers. The Seller has not waived any material
default, breach, violation or event of acceleration existing under the Mortgage
or Mortgage Note for any Mortgage Loan, except by a written instrument contained
in the related Mortgage File, which instrument has been taken into account by
the Seller when giving the representations and warranties set forth herein.
41. Tax Parcels. Except as described on Schedule C-1, each
Mortgaged Property constitutes one or more complete separate tax lots or is
subject to an endorsement under the related Title Policy or in certain instances
an application has been made to the applicable governing authority for creation
of separate tax lots which shall be effective for the next tax year.
42. ARD Loans. As of the Closing Date, each ARD Loan requires
scheduled monthly payments of principal. If any ARD Loan is not paid in full by
its Anticipated Repayment Date, and assuming it is not otherwise in default, the
rate at which such ARD Loan accrues interest will increase to the sum of the
original Mortgage Rate and a specified margin (such margin, the "Additional
Interest Rate").
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<PAGE>
43. Security Interests. In connection with the operation of
any Mortgaged Property as either (i) a hospitality property or (ii) an
independent/assisted living or healthcare facility, the security agreements,
financing statements or other instruments, if any, related to the corresponding
Mortgage Loan establish and create a valid security interest in all items of
personal property owned by the related Borrower material to the conduct in the
ordinary course of the Borrower's business conducted on the related Mortgaged
Property, subject only to purchase money security interests and security
interests to secure revolving lines of credit and similar financing. The related
assignment of such security interest executed and delivered in favor of the
Trustee constitutes a legal, valid and binding assignment thereof from the
relevant assignor to the Trustee.
44. Factors that may Affect Coverage Under the Related
Environmental Insurance Policy. With respect to the Mortgaged Properties
identified on the Mortgage Loan Schedule as
_____________________________________________, as to which the Seller did not
require an environmental assessment in connection with the origination of the
related Mortgage Loans, the Seller: (a) did not willfully conceal or
misrepresent any fact or circumstance in the application for the related
environmental insurance policy material to the granting of coverage under such
policy; (b) has not otherwise willfully concealed from, or misrepresented to,
the insurer under such environmental insurance policy any fact or circumstance
material to the granting of coverage under such policy; (c) has not engaged in
any intentional or illegal act or omission that it knew or should have
reasonably foreseen would directly result in "Pollution Conditions" within the
meaning of such environmental insurance policy; (d) has disclosed in the
application for such environmental insurance policy all "Pollution Conditions"
within the meaning of such policy known to the Seller; and (e) has delivered to
the insurer under such environmental insurance policy copies of all engineering
reports in the possession of the Seller with respect to such Mortgaged
Properties.
45. Prepayment Premiums and Yield Maintenance Charges.
Prepayment Premiums and Yield Maintenance Charges payable with respect to such
Mortgage Loan, if any, constitutes "customary prepayment penalties" within
meaning of Treasury Regulation Section 1.860G-1(b)(2).
46. Delivery of Financial Information. The related Borrower
covenanted under the related Mortgage Loan documents to deliver at least
annually to the mortgagee under each Mortgage Loan an operating statement of the
related Mortgaged Property.
47. Servicing Rights. Except as set forth on Schedule C-2 or
as otherwise contemplated in this Agreement, no Person has been granted or
conveyed the right to the service any Mortgage Loan or receive any consideration
in connection therewith.
48. Defeasance Costs. If any Mortgage Loan permits defeasance,
then the related Mortgage Loan documents provide that the related Borrower is
responsible for the payment of all reasonable costs and expenses incurred by the
related mortgagee, including rating agency fees, accountant's fees and lender's
attorney's fees and expenses, in connection with the defeasance of such Mortgage
Loan.
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Schedule C-1
Tax Parcel Exceptions
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<PAGE>
Schedule C-2
Servicing Rights Exceptions
Property Name Servicer
------------- --------
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<PAGE>
Exhibit D-1
Certificate of an Officer of the Seller
I, _________________________, hereby certify that I am a
____________________ of _______________, a _________________ Corporation (the
"Seller"), and further certify as follows:
1. Attached hereto as Attachment A are true, correct and complete
copies of the Articles of Incorporation and By-Laws of the Seller, which are in
full force and effect on the date hereof.
2. Attached hereto as Attachment B are the resolutions of the board of
directors of the Seller authorizing and approving Seller's execution, delivery
and performance of the Mortgage Loan Purchase and Sale Agreement, dated as of
_______________ (the "Mortgage Loan Purchase and Sale Agreement"), between
Greenwich Capital Commercial Funding Corp. as purchaser and the Seller as
seller.
3. Attached hereto as Attachment C is a certificate of good standing of
the Seller issued by the Secretary of State of the State of ______________
issued within ten days of the date hereof and no event (including, without
limitation, any act or omission on the part of the Seller) has occurred since
the date thereof which has affected the good standing of the Seller under the
laws of the State of ___________________.
4. Each person who, as an officer or representative of the Seller,
signed the Mortgage Loan Purchase and Sale Agreement or any other document or
certificate delivered by or on behalf of the Seller prior hereto or on the date
hereof in connection with the transactions contemplated in the Mortgage Loan
Purchase and Sale Agreement, was, at the respective times of such signing and
delivery, and is as of the date hereof, duly elected or appointed, qualified and
acting as such officer or representative, and the signature of such persons
appearing on such documents are their genuine signatures.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Mortgage Loan Purchase and Sale Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
_________________________.
By: ______________________
Name: ____________________
Title: ___________________
<PAGE>
Exhibit D-2
Certificate of the Seller
In connection with the execution and delivery by
_______________ (the "Seller") of, and the consummation of the various
transactions contemplated by, that certain Mortgage Loan Purchase and Sale
Agreement (the "Agreement"), dated as of _______________, between Greenwich
Capital Commercial Funding Corp., as purchaser, and the Seller, as seller, the
undersigned hereby certifies that (i) the representations and warranties of the
Seller in the Agreement are true and correct in all material respects at and as
of the date hereof with the same effect as if made on the date hereof, and (ii)
the Seller has, in all material respects, complied with all the agreements and
satisfied all the conditions on its part required under the Agreement to be
performed or satisfied at or prior to the date hereof. Capitalized terms used
but not defined herein shall have the respective meanings assigned to them in
the Agreement.
Certified this ____ day of ___________________.
[SELLER]
By: ______________________
Name: ____________________
Title: ___________________
<PAGE>
Exhibit D-3
Opinion of Counsel to the Seller
<PAGE>
Schedule 1
Mortgage Loan Schedule
[See Attached Schedule]
<PAGE>
Schedule 2
Third Party Originator Agreements
<TABLE>
<CAPTION>
THIRD PARTY ORIGINATOR THIRD PARTY ORIGINATOR AGREEMENT
<S> <C>
</TABLE>
<PAGE>
EXHIBIT N
SCHEDULE OF DESIGNATED ARD LOANS
<TABLE>
<CAPTION>
Property Name Cut-off Date Balance Maturity Date ARD Date
<S> <C> <C> <C>
</TABLE>
N-1
<PAGE>
EXHIBIT O
SCHEDULE OF DESIGNATED SUB-SERVICERS
<TABLE>
<CAPTION>
Cut-off Date Designated
Property Name Balance Sub-Servicer
<S> <C> <C>
</TABLE>
O-1
<PAGE>
Sidley & Austin
875 Third Avenue
New York, New York 10022
Telephone: (212) 906-2000
Fax: (212) 906-2021
April __, 2000
Greenwich Capital Commercial Funding Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
Re: Greenwich Capital Commercial Funding Corp.
Commercial Mortgage Pass-Through Certificates
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
We have acted as counsel for Greenwich Capital Commercial
Funding Corp., a Delaware corporation (the "Registrant"), in connection with the
registration statement on Form S-3 (the "Registration Statement") being filed by
the Registrant on or about the date hereof with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933 (the "Act") with
respect to the Registrant's Commercial Mortgage Pass-Through Certificates (the
"Certificates") to be issued from time to time. The Registration Statement
relates to the registration under the Act of Certificates that will evidence
interests in trust funds as described in the Registration Statement. The
Certificates are issuable in one or more series (each a "Series") under separate
pooling and servicing agreements (each, a "Pooling and Servicing Agreement")
among the Registrant, the master servicer named therein, the special servicer
named therein, and the trustee named therein. The Certificates of each Series
are to be sold as described in the Registration Statement, in any amendment
thereto and in the prospectus and prospectus supplement relating to such Series
(the "Prospectus" and "Prospectus Supplement", respectively).
<PAGE>
In this connection, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments as we deemed necessary for the purposes
of this opinion. In our examination, we have assumed the following: (a) the
genuineness of all signatures; (b) the legal capacity of natural persons; (c)
the authenticity of all documents submitted to us as originals; (d) the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such documents;
and (e) the truth, accuracy and completeness of the information, representations
and warranties contained in the records, documents, instruments and certificates
that we have reviewed. As to any facts material to the opinions expressed herein
which were not known to us, we have relied upon certificates, statements and
representations of officers and other representatives of the Registrant and
others.
In rendering this opinion, we have assumed that (i) the
Pooling and Servicing Agreement with respect to each Series of Certificates is
executed and delivered substantially in the form included as Exhibit 4.1 to the
Registration Statement; (ii) each party to the Pooling and Servicing Agreement
with respect to each Series of Certificates has the power and authority to enter
into and perform all of such party's obligations thereunder; (iii) the Pooling
and Servicing Agreement constitutes the valid and binding obligation of each
party thereto, enforceable against such party in accordance with its terms; and
(iv) and that the transactions contemplated to occur under the Registration
Statement and the Pooling and Servicing Agreement with respect to each Series of
Certificates in fact occur in accordance with the terms thereof.
Based upon and subject to the foregoing, we are of the opinion
that when
(i) the Registration Statement becomes effective,
(ii) the issuance and principal terms of any Series of
Certificates have been duly authorized by appropriate corporate action
by the Registrant,
(iii) the Pooling and Servicing Agreement has been duly
authorized by all necessary action and executed and delivered by or on
behalf of each party thereto, and
-2-
<PAGE>
(iv) the Certificates of such Series have been duly executed,
authenticated and delivered in accordance with the terms and conditions
of the Pooling and Servicing Agreement relating to such Series and sold
in the manner described in the Registration Statement, in any amendment
thereto and in the Prospectus and Prospectus Supplement relating
thereto,
the Certificates of such Series will be legally and validly issued and
outstanding, fully paid and non-assessable, except as enforcement thereof may
be limited by applicable bankruptcy, insolvency, reorganization, arrangement,
fraudulent conveyance, moratorium or other laws relating to or affecting the
rights of creditors generally and general principles of equity, including
concepts of materiality, reasonableness, good faith and fair dealing, and the
possible unavailability of specific performance or injunctive relief, regardless
of whether such enforceability is considered in a proceeding in equity or at
law.
We hereby consent to the filing of this opinion letter as an
exhibit to the Registration Statement and to the use of our name under the
heading "Legal Matters" in the Prospectus included as part of the Registration
Statement and in the Prospectus Supplement relating to each Series of
Certificates with respect to which we act as counsel to the Registrant. In
giving such consent, we do not consider that we are "experts", within the
meaning of the term as used in the Act or the rules and regulations of the
Commission issued thereunder, with respect to any part of the Registration
Statement, including this opinion as an exhibit or otherwise.
We express no opinion as to any laws other than the laws of
the State of New York and the federal laws of the United States of America, and
do not express any opinion, either implicitly or otherwise, on any issue not
expressly addressed above.
Very truly yours,
/s/ Sidley & Austin
<PAGE>
[LETTERHEAD OF SIDLEY & AUSTIN]
April , 2000]
Greenwich Capital Commercial Funding Corp.
600 Steamboat Road
Greenwich, Connecticut 06830
Re: Greenwich Capital Commercial Funding Corp.
Commercial Mortgage Pass-Through Certificates
Registration Statement on Form S-3
----------------------------------
Dear Ladies and Gentlemen:
We have acted as counsel for Greenwich Capital Commercial
Funding Corp., a Delaware corporation (the "Registrant"), in connection with the
registration statement on Form S-3 (the "Registration Statement") being filed by
the Registrant on or about the date hereof with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933 (the "Act") with
respect to the Registrant's Commercial Mortgage Pass-Through Certificates (the
"Certificates") to be issued from time to time. The Registration Statement
relates to the registration under the Act of Certificates that will evidence
interests in trust funds as described in the Registration Statement. The
Certificates are issuable in one or more series (each a "Series") under separate
pooling and servicing agreements among the Registrant, the Master Servicer named
therein, the Special Servicer named therein, the REMIC Administrator (if any)
named therein and the Trustee named therein. The Certificates of each Series are
to be sold as described in the Registration Statement, in any amendment thereto
and in the prospectus and prospectus supplement relating to such Series (the
"Prospectus" and "Prospectus Supplement", respectively).
In this connection, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments as we deemed necessary for the purposes
of this opinion. In our examination, we have assumed the following: (a) the
genuineness of all signatures; (b) the legal capacity of natural persons; (c)
the authenticity of all documents submitted to us as originals; (d) the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such documents;
and (e) the truth, accuracy and completeness of the information, representations
and warranties contained in the records, documents, instruments and certificates
that we have reviewed. As to any facts material to the opinions expressed herein
<PAGE>
SIDLEY & AUSTIN NEW YORK
Greenwich Capital Commercial Funding Corp.
April __, 2000
Page 2
which were not known to us, we have relied upon certificates, statements and
representations of officers and other representatives of the Registrant and
others.
Based upon the foregoing, we are of the opinion that the
description set forth under the caption "Certain Federal Income Tax
Consequences" in the Prospectus included as a part of the Registration Statement
correctly describes the material aspects of the federal income tax treatment of
an investment in the Certificates to investors that are United States Persons
(as defined in the Prospectus), as of the date hereof, and, where expressly
indicated therein, to investors that are not United States Persons.
We know that we are referred to under the heading "Certain
Federal Income Tax Consequences" in the Prospectus forming a part of the
Registration Statement, and we hereby consent to such use of our name in the
Registration Statement and to the use of this opinion for filing with the
Registration Statement as Exhibit 8.1 thereto. In giving such consent, we do not
consider that we are "experts", within the meaning of the term as used in the
Act or the rules and regulations of the Commission issued thereunder, with
respect to any part of the Registration Statement, including this opinion as an
exhibit or otherwise.
We express no opinion as to any laws other than the federal
laws of the United States of America, and do not express any opinion, either
implicitly or otherwise, on any issue not expressly addressed above.
Very truly yours,
/s/ Sidley & Austin
