<PAGE>
As filed with the Securities and Exchange Commission on March 20, 1998
================================================================================
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
STRUCTURED ASSET SECURITIES CORPORATION
(Exact name of Registrant as specified in its charter)
on behalf of itself and trusts with respect to which it is the settlor or
depositor
Delaware 200 Vesey Street 74-2440850
(State or other jurisdiction of New York, New York 10285 (I.R.S. Employer
incorporation or organization) (212) 526-5594 Identification No.)
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Theodore P. Janulis
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
(212) 526-5594
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------
COPIES TO:
William J. Cullen, Esq. Scott Kimmel Michael S. Gambro, Esq.
Sidley & Austin Vice President Cadwalader, Wickersham
875 Third Avenue Lehman Brothers Inc. & Taft
New York, New York 10022 3 World Financial Center 100 Maiden Lane
(212) 906-2276 New York, New York 10285 New York, New York 10038
(212) 526-4058 (212) 504-6000
Richard F. Kadlick, Esq. Mitchell G. William, Esq.
Skadden, Arps, Slate, Meagher & Flom Thacher, Proffitt & Wood
919 Third Avenue Two World Trade Center
New York, New York 10022 New York, New York 10048
(212) 735-2716 (212) 912-7481
-----------------------
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective as determined by market
conditions.
-----------------------
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /x/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- - ---------------------------- ------------------- ----------------------------- --------------------------- -----------------------
Title of Securities Amount to be Proposed Maximum Aggregate Proposed Maximum Aggregate Amount of Registration
to be Registered Registered (1) Price Per Unit (2) Offering Price (1)(2) Fee (1) (2) (3)
- - ---------------------------- ------------------- ----------------------------- --------------------------- -----------------------
<S> <C> <C> <C> <C>
Collateralized Mortgage $ 5,824,107,493 100% $ 5,824,107,493 $ 1,724,729
Obligations and
Commercial Mortgage Pass-
Through Certificates
- - ---------------------------- ------------------- ----------------------------- --------------------------- -----------------------
</TABLE>
(1) Pursuant to Rule 429 under the Securities Act of 1933, includes $824,107,493
of securities carried forward from the Registration Statement on Form S-3
(File No. 33-96378) for which a filing fee of $249,729 has been previously
paid.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Includes $249,729 in filing fees which have been previously paid.
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 this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429 under the Securities Act of 1933, each Prospectus which is
part of this Registration Statement shall relate to any securities which remain
unsold under the Registration Statement on Form S-3 (File No. 33-96378) of the
Registrant, and this Registration Statement constitutes a post-effective
amendment to such Registration Statement.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted without the delivery of a final form of this
prospectus supplement and the prospectus to which it relates. This prospectus
supplement and the prospectus to which it relates shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 20, 1998.
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED ____________, _______)
$________ (APPROXIMATE)
LB COMMERCIAL MORTGAGE TRUST [I]
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES ____-__
----------------
The Series___-_ Commercial Mortgage Pass-Through Certificates (the
"Certificates") will consist of [18] classes (each, a "Class") of Certificates,
including the [eight] Classes of Certificates offered hereby (collectively, the
"Offered Certificates"). The Certificates, in the aggregate, will represent the
entire undivided beneficial ownership interest in a trust fund (the "Trust
Fund") to be established by Structured Asset Securities Corporation (the
"Depositor"), that is expected to consist primarily of a segregated pool (the
"Mortgage Pool") of ______ [specify general characteristics of the Mortgage
Loans] mortgage loans (the "Mortgage Loans") having the characteristics
described herein.
(CONTINUED ON NEXT PAGE)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE INFORMATION SET FORTH UNDER "RISK
FACTORS" BEGINNING ON PAGE S-__ OF THIS PROSPECTUS SUPPLEMENT AND ON PAGE __ OF
THE PROSPECTUS.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
<TABLE>
<CAPTION>
% OF
INITIAL INITIAL ASSUMED FINAL
CERTIFICATE POOL PASS-THROUGH DISTRIBUTION EXPECTED
CLASS BALANCE(1) BALANCE(1) RATE DATE(2) CUSIP NO. RATING(3)
<S> <C> <C> <C> <C> <C> <C>
[Class A-1............... $ % % , 20
Class A-2................ $ % % , 20
Class A-3................ $ % % , 20
Class B.................. $ % % , 20
Class C.................. $ % % , 20
Class D.................. $ % % , 20
Class E.................. $ % % , 20
Class IO]................ N/A(4) N/A(4) N/A(4) , 20
</TABLE>
(FOOTNOTES ON NEXT PAGE)
The Offered Certificates will be offered by Lehman Brothers Inc. (the
"Underwriter") from time to time in negotiated transactions or otherwise at
varying prices to be determined at the time of sale. Proceeds to the Depositor
from the sale of the Offered Certificates, before deducting expenses payable by
the Depositor, will be approximately $_____________, which includes accrued
interest. See "Method of Distribution" herein.
The Offered Certificates are offered by the Underwriter when, as and if
issued and delivered to and accepted by the Underwriter, subject to prior sale
and subject to the Underwriter's right to reject orders in whole or in part. It
is expected that the Offered Certificates will be delivered to the Underwriter
in book-entry form through the Same-Day Funds Settlement System of The
Depository Trust Company on or about _________,-____.
--------------------
LEHMAN BROTHERS
--------------------
The date of this Prospectus Supplement is _________, ____.
<PAGE>
(FOOTNOTES FROM TABLE ON PRIOR PAGE)
(1) Subject to a permitted variance of plus or minus ___%.
(2) The Assumed Final Distribution Date is defined (and has been determined on
the basis of the assumptions set forth) under "Description of the
Certificates--Assumed Final Distribution Date; Rated Final Distribution
Date" herein. The "Rated Final Distribution Date" is the Distribution Date
in _________, 20_ which is the first Distribution Date that follows the
second anniversary of the end of the amortization term for the Mortgage Loan
that, as of the Cut-off Date, has the longest remaining amortization term.
See "Description of the Certificates--Assumed Final Distribution Date; Rated
Final Distribution Date" and "Ratings" herein.
(3) By each of _______________ and ________________.
(4) The Class IO Certificates will not have a Certificate Balance nor will
they entitle the holders thereof to receive distributions of principal;
however, such Certificates will entitle the holders thereof to receive
payments of the aggregate interest accrued from time to time on the
respective notional amounts of the Class IO Components, as described
herein. The aggregate of such notional amounts will initially equal
approximately $_______. See "Description of the Certificates--Certificate
Balances and Notional Amounts", "--Pass-Through Rates" and
"--Distributions" herein.
(COVER CONTINUED)
[On or before the date the Certificates are issued, the Depositor will
acquire the Mortgage Loans from an affiliate thereof and will transfer the
Mortgage Loans, without recourse, to ________________________, as trustee of the
Trust Fund (the "Trustee"), in exchange for the Certificates. As of _______ _,
____ (the "Cut-off Date"), the Mortgage Loans had an aggregate principal balance
(the "Initial Pool Balance") of approximately $_____________ after application
of all payments of principal due on or before such date, whether or not
received. ______________________as master servicer (in such capacity, the
"Master Servicer") and as special servicer (in such capacity, the "Special
Servicer"), directly or through one or more subservicers, will service the
Mortgage Loans. The Offered Certificates bear the class designations and have
the characteristics set forth in the table on the preceding page. Simultaneously
with the issuance of the Offered Certificates, the Private Certificates (as
defined herein) will be issued. Only the Offered Certificates are offered
hereby.]
[As and to the extent described herein, the Private Certificates will be
subordinate to the Offered Certificates; the Class B, Class C, Class D and Class
E Certificates will be subordinate to the Class A-1, Class A-2, Class A-3 and
Class IO Certificates; the Class C, Class D and Class E Certificates will be
subordinate to the Class B Certificates; the Class D and Class E Certificates
will be subordinate to the Class C Certificates; and the Class E Certificates
will be subordinate to the Class D Certificates. Distributions of interest on
and principal of the Certificates will be made, to the extent of available
funds, on the ___ day of each month or, if any such ___ day is not a business
day, then on the next succeeding business day, commencing in ___________ (each,
a "Distribution Date"). As described herein, distributions allocable to interest
in respect of each Class of Offered Certificates (other than the Class IO
Certificates) will be made on each Distribution Date based on the pass-through
rate (the "Pass-Through Rate") applicable to such Class and the principal amount
(the "Certificate Balance") of such Class outstanding immediately prior to such
Distribution Date. The Class IO Certificates will have fourteen components
(collectively, the "Class IO Components"), each with a designation and a
notional amount that corresponds with the designation and Certificate Balance of
a Class of Sequential Pay Certificates (as defined herein). As described herein,
distributions allocable to interest in respect of the Class IO Certificates will
be made on each Distribution Date in an amount equal to the aggregate amount of
interest which has accrued on the notional amount of each of the Class IO
Components. Interest will
S-2
<PAGE>
accrue on the notional amount of each Class IO Component based on the
Pass-Through Rate of such Class IO Component. The Pass-Through Rate applicable
to each Class IO Component will be equal to the Weighted Average Net Mortgage
Rate (as defined herein) minus the Pass-Through Rate applicable to the
corresponding Class of Sequential Pay Certificates. As described herein,
distributions allocable to principal of the Offered Certificates will be made
sequentially to the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D
and Class E Certificates, in that order, until the respective Classes of
Certificates are retired. The Class IO Certificates will not have a Certificate
Balance, nor will they entitle the holders thereof to distributions of
principal. The holders of the Certificates may also receive portions of any
Prepayment Premiums and Yield Maintenance Charges (each as defined herein) to
the extent described herein. See "Description of the
Certificates--Distributions" herein.]
The yield to maturity on each Class of Offered Certificates will depend on,
among other things, the rate and timing of principal payments (including by
reason of prepayments, defaults and liquidations) on the Mortgage Loans. [THE
YIELD TO MATURITY ON THE CLASS IO CERTIFICATES WILL BE HIGHLY SENSITIVE TO THE
RATE AND TIMING OF PRINCIPAL PAYMENTS (INCLUDING BY REASON OF PREPAYMENTS,
DEFAULTS AND LIQUIDATIONS) ON THE MORTGAGE LOANS AND INVESTORS IN THE CLASS IO
CERTIFICATES SHOULD FULLY CONSIDER THE ASSOCIATED RISKS, INCLUDING THE RISK THAT
A RAPID RATE OF PREPAYMENT OF THE MORTGAGE LOANS COULD RESULT IN THE FAILURE OF
SUCH INVESTORS TO FULLY RECOUP THEIR INITIAL INVESTMENTS.] The allocation to any
Class of Offered Certificates of any Prepayment Premium or Yield Maintenance
Charge may be insufficient to offset fully the adverse effects on the
anticipated yield to maturity resulting from the corresponding principal
prepayment. Any delay in collection of a Balloon Payment (as defined herein) due
at the maturity of a Mortgage Loan will likely extend the weighted average life
of the Class or Classes of Offered Certificates entitled to distributions in
respect of principal as of the date such Balloon Payment was due. See
"Description of the Certificates-- Certificate Balances and Notional Amounts"
and "--Distributions," "Yield and Maturity Considerations" and "Servicing of the
Mortgage Loans--Modifications, Waivers and Amendments" herein, and "Yield and
Prepayment Considerations" and "Risk Factors--Yield and Prepayment
Considerations" in the Prospectus.
As described herein, three separate "real estate mortgage investment
conduit" ("REMIC") elections will be made with respect to the Trust Fund for
federal income tax purposes (the REMICs formed thereby, "REMIC I", "REMIC II"
and "REMIC III", respectively). The Offered Certificates will evidence "regular
interests" in the related REMIC. See "Certain Federal Income Tax Consequences"
herein and "Federal Income Tax Considerations" in the Prospectus.
There is currently no secondary market for the Offered Certificates. The
Underwriter currently intends to make a secondary market in the Offered
Certificates, but has no obligation to do so. See "Risk Factors--The
Certificates--Limited Liquidity" herein.
------------------------
PROCEEDS OF THE ASSETS IN THE TRUST FUND WILL BE THE SOLE SOURCE OF PAYMENTS
ON THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES WILL NOT REPRESENT AN
INTEREST IN OR OBLIGATION OF THE DEPOSITOR, THE UNDERWRITER, THE MASTER
SERVICER, THE SPECIAL SERVICER, THE TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE LOANS
WILL BE INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THE PROSPECTUS THAT ACCOMPANIES THIS PROSPECTUS SUPPLEMENT CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING THAT IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL TO OBTAIN MATERIAL INFORMATION CONCERNING
S-3
<PAGE>
THE OFFERED CERTIFICATES. SALES OF THE OFFERED CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED A COPY OF BOTH THE PROSPECTUS AND
THIS PROSPECTUS SUPPLEMENT.
THROUGH AND INCLUDING ____________ ___, ALL DEALERS EFFECTING TRANSACTIONS
IN THE OFFERED CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION,
MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS. THIS DELIVERY
REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
S-4
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
SUMMARY OF PROSPECTUS SUPPLEMENT........................................................................... S-6
RISK FACTORS............................................................................................... S-27
The Certificates....................................................................................... S-27
The Mortgage Loans..................................................................................... S-29
DESCRIPTION OF THE MORTGAGE POOL........................................................................... S-34
General................................................................................................ S-34
Certain Payment Characteristics........................................................................ S-34
The Index.............................................................................................. S-35
[Delinquent and Non-performing Mortgage Loans]......................................................... S-35
Additional Mortgage Loan Information................................................................... S-35
Delinquencies...................................................................................... S-43
The Mortgage Loan Seller............................................................................... S-43
General............................................................................................ S-43
Underwriting of the Mortgage Loans..................................................................... S-44
Representations and Warranties with respect to the Mortgage Loans; Repurchases......................... S-44
Changes in Mortgage Pool Characteristics............................................................... S-44
SERVICING OF THE MORTGAGE LOANS............................................................................ S-45
General................................................................................................ S-45
The Master Servicer [and the Special Servicer]......................................................... S-46
THE SPECIAL SERVICER................................................................................... S-47
Servicing and Other Compensation and Payment of Expenses............................................... S-47
Modifications, Waivers and Amendments.................................................................. S-49
Custodial Account...................................................................................... S-50
[The Controlling Class Representative.................................................................. S-53
Limitation on Liability of Controlling Class Representative........................................ S-54
Realization Upon Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans and REO Properties......... S-54
REO Properties......................................................................................... S-56
Replacement of the Special Servicer.................................................................... S-57
Inspections; Collection of Operating Information....................................................... S-57
Due-on-Sale and Due-on-Encumbrance Provisions.......................................................... S-58
[Maintenance of Insurance.............................................................................. S-58
[Evidence as to Compliance............................................................................. S-59
[Certain Matters Regarding the Depositor, the Master Servicer and the Special Servicer................. S-59
[Events of Default..................................................................................... S-60
[Rights Upon Event of Default.......................................................................... S-61
DESCRIPTION OF THE CERTIFICATES............................................................................ S-61
General................................................................................................ S-61
Registration and Denominations......................................................................... S-62
Certificate Balances and Notional Amounts.............................................................. S-62
Pass-Through Rates..................................................................................... S-63
Collection Account..................................................................................... S-64
Distributions.......................................................................................... S-64
Subordination; Allocation of Losses and Certain Expenses............................................... S-71
P&I Advances........................................................................................... S-73
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Appraisal Reductions................................................................................... S-74
Reports to Certificateholders; Available Information................................................... S-75
Assumed Final Distribution Date; Rated Final Distribution Date......................................... S-79
Voting Rights.......................................................................................... S-80
Termination............................................................................................ S-80
The Trustee............................................................................................ S-81
[The Fiscal Agent...................................................................................... S-81
YIELD AND MATURITY CONSIDERATIONS.......................................................................... S-81
Yield Considerations................................................................................... S-81
Price/Yield Tables..................................................................................... S-84
Weighted Average Life.................................................................................. S-85
USE OF PROCEEDS............................................................................................ S-88
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................................................... S-88
General................................................................................................ S-88
Discount and Premium; Prepayment Premiums and Yield Maintenance Charges................................ S-89
Characterization of Investments in Offered Certificates................................................ S-89
Possible Taxes on Income from Foreclosure Property and Other Taxes..................................... S-90
Reporting and other Administrative Matters............................................................. S-91
ERISA CONSIDERATIONS....................................................................................... S-91
LEGAL INVESTMENT........................................................................................... S-94
METHOD OF DISTRIBUTION..................................................................................... S-95
LEGAL MATTERS.............................................................................................. S-95
RATINGS.................................................................................................... S-95
INDEX OF PRINCIPAL DEFINITIONS............................................................................. S-97
[ANNEX A--CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS.................................................... A-1
ANNEX B--TERM SHEET........................................................................................ B-1
ANNEX C--FORM OF DISTRIBUTION DATE STATEMENT............................................................... C-1
ANNEX D--FORM OF DELINQUENT LOAN STATUS REPORT............................................................. D-1
ANNEX E--FORM OF HISTORICAL LOAN MODIFICATION REPORT....................................................... E-1
ANNEX F--FORM OF HISTORICAL LOSS ESTIMATE REPORT........................................................... F-1
ANNEX G--FORM OF REO STATUS REPORT......................................................................... G-1
ANNEX H--FORM OF WATCH LIST REPORT......................................................................... H-1
ANNEX I--OPERATING STATEMENT ANALYSIS...................................................................... I-1
ANNEX J--NOI ADJUSTMENT WORKSHEET.......................................................................... J-1
ANNEX K--COMPARATIVE FINANCIAL STATUS REPORT............................................................... K-1]
</TABLE>
S-6
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND IN
THE ACCOMPANYING PROSPECTUS. CERTAIN CAPITALIZED TERMS USED IN THIS SUMMARY MAY
BE DEFINED ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT OR IN THE PROSPECTUS. AN
"INDEX OF PRINCIPAL DEFINITIONS" IS INCLUDED AT THE END OF THIS PROSPECTUS
SUPPLEMENT AND A "GLOSSARY" IS INCLUDED AT THE END OF THE PROSPECTUS. TERMS THAT
ARE USED BUT NOT DEFINED IN THIS PROSPECTUS SUPPLEMENT HAVE THE MEANINGS
SPECIFIED IN THE PROSPECTUS. ALL NUMERICAL INFORMATION PROVIDED HEREIN WITH
RESPECT TO THE MORTGAGE LOANS IS PROVIDED ON AN APPROXIMATE BASIS.
<TABLE>
<CAPTION>
INITIAL PERCENT OF
CERTIFICATE INITIAL POOL CREDIT PASS-THROUGH
CLASS RATING BALANCE(1) BALANCE(1) SUPPORT (2) DESCRIPTION RATE
- - -------------------- ------------- ------------- --------------- --------------- -------------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
[Class A-1.......... / / $ % % Fixed Coupon %
Class A-2........... / / $ % % Fixed Coupon %
Class A-3........... / / $ % % Fixed Coupon %
Class B............. / / $ % % Fixed Coupon %
Class C............. / / $ % % Fixed Coupon %
Class D............. / / $ % % Fixed Coupon %
Class E............. / / $ % % Fixed Coupon %
Class IO............ / / (4) N/A N/A Variable IO Strip (5)
Class F............. (6) $ % % WAC %(7)
Class G............. (6) $ % % WAC %(7)
Class H............. (6) $ % % WAC %(7)
Class J............. (6) $ % % WAC %(7)
Class K............. (6) $ % % WAC %(7)
Class L............. (6) $ % % WAC %(7)
Class M............. (6) $ % % WAC %(7)
<CAPTION>
WEIGHTED CASH FLOW
AVERAGE LIFE OR PRINCIPAL
CLASS (YEARS)(3) WINDOW(3)
- - -------------------- ----------------- ---------------
<S> <C> <C>
[Class A-1..........
Class A-2...........
Class A-3...........
Class B.............
Class C.............
Class D.............
Class E.............
Class IO............ N/A
Class F.............
Class G.............
Class H.............
Class J.............
Class K.............
Class L.............
Class M.............
</TABLE>
- - ------------------------
(1) Subject to a permitted variance of plus or minus __%.
(2) Represents initial aggregate Certificate Balance of all Classes of
Sequential Pay Certificates that are subordinate to the indicated Class
(expressed as a percentage of the Initial Pool Balance).
(3) Based on 0% CPR and the other assumptions set forth under "Yield and
Maturity Considerations-- Weighted Average Life" herein.
(4) The Class IO Certificates will not have a specified Certificate Balance nor
will they entitle the holders thereof to receive distributions of principal.
See "--Description of the Certificates--Certificate Balances and Notional
Amounts" herein.
(5) Holders of the Class IO Certificates will be entitled to receive
distributions of interest in an amount equal to the aggregate interest
accrued on the notional amount of each of the Class IO Components, as
described herein. The Pass-Through Rate for each Class IO Component is
variable and, in general, equals the Weighted Average Net Mortgage Rate (as
defined herein) from time to time minus the Pass-Through Rate for the
corresponding Class of Sequential Pay Certificates. See "--Description of
the Certificates--Pass-Through Rates" herein.
(6) Not offered hereby. Accordingly, any information herein regarding the terms
of such Class of Certificates is provided solely because of its potential
relevance to a prospective purchaser of an Offered Certificate.]
S-7
<PAGE>
<TABLE>
<S> <C>
TITLE OF CERTIFICATES........... LB Commercial Mortgage Trust [I], Commercial Mortgage
Pass- Through Certificates, Series ____-____ (the
"Certificates"), to be issued in [18] classes (each, a
"Class") to be designated as: [(i) the Class A-1, Class
A-2 and Class A-3 Certificates (collectively the "Class A
Certificates"); (ii) the Class B, Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class K, Class L
and Class M Certificates (collectively with the Class A
Certificates, the "Sequential Pay Certificates"); (iii)
the Class IO Certificates (collectively with the
Sequential Pay Certificates, the "Regular Interest
Certificates"); and (iv) the Class R-I, Class R-II and
Class R-III Certificates (collectively, the "Residual
Interest Certificates"). Only the Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D, Class E and Class IO
Certificates (collectively, the "Offered Certificates")
are offered hereby. The Class F, Class G, Class H, Class
J, Class K, Class L, Class M and Residual Interest
Certificates (collectively, the "Private Certificates")
have not been registered under the Securities Act of 1933,
as amended (the "Securities Act"), and are not offered
hereby.] The table on the preceding page sets forth the
indicated characteristics of the Certificates.
DEPOSITOR....................... Structured Asset Securities Corporation, a Delaware
corporation. The Depositor is a wholly owned subsidiary of
Lehman Commercial Paper Inc., which, in turn, is a wholly
owned subsidiary of the Underwriter. Neither the Depositor
nor any of its affiliates has insured or guaranteed the
Offered Certificates. See "The Issuer" in the Prospectus.
MASTER SERVICER [AND SPECIAL
SERVICER]..................... _______, a _______ corporation. In its capacity as Master
Servicer, _______will be responsible for the servicing of
all the Mortgage Loans that, in general, are not in
default or in imminent danger thereof [, and in its
capacity as Special Servicer, will be responsible for
performing certain servicing functions with respect to the
Mortgage Loans that, in general, are in default or as to
which default is imminent, for administering any REO
Property (as defined herein). The Controlling Class (as
defined herein) of Sequential Pay Certificates will have
the right, subject to certain conditions described herein,
to replace the Special Servicer and to select a
representative (the "Controlling Class Representative")
from whom the Special Servicer will seek advice and
approval and take direction under certain circumstances,
as described herein.] See "Servicing of the Mortgage
Loans--The Master Servicer [and the Special Servicer]",
"--The Controlling Class Representative" and "--Servicing
and Other Compensation and Payment of Expenses" herein.
[SPECIAL SERVICER............... _______, a _______ corporation. In its capacity as Special
Servicer, will be responsible for performing certain
servicing functions with respect to the Mortgage Loans
that, in general, are in default or as to which default is
imminent, for administering any REO Property (as defined
herein). The Controlling Class (as defined herein) of
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Sequential Pay Certificates will have the right, subject
to certain conditions described herein, to replace the
Special Servicer and to select a representative (the
"Controlling Class Representative") from whom the Special
Servicer will seek advice and approval and take direction
under certain circumstances, as described herein. See
"Servicing of the Mortgage Loans--The Special Servicer",
"-- The Controlling Class Representative" and "--Servicing
and Other Compensation and Payment of Expenses" herein.]
TRUSTEE......................... _______, a [describe type of organization] and [describe
relationship to other parties, if any].
[FISCAL AGENT................... _______ a [describe type of organization] and [describe
relationship to other parties, if any].]
MORTGAGE LOAN SELLER............ An affiliate of the Underwriter and the Depositor. See
"Description of the Mortgage Pool--The Mortgage Loan
Seller" herein.
CUT-OFF DATE.................... ________, ____.
CLOSING DATE.................... On or about _______, ____.
RECORD DATE..................... With respect to any Distribution Date other than the
initial Distribution Date, the last business day of the
month immediately preceding the month in which such
Distribution Date occurs, and with respect to the initial
Distribution Date, the Closing Date.
DETERMINATION DATE.............. The ___ day of each month, or if such ___ day is not a
business day, the next preceding business day.
DISTRIBUTION DATE............... The ___ day of each month , or if such ___ day is not a
business day, the next succeeding business day, commencing
in _______, ___.
COLLECTION PERIOD............... With respect to any Distribution Date, the period
commencing on the day 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.
INTEREST ACCRUAL PERIOD......... With respect to each Distribution Date, the calendar month
immediately preceding the month in which such Distribution
Date occurs.
REGISTRATION OF THE OFFERED
CERTIFICATES.................. The Offered Certificates of each Class will initially be
represented by one or more global Certificates registered
in the name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"). No person acquiring an interest in
any Offered Certificate (any such person, a "Certificate
Owner") will be entitled to receive such Certificate in
fully registered, certificated form (a "Definitive Offered
Certificate"), except under the limited circumstances
described under "Description of the
Certificates--Registration and
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Denominations" herein and "Description of the
Securities--Book-Entry Registration" in the Prospectus.
Instead, DTC will effect payments and transfers in respect
of the Offered Certificates by means of its electronic
recordkeeping services, acting through certain
participating organizations ("Participants"). This may
result in certain delays in receipt of payments by an
investor and may restrict an investor's ability to pledge
its Certificates. Unless and until Definitive Offered
Certificates of any Class are issued to the related
Certificate Owners, all references herein to the rights of
holders of such Class of Offered Certificates are to the
rights of those Certificate Owners as such rights may be
exercised through DTC and its participants, except as
otherwise specified herein.
DENOMINATIONS................... The Offered Certificates of each Class will be issued,
maintained and transferred on the book-entry records of
DTC and its Participants in denominations of $_______
actual principal amount (or $_______ notional amount with
respect to the Class IO Certificates), and in integral
multiples of $_______ in excess thereof.
THE MORTGAGE POOL............... The Mortgage Pool will consist of __ [describe general
characteristics of Mortgage Loans] mortgage loans (the
"Mortgage Loans") with an aggregate Cut-off Date Balance
of $_______ (the "Initial Pool Balance") [, subject to a
permitted variance of plus or minus ___%]. The "Cut-off
Date Balance" of each Mortgage Loan is the unpaid
principal balance thereof as of the Cut-off Date, after
application of all payments due on or before such date,
whether or not received. ALL NUMERICAL INFORMATION
PROVIDED HEREIN WITH RESPECT TO THE MORTGAGE LOANS IS
PROVIDED ON AN APPROXIMATE BASIS. ALL WEIGHTED AVERAGE
INFORMATION PROVIDED HEREIN WITH RESPECT TO THE MORTGAGE
LOANS REFLECTS THE WEIGHTING OF THE MORTGAGE LOANS BY
THEIR CUT-OFF DATE BALANCES.
Each Mortgage Loan is evidenced by a note or bond (a
"Mortgage Note") and is secured by a [first] mortgage,
deed of trust or similar security instrument (a
"Mortgage") on the fee simple (or, in __ cases,
representing __% of the Initial Pool Balance, the
leasehold) interest of the related mortgagor (the
"Mortgagor") in real property used for commercial or
multifamily purposes, all buildings and improvements
thereon and certain personal property located thereon
(each, a "Mortgaged Property") and security interests in
certain funds and accounts and other collateral described
herein.
The Mortgage Loans are non-recourse obligations of the
related Mortgagors. No Mortgage Loan will be insured or
guaranteed by any governmental entity or private insurer
or by any other person.
Set forth below are the number of Mortgage Loans, and the
approximate percentage of the Initial Pool Balance
represented by such Mortgage Loans, that are secured by
Mortgaged Properties located in the ___ states with the
highest concentrations:
</TABLE>
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<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
MORTGAGE INITIAL POOL
STATE LOANS BALANCE
---------------------------- ------------ --------------
<S> <C>
</TABLE>
<TABLE>
<S> <C>
[Identify states representing 10% or more of the Initial Pool
Balance.]
The remaining Mortgaged Properties are located throughout __
other states.
Set forth below are the number of Mortgage Loans, and the
approximate percentage of the Initial Pool Balance represented by
such Mortgage Loans, that are secured by Mortgaged Properties
operated for each indicated purpose:
</TABLE>
<TABLE>
<CAPTION>
PERCENTAGE OF
NUMBER OF INITIAL POOL
STATE MORTGAGE LOANS BALANCE
----------------------------------- --------------- ------------------
<S> <C> <C> <C>
</TABLE>
<TABLE>
<S> <C>
[Identify particular property types representing 10% or
more of the Initial Pool Balance.]
____of the Mortgage Loans, which represent ___% of the
Initial Pool Balance, provide for scheduled payments of
principal and/or interest ("Monthly Payments") to be due
on the __ day of each month; the remainder of the Mortgage
Loans provide for Monthly Payments to be due on the __,
__, __ or __ day of each month (the date in any month on
which a Monthly Payment on a Mortgage Loan is first due,
the "Due Date"). [The annualized rate at which interest
accrues (the "Mortgage Rate") on __ of the Mortgage Loans
(the "ARM Loans"), which represent __% of the Initial Pool
Balance, is subject to adjustment on specified Due Dates
(each such date of adjustment, an "Interest Rate
Adjustment Date") by adding a fixed number of basis points
(a "Gross Margin") to the value of a base index (an
"Index"), subject, in ___ cases, to lifetime maximum
and/or minimum Mortgage Rates, and in __ cases, to
periodic maximum and/or minimum Mortgage Rates, in each
case as described herein; and the remaining Mortgage Loans
(the "Fixed Rate Loans") bear interest at fixed Mortgage
Rates. __ of the ARM Loans, which represent __% of the
Initial Pool Balance, provide for Interest Rate Adjustment
Dates that occur monthly, while the remainder of the ARM
Loans provide for adjustments of the Mortgage Rate to
occur semi-annually or annually. [Identify Mortgage Loan
Index].] See "Description of the Mortgage Pool-- Certain
Payment Characteristics" herein.
[If there are ARM Loans: The amount of the Monthly Payment
on all of the ARM Loans is subject to adjustment on
specified Due Dates (each such date, a "Payment Adjustment
Date") to an amount [that would amortize the outstanding
principal balance of the Mortgage Loan over its then
remaining amortization schedule
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and pay interest at the then applicable Mortgage Rate].
[Discuss frequency of Payment Adjustment Dates and
possibility of negative amortization of interest.]]
__ of the Mortgage Loans (the "Balloon Loans"),
representing __% of the Initial Pool Balance, provide for
monthly payments of principal based on amortization
schedules significantly longer than the remaining terms of
such Mortgage Loans, thereby leaving substantial principal
amounts due and payable (each such payment, together with
the corresponding interest payment, a "Balloon Payment")
on their respective maturity dates (each, a "Maturity
Date"), unless prepaid prior thereto. The remaining
Mortgage Loans are fully amortizing.
[All the Mortgage Loans provided at origination for,
sequentially, a period (a "Lockout Period") during which
voluntary prepayments of principal (each, a "Principal
Prepayment") are prohibited, then a period during which
Principal Prepayments are permitted but are required to be
accompanied by an additional amount (a "Prepayment
Premium") the greater of a specified percentage of the
principal amount being prepaid and a premium calculated on
the basis of a yield maintenance formula, and then,
commencing on a specified date prior to maturity, a period
(the related "Open Period") during which Principal
Prepayments may be made without payment of any Prepayment
Premium.]
On or prior to the Closing Date, the Company will acquire
the Mortgage Loans from the Mortgage Loan Seller pursuant
to a Mortgage Loan Purchase Agreement dated as of ____
(the "Mortgage Loan Purchase Agreement") between the
Company and the Mortgage Loan Seller. In the Mortgage Loan
Purchase Agreement, the Mortgage Loan Seller has made
certain representations and warranties to the Company
regarding the characteristics and quality of the Mortgage
Loans and, as more particularly described herein, has
agreed to cure any material breach thereof or repurchase
the affected Mortgage Loan. In connection with the
creation of, and the assignment of its interests in the
Mortgage Loans to, the Issuer, the Company will also
assign its rights under the Mortgage Loan Purchase
Agreement insofar as they relate to or arise out of the
Mortgage Loan Seller's representations and warranties
regarding the Mortgage Loans. The Issuer will, in turn,
pledge such rights under the Mortgage Loan Purchase
Agreement so assigned to it as part of the Trust Estate to
secure the Bonds. See "Description of the Mortgage Pool--
Representations and Warranties with respect to the
Mortgage Loans; Repurchases" herein.
The Mortgage Loans will be serviced and administered by
the Master Servicer and, under the circumstances described
herein, the Special Servicer pursuant to [the Pooling and
Servicing Agreement dated as of ____, __ (the "Pooling and
Servicing Agreement"), among the Owner Trustee on behalf
of the Issuer, the Trustee on behalf of the
Securityholders, the Master Servicer and the Special
Servicer.] See "Servicing of the Mortgage Loans" herein
and "Servicing of Mortgage Loans" in the Prospectus.
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DESCRIPTION OF THE CERTIFICATES......... The Certificates will be issued pursuant to a Pooling and Servicing Agreement,
to be dated as of __, __, __among the Depositor, the Master Servicer, the
Special Servicer, the Trustee [and the Fiscal Agent] (the "Pooling and Servicing
Agreement"), and will represent in the aggregate the entire beneficial ownership
interest in a trust fund (the "Trust Fund") consisting of the Mortgage Pool and
certain related assets. For purposes of the Prospectus, the Pooling and
Servicing Agreement constitutes, collectively, a "Trust Agreement", a "Master
Servicing Agreement" and a "Special Servicing Agreement".
A. CERTIFICATE BALANCES AND NOTIONAL
AMOUNTS............................... Upon initial issuance[, and in each case subject to a permitted variance of plus
or minus ___%,] the respective Classes of Sequential Pay Certificates will have
the Certificate Balances set forth in the table at the beginning of this
Summary.
The "Certificate Balance" of any Class of Sequential Pay Certificates
outstanding at any time represents the maximum amount that the holders thereof
are entitled to receive as distributions allocable to principal from the cash
flow on the Mortgage Loans and other assets in the Trust Fund. As more
particularly described herein, the Certificate Balance of a Class of Sequential
Pay Certificates will be permanently reduced on each Distribution Date by any
distributions of principal actually made on such Class of Certificates on such
Distribution Date, and further permanently reduced by any losses (as more
particularly described herein, "Realized Losses") on the Mortgage Loans and
certain Trust Fund expenses (as more particularly described herein, "Additional
Trust Fund Expenses") actually allocated to such Class of Certificates on such
Distribution Date.
[The Class IO Certificates will not have a Certificate Balance, but will
represent the right to receive distributions of interest in an amount equal to
the aggregate interest accrued on the notional amount of each of the Class IO
Components, as described herein. The Class IO Certificates will have fourteen
components (each, a "Class IO Component"), each corresponding to a different
Class of Sequential Pay Certificates. Each Class IO Component will have the same
letter and/or numerical designation as the corresponding Class of Sequential Pay
Certificates. The notional amount of each Class IO Component will equal the
Certificate Balance of the corresponding Class of Sequential Pay Certificates
outstanding from time to time. On the Closing Date, the aggregate of the
notional amounts of all the Class IO Components will equal the Initial Pool
Balance. References herein to the "notional amount" of the Class IO Certificates
shall mean the aggregate of the notional amounts of all the Class IO Components.
See "Description of the Certificates--Certificate Balances and Notional Amounts"
herein.]
The Residual Interest Certificates will not have Certificate Balances or
notional amounts, but will represent the right to
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receive certain limited amounts not otherwise payable on the Regular Interest
Certificates.
B. PASS-THROUGH RATES................... [The Pass-Through Rate applicable to each Class of Sequential Pay Certificates
for each Distribution Date is fixed at the respective rate per annum set forth
with respect to such Class in the table at the beginning of this Summary. The
Pass-Through Rate applicable to each Class IO Component for any Distribution
Date will be equal to the Weighted Average Net Mortgage Rate for such
Distribution Date minus the fixed Pass-Through Rate applicable to the
corresponding Class of Sequential Pay Certificates. The Residual Interest
Certificates will not bear interest.
The "Weighted Average Net Mortgage Rate" for each Distribution Date is the
weighted average of the Net Mortgage Rates for the Mortgage Loans as of the
commencement of the related Collection Period, weighted on the basis of their
respective Stated Principal Balances outstanding immediately prior to such
Distribution Date. The "Net Mortgage Rate" for each Mortgage Loan will generally
equal (x) the Mortgage Rate in effect for such Mortgage Loan as of the Cut-off
Date, minus (y) the applicable Administrative Cost Rate (as defined herein) for
such Mortgage Loan; provided that if any Mortgage Loan does not accrue interest
on the basis of a 360-day year consisting of twelve 30-day months (which is the
basis on which interest accrues in respect of the Regular Interest
Certificates), then, solely for the purposes of calculating the Weighted Average
Net Mortgage Rate, the Mortgage Rate referred to in clause (x) will, to the
extent appropriate, be adjusted from accrual period to accrual period to
compensate for such difference. The "Stated Principal Balance" of each Mortgage
Loan outstanding at any time represents the principal balance of such Mortgage
Loan ultimately due and payable thereon to Certificateholders and will generally
equal the Cut-off Date Balance thereof, permanently reduced on each Distribution
Date (to not less than zero) by (i) any payments or other collections (or
advances in lieu thereof) of principal of such Mortgage Loan that are due or
received, as the case may be, during the related Collection Period (as defined
herein) and distributed on the Certificates on such date and (ii) the principal
portion of any Realized Loss incurred in respect of such Mortgage Loan during
the related Collection Period for such Distribution Date. See "Description of
the Certificates--Pass-Through Rates" herein.]
C. DISTRIBUTIONS........................ Distributions on the Certificates will be made by the [Trustee], to the extent
of available funds, monthly, on each Distribution Date. The total of all
payments or other collections (or advances in lieu thereof) on or in respect of
the Mortgage Loans (other than collections of Additional Interest, Prepayment
Premiums and Yield Maintenance Charges, which are separately distributable in
respect of the Certificates) that are available for distribution to
Certificateholders on any Distribution Date is herein referred to as the
"Available Distribution Amount" for such date. See
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"Description of the Certificates--Distributions--The Available Distribution
Amount" herein.
[On each Distribution Date, the Trustee will (except as otherwise described
under "Description of the Certificates--Termination" herein) after deduction of
the Trustee Fee for such Distribution Date, apply the Available Distribution
Amount for such date for the following purposes and in the following order of
priority, in each case to the extent of remaining available funds:
(1) to distributions of interest to the holders of the Class A-1, Class A-2,
Class A-3 and Class IO Certificates (in each case, so long as any such
Class remains outstanding), PRO RATA, in accordance with the respective
amounts of Distributable Certificate Interest (as defined herein) on such
Classes of Certificates on such Distribution Date, in 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;
(2) to distributions of principal to the holders of the Class A-1 Certificates
in an amount (not to exceed the then outstanding Certificate Balance of
such Class of Certificates) equal to the Principal Distribution Amount (as
defined herein) for such Distribution Date;
(3) after the Class A-1 Certificates have been retired, to distributions of
principal to the holders of the Class A-2 Certificates in an amount (not to
exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates;
(4) after the Class A-1 and Class A-2 Certificates have been retired, to
distributions of principal to the holders of the Class A-3 Certificates in
an amount (not to exceed the then outstanding Certificate Balance of such
Class of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 and/or Class A-2 Certificates;
(5) to distributions to the holders of the Class A-1, Class A-2 and Class A-3
Certificates, PRO RATA, in accordance with the amount of Realized Losses
and Additional Trust Fund Expenses, if any, previously allocated to such
Classes of Certificates and for which no reimbursement has previously been
received, to reimburse such holders for such Realized Losses and Additional
Trust Fund Expenses, if any;
(6) to distributions of interest to the holders of the Class B Certificates in
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such
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Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates;
(7) after the Class A-1, Class A-2 and Class A-3 Certificates have been
retired, to distributions of principal to the holders of the Class B
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2 and/or Class A-3 Certificates;
(8) to distributions to the holders of the Class B Certificates to reimburse
such holders for all Realized Losses and Additional Trust Fund Expenses, if
any, previously allocated to such Class of Certificates and for which no
reimbursement has previously been received;
(9) to distributions of interest to the holders of the Class C Certificates in
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(10) after the Class A-1, Class A-2, Class A-3 and Class B Certificates have
been retired, to distributions of principal to the holders of the Class C
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class A-3 and/or Class B
Certificates;
(11) to distributions to the holders of the Class C Certificates to reimburse
such holders for all Realized Losses and Additional Trust Fund Expenses,
if any, previously allocated to such Class of Certificates and for which
no reimbursement has previously been received;
(12) to distributions of interest to the holders of the Class D Certificates in
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(13) after the Class A-1, Class A-2, Class A-3, Class B and Class C
Certificates have been retired, to distributions of principal to the
holders of the Class D Certificates in an amount (not to exceed the then
outstanding Certificate Balance of such Class of Certificates) equal to
the Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A-1, Class A-2, Class
A-3, Class B and/or Class C Certificates;
</TABLE>
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(14) to distributions to the holders of the Class D Certificates to reimburse
such holders for all Realized Losses and Additional Trust Fund Expenses,
if any, previously allocated to such Class of Certificates and for which
no reimbursement has previously been received;
(15) to distributions of interest to the holders of the Class E Certificates in
an amount equal to all Distributable Certificate Interest in respect of
such Class of Certificates for such Distribution Date and, to the extent
not previously paid, for all prior Distribution Dates;
(16) after the Class A-1, Class A-2, Class A-3, Class B, Class C and Class D
Certificates have been retired, to distributions of principal to the
holders of the Class E Certificates in an amount (not to exceed the then
outstanding Certificate Balance of such Class of Certificates) equal to
the Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A-1, Class A-2, Class
A-3, Class B, Class C and/or Class D Certificates;
(17) to distributions to the holders of the Class E Certificates to reimburse
such holders for all Realized Losses and Additional Trust Fund Expenses,
if any, previously allocated to such Class of Certificates and for which
no reimbursement has previously been received; and
(18) to distributions to the holders of the respective Classes of Private
Certificates as described herein (provided that no distributions of
principal will be made in respect of any Class of Private Certificates
until the aggregate Certificate Balance of the Class A-1, Class A-2, Class
A-3, Class B, Class C, Class D and Class E Certificates has been reduced
to zero). See "Description of the Certificates--Distributions--
Application of the Available Distribution Amount" herein;
provided that, on each Distribution Date, if any, after the aggregate of the
Certificate Balances of the Subordinate Certificates (as defined herein) has
been reduced to zero as a result of the allocation of Realized Losses and
Additional Trust Fund Expenses, and prior to retirement of the Class A
Certificates, the payments of principal to be made as contemplated by clauses
(2), (3) and (4) above with respect to the Class A Certificates, will be so made
to the holders of the respective Classes of such Certificates, up to an amount
equal to, and PRO RATA as among such Classes in accordance with, the respective
then outstanding Certificate Balances of such Classes of Certificates, and
without regard to the Principal Distribution Amount for such date.]
[The "Distributable Certificate Interest" in respect of any Class of Sequential
Pay Certificates for any Distribution Date will generally equal one month's
interest at the applicable Pass-Through Rate accrued during the related Interest
Accrual Period on the Certificate Balance of such Class of Certificates
outstanding
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immediately prior to such Distribution Date, reduced (to not less than zero) by
such Class' allocable share (calculated as described herein) of any Net
Aggregate Prepayment Interest Shortfall (as defined herein) for such
Distribution Date. The "Distributable Certificate Interest" in respect of the
Class IO Certificates for any Distribution Date will generally equal the
aggregate of one month's interest at the applicable Pass-Through Rate accrued
during the related Interest Accrual Period on the notional amount of each Class
IO Component outstanding immediately prior to such Distribution Date, reduced
(to not less than zero) by such Class' allocable share (calculated as described
herein) of any Net Aggregate Prepayment Interest Shortfall for such Distribution
Date. Interest payable on the Regular Interest Certificates will be calculated
on the basis of a 360-day year consisting of twelve 30-day months. See
"Servicing of the Mortgage Loans--Servicing and Other Compensation and Payment
of Expenses" and "Description of the Certificates-- Distributions--Distributable
Certificate Interest" herein.]
[The "Principal Distribution Amount" for any Distribution Date will generally
equal the aggregate of the following (without duplication): (a) the aggregate of
the principal portions of all Scheduled Payments (other than Balloon Payments)
and the principal portions of any Assumed Scheduled Payments (as defined herein)
due or deemed due, as the case may be, on or in respect of the Mortgage Loans
for their respective Due Dates (as defined herein) occurring during the related
Collection Period; (b) the aggregate of all principal prepayments received on
the Mortgage Loans during the related Collection Period; (c) with respect to any
Mortgage Loan as to which the related stated maturity date occurred during or
prior to the related Collection Period, any payment of principal (exclusive of
any amounts described in clause (b) above or clause (d) below) made by or on
behalf of the related borrower during the related Collection Period (including
any Balloon Payment), net of any portion of such payment that represents a
recovery of the principal portion of any Scheduled Payment (other than a Balloon
Payment) due, or the principal portion of any Assumed Scheduled Payment deemed
due, in respect of such Mortgage Loan on a Due Date during or prior to the
related Collection Period and not previously recovered; (d) the aggregate of all
Liquidation Proceeds and Insurance Proceeds (each, as defined herein) 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, in each case net of any portion of such amounts that
represents a recovery of the principal portion of any Scheduled Payment (other
than a Balloon Payment) due, or of the principal portion of any Assumed
Scheduled Payment deemed due, in respect of the related Mortgage Loan on a Due
Date during or prior to the related Collection Period and not previously
recovered; and (e) for each Distribution Date after the initial Distribution
</TABLE>
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<S> <C>
Date, the excess, if any, of the Principal Distribution Amount for the
immediately preceding Distribution Date, over the aggregate distributions of
principal made on the Certificates on such immediately preceding Distribution
Date.]
[The "Scheduled Payment" due on any Mortgage Loan on any related Due Date is the
Monthly Payment that is or would have been, as the case may be, due thereon on
such date, without regard to any waiver, modification or amendment granted or
agreed to by the Special Servicer or otherwise resulting from a bankruptcy or
similar proceeding involving the related borrower, and assuming that the full
amount of each prior Scheduled Payment has been timely made. The "Assumed
Scheduled Payment" is an amount deemed due (i) in respect of a Balloon Loan that
is delinquent in respect of its Balloon Payment beyond the first Determination
Date (as defined herein) after its stated maturity date and (ii) in respect of
each Mortgage Loan as to which the related Mortgaged Property has been acquired
on behalf of the Certificateholders through foreclosure, deed in lieu of
foreclosure or otherwise (upon acquisition, an "REO Property"). The Assumed
Scheduled Payment deemed due on any such Balloon Loan, on its stated maturity
date and on each successive related Due Date that it remains outstanding and
part of the Trust Fund, will equal the Scheduled Payment that would have been
due thereon on such date if the related Balloon Payment had not come due but
rather such Mortgage Loan had continued to amortize in accordance with its
amortization schedule in effect as of the Closing Date. The Assumed Scheduled
Payment deemed due on any Mortgage Loan as to which the related Mortgaged
Property has become an REO Property, on each Due Date that the related REO
Property remains part of the Trust Fund, will equal the Scheduled Payment that
would have been due in respect of such Mortgage Loan on such Due Date had it
remained outstanding (or, if such Mortgage Loan was a Balloon Loan and such Due
Date coincides with or follows what had been its stated maturity date, the
Assumed Scheduled Payment that would have been deemed due in respect of such
Mortgage Loan on such Due Date had it remained outstanding). See "Description of
the Certificates--Distributions-- Principal Distribution Amount" herein.]
[Reimbursements of previously allocated Realized Losses and Additional Trust
Fund Expenses will not constitute distributions of principal for any purpose and
will not result in an additional reduction in the Certificate Balance of the
Class of Certificates in respect of which any such reimbursement is made.]
[The holders of the Certificates may also receive portions of any Prepayment
Premiums and Yield Maintenance Charges to the extent described under
"Description of the Certificates-- Distributions--Allocation of Prepayment
Premiums and Yield Maintenance Charges" herein. Such distributions will be in
addition to the distributions of interest, if any, made to such
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holders from the Available Distribution Amount on each Distribution Date.]
P&I ADVANCES............................ [Subject to a recoverability determination, as described herein, and further
subject to the reduced advancing obligations in respect of certain Required
Appraisal Loans (as defined herein) and certain Mortgage Loans as to which the
Monthly Payment has been reduced as part of a modification or otherwise, the
Master Servicer will be required to make advances (each, a "P&I Advance") with
respect to each Distribution Date in an amount that is generally equal to the
aggregate of all Scheduled Payments (other than Balloon Payments) and any
Assumed Scheduled Payments, net of related Master Servicing Fees and, if
applicable, any related Workout Fees (each as defined herein), due or deemed
due, as the case may be, on or in respect of the Mortgage Loans on their
respective Due Dates during the related Collection Period, in each case to the
extent that such amount was not paid by or on behalf of the related borrower or
otherwise collected as of the close of business on the last day of the related
Collection Period. Pursuant to the terms of the Pooling and Servicing Agreement,
if the Master Servicer fails to make a required P&I Advance, the Trustee shall
then be obligated to make such P&I Advance, and if the Trustee fails to make a
required P&I Advance, the Fiscal Agent will then be obligated to make such P&I
Advance, in each case subject to a recoverability determination, as described
herein. No default by the Trustee will be deemed to have occurred if the Fiscal
Agent makes such P&I Advance in a timely manner, as set forth in the Pooling and
Servicing Agreement.]
[As more fully described herein, the Master Servicer (or the Trustee or Fiscal
Agent, as applicable) will be entitled to interest on any P&I Advance made by
it, and each of the Master Servicer, the Special Servicer, the Trustee and the
Fiscal Agent will be entitled to interest on certain reimbursable servicing
expenses incurred by any of them. Such interest will accrue from the date any
such P&I Advance is made or such servicing expense is incurred at a rate per
annum equal to the "prime rate" published in the "Money Rates" section of THE
WALL STREET JOURNAL, as such "prime rate" may change from time to time (the
"Reimbursement Rate"); and such interest will be compounded annually and will be
paid, contemporaneously with the reimbursement of such P&I Advance or servicing
expense, out of general collections on the Mortgage Pool then on deposit in the
Custodial Account. See "Description of the Certificates--P&I Advances" and
"Servicing of the Mortgage Loans--Custodial Account" herein.]
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[COMPENSATING INTEREST PAYMENTS................... The Master Servicer is required to make a non-reimbursable
payment (a "Compensating Interest Payment") with respect to
each Distribution Date to cover any Prepayment Interest
Shortfalls incurred during such Collection Period in an
amount equal to the lesser of (a) the aggregate of all
Prepayment Interest Shortfalls experienced during the
related Collection Period and (b) the sum of (i) the
aggregate of its Master Servicing Fees for such Collection
Period (but only to the extent of that portion thereof
calculated at a rate of ____% per annum with respect to each
and every Mortgage Loan) and (ii) all of its other servicing
compensation for such Collection Period. A "Prepayment
Interest Shortfall" is a shortfall in the collection of a
full month's interest (net of the related Servicing Fees
and, if applicable, Additional Interest and without regard
to any Prepayment Premium or Yield Maintenance Charge
collected) on any Mortgage Loan by reason of a full or
partial principal prepayment made prior to its Due Date in
any Collection Period. The "Net Aggregate Prepayment
Interest Shortfall" for any Distribution Date will be the
amount, if any, by which (a) the aggregate of any Prepayment
Interest Shortfalls incurred during the related Collection
Period exceeds (b) any Compensating Interest Payment made by
the Master Servicer with respect to such Distribution Date.
See "Servicing of the Mortgage Loans-- Servicing and Other
Compensation and Payment of Expenses" and "Description of
the Certificates--Distributions--Distributable Certificate
Interest" herein.]
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN
EXPENSES........................................ [The rights of holders of the Class B, Class C, Class D,
Class E and Private Certificates (collectively, the
"Subordinate Certificates"), to receive distributions of
amounts collected or advanced on the Mortgage Loans will, in
each case, be subordinated, to the extent described herein,
to the rights of holders of the Class A and Class IO
Certificates (collectively, the "Senior Certificates") and
each other such Class of Subordinate Certificates, if any,
with an earlier alphabetical Class designation. This
subordination is intended to enhance the likelihood of
timely receipt by the holders of the Senior Certificates of
the full amount of Distributable Certificate Interest
payable in respect of such Classes of Certificates on each
Distribution Date, and the ultimate receipt by the holders
of each Class of the Class A Certificates of principal equal
to the entire related Certificate Balance. Similarly, but to
decreasing degrees, this subordination is also intended to
enhance the likelihood of timely receipt by the holders of
the Class B, Class C, Class D and Class E Certificates of
the full amount of Distributable Certificate Interest
payable in respect of such Classes of Certificates on each
Distribution Date, and the ultimate receipt by the holders
of the Class B, Class C, Class D and Class E Certificates of
principal equal to the entire related Certificate Balance.
The protection afforded to the holders of the Offered
Certificates by means of the subordination referred to above
will be accomplished by (i) the application of the Available
Distribution Amount on each
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Distribution Date in the order described above in this
Summary under "--Description of the
Certificates--Distributions" and (ii) by the allocation of
Realized Losses and Additional Trust Fund Expenses as
described below. No other form of credit support will be
available for the benefit of the holders of the Offered
Certificates.
On each Distribution Date, following all distributions on
the Certificates to be made on such date, the aggregate of
all Realized Losses and Additional Trust Fund Expenses that
have been incurred since the Cut-off Date through the end of
the related Collection Period and that have not previously
been so allocated will be allocated, subject to the
limitations described herein, first to the Private
Certificates (other than the Residual Interest Certificates)
in the order described herein, and then to the Class E,
Class D, Class C and Class B Certificates, in that order,
until the Certificate Balance of each such Class has been
reduced to zero. Thereafter any additional Realized Losses
and Additional Trust Fund Expenses will be allocated,
subject to the limitations described herein, to the Class
A-1, Class A-2 and Class A-3 Certificates, PRO RATA, in
proportion to their outstanding Certificate Balances (in
each such case, in reduction of the related Certificate
Balance).] See "Description of the
Certificates--Subordination; Allocation of Losses and
Certain Expenses" herein.
[Any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance of any
Class of Sequential Pay Certificates will result in a
corresponding reduction in the notional amount of the
related Class IO Component.]
TREATMENT OF REO PROPERTIES....................... In the event that a Mortgaged Property is acquired on behalf
of the Certificateholders through foreclosure, deed in lieu
of foreclosure or otherwise (upon acquisition, an "REO
Property"), the related Mortgage Loan will be treated, for
purposes of determining (i) distributions on the
Certificates, (ii) allocations of Realized Losses and
Additional Trust Fund Expenses to the Certificates and (iii)
the amount of fees payable to the Trustee, the Master
Servicer and the Special Servicer under the Pooling and
Servicing Agreement, as having remained outstanding until
such REO Property is liquidated. In connection therewith,
operating revenues and other proceeds derived from such REO
Property (net of related operating costs, including certain
reimbursements payable to the Master Servicer or the Special
Servicer in connection with the operation and disposition of
such REO Property) will be "applied" by the Master Servicer
as principal, interest and other amounts that would have
been "due" on such Mortgage Loan, and the Master Servicer
(and, if necessary, the Trustee and Fiscal Agent) will be
required to make P&I Advances in respect of such Mortgage
Loan, in all cases as if such Mortgage Loan had remained
outstanding.
[OPTIONAL TERMINATION]............................ [Each of the Depositor, the Master Servicer, the Special
Servicer, the Underwriter and the Majority Subordinate
Certificateholder (as defined herein) will have an option to
purchase all of the
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Mortgage Loans and REO Properties, and thereby effect
termination of the Trust Fund and early retirement of the
then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balance of the Mortgage
Pool is less than ____% of the Initial Pool Balance. See
"Description of the Certificates--Termination" herein.]
CERTAIN INVESTMENT
CONSIDERATIONS.................................. The yield to maturity of a [Class A-1, Class A-2, Class A-3,
Class B, Class C, Class D or Class E Certificate] purchased
at a discount or premium will be affected by the rate of
prepayments and other unscheduled collections of principal
on or in respect of the Mortgage Loans and the allocation
thereof to reduce the principal balance of such Certificate.
An investor should consider, in the case of any such
Certificate purchased at a discount, the risk that a slower
than anticipated rate of prepayments could result in a lower
than anticipated yield and, in the case of any such
Certificate purchased at a premium, the risk that a faster
than anticipated rate of prepayments could result in a lower
than anticipated yield. [IN ADDITION, THE YIELD TO MATURITY
OF THE CLASS IO CERTIFICATES WILL BE HIGHLY SENSITIVE TO THE
RATE AND TIMING OF PRINCIPAL PAYMENTS (INCLUDING BY REASON
OF PREPAYMENTS, DEFAULTS AND LIQUIDATIONS) ON THE MORTGAGE
LOANS, AND INVESTORS IN THE CLASS IO CERTIFICATES SHOULD
FULLY CONSIDER THE ASSOCIATED RISKS, INCLUDING THE RISK THAT
A RAPID RATE OF PREPAYMENTS AND/OR LIQUIDATIONS IN RESPECT
OF THE MORTGAGE LOANS COULD RESULT IN THE FAILURE OF SUCH
INVESTORS TO FULLY RECOUP THEIR INITIAL INVESTMENTS.] See
"Yield and Maturity Considerations" herein and "Yield and
Prepayment Considerations" in the Prospectus. The allocation
to any Class of any Prepayment Premium or Yield Maintenance
Charge may be insufficient to offset fully any adverse
effects on the anticipated yield to maturity resulting from
the corresponding principal prepayment. See "Description of
Certificates-- Distributions-- Allocation of Prepayment
Premiums and Yield Maintenance Charges" herein.
In addition, insofar as an investor's initial investment in
any Offered Certificate is returned in the form of payments
of principal thereon, there can be no assurance that such
amounts can be reinvested in comparable alternative
investments with comparable yields. Because borrowers would
have an incentive to prepay their Mortgage Loans when, in
any particular case, prevailing market interest rates are
below the related Mortgage Rate, the rate of prepayments on
the Mortgage Loans is likely to be inversely related to the
level of prevailing market interest rates (and, presumably,
to the yields on comparable alternative investments).
CERTAIN FEDERAL INCOME TAX CONSEQUENCES........... [Three separate "real estate mortgage investment conduit"
("REMIC") elections will be made with respect to the Trust
Fund for federal income tax purposes, with the resulting
REMICs being herein referred to as "REMIC I," "REMIC II" and
"REMIC III". The assets of REMIC I will consist of the
Mortgage Loans, any
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REO Properties acquired on behalf of the Certificateholders
and funds deposited from time to time in the Custodial
Account, the Collection Account and any REO Account (each as
defined herein) (see "Servicing of the Mortgage
Loans--Custodial Account" and "Description of the
Certificates--Collection Account" herein). For federal
income tax purposes, (a) the separate noncertificated
regular interests in REMIC I will be the "regular interests"
in REMIC I and will constitute the assets of REMIC II, (b)
the Class R-I Certificates will be the sole class of
"residual interests" in REMIC I, (c) the separate
noncertificated regular interests in REMIC II will be the
"regular interests" in REMIC II and will constitute the
assets of REMIC III, (d) the Class R-II Certificates will be
sole class of "residual interests" in REMIC II, (e) the
Regular Interest Certificates will evidence ownership of the
"regular interests" in REMIC III (with each Class IO
Component constituting a separate "regular interest"), which
generally will be treated as debt instruments of REMIC III,
and (f) the Class R-III Certificates will be the sole class
of "residual interests" in REMIC III.]
[The [identify Classes, if any] Certificates will not, and
the Class IO and Class ____ Certificates will, be treated as
having been issued with original issue discount for federal
income tax reporting purposes. The prepayment assumption
that will be used for purposes of computing the accrual of
original issue discount, market discount and premium, if
any, for federal income tax purposes will be that the
Mortgage Loans will not prepay (that is, a CPR of 0%).
However, no representation is made that the Mortgage Loans
will prepay at that rate or at any other rate.]
[The Offered Certificates will be treated as "real estate
assets" within the meaning of Section 856(c)(5)(A) of the
Code. In addition, interest (including original issue
discount) on the Offered Certificates will be interest
described in Section 856(c)(3)(B) of the Code. However, the
Offered Certificates will generally only be considered
assets described in Section 7701(a)(19)(C) of the Code to
the extent that the Mortgage Loans are secured by
residential property and, accordingly, an investment in the
Offered Certificates may not be suitable for certain thrift
institutions.]
For further information regarding the federal income tax
consequences of investing in the Offered Certificates, see
"Certain Federal Income Tax Consequences" herein and
"Federal Income Tax Considerations" in the Prospectus.
ERISA CONSIDERATIONS.............................. A fiduciary of any employee benefit plan or other retirement
arrangement subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975
of the Code (a "Plan") should review carefully with its
legal advisors whether the purchase or holding of Offered
Certificates could give rise to a transaction that is
prohibited or is not otherwise permitted either under ERISA
or Section 4975 of the Code or whether there exists
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any statutory or administrative exemption applicable to an
investment therein.
[The Underwriter has received from the U.S. Department of
Labor (the "DOL") an individual exemption, Prohibited
Transaction Exemption 91-14, which generally exempts from
the application of certain of the prohibited transaction
provisions of Sections 406(a) and (b) and 407(a) of ERISA
and the excise taxes imposed on such prohibited transactions
by Section 4975(a) and (b) of the Code, transactions
relating to the purchase, sale and holding of pass-through
certificates underwritten by the Underwriter provided that
certain conditions are satisfied.]
[The Depositor expects that the Prohibited Transaction
Exemption will generally apply to the Senior Certificates,
but it will not apply to the other Classes of Offered
Certificates. ACCORDINGLY, EXCEPT AS DESCRIBED HEREIN, THE
CLASS B, CLASS C, CLASS D AND CLASS E CERTIFICATES SHOULD
NOT BE ACQUIRED BY A PLAN OR ANY INVESTOR HOLDING ASSETS OF
A PLAN. PURCHASERS USING INSURANCE COMPANY GENERAL ACCOUNT
FUNDS TO EFFECT SUCH PURCHASE SHOULD CONSIDER THE
AVAILABILITY OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60
(60 FED. REG. 35925, JULY 12, 1995) ISSUED BY THE DOL.] SEE
"ERISA CONSIDERATIONS" HEREIN AND IN THE PROSPECTUS.
RATINGS........................................... It is a condition of their issuance that the Offered
Certificates receive the ratings from each of _________
("_______") [,____] and/or _________("____" and, together
with _______, the "Rating Agencies") set forth on the cover
page of this Prospectus Supplement. The ratings on the
Offered Certificates address the likelihood of the timely
receipt by holders thereof of all distributions of interest
to which they are entitled and [, except in the case of the
Class IO Certificates,] distributions of principal by the
Rated Final Distribution Date set forth on the cover page of
this Prospectus Supplement. A security rating is not a
recommendation to buy, sell or hold securities and may be
subject to revision or withdrawal at any time by the
assigning rating organization. A security rating does not
represent any assessment of (i) the likelihood or frequency
of principal prepayments or default interest on the Mortgage
Loans, (ii) the degree to which such prepayments might
differ from those originally anticipated or (iii) whether
and to what extent Additional Interest, Prepayment Premiums
and Yield Maintenance Charges 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 holders of the Class IO Certificates
might not fully recover their investment in the event of
rapid prepayments of the Mortgage Loans (including both
voluntary and involuntary prepayments). Therefore, such
security rating addresses credit risk and not the risk of
prepayment. As described herein, the amounts payable with
respect to the Class IO Certificates consist only of
interest. Each Class IO Component's notional amount upon
which interest is calculated will be permanently reduced by
the allocation of
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Realized Losses and the distribution of prepayments, whether
voluntary or involuntary, to or in respect of the
corresponding Class of Sequential Pay Certificates. The
rating does not address the timing or magnitude of
reductions of the notional amounts of the Class IO
Components, but only the obligation to pay interest timely
on each such notional amount as reduced from time to time.
Accordingly, the ratings of the Class IO Certificates should
be evaluated independently from similar ratings on other
types of securities.] See "Ratings" herein and "Risk
Factors--Limited Nature of Rating" in the Prospectus.
LEGAL INVESTMENT.................................. [Upon initial issuance, the Class A, Class B and Class IO
Certificates will constitute "mortgage related securities"
pursuant to the Secondary Mortgage Market Enhancement Act of
1984, as amended ("SMMEA"). All other Offered Certificates
(the "Non-SMMEA Certificates") will not constitute "mortgage
related securities" for purposes of SMMEA. As a result, the
appropriate characterization of the Non-SMMEA Certificates
under various legal investment restrictions, and thus the
ability of investors subject to these restrictions to
purchase the Non-SMMEA Certificates of any Class, may be
subject to significant interpretative uncertainties. In
addition, institutions whose investment activities are
subject to review by federal or state regulatory authorities
may be or may become subject to restrictions on the
investment by such institutions in certain forms of mortgage
backed securities. Investors should consult their own legal
advisors to determine whether and to what extent the Offered
Certificates constitute legal investments for them. See
"Legal Investment" herein and in the Prospectus.]
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RISK FACTORS
Prospective purchasers of the Offered Certificates of any Class should
consider, among other things, the following risk factors (as well as the risk
factors set forth under "Risk Factors" in the Prospectus) in connection with an
investment therein. [The following risks are subject to modification to reflect
the actual circumstances relating to any series of Certificates.]
THE CERTIFICATES
LIMITED LIQUIDITY. There is currently no secondary market for the Offered
Certificates. While the Underwriter currently intends to make a secondary market
in the Offered Certificates, it is not under any obligation to do so.
Accordingly, there can be no assurance that a secondary market for the Offered
Certificates will develop. Moreover, if a secondary market does develop, there
can be no assurance that it will provide holders of the Offered Certificates
with liquidity of investment or that it will continue for the life of the
Offered Certificates. Any such secondary market may provide less liquidity to
investors than any comparable market for securities that evidence, for example,
interests solely in single-family mortgage loans. The Certificates will not be
listed on any securities exchange. See "Risk Factors--Limited Liquidity" in the
Prospectus.
CERTAIN YIELD AND MATURITY CONSIDERATIONS. [The yield on the Class IO
Certificates and any other Classes of Offered Certificates that are purchased at
a discount or premium will be affected by the rate and timing of principal
payments applied or otherwise resulting in reduction of the Certificate Balance
of such Class of Certificates (or, in the case of the Class IO Certificates, the
notional amount of any Class IO Component), which in turn will be affected by
(i) the rate and timing of principal payments and collections on the Mortgage
Loans, particularly unscheduled payments or collections in the form of voluntary
prepayments of principal or unscheduled recoveries of principal due to defaults,
casualties or condemnations whether before or after the scheduled maturity date
of the related Mortgage Loans, and (ii) the order of priority of distributions
of principal in respect of the Sequential Pay Certificates. The rate and timing
of unscheduled payments and collections of principal on the Mortgage Loans is
impossible to accurately predict and will be affected by a variety of factors,
including, without limitation, the level of prevailing interest rates,
restrictions on voluntary prepayments contained in the Mortgage Notes, the
availability of mortgage credit and other economic, demographic, geographic, tax
and legal factors. In general, however, if prevailing interest rates fall
significantly below the Mortgage Rates on the Mortgage Loans, borrowers under
the Mortgage Loans will have an increased incentive to prepay. As described
herein, the Principal Distribution Amount for each Distribution Date will be
distributable entirely in reduction of the Certificate Balances of the Class
A-1, Class A-2 and Class A-3 Certificates, in that order (unless the aggregate
Certificate Balance of the Subordinate Certificates has been reduced to zero),
in each such case until the related Certificate Balance thereof is reduced to
zero, and will thereafter be distributable in its entirety in respect of each
remaining Class of Sequential Pay Certificates, sequentially in alphabetical
order of Class designation, until the related Certificate Balance of each such
Class is, in turn, reduced to zero. See "Description of the
Certificates--Distributions--Application of the Available Distribution Amount"
herein. Accordingly, the actual rate of principal payments on the Mortgage Loans
may have different effects on the yields of the respective Classes of Offered
Certificates. Any payment in reduction of the Certificate Balance of a Class of
Sequential Pay Certificates will also result in a corresponding reduction in the
notional amount of the related Class IO Component. Thus, the yield on the Class
IO Certificates will be extremely sensitive to the rate and timing of principal
payments on the Mortgage Loans, and the more rapidly the notional amount of any
Class IO Component is reduced, the greater will be the negative effect on the
yield on such Certificates, to the extent such effect is not offset by
distributions of a portion of any applicable Prepayment Premiums or Yield
Maintenance Charges to the holders thereof, as described under "Description of
the Certificates--Distributions--Allocation of Prepayment Premiums and Yield
Maintenance Charges" herein. In addition, the Mortgage Loans generally do not
require the payment of Prepayment Premiums or Yield Maintenance Charges in the
event of involuntary prepayments resulting
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from casualty or condemnation. Furthermore, the enforceability, under the laws
of a number of states, of provisions of the Mortgage Loans providing for the
payment of a Prepayment Premium or Yield Maintenance Charge is unclear. Thus, in
the event of a liquidation of a Mortgage Loan following a default, the
liquidation proceeds may be insufficient to cover any Prepayment Premium or
Yield Maintenance Charge, together with all principal, interest and other sums
that may be due and owing in respect of such Mortgage Loan, and the obligation
to pay such Prepayment Premium or Yield Maintenance Charge under those
circumstances may be unenforceable. No Prepayment Premium or Yield Maintenance
Charge will be payable in connection with any repurchase of a Mortgage Loan for
a material breach of representation or warranty or the failure to deliver
material Mortgage Loan documents, nor will any Prepayment Premium or Yield
Maintenance Charge be payable in connection with the purchase of all the
Mortgage Loans and any REO Properties by the Depositor, the Underwriter, the
Master Servicer, the Special Servicer or the Majority Subordinate
Certificateholder in connection with the termination of the Trust Fund. See
"Description of the Mortgage Pool--Representations and Warranties with respect
to the Mortgage Loans; Repurchases" and "Description of the
Certificates--Termination" herein. ACCORDINGLY, PROSPECTIVE INVESTORS IN THE
CLASS IO CERTIFICATES SHOULD CONSIDER THE ASSOCIATED RISKS, INCLUDING THE RISK
THAT A RAPID RATE OF PREPAYMENTS ON THE MORTGAGE LOANS COULD RESULT IN THE
FAILURE OF SUCH INVESTORS TO FULLY RECOUP THEIR INITIAL INVESTMENTS.]
[The yield on any Offered Certificate also will be affected by the rate and
timing of losses attributable to defaults on the Mortgage Loans, the severity of
such losses and the extent to which such losses and related expenses are applied
in reduction of the actual or notional principal amount of such Certificate or
otherwise reduce the amount of funds available for distribution to the holder of
such Certificate. To the extent described herein, the Private Certificates are
subordinate in right and time of payment to the Offered Certificates and will
bear shortfalls in collections and losses incurred in respect of the Mortgage
Loans prior to the Offered Certificates; and the Class B, Class C, Class D and
Class E Certificates are subordinate in right and time of payment to the Senior
Certificates and will bear such shortfalls and losses prior to the Senior
Certificates, in reverse alphabetical order of Class designation. The Class A-1,
Class A-2 and Class A-3 Certificates will bear shortfalls in collections and
losses incurred in respect of the Mortgage Loans PRO RATA, in proportion to
their respective outstanding Certificate Balances. However, until the first
Distribution Date after the aggregate of the Certificate Balances of the
Subordinate Certificates has been reduced to zero, (i) the Class A-3
Certificates will receive principal payments only after the Certificate Balances
of the Class A-2 and Class A-1 Certificates have been reduced to zero and (ii)
the Class A-2 Certificates will receive principal payments only after the
Certificate Balance of the Class A-1 Certificates has been reduced to zero. As a
result, the shortfalls and losses allocated to the Class A-1, Class A-2 and
Class A-3 Certificates will, depending on the timing of such shortfalls and
losses, have a greater effect on the Class A-3 Certificates than on the Class
A-1 and Class A-2 Certificates and a greater effect on the Class A-2
Certificates than on the Class A-1 Certificates. Any Realized Loss or Additional
Trust Fund Expenses allocated in reduction of the Certificate Balance of any
Class of Sequential Pay Certificates will result in a corresponding reduction in
the notional amount of the corresponding Class IO Component. See "Description of
the Certificates--Distributions" and "--Subordination; Allocation of Losses and
Certain Expenses" and "Yield and Maturity Considerations" herein and "Yield and
Prepayment Considerations" in the Prospectus.]
[The Pass-Through Rate applicable to each Class IO Component will be
variable and will be equal to the Weighted Average Net Mortgage Rate from time
to time minus the Pass-Through Rate on the Class of Sequential Pay Certificates
related to such Class IO Component. Accordingly, the Pass-Through Rate
applicable to each such Class IO Component and, correspondingly, the yield on
the Class IO Certificates will be sensitive to changes in the relative
composition of the Mortgage Pool as a result of scheduled amortization,
voluntary prepayments and liquidations. See "Description of the
Certificates--Distributions" and "--Subordination; Allocation of Losses and
Certain Expenses" and "Yield and Maturity Considerations" herein and "Yield and
Prepayment Considerations" in the Prospectus.]
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POTENTIAL CONFLICTS OF INTEREST. [Subject to certain conditions described
herein, the Pooling and Servicing Agreement will permit the holder (or holders)
of the majority of the Voting Rights (as defined herein) allocated to the
Controlling Class of Sequential Pay Certificates (that is, the Class of
Sequential Pay Certificates that bears the latest alphabetical Class designation
and that has a Certificate Balance that is greater than 25% of its original
Certificate Balance (or, if no Class of Sequential Pay Certificates has a
Certificate Balance that is greater than 25% of its original Certificate
Balance, the then outstanding Class of Sequential Pay Certificates with the
latest alphabetical Class designation)) to replace the Special Servicer or any
successor thereafter appointed and to select the Controlling Class
Representative from whom the Special Servicer will seek advice and approval and
take direction under certain circumstances, as described herein. The replacement
Special Servicer may be a Certificateholder of such Class or an affiliate of any
such Certificateholder. As described herein, any such Special Servicer will have
considerable latitude in determining to liquidate or modify defaulted Mortgage
Loans. In addition, the Special Servicer will perform certain servicing
functions with respect to the Mortgage Loans, pursuant to the Pooling and
Servicing Agreement. See "Servicing of the Mortgage Loans--Modifications,
Waivers and Amendments" herein. It is contemplated that the initial Special
Servicer or an affiliate thereof may purchase some or all of the Certificates of
one or more Classes of Private Certificates, including the initial Controlling
Class of Sequential Pay Certificates, and the Special Servicer or an affiliate
thereof is not prohibited from purchasing the Certificates of any other Class.
Although the Special Servicer will be obligated to observe the terms of the
Pooling and Servicing Agreement and will be governed by the servicing standard
described herein, it may, especially if it is itself a Certificateholder, have
interests when dealing with defaulted Mortgage Loans that are in conflict with
those of holders of Offered Certificates. For instance, a Special Servicer that
is a Certificateholder 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, such action could result in less proceeds
to the Trust Fund than would have been realized if earlier action had been
taken. In connection with the servicing of the Specially Serviced Mortgage
Loans, the Special Servicer may, at the direction of the Controlling Class
Representative, take actions with respect to such Specially Serviced Mortgage
Loans that could adversely affect the holders of some or all of the Classes of
Offered Certificates. It is possible that the Controlling Class Representative
may direct the Special Servicer to take actions which conflict with the
interests of the holders of certain Classes of Offered Certificates.]
BOOK-ENTRY REGISTRATION. The Offered Certificates of each Class thereof will
be initially represented by one or more Certificates registered in the name of a
nominee for DTC. As a result, unless and until corresponding Definitive Offered
Certificates are issued, the Certificate Owners with respect to each Class of
Offered Certificates will be able to exercise the rights of Certificateholders
only indirectly through DTC and its Participants. In addition, the access of
Certificate Owners to information regarding the Offered Certificates in which
they hold interests may be limited. Conveyance of notices and other
communications by DTC to Participants, and directly and indirectly through the
Participants to Certificate Owners, will be governed by arrangements among them,
subject to any statutory or regulatory requirements as may be in effect from
time to time. Furthermore, as described herein, Certificate Owners may suffer
delays in the receipt of payments on the Offered Certificates when in the form
of global certificates, and the ability of any Certificate Owner to pledge or
otherwise take actions with respect to its interest in the Offered Certificates
may be limited due to the lack of a physical certificate evidencing such
interest. See "Description of the Certificates--Book-Entry Registration" herein
and "Description of the Securities--Book-Entry Registration" in the Prospectus.
THE MORTGAGE LOANS
RISKS OF LENDING ON INCOME-PRODUCING PROPERTIES. The Mortgaged Properties
consist entirely of income-producing real estate. Lending on the security of
income-producing real estate is generally viewed as exposing a lender to a
greater risk of loss than lending on the security of single-family residences.
Lending on the security of income-producing property typically involves larger
loans than single-family
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<PAGE>
lending. In addition, and unlike loans made on the security of single family
residences, repayment of loans made on the security of income-producing real
property depends upon the ability of the related real estate project (i) to
generate income sufficient to pay operating expenses and leasing commissions, to
make necessary repairs, tenant improvements and capital improvements and to pay
debt service and (ii) in the case of loans that do not fully amortize over their
terms, to retain sufficient value to permit the borrower to pay off the loan at
maturity by sale or refinancing. A number of factors, many beyond the control of
the property owner, can affect the ability of an income-producing real estate
project to generate sufficient net operating income to pay debt service and/or
to maintain its value. Among these factors are economic conditions generally and
in the area of the project, the age, quality and design of the project and the
degree to which it competes with other projects in the area, changes or
continued weakness in specific industry segments, increases in operating costs,
the willingness and ability of the owner to provide capable property management
and maintenance and, in the case of Mortgaged Properties that are retail,
industrial/ warehouse or office properties, the degree to which the project's
revenue is dependent upon a single tenant or user, a small group of tenants,
tenants concentrated in a particular business or industry and the competition to
any such tenants. If leases are not renewed or replaced, if tenants default
and/or if rental rates fall and/or if operating expenses increase, the
borrower's ability to repay the loan may be impaired and the resale value of the
property, which is substantially dependent upon the property's ability to
generate income, may decline. In addition, there are other factors, including
changes in zoning or tax laws, the availability of credit for refinancing, and
changes in interest rate levels that may adversely affect the value of a project
(and thus the borrower's ability to sell or refinance) without necessarily
affecting the ability to generate current income.
In addition, particular types of income properties are exposed to particular
risks. For instance, office properties may require their owners to expend
significant amounts of cash to pay for general capital improvements, tenant
improvements and costs of re-leasing space. Also, office properties that are not
equipped to accommodate the needs of modern businesses may become functionally
obsolete and thus non-competitive. Multifamily projects are part of a market
that, in general, is characterized by low barriers to entry. Thus, a particular
apartment market with historically low vacancies could experience substantial
new construction, and a resultant oversupply of units, in a relatively short
period of time. Since multifamily apartment units are typically leased on a
short-term basis, the tenants who reside in a particular project within such a
market may easily move to alternative projects with more desirable amenities or
locations. Shopping centers, in general, are affected by the health of the
retail industry, which is currently undergoing a consolidation and is
experiencing changes due to the growing market share of "off-price" retailing,
and a particular shopping center may be adversely affected by the bankruptcy or
decline in drawing power of an anchor tenant, a shift in consumer demand due to
demographic changes (for example, population decreases or changes in average age
or income) and/or changes in consumer preference (for example, to discount
retailers). Industrial properties may be adversely affected by reduced demand
for industrial space occasioned by a decline in a particular industry segment
(for example, a decline in defense spending), and a particular industrial
property that suited the needs of its original tenant may be difficult to re-let
to another tenant or may become functionally obsolete relative to newer
properties.
In the case of retail properties, the failure of an anchor tenant to renew
its lease, the termination of an anchor tenant's lease, the bankruptcy or
economic decline of an anchor tenant, or the cessation of the business of an
anchor at its store, notwithstanding its continued payment of rent after "going
dark", can have a particularly negative effect on the economic performance of a
shopping center property given the importance of anchor tenants in attracting
traffic to other stores within the same shopping center. In addition, the
failure of one or more major tenants, such as an anchor tenant, to operate from
its premises may entitle other tenants to rent reductions or the right to
terminate their leases.
Mortgage Loans secured by liens on residential health care facilities pose
risks not associated with loans secured by liens on other types of
income-producing real estate. Providers of long-term nursing care, assisted
living and other medical services are subject to federal and state laws that
relate to the adequacy of
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<PAGE>
medical care, distribution of pharmaceuticals, rate setting, equipment,
personnel, operating policies and additions to facilities and services and, to
the extent dependent on patients whose fees are reimbursed by private insurers,
to the reimbursement policies of such insurers. The failure of any of such
borrower to maintain or renew any required license or regulatory approval could
prevent it from continuing operations at a Mortgaged Property (in which case no
revenues would be received from such property or portion thereof requiring
licensing) or, if applicable, bar it from participation in government
reimbursement programs. Furthermore, in the event of foreclosure, there can be
no assurance that the Trustee or any other purchaser at a foreclosure sale would
be entitled to the rights under such licenses and such party may have to apply
in its own right for such a license. There can be no assurance that a new
license could be obtained or that the related Mortgaged Property would be
adaptable to other uses. To the extent any nursing home receives a significant
portion of its revenues from government reimbursement programs, primarily
Medicaid and Medicare, such revenue may be subject to statutory and regulatory
changes, retroactive rate adjustments, administrative rulings, policy
interpretations, delays by fiscal intermediaries and government funding
restrictions. Moreover, governmental payors have employed cost-containment
measures that limit payments to health care providers, and there are currently
under consideration various proposals in the United States Congress that could
materially change or curtail those payments. Accordingly, there can be no
assurance that payments under government reimbursement programs will, in the
future, be sufficient to fully reimburse the cost of caring for program
beneficiaries. If not, net operating income of the Mortgaged Properties that
receive substantial revenues from those sources, and consequently the ability of
the related borrowers to meet their Mortgage Loan obligations, could be
adversely affected. Under applicable federal and state laws and regulations,
including those that govern Medicare and Medicaid programs, only the provider
who actually furnished the related medical goods and services may sue for or
enforce its rights to reimbursement. Accordingly, in the event of foreclosure,
none of the Trustee, the Master Servicer, the Special Servicer or a subsequent
lessee or operator of the property would generally be entitled to obtain from
federal or state governments any outstanding reimbursement payments relating to
services furnished at the respective properties prior to such foreclosure.
Various factors, including location, quality and franchise affiliation (or
lack thereof), affect the economic viability of a hotel. Adverse economic
conditions, either local, regional or national, may limit the amount that may be
charged for a room and may result in a reduction in occupancy levels. The
construction of competing hotels or motels can have similar effects. Because
hotel rooms generally are rented for short periods of time, hotel properties
tend to respond more quickly to adverse economic conditions and competition than
do other commercial properties. The successful operation of a hotel with a
franchise affiliation may depend in part upon the strength of the franchisor,
the public perception of the franchise service mark and the continued existence
of any franchise license agreement. The transferability of a franchise license
agreement may be restricted, and a lender or other person that acquires title to
a hotel property as a result of foreclosure may be unable to succeed to the
borrower's rights under any franchise license agreement. Furthermore, the
ability of a hotel to attract customers, and some of such hotel's revenues, may
depend in large part on its having a liquor license. Such a license may not be
transferable (for example, in connection with a foreclosure). See "Risk
Factors--Certain Mortgage Loans and Mortgaged Property; Obligor Default" in the
Prospectus.
RISKS PARTICULAR TO _________ PROPERTIES. [Add disclosure regarding risks
particular to Mortgage Loans secured by any property type that represents 10% or
more of the Initial Pool Balance.]
PROPERTY LOCATION AND CONDITION. The location and construction quality of a
particular building may affect the occupancy level, the rents that may be
charged and/or the performance of the occupants' businesses. The characteristics
of an area or neighborhood in which a Mortgaged Property is located may change
over time or in relation to competing facilities. The effects of poor
construction quality will increase over time in the form of increased
maintenance and capital improvements. Even good construction will deteriorate
over time if the management company does not schedule and perform adequate
maintenance in a timely fashion. The borrowers are generally required to keep
the Mortgaged Properties
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in good repair. In addition, all the Mortgaged Properties have been inspected
within the last 18 months and, as of the date of such inspection, show no
material maintenance deficiencies. Although the Master Servicer or the Special
Servicer, as applicable, will be required to inspect the Mortgaged Properties at
least once every year, there can be no assurance that such inspections will
detect damage or prevent a default. [See "Description of the Mortgage
Pool--___________________" herein.]
COMPETITION. Other comparable multifamily/commercial properties located in
the same areas compete with the Mortgaged Properties to attract residents,
retail sellers, tenants, customers and/or guests. The leasing of real estate is
highly competitive. The principal means of competition are price, location and
the nature and condition of the facility to be leased. A borrower competes with
all lessors and developers of comparable types of real estate in the area in
which the related Mortgaged Property is located. Such lessors or developers
could have lower rents, lower operating costs, more favorable locations or
better facilities. While a borrower may renovate, refurbish or expand the
related Mortgaged Property to maintain it and remain competitive, such
renovation, refurbishment or expansion may itself entail significant risks.
Increased competition could adversely affect income from and the market value of
the Mortgaged Properties. In addition, the business conducted at each Mortgaged
Property may face competition from other industries and industry segments.
CHANGES IN LAWS. Increases in income, service or other taxes (other than
real estate taxes) in respect of a Mortgaged Property generally are not passed
through to tenants under leases and may adversely affect the related borrower's
funds from operations. Similarly, changes in laws increasing the potential
liability for environmental conditions existing on properties or increasing the
restrictions on discharges or other conditions may result in significant
unanticipated expenditures, which could adversely affect the borrowers' funds
from operations. See "--Environmental Law Considerations" herein.
UNINSURED LOSS; SUFFICIENCY OF INSURANCE. All the borrowers are required to
maintain various types of casualty insurance with respect to the Mortgaged
Properties. See "Servicing of the Mortgage Loans-- Maintenance of Insurance"
herein. Certain types of losses, however, may be either uninsurable or not
economically insurable, such as losses due to riots or acts of war or
earthquakes. Should an uninsured loss occur, a borrower could lose both its
investment in and its anticipated profits and cash flow from its Mortgaged
Property, which would adversely affect the borrower's ability to make payments
under its Mortgage Loan. In addition, there is a possibility of casualty losses
with respect to the Mortgaged Property for which Insurance Proceeds may not be
adequate. There can be no assurance that any loss incurred will not exceed the
limits of policies obtained. In addition, although the Mortgage Loan Seller
required that probable or bounded maximum loss studies be conducted for all of
the _______ Mortgaged Properties located in the State of California, earthquake
insurance is generally not required to be maintained by a borrower, even in
respect of Mortgaged Properties located in California. [See "Description of the
Mortgage Pool--________________" herein.]
GEOGRAPHIC CONCENTRATION. Repayments by the borrowers and the market value
of the Mortgaged Properties could be affected by economic conditions in regions
where the Mortgaged Properties are located, conditions in the real estate
markets where the Mortgaged Properties are located, changes in governmental
rules and fiscal policies, acts of nature (which may result in uninsured losses)
and other factors particular to the locales of the respective Mortgaged
Properties.
The Mortgaged Properties are located in _______ states. However, _______ of
the Mortgaged Properties, representing security for __% of the Initial Pool
Balance, are located in ____[; continue for additional states].
The economy of any state or region in which a Mortgaged Property is located
may be adversely affected to a greater degree than that of other areas of the
country by certain developments affecting industries concentrated in such state
or region. To the extent that a decline occurs in general economic or other
relevant conditions in states or regions in which Mortgaged Properties securing
significant portions
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<PAGE>
of the aggregate unpaid principal balance of the Mortgage Pool are located,
resulting in a decrease in the consumer demand for commercial property and/or
housing in the region, the income from and market value of such Mortgaged
Properties may be adversely affected.
HIGHER THAN AVERAGE BALANCES. Certain groups of Cross-Collateralized
Mortgage Loans (as defined in "Description of the Mortgage Pool-General") and
several of the individual Mortgage Loans have Cut-off Date Balances that are
substantially higher than the average Cut-off Date Balance. See Annex __ hereto.
In mortgage pools with concentrations of loans having larger-than-average
balances, adverse circumstances relating to an individual loan or group of
cross-collateralized loans (such as a default or the occurrence of a material
casualty event with respect to a related mortgaged property) having a
larger-than-average balance can result in losses that are more severe, relative
to the size of the pool, than would be the case if the aggregate balance of such
pool were more evenly distributed.
RISK OF CHANGES IN CONCENTRATIONS. If and as payments in respect of
principal (including any voluntary principal prepayments and the principal
portion of any Liquidation Proceeds, Condemnation Proceeds and Insurance
Proceeds) are received with respect to the Mortgage Loans, the remaining
Mortgage Loans as a group may exhibit increased concentration with respect to
the type of properties, property characteristics, number of borrowers and
affiliated borrowers and geographic location. Because principal of the
Sequential Pay Certificates is payable in sequential order, such Classes that
have a lower sequential priority are relatively more likely to be exposed to any
risks associated with changes in concentrations of loan or property
characteristics.
ZONING COMPLIANCE. Due to, among other reasons, changes in applicable
building and zoning ordinances and codes ("Zoning Laws") affecting certain of
the Mortgaged Properties which have come into effect after the construction of
improvements on such Mortgaged Properties, certain improvements may not comply
fully with current Zoning Laws, including density, use, parking and set back
requirements, but qualify as permitted non-conforming uses and/or structures.
Such changes may limit the ability of the borrower to rebuild the premises "as
is" in the event of a substantial casualty loss with respect thereto.
NONRECOURSE MORTGAGE LOANS. The Mortgage Loans are not insured or
guaranteed by any governmental entity or private mortgage insurer. The Depositor
has not undertaken any evaluation of the significance of the recourse provisions
of Mortgage Loans that may permit recourse against the related borrower or
another person in the event of a default. Accordingly, investors should consider
all of the Mortgage Loans to be nonrecourse loans as to which recourse in the
case of default will be limited to the related Mortgaged Property.
ENVIRONMENTAL LAW CONSIDERATIONS. Contamination of real property may give
rise to a lien on that property to assure payment of the cost of clean-up or, in
certain circumstances, may result in liability to the lender for that cost. Such
contamination may also reduce the value of a property. A "Phase I" environmental
site assessment was performed at each of the Mortgaged Properties. [See
"Description of the Mortgage Pool--___________________" herein.]
The Pooling and Servicing Agreement requires that the Special Servicer
obtain an environmental site assessment of a Mortgaged Property prior to taking
possession of the property through foreclosure or otherwise or assuming control
of its operation. Such requirement effectively precludes enforcement of the
security for the related Mortgage Note until a satisfactory environmental site
assessment is obtained (or until any required remedial action is thereafter
taken), but will decrease the likelihood that the Trust Fund will become liable
for a material adverse environmental condition at the Mortgaged Property.
However, there can be no assurance that the requirements of the Pooling and
Servicing Agreement will effectively insulate the Trust Fund from potential
liability for a materially adverse environmental condition at any Mortgaged
Property. See "Servicing of the Mortgage Loans--Realization Upon Defaulted
Mortgage Loans; Sale of Defaulted Mortgage Loans and REO Properties" herein and
"Risk Factors--Environmental Risks" and "Certain Legal Aspects of Mortgage
Loans--Environmental Matters" in the Prospectus.
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<PAGE>
BALLOON PAYMENTS. _________ (_______) of the Mortgage Loans, representing
__% of the Initial Pool Balance, will have substantial payments (that is,
Balloon Payments) due at their respective stated maturities, in each case unless
the Mortgage Loan is previously prepaid. _________ (_______) of the Balloon
Loans, representing in the aggregate __% of the Initial Pool Balance, will have
Balloon Payments due during the period from ____through ____. Mortgage Loans
with Balloon Payments involve a greater risk to the lender than fully amortizing
loans, because the ability of a borrower to make a Balloon Payment typically
will depend upon its ability either to refinance the loan or to sell the related
Mortgaged Property at a price sufficient to permit the borrower to make the
Balloon Payment. The ability of a borrower to accomplish either of these goals
will be affected by a number of factors occurring at the time of attempted sale
or refinancing, including the level of available mortgage rates, the fair market
value of the property, the borrower's equity in the related property, the
financial condition of the borrower and operating history of the property, tax
laws, prevailing economic conditions and the availability of credit for
multifamily or commercial properties, as the case may be. [See "Description of
the Mortgage Pool-- ________________________" herein.]
In order to maximize recoveries on defaulted Mortgage Loans, the Pooling and
Servicing Agreement permits the Special Servicer to extend and modify Mortgage
Loans that are in material default or as to which a payment default (including
the failure to make a Balloon Payment) is imminent; subject, however, to the
limitations described under "Servicing of the Mortgage Loans--Modifications,
Waivers and Amendments" and "--The Controlling Class Representative" herein.
There can be no assurance, however, that any such extension or modification will
increase the present value of recoveries in a given case. Any delay in
collection of a Balloon Payment that would otherwise be distributable in respect
of a Class of Offered Certificates, whether such delay is due to borrower
default or to modification of the related Mortgage Loan, will likely extend the
weighted average life of such Class of Offered Certificates. See "Yield and
Maturity Considerations" herein and in the Prospectus.
RISK OF SUBORDINATED DEBT. To the Depositor's knowledge, [none] [only
_______] of the Mortgaged Properties, representing security for [a] Mortgage
Loan[s] with a Cut-off Date Balance of $_______ , [is] [are]encumbered by [an
aggregate of] $_______ of subordinated debt. The existence of subordinated debt
encumbering any Mortgaged Property may increase the difficulty of refinancing
the related Mortgage Loan at maturity and the possibility that reduced cash flow
could result in deferred maintenance. Also, in the event that the holder of the
subordinated debt has filed for bankruptcy or been placed in involuntary
receivership, foreclosing on the Mortgaged Property could be delayed. See
"Certain Legal Aspects of Mortgage Loans--Secondary Financing;
Due-On-Encumbrance Provisions" in the Prospectus. In addition, in several cases,
ownership interests in certain borrowers under the Mortgage Loans have been
pledged to secure debt of the related principals.
[RISK OF ADJUSTABLE RATE MORTGAGE LOANS. _______ of the Mortgage Loans,
which represent __% of the Initial Pool Balance, are ARM Loans. Increases in the
required Monthly Payments on ARM Loans in excess of those assumed in the
original underwriting of such loans may result in a default rate higher than
that on mortgage loans with fixed mortgage rates.]
[INCLUSION OF DELINQUENT, UNDER-PERFORMING AND NON-PERFORMING MORTGAGE
LOANS. The Mortgage Pool will include ____ Mortgage Loans, representing ____%
of the Initial Pool Balance, that [describe generally the characteristics of
those delinquent, under-performing and non-performing Mortgage Loans, if any,
included in the Mortgage Pool]. The amount of any applicable credit support
provided to a Class of Offered Certificates may not cover all losses and
shortfalls related to such delinquent, under-performing and non-performing
Mortgage Loans, and investors should consider the risk that the inclusion of
such Mortgage Loans in the Mortgage Pool may adversely affect the rate of
defaults and prepayments in respect of the Mortgage Pool and the yield on the
Offered Certificates. See "Risk Factors--Limited Nature of Rating", "--Certain
Mortgage Loans and Mortgaged Property; Obligor Default" and "--Delinquent and
Non-Performing Loans" in the Prospectus.]
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<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The "Mortgage Pool" will be a segregated pool of __ [describe general
characteristics of the Mortgage Loans] mortgage loans (the "Mortgage Loans")
with an aggregate Cut-off Date Balance of $_________ (the "Initial Pool
Balance")[, subject to a permitted variance of plus or minus __%]. The "Cut-off
Date Balance" of each Mortgage Loan is the unpaid principal balance thereof as
of the Cut-off Date, after application of all payments due on or before such
date, whether or not received. ALL NUMERICAL INFORMATION PROVIDED HEREIN WITH
RESPECT TO THE MORTGAGE LOANS IS PROVIDED ON AN APPROXIMATE BASIS. ALL WEIGHTED
AVERAGE INFORMATION PROVIDED HEREIN WITH RESPECT TO THE MORTGAGE LOANS REFLECTS
THE WEIGHTING OF THE MORTGAGE LOANS BY THEIR CUT-OFF DATE BALANCES.
Each Mortgage Loan is evidenced by a note or bond (a "Mortgage Note") and is
secured by a [first]mortgage, deed of trust or similar security instrument (a
"Mortgage") on the fee simple (or, in __ cases, representing __% of the Initial
Pool Balance, the leasehold) interest of the related mortgagor (the "Mortgagor")
in real property used for commercial or multifamily purposes, all buildings and
improvements thereon and certain personal property located thereon (each, a
"Mortgaged Property") and security interests in certain funds and accounts and
other collateral described herein.
The Mortgage Loans are not insured or guaranteed by the Issuer, the Company
or the Mortgage Loan Seller, by any governmental entity or private mortgage
insurer or by any other person. All of the Mortgage Loans are nonrecourse loans
as to which recourse in the case of default will be limited to the specific
property and such other assets, if any, as were pledged to secure a Mortgage
Loan.
On or prior to the Closing Date, the Company will acquire the Mortgage Loans
from the Mortgage Loan Seller pursuant to the Mortgage Loan Purchase Agreement
dated as of _________, __ (the "Mortgage Loan Purchase Agreement"), between the
Company and the Mortgage Loan Seller, and the Company will thereupon assign its
interests in the Mortgage Loans, without recourse, to the Issuer. The Issuer
will pledge the Mortgage Loans and the other assets in the Trust Estate to
secure the Bonds. See "--The Mortgage Loan Seller" herein and "Security for the
Bonds and Certificates" in the Prospectus.
[The Mortgage Loans were originated during the period from _________ to
_________, generally in accordance with the underwriting criteria described
below under "--Underwriting of the Mortgage Loans". The Mortgage Loan Seller
originated __ of the Mortgage Loans, which represent __% of the Initial Pool
Balance, and acquired the remaining Mortgage Loans from the respective
originators thereof.]
[____ separate sets of Mortgage Loans (the "Cross-Collateralized Mortgage
Loans"), representing __%, __%, __%[, ...], respectively, of the Initial Pool
Balance, are, solely as among the Mortgage Loans in each such particular set,
cross-collateralized and cross-defaulted with each other as indicated in Annex
__. No Mortgage Loans are cross-collateralized or cross-defaulted with any loans
which are not included in the Mortgage Pool. The Master Servicer or the Special
Servicer, as the case may be, will determine whether to enforce the
cross-default and cross-collateralization rights upon a default with respect to
any of such Cross-Collateralized Mortgage Loans. The Certificateholders will not
have any right to participate in or control any such determination. No other
Mortgage Loans are subject to cross-collateralization or cross-default
provisions.]
CERTAIN PAYMENT CHARACTERISTICS
__ of the Mortgage Loans, which represent __% of the Initial Pool Balance,
have Due Dates that occur on the ____ day of each month. The remaining Mortgage
Loans have Due Dates that occur on the __ (____% of the Mortgage Loans), __
(____% of the Mortgage Loans), __ (____% of the Mortgage Loans), and __(__% of
the Mortgage Loans) day of each month.
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<PAGE>
[_________ of the Mortgage Loans, which represent __% of the Initial Pool
Balance, are ARM Loans. The ARM Loans bear interest at Mortgage Rates that are
subject to adjustment on periodically occurring Interest Rate Adjustment Dates
by adding the related Gross Margin to the applicable value of the related Index,
subject in ______ cases to rounding conventions and lifetime minimum and/or
maximum Mortgage Rates and, in the case of ________ Mortgage Loans, which
represent __% of the Initial Pool Balance, to periodic minimum and/or maximum
Mortgage Rates. The remaining Mortgage Loans are Fixed Rate Loans. None of the
ARM Loans is convertible into a Fixed Rate Loan.]
[If there are ARM Loans: [Identify Mortgage Loan Index]. The adjustments to
the Mortgage Rates on the ARM Loans may in each case be based on the value of
the related Index as available a specified number of days prior to an Interest
Rate Adjustment Date, or may be based on the value of the related Index as most
recently published as of an Interest Rate Adjustment Date or as of a designated
date preceding an Interest Rate Adjustment Date. __ of the ARM Loans, which
represent __% of the Initial Pool Balance, provide for Interest Rate Adjustment
Dates that occur monthly; __ of the ARM Loans, which represent __% of the
Initial Pool Balance, provide for Interest Rate Adjustment Dates that occur
semi-annually; and the remaining ARM Loans provide for Interest Rate Adjustment
Dates that occur annually.]
[If there are ARM Loans: The Monthly Payments on each ARM Loan are subject
to adjustment on each Payment Adjustment Date to an amount [that would amortize
fully the principal balance of the Mortgage Loan over its then remaining
amortization schedule and pay interest at the then applicable Mortgage Rate].
[Discuss frequency of Payment Adjustment Dates and possibility of negative
amortization of interest.]]
____ of the Mortgage Loans, representing __% of the Initial Pool Balance,
are Balloon Loans that provide for monthly payments of principal based on
amortization schedules significantly longer than the remaining terms of such
Mortgage Loans. Thus, each such Mortgage Loan will have a Balloon Payment due at
its stated maturity date, unless prepaid prior thereto. The remaining Mortgage
Loans are fully amortizing.
[All the Mortgage Loans provided at origination for, sequentially, a period
(a "Lockout Period") during which voluntary prepayments of principal (each, a
"Principal Prepayment") are prohibited, then a period during which Principal
Prepayments are permitted but are required to be accompanied by an additional
amount (a "Prepayment Premium") equal to the greater of a specified percentage
of the principal amount being prepaid or a premium calculated on the basis of a
yield maintenance formula, and then, commencing on a specified date prior to
maturity, a period (the related "Open Period") during which Principal
Prepayments may be made without payment of any Prepayment Premium.]
[THE INDEX]
[Describe Index.]
[DELINQUENT AND NON-PERFORMING MORTGAGE LOANS]
[Describe those delinquent and non-performing Mortgage Loans, if any,
included in the Mortgage Pool.]
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<PAGE>
ADDITIONAL MORTGAGE LOAN INFORMATION
The following tables set forth the specified characteristics of [, in each
case as indicated, the ARM Loans, the Fixed Rate Loans or] all the Mortgage
Loans. The sum in any column may not equal the indicated total due to rounding.
MORTGAGE RATES AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER OF CUT-OFF CUT-OFF
MORTGAGE DATE DATE
RANGE OF MORTGAGE RATES(%) LOANS BALANCE BALANCE
- - -------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Total.....................................................................
Weighted Average Mortgage Rate
(All Mortgage Loans): ____% per annum
[Weighted Average Mortgage Rate
(ARM Loans): ____% per annum
Weighted Average Mortgage Rate
(Fixed Rate Loans): ____% per annum]
</TABLE>
[GROSS MARGINS FOR THE ARM LOANS]
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
NUMBER OF DATE DATE
[RANGE OF GROSS MARGINS(%) ARM LOANS BALANCE BALANCE
- - ------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Total....................................................................
Weighted Average Gross Margin:____%]
</TABLE>
[FREQUENCY OF ADJUSTMENTS TO MORTGAGE RATES AND MONTHLY PAYMENTS FOR THE ARM
LOANS
<TABLE>
<CAPTION>
PERCENT BY
MORTGAGE MONTHLY AGGREGATE AGGREGATE
RATE PAYMENT CUT-OFF CUT-OFF
ADJUSTMENT ADJUSTMENT NUMBER OF DATE DATE
FREQUENCY FREQUENCY MORTGAGE LOANS BALANCE BALANCE
----------- ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total......................................
</TABLE>
MAXIMUM LIFETIME MORTGAGE RATES FOR THE ARM LOANS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
RANGE OF MAXIMUM NUMBER OF DATE DATE
LIFETIME MORTGAGE RATES(%) ARM LOANS BALANCE BALANCE
- - -------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Total.....................................................................
Weighted Average Maximum
Lifetime Mortgage Rate]
(ARM Loans): ____% per annum (A)
</TABLE>
- - ------------------------
(A) This calculation does not include the _________ ARM Loans without maximum
lifetime Mortgage Rates.
S-37
<PAGE>
MINIMUM LIFETIME MORTGAGE RATES FOR THE ARM LOANS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
RANGE OF MINIMUM NUMBER OF DATE DATE
LIFETIME MORTGAGE RATES(%) ARM LOANS BALANCE BALANCE
- - -------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Total.....................................................................
Weighted Average Minimum
Lifetime Mortgage Rate
(ARM Loans): ____% per annum (A)
</TABLE>
- - ------------------------
(A) This calculation does not include the _________ ARM Loans without minimum
lifetime Mortgage Rates.]
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
CUT-OFF DATE NUMBER OF DATE DATE
BALANCE RANGE ($) MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Total................................................................
Average Cut-off Date Balance
(All Mortgage Loans): $______
[Average Cut-off Date Balance
(ARM Loans): $______
Average Cut-off Date Balance
(Fixed Rate Loans): $______]
</TABLE>
TYPES OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
NUMBER OF DATE DATE
PROPERTY TYPE MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Total................................................................
</TABLE>
GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
NUMBER OF DATE DATE
STATE MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Total................................................................
</TABLE>
S-38
<PAGE>
ORIGINAL TERM TO STATED MATURITY (IN MONTHS)
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
RANGE OF ORIGINAL NUMBER OF DATE DATE
TERMS (IN MONTHS) MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Total................................................................
Weighted Average Original Term to Stated Maturity
(All Mortgage Loans): ___ months
[Weighted Average Original Term to Stated Maturity
(ARM Loans): ___ months
Weighted Average Original Term to Stated Maturity
(Fixed Rate Loans): ___ months]
</TABLE>
REMAINING TERM TO STATED MATURITY (IN MONTHS) AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
RANGE OF REMAINING NUMBER OF DATE DATE
TERMS (IN MONTHS) MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Total................................................................
Weighted Average Remaining Term to Stated Maturity
(All Mortgage Loans): ___ months
[Weighted Average Remaining Term to Stated Maturity
(ARM Loans): ___ months
Weighted Average Remaining Term to Stated Maturity
(Fixed Rate Loans): ___ months]
</TABLE>
The following table sets forth a range of Debt Service Coverage Ratios for
the Mortgage Loans. The "Debt Service Coverage Ratio" set forth in the following
table for any Mortgage Loan is [the ratio of (i) Net Operating Income produced
by the related Mortgaged Property for the period (annualized if the period was
less than one year) covered by the most recent operating statement available to
the Company to (ii) the amount of the Monthly Payment in effect as of the
Cut-off Date multiplied by 12. "Net Operating Income" is the revenue derived
from the use and operation of a Mortgaged Property (consisting primarily of
rental income and deposit forfeitures), less operating expenses (such as
utilities, general administrative expenses, management fees, advertising,
repairs and maintenance), and further less fixed expenses (such as insurance and
real estate taxes). Net Operating Income generally does not reflect capital
expenditures. The following table was prepared using operating statements
obtained from the respective Mortgagors or the related property managers. In
each case, the information contained in such operating statements was unaudited,
and neither the Issuer nor the Company has made any attempt to verify its
accuracy. In the case of ____ Mortgage Loans [(__ ARM Loans and __ Fixed Rate
Loans)], representing __% of the Initial Pool Balance, operating statements
could not be obtained, and accordingly, Debt Service Coverage Ratios for those
Mortgage Loans were not calculated. The last day of the period (which may not
correspond to the most recently ended calendar year) covered by each operating
statement from which a Debt Service Coverage Ratio was calculated is set forth
in [Annex A] with respect to the related Mortgage Loan.]
S-39
<PAGE>
DEBT SERVICE COVERAGE RATIOS(A)
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE
RANGE OF NUMBER OF AGGREGATE CUT-OFF
DEBT SERVICE MORTGAGE CUT-OFF DATE
COVERAGE RATIOS (X) LOANS DATE BALANCE BALANCE
- - ---------------------------------------------------------------------- ----------- ---------------- -----------
<S> <C> <C> <C>
Not Calculated(B).....................................................
Total.................................................................
Weighted Average Debt Service Coverage
Ratio (All Mortgage Loans): ___x(C)
[Weighted Average Debt Service Coverage
Ratio (ARM Loans): ___x(D)
Weighted Average Debt Service Coverage
Ratio (Fixed Rate Loans): ___x(E)]
</TABLE>
- - ------------------------
(A) The Debt Service Coverage Ratios are based on the most recently available
operating statements obtained from the respective mortgagors or the related
property managers.
(B) The Debt Service Coverage Ratios for these Mortgage Loans were not
calculated due to a lack of available operating statements.
(C) This calculation does not include the _______ Mortgage Loans as to which
Debt Service Coverage Ratios were not calculated.
[(D) This calculation does not include the _______ ARM Loans as to which Debt
Service Coverage Ratios were not calculated.
(E) This calculation does not include the _______ Fixed Rate Loans as to which
Debt Service Coverage Ratios were not calculated.]
S-40
<PAGE>
The following tables set forth the range of LTV Ratios of the Mortgage Loans
at the Cut-off Date. The "LTV Ratio" set forth in the following table for any
Mortgage Loan is [a fraction, expressed as a percentage, the numerator of which
is the Cut-off Date Balance of such Mortgage Loan, and the denominator of which
is the appraised value of the related Mortgaged Property as determined by an
appraisal thereof obtained in connection with the origination of such Mortgage
Loan. Because it is based on the value of a Mortgaged Property determined as of
loan origination, the information set forth in the table below is not
necessarily a reliable measure of the related borrower's current equity in each
Mortgaged Property. In a declining real estate market, the fair market value of
a Mortgaged Property could have decreased from the value determined at
origination, and the current actual loan-to-value ratio of a Mortgage Loan may
be higher than its LTV Ratio as reflected in the table set forth below.]
LTV RATIOS AT CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
RANGE OF LTV RATIOS(%) NUMBER OF DATE DATE
AS OF CUT-OFF DATE MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Total..........................................................
Weighted Average LTV
Ratios as of Cut-off Date
(All Mortgage Loans):
___%
[Weighted Average LTV Ratio
as of Cut-off Date
(ARM Loans): ___%
Weighted Average LTV Ratio
as of Cut-off Date
(Fixed Rate Loans): ___%]
</TABLE>
S-41
<PAGE>
OCCUPANCY RATES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF CUT-OFF
RANGE OF NUMBER OF DATE DATE
OCCUPANCY RATES(A) MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- --------------- ----------- -----------
<S> <C> <C> <C>
Total..........................................................
Weighted Average Occupancy Rate
(All Mortgage Loans)(A):___%
[Weighted Average Occupancy Rate
(ARM Loans)(A):___%
Weighted Average Occupancy Rate
(Fixed Rate Loans)(A):___%]
</TABLE>
- - ------------------------
(A) Physical occupancy rates calculated based on rent rolls provided by the
respective Mortgagors or related property managers as of a date no more than
__ months prior to the Cut-off Date.
Specified in [Annex A] to this Prospectus Supplement are the foregoing and
certain additional characteristics of the Mortgage Loans set forth on a
loan-by-loan basis. Certain additional information regarding the Mortgage Loans
is contained herein under "--Underwriting of the Mortgage Loans" and
"--Representations and Warranties with respect to the Mortgage Loans;
Repurchases" and in the Prospectus under "Security for the Bonds and
Certificates--Mortgage Loans" and "Certain Legal Aspects of Mortgage Loans".
[DELINQUENCIES. As of the Cut-off Date, [no] Mortgage Loan was more than 30
days delinquent in respect of any Monthly Payment.]
THE MORTGAGE LOAN SELLER
GENERAL. [The Mortgage Loan Seller [, a wholly-owned subsidiary of
_________,] is a ___________________ organized in 19__ under the laws of
___________________. [Specify additional information regarding the Mortgage Loan
Seller's multifamily and commercial portfolio.]
The information set forth herein concerning the Mortgage Loan Seller and the
underwriting of the Mortgage Loans has been provided by the Mortgage Loan
Seller, and none of the Issuer, the Company or the Underwriter makes any
representation or warranty as to the accuracy or completeness of such
information.
UNDERWRITING OF THE MORTGAGE LOANS
[All of the Mortgage Loans were originated generally in accordance with the
underwriting criteria described herein.]
[Description of underwriting.]
S-42
<PAGE>
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE MORTGAGE LOANS; REPURCHASES
In the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller has
represented and warranted with respect to each Mortgage Loan, as of [the Closing
Date], or as of such other date specifically provided in the representation and
warranty, among other things, that:
[Specify significant representations and warranties.]
If the Mortgage Loan Seller has been notified of a material breach of any of
the foregoing representations and warranties and if the Mortgage Loan Seller
cannot cure such breach within a period of __ days following its receipt of such
notice, then the Mortgage Loan Seller will be obligated pursuant to the Mortgage
Loan Purchase Agreement (the relevant rights under which will be assigned,
together with the Mortgage Loans, by the Company to the Issuer and, further,
will be pledged, together with the Mortgage Loans, by the Issuer to secure the
Bonds) to repurchase the affected Mortgage Loan within such __-day period at a
price (the "Purchase Price") equal to [the sum of (i) the unpaid principal
balance of such Mortgage Loan, (ii) unpaid accrued interest on such Mortgage
Loan at the related Mortgage Rate from the date to which interest was last paid
to the Due Date in the Due Period in which the purchase is to occur, and (iii)
certain servicing expenses that are reimbursable to the Master Servicer and the
Special Servicer].
The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any breach of the
Mortgage Loan Seller's representations and warranties regarding the Mortgage
Loans. The Mortgage Loan Seller will be the sole Warranting Party in respect of
the Mortgage Loans, and none of the Issuer, the Company, the Master Servicer,
the Special Servicer or any of their affiliates [(other than the Mortgage Loan
Seller)] will be obligated to repurchase any affected Mortgage Loan in
connection with a breach of the Mortgage Loan Seller's representations and
warranties if the Mortgage Loan Seller defaults on its obligation to do so. See
"The Trust Agreement" in the Prospectus.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Certificates are issued. Prior to the
issuance of the Offered Certificates, a Mortgage Loan may be removed from the
Mortgage Pool if the Depositor deems such removal necessary or appropriate or if
it is prepaid. A limited number of other mortgage loans may be included in the
Mortgage Pool prior to the issuance of the Offered Certificates, unless
including such mortgage loans would materially alter the characteristics of the
Mortgage Pool as described herein. The Depositor believes that the information
set forth herein will be representative of the characteristics of the Mortgage
Pool as it will be constituted at the time the Offered Certificates are issued,
although the range of Mortgage Rates, maturities and certain other
characteristics of the Mortgage Loans in the Mortgage Pool may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Closing Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates. In the event Mortgage Loans are removed
from or added to the Mortgage Pool as set forth in the preceding paragraph, such
removal or addition will be noted in the Form 8-K.
S-43
<PAGE>
SERVICING OF THE MORTGAGE LOANS
GENERAL
[Although the obligations and duties of the Master Servicer and the Special
Servicer with respect to the Mortgage Pool will initially be performed by a
single entity (see "--The Master Servicer and the Special Servicer" below), the
discussion herein is presented so as to reflect an allocation of
responsibilities as if two separate entities were acting as Master Servicer and
Special Servicer. In the event the obligations and duties of the Master Servicer
and the Special Servicer are performed by separate entities, neither entity will
be liable for the actions of the other as Master Servicer or Special Servicer.]
The servicing of the Mortgage Loans and any REO Properties 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 REO Properties. The summaries do
not purport to be complete and are subject, and qualified in their entirety by
reference, to the provisions of the Pooling and Servicing Agreement. Reference
is made to the Prospectus for additional information regarding the terms of the
Pooling and Servicing Agreement relating to the servicing and administration of
the Mortgage Loans and any REO Properties and to the rights and obligations of
the Master Servicer and the Special Servicer thereunder, PROVIDED THAT THE
INFORMATION HEREIN SUPERSEDES ANY CONTRARY INFORMATION SET FORTH IN THE
PROSPECTUS. See "Servicing of Mortgage Loans" and "The Trust Agreement" in the
Prospectus. For purposes of the Prospectus, the Pooling and Servicing Agreement
constitutes a Master Servicing Agreement and a Special Servicing Agreement.
The Master Servicer and the Special Servicer, either directly or through
sub-servicers, will be required to service and administer the Mortgage Loans on
behalf of the Trustee for the benefit of the Certificateholders, in accordance
with applicable law, the terms of the Pooling and Servicing Agreement and the
terms of the respective Mortgage Loans and, to the extent consistent with the
foregoing, in accordance with the following standards (collectively, the
"Servicing Standard"): (i) with the same care, skill and diligence as is normal
and usual in its general mortgage servicing and asset management activities on
behalf of third parties or on behalf of itself, whichever is higher, with
respect to mortgage loans comparable to the Mortgage Loans; (ii) with a view to
the timely collection of all scheduled payments of principal and interest under
the Mortgage Loans, or, if a Mortgage Loan comes into and continues in default
and 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, the maximization of the recovery on such Mortgage Loan to the
Certificateholders (as a collective whole) on a present value basis; and (iii)
without regard to (A) any relationship that the Master Servicer or the Special
Servicer, as the case may be, or any affiliate thereof may have with the related
borrower; (B) the ownership of any Certificate by the Master Servicer or the
Special Servicer, as the case may be, or any affiliate thereof; (C) the Master
Servicer's or the Special Servicer's obligation to make Advances (as defined
herein); and (D) the right of the Master Servicer or the Special Servicer, as
the case may be, or any affiliate of either of them, 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. The
Master Servicer and Special Servicer will each be required to service and
administer any group of related Cross-Collateralized Mortgage Loans as a single
Mortgage Loan as and when it deems necessary and appropriate, consistent with
the Servicing Standard.
In general, the Master Servicer will be responsible for the servicing and
administration of all the Mortgage Loans as to which no Servicing Transfer Event
(as defined herein) has occurred and all Corrected Mortgaged Loans (as defined
herein), and the Special Servicer will be obligated to service and administer
each Mortgage Loan (other than a Corrected Mortgage Loan) as to which a
Servicing Transfer Event has occurred (each, a "Specially Serviced Mortgage
Loan"). A "Servicing Transfer Event" with respect to any Mortgage Loan consists
of any of the following events: (a) any Monthly Payment shall be delinquent 60
or more days (or, in the case of a delinquent Balloon Payment, if the Master
Servicer
S-44
<PAGE>
determines that the related borrower has obtained a binding commitment to
refinance, such Balloon Payment shall be delinquent for such longer period of
delinquency (not to exceed 120 days) within which such refinancing is expected
to occur); (b) the Master Servicer shall have determined that (i) a default in
making a Monthly Payment is likely to occur within 30 days, (ii) such default is
likely to remain unremedied for at least 60 days, and (iii) in the case of a
Balloon Payment, the related borrower is not likely to refinance the subject
Mortgage Loan within 120 days of the maturity date; (c) there shall have
occurred a default (other than as described in clause (a) above) that materially
impairs the value of the Mortgaged Property as security for the Mortgage Loan or
otherwise materially adversely affects the interests of Certificateholders and
that continues unremedied for the applicable grace period under the terms of the
Mortgage Loan (or, if no grace period is specified, for 30 days); (d) a decree
or order under any bankruptcy, insolvency or similar law 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; (e) the related
borrower shall consent to the appointment of a conservator or receiver or
liquidator in any insolvency or similar proceedings of or relating to such
related borrower or of or relating to all or substantially all of its property;
(f) the related borrower shall admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations; or
(g) the Master Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related Mortgaged
Property.
If a Servicing Transfer Event occurs with respect to any Mortgage Loan, the
Master Servicer is required to transfer certain of its servicing
responsibilities with respect thereto to the Special Servicer. Notwithstanding
such transfer, the Master Servicer will continue to receive payments on such
Mortgage Loan (including amounts collected by the Special Servicer), to make
certain calculations with respect to such Mortgage Loan, and to make remittances
(including, if necessary, P&I Advances) and prepare certain reports to the
Trustee with respect to such Mortgage Loan. If title to the related Mortgaged
Property is acquired by the Trust Fund (upon acquisition, an "REO Property"),
whether through foreclosure, deed in lieu of foreclosure or otherwise, the
Special Servicer will continue to be responsible for the operation and
management thereof. Mortgage Loans serviced by the Special Servicer are referred
to herein as "Specially Serviced Mortgage Loans" and, together with any REO
Properties, constitute "Specially Serviced Trust Fund Assets." The Master
Servicer will have no responsibility for the Special Servicer's performance of
its duties under the Pooling and Servicing Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities):
(w) with respect to the circumstances described in clause (a) of the
second preceding paragraph, 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 or by reason
of a written modification, waiver or amendment granted or agreed to by the
Special Servicer);
(x) with respect to any of the circumstances described in clauses (b),
(d), (e) and (f) of the second preceding paragraph, when such circumstances
cease to exist in the good faith, reasonable judgment of the Special
Servicer, but, with respect to any bankruptcy or insolvency proceedings
described in clauses (d), (e) and (f), no later than the entry of an order
or decree dismissing such proceeding;
(y) with respect to the circumstances described in clause (c) of the
second preceding paragraph, when such default is cured; and
(z) with respect to the circumstances described in clause (g) of the
second preceding paragraph, when such proceedings are terminated;
so long as at that time no other circumstance identified in such clauses (a)
through (g) then exists.
S-45
<PAGE>
THE MASTER SERVICER [AND THE SPECIAL SERVICER]
[The duties of both Master Servicer and Special Servicer will be performed
by ________________("____ "). The following information has been provided by
____. None of the Depositor, the Underwriter or any of their affiliates takes
any responsibility therefor or makes any representation or warranty as to the
accuracy or completeness thereof.
___________________, a corporation organized under the laws of the State of
_________, is [trace ownership to controlling party]. The principal offices of
____________ are located at ____________. Its telephone number is _________. As
of _________, ___ was the servicer of a portfolio of multifamily and commercial
mortgage loans totaling approximately $_________ in aggregate outstanding
principal amounts.]
[____________________________________ (the "Master Servicer") will act as
Master Servicer with respect to the Mortgage Pool. The offices of the Master
Servicer that will be primarily responsible for servicing and administering the
Mortgage Pool are located at ____________________________________. As
of___________________, _________, the Master Servicer had a net worth of
approximately $___________________ and was the servicer of a portfolio of
multifamily and commercial mortgage loans in __ states totaling approximately
$___________________ in aggregate outstanding principal amount.
The foregoing information has been provided by the Master Servicer. None of
the Depositor, the Underwriter or any of their affiliates takes any
responsibility therefor or makes any representation or warranty as to the
accuracy or completeness thereof.
THE SPECIAL SERVICER
_______________________________ will act as Special Servicer with respect to
the Mortgage Pool. The principal offices of the Special Servicer are located at
________________________. As of _________, ___, the Special Servicer was
responsible for the servicing of approximately _________ commercial and
multifamily loans with an aggregate principal balance of approximately
$_________ , the collateral for which is located in __ states.
The foregoing information has been provided by the Special Servicer. None of
the Depositor, the Underwriter or any of their respective affiliates takes any
responsibility therefor or makes any representation or warranty as to the
accuracy or completeness of such information.]
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
[The principal compensation to be paid to the Master Servicer in respect of
its servicing activities will be the Master Servicing Fee for each Mortgage
Loan, including each Specially Serviced Mortgage Loan and each Mortgage Loan as
to which the related Mortgaged Property has become an REO Property (an "REO
Mortgage Loan"). The "Master Servicing Fee" will be payable monthly on a
loan-by-loan basis from amounts received in respect of interest on each Mortgage
Loan, will be calculated on the basis of a 360-day year consisting of twelve
30-day months, will accrue at the related Master Servicing Fee Rate and will be
computed on the basis of the same principal amount respecting which any related
interest payment due on the Mortgage Loan is computed. For each Mortgage Loan,
the "Master Servicing Fee Rate" will be a per annum rate ranging from __% to
__%. As of the Cut-off Date, the weighted average Master Servicing Fee Rate is
__% per annum.]
[If a borrower voluntarily prepays a Mortgage Loan on a date that is prior
to its Due Date in such Collection Period, the amount of interest (net of
related Servicing Fees (as defined herein) and, if applicable Additional
Interest) that accrues on the Mortgage Loan during such Collection Period,
without
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<PAGE>
regard to any Prepayment Premium or Yield Maintenance Charge actually collected,
will be less (such shortfall, a "Prepayment Interest Shortfall") than the amount
of interest (net of related Servicing Fees and, if applicable, Additional
Interest) that would otherwise have accrued on the Mortgage Loan through such
Due Date. If such a principal prepayment occurs during any Collection Period
after the Due Date for such Mortgage Loan in such Collection Period, the amount
of interest (net of related Servicing Fees and, if applicable, Additional
Interest) that accrues and is collected on the Mortgage Loan during such
Collection Period, without regard to any Prepayment Premium or Yield Maintenance
Charge actually collected, will exceed (such excess, a "Prepayment Interest
Excess") the amount of interest (net of related Servicing Fees and, if
applicable, Additional Interest) that would have been collected on the Mortgage
Loan during such Collection Period if the borrower had not prepaid. Any
Prepayment Interest Excesses collected will be paid to the Master Servicer as
additional servicing compensation. However, with respect to each Distribution
Date, the Master Servicer will be required to deposit into the Collection
Account (such deposit, a "Compensating Interest Payment"), without any right of
reimbursement therefor, an amount equal to the lesser of (a) the aggregate of
all Prepayment Interest Shortfalls experienced during the related Collection
Period and (b) the sum of (i) the aggregate of its Master Servicing Fees for
such Collection Period (but only to the extent of that portion thereof
calculated at a rate of __% per annum with respect to each and every Mortgage
Loan) and (ii) all of its other servicing compensation (including any Prepayment
Interest Excesses received) for such Collection Period. Compensating Interest
Payments will not cover shortfalls in Mortgage Loan interest accruals that
result from any liquidation of a defaulted Mortgage Loan, or of any REO Property
acquired in respect thereof, that occurs during a Collection Period prior to the
related Due Date therein.]
[The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be: (i) the Special Servicing Fee
(together with the Master Servicing Fee, the "Servicing Fees") for each
Specially Serviced Mortgage Loan and each REO Mortgage Loan; (ii) the
Liquidation Fee for each Specially Serviced Trust Fund Asset as to which the
Special Servicer receives any full or discounted payoff or any Liquidation
Proceeds (as defined herein); and (iii) the Workout Fee for each Corrected
Mortgage Loan. The "Special Servicing Fee" will be calculated on the basis of a
360-day year consisting of twelve 30-day months, will accrue at a rate (the
"Special Servicing Fee Rate") equal to __ % per annum and will be computed on
the basis of the same principal amount respecting which any related interest
payment on the related Specially Serviced Mortgage Loan or REO Mortgage Loan is
computed. However, earned Special Servicing Fees will be payable out of general
collections on the Mortgage Loans then on deposit in the Custodial Account. The
Special Servicing Fee with respect to any Specially Serviced Mortgage Loan or
REO Mortgage Loan will cease to accrue if such Mortgage Loan (or the related REO
Property) is liquidated or such Mortgage Loan becomes a Corrected Mortgage Loan.
The "Liquidation Fee" with respect to each Specially Serviced Trust Fund Asset
as to which any full or discounted payoff or any Liquidation Proceeds have been
received, will generally be in an amount equal to __% of such full or discounted
payoff or such Liquidation Proceeds; provided that no Liquidation Fee will be
payable in connection with, or out of Liquidation Proceeds resulting from, the
purchase of any Specially Serviced Trust Fund Asset (i) by the Mortgage Loan
Seller (as described herein under "Description of the Mortgage
Pool--Representations and Warranties with respect to the Mortgage Loans;
Repurchases," (ii) by the Depositor, the Master Servicer, the Special Servicer,
the Underwriter or the Majority Subordinate Certificateholder as described
herein under "Description of the Certificates --Termination" or (iii) in certain
other limited circumstances. The "Workout Fee" with respect to each Corrected
Mortgage loan will generally be an amount equal to __% of all collections of
principal and interest received in respect of such Corrected Mortgage Loan.]
[As additional servicing compensation, the Master Servicer and/or the
Special Servicer will be entitled to retain or receive, as the case may be, any
assumption fees, modification fees, extension fees, "Default Interest" (that is,
interest in excess of interest at the related Mortgage Rate (or, if applicable,
the Revised Rate) accrued in respect of any Mortgage Loan as a result of a
default thereunder) and late payment charges payable under the related loan
documents and actually collected on the Mortgage Loans, all such
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<PAGE>
amounts to be allocated between the Master Servicer and the Special Servicer as
provided in the Pooling and Servicing Agreement. In addition, each of the Master
Servicer and the Special Servicer is authorized to invest or direct the
investment of funds held in those accounts maintained by it that relate to the
Mortgage Loans or REO Properties, as the case may be, in certain short-term
United States government securities and other permitted investment grade
obligations ("Permitted Investments"), and the Master Servicer and the Special
Servicer each will be entitled to retain any interest or other income earned on
such funds held in those accounts maintained by it, but shall be required to
cover any losses on investments of funds held in those accounts maintained by
it, from its own funds without any right to reimbursement.]
Each of the Master Servicer and Special Servicer will, in general, be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the Pooling and Servicing Agreement, including the
fees of any sub-servicers retained by it, and will not be entitled to
reimbursement therefor except as expressly provided in the Pooling and Servicing
Agreement. In general, customary, reasonable and necessary "out of pocket" costs
and expenses required to be incurred by the Master Servicer or Special Servicer
in connection with the servicing of a Mortgage Loan after a default, delinquency
or other unanticipated event, or in connection with the administration of any
REO Property, will constitute "Servicing Advances" (Servicing Advances and P&I
Advances, collectively, "Advances") and, in all cases, will be reimbursable from
future payments and other collections, including in the form of Insurance
Proceeds, Condemnation Proceeds and Liquidation Proceeds (each as defined
herein), on or in respect of the related Mortgage Loan or REO Property ("Related
Proceeds"). Notwithstanding the foregoing, each of the Master Servicer and
Special Servicer will be permitted to pay certain of such expenses (including
certain expenses incurred as a result of a Mortgage Loan default) directly out
of the Custodial Account and at times without regard to the relationship between
the expense and the funds from which it is being paid. See "--The Custodial
Account" and "Description of the Certificates--Collection Account" herein.
[If the Master Servicer or Special Servicer is required under the Pooling
and Servicing Agreement to make a Servicing Advance, but neither does so within
15 days after such Servicing Advance is required to be made, then the Trustee
will, if it has actual knowledge of such failure, be required to give the
defaulting party notice of such failure and further will, if such failure
continues for three more business days, be required to make such Servicing
Advance. The Fiscal Agent will be required to make any such Servicing Advance
that the Trustee was required, but failed, to make.]
Notwithstanding anything herein to the contrary, the Master Servicer, the
Special Servicer, the Trustee and the Fiscal Agent will be obligated to make
Servicing Advances only to the extent that such Servicing Advances are, in the
reasonable, good faith judgment of the Master Servicer, the Special Servicer,
the Trustee or the Fiscal Agent, as the case may be, ultimately recoverable from
Related Proceeds. With respect to any Servicing Advance, the Trustee and the
Fiscal Agent will be entitled to conclusively rely on the non-recoverability
determination made by the Master Servicer or Special Servicer.
The Master Servicer, the Special Servicer, the Trustee and the Fiscal Agent
will be each entitled to receive interest, at the Reimbursement Rate, on any
Servicing Advances made by it. Such interest will compound annually and will be
paid, contemporaneously with the reimbursement of the related Servicing Advance,
from general collections on the Mortgage Loans then on deposit in the Custodial
Account.
MODIFICATIONS, WAIVERS AND AMENDMENTS
[The Pooling and Servicing Agreement will permit the Special Servicer to
modify, waive or amend any term of any Mortgage Loan if (a) it determines, in
accordance with the Servicing Standard, that it is appropriate to do so and (b)
except as described in the following paragraph, such modification, waiver or
amendment, will not (i) affect the amount or timing of any scheduled payments of
principal, interest or other amount (including Prepayment Premiums and Yield
Maintenance Charges but excluding Default Interest and other amounts payable as
additional servicing compensation) payable under the Mortgage
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Loan, (ii) affect the obligation of the related borrower to pay a Prepayment
Premium or Yield Maintenance Charge or permit a principal prepayment during the
applicable Lockout Period, (iii) except as expressly provided by the related
Mortgage or in connection with a material adverse environmental condition at the
related Mortgaged Property, result in a release of the lien of the related
Mortgage on any material portion of such Mortgaged Property without a
corresponding principal prepayment or (iv) in the reasonable, good faith
judgment of the Special Servicer, materially impair the security for the
Mortgage Loan or reduce the likelihood of timely payment of amounts due thereon.
Notwithstanding clause (b) of the preceding paragraph, subject to the
following sentence and the discussion under "--The Controlling Class
Representative" below, the Special Servicer may (i) reduce the amounts owing
under any Specially Serviced Mortgage Loan by forgiving principal, accrued
interest and/or any Prepayment Premium or Yield Maintenance Charge, (ii) reduce
the amount of the Monthly Payment on any Specially Serviced Mortgage Loan,
including by way of a reduction in the related Mortgage Rate, (iii) forbear in
the enforcement of any right granted under any Mortgage Note or Mortgage
relating to a Specially Serviced Mortgage Loan, (iv) accept a principal
prepayment during any Lockout Period, or (v) extend the date on which any
Balloon Payment is scheduled to be due in respect of a Specially Serviced
Mortgage Loan; provided that (w) the related borrower is in default with respect
to the Specially Serviced Mortgage Loan or, in the reasonable, good faith
judgment of the Special Servicer, such default is reasonably foreseeable, (x) in
the reasonable, good faith judgment of the Special Servicer, such modification,
waiver or amendment would increase the recovery to Certificateholders on a net
present value basis, (y) such modification, waiver or amendment does not result
in a tax being imposed on the Trust Fund or cause any REMIC created pursuant to
the Pooling and Servicing Agreement to fail to qualify as a REMIC at any time
the Certificates are outstanding and (z) in connection with extending the date
on which any Balloon Payment is scheduled to be due in respect of a Specially
Serviced Mortgage Loan, the Special Servicer has obtained an appraisal, in
accordance with the standards of the Appraisal Institute, of the related
Mortgaged Property, performed by an independent appraiser, in connection with
such extension, which appraisal supports the determination of the Special
Servicer contemplated by clause (x) of this proviso. In no event, however, will
the Special Servicer be permitted to (i) extend the maturity date of a Mortgage
Loan beyond a date that is two years prior to the Rated Final Distribution Date,
(ii) extend the maturity date of any Mortgage Loan which has a Mortgage Rate
below the then prevailing interest rate for comparable loans, as determined by
the Special Servicer, unless such Mortgage Loan is a Balloon Loan as to which
the borrower has failed to make the Balloon Payment at its scheduled maturity
and such Balloon Loan is not a Specially Serviced Mortgage Loan (other than by
reason of failure to make the Balloon Payment) and has not been delinquent in
the preceding 12 months (other than with respect to the Balloon Payment), in
which case the Special Servicer may make up to three one-year extensions at the
existing Mortgage Rate for such Mortgage Loan (provided that such limitation of
extensions made at a below market rate will not limit the ability of the Special
Servicer to extend the maturity date of any Mortgage Loan at an interest rate at
or in excess of the prevailing rate for comparable loans at the time of such
modification), (iii) if the Mortgage Loan is secured by a ground lease, extend
the maturity date of such Mortgage Loan beyond a date which is less than 10
years prior to the expiration of the term of such ground lease, (iv) reduce the
Mortgage Rate to a rate below the then prevailing interest rate for comparable
loans, as determined by the Special Servicer or (v) defer interest due on any
Mortgage Loan in excess of 10% of the Stated Principal Balance of such Mortgage
Loan or defer the collection of interest on any Mortgage Loan without accruing
interest on such deferred interest at a rate at least equal to the Mortgage Rate
of such Mortgage Loan.
The Special Servicer will be required to notify the Trustee and the Master
Servicer of any modification, waiver or amendment of any term of any Mortgage
Loan, and to deliver to the Trustee or the related Custodian, for deposit in the
related Mortgage File, an original counterpart of the agreement related to such
modification, waiver or amendment, promptly (and in any event within 10 business
days) following the execution thereof. Upon reasonable prior written notice to
the Trustee, copies of each agreement whereby any such modification, waiver or
amendment of any term of any Mortgage Loan is effected are
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required to be available for review during normal business hours at the offices
of the Trustee. See "Description of the Certificates--Reports to
Certificateholders; Available Information" herein.]
CUSTODIAL ACCOUNT
GENERAL. The Master Servicer will be required to establish and maintain one
or more separate accounts for the collection of payments on the Mortgage Loans
(collectively, the "Custodial Account"), which will be established in such
manner and/or with such a depository as are specified in the Pooling and
Servicing Agreement or, as confirmed in writing by each Rating Agency, as would
not cause a qualification, downgrade or withdrawal of any of the ratings then
assigned by it to any Class of Certificates (and, accordingly, which constitute
an "Eligible Account"). The funds held in the Custodial Account may be held as
cash or invested in Permitted Investments.
Any interest or other income earned on funds in the Custodial Account will
be paid to the Master Servicer as additional compensation subject to the
limitations set forth in the Pooling and Servicing Agreement. See "--Servicing
and Other Compensation and Payment of Expenses" above.
DEPOSITS. The Master Servicer will be required to deposit or cause to be
deposited in the Custodial Account upon receipt (in the case of collections and
payments 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 subsequent to the Closing Date (other than
in respect of scheduled payments of principal and interest due on the Mortgage
Loans on or before the Cut-off Date, which belong to the 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 Additional Interest;
(iii) all Prepayment Premiums and Yield Maintenance Charges;
(iv) (A) all proceeds received under any hazard, flood, title or other
insurance policy that provides coverage with respect to a Mortgaged Property
or the related Mortgage Loan (collectively with any comparable amounts
received with respect to an REO Property, "Insurance Proceeds"), other than
any such proceeds applied to the restoration of the property or otherwise
released to the borrower or another appropriate person, (B) all proceeds
received in connection with the condemnation or the taking by right of
eminent domain of a Mortgaged Property (collectively with any comparable
amounts received with respect to an REO Property, "Condemnation Proceeds"),
other than any such proceeds applied to the restoration of the property or
otherwise released to the borrower or another appropriate person, and (C)
all other amounts received and retained in connection with the liquidation
of defaulted Mortgage Loans by foreclosure or otherwise (collectively with
any amounts received in connection with the sale of an REO Property and the
amounts described in clause (v) below, "Liquidation Proceeds");
(v) all cash proceeds paid in connection with (A) the repurchase of any
Mortgage Loan by the Mortgage Loan Seller as described under "Description of
the Mortgage Pool--Representations and Warranties with respect to the
Mortgage Loans; Repurchases" herein, (B) the purchase of any defaulted
Mortgage Loan by any party as described under "--Realization Upon Defaulted
Mortgage Loans; Sale of Defaulted Mortgage Loans and REO Properties" below
and (C) the purchase of all remaining Mortgage Loans and REO Properties by
the Depositor, the Master Servicer, the Special Servicer, the Underwriter or
the Majority Subordinate Certificateholder as described under "Description
of the Certificates--Termination" herein;
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(vi) 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 Custodial Account;
(vii) all payments required to be deposited by the Master Servicer or
the Special Servicer in the Custodial Account with respect to any deductible
clause in any blanket insurance policy described under "--Maintenance of
Insurance" herein;
(viii) any amount required to be transferred from the REO Account (if
established); and
(ix) any other amounts required to be so deposited under the Pooling and
Servicing Agreement.]
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 generally required to promptly remit such amounts to the Master Servicer for
deposit in the Custodial Account.
WITHDRAWALS. The Master Servicer may make withdrawals from the Custodial
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 on or before the Distribution Date each
month an amount generally equal to that portion of the Available
Distribution Amount (inclusive of any amounts to be paid or reimbursed from
the Collection Account by the Trustee) for the related Distribution Date
then on deposit in the Custodial Account, together with any Prepayment
Premiums and/or Yield Maintenance Charges received during the related
Collection Period and in the case of the final distribution date, any
additional amounts received in connection with a purchase of all remaining
Mortgage Loans and REO Properties by the Depositor, the Master Servicer, the
Special Servicer, the Underwriter or the Majority Subordinate
Certificateholder as described under "Description of the
Certificates--Termination" herein;
(ii) to apply amounts held for future distribution on the Certificates
to make P&I Advances;
(iii) to reimburse the Fiscal Agent, the Trustee or itself (in that
order), as applicable, for unreimbursed P&I Advances (other than P&I
Advances that constitute Nonrecoverable Advances (as defined below), which
are reimbursable as described in clause (viii) below) made thereby (in each
case, with its own funds), such reimbursement to be made out of amounts
received which were identified and applied by the Master Servicer as late
collections of interest on and principal (net of related Master Servicing
Fees and any related Workout Fees and/or Liquidations) of the particular
Mortgage Loan (including an REO Mortgage Loan) as to which each such P&I
Advance was made;
(iv) to pay itself earned and unpaid Master Servicing Fees in respect of
each Mortgage Loan (including each Specially Serviced Mortgage Loan and each
REO Mortgage Loan), such payment being limited to amounts received on or in
respect of such Mortgage Loan that are allocable as a recovery of interest
thereon;
(v) to pay the Special Servicer, out of general collections on the
Mortgage Loans, Special Servicing Fees in respect of each Specially Serviced
Mortgage Loan and each REO Mortgage Loan;
(vi) to pay the Special Servicer earned and unpaid Workout Fees and
Liquidation Fees to which it is entitled as and from the sources described
above under "--Servicing and Other Compensation and Payment of Expenses";
(vii) to reimburse the Fiscal Agent, the Trustee, itself or the Special
Servicer (in that order), as applicable, for any unreimbursed Servicing
Advances made thereby (in each case, with its own funds), such reimbursement
to be made out of Related Proceeds;
(viii) to reimburse the Fiscal Agent, the Trustee, itself or the Special
Servicer (in that order), as applicable, out of general collections on the
Mortgage Loans and REO Properties, for any unreimbursed Advances made
thereby (in each case, with its own funds) that have been determined
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not to be ultimately recoverable from Related Proceeds (any such Advance, a
"Nonrecoverable Advance");
(ix) at or following such time as it reimburses the Fiscal Agent, the
Trustee, the Special Servicer or itself, as applicable, for any unreimbursed
Advance as described in clause (iii), (vii) or (viii) above, to pay Fiscal
Agent, the Trustee, the Special Servicer or itself (in that order), as the
case may be, out of general collections on the Mortgage Loans and any REO
Properties, any interest at the Reimbursement Rate accrued and payable on
such Advance;
(x) to pay, out of general collections on the Mortgage Loans and any REO
Properties, for costs and expenses incurred by the Trust Fund in connection
with environmental testing and/or remediation as described in "--Realization
Upon Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans and REO
Properties";
(xi) to pay itself, as additional servicing compensation, (A) interest
and investment income earned in respect of amounts held in the Custodial
Account, (B) any Prepayment Interest Excesses and (C) Default Interest in
respect of Mortgage Loans that are not Specially Serviced Mortgage Loans or
REO Mortgage Loans, and to pay the Special Servicer as additional servicing
compensation, Default Interest in respect of Specially Serviced Mortgage
Loans and REO Mortgage Loans;
(xii) to pay, out of general collections on the Mortgage Loans and any
REO Properties, for the cost of an independent appraiser or other expert in
real estate matters as required under the Pooling and Servicing Agreement.
(xiii) to pay itself, the Special Servicer, the Depositor, or any of
their respective directors, officers, employees and agents, as the case may
be, out of general collections on the Mortgage Loans and any REO Properties,
amounts payable to any such person as described under "--Certain Matters
Regarding the Depositor, the Master Servicer and the Special Servicer"
below;
(xiv) to pay, out of general collections on the Mortgage Loans and any
REO Properties, for the cost of certain advice of counsel and tax
accountants, the cost of certain opinions of counsel and the cost of
recording the Pooling and Servicing Agreement, all as set forth in the
Pooling and Servicing Agreement;
(xv) with respect to each Mortgage Loan purchased pursuant to or as
contemplated by the Pooling and Servicing Agreement, to pay to the purchaser
thereof all amounts received thereon subsequent to the date of purchase;
(xvi) to pay certain servicing expenses that would, if advanced,
constitute Nonrecoverable Advances, but the payment of which is determined
nonetheless to be in the best interests of the Certificateholders; and
(xvii) to clear and terminate the Custodial Account upon the termination
of the Pooling and Servicing Agreement.]
[THE CONTROLLING CLASS REPRESENTATIVE
SELECTION. The Pooling and Servicing Agreement permits the holder (or
holders) of the majority of the Voting Rights allocated to the Controlling Class
of Sequential Pay Certificates to replace the Special Servicer and to select a
representative (the "Controlling Class Representative") from whom the Special
Servicer will seek advice and approval and take direction under certain
circumstances. The "Controlling Class" of Sequential Pay Certificates is the
Class of Sequential Pay Certificates with the latest alphabetical Class
designation that has a Certificate Balance that is greater than 25% of its
original Certificate Balance; provided that if no Class of Sequential Pay
Certificates has a Certificate Balance that is greater than 25% of its original
Certificate Balance, the then outstanding Class of Sequential Pay Certificates
with the latest alphabetical Class designation will be the "Controlling Class"
of Sequential Pay Certificates. The Class A-1, Class A-2 and Class A-3
Certificates will be treated as one Class for determining the Controlling Class
of Sequential Pay Certificates.
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CERTAIN RIGHTS AND POWERS. The Controlling Class Representative will be
entitled to advise the Special Servicer with respect to the following actions of
the Special Servicer, and subject to the discussion in the second following
paragraph, 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 being notified thereof (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 of a monetary term of a Mortgage Loan other than a
modification consisting of the extension of the maturity date of a Mortgage
Loan for one year or less;
(iii) any proposed sale of a defaulted Mortgage Loan or REO Property
(other than in connection with the termination of the Trust Fund as
described under "Description of the Certificates-- Termination" herein) for
less than the applicable Purchase Price;
(iv) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address hazardous materials
located at an REO Property;
(v) any acceptance of substitute or additional collateral for a Mortgage
Loan;
(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause; and
(vii) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan.
In addition, subject to the discussion in the following paragraph, the
Controlling Class Representative may direct the Special Servicer to take, or to
refrain from taking, such other actions as the Controlling Class Representative
may deem advisable or as to which provision is otherwise made in the Pooling and
Servicing Agreement.
The foregoing notwithstanding, no such advice, direction or objection
contemplated by either of the two preceding paragraphs may require or cause the
Special Servicer to violate any provision of the Pooling and Servicing
Agreement, including the Special Servicer's obligation to act in accordance with
the Servicing Standard or expose the Master Servicer, the Special Servicer, the
Trust Fund, the Trustee or the Fiscal Agent to material liability, or materially
expand the scope of the Special Servicer's responsibilities under the Pooling
and Servicing Agreement or cause the Special Servicer to act (including, without
limitation, by omission) in a manner which, in the reasonable judgment of the
Special Servicer, is not in the best interests of the Certificateholders.
Limitation on Liability of Controlling Class Representative. The Controlling
Class Representative will have no liability to the Certificateholders for any
action taken, or for refraining from the taking of any action, in good faith
pursuant to the Pooling and Servicing Agreement, or for errors in judgment;
provided, however, that the Controlling Class Representative will not be
protected against any liability which would otherwise be imposed by reason of
wilful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations or duties. By its acceptance of a
Certificate, each Certificateholder confirms its understanding that the
Controlling Class Representative may take actions that favor the interests of
one or more Classes of the Certificates over other Classes of the Certificates,
and that the Controlling Class Representative may have special relationships and
interests that conflict with those of holders of some Classes of the
Certificates, and each Certificateholder agrees to take no action against the
Controlling Class Representative or any of its officers, directors, employees,
principals or agents as a result of such a special relationship or conflict.]
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[REALIZATION UPON DEFAULTED MORTGAGE LOANS; SALE OF DEFAULTED MORTGAGE LOANS AND
REO PROPERTIES
A borrower's failure to make required Mortgage Loan payments may mean that
operating income is insufficient to service the mortgage debt, or may reflect
the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make Mortgage Loan payments may also be
unable to make timely payments of taxes and to otherwise maintain and insure the
related Mortgaged Property. In general, the Special Servicer will be required to
monitor any Mortgage Loan that is in default, evaluate whether the causes of the
default can be corrected over a reasonable period without significant impairment
of the value of the related Mortgaged Property, initiate corrective action in
cooperation with the borrower if cure is likely, inspect the related Mortgaged
Property and take such other actions as are consistent with the Servicing
Standard. A significant period of time may elapse before the Special Servicer is
able to assess the success of any such corrective action or the need for
additional initiatives.
The time within which the Special Servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a Mortgaged Property in lieu of foreclosure) on
behalf of the Certificateholders may vary considerably depending on the
particular Mortgage Loan, the Mortgaged Property, the borrower, the presence of
an acceptable party to assume the Mortgage Loan and the laws of the jurisdiction
in which the Mortgaged Property is located. If a borrower files a bankruptcy
petition, the Special Servicer may not be permitted to accelerate the maturity
of the related Mortgage Loan or to foreclose on the Mortgaged Property for a
considerable period of time. See "Certain Legal Aspects of Mortgage Loans" in
the Prospectus.
The Pooling and Servicing Agreement grants to the Master Servicer, the
Special Servicer and any holder of Certificates evidencing a majority interest
(or, if no Certificateholder holds a majority interest, the holder of
Certificates evidencing the largest interest) in the Controlling Class (the
"Majority Subordinate Certificateholder") a right to purchase from the Trust
Fund certain defaulted Specially Serviced Mortgage Loans in the priority
described below. If the Special Servicer has determined in good faith that any
such defaulted Specially Serviced Mortgage Loan will become subject to
foreclosure proceedings, the Special Servicer will be required to promptly so
notify in writing the Trustee and the Master Servicer, and the Trustee will be
required, within ten days after receipt of such notice, to notify the Majority
Subordinate Certificateholder. Such Certificateholder may at its option purchase
from the Trust Fund, at a cash price equal to the applicable Purchase Price, any
such defaulted Specially Serviced Mortgage Loan; provided that if such
Certificateholder has not purchased such defaulted Specially Serviced Mortgage
Loan within 30 days of its having received notice in respect thereof, either the
Special Servicer or the Master Servicer, in that order of preference, may at its
option purchase such Mortgage Loan from the Trust Fund, at a cash price equal to
the applicable Purchase Price. The Special Servicer may offer to sell any such
defaulted Specially Serviced Mortgage Loan not otherwise purchased as described
in the preceding sentence, if and when the Special Servicer determines,
consistent with the Servicing Standard, that such a sale would be in the best
economic interests of the Trust Fund. Such offer will be required to be made in
a commercially reasonable manner for a period of not less than ten days. Unless
the Special Servicer determines that acceptance of any bid would not be in the
best economic interests of the Certificateholders (as a collective whole) and
subject to any rights that the Controlling Class Representative may have to
object if the winning bid is not at least equal to the applicable Purchase
Price, the Special Servicer will be required to accept the highest cash bid
received from any person that constitutes a "fair price" (determined in
accordance with the Pooling and Servicing Agreement) for the particular Mortgage
Loan. See "--The Controlling Class Representative--Certain Rights and Powers"
above.
Notwithstanding any of the foregoing, 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 such bid would be in
the best interests of the Certificateholders (as a collective whole); and
subject to any rights that the Controlling Class Representative may have to
object if the winning bid is not at least equal to the applicable Purchase
Price, 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
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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 the
price) offered by the prospective buyer making the lower bid are more
favorable).
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Neither the Trustee, in its individual capacity, nor any of its affiliates
may bid for or purchase any defaulted Specially Serviced Mortgage Loan or any
REO Property.
The Special Servicer will be required to exercise reasonable efforts,
consistent with the Servicing Standard and the discussion under "--The
Controlling Class Representative--Certain Rights and Powers" above, to foreclose
upon or otherwise comparably convert the ownership of properties 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 and
which are not sold as described above. Notwithstanding the foregoing, neither
the Master Servicer nor the Special Servicer is permitted, on behalf of the
Trust Fund, to 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 report prepared by a person who regularly
conducts environmental audits, 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 that have
resulted in any contamination for which investigation, testing, monitoring,
containment, clean-up or remediation could be required under any applicable
environmental laws and regulations; or
(ii) in the event that the determination described in the immediately
preceding clause (i) above cannot be made, (A) the Special Servicer has
previously determined in accordance with the Servicing Standard, on the same
basis as described in the immediately preceding clause (i) above, that it
would maximize the recovery to the Certificateholders on a present value
basis 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 the immediately preceding clause
(i) above, and (B) the Controlling Class Representative has not properly
objected to the Special Servicer's doing so. See "--The Controlling Class
Representative --Certain Rights and Powers" above and "Certain Legal Aspects
of Mortgage Loans--Environmental Matters" in the Prospectus.
The cost of any environmental testing, as well as the cost of any remedial,
corrective or other further action contemplated by clause (ii) of the preceding
paragraph, is payable directly out of the Custodial Account.
If neither of the conditions set forth in clauses (i) and (ii) of the second
preceding paragraph has been satisfied with respect to any Mortgaged Property
securing a defaulted Mortgage Loan, the Special Servicer will be required to
take such action as is in accordance with the Servicing Standard (other than
proceeding against the Mortgaged Property) and, at such time as it deems
appropriate, may, on behalf of the Trustee, release all or a portion of such
Mortgaged Property from the lien of the related Mortgage; provided that, if such
Mortgage Loan has a then outstanding principal balance greater than $1 million,
then, prior to effecting such release, (i) the Special Servicer shall have
notified the Rating Agencies, the Trustee and the Master Servicer, (ii) the
Trustee shall have notified the Certificateholders and (iii) the holders of
Certificates entitled to a majority of the Voting Rights (as defined herein)
shall not have objected to such release within 30 days of their having been so
notified thereof.]
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REO PROPERTIES
[If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders pursuant to foreclosure proceedings instituted by the
Special Servicer or otherwise, the Special Servicer, on behalf of such holders,
will be required to sell the Mortgaged Property by the end of the third calendar
year following the calendar year of acquisition, unless (i) the Internal Revenue
Service grants an extension of time to sell such property (an "REO Extension")
or (ii) the Special Servicer obtains an opinion of counsel generally to the
effect that the holding of the property for more than three years after the end
of the calendar year in which it was acquired will not result in the imposition
of a tax on the Trust Fund or cause any REMIC created pursuant to the Pooling
and Servicing Agreement to fail to qualify as a REMIC under the Code. Subject to
the foregoing, the Special Servicer will generally be required to solicit bids
for any Mortgaged Property so acquired in such a manner as will be reasonably
likely to realize a fair price for such property. The Special Servicer may
retain an independent contractor to operate and manage any REO Property;
however, the retention of an independent contractor will not relieve the Special
Servicer of its obligations with respect to such REO Property.
In general, the Special Servicer or an independent contractor employed by
the Special Servicer at the expense of the Trust Fund will be obligated to
operate and manage any Mortgaged Property acquired as REO Property in a manner
that (i) maintains its status as "foreclosure property" under the REMIC
Provisions and (ii) would, to the extent commercially reasonable and consistent
with the foregoing clause (i), maximize the Trust Fund's net after-tax proceeds
from such property. After the Special Servicer reviews the operation of such
property and consults with the Trustee (or any person appointed thereby to act
as REMIC administrator) to determine the Trust Fund's federal income tax
reporting position with respect to the income it is anticipated that the Trust
Fund would derive from such property, the Special Servicer could determine
(particularly in the case of an REO Property that is a hospitality or
residential health care facility) that it would not be commercially reasonable
to manage and operate such property in a manner that would avoid the imposition
of a tax on "net income from foreclosure property", within the meaning of
Section 857(b)(4)(B) of the Code or a tax on "prohibited transactions" under
Section 860F of the Code (either such tax referred to herein as an "REO Tax").
To the extent that income the Trust Fund receives from an REO Property is
subject to a tax on (i) "net income from foreclosure property" such income would
be subject to federal tax at the highest marginal corporate tax rate (currently
35%) or (ii) "prohibited transactions," such income would be subject to federal
tax at a 100% rate. The determination as to whether income from an REO Property
would be subject to an REO Tax will depend on the specific facts and
circumstances relating to the management and operation of each REO Property.
Generally, income from an REO Property that is directly operated by the Special
Servicer would be apportioned and classified as "service" or "non-service"
income. The "service" portion of such income could be subject to federal tax
either at the highest marginal corporate tax rate or at the 100% rate on
"prohibited transactions," and the "non-service" portion of such income could be
subject to federal tax at the highest marginal corporate tax rate or, although
it appears unlikely, at the 100% rate applicable to "prohibited transactions."
Any REO Tax imposed on the Trust Fund's income from an REO Property would reduce
the amount available for distribution to Certificateholders. Certificateholders
are advised to consult their tax advisors regarding the possible imposition of
REO Taxes in connection with the operation of commercial REO Properties by
REMICs. See "Certain Federal Income Tax Consequences" herein and "Federal Income
Tax Considerations" in the 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 Custodial 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 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. The
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REO Account is to be an Eligible Account. The Special Servicer will be required
to deposit, or cause to be deposited, in the REO Account, upon receipt, all net
income, Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds
received in respect of an REO Property. The funds held in the REO Account may be
held as cash or invested in Permitted Investments. Any interest or other income
earned on funds in the REO Account will be payable to the Special Servicer,
subject to the limitations set forth in the Pooling and Servicing Agreement.
The Special Servicer will be required to 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. 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 Custodial 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 as described in the preceding sentence; provided that the Special
Servicer may, subject to certain limitations set forth in the Pooling and
Servicing Agreement, 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 and necessary capital improvements and other related
expenses).]
REPLACEMENT OF THE SPECIAL SERVICER
[The Pooling and Servicing Agreement will permit the holder (or holders) of
the majority of the Voting Rights allocated to the Controlling Class to
terminate an existing Special Servicer and to appoint a successor thereto. Any
such appointment of a successor Special Servicer will be subject to, among other
things, the Trustee's receipt of (i) written confirmation from each Rating
Agency that the appointment will not result in a qualification, downgrade or
withdrawal of any of the ratings then assigned thereby to the respective Classes
of 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 thereof. Subject to the foregoing, any Certificateholder or
affiliate thereof may be appointed as Special Servicer.]
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
[The Special Servicer will be required to perform or cause to be performed a
physical inspection of each REO Property and each Mortgaged Property securing a
Specially Serviced Mortgage Loan, at least once per calendar year. In addition,
the Master Servicer will be required to inspect or cause to be inspected each
other Mortgaged Property at least once per calendar year if, in a given calendar
year. The Master Servicer and the Special Servicer will each be required to
promptly prepare or cause to be prepared and deliver to the Trustee a written
report of each such inspection performed by it that generally describes the
condition of the Mortgaged Property and that specifies the existence with
respect thereto of any sale, transfer or abandonment or any material change in
its condition or value.
The Special Servicer, in the case of any Specially Serviced Mortgage Loans,
and the Master Servicer, in the case of all other Mortgage Loans, will also be
required to use reasonable efforts to collect from the related borrower and
review the quarterly and annual operating statements and rent rolls with respect
to each of the Mortgaged Properties and REO Properties. In connection therewith,
with respect to each Mortgaged Property and REO Property, the Master Servicer
(based on reports generated by itself and the Special Servicer) will be required
to deliver to the Trustee an Operating Statement Analysis for or as of the end
of, the applicable period. See "Description of the Certificates--Reports to
Certificateholders; Available Information" herein. Each of the Mortgages
requires the related borrower to deliver an annual property operating statement.
However, there can be no assurance that any operating statements required
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to be delivered will in fact be delivered, nor are the Master Servicer and the
Special Servicer likely to have any practical means of compelling such delivery
in the case of an otherwise performing Mortgage Loan.
Upon reasonable prior written notice to the Trustee, copies of the
inspection reports and operating statements referred to above will be required
to be available for review by Certificateholders during normal business hours at
the offices of the Trustee. See "Description of the Certificates--Reports to
Certificateholders; Available Information" herein.]
[DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS
Substantially all of the Mortgages contain "due-on-sale" and
"due-on-encumbrance" provisions, that, in general, entitle the holder thereof to
accelerate the maturity of the related Mortgage Loan upon any sale or other
transfer of, or upon the creation of any lien or other encumbrance upon, the
related Mortgaged Property or prohibit the borrower from doing so without the
consent of the lender. With respect to each Mortgage Loan, the Special Servicer,
on behalf of the Trustee as the mortgagee of record, will be required under the
Pooling and Servicing Agreement, to the extent permitted by applicable law, to
enforce the restrictions contained in the related Mortgage on transfers or
further encumbrances of the related Mortgaged Property and on transfers of
interests in the related borrower, unless the Special Servicer determines, in
its reasonable, good faith judgment, that waiver of such restrictions is in
accordance with the Servicing Standard and has not been properly objected to by
the Controlling Class Representative. See "-- Controlling Class
Representative--Certain Rights and Powers" above. Notwithstanding the foregoing,
the Special Servicer's exercise of any such waiver in respect of a
due-on-encumbrance provision is conditioned upon its receipt of prior written
confirmation from each Rating Agency (in the case of DCR, only if the related
Mortgage Loan represents [2]% or more of the then aggregate unpaid principal
balance of the Mortgage Pool) that such action would not result in a
qualification, downgrade or withdrawal of any of the ratings then assigned to
the Certificates.]
[MAINTENANCE OF INSURANCE
The Master Servicer (with respect to Mortgage Loans other than Specially
Serviced Mortgaged Loans) and the Special Servicer (with respect to Specially
Serviced Mortgage Loans) are required, consistent with the Servicing Standard,
to cause to be maintained for each Mortgaged Property all insurance coverage as
is required under the related Mortgage; provided that if and to the extent that
any such Mortgage permits the holder thereof any discretion (by way of consent,
approval or otherwise) as to the insurance coverage that the related borrower is
required to maintain, the Master Servicer or the Special Servicer, as the case
may be, is to exercise such discretion in a manner consistent with the Servicing
Standard; and provided further that, if and to the extent that a Mortgage so
permits, the related borrower will be required to exercise its reasonable best
efforts to obtain the required insurance coverage from insurance companies or
security or bonding companies qualified to write the related insurance policy in
the relevant jurisdiction ("Qualified Insurers") that have a "claims paying
ability" rating meeting the requirements of the Pooling and Servicing Agreement.
The Majority Subordinate Certificateholder may request that earthquake insurance
be secured for one or more Mortgaged Properties at its expense.
The Special Servicer is required consistent with the Servicing Standard to
cause to be maintained for each REO Property no less insurance coverage than was
previously required of the borrower under the related Mortgage, all such
insurance to be obtained from Qualified Insurers that have, if they are
providing casualty insurance, a "claims paying ability" rating meeting the
requirements of the Pooling and Servicing Agreement. Such insurance policies are
required to be in the name of the Special Servicer, on behalf of the Trustee.
If either the Master Servicer or the Special Servicer obtains and maintains
a blanket policy insuring against hazard losses on all of the Mortgage Loans
and/or REO Properties that it is required to service and administer, then, to
the extent such policy is obtained from a Qualified Insurer having a
claims-paying
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rating meeting the requirements of the Pooling and Servicing Agreement and
provides protection equivalent to the individual policies otherwise required,
the Master Servicer or the Special Servicer, as the case may be, will be deemed
to have satisfied its obligation to cause hazard insurance to be maintained on
the related Mortgaged Properties and/or REO Properties. Such blanket policy may
contain a customary deductible clause, in which case the Master Servicer or the
Special Servicer, as appropriate, will, if there shall not have been maintained
on the related Mortgaged Property or REO Property a hazard insurance policy
complying with the requirements described in the preceding two paragraphs, and
there shall have been one or more losses that would have been covered by such
individual policy, promptly deposit into the Custodial Account from its own
funds the amount of such losses that would have been so covered by an individual
policy but are not covered under the blanket policy because of such deductible
clause. The Master Servicer or the Special Servicer, as appropriate, are
required to prepare and present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.]
[EVIDENCE AS TO COMPLIANCE
On or before _______ ____ of each year beginning _________ __, _______,
there is to be furnished by each of the Master Servicer and the Special Servicer
to the Trustee, the Depositor, the Underwriter and to each other, a statement
from a firm of independent certified public accountants to the effect that (i)
it has obtained a letter of representation regarding certain matters from the
management of the Master Servicer or Special Servicer, as applicable, which
includes an assertion that the Master Servicer or Special Servicer, as
applicable, has complied with certain minimum mortgage loan servicing standards
(to the extent applicable to commercial and multifamily mortgage loans),
identified in the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to the
servicing of commercial and multifamily mortgage loans during the most recently
completed calendar year and (ii) on the basis of an examination conducted by
such firm in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that may
be appropriate. In rendering its report such firm may rely, as to matters
relating to the direct servicing of commercial and multifamily mortgage loans by
sub-servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those sub-servicers.
The Pooling and Servicing Agreement also provides for each of the Master
Servicer and the Special Servicer to deliver to the Trustee, the Depositor, the
Underwriter and each other on or before _________ __, of each year, beginning
_________ __, _______, a certificate signed by one of its officers generally to
the effect that, except as otherwise indicated in such certificate, the Master
Servicer or the Special Servicer, as the case may be, has fulfilled its material
obligations under the Pooling and Servicing Agreement in all material respects
throughout the preceding calendar year and that 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 of REMIC I, REMIC II or REMIC
III as a REMIC.
Copies of the foregoing annual accountants' statement and officer's
certificate of each of the Master Servicer and the Special Servicer will be made
available to Certificateholders (at their expense) upon written request to the
Trustee.]
[CERTAIN MATTERS REGARDING THE DEPOSITOR, THE MASTER SERVICER AND THE SPECIAL
SERVICER
Any entity serving as Master Servicer or Special Servicer under the Pooling
and Servicing Agreement may have other normal business relationships with the
Depositor or the Depositor's affiliates. The Pooling and Servicing Agreement
will permit each of the Master Servicer and the Special Servicer to resign from
its obligations thereunder (in such capacity) upon a determination that such
obligations are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other
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activities carried on by it; provided that unless required by applicable law, no
such resignation will become effective until the Trustee or other successor has
assumed the obligations and duties of the resigning Master Servicer or Special
Servicer, as the case may be, under the Pooling and Servicing Agreement. The
Master Servicer and the Special Servicer will each have the right to resign at
any other time provided that (i) a willing successor thereto has been found,
(ii) each of the Rating Agencies confirms in writing that the successor's
appointment will not result in a qualification, downgrade or withdrawal of any
rating or ratings then assigned to any Class of 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 will be
permitted to resign except as described above. The Master Servicer and Special
Servicer will each be required to maintain a fidelity bond and errors and
omissions policy or their equivalent that provides coverage against losses that
may be sustained as a result of an officer's or employee's misappropriation of
funds or errors and omissions, subject to certain limitations as to amount of
coverage, deductible amounts, conditions, exclusions and exceptions permitted by
the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement will provide that none of the Depositor,
the Master Servicer or the Special Servicer will be under any liability to the
Trust Fund, the Trustee, the Fiscal Agent or Certificateholders for any action
taken, or not taken, in good faith pursuant to the Pooling and Servicing
Agreement or for errors in judgment; provided, however, that no such entity will
be protected against any liability that would otherwise be imposed by reason of
wilful misfeasance, bad faith or gross negligence in the performance of
obligations or duties thereunder. The Pooling and Servicing Agreement will
further provide that the Depositor, the Master Servicer, the Special Servicer
and any director, officer, employee or agent of any of them will be entitled to
indemnification by the Trust Fund against any loss, liability or reasonable
expense incurred in connection with any legal action that relates to the Pooling
and Servicing Agreement or the Certificates, other than any loss, liability or
expense: (i) incidental to its duties and obligations thereunder; (ii)
specifically required to be borne by such party without right of reimbursement
pursuant to the terms thereof; (iii) incurred in connection with any breach of a
representation, warranty or covenant made therein; or (iv) incurred by reason of
wilful misfeasance, bad faith or gross negligence in the performance of
obligations or duties thereunder. In addition, the Pooling and Servicing
Agreement will provide that none of the Depositor, the Master Servicer or the
Special Servicer will be under any obligation to appear in, prosecute or defend
any legal action that is not related to its respective responsibilities under
the Pooling and Servicing Agreement and, unless it is specifically required to
bear the costs of such legal action, that in its opinion may involve it in any
expense or liability. However, each of the Depositor, the Master Servicer and
the Special Servicer will be permitted, in the exercise of its discretion, to
undertake any such action that it may deem necessary or desirable with respect
to the enforcement and/or protection of the rights and duties of the parties to
the Pooling and Servicing Agreement and the interests of the Certificateholders
thereunder. In such event, the legal expenses and costs of such action, and any
liability resulting therefrom, will be expenses, costs and liabilities of the
Trust Fund, and the Depositor, the Master Servicer or the Special Servicer, as
the case may be, will be entitled to charge the Custodial Account therefor.
Any person into which the Depositor, the Master Servicer or the Special
Servicer may be merged or consolidated, or any person resulting from any merger
or consolidation to which the Depositor, the Master Servicer or the Special
Servicer is a party, or any person succeeding to the business of the Depositor,
the Master Servicer or the Special Servicer, will be the successor of the
Depositor, the Master Servicer or the Special Servicer, as the case may be,
under the Pooling and Servicing Agreement; provided, however, that no successor
or surviving person shall succeed to the rights of the Master Servicer or the
Special Servicer unless, among other things, such succession will not result in
any qualification, downgrade or withdrawal of the rating then assigned by any
Rating Agency to any Class of Certificates (as confirmed in writing).]
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[EVENTS OF DEFAULT
"Events of Default" under the Pooling and Servicing Agreement include each
of the following: (i) any failure by the Master Servicer or the Special Servicer
to deposit, or to remit to the appropriate party for deposit, into the Custodial
Account or REO Account, as applicable, any amount required to be so deposited or
any failure by the Master Servicer or the Special Servicer to make any required
Servicing Advances; (ii) any failure by the Master Servicer to remit to the
Trustee for deposit in the Collection Account any amount (other than a P&I
Advance) required to be so remitted, which continues unremedied as of a
specified time on the next Distribution Date; (iii) any failure by the Master
Servicer or the Special Servicer duly to observe or perform in any material
respect any of its other covenants or obligations under the Pooling and
Servicing Agreement, which failure continues unremedied for 60 days after
written notice of such failure 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 to the Master Servicer or the Special Servicer, as the
case may be (with a copy to each other party to the Pooling and Servicing
Agreement), by Certificateholders entitled to not less than 25% of the Voting
Rights; (iv) any 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 interest of any Class of
Certificateholders and that continues unremedied for 60 days after written
notice of such breach 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 to the Master Servicer or the Special Servicer, as the case may be
(with a copy to each other party to the Pooling and Servicing Agreement), by
Certificateholders entitled to not less than 25% of the Voting Rights; (v)
certain events of insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings in respect of or relating to the Master
Servicer or the Special Servicer and certain actions by or on behalf of the
Master Servicer or the Special Servicer indicating its insolvency or inability
to pay its obligations; and (vi) the Trustee shall have received notice from
either of the Rating Agencies that (A) the Master Servicer's or the Special
Servicer's acting in such capacity shall have resulted in one or more ratings
assigned to the respective Classes of Certificates being qualified, downgraded
or withdrawn, or (B) 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. When a
single entity acts as Master Servicer and Special Servicer, an Event of Default
in one such capacity shall constitute an Event of Default in the other such
capacity.]
[RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default described in clauses (i)-(v) of under
"--Events of Default" above with respect to the Master Servicer or the Special
Servicer under the Pooling and Servicing Agreement remains unremedied, the
Trustee will be authorized, and at the direction of Certificateholders entitled
to not less than 25% of the Voting Rights, 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 Fund other than any
rights thereof as a Certificateholder. If an Event of Default described in
clause (vi) under "--Events of Default" above occurs with respect to the Master
Servicer or, if applicable, the Special Servicer, the Trustee is required (by
notice in writing to the defaulting party with a copy to each other party hereto
and the Rating Agencies) to terminate all of the rights and obligations of the
defaulting party under the Pooling and Servicing Agreement and in and to the
Trust Fund other than any rights thereof as a Certificateholder. Upon any such
termination, the Trustee will 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 and will be entitled to like
compensation arrangements. If the Trustee is unwilling to so act, it may (or, at
the written request of Certificateholders entitled to a majority of the Voting
Rights, or if the Trustee is unable, or is not approved by each Rating Agency,
to act as a master servicer or special servicer, as the case may be, the Trustee
will be required to) appoint, or petition a court of competent jurisdiction to
appoint, an established and qualified institution to act as successor Master
Servicer or
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Special Servicer (subject in the case of successor Special Servicer, to the
rights of the holders of Certificates evidencing a majority of Voting Rights in
the Controlling Class to designate a successor Special Servicer), as the case
may be, under the Pooling and Servicing Agreement. Pending such appointment, the
Trustee will be obligated to act in such capacity.
The Certificateholders entitled to at least 66-2/3% of the Voting Rights
allocated to each Class of Certificates affected by any Event of Default may
waive such Event of Default; provided, however, that an Event of Default
described in clauses (i), (vi) and (vii) under "--Events of Default" above may
be waived only by all of the Certificateholders of the affected Classes. Upon
any such waiver of an Event of Default, such Event of Default will cease to
exist and will be deemed to have been remedied for every purpose under the
Pooling and Servicing Agreement.
No Certificateholder will have the right under the Pooling and Servicing
Agreement to institute any proceeding with respect thereto unless such holder
previously has given to the Trustee written notice of default and unless (except
in the case of a default by the Trustee) Certificateholders entitled to not less
than 25% of the Voting Rights shall have made written request upon the Trustee
to institute such proceeding in its own name as Trustee thereunder and shall
have offered to the Trustee reasonable indemnity, and the Trustee for 60 days
shall have neglected or refused to institute any such proceeding. The Trustee,
however, will be under no obligation to exercise any of the trusts or powers
vested in it by the Pooling and Servicing Agreement or to make any investigation
of matters arising thereunder or to institute, conduct or defend any litigation
thereunder or in relation thereto at the request, order or direction of any of
the Certificateholders, unless in the Trustee's opinion, such Certificateholders
have offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.]
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The LB Commercial Mortgage Trust [I], Commercial Mortgage Pass-Through
Certificates, Series _________-_________ (the "Certificates") will be issued
pursuant to a Pooling and Servicing Agreement, to be dated as of _________, __,
among the Depositor, the Master Servicer, the Special Servicer, the Trustee and
the Fiscal Agent (the "Pooling and Servicing Agreement"). The Certificates will
represent in the aggregate the entire beneficial ownership interest in a trust
fund (the "Trust Fund") consisting primarily of: [(i) the Mortgage Loans and all
payments and other collections in respect of the Mortgage Loans received or
applicable to periods after the Cut-off Date (exclusive of payments of principal
and interest due, and principal prepayments received, on or before the Cut-off
Date); (ii) any REO Property acquired on behalf of the Trust Fund; (iii) such
funds or assets as from time to time are deposited in the Collection Account
(See "--Collection Account" below), the Custodial Account or, if established,
the REO Account; and (iv) certain rights of the Depositor under the Mortgage
Loan Purchase Agreement relating to Mortgage Loan document delivery requirements
and the representations and warranties of the Mortgage Loan Seller regarding the
Mortgage Loans].
The Certificates will consist of [18] classes (each, a "Class") to be
designated as:[ (i) the Class A-1 Certificates, the Class A-2 Certificates and
the Class A-3 Certificates (collectively, the "Class A Certificates"); (ii) the
Class B Certificates, the Class C Certificates, the Class D Certificates, the
Class E Certificates, the Class F Certificates, the Class G Certificates, the
Class H Certificates, the Class J Certificates, the Class K Certificates, Class
L Certificates and the Class M Certificates (collectively with the Class A
Certificates, the "Sequential Pay Certificates"); (iii) the Class IO
Certificates (collectively with the Sequential Pay Certificates, the "Regular
Interest Certificates"); and (iv) the Class R-I Certificates, the Class R-II
Certificates and the Class R-III Certificates (collectively, the "Residual
Interest Certificates")].
[Only the Class A-1, Class A-2, Class A-3, Class IO, Class B, Class C, Class
D and Class E Certificates (collectively, the "Offered Certificates") are
offered hereby. The Class F, Class G, Class H, Class J, Class K, Class L, Class
M and the Residual Interest Certificates (collectively, the "Private
Certificates") have not been registered under the Securities Act, and are not
offered hereby. Accordingly, information herein regarding the terms of the
Private Certificates is provided solely because of its potential relevance to a
prospective purchaser of an Offered Certificate.]
REGISTRATION AND DENOMINATIONS
[The Offered Certificates will be issued in book-entry format through the
facilities of The Depository Trust Company ("DTC"). Each Class of Offered
Certificates will be issued in denominations of not less than $_________ actual
principal amount (or $_________ notional amount with respect to the Class IO
Certificates), and in integral multiples of $__ in excess thereof.
Each Class of Offered Certificates will initially be represented by one or
more global Certificates registered in the name of the nominee of DTC. The
Depositor has been informed by DTC that DTC's nominee will be Cede & Co. No
beneficial owner of an Offered Certificate (each, a "Certificate Owner") will be
entitled to receive a fully registered, certificated form of such Certificate (a
"Definitive Offered Certificate"), except under the limited circumstances
described under "Description of the Securities-- Book-Entry Registration" in the
Prospectus. Unless and until Definitive Offered Certificates are issued in
respect of a Class of Offered Certificates, beneficial ownership interests in
such Class will be recorded and transferred on the book-entry records of DTC and
its participating organizations (the "Participants"), and all references herein
to actions by holders of a Class of Offered Certificates will refer to actions
taken by DTC upon instructions received from the related Certificate Owners
through the Participants in accordance with DTC procedures, and all references
herein to payments, notices, reports and statements to the holders of a Class of
Offered Certificates will refer to payments, notices, reports and statements to
DTC or Cede & Co., as the registered holder thereof, for distribution to the
related Certificate Owners through the Participants in accordance with DTC
procedures. The form of such payments and transfers may result in
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certain delays in receipt of payments by an investor and may restrict an
investor's ability to pledge its securities. None of the Depositor, the Master
Servicer, the Special Servicer, the Trustee or the Fiscal Agent or any of their
respective affiliates will have any liability for any actions taken by DTC or
its nominee, including, without limitation, actions for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in Offered Certificates held by Cede & Co., as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests. See "Risk Factors--The Certificates--Book-Entry
Registration" herein and "Description of the Securities-- Book-Entry
Registration" in the Prospectus.]
CERTIFICATE BALANCES AND NOTIONAL AMOUNTS
Upon initial issuance, and in each case subject to a permitted variance of
plus or minus 5%, the respective Classes of Sequential Pay Certificates will
have the Certificate Balances set forth in the following table:
<TABLE>
<CAPTION>
PERCENT OF
INITIAL INITIAL
CERTIFICATE POOL
CLASS OF SEQUENTIAL PAY CERTIFICATES BALANCE BALANCE
- - ---------------------------------------------------------------------------------- ----------------- -----------
<S> <C> <C>
[Class A-1 Certificates........................................................... $ %
Class A-2 Certificates............................................................ $ %
Class A-3 Certificates............................................................ $ %
Class B Certificates.............................................................. $ %
Class C Certificates.............................................................. $ %
Class D Certificates.............................................................. $ %
Class E Certificates.............................................................. $ %
Class F Certificates.............................................................. $ %
Class G Certificates.............................................................. $ %
Class H Certificates.............................................................. $ %
Class J Certificates.............................................................. $ %
Class K Certificates.............................................................. $ %
Class L Certificates.............................................................. $ %
Class M Certificates.............................................................. $ %]
</TABLE>
The "Certificate Balance" of any Class of Sequential Pay Certificates
outstanding at any time represents the maximum amount that the holders thereof
are entitled to receive as distributions allocable to principal from the cash
flow on the Mortgage Loans and the other assets in the Trust Fund. The
Certificate Balance of each Class of Sequential Pay Certificates will be
permanently reduced on each Distribution Date by any distributions of principal
actually made on such Class of Certificates on such Distribution Date, and
further permanently reduced by any Realized Losses and Additional Trust Fund
Expenses actually allocated to such Class of Certificates on such Distribution
Date.
[The Class IO Certificates will not have a Certificate Balance, but will
represent the right to receive distributions of interest in an amount equal to
the aggregate interest accrued on the notional amount of each of the Class IO
Components, as described herein. The Class IO Certificates will have fourteen
components (each a "Class IO Component"), each corresponding to a different
Class of Sequential Pay Certificates. Each such Class IO Component will have the
same letter and/or numerical designation as a Class of Sequential Pay
Certificates. The notional amount of each such Class IO Component will equal the
Certificate Balance of the corresponding Class of Sequential Pay Certificates
outstanding from time to time. On the Closing Date, the aggregate of the
notional amounts of all the Class IO Components will equal the Initial Pool
Balance. References herein to the "notional amount" of the Class IO Certificates
shall mean the aggregate of the notional amounts of the Class IO Components.
The Residual Interest Certificates will not have Certificate Balances or
notional amounts, but will represent the right to receive on each Distribution
Date any portion of the Available Distribution Amount
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(as defined below) for such date that remains after the required distributions
have been made on all the Regular Interest Certificates.]
PASS-THROUGH RATES
[The Pass-Through Rate applicable to each Class of Sequential Pay
Certificates for each Distribution Date is fixed at the respective rate per
annum set forth with respect to such Class in the table at the beginning of the
Summary. The Pass-Through Rate applicable to each Class IO Component for any
Distribution Date will be equal to the Weighted Average Net Mortgage Rate for
such Distribution Date minus the fixed Pass-Through Rate applicable to the
corresponding Class of Sequential Pay Certificates. The Residual Interest
Certificates will not bear interest.]
[The "Weighted Average Net Mortgage Rate" for each Distribution Date is the
weighted average of the Net Mortgage Rates for the Mortgage Loans as of the
commencement of the related Collection Period, weighted on the basis of their
respective Stated Principal Balances outstanding immediately prior to such
Distribution Date. The "Net Mortgage Rate" for each Mortgage Loan will generally
equal (x) the Mortgage Rate in effect for such Mortgage Loan as of the Cut-off
Date, minus (y) the sum of the applicable Master Servicing Fee Rate and the
Trustee Fee Rate (such sum, as to any Mortgage Loan, the "Administrative Cost
Rate"); provided that if any Mortgage Loan does not accrue interest on the basis
of a 360-day year consisting of twelve 30-day months (which is the basis on
which interest accrues in respect of the Regular Interest Certificates), then,
solely for purposes of calculating the Weighted Average Net Mortgage Rate, the
Mortgage Rate referred to in clause (x) will, to the extent appropriate, be
adjusted from accrual period to accrual period to compensate for such
difference. The "Stated Principal Balance" of each Mortgage Loan outstanding at
any time will generally be an amount equal to the Cut-off Date Balance thereof,
permanently reduced on each Distribution Date (to not less than zero) by (i) any
payments or other collections (or advances in lieu thereof) of principal of such
Mortgage Loan that are due or received, as the case may be, during the related
Collection Period and are distributed on the Certificates on such Distribution
Date and (ii) the principal portion of any Realized Loss incurred in respect of
such Mortgage Loan during the related Collection Period. Notwithstanding the
foregoing, if any Mortgage Loan is paid in full, liquidated or otherwise removed
from the Trust Fund, commencing as of the first Distribution Date following the
Collection Period during which such event occurred, the Stated Principal Balance
of such Mortgage Loan will be zero.]
[The "Collection Period" for each Distribution Date will be the period that
begins immediately following the Determination Date in the month preceding the
month in which such Distribution Date occurs (or, in the case of the initial
Distribution Date, immediately following the Cut-off Date) and ends on and
includes the Determination Date in the same month as such Distribution Date. The
"Determination Date" will be the ____ day of each month (or, if not a business
day, the next preceding business day).]
COLLECTION ACCOUNT
GENERAL. The Trustee will be required to establish and maintain one or more
accounts (collectively, the "Collection Account") for the distribution of
payments to the Certificateholders. Each such account is to be an Eligible
Account. The funds held in the Collection Account may be invested at the
direction of the Master Servicer (or as otherwise provided in the Pooling and
Servicing Agreement) in Permitted Investments.
[DEPOSITS. On or before the business day prior to each Distribution Date,
the Master Servicer will be required to deliver to the Trustee, for deposit in
the Collection Account, in immediately available funds, the amounts described in
clause (i) under "Servicing of the Mortgage Loans--Custodial
Account--Withdrawals". In addition, the Master Servicer will be required, as and
when provided in the Pooling and Servicing Agreement, to deliver to the Trustee
for deposit in the Collection Account, any P&I Advances and/or Compensating
Interest Payment with respect to each Distribution Date.]
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[WITHDRAWALS. The Trustee may, from time to time, make withdrawals from the
Collection Account for any of the following purposes, among others: (i) to make
distributions to the Certificateholders on each Distribution Date; (ii) to pay
itself the Trustee Fee each month; (iii) to reimburse and/or indemnify itself
and certain related persons as described under "--The Trustee" herein and to
make certain comparable reimbursements and/or indemnifications with respect to
the Fiscal Agent; (iv) to pay the Master Servicer, as additional servicing
compensation, interest and other investment income earned in respect of amounts
held in the Collection Account; (v) to pay for the cost of certain opinions of
counsel required under the Pooling and Servicing Agreement; (vi) to pay any
federal, state and local taxes imposed on the Trust Fund, its assets and/or
transactions, together with all incidental costs and expenses, to the extent
required to be borne by the Trust Fund, all as described under "Certain Federal
Income Tax Consequences--Possible Taxes on Income from Foreclosure Property and
Other Taxes" and "Servicing of the Mortgage Loans-- REO Properties" herein and
as provided in the Pooling and Servicing Agreement; and (vii) to clear and
terminate the Collection Account upon termination of the Trust Fund.]
DISTRIBUTIONS
GENERAL. Distributions on the Certificates will be made by the Trustee, to
the extent of available funds, on the __ day of each month or, if any such __
day is not a business day, then on the next succeeding business day, commencing
in _________ __ (each, a "Distribution Date"). Except as described below, all
such distributions will be made on each Distribution Date to the persons in
whose names the Certificates are registered (the "Certificateholders") at the
close of business on the last business day of the month preceding the month in
which such Distribution Date occurs (or, in the case of the initial Distribution
Date, at the close of business on the Closing Date) and shall be made by wire
transfer of immediately available funds, if such Certificateholder shall have
provided wiring instructions no less than five business days prior to such
record date, or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate register. The final
distribution on any Certificate (determined without regard to any possible
future reimbursement of any Realized Loss or Additional Trust Fund Expense
previously allocated to such Certificate) will be made only upon presentation
and surrender of such Certificate at the location that will be specified in a
notice of the pendency of such final distribution. All distributions made with
respect to a Class of Certificates will be allocated PRO RATA among the
outstanding Certificates of such Class based on their respective percentage
interests in such Class.
THE AVAILABLE DISTRIBUTION AMOUNT. [The aggregate amount available for
distributions of interest and principal to Certificateholders on each
Distribution Date (the "Available Distribution Amount") will, in general, equal
the sum of the following amounts:
(a) the total amount of all cash received on or in respect of the
Mortgage Loans and any REO Properties by the Master Servicer as of the close
of business on the related Determination Date and not previously distributed
with respect to the Certificates, exclusive of any portion thereof that
represents one or more of the following:
(i) any Monthly Payments collected but due on a Due Date after the
related Collection Period,
(ii) any Prepayment Premiums and Yield Maintenance Charges, and
(iii) all amounts that are payable or reimbursable to any person
other than the Certificateholders as described under "--Collection
Account--Withdrawals" above and "Servicing of the Mortgage
Loans--Custodial Account--Withdrawals" and "--REO Properties" herein;
(b) all P&I Advances made by the Master Servicer with respect to such
Distribution Date (see "--P&I Advances" below);
(c) any Compensating Interest Payment made by the Master Servicer to
cover the aggregate of any Prepayment Interest Shortfalls experienced during
the related Collection Period (see "Servicing of the Mortgage
Loans--Servicing and Other Compensation and Payment of Expenses" herein).
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<PAGE>
Any Prepayment Premiums and Yield Maintenance Charges actually collected
will be distributed separately from the Available Distribution Amount. See
"--Distributions--Allocation of Prepayment Premiums and Yield Maintenance
Charges" herein.]
APPLICATION OF THE AVAILABLE DISTRIBUTION AMOUNT. [On each Distribution
Date, the Trustee will (except as otherwise described under "--Termination"
below), after deduction of the Trustee Fee for such Distribution Date, apply
amounts on deposit in the Collection Account, to the extent of the Available
Distribution Amount, for the following purposes and in the following order of
priority:
(1) to distributions of interest to the holders of the Class A-1, Class
A-2, Class A-3 and Class IO Certificates (in each case, so long as any such
Class remains outstanding), PRO RATA based on entitlement, in 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;
(2) to distributions of principal to the holders of the Class A-1
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount (as defined herein) for such Distribution Date;
(3) after the Class A-1 Certificates have been retired, to distributions
of principal to the holders of the Class A-2 Certificates in an amount (not
to exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 Certificates;
(4) after the Class A-1 and Class A-2 Certificates have been retired, to
distributions of principal to the holders of the Class A-3 Certificates in
an amount (not to exceed the then outstanding Certificate Balance of such
Class of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1 and/or Class A-2 Certificates;
(5) to distributions to the holders of the Class A-1, Class A-2 and
Class A-3 Certificates, pro rata in accordance with the respective amounts
of Realized Losses and Additional Trust Fund Expenses, if any, previously
allocated to such Classes of Certificates and for which no reimbursement has
previously been received, to reimburse such holders for all such Realized
Losses and Additional Trust Fund Expenses;
(6) to distributions of interest to the holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(7) after the Class A-1, Class A-2 and Class A-3 Certificates have been
retired, to distributions of principal to the holders of the Class B
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2 and/or Class A-3 Certificates on such
Distribution Date;
(8) to distributions to the holders of the Class B Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(9) to distributions of interest to the holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(10) after the Class A-1, Class A-2, Class A-3 and Class B Certificates
have been retired, to distributions of principal to the holders of the Class
C Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
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<PAGE>
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class A-3 and/or Class B Certificates
on such Distribution Date;
(11) to distributions to the holders of the Class C Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(12) to distributions of interest to the holders of the Class D
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(13) after the Class A-1, Class A-2, Class A-3, Class B and Class C
Certificates have been retired, to distributions of principal to the holders
of the Class D Certificates in an amount (not to exceed the then outstanding
Certificate Balance of such Class of Certificates) equal to the Principal
Distribution Amount for such Distribution Date, less any portion thereof
distributed in respect of the Class A-1, Class A-2, Class A-3, Class B
and/or Class C Certificates on such Distribution Date;
(14) to distributions to the holders of the Class D Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(15) to distributions of interest to the holders of the Class E
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(16) after the Class A-1, Class A-2, Class A-3, Class B, Class C and
Class D Certificates have been retired, to distributions of principal to the
holders of the Class E Certificates in an amount (not to exceed the then
outstanding Certificate Balance of such Class of Certificates) equal to the
Principal Distribution Amount for such Distribution Date, less any portion
thereof distributed in respect of the Class A-1, Class A-2, Class A-3, Class
B, Class C and/or Class D Certificates;
(17) to distributions to the holders of the Class E Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(18) to distributions of interest to the holders of the Class F
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(19) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D and Class E Certificates have been retired, to distributions of principal
to the holders of the Class F Certificates in an amount (not to exceed the
then outstanding Certificate Balance of such Class of Certificates) equal to
the Principal Distribution Amount for such Distribution Date, less any
portion thereof distributed in respect of the Class A-1, Class A-2, Class
A-3, Class B, Class C, Class D and/or Class E Certificates;
(20) to distributions to the holders of the Class F Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(21) to distributions of interest to the holders of the Class G
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(22) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E and Class F Certificates have been retired, to distributions of
principal to the holders of the Class G Certificates in an amount (not to
exceed the then outstanding Certificate Balance of such Class of
Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E and/or
Class F Certificates;
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<PAGE>
(23) to distributions to the holders of the Class G Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(24) to distributions of interest to the holders of the Class H
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(25) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F and Class G Certificates have been retired, to
distributions of principal to the holders of the Class H Certificates in an
amount (not to exceed the then outstanding Certificate Balance of such Class
of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class F
and/or Class G Certificates;
(26) to distributions to the holders of the Class H Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(27) to distributions of interest to the holders of the Class J
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(28) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F, Class G and Class H Certificates have been retired, to
distributions of principal to the holders of the Class J Certificates in an
amount (not to exceed the then outstanding Certificate Balance of such Class
of Certificates) equal to the Principal Distribution Amount for such
Distribution Date, less any portion thereof distributed in respect of the
Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class
F, Class G and/or Class H Certificates;
(29) to distributions to the holders of the Class J Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to such Class of Certificates and for
which no reimbursement has previously been received;
(30) to distributions of interest to the holders of the Class K
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(31) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F, Class G, Class H and Class J Certificates have been
retired, to distributions of principal to the holders of the Class K
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less any portion thereof distributed in
respect of the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D,
Class E, Class F, Class G, Class H and/or Class J Certificates;
(32) to distributions to the holders of the Class K Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received;
(33) to distributions of interest to the holders of the Class L
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(34) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J and Class K Certificates have
been retired, to distributions of principal to the holders of the Class L
Certificates in an amount (not to exceed the then outstanding Certificate
Balance of such Class of Certificates) equal to the Principal Distribution
Amount for such Distribution Date, less
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any portion thereof distributed in respect of the Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D, Class E, Class F, Class G, Class H,
Class J and/or Class K Certificates;
(35) to distributions to the holders of the Class L Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received;
(36) to distributions of interest to the holders of the Class M
Certificates in an amount equal to all Distributable Certificate Interest in
respect of such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for all prior Distribution Dates;
(37) after the Class A-1, Class A-2, Class A-3, Class B, Class C, Class
D, Class E, Class F, Class G, Class H, Class J, Class K and Class L
Certificates have been retired, to distributions of principal to the holders
of the Class M Certificates in an amount (not to exceed the then outstanding
Certificate Balance of such Class of Certificates) equal to the Principal
Distribution Amount for such Distribution Date, less any portion thereof
distributed in respect of the Class A-1, Class A-2, Class A-3, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K
and/or Class L Certificates;
(38) to distributions to the holders of the Class M Certificates to
reimburse such holders for all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and for which no reimbursement has previously been received; and
(39) to make distributions to the holders of the Residual Interest
Certificates, up to an amount equal to the excess, if any, of (a) the
Available Distribution Amount remaining for such Distribution Date, over (b)
the aggregate distributions made in respect of the Regular Interest
Certificates on such Distribution Date as described in clauses (1) through
(38) above;]
[provided that, on each Distribution Date, if any, after the aggregate of the
Certificate Balances of the Subordinate Certificates has been reduced to zero as
a result of the allocations of Realized Losses and Additional Trust Fund
Expenses, and prior to retirement of the Class A Certificates, the payments of
principal to be made as contemplated by clauses (2), (3) and (4) above with
respect to the Class A Certificates will be so made to the holders of the
respective Classes of such Certificates, up to an amount equal to, and PRO RATA
as among such Classes in accordance with, the respective then outstanding
Certificate Balances of such Classes of Certificates, and without regard to the
Principal Distribution Amount for such date.]
DISTRIBUTABLE CERTIFICATE INTEREST. [The "Distributable Certificate
Interest" in respect of each Class of Regular Interest Certificates for each
Distribution Date will equal the Accrued Certificate Interest in respect of such
Class of Certificates for such Distribution Date, net of such Class's allocable
share (calculated as described below) of the aggregate of any Prepayment
Interest Shortfalls resulting from voluntary principal prepayments made on the
Mortgage Loans during the related Collection Period that are not covered by the
Master Servicer's Compensating Interest Payment for such Distribution Date (the
aggregate of such Prepayment Interest Shortfalls that are not so covered, as to
any Distribution Date, the "Net Aggregate Prepayment Interest Shortfall").]
[The "Accrued Certificate Interest" in respect of each Class of Sequential
Pay Certificates for each Distribution Date will equal one month's interest at
the applicable Pass-Through Rate accrued during the related Interest Accrual
Period on the Certificate Balance of such Class of Certificates outstanding
immediately prior to such Distribution Date. The "Accrued Certificate Interest"
in respect of the Class IO Certificates for any Distribution Date will equal the
aggregate of one month's interest at the applicable Pass-Through Rate accrued
during the related Interest Accrual Period on the notional amount of each Class
IO Component outstanding immediately prior to such Distribution Date. Accrued
Certificate Interest will be calculated on a basis of a 360-day year consisting
of twelve 30-day months.]
[The "Interest Accrual Period" in respect of each Class of Regular Interest
Certificates for each Distribution Date is the calendar month preceding the
month in which such Distribution Date occurs.]
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[The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of Regular Interest
Certificates will equal the product of (a) such Net Aggregate Prepayment
Interest Shortfall, multiplied by (b) a fraction, the numerator of which is
equal to the Accrued Certificate Interest in respect of such Class of
Certificates for such Distribution Date, and the denominator of which is equal
to the aggregate Accrued Certificate Interest in respect of all Classes of
Regular Interest Certificates for such Distribution Date.]
PRINCIPAL DISTRIBUTION AMOUNT. [The "Principal Distribution Amount" for
each Distribution Date will generally equal the aggregate of the following
(without duplication):
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) due, and the principal portions of any Assumed
Scheduled Payments deemed due, on or in respect of the Mortgage Loans for
their respective Due Dates occurring during the related Collection Period;
(b) the aggregate of all principal prepayments received on the Mortgage
Loans during the related Collection Period;
(c) with respect to any Mortgage Loan as to which the related stated
maturity date occurred during or prior to the related Collection Period, any
payment of principal (exclusive of any amounts described in clause (b) above
or clause (d) below) made by or on behalf of the related borrower during the
related Collection Period (including any Balloon Payment), net of any
portion of such payment that represents a recovery of the principal portion
of any Scheduled Payment (other than a Balloon Payment) due, or the
principal portion of any Assumed Scheduled Payment deemed due, in respect of
such Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered;
(d) the aggregate of all Liquidation Proceeds, Condemnation Proceeds and
Insurance 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, in each case
net of any portion of such amounts that represents a recovery of the
principal portion of any Scheduled Payment (other than a Balloon Payment)
due, or of the principal portion of any Assumed Scheduled Payment deemed
due, in respect of the related Mortgage Loan on a Due Date during or prior
to the related Collection Period and not previously recovered; and
(e) if such Distribution Date is subsequent to the initial Distribution
Date, the excess, if any, of the Principal Distribution Amount for the
immediately preceding Distribution Date, over the aggregate distributions of
principal made on the Certificates on such immediately preceding
Distribution Date.]
[The "Scheduled Payment" due on any Mortgage Loan on any related Due Date is
the Monthly Payment that is or would have been, as the case may be, due thereon
on such date, without regard to any waiver, modification or amendment of such
Mortgage Loan granted or agreed to by the Special Servicer or otherwise
resulting from a bankruptcy or similar proceeding involving the related
borrower, and assuming that the full amount of each prior Scheduled Payment has
been made in a timely manner. The "Assumed Scheduled Payment" is an amount
deemed due in respect of any Mortgage Loan that constitutes either (i) a Balloon
Loan that is delinquent in respect of its Balloon Payment beyond the first
Determination Date that follows its stated maturity date or (ii) a Mortgage Loan
as to which the related Mortgaged Property has become an REO Property (an "REO
Mortgage Loan"). The Assumed Scheduled Payment deemed due on any such Balloon
Loan on its stated maturity date and on each successive related Due Date that it
remains outstanding and part of the Trust Fund will equal the Scheduled Payment
that would have been due thereon on such date if the related Balloon Payment had
not come due but rather such Mortgage Loan had continued to amortize in
accordance with its amortization schedule, if any, in effect as of the Closing
Date. The Assumed Scheduled Payment deemed due on any REO Mortgage Loan on each
Due Date that the related REO Property remains part of the Trust Fund will equal
the Scheduled Payment
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that would have been due in respect of such Mortgage Loan on such Due Date had
it remained outstanding (or, if such Mortgage Loan was a Balloon Loan and such
Due Date coincides with or follows what had been its stated maturity date, the
Assumed Scheduled Payment that would have been deemed due in respect of such
Mortgage Loan on such Due Date had it remained outstanding).]
[Distributions of the Principal Distribution Amount will constitute the only
distributions of principal on the Certificates. Reimbursements of previously
allocated Realized Losses and Additional Trust Fund Expenses will not constitute
distributions of principal for any purpose and will not result in an additional
reduction in the Certificate Balance of the Class of Certificates in respect of
which any such reimbursement is made.]
TREATMENT OF REO PROPERTIES. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Fund through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will be treated, for
purposes of determining (i) distributions on the Certificates, (ii) allocations
of Realized Losses and Additional Trust Fund Expenses to the Certificates, and
(iii) the amount of Trustee Fees and Servicing Fees payable under the Pooling
and Servicing Agreement, as having remained outstanding until such REO Property
is liquidated. In connection therewith, operating revenues and other proceeds
derived from such REO Property (net of related operating costs) will be
"applied" by the Master Servicer as principal, interest and other amounts that
would have been "due" on such Mortgage Loan, and the Master Servicer will be
required to make P&I Advances in respect of such Mortgage Loan, in all cases as
if such Mortgage Loan had remained outstanding. References to "Mortgage Loan" or
"Mortgage Loans" in the definitions of "Principal Distribution Amount" and
"Weighted Average Net Mortgage Rate" are intended to include any REO Mortgage
Loan.
[ALLOCATION OF PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES. In the
event a borrower is required to pay any Yield Maintenance Charge or any
Prepayment Premium, the amount of such payments actually collected will be
distributed in respect of the Offered Certificates as set forth below. "Yield
Maintenance Charges" are fees paid or payable, as the context requires, as a
result of a prepayment of principal on a Mortgage Loan, which fees have been
calculated (based on Scheduled Payments on such Mortgage Loan) to compensate the
holder of the Mortgage for reinvestment losses based on the value of a discount
rate at or near the time of prepayment. Any other fees paid or payable, as the
context requires, as a result of a prepayment of principal on a Mortgage Loan,
which are calculated based upon a specified percentage (which may decline over
time) of the amount prepaid are considered "Prepayment Premiums."
On each Distribution Date, any Prepayment Premium or Yield Maintenance
Charge collected on a Mortgage Loan during the related Collection Period will be
distributed as follows. The holders of each Class of Sequential Pay Certificates
(other than an Excluded Class thereof) then entitled to distributions of
principal on such Distribution Date will be entitled to an amount equal to (a)
the amount of such Prepayment Premium or Yield Maintenance Charge, multiplied by
(b) a fraction (which in no event may be greater than one), the numerator of
which is equal to the excess, if any, of the Pass-Through Rate of such Class of
Sequential Pay Certificates, over the relevant Discount Rate (as defined below),
and the denominator of which is equal to the excess, if any, of the Mortgage
Rate of the prepaid Mortgage Loan, over the relevant Discount Rate, and (c) a
fraction, the numerator of which is equal to the amount of principal
distributable on such Class of Sequential Pay Certificates on such Distribution
Date, and the denominator of which is the Principal Distribution Amount for such
Distribution Date. If there is more than one Class of Sequential Pay
Certificates (other than an Excluded Class thereof) entitled to distributions of
principal on any particular Distribution Date on which a Prepayment Premium or
Yield Maintenance Charge is distributable, the aggregate amount of such
Prepayment Premium or Yield Maintenance Charge will be allocated among all such
Classes up to, and on a PRO RATA basis in accordance with, their respective
entitlements thereto calculated as described in the foregoing sentence. The
portion, if any, of the Prepayment Premium or Yield Maintenance Charge remaining
after any such payments to the holders of the Sequential Pay Certificates will
be distributed to the holders of the Class IO Certificates. For purposes of the
foregoing, an "Excluded Class" of Sequential Pay Certificates is any Class
thereof other
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than the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class E,
Class F and Class G Certificates.
The "Discount Rate" applicable to any Class of Offered Certificates will be
equal to the yield (when compounded monthly) on the U.S. Treasury issue (primary
issue) with a maturity date closest to the maturity date for the prepaid
Mortgage Loan. In the event that there are two such U.S. Treasury issues (a)
with the same coupon, the issue with the lower yield will be utilized, and (b)
with maturity dates equally close to the maturity date for the prepaid Mortgage
Loan, the issue with the earliest maturity date will be utilized.
For an example of the foregoing allocation of Prepayment Premiums and Yield
Maintenance Charges, see Annex __ hereto. The Depositor makes no representation
as to the enforceability of the provision of any Mortgage Note requiring the
payment of a Prepayment Premium or Yield Maintenance Charge, or of the
collectability of any Prepayment Premium or Yield Maintenance Charge. [See
"Description of the Mortgage Pool--______________" herein.]
SUBORDINATION; ALLOCATION OF LOSSES AND CERTAIN EXPENSES
[The rights of holders of the Class B, Class C, Class D and Class E
Certificates and each Class of the Private Certificates (collectively, the
"Subordinate Certificates") to receive distributions of amounts collected or
advanced on the Mortgage Loans will be subordinated, to the extent described
herein, to the rights of holders of the Class A and Class IO Certificates
(collectively, the "Senior Certificates") and each other such Class of
Subordinate Certificates, if any, with an earlier alphabetical Class
designation. This subordination is intended to enhance the likelihood of timely
receipt by the holders of the Senior Certificates of the full amount of
Distributable Certificate Interest payable in respect of such Classes of
Certificates on each Distribution Date, and the ultimate receipt by the holders
of each Class of the Class A Certificates of principal in an amount equal to the
entire related Certificate Balance. Similarly, but to decreasing degrees, this
subordination is also intended to enhance the likelihood of timely receipt by
the holders of the Class B, the Class C, the Class D and the Class E
Certificates of the full amount of Distributable Certificate Interest payable in
respect of such Classes of Certificates on each Distribution Date, and the
ultimate receipt by the holders of each such Class of Certificates of principal
equal to the entire related Certificate Balance. The protection afforded to the
holders of the Class E Certificates by means of the subordination of the Private
Certificates, to the holders of the Class D Certificates by means of the
subordination of the Class E and the Private Certificates, to the holders of the
Class C Certificates by means of the subordination of the Class D, the Class E
and the Private Certificates, to the holders of the Class B Certificates by
means of the subordination of the Class C, the Class D, the Class E and the
Private Certificates, and to the holders of the Senior Certificates by means of
the subordination of the Subordinate Certificates, will be accomplished by (i)
the application of the Available Distribution Amount on each Distribution Date
in accordance with the order of priority described under
"--Distributions--Application of the Available Distribution Amount" above and
(ii) by the allocation of Realized Losses and Additional Trust Fund Expenses as
described below. Until the first Distribution Date after the aggregate of the
Certificate Balances of the Subordinate Certificates has been reduced to zero,
the Class A-3 Certificates will receive principal payments only after the
Certificate Balances of the Class A-2 and Class A-1 Certificates have been
reduced to zero and the Class A-2 Certificates will receive principal payments
only after the Certificate Balance of the Class A-1 Certificates has been
reduced to zero. However, the Class A-1, Class A-2, Class A-3 and Class IO
Certificates will bear shortfalls in collections and losses incurred in respect
of the Mortgage Loans concurrently. No other form of credit support will be
available for the benefit of the holders of the Offered Certificates.
On each Distribution Date, following all distributions on the Certificates
to be made on such date, the aggregate of all Realized Losses and Additional
Trust Fund Expenses that have been incurred since the Cut-off Date through the
end of the related Collection Period and that have not previously been allocated
as described below will be allocated among the respective Classes of Sequential
Pay Certificates (in each case in reduction of their respective Certificate
Balances) as follows, but in the aggregate only to the extent
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that the aggregate Certificate Balance of all Classes of Sequential Pay
Certificates remaining outstanding after giving effect to the distributions on
such Distribution Date exceeds the aggregate Stated Principal Balance of the
Mortgage Pool that will be outstanding immediately following such Distribution
Date: first, to the Class M Certificates, until the remaining Certificate
Balance of such Class of Certificates is reduced to zero; second, to the Class L
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; third, to the Class K Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
fourth, to the Class J Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; fifth, to the Class H
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; sixth, to the Class G Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
seventh, to the Class F Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; eighth, to the Class E
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; ninth, to the Class D Certificates, until the
remaining Certificate Balance of such Class of Certificates is reduced to zero;
tenth, to the Class C Certificates, until the remaining Certificate Balance of
such Class of Certificates is reduced to zero; eleventh, to the Class B
Certificates, until the remaining Certificate Balance of such Class of
Certificates is reduced to zero; and, last, to the Class A-1 Certificates, the
Class A-2 Certificates and the Class A-3 Certificates, pro rata, in proportion
to their respective outstanding Certificate Balances, until the remaining
Certificate Balances of such Classes of Certificates are reduced to zero.
Any Realized Loss or Additional Trust Fund Expenses allocated in reduction
of the Certificate Balance of any Class of Sequential Pay Certificates will
result in a corresponding reduction in the notional amount for the Class IO
Component that is related to such Class of Sequential Pay Certificates.
"Realized Losses" are losses arising from the inability to collect all
amounts due and owing under any Mortgage Loan, including by reason of the fraud
or bankruptcy of the borrower or a casualty of any nature at the related
Mortgaged Property, to the extent not covered by insurance. 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 (a) the outstanding principal balance
of such Mortgage Loan as of the date of liquidation, together with (i) all
unpaid interest accrued thereon to but not including the Due Date in the
Collection Period in which the liquidation occurred (exclusive, however, of any
such accrued and unpaid interest that constitutes Default Interest and/or
Additional Interest) and (ii) related unreimbursed Servicing Advances, over (b)
the aggregate amount of Liquidation Proceeds, if any, recovered in connection
with such 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 Special Servicer or in connection with the bankruptcy or
similar proceeding involving the related borrower, the amount so forgiven (to
the extent it constitutes principal, interest (other than Default Interest or
Additional Interest) or an amount for which a Servicing Advance has been made)
also will be treated as a Realized Loss.
"Additional Trust Fund Expenses" are any expenses experienced with respect
to the Trust Fund other than Realized Losses, that would result in the holders
of the Regular Interest Certificates receiving less than the full amount of
principal and/or interest to which they are entitled on any Distribution Date,
and include, among other things, (i) any Special Servicing Fees, Liquidation
Fees and/or Work-out Fees paid to the Special Servicer, (ii) any interest paid
to the Master Servicer, the Special Servicer, the Trustee and/or the Fiscal
Agent in respect of unreimbursed Advances, and (iii) any of certain
unanticipated, non-Mortgage Loan specific expenses of the Trust Fund, including
certain indemnities and reimbursements to the Trustee and the Fiscal Agent of
the type described under "--The Trustee" herein (the Fiscal Agent having the
same rights to indemnity and reimbursement as described with respect to the
Trustee), certain indemnities and reimbursements to the Depositor, the Master
Servicer and the Special Servicer of the type described under "Servicing of the
Mortgage Loans--Certain Matters Regarding the Depositor, the Master Servicer and
the Special Servicer" herein and certain federal, state and local taxes, and
certain tax related expenses, payable from the assets of the Trust Fund and
described under "Certain Federal Income Tax Consequences--Possible Taxes on
Income from Foreclosure Property and Other Taxes" and "Servicing of
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the Mortgage Loans--REO Properties" herein. Additional Trust Fund Expenses will
reduce amounts payable to Certificateholders and, subject to the distribution
priorities described above, may result in a loss on one or more Classes of
Offered Certificates.]
P&I ADVANCES
[On or about each Distribution Date, the Master Servicer will be obligated,
subject to the recoverability determination described in the next paragraph, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the Pooling and Servicing Agreement, from
funds held in the Custodial Account that are not required to be distributed to
Certificateholders (or paid to any other person pursuant to the Pooling and
Servicing Agreement) on such Distribution Date, in an amount that is generally
equal to the aggregate of all Scheduled Payments (other than Balloon Payments)
and any Assumed Scheduled Payments, net of related Master Servicing Fees and, if
any, Workout Fees, due or deemed due, as the case may be, in respect of the
Mortgage Loans during the related Collection Period, in each case to the extent
such amount was not paid by or on behalf of the related borrower or otherwise
collected as of the close of business on the related Determination Date. The
Master Servicer's obligations to make P&I Advances in respect of any Mortgage
Loan will continue until liquidation of such Mortgage Loan or disposition of any
REO Property acquired in respect thereof. However, if the Monthly Payment on any
Mortgage Loan has been reduced in connection with a bankruptcy or similar
proceeding or a modification, waiver or amendment granted or agreed to by the
Special Servicer, the Master Servicer will be required to advance only the
amount of the reduced Monthly Payment (net of related Master Servicing Fees and,
if any, Workout Fees) in respect of subsequent delinquencies. In addition, if it
is determined that an Appraisal Reduction Amount (as defined below) exists with
respect to any Required Appraisal Loan (as defined below), then, with respect to
the Distribution Date immediately following the date of such determination and
with respect to each subsequent Distribution Date for so long as such Appraisal
Reduction Amount exists, the Master Servicer will be required in the event of
subsequent delinquencies to advance in respect of such Mortgage Loan only an
amount equal to the product of (i) the amount of the P&I Advance that would
otherwise be required without regard to this sentence, multiplied by (ii) a
fraction, the numerator of which is equal to the Stated Principal Balance of
such Mortgage Loan, net of such Appraisal Reduction Amount, and the denominator
of which is equal to the Stated Principal Balance of such Mortgage Loan.
Pursuant to the terms of the Pooling and Servicing Agreement, if the Master
Servicer fails to make a P&I Advance required to be made, the Trustee shall then
be required to make such P&I Advance, and if the Trustee fails to make a P&I
Advance required to be made, the Fiscal Agent will then be required to make such
P&I Advance, in each case, subject to the recoverability standard described
below. No default on the part of the Trustee will be deemed to have occurred if
the Fiscal Agent makes such P&I Advance in a timely manner, as set forth in the
Pooling and Servicing Agreement. See "--Appraisal Reductions" below.]
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[The Master Servicer (or the Trustee or Fiscal Agent, as applicable) will be
entitled to recover any P&I Advance made out of its own funds from any amounts
collected in respect of the Mortgage Loan as to which such P&I Advance was made
that constitute late collections of principal and interest (net of related
Master Servicing Fees and Workout Fees), whether such amounts are collected in
the form of late payments, Insurance Proceeds, Condemnation Proceeds or
Liquidation Proceeds, or any other recovery of the related Mortgage Loan or REO
Property. Neither the Master Servicer, the Trustee nor the Fiscal Agent will be
obligated to make any P&I Advance that it determines in accordance with the
Servicing Standard, would, if made, constitute a Nonrecoverable Advance, and the
Master Servicer (or the Trustee or the Fiscal Agent, as applicable) will be
entitled to recover, from general funds on deposit in the Custodial Account, any
P&I Advance made by it out of its own funds that it later determines to be a
Nonrecoverable Advance. See "Servicing of the Mortgage Loans--Custodial Account"
herein.]
[In connection with the recovery by the Master Servicer, the Trustee or the
Fiscal Agent of any P&I Advance made by it, the Master Servicer, the Trustee or
the Fiscal Agent, as applicable, will be entitled to be paid, out of any amounts
then on deposit in the Custodial Account, interest compounded annually at a per
annum rate (the "Reimbursement Rate") equal to the "prime rate" published in the
"Money Rates" section of THE WALL STREET JOURNAL, as such "prime rate" may
change from time to time, accrued on the amount of such P&I Advance from the
date made to but not including the date of reimbursement. To the extent not
offset or covered by amounts otherwise payable on the Private Certificates,
interest accrued on outstanding Advances will result in a reduction in amounts
payable on the Offered Certificates, subject to the distribution priorities
described herein.]
[APPRAISAL REDUCTIONS]
[Upon the earliest of the date (each such date, a "Required Appraisal Date")
that (1) any Mortgage Loan is sixty (60) days delinquent in respect of any
Monthly Payments, (2) the Mortgaged Property securing any Mortgage Loan has
become an REO Property, (3) any Mortgage Loan has been modified by the Special
Servicer to reduce the amount of any Monthly Payment, other than a Balloon
Payment, (4) a receiver is appointed and continues in such capacity in respect
of the Mortgaged Property securing any Mortgage Loan, (5) a borrower with
respect to any Mortgage Loan is subject to any bankruptcy proceeding or (6) a
Balloon Payment with respect to any Mortgage Loan has not been paid within 20
days following its most recent scheduled maturity date (each such Mortgage Loan,
including an REO Mortgage Loan, a "Required Appraisal Loan"), the Special
Servicer will be required to use reasonable efforts to obtain (within 60 days of
the applicable Required Appraisal Date) an appraisal of the related Mortgaged
Property prepared in accordance with 12 CFR Section225.62 and conducted in
accordance with the standards of the Appraisal Institute by a Qualified
Appraiser, unless such an appraisal had previously been obtained within the
prior 12 months. A "Qualified Appraiser" is an independent appraiser that (i) is
a member in good standing of the Appraisal Institute, (ii) if the state in which
the subject Mortgaged Property is located certifies or licenses appraisers, is
certified or licensed in such state, and (iii) has a minimum of five years
experience in the subject property type and market. The cost of such appraisal
will be borne by the Special Servicer, subject to the Special Servicer's right
to be reimbursed therefor out of Related Proceeds or, if not reimbursable
therefrom, out of general funds on deposit in the Custodial Account. As a result
of any such appraisal, it may be determined that an "Appraisal Reduction Amount"
exists with respect to the related Required Appraisal Loan, such determination
to be made upon the later of 30 days after the Required Appraisal Date (if no
new appraisal is required) or after receipt of a new appraisal (if one is
required). The Appraisal Reduction Amount for any Required Appraisal Loan will
equal the excess, if any, of (a) the sum of, without duplication, (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 the
Fiscal Agent, all unpaid interest on the Required Appraisal Loan through the
most recent Due Date prior to the date of calculation (net of related Master
Servicing Fees, and exclusive of any portion of such accrued and unpaid interest
that constitutes Additional Interest and/or Default Interest) (iii) all accrued
but unpaid Servicing Fees and any Additional Trust Fund Expenses in respect of
such Required Appraisal Loan, (iv) all related unreimbursed
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Advances (plus accrued interest thereon) made by or on behalf of the Master
Servicer, the Special Servicer, the Trustee or the Fiscal Agent with respect to
such Required Appraisal Loan and (v) all currently due and unpaid real estate
taxes and reserves owed for improvements (net of any amount escrowed therefor)
and assessments, insurance premiums, and, if applicable, ground rents in respect
of the related Mortgaged Property, over (b) an amount equal to 90% of the
appraised value (net of any prior liens) of the related Mortgaged Property as
determined by such appraisal.
With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for twelve consecutive
Monthly Payments, and no other Servicing Transfer Event has occurred with
respect thereto during such twelve-month period, in which case it will cease to
be a Required Appraisal Loan), the Special Servicer is required, within 30 days
of each anniversary of such loan's becoming a Required Appraisal Loan, to order
an update of the prior appraisal (the cost of which is to be covered by, and
reimbursable as, a Servicing Advance). Based upon such appraisal, the Special
Servicer will be required to redetermine and report to the Trustee the then
applicable Appraisal Reduction Amount, if any, with respect to such Required
Appraisal Loan.]
REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION
[CERTIFICATEHOLDER REPORTS. Based on information provided in monthly reports
prepared by the Master Servicer and the Master Servicer or Special Servicer, as
applicable, and delivered to the Trustee, the Trustee will prepare and forward
either electronically or by first class mail on each Distribution Date to, among
others, each Certificateholder, each initial Certificate Owner and (upon written
request made to the Trustee) each subsequent Certificate Owner (as identified to
the reasonable satisfaction of the Trustee):
1. A statement (a "Distribution Date Statement"), substantially in the
form of Annex __ hereto, setting forth, among other things, for each
Distribution Date: (i) the amount of the distribution to the holders of each
Class of Sequential Pay Certificates in reduction of the Certificate Balance
thereof; (ii) the amount of the distribution to the holders of each Class of
Regular Interest Certificates allocable to Distributable Certificate
Interest; (iii) the amount of the distribution to the holders of each Class
of Regular Interest Certificates allocable to Prepayment Premiums and Yield
Maintenance Charges; (iv) the amount of the distribution to the holders of
each Class of Sequential Pay Certificates in reimbursement of previously
allocated Realized Losses and Additional Trust Fund Expenses; (v) the
Available Distribution Amount for such Distribution Date; (vi) the aggregate
amount of P&I Advances made in respect of the prior Distribution Date (vii)
(A) the aggregate amount of unreimbursed P&I Advances (and the aggregate
amount of interest accrued and payable thereon) as of the close of business
on the related Determination Date and (B) the aggregate amount of
unreimbursed Servicing Advances (and the aggregate amount of interest
accrued and payable thereon) outstanding as of the close of business on the
related Determination Date; (viii) the aggregate unpaid principal balances
of the Mortgage Pool outstanding immediately prior to, as of the close of
business on, and immediately after, the related Determination Date; (ix) the
number, aggregate unpaid principal balance, weighted average remaining term
to maturity and weighted average Mortgage Rate of the Mortgage Loans (other
than REO Mortgage Loans) as of the close of business on the related
Determination Date; (x) the number, aggregate unpaid principal balance (as
of the close of business on the related Determination Date) and aggregate
Stated Principal Balance (immediately after such Distribution Date) of
Mortgage Loans (A) delinquent one month, (B) delinquent two months, (C)
delinquent three or more months, and (D) as to which foreclosure proceedings
have been commenced; (xi) as to each Mortgage Loan referred to in the
preceding clause (x) above, (A) the loan number thereof, (B) the Stated
Principal Balance thereof immediately following such Distribution Date, (C)
whether the delinquency is in respect of its Balloon Payment, (D) whether a
notice of acceleration has been sent to the borrower and, if so, the date of
such notice, (E) whether a "Phase I" environmental assessment of the related
Mortgaged Property has been
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performed as contemplated by the Pooling and Servicing Agreement and (F) a
brief description of the status of any foreclosure proceedings or any
workout or loan modification negotiations with the related borrower; (xii)
with respect to any Mortgage Loan as to which a liquidation event occurred
during the related Collection Period (other than a payment in full), (A) the
loan number thereof, (B) the nature of the liquidation event and, in the
case of a determination by the Special Servicer with respect to any
defaulted Mortgage Loan or REO Property that there has been a recovery of
all Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and
other payments or recoveries that the Special Servicer has determined in
accordance with the Servicing Standard, will be ultimately recoverable (a
"Final Recovery Determination"), a brief description of the basis for such
Final Recovery Determination, (C) the aggregate of all Liquidation Proceeds
and other amounts received in connection with such liquidation event
(separately identifying the portion thereof allocable to distributions on
the Certificates), and (D) the amount of any Realized Loss in connection
with such liquidation event; (xiii) with respect to any REO Property
included in the Trust Fund as of the close of business on the related
Determination Date, the loan number of the related Mortgage Loan, the book
value of such REO Property and the amount of income and other amounts, if
any, received with respect to such REO Property during the related
Collection Period (separately identifying the portion thereof allocable to
distributions on the Certificates); (xiv) with respect to any Mortgage Loan
as to which the related Mortgaged Property became an REO Property during the
related Collection Period, the loan number of such Mortgage Loan and the
Stated Principal Balance of such Mortgage Loan as of the related acquisition
date of such REO Property; (xv) with respect to any REO Property included in
the Trust Fund as to which a Final Recovery Determination was made during
the related Collection Period, (A) the loan number of the related Mortgage
Loan, (B) a brief description of the basis for the Final Recovery
Determination, (C) the aggregate of all Liquidation Proceeds and other
amounts received in connection with such Final Recovery Determination
(separately identifying the portion thereof allocable to distributions on
the Certificates), and (D) the amount of any Realized Loss in respect of the
related REO Property in connection with such Final Recovery Determination;
(xvi) the Accrued Certificate Interest and Distributable Certificate
Interest in respect of each Class of Regular Interest Certificates for such
Distribution Date; (xvii) any unpaid Distributable Certificate Interest in
respect of each Class of Regular Interest Certificates after giving effect
to the distributions made on such Distribution Date, and if the full amount
of the Principal Distribution Amount was not distributed on such
Distribution Date, the portion of the shortfall affecting each Class of
Sequential Pay Certificates; (xviii) the Pass-Through Rate for each Class of
Regular Interest Certificates for such Distribution Date; (xix) the
Principal Distribution Amount for such Distribution Date, separately
identifying the respective components thereof (and, in the case of any
principal prepayment or other unscheduled collection of principal received
during the related Collection Period, the loan number for the related
Mortgage Loan and the amount of such prepayment or other collection of
principal); (xx) the aggregate of all Realized Losses incurred during the
related Collection Period and, aggregated by type, all Additional Trust Fund
Expenses incurred during the related Collection Period; (xxi) the aggregate
of all Realized Losses and Additional Trust Fund Expenses that remain
unallocated immediately following such Distribution Date; (xxii) the
Certificate Balance of each Class of Sequential Pay Certificates and the
notional amount of each Class IO Component immediately before and
immediately after such Distribution Date, separately identifying any
reduction therein due to the allocation of Realized Losses and Additional
Trust Fund Expenses on such Distribution Date; (xxiii) the certificate
factor for each Class of Regular Interest Certificates immediately following
such Distribution Date; (xxiv) the aggregate amount of interest on Advances
paid to the Master Servicer, the Special Servicer, the Trustee and the
Fiscal Agent during the related Collection Period; and (xxv) (A) the
aggregate amount of servicing compensation (separately identifying the
amount of each category of compensation) paid to the Master Servicer, the
Special Servicer and, if payable directly out of the Trust Fund without a
reduction in the servicing compensation otherwise payable to the Master
Servicer or the Special Servicer, to each sub-servicer, during the related
Collection Period, and
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(B) such other information as the Trustee is required by the Code or other
applicable law to furnish to enable Certificateholders to prepare their tax
returns.
2. A "CSSA Loan File" report and a "CSSA Property File" report setting
forth certain information with respect to the Mortgage Loans and the
Mortgaged Properties, respectively.
The Master Servicer or the Special Servicer (as specified in the Pooling and
Servicing Agreement) is required to deliver to the Trustee monthly (or, in the
case of the reports described in clauses (g) and (h) below, within 30 days after
receiving annual operating statements for the subject Mortgaged Property or REO
Property), and the Trustee is required to deliver to each Certificateholder and
each other person sent a Distribution Date Statement, on the first Distribution
Date following receipt thereof, the following nine reports (to the extent
received by the Trustee):
(a) A "Delinquent Loan Status Report" containing substantially the
information set forth in Annex __ attached hereto, including, among other
things, those Mortgage Loans that were, as of the Determination Date
immediately preceding the preparation of such report, (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 not REO Property.
(b) An "Historical Loan Modification Report" containing substantially
the information set forth in Annex __ 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,
have been modified pursuant to the Pooling and Servicing Agreement (i)
during the related Collection Period and (ii) since the Cut-off Date,
showing the original and the revised terms thereof.
(c) An "Historical Loss Estimate Report" containing substantially the
information set forth in Annex __ attached hereto, including, 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, 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 loan-by-loan basis.
(d) An "REO Status Report" containing substantially the information set
forth in Annex __ attached hereto, including, with respect to each REO
Property 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 prepared
internally by the Special Servicer).
(e) A "Watch List Report" containing substantially the information set
forth in Annex __ attached hereto, including, among other things, any
Mortgage Loan that, as of the Determination Date immediately preceding the
preparation of such report, had a debt service coverage ratio of less than
1.0x and was in jeopardy of becoming a Specially Serviced Mortgage Loan.
(f) A "Loan Payoff Notification Report" setting forth, among other
things, for each Mortgage Loan where notice of anticipated payoff has been
received as of the Determination Date immediately preceding the preparation
of such report, the control number, the property name, the amount of
principal expected to be paid, the expected date of payment and the
estimated amount of Yield Maintenance or Prepayment Premium due.
(g) With respect to any Mortgaged Property or REO Property, an
"Operating Statement Analysis" containing substantially the information set
forth in Annex __, together with copies of the
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subject annual operating statements for such property attached thereto as an
exhibit. See "Servicing of the Mortgage Loans--Inspections; Collection of
Operating Information" herein.
(h) With respect to any Mortgaged Property or REO Property, an "NOI
Adjustment Worksheet" containing substantially the information set forth in
Annex __ (together with copies of the subject annual operating statements
attached thereto as an exhibit), and presenting the computations made in
accordance with the methodology described in the Pooling and Servicing
Agreement to "normalize" the full year net operating income and debt service
coverage numbers used by the Special Servicer in the other reports
referenced above.
(i) A "Comparative Financial Status Report" containing substantially the
information set forth in Annex __ setting forth, among other things, the
occupancy, revenue, net operating income and debt service coverage ratio for
each Mortgage Loan or related Mortgaged Property, as applicable, as of the
last day of the calendar month immediately preceding the month of the
preparation of such report for each of the following three periods (to the
extent such information is in the Special Servicer's possession): (i) the
most current available year-to-date, (ii) each of the previous two full
fiscal years stated separately; and (iii) the "base year" (representing the
original analysis of information used as of the Cut-off Date).
The Trustee will be required to make available monthly to, among others,
Certificateholders and Certificate Owners identified to the Trustee in writing,
an electronic file containing Mortgage Loan information, based on reports
provided to it by the Master Servicer and the Special Servicer, in the "CSSA
Loan periodic update file" and the "CSSA Property File" with the Delinquent Loan
Status Report, Historical Loan Modification Report, Historical Loss Estimate
Report, REO Status Report, Loan Payoff Notification Report and Watch List Report
attached (provided that these reports are delivered to the Trustee in an
electronic format acceptable to the Trustee) via the Trustee's bulletin board.
Access to the bulletin board can be obtained by dialing _________. Those who
have an account on the bulletin board may retrieve the data file for each
transaction in the directory. An account number may be obtained by typing "NEW"
upon logging into the bulletin board. In order to access information from the
bulletin board the user must have available their assigned log-on ID. [The
Trustee may (at its discretion and with the consent of the Depositor and the
Underwriter) make the information that is available via its bulletin board, also
available via the Internet at ___________________.]
[In addition, within a reasonable period of time after the end of each
calendar year, the Trustee is required to send to each person who at any time
during the calendar year was a Certificateholder of record, a report summarizing
on an annual basis (if appropriate) items (i), (ii), (iii) and (iv) of the
monthly Distribution Date Statements and such other information as may be
required to enable such Certificateholders to prepare their federal income tax
returns. Such information is required to include the amount of original issue
discount accrued on each Class of Certificates held by persons other than
Certificateholders and information regarding the expenses of the Trust Fund.]
OTHER INFORMATION. [The Pooling and Servicing Agreement requires that the
Trustee, upon reasonable prior written notice, make available at its offices
primarily responsible for administration of the Trust Fund, during normal
business hours, for review by the Depositor, the Rating Agencies, the
Controlling Class Representative and, subject to the discussion in the following
paragraph, any Certificateholder, Certificate Owner or person identified to the
Trustee as a prospective transferee of a Certificate or an interest therein,
originals and/or copies of the following items: (i) this Prospectus Supplement,
the Prospectus and any other disclosure document relating to the Offered
Certificates and the Private Certificates, in the form most recently provided to
the Trustee by the Depositor or by any person designated by the Depositor; (ii)
the Pooling and Servicing Agreement, each sub-servicing agreement delivered to
the Trustee since the Closing Date and any amendments thereto; (iii) all reports
delivered to Certificateholders since the Closing Date as described in
"--Certificateholder Reports" above; (iv) all annual performance certifications
delivered by the Master Servicer and the Special Servicer, respectively,
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to the Trustee since the Closing Date as described in "Servicing of the Mortgage
Loans--Evidence as to Compliance" herein; (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 as
described in "Servicing of the Mortgage Loans--Evidence as to Compliance"
herein; (vi) the most recent inspection report prepared by the Master Servicer
or Special Servicer, as applicable, and delivered to the Trustee in respect of
each Mortgaged Property as described under "Servicing of the Mortgage
Loans--Inspections; Collection of Operating Information" herein; (vii) the most
recent annual operating statement and rent roll of each related Mortgaged
Property and financial statements of the related borrower collected by the
Master Servicer or Special Servicer, as applicable, and delivered to the Trustee
as described under "Servicing of the Mortgage Loans--Inspections; Collection of
Operating Information" herein; (viii) any and all notices and reports delivered
to the Trustee with respect to any Mortgaged Property as to which the
environmental testing described in "Servicing of the Mortgage Loans--Realization
Upon Defaulted Mortgage Loans; Sale of Defaulted Mortgage Loans and REO
Properties" revealed that both of the conditions set forth therein were not
satisfied; (ix) 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 Special Servicer and delivered to the Trustee; (x) the most recent
appraisal for each Mortgaged Property and REO Property that has been delivered
to the Trustee by either the Master Servicer or the Special Servicer; and (xi)
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 the
Fiscal Agent's, as the case may be, determination that any Advance was (or, if
made, would be) a Nonrecoverable Advance. Copies of any and all of the foregoing
items will be available from the Trustee upon written request; however, except
with respect to the Rating Agencies, the Trustee will be permitted to require
payment of a sum sufficient to cover the reasonable costs and expenses of
providing such information, including, without limitation, copy charges and
reasonable fees for employee time and for space.]
[In connection with providing access to or copies of the items described in
the preceding paragraph, the Trustee will require: (a) in the case of
Certificate Owners, a confirmation executed by the requesting person (in a form
reasonably acceptable to the Trustee) generally to the effect that such person
is a beneficial holder of Certificates held in book-entry format and will keep
such information confidential (except that such Certificate Owner may provide
such information 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 (in a form 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 will otherwise keep such information
confidential. The holders of the Certificates, by their acceptance thereof, will
be deemed to have agreed to keep such information confidential (except that any
Certificateholder may provide any such information obtained by it 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).]
[BOOK-ENTRY CERTIFICATES. Until such time as Definitive Offered Certificates
are issued in respect of any Class of Offered Certificates, the foregoing
information and access will be available to the holders of the Offered
Certificates only to the extent it is forwarded by or otherwise available
through DTC and DTC participants. Any beneficial owner of an Offered Certificate
who does not receive information through DTC or its participants may request
that Certificateholder reports be mailed directly to it by written request to
the Trustee (accompanied by evidence of such beneficial ownership). The manner
in which notices and other communications are conveyed by DTC to its
Participants, and by such Participants to Certificate Owners, will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time. The Master Servicer, the Special
Servicer, the Trustee
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and the Depositor are required to recognize as "Certificateholders" only those
persons in whose names the Certificates are registered on the books and records
of the Trustee or other registrar for the Certificates.]
ASSUMED FINAL DISTRIBUTION DATE; RATED FINAL DISTRIBUTION DATE
[The "Assumed Final Distribution Date" with respect to any Class of Regular
Interest Certificates is the Distribution Date on which the Certificate Balance
of such Class of Certificates (or, in the case of the Class IO Certificates, the
aggregate of the notional amounts of the respective Class IO Components) would
be reduced to zero based on the assumption that no Mortgage Loan is voluntarily
prepaid prior to its stated maturity date and otherwise based on the "Table
Assumptions" set forth under "Yield and Maturity Considerations--Weighted
Average Life" herein, which Distribution Date shall in each case be as follows:
<TABLE>
<CAPTION>
ASSUMED FINAL
DISTRIBUTION DATE
-----------------------
<S> <C>
[Class A-1..................................................................
Class A-2...................................................................
Class A-3...................................................................
Class IO....................................................................
Class B.....................................................................
Class C.....................................................................
Class D.....................................................................
Class E.....................................................................
Class F.....................................................................
Class G.....................................................................
Class H.....................................................................
Class J.....................................................................
Class K.....................................................................
Class L.....................................................................
Class M]....................................................................
</TABLE>
The Assumed Final Distribution Dates set forth above were calculated without
regard to any delays in the collection of Balloon Payments and without regard to
a reasonable liquidation time with respect to any Mortgage Loans that may be
delinquent. Accordingly, in the event of defaults on the Mortgage Loans, the
actual final Distribution Date for one or more Classes of the Offered
Certificates may be later, and could be substantially later, than the related
Assumed Final Distribution Date(s).
In addition, the Assumed Final Distribution Dates set forth above were
calculated on the basis of a 0% CPR (as defined herein). Because the rate of
principal payments (including voluntary prepayments and prepayments resulting
from casualties and/or condemnations at the Mortgaged Properties or liquidations
of defaulted Mortgage Loans) on the Mortgage Loans can be expected to exceed the
scheduled rate of principal payments, and could exceed such scheduled rate by a
substantial amount, the actual final Distribution Date for one or more Classes
of the Offered Certificates may be earlier, and could be substantially earlier,
than the related Assumed Final Distribution Date(s). The rate of principal
payments (including prepayments) on the Mortgage Loans will depend on the
characteristics of the Mortgage Loans, as well as on the prevailing levels of
interest rates and other economic factors, and no assurance can be given as to
actual principal payment experience. See "Yield and Maturity Considerations" and
"Description of the Mortgage Pool" herein and "Yield and Prepayment
Considerations" in the Prospectus.
The "Rated Final Distribution Date" with respect to each Class of Offered
Certificates is the first Distribution Date that follows the second anniversary
of the end of the amortization term for the Mortgage Loan that, as of the
Cut-off Date, has the longest remaining amortization term. The rating assigned
by a Rating Agency to any Class of Offered Certificates entitled to receive
distributions in respect
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of principal reflects an assessment of the likelihood that Certificateholders of
such Class will receive, on or before the Rated Final Distribution Date, all
principal distributions to which they are entitled. See "Ratings" herein.]
VOTING RIGHTS
[At all times during the term of the Pooling and Servicing Agreement, __% of
the voting rights for the Certificates (the "Voting Rights") will be allocated
among the respective Classes of Sequential Pay Certificates in proportion to the
Certificate Balances of those Classes, and __% of the Voting Rights will be
allocated to the Class IO Certificates. Voting Rights allocated to a Class of
Certificates will be allocated among the related Certificateholders in
proportion to the percentage interests in such Class evidenced by their
respective Certificates. See "The Trust Agreement--Voting Rights" in the
Prospectus.]
TERMINATION
[The obligations created by the Pooling and Servicing Agreement will, with
limited exception, terminate upon payment (or provision for payment) to the
appropriate persons of all amounts held as part of the Trust Fund following the
earlier of (i) the final payment (or advance in respect thereof) or other
liquidation of the last Mortgage Loan or REO Property subject thereto, and (ii)
the purchase of all of the Mortgage Loans and all of the REO Properties
remaining in the Trust Fund, if any, by (in the following order of priority) the
Depositor, the Underwriter, the Special Servicer, the Majority Subordinate
Certificateholder or the Master Servicer. Written notice of termination of the
Pooling and Servicing Agreement will be given to each Certificateholder, and the
final distribution will be made only upon surrender and cancellation of the
Certificates at the office of the Trustee or other registrar for the
Certificates or at such other location as may be specified in such notice of
termination.
Any such purchase by the Depositor, the Underwriter, the Special Servicer,
the Majority Subordinate Certificateholder or the Master Servicer of all the
Mortgage Loans and any REO Properties remaining in the Trust Fund is required to
be made at a price equal to (1) the greater of (x) the aggregate Purchase Price
of all the Mortgage Loans and any REO Properties then included in the Trust
Fund, and (y) the aggregate fair market value of such Mortgage Loans and REO
Properties then included in the Trust Fund (to be determined as mutually agreed
upon by the Master Servicer, the Special Servicer and the Trustee), minus (2) if
the purchaser is the Master Servicer or the Special Servicer, the aggregate of
amounts payable or reimbursable to such person under the Pooling and Servicing
Agreement. Such purchase will effect early retirement of the then outstanding
Offered Certificates, but the right of the Depositor, the Underwriter, the
Special Servicer, the Majority Subordinate Certificateholder or the Master
Servicer to effect such termination is subject to the requirement that the then
aggregate Stated Principal Balance of the Mortgage Pool be less than 1% of the
Initial Pool Balance.
The purchase price paid in connection with the purchase of all Mortgage
Loans and any REO Properties remaining in the Trust Fund, exclusive of any
portion thereof payable or reimbursable to any person other than the
Certificateholders, will constitute part of the Available Distribution Amount
for the final Distribution Date. The Available Distribution Amount for the final
Distribution Date will be distributed by the Trustee generally as described
herein under "--Distributions--Application of the Available Distribution
Amount", except that the distributions of principal on any Class of Sequential
Pay Certificates described thereunder will be made, subject to available funds
and the distribution priorities described thereunder, in an amount equal to the
entire Certificate Balance of such Class remaining outstanding, and further
except that any distributions of principal on the respective Classes of Class A
Certificates (if more than one is then outstanding) described thereunder will be
made on a pro rata basis in accordance with their respective Certificate
Balances.]
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THE TRUSTEE
____________, a ____________, will act as Trustee on behalf of the
Certificateholders. See "The Trust Agreement--The Trustee", "--Duties of the
Trustee" and "--Resignation of the Trustee" in the Prospectus. As of the Closing
Date, the offices of the Trustee primarily responsible for administration of the
Trust Fund (the "Corporate Trust Office") is located at ____________, Attention:
____________--LB Commercial Mortgage Trust [I] ____-____. [As compensation for
its services, the Trustee will be entitled to receive monthly, from general
funds on deposit in the Collection Account, the Trustee Fee. The "Trustee Fee"
for each Mortgage Loan and REO Mortgage Loan for any Distribution Date will
equal one month's interest for the most recently ended calendar month
(calculated on the basis of a 360-day year consisting of twelve 30-day months),
accrued at the per annum rate (the "Trustee Fee Rate") set forth in the Pooling
and Servicing Agreement on the Stated Principal Balance of such Mortgage Loan or
REO Mortgage Loan, as the case may be, outstanding immediately following the
prior Distribution Date (or, in the case of the initial Distribution Date, as of
the Closing Date).]
[The Trustee and any director, officer, employee or agent thereof will be
entitled to indemnification, from amounts held in the Trust Fund, for any loss,
liability or reasonable "out-of-pocket" expense arising in respect of the
Pooling and Servicing Agreement or the Certificates; provided, however, that
such indemnification will not extend to any expense specifically required to be
borne by the Trustee pursuant to the terms of the Pooling and Servicing
Agreement, or to any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence on the part of the Trustee in the
performance of its obligations and duties thereunder.]
The Trustee will also have certain duties with respect to REMIC
administration. See "Certain Federal Income Tax Consequences--REMICs--Reporting
and Other Administrative Matters" herein.
[THE FISCAL AGENT
____________, a ____________ organized under the laws of ____________, will
act as Fiscal Agent pursuant to the Pooling and Servicing Agreement. The Fiscal
Agent's office is located at ____________; Attention: ____________--LB
Commercial Mortgage Trust [I] ____-____. The Fiscal Agent will make no
representation as to the validity or sufficiency of the Pooling and Servicing
Agreement, the Certificates, the Mortgage Loans, this Prospectus Supplement
(except for the first two sentences of this paragraph) or related documents. The
duties and obligations of the Fiscal Agent consist only of making P&I Advances
as described under "--P&I Advances" above and Servicing Advances as described
under "Servicing of the Mortgage Loans--Servicing and Other Compensation and
Payment of Expenses" herein. The Fiscal Agent will not be liable except for the
performance of such duties and obligations. The Fiscal Agent will be entitled to
reimbursement for each Advance made by it (with interest thereon at the
Reimbursement Rate) in the same manner and to the same extent as the Trustee and
the Master Servicer. The Fiscal Agent will be entitled to various rights,
protections and indemnities similar to those afforded the Trustee. The Trustee
will be responsible for payment of the compensation of the Fiscal Agent. As of
_________ __, _______ the Fiscal Agent had consolidated assets of approximately
$_________.]
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<PAGE>
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
[GENERAL. The yield on any Offered Certificate will depend on (a) the price
at which such Certificate is purchased by an investor and (b) the rate, timing
and amount of distributions on such Certificate. The rate, timing and amount of
distributions on any Offered Certificate will in turn depend on, among other
things, (i) the Pass-Through Rate for such Certificate (or, in the case of a
Class IO Certificate, the weighted average of the Pass-Through Rates for the
respective Class IO Components from time to time), (ii) the rate and timing of
principal payments (including principal prepayments) and other principal
collections on the Mortgage Loans and the extent to which such amounts are to be
applied in reduction of the Certificate Balance of the related Class (or, in the
case of a Class IO Certificate, the notional amount of a Class IO Component),
(iii) the rate, timing and severity of Realized Losses and Additional Trust Fund
Expenses and the extent to which such losses and expenses are allocable in
reduction of the Certificate Balance of the related Class (or, in the case of a
Class IO Certificate, the notional amount of a Class IO Component), and (iv) the
timing and severity of any Net Aggregate Prepayment Interest Shortfalls and the
extent to which such shortfalls are allocable in reduction of the Distributable
Certificate Interest payable on the related Class.]
BOOK RATE AND TIMING OF PRINCIPAL PAYMENT. The yield to holders of the
Class IO Certificates will be extremely sensitive to, and the yield to holders
of any other Offered Certificates purchased at a discount or premium will be
affected by, the rate and timing of principal payments on or in respect of the
Mortgage Loans, which will in turn be affected by the amortization schedules
thereof, the dates on which Balloon Payments are due and the rate and timing of
principal prepayments and other unscheduled collections thereon (including for
this purpose, collections made in connection with liquidations of Mortgage Loans
due to defaults, casualties or condemnations affecting the Mortgaged Properties,
or purchases of Mortgage Loans out of the Trust Fund). Prepayments and, assuming
the respective stated maturity dates therefor have not occurred, liquidations
and purchases of the Mortgage Loans, will result in distributions on the
Certificates of amounts that would otherwise be distributed over the remaining
terms of the Mortgage Loans. Defaults on the Mortgage Loans, particularly at or
near their stated maturity dates, may result in significant delays in payments
of principal on the Mortgage Loans (and, accordingly, on the Offered
Certificates that are Sequential Pay Certificates) while work-outs are
negotiated or foreclosures are completed. See "Servicing of the Mortgage
Loans--Modifications, Waivers and Amendments" and "--Realization Upon Defaulted
Mortgage Loans; Sale of Defaulted Mortgage Loans and REO Properties" herein and
"Certain Legal Aspects of Mortgage Loans--Foreclosure of Mortgage" in the
Prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which such Certificates are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in turn are distributed
or otherwise result in reduction of the Certificate Balance or notional amount,
as the case may be, of such Certificates. An investor should consider, in the
case of any Offered Certificate purchased at a discount, the risk that a slower
than anticipated rate of principal payments on the Mortgage Loans could result
in an actual yield to such investor that is lower than the anticipated yield
and, in the case of a Class IO Certificate or any other Offered Certificate
purchased at a premium, the risk that a faster than anticipated rate of
principal payments could result in an actual yield to such investor that is
lower than the anticipated yield. In general, the earlier a payment of principal
on the Mortgage Loans is distributed or otherwise results in reduction of the
principal balance of an Offered Certificate that is a Sequential Pay Certificate
purchased at a discount or premium, the greater will be the effect on an
investor's yield to maturity. As a result, the effect on an investor's yield of
principal payments on the Mortgage Loans occurring at a rate higher (or lower)
than the rate anticipated by the investor during any particular period would not
be fully offset by a subsequent like reduction (or increase) in the rate of such
principal payments. THE YIELD ON THE CLASS IO CERTIFICATES WILL BE AFFECTED BY
ALL PRINCIPAL PAYMENTS ON THE MORTGAGE
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LOANS, AND INVESTORS IN SUCH CERTIFICATES SHOULD FULLY CONSIDER THE RISK THAT A
RAPID RATE OF PRINCIPAL PAYMENTS ON THE MORTGAGE LOANS COULD RESULT IN THE
FAILURE OF SUCH INVESTORS TO RECOUP THEIR INITIAL INVESTMENTS. Because the rate
of principal payments on the Mortgage Loans will depend on future events and a
variety of factors (as described more fully below), no assurance can be given as
to such rate or the rate of principal prepayments in particular. The Depositor
is not aware of any relevant publicly available or authoritative statistics with
respect to the historical prepayment experience of a large group of mortgage
loans comparable to the Mortgage Loans.
LOSSES AND SHORTFALLS. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne by the holders of the
respective Classes of Sequential Pay Certificates, to the extent of amounts
otherwise distributable in respect of their Certificates, in reverse
alphabetical order of their Class designations. Realized Losses and Additional
Trust Fund Expenses will be allocated, as and to the extent described herein, to
the respective Classes of Sequential Pay Certificates (in reduction of the
Certificate Balance of each such Class), in reverse alphabetical order of their
Class designations. Any Realized Loss or Additional Trust Fund Expenses
allocated in reduction of the Certificate Balance of any Class of Sequential Pay
Certificates will result in a corresponding reduction in the notional amount of
the related Class IO Component. As more fully described herein under
"Description of the Certificates--Distributions--Distributable Certificate
Interest," Net Aggregate Prepayment Interest Shortfalls will generally be borne
by the respective Classes of Regular Interest Certificates on a PRO RATA basis.
PASS-THROUGH RATES. [The Pass-Through Rate applicable to each Class IO
Component will be variable and will be equal to the Weighted Average Net
Mortgage Rate from time to time minus the fixed Pass-Through Rate on the Class
of Sequential Pay Certificates relating to such Class IO Component. Accordingly,
the Pass-Through Rates on the Class IO Components and, correspondingly, the
yield on the Class IO Certificates, will be sensitive to changes in the relative
composition of the Mortgage Pool as a result of scheduled amortization,
voluntary prepayments and liquidations and to changes in the relative sizes of
the Certificate Balances of the respective Classes of Sequential Pay
Certificates.]
CERTAIN RELEVANT FACTORS. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, Lockout Periods, provisions requiring
the payment of Prepayment Premiums and Yield Maintenance Charges and
amortization terms that require Balloon Payments), the demographics and relative
economic vitality of the areas in which the Mortgaged Properties are located and
the general supply and demand for rental units, hotel/motel guest rooms, health
care facility beds, mobile home park pads or comparable commercial space, as
applicable, in such areas, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. See "Risk Factors--The Mortgage Loans"
and "Description of the Mortgage Pool" herein and "Yield and Prepayment
Considerations" in the Prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below the Mortgage
Rate at which a Mortgage Loan accrues interest, the related borrower may have an
increased incentive to refinance its mortgage loan. Conversely, to the extent
prevailing market interest rates exceed the applicable Mortgage Rate for any
Mortgage Loan, such Mortgage Loan may be less likely to prepay.
As of the Cut-off Date, all of the Mortgage Loans may be prepaid at any time
after the expiration of the applicable Lockout Period [and/or any period when
the holder of a Mortgage may require a borrower to pledge Defeasance Collateral
in lieu of prepaying the related Mortgage Loan (a "Required Defeasance
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Period")], subject, in most cases, to the payment of a Prepayment Premium or a
Yield Maintenance Charge. A requirement that a prepayment be accompanied by a
Prepayment Premium or Yield Maintenance Charge may not provide a sufficient
economic disincentive to deter a borrower from refinancing at a more favorable
interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell or
refinance Mortgaged Properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some borrowers may be
motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that will
affect the rate and timing of prepayments and defaults on the Mortgage Loans, as
to the relative importance of such factors, as to the percentage of the
principal balance of the Mortgage Loans that will be prepaid or as to whether a
default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
DELAY IN PAYMENT OF DISTRIBUTIONS. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be at least
______ days following the Due Dates for the Mortgage Loans during the related
Collection Period, the effective yield to the holders of the Offered
Certificates will be lower than the yield that would otherwise be produced by
the applicable Pass-Through Rates and purchase prices (assuming such prices did
not account for such delay).
UNPAID DISTRIBUTABLE CERTIFICATE INTEREST. As described under "Description
of the Certificates--Distributions--Application of the Available Distribution
Amount" herein, if the portion of the Available Distribution Amount
distributable in respect of interest on any Class of Offered Certificates on any
Distribution Date is less than the Distributable Certificate Interest then
payable for such Class, the shortfall will be distributable to holders of such
Class of Certificates on subsequent Distribution Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Certificates
for so long as it is outstanding.
[YIELD SENSITIVITY OF THE CLASS IO CERTIFICATES. The yield to maturity on
the Class IO Certificates will be extremely sensitive to the rate and timing of
principal payments (including by reason of prepayments, defaults and
liquidations) on the Mortgage Loans. ACCORDINGLY, INVESTORS IN THE CLASS IO
CERTIFICATES SHOULD FULLY CONSIDER THE ASSOCIATED RISKS, INCLUDING THE RISK THAT
A RAPID RATE OF PREPAYMENT OF THE MORTGAGE LOANS COULD RESULT IN THE FAILURE OF
SUCH INVESTORS TO FULLY RECOUP THEIR INITIAL INVESTMENTS. The allocation of a
portion of collected Prepayment Premiums and Yield Maintenance Charges to the
Class IO Certificates is intended to reduce those risks; however, such
allocation may be insufficient to offset fully the adverse effects on the yield
on such Class of Certificates that the related prepayments may otherwise have.]
PRICE/YIELD TABLES
[The tables beginning on page B-______ of Annex ______ hereto (the "Yield
Tables") show the pre-tax corporate bond equivalent ("CBE") yield to maturity,
modified duration (except in the case of the Class IO Certificates), weighted
average life, first Distribution Date on which principal is to be paid ("First
Principal Payment Date") and final Distribution Date on which principal is to be
paid ("Last Principal Payment Date") with respect to each Class of Offered
Certificates, prepared using the Table Assumptions (as described below) and,
where applicable, the specified assumed purchase prices (which prices do not
include accrued interest). Assumed purchase prices are expressed in 32nds (i.e.
______ means ___%) as a percentage of the initial Certificate Balance (or, in
the case of the Class IO Certificates, of the aggregate of the initial notional
amounts of the respective Class IO Components) of each Class of Offered
Certificates. For purposes of the Yield Tables relating to the Class IO
Certificates, the information therein relating to weighted average life, First
Principal Payment Date and Last Principal Payment Date is being calculated in
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<PAGE>
respect of the aggregate notional amount of the respective Class IO Components
of the Class IO Certificates.]
[The yields set forth in the Yield Tables were calculated by determining the
monthly discount rates which, when applied to the assumed stream of cash flows
to be paid on each Class of Offered Certificates, would cause the discounted
present value of such assumed stream of cash flows to equal the assumed purchase
prices, plus accrued interest from and including the Cut-off Date to but
excluding the Assumed Settlement Date (as defined below), and by converting such
monthly rates to semi-annual corporate bond equivalent rates. Such calculation
does 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 distributions
on the Offered Certificates and consequently does not purport to reflect the
return on any investment in such Classes of Offered Certificates when such
reinvestment rates are considered. For purposes of the Yield Tables (except in
the case of the Class IO Certificates), "modified duration" has been calculated
using the modified Macaulay Duration as specified in the "PSA Standard
Formulas." The Macaulay Duration is calculated as the present value weighted
average time to receive future payments of principal and interest, and the PSA
Standard Formula modified duration is calculated by dividing the Macaulay
Duration by the appropriate semi-annual compounding factor. The duration of a
security may be calculated according to various methodologies; accordingly, no
representation is made by the Depositor or any other person that the "modified
duration" approach used herein is appropriate. Duration, like yield, will be
affected by the prepayment rate of the Mortgage Loans and extensions in respect
of Balloon Payments that actually occur during the life of the Class A, Class B,
Class C, Class D and Class E Certificates and by the actual performance of the
Mortgage Loans, all of which may differ, and may differ significantly, from the
assumptions used in preparing the Yield Tables.]
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the "Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum percentage of the then
scheduled principal balance of one or more mortgage loans.
[The Yield Tables were derived from calculations based on the following
assumptions (the "Table Assumptions"): (i) no Mortgage Loan prepays during any
applicable Lockout Period [or Required Defeasance Period] or during any period
when a Prepayment Premium or a Yield Maintenance Charge could be required in
connection with a voluntary prepayment of principal and, otherwise, in the case
of each of the Yield Tables, each Mortgage Loan is assumed to prepay at the
indicated level of CPR, with each prepayment being applied on the first day of
the applicable month in which it is assumed to be received, (ii) the
Pass-Through Rates and initial Certificate Balances of the respective Classes of
Sequential Pay Certificates are as described herein, (iii) there are no
delinquencies or defaults with respect to, and no modifications, waivers or
amendments of the terms of, the Mortgage Loans, (iv) there are no Realized
Losses, Additional Trust Fund Expenses or Appraisal Reduction Amounts with
respect to the Mortgage Loans or the Trust Fund, (v) scheduled interest and
principal payments on the Mortgage Loans are timely received, (vi) all Mortgage
Loans have Due Dates on the first day of each month and accrue interest on the
respective basis described herein (I.E., a 30/360 basis or an actual/360 basis),
(vii) all prepayments are accompanied by a full month's interest and there are
no Prepayment Interest Shortfalls, (viii) there are no breaches of the Mortgage
Loan Seller's representations and warranties regarding the Mortgage Loans, (ix)
no Prepayment Premiums or Yield Maintenance Charges are collected, (x) no party
entitled thereto exercises its right of optional termination of the Trust Fund
described herein, (xi) distributions on the Certificates are made on the 18th
day (each assumed to be a business day) of each month, commencing in ______
______, and (xii) the settlement date for the sale of the Offered Certificates
is ______ ______, ______ (the "Assumed Settlement Date").]
The characteristics of the Mortgage Loans differ in certain respects from
those assumed in preparing the Yield Tables, and the Yield Tables are presented
for illustrative purposes only. In particular, none of the Mortgage Loans permit
voluntary partial prepayments. Thus neither the Mortgage Pool nor any
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<PAGE>
Mortgage Loan will prepay at any constant rate, and it is unlikely that the
Mortgage Loans will prepay in a manner consistent with any designated scenario
for the Yield Tables. In addition, there can be no assurance that the Mortgage
Loans will prepay at any particular rate, that the Mortgage Loans will not
prepay (involuntarily or otherwise) during Lockout Periods [and/or Required
Defeasance Periods], that the actual pre-tax yields on, or any other payment
characteristics of, any Class of Offered Certificates will correspond to any of
the information shown in the Yield Tables, or that the aggregate purchase prices
of the Offered Certificates will be as assumed. Accordingly, investors must make
their own decisions as to the appropriate assumptions (including prepayment
assumptions) to be used in deciding whether to purchase the Offered
Certificates.
WEIGHTED AVERAGE LIFE
[The weighted average life of any Class A-1, Class A-2, Class A-3, Class B,
Class C, Class D or Class E Certificate refers to the average amount of time
that will elapse from the assumed Closing Date until each dollar allocable to
principal of such Certificate is distributed to the investor. The weighted
average life of any such Offered Certificate will be influenced by, among other
things, the rate at which principal on the Mortgage Loans is paid or otherwise
collected or advanced and applied to pay principal of such Offered Certificate.
As described herein, the Principal Distribution Amount for each Distribution
Date will generally be distributable first in respect of the Class A-1
Certificates until the Certificate Balance thereof is reduced to zero, and will
thereafter generally be distributable entirely in respect of the Class A-2
Certificates, the Class A-3 Certificates, the Class B Certificates, the Class C
Certificates, the Class D Certificates and the Class E Certificates, in that
order, in each case until the Certificate Balance of such Class of Certificates
is reduced to zero.]
[The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates (other than the Class IO
Certificates) that would be outstanding after each of the dates shown and the
corresponding weighted average life of each such Class of Offered Certificates.
The tables have been prepared on the basis of the Table Assumptions. To the
extent that the Mortgage Loans or the Certificates have characteristics that
differ from those assumed in preparing the tables, the Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D and/or Class E Certificates may mature
earlier or later than indicated by the tables. In particular, partial
prepayments on the Mortgage Loans in fact are not permitted. Accordingly, the
Mortgage Loans will not prepay at any constant rate, and it is highly unlikely
that the Mortgage Loans will prepay in a manner consistent with the assumptions
described above. In addition, variations in the actual prepayment experience and
the balance of the Mortgage Loans that prepay may increase or decrease the
percentages of initial Certificate Balances (and shorten or extend the weighted
average lives) shown in the following tables. Investors are urged to conduct
their own analyses of the rates at which the Mortgage Loans may be expected to
prepay.]
[The tables set forth below were prepared on the basis of the Table
Assumptions and indicate the resulting weighted average lives of each Class of
Offered Certificates (other than the Class IO Certificates) and set forth the
percentages of the initial Certificate Balance of such Class of Offered
Certificates that would be outstanding after each of the dates shown in each
case assuming the indicated level of CPR. For purposes of the following tables,
the weighted average life of an Offered Certificate (other than the Class IO
Certificates) is determined by (i) multiplying the amount of each principal
distribution thereon by the number of years from the Assumed Settlement Date of
such Certificate to the related Distribution Date, (ii) summing the results and
(iii) dividing the sum by the aggregate amount of the reductions in the
principal balance of such Certificate.]
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<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE [CLASS A-1 CERTIFICATES]
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT[, DEFEASANCE], YM OR
PP-- OTHERWISE AT INDICATED CPR
----------------------------------------------
<S> <C> <C> <C> <C> <C>
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - --------------------------------------------------------------------------- ------ ------- ------- ------- -------
Date.......................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
Weighted Average Life (in years)...........................................
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE [CLASS A-2 CERTIFICATES]
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, [DEFEASANCE,] YM OR PP-- OTHERWISE AT INDICATED
CPR
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ------------- ------------- ------------- -------------
Assumed Settlement Date....................................
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
Weighted Average Life (in years)...........................
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE [CLASS A-3 CERTIFICATES]
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, [DEFEASANCE,] YM OR
PP-- OTHERWISE AT INDICATED CPR
----------------------------------------------
<S> <C> <C> <C> <C> <C>
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - --------------------------------------------------------------------------- ------ ------- ------- ------- -------
Assumed Settlement Date....................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
Weighted Average Life (in years)...........................................
</TABLE>
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<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE [CLASS B CERTIFICATES]
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, [DEFEASANCE,] YM OR
PP-- OTHERWISE AT INDICATED CPR
----------------------------------------------
<S> <C> <C> <C> <C> <C>
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - --------------------------------------------------------------------------- ------ ------- ------- ------- -------
Assumed Settlement Date....................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
Weighted Average Life (in years)...........................................
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE [CLASS C CERTIFICATES]
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT,[ DEFEASANCE,] YM OR
PP-- OTHERWISE AT INDICATED CPR
----------------------------------------------
<S> <C> <C> <C> <C> <C>
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - --------------------------------------------------------------------------- ------ ------- ------- ------- -------
Assumed Settlement Date....................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
Weighted Average Life (in years)...........................................
</TABLE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE [CLASS D CERTIFICATES]
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT, [DEFEASANCE,] YM OR
PP-- OTHERWISE AT INDICATED CPR
----------------------------------------------
<S> <C> <C> <C> <C> <C>
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - --------------------------------------------------------------------------- ------ ------- ------- ------- -------
Assumed Settlement Date....................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
...........................................................................
Weighted Average Life (in years)...........................................
</TABLE>
S-91
<PAGE>
PERCENTAGES OF THE INITIAL CERTIFICATE BALANCE OF THE [CLASS E CERTIFICATES]
<TABLE>
<CAPTION>
0% CPR DURING LOCKOUT,[ DEFEASANCE,] YM OR PP-- OTHERWISE AT INDICATED
CPR
-----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DISTRIBUTION DATE 0% CPR 10% CPR 20% CPR 30% CPR 50% CPR
- - ----------------------------------------------------------- ----------- ------------- ------------- ------------- -------------
Assumed Settlement Date....................................
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
...........................................................
Weighted Average Life (in years)...........................
</TABLE>
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered Certificates
will be used by the Depositor to purchase the Mortgage Loans and to pay certain
expenses in connection with the issuance of the Certificates.
S-92
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
[Upon the issuance of the Offered Certificates, ______, counsel to the
Depositor, will deliver its opinion generally to the effect that, assuming
compliance with all provisions of the Pooling and Servicing Agreement, for
federal income tax purposes, the portions of the Trust Fund designated in the
Pooling and Servicing Agreement as "REMIC I," "REMIC II" and "REMIC III,"
respectively, will each qualify as a REMIC under the Code. The assets of REMIC I
will consist of the Mortgage Loans, any REO Properties acquired on behalf of the
Certificateholders and funds deposited from time to time in the Custodial
Account, the Collection Account and any REO Account (see "Servicing of the
Mortgage Loans-- Custodial Account" and "--REO Properties" and "Description of
the Certificates--Collection Account"). For federal income tax purposes, (a) the
separate noncertificated regular interests in REMIC I will be the "regular
interests" in REMIC I and will constitute the assets of REMIC II, (b) the Class
R-I Certificates will be the sole class of "residual interests" in REMIC I, (c)
the separate noncertificated regular interests in REMIC II will be the "regular
interests" in REMIC II and will constitute the assets of REMIC III, (d) the
Class R-II Certificates will be the sole class of "residual interests," in REMIC
II, (e) the Regular Interest Certificates (or, in the case of the Class IO
Certificates, the Class IO Components) evidence the ownership of the "regular
interests" in REMIC III, which generally will be treated as debt instruments of
REMIC III, and (f) the Class R-III Certificates will be the sole class of
"residual interests" in REMIC III. For federal income tax purposes the Class IO
Certificates will consist of fourteen components, each corresponding to one of
the Classes of Sequential Pay Certificates constituting "regular interests" in
REMIC III. See "Federal Income Tax Considerations" in the Prospectus.]
DISCOUNT AND PREMIUM; PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES
[The Class ______, Class ______, Class ______ and Class ______ Certificates
will not, and the Class IO and Class ______ Certificates will, be treated as
having been issued with original issue discount for federal income tax reporting
purposes. The prepayment assumption that will be used in determining the rate of
accrual of original issue discount, market discount and premium, if any, for
federal income tax purposes will be based on the assumption that subsequent to
the date of any determination the Mortgage Loans will prepay at a rate equal to
a CPR of 0%. No representation is made as to how the Mortgage Loans will prepay,
if at all. See "Federal Income Tax Considerations" in the Prospectus.]
[If the method for computing original issue discount described in the
Prospectus results in a negative amount for any period with respect to a
Certificateholder (in particular, the holder of a Class IO Certificate), the
amount of original issue discount allocable to such period would be zero and
such Certificateholder will be permitted to offset such negative amount only
against future original issue discount (if any) attributable to such
Certificates. Although the matter is not free from doubt, a holder of a Class IO
Certificate may be permitted to deduct a loss to the extent that his or her
respective remaining basis in such Certificate exceeds the maximum amount of
future payments to which such Certificateholder is entitled, assuming no further
prepayments of the Mortgage Loans. Any such loss might be treated as a capital
loss.]
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. The OID
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 the holder of an Offered
Certificate may be able to select a method for recognizing original issue
discount that differs from that used by the Trustee in preparing reports to the
Certificateholders and the IRS. Prospective purchasers of Offered Certificates
are advised to consult their tax advisors concerning the tax treatment of such
Certificates.
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<PAGE>
Certain Classes of the Offered Certificates may be treated for federal
income tax purposes as having been issued at a premium. Whether any holder of
such a Class of Certificates will be treated as holding a Certificate with
amortizable bond premium will depend on such Certificateholder's purchase price
and the distributions remaining to be made on such Certificate at the time of
its acquisition by such Certificateholder. Holders of such Classes of
Certificates should consult their own tax advisors regarding the possibility of
making an election to amortize such premium. See "Federal Income Tax
Considerations-- Taxation of Regular Interest Securities--Market Discount and
Premium" in the Prospectus.
Prepayment Premiums and Yield Maintenance Charges actually collected will be
distributed to the holders of the Offered Certificates as described herein. 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 an Offered
Certificate, but it is not expected, for federal income tax reporting purposes,
that Prepayment Premiums and Yield Maintenance Charges will be treated as giving
rise to any income to the holders of the Offered Certificates prior to the
Master Servicer's actual receipt of a Prepayment Premium or Yield Maintenance
Charge. It appears that Prepayment Premiums and Yield Maintenance Charges, if
any, will be treated as ordinary income rather than capital gain. However, that
is not entirely clear and Certificateholders should consult their own tax
advisors concerning the treatment of Prepayment Premiums and Yield Maintenance
Charges.
CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES
[In general, except to the extent noted below, the Offered Certificates will
be "real estate assets" within the meaning of Section 856(c)(5)(A) of the Code
in the same proportion that the assets of the Trust Fund would be so treated.
The Offered Certificates will generally only be considered assets described in
Section 7701(a)(19)(C) of the Code to the extent that the Mortgage Loans are
secured by residential property and, accordingly, investment in the Offered
Certificates may not be suitable for certain thrift institutions. Moreover, if
___% or more of the assets of the Trust Fund qualify for any of the foregoing
characterizations at all times during a calendar year, the Offered Certificates
will qualify for the corresponding status in their entirety for that calendar
year. Interest (including original issue discount) on the Offered Certificates
will be interest described in Section 856(c)(3)(B) of the Code to the extent
that such Certificates are treated as "real estate assets" within the meaning of
Section 856(c)(5)(A) of the Code. In addition, the Offered Certificates will be
"qualified mortgages" within the meaning of Section 860G(a)(3) of the Code. The
determination as to the percentage of the Trust Fund that constitutes assets
described in the foregoing sections of the Code will be made with respect to
calendar quarter based on the average adjusted basis of each category of the
assets included in the Trust Fund during such calendar quarter.]
[However, the Trust Fund will include, in addition to the Mortgage Loans,
payments on Mortgage Loans held pending distribution on the Certificates,
certain amounts in reserve accounts and property acquired by foreclosure held
pending sale. It is unclear whether property acquired by foreclosure held
pending sale would be considered to be part of the Mortgage Loans, or whether
such assets (to the extent not invested in assets described in the foregoing
sections of the Code) otherwise would receive the same treatment as the Mortgage
Loans for purposes of all of the foregoing sections of the Code. In addition, to
the extent an Offered Certificate represents ownership of an interest in any
Mortgage Loan which is secured in part by the related borrower's interest in an
account containing a holdback of loan proceeds, a portion of such Certificate
may not represent ownership of assets described in Section 7701(a)(19)(C) of the
Code and "real estate assets" under Section 856(c)(5)(A) of the Code and the
interest thereon may not constitute "interest on obligations secured by
mortgages on real property" within the meaning of Section 856(c)(3)(B) of the
Code. The REMIC Regulations (as defined in the Prospectus) do provide, however,
that cash received from payments on Mortgage Loans held pending distribution are
considered part of the Mortgage Loans for purposes of Section 856(c)(5)(A) of
the Code.]
S-94
<PAGE>
See "Description of the Mortgage Pool" herein.
POSSIBLE TAXES ON INCOME FROM FORECLOSURE PROPERTY AND OTHER TAXES
[In general, the Special Servicer will be obligated to operate and manage
any Mortgaged Property acquired as REO Property in a manner that (i) maintains
its status as "foreclosure property" under the REMIC Provisions and (ii) would,
to the extent commercially reasonable and consistent with the foregoing clause
(i), maximize the Trust Fund's net after-tax proceeds from such property. After
the Special Servicer reviews the operation of such property and consults with
the Trustee or other REMIC administrator to determine the Trust Fund's federal
income tax reporting position with respect to income it is anticipated that the
Trust Fund would derive from such property, the Special Servicer could determine
that it would not be commercially reasonable to manage and operate such property
in a manner that would avoid the imposition of a tax on "net income from
foreclosure property" within the meaning of the REMIC Regulations or a tax on
"prohibited transactions" under Section 860F of the Code (either such tax
referred to herein as an "REO Tax"). To the extent that income the Trust Fund
receives from an REO Property is subject to a tax on (i) "net income from
foreclosure property", such income would be subject to federal tax at the
highest marginal corporate tax rate (currently 35%) and (ii) "prohibited
transactions", such income would be subject to federal tax at a 100% rate. The
determination as to whether income from an REO Property would be subject to an
REO Tax will depend on the specific facts and circumstances relating to the
management and operation of each REO Property. Generally, income from an REO
Property that is directly operated by the Special Servicer would be apportioned
and classified as "service" or "non-service" income. The "service" portion of
such income could be subject to federal tax either at the highest marginal
corporate tax rate or at the 100% rate on "prohibited transactions", and the
"non-service" portion of such income could be subject to federal tax at the
highest marginal corporate tax rate or, although it appears unlikely, at the
100% rate applicable to "prohibited transactions". Any REO Tax imposed on the
Trust Fund's income from an REO Property would reduce the amount available for
distribution to Certificateholders. Certificateholders are advised to consult
their own tax advisors regarding the possible imposition of REO Taxes in
connection with the operation of commercial REO Properties by REMICs.
To the extent permitted by then applicable laws, any tax on "prohibited
transactions", tax on non-permitted contributions or tax on "net income from
foreclosure property" that may be imposed on REMIC I, REMIC II or REMIC III will
be borne by the Trustee, the Master Servicer or the Special Servicer, in any
case out of its own funds, provided that such person has sufficient assets to do
so, and provided further that such tax arises out of a breach of such person's
obligations under the Pooling and Servicing Agreement. Any such tax not borne by
the Trustee, the Master Servicer or the Special Servicer will be charged against
the Trust Fund resulting in a reduction in amounts available for distribution to
the Certificateholders. See "Federal Income Tax Considerations--Taxation of the
REMIC--Prohibited Transactions and Contributions Tax" in the Prospectus.]
REPORTING AND OTHER ADMINISTRATIVE MATTERS
Reporting of interest income, including any original issue discount, if any,
with respect to Regular Interest Certificates is required annually, and may be
required more frequently under Treasury regulations. These information reports
generally are required to be sent to individual holders of Regular Interest
Certificates and the Internal Revenue Service; holders of Regular Interest
Certificates that are corporations, trusts, securities dealers and certain other
non-individuals will be provided interest and original issue discount income
information and the information set forth in the following paragraph upon
request in accordance with the requirements of the applicable regulations. The
information must be provided by the later of 30 days after the end of the
quarter for which the information was requested, or two weeks after the receipt
of the request. The REMIC must also comply with rules requiring a Regular
Interest Certificate issued with original issue discount to disclose on its face
the amount of original issue discount and the issue date, and requiring such
information to be reported to the Internal Revenue Service.
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<PAGE>
As applicable, the Regular Interest Certificate information reports will
include a statement of the adjusted issue price of the REMIC Regular Certificate
at the beginning of each accrual period. In addition, the reports will include
information required by regulations with respect to computing the accrual of any
market discount. Because exact computation of the accrual of market discount on
a constant yield method would require information relating to the holder's
purchase price that the REMIC may not have, such regulations only require that
information pertaining to the appropriate proportionate method of accruing
market discount be provided.
The "tax matters person" for each REMIC will be the holder of Residual
Interest Certificates evidencing the largest percentage interest in the
applicable Class of Residual Interest Certificates. All holders of Residual
Interest Certificates will irrevocably designate the Trustee (or other REMIC
administrator appointed by the Trustee) as agent for such "tax matters person"
in all respects.
For further information regarding the federal income tax consequences of
investing in the Offered Certificates, see "Federal Income Tax Considerations"
in the Prospectus.
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds, separate accounts and general accounts in which
such plans, accounts or arrangements are invested, that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code (each, a "Plan") should carefully review with its legal
advisors whether the purchase or holding of Offered Certificates could give rise
to a transaction that is prohibited or is not otherwise permitted either under
ERISA or Section 4975 of the Code or whether there exists any statutory or
administrative exemption applicable thereto.
[The Underwriter received from the Department of Labor (the "DOL") an
individual prohibited transaction exemption, Prohibited Transaction Exemption
91-14 (the "Exemption"), which 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 such prohibited transactions pursuant to
Sections 4975(a) and (b) of the Code, certain transactions, among others,
relating to the servicing and operation of mortgage pools and the purchase, sale
and holding of mortgage pass-through certificates underwritten or placed by an
Exemption-Favored Party, as hereinafter defined, provided that certain
conditions set forth in the Exemption are satisfied. For purposes of this
discussion, the term "Exemption-Favored Party" shall include (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 the Underwriter or a person described in (b) is a manager or co-manager
with respect to the Offered Certificates.
The Exemption sets forth six general conditions which must be satisfied for
a transaction involving the purchase, sale and holding of Offered Certificates
to be eligible for exemptive relief thereunder. First, the acquisition of
Offered Certificates by a Plan must be on terms that are at least as favorable
to the Plan as they would be in an arm's-length transaction with an unrelated
party. Second, the Exemption only applies to Offered Certificates evidencing
rights and interests not subordinated to the rights and interests evidenced by
the other Offered Certificates of the same series. Third, the Offered
Certificates at the time of acquisition by the Plan must be rated in one of the
three highest generic rating categories by DCR, Moody's, Standard & Poor's
Ratings Services A Division of the McGraw-Hill Companies, Inc. ("S&P") or Fitch
IBCA Inc. ("Fitch"). Fourth, the Trustee cannot be an affiliate of any other
member of the "Restricted Group", which consists of any Exemption-Favored Party,
the Depositor, the Trustee, the Master Servicer, the Special Servicer, any
sub-servicer, the Mortgage Loan Seller, the provider of any credit support, any
mortgagor with respect to Mortgage Loans constituting more than 5% of the
aggregate unamortized principal balance of the Mortgage Loans as of the date of
initial issuance of the Offered
S-96
<PAGE>
Certificates and any affiliates of the foregoing parties. Fifth, the sum of all
payments made to and retained by the Exemption-Favored Parties in connection
with the sale of Certificates must represent not more than reasonable
compensation for underwriting the Offered Certificates; the sum of all payments
made to and retained by the Depositor pursuant to the assignment of the Mortgage
Loans to the Trust Fund must represent not more than the fair market value of
such obligations; and the sum of all payments made to and retained by the Master
Servicer, the Special Servicer and any sub-servicer must represent not more than
reasonable compensation for such person's services under the Pooling and
Servicing Agreement and reimbursement of such person's reasonable expenses in
connection therewith. Sixth, the investing Plan must be an accredited investor
as defined in Rule 501(a)(1) of Regulation D of the Commission under the
Securities Act.
Because the Senior Certificates are not subordinated to any other Class of
Offered Certificates, the second general condition set forth above is satisfied
with respect to such Certificates. It is a condition of their issuance that the
Senior Certificates be rated not lower than "______" by ______ [, ______] and
"______" by ______. Accordingly, upon initial issuance, the third general
condition set forth above will be satisfied with respect to the Senior
Certificates. As of the Closing Date, the fourth general condition set forth
above will be satisfied with respect to the Senior Certificates. A fiduciary of
a Plan contemplating purchasing a Senior Certificate in the secondary market
must make its own determination that, at the time of such purchase, such
Certificate continues to satisfy the second, third and fourth general conditions
set forth above. In addition, a fiduciary of a Plan contemplating the purchase
of a Senior Certificate, whether in the initial issuance of such Certificate or
in the secondary market, must make its own determination that the first, fifth
and sixth general conditions set forth above will be satisfied with respect to
such Certificate.]
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest generic
categories of DCR, Moody's, S&P or Fitch for at least one year prior to the
Plan's acquisition of Senior Certificates; and (iii) certificates in such other
investment pools must have been purchased by investors other than Plans for at
least one year prior to any Plan's acquisition of Senior Certificates.
If the general conditions of the Exemption are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a) and 407(a)
of ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Sections 4975(c)(1)(A) through (D) of the Code) in connection
with (i) the direct or indirect sale, exchange or transfer of Senior
Certificates acquired by a Plan upon initial issuance from the Depositor or an
Exemption-Favored Party when the Depositor, the Mortgage Loan Seller, the Master
Servicer, the Special Servicer, the Trustee or any sub-servicer, provider of
credit support, Exemption-Favored Party or mortgagor is a Party in Interest with
respect to the investing Plan, (ii) the direct or indirect acquisition or
disposition in the secondary market of Senior Certificates by a Plan and (iii)
the continued holding of Senior Certificates by a Plan. However, no exemption is
provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of
ERISA for the acquisition or holding of a Senior Certificate on behalf of an
"Excluded Plan" (as defined in the following sentence) by any person who has
discretionary authority or renders investment advice with respect to the assets
of such Excluded Plan. For purposes hereof, an Excluded Plan is a Plan sponsored
by any member of the Restricted Group.
Moreover, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
also provide an exemption from the restrictions imposed by Sections 406(b)(1)
and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of the Code
in connection with (i) the direct or indirect sale, exchange or transfer of
Senior Certificates in the initial issuance of Senior Certificates between the
Depositor or an Exemption-Favored Party and a Plan when the person who has
discretionary authority or renders investment advice with respect to the
investment of Plan assets in such Certificates is (a) a mortgagor with respect
to 5% or less of the fair market value of the
S-97
<PAGE>
Mortgage Loans or (b) an affiliate of such a person, (ii) the direct or indirect
acquisition or disposition in the secondary market of Senior Certificates by a
Plan and (iii) the holding of Senior Certificates by a Plan.
Further, if the general conditions of the Exemption, as well as certain
other conditions set forth in the Exemption, are satisfied, the Exemption may
provide an exemption from the restrictions imposed by Sections 406(a), 406(b)
and 407(a) of ERISA, and the taxes imposed by Sections 4975(a) and (b) of the
Code by reason of Section 4975(c) of the Code for transactions in connection
with the servicing, management and operation of the Trust Fund.
Lastly, if the general conditions of the Exemption are satisfied, the
Exemption also may provide an exemption from the restrictions imposed by
Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a)
and (b) of the Code by reason of Sections 4975(c)(1)(A) through (D) of the Code
if such restrictions are deemed to otherwise apply merely because a person is
deemed to be a Party in Interest (as defined in the Prospectus) with respect to
an investing Plan by virtue of providing services to the Plan (or by virtue of
having certain specified relationships to such a person) solely as a result of
the Plan's ownership of Senior Certificates.
Before purchasing a Senior Certificate, a fiduciary of a Plan should itself
confirm (i) that the Senior Certificates constitute "certificates" for purposes
of the Exemption and (ii) that the general and other conditions set forth in the
Exemption and the other requirements set forth in the Exemption would be
satisfied at the time of such purchase.
In addition to making its own determination as to the availability of the
exemptive relief provided in the Exemption, the Plan fiduciary considering an
investment in Senior Certificates should consider the availability of any other
prohibited transaction exemptions. See "ERISA Considerations" in the Prospectus.
There can be no assurance that any such class exemptions will apply with respect
to any particular Plan investment in Senior Certificates or, even if it were
deemed to apply, that any exemption would apply to all prohibited transactions
that may occur in connection with such investment. A purchaser of Senior
Certificates should be aware, however, that even if the conditions specified in
one or more exemptions are satisfied, the scope of relief provided by an
exemption may not cover all acts which might be construed as prohibited
transactions.
[Because the characteristics of the Class B, Class C, Class D and Class E
Certificates do not meet the requirements of the Exemption, the purchase or
holding of such Certificates by a Plan may result in a prohibited transaction or
the imposition of excise taxes or civil penalties. AS A RESULT, NO TRANSFER OF A
CLASS B, CLASS C, CLASS D OR CLASS E CERTIFICATE OR ANY INTEREST THEREIN MAY BE
MADE TO A PLAN OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING SUCH
CERTIFICATE OR INTEREST THEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE
OF, OR WITH ASSETS OF A PLAN UNLESS THE PURCHASE AND HOLDING OF SUCH CERTIFICATE
OR INTEREST THEREIN IS EXEMPT FROM THE PROHIBITED TRANSACTION PROVISIONS OF
SECTION 406 OF ERISA AND SECTION 4975 OF THE CODE UNDER SECTIONS I AND III OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60, WHICH PROVIDES AN EXEMPTION FROM
THE PROHIBITED TRANSACTION RULES FOR CERTAIN TRANSACTIONS INVOLVING AN INSURANCE
COMPANY GENERAL ACCOUNT. ANY PERSON TO WHOM A TRANSFER OF ANY SUCH CERTIFICATE
OR INTEREST THEREIN IS MADE WILL BE DEEMED TO HAVE REPRESENTED TO THE DEPOSITOR,
THE UNDERWRITER, THE MASTER SERVICER, THE SPECIAL SERVICER, THE TRUSTEE, ANY
SUB-SERVICER AND ANY MORTGAGOR WITH RESPECT TO THE MORTGAGE LOANS, THAT EITHER
(I) IT IS NOT A PLAN AND IS NOT DIRECTLY OR INDIRECTLY PURCHASING SUCH
CERTIFICATE OR INTEREST THEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE
OF, OR WITH ASSETS OF A PLAN OR (II) THE PURCHASE AND HOLDING OF SUCH
CERTIFICATE OR INTEREST THEREIN IS SO EXEMPT ON THE BASIS OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60.
Section III of Prohibited Transaction Class Exemption 95-60 ("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 Code
transactions in connection with the servicing, management and operation of a
trust (such as the Trust Fund) in which an insurance company general account has
an interest as a result of its acquisition of certificates issued by the trust,
provided that certain conditions are satisfied. If these conditions are met,
insurance company general accounts would be allowed to purchase classes of
S-98
<PAGE>
Certificates (such as the Class B, Class C, Class D and Class E Certificates)
which do not meet the requirements of the Exemption solely because they (i) are
subordinated to other Classes of Certificates and/or (ii) have not received a
rating at the time of the acquisition in one of the three highest rating
categories from DCR, Moody's, S&P or Fitch. All other conditions of the
Exemption would have to be satisfied in order for PTCE 95-60 to be available.
Before purchasing Class B, Class C, Class D or Class E 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.]
LEGAL INVESTMENT
[Upon issuance, the Class A, Class IO and Class B Certificates (the "SMMEA
Certificates") will constitute "mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984, as amended ("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 (or effectively first) mortgage liens on one or more parcels of
real estate upon which is located a residential, commercial or mixed residential
and commercial structure. No representation is made as to the effect on their
status as "mortgage related securities" if any of the mortgagors entitled to do
so elect to defease their respective Mortgage Loans. Such defeasance may not
occur within two years of the Closing Date.]
[THE CLASS B CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D
CERTIFICATES AND THE CLASS E CERTIFICATES WILL NOT BE "MORTGAGE RELATED
SECURITIES" FOR PURPOSES OF SMMEA. As a result, the appropriate characterization
of such Offered Certificates under various legal investment restrictions, and
thus the ability of investors subject to these restrictions to purchase such
Offered Certificates, is subject to significant interpretive uncertainties.]
The Depositor makes no representation as to the ability of particular
investors to purchase the Offered Certificates under applicable legal investment
or other restrictions. All institutions whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for them or are subject to investment, capital or other
restrictions.
All depository institutions considering an investment in the Offered
Certificates should review the Federal Financial Institutions Examination
Council's Supervisory Policy Statement on the Selection of Securities Dealers
and Unsuitable Investment Practices (to the extent adopted by their respective
regulatory authorities), setting forth, in relevant part, certain investment
practices deemed to be unsuitable for an institution's investment portfolio, as
well as guidelines for investing in certain types of mortgage related
securities.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying".
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Certificates or to
purchase Offered Certificates representing more than a specified percentage of
the investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for such investors.
See "Legal Investment" in the Prospectus.
S-99
<PAGE>
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the underwriting agreement
(the "Underwriting Agreement") between the Depositor and the Underwriter, the
Depositor has agreed to sell to the Underwriter, and the Underwriter has agreed
to purchase, each class of Offered Certificates.
In the Underwriting Agreement, the Underwriter has agreed to purchase all of
the Offered Certificates if any are purchased. Proceeds to the Depositor from
the sale of the Offered Certificates, before deducting expenses payable by the
Depositor, will be approximately $_________ , which includes accrued interest.
Distribution of the Offered Certificates will be made by the Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. The Underwriter may effect such 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. In connection with the purchase and sale of
the Offered Certificates, the Underwriter may be deemed to have received
compensation from the Depositor in the form of underwriting discounts. The
Underwriter and any dealers that participate with the Underwriter in the
distribution of the Offered Certificates may be deemed to be underwriters and
any profit on the resale of the Offered Certificates positioned by them may be
deemed to be underwriting discounts and commissions under the Securities Act.
Purchasers of the Offered Certificates, including dealers, may, depending on
the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act in connection with reoffers and sales
by them of Offered Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
The Depositor also has been advised by the Underwriter that it, through one
or more of its affiliates, currently intends to make a market in the Offered
Certificates; however, the Underwriter has no obligation to do so, any market
making may be discontinued at any time and there can be no assurance that an
active public market for the Offered Certificates will develop. See "Risk
Factors--Limited Liquidity" herein and in the Prospectus.
The Depositor has agreed to indemnify the Underwriter and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act against, or to make contributions to the Underwriter and each
such controlling person with respect to, certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for each of the Depositor and the
Underwriter by __________, New York, New York.
S-100
<PAGE>
RATINGS
[It is a condition of their issuance that each of the Class A-1, Class A-2
and Class A-3 Certificates be rated not lower than "______" by ______ [, ______
by ______] and "______" by ______; that the Class IO Certificates be rated not
lower than "______" by______ [, ______ by ______] and "______" by ______; that
the Class B Certificates be rated not lower than "______" by______ [, ______ by
______] and "______" by ______; that the Class C Certificates be rated not lower
than "______" by______ [, ______ by ______] and "______" by ______, that the
Class D Certificates be rated not lower than "______" by ______[, ______by
______] and "______" by ______; and that the Class E Certificates be rated not
lower than "______" by ______[, ______ by ______] and "______" by ______.]
The ratings on the Offered Certificates address the likelihood of timely
receipt by holders thereof of all distributions of interest to which they are
entitled on each Distribution Date and, [except in the case of the Class IO
Certificates,] all distributions of principal to which they are entitled by the
Rated Final Distribution Date. The ratings take into consideration the credit
quality of the Mortgage Pool, structural and legal aspects associated with the
Offered Certificates, and the extent to which the payment stream from the
Mortgage Pool is adequate to make payments required under the Offered
Certificates. A security rating does not represent any assessment of (i) the
likelihood or frequency of principal prepayments or default interest on the
Mortgage Loans, (ii) the degree to which such prepayments might differ from
those originally anticipated or (iii) whether and to what extent Additional
Interest, Prepayment Premiums and Yield Maintenance Charges 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 holders of
the Class IO Certificates might not fully recover their investment in the event
of rapid prepayments of the Mortgage Loans (including both voluntary and
involuntary prepayments). Therefore, such security rating addresses credit risk
and not the risk of prepayment. As described herein, the amounts payable with
respect to the Class IO Certificates consist only of interest. If the entire
Mortgage Pool were to prepay in the initial month, with the result that the
holders of the Class IO Certificates receive only a single month's interest and
thus suffer a nearly complete loss of their investment, all amounts "due" to
such Certificateholders will nevertheless have been paid, and such result is
consistent with the ratings received on the Class IO Certificates. The Class IO
Certificates' notional amount upon which interest is calculated is reduced by
the allocation of Realized Losses and prepayments, whether voluntary or
involuntary. The rating does not address the timing or magnitude of reductions
of the notional amounts of the Class IO Components, but only the obligation to
pay interest timely on the notional amount of any Class IO Component as reduced
from time to time. Accordingly, the ratings of the Class IO Certificates should
be evaluated independently from similar ratings on other types of securities.]
There can be no assurance that any rating agency not requested to rate the
Offered Certificates will not nonetheless issue a rating to any or all Classes
thereof and, if so, what such rating or ratings would be. A rating assigned to
any Class of Offered Certificates by a rating agency that has not been requested
by the Depositor to do so may be lower than the rating assigned thereto by
either of the Rating Agencies.
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 agency. See "Risk
Factors--Limited Nature of Rating" in the Prospectus.
S-101
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<S> <C>
S-8, S-12, S-35,
Accrued Certificate Interest...... S-69
Additional Trust Fund Expenses.... S-13, S-74
Administrative Cost Rate.......... S-65
Advances.......................... S-48
Appraisal Reduction Amount........ S-76
ARM Loans......................... S-11
Assumed Final Distribution Date... S-82
Assumed Scheduled Payment......... S-19, S-71
Assumed Settlement Date........... S-88
Available Distribution Amount..... S-14, S-66
Balloon Loans..................... S-12
Balloon Payment................... S-12
CBE............................... S-87
Certificate Balance............... S-2, S-13, S-64
Certificate Owner................. S-9, S-63
Certificateholders................ S-66
Certificates...................... S-1, S-8, S-63
Class............................. S-1, S-8, S-63
Class A Certificates.............. S-8, S-64
Class IO Component................ S-13, S-64
Class IO Components............... S-2
Collection Account................ S-65
Collection Period................. S-65
Comparative Financial Status
Report.......................... S-80
Compensating Interest Payment..... S-21, S-47
Condemnation Proceeds............. S-50
Constant Prepayment Rate.......... S-84
Controlling Class................. S-52
Controlling Class
Representative.................. S-7, S-8, S-52
Corporate Trust Office............ S-81
Corrected Mortgage Loan........... S-45
CPR............................... S-84
Cross-Collateralized Mortgage
Loans........................... S-35
Custodial Account................. S-48
Cut-off Date...................... S-2
Cut-off Date Balance.............. S-9, S-34
Debt Service Coverage Ratio....... S-39
Default Interest.................. S-48
Definitive Offered Certificate.... S-9, S-63
Depositor......................... S-1
Discount Rate..................... S-73
Distributable Certificate
Interest........................ S-17, S-18, S-70
Distribution Date................. S-2, S-66
Distribution Date Statement....... S-75
DOL............................... S-25, S-96
DTC............................... S-9, S-63
Due Date.......................... S-11
Eligible Account.................. S-50
ERISA............................. S-24, S-96
Events of Default................. S-61
Excluded Class.................... S-72
Excluded Plan..................... S-97
Exemption......................... S-96
Exemption-Favored Party........... S-96
First Principal Payment Date...... S-87
Fitch............................. S-96
Fixed Rate Loans.................. S-11
Form 8-K.......................... S-43
Gross Margin...................... S-10
Historical Loan Modification
Report.......................... S-79
Historical Loss Estimate Report... S-79
Index............................. S-11
Initial Pool Balance.............. S-2, S-10, S-34
Insurance Proceeds................ S-50
Interest Accrual Period........... S-70
Interest Rate Adjustment Date..... S-10
IRS............................... S-93
Last Principal Payment Date....... S-87
Liquidation Proceeds.............. S-50
Loan Payoff Notification Report... S-79
Lockout Period.................... S-12, S-35
LTV Ratio......................... S-42
Majority Subordinate
Certificateholder .............. S-54
Master Servicer................... S-2, S-46
Master Servicing Fee.............. S-47
Master Servicing Fee Rate......... S-47
Maturity Date..................... S-12
Monthly Payments.................. S-11
Mortgage.......................... S-10, S-35
Mortgage Loan Purchase
Agreement ...................... S-12, S-35
Mortgage Loans.................... S-1, S-9, S-35
Mortgage Note..................... S-10, S-35
Mortgage Pool..................... S-1, S-35
Mortgage Rate..................... S-10
Mortgaged Property................ S-9, S-34
Mortgagor......................... S-9, S-34
Net Aggregate Prepayment Interest
Shortfall....................... S-21
Net Mortgage Rate................. S-13, S-63
Net Operating Income.............. S-41
Non-SMMEA Certificates............ S-26
Nonrecoverable Advance............ S-52
Offered Certificates.............. S-1, S-8, S-62
OID Regulations................... S-93
Open Period....................... S-12, S-36
Operating Statement Analysis...... S-79
P&I Advance....................... S-20, S-75
Participants...................... S-10, S-62
Pass-Through Rate................. S-2
Payment Adjustment Date........... S-12
Permitted Investments............. S-48
Plan.............................. S-24, S-96
Pooling and Servicing Agreement... S-12, S-61
Prepayment Interest Excess........ S-47
Prepayment Interest Shortfall..... S-21, S-47
Prepayment Premium................ S-12, S-36
Prepayment Premiums............... S-72
Principal Distribution Amount..... S-18, S-71
Principal Prepayment.............. S-12, S-35
Private Certificates.............. S-8, S-62
PTCE 95-60........................ S-98
Purchase Agreement................ S-11
Purchase Price.................... S-44
Qualified Appraiser............... S-74
Qualified Insurers................ S-58
Rated Final Distribution Date..... S-2, S-80
Rating Agencies................... S-25
Realized Losses................... S-12
</TABLE>
S-102
<PAGE>
<TABLE>
<S> <C>
Regular Interest Certificates..... S-8, S-62
Reimbursement Rate................ S-20, S-76
Related Proceeds.................. S-48
REMIC............................. S-3, S-24
REMIC I........................... S-3, S-24, S-93
REMIC II.......................... S-3, S-24, S-93
REMIC III......................... S-3, S-24, S-93
REO Account....................... S-56
REO Extension..................... S-56
REO Mortgage Loan................. S-46
REO Property...................... S-19, S-22, S-46
REO Status Report................. S-79
REO Tax........................... S-56, S-95
Required Appraisal Date........... S-76
Required Appraisal Loan........... S-76
Residual Interest Certificates.... S-8, S-62
Restricted Group.................. S-96
S&A Agreement..................... S-12
S&P............................... S-96
Scheduled Payment................. S-19, S-71
Securities Act.................... S-8
Senior Certificates............... S-21, S-73
Sequential Pay Certificates....... S-8, S-62
Servicing Advances................ S-48
Servicing Fees.................... S-47
Servicing Standard................ S-45
Servicing Transfer Event.......... S-44
SMMEA............................. S-26, S-99
SMMEA Certificates................ S-99
Special Servicer.................. S-2
Special Servicing Fee............. S-48
Special Servicing Fee Rate........ S-48
Specially Serviced Mortgage
Loan............................ S-44
Specially Serviced Mortgage
Loans........................... S-46
Specially Serviced Trust Fund
Assets ......................... S-46
Stated Principal Balance.......... S-14, S-65
Subordinate Certificates.......... S-21, S-71
Table Assumptions................. S-79, S-88
Trust Fund........................ S-1, S-12, S-61
Trustee........................... S-2
Underwriter....................... S-1
Underwriting Agreement............ S-100
Voting Rights..................... S-83
Watch List Report................. S-79
Weighted Average Net Mortgage
Rate ........................... S-14, S-65
Yield Maintenance Charges......... S-72
Yield Tables...................... S-85
Zoning Laws....................... S-33
</TABLE>
S-103
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Summary of Prospectus Supplement...............
Risk Factors...................................
Description of the Mortgage Pool...............
Servicing of the Mortgage Loans................
Description of the Certificates................
Yield and Maturity Considerations..............
Use of Proceeds................................
Certain Federal Income Tax Consequences........
Erisa Considerations...........................
Legal Investment...............................
Method of Distribution.........................
Legal Matters..................................
Ratings........................................
Index of Principal Definitions.................
PROSPECTUS
Prospectus Supplement..........................
Additional Information.........................
Incorporation of Certain Documents by
Reference....................................
Summary of Terms...............................
Risk Factors...................................
Description of the Securities..................
Yield and Prepayment Considerations............
Security for the Bonds and Certificates........
Servicing of Mortgage Loans....................
Enhancement....................................
Description of Insurance on the Mortgage
Loans........................................
Certain Legal Aspects of Mortgage Loans........
The Indenture..................................
The Trust Agreement............................
The Issuer.....................................
Use of Proceeds................................
Limitations on Issuance of Bearer Securities...
Federal Income Tax Considerations..............
State and Local Tax Considerations.............
ERISA Considerations...........................
Legal Investment...............................
Plan of Distribution...........................
Legal Matters..................................
Glossary.......................................
</TABLE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
$______________
(APPROXIMATE)
LB COMMERCIAL MORTGAGE TRUST [I]
(ISSUER)
COMMERCIAL MORTGAGE PASS-THRU CERTIFICATES
SERIES ______-__
[CLASS A-1, CLASS A-2, CLASS A-3, CLASS B, CLASS C, CLASS D, CLASS E AND CLASS
IO]
-------------------
PROSPECTUS SUPPLEMENT
-------------------
LEHMAN BROTHERS
DATED ___________, ____
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the prospectus to which it relates
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 20, 1998.
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED _________, __)
$_____
(APPROXIMATE)
STRUCTURED ASSET SECURITIES
CORPORATION TRUST [I]
COLLATERALIZED MORTGAGE OBLIGATIONS
SERIES _____-_____
------------------
Structured Asset Securities Corporation Trust [I] (the "Issuer"), a trust
established by Structured Asset Securities Corporation (the "Company"), is
issuing approximately $____________ aggregate Bond Principal Amount (as defined
in the accompanying Prospectus) of its Series __-__ Collateralized Mortgage
Obligations (the "Bonds"). The Bonds will consist of [seven] classes (each, a
"Class") to be designated as: [(i) the Class A-1 and Class A-2 Bonds
(collectively, the "Class A Bonds" or the "Senior Bonds"); and (ii) the Class B,
Class C, Class D, Class E and Class F Bonds (collectively, the "Subordinate
Bonds"). Only the Class A, Class B, Class C and Class D Bonds (collectively, the
"Offered Bonds") are offered hereby]. The respective Classes of Offered Bonds
will be issued in the aggregate Bond Principal Amounts, and will accrue interest
at the Bond Interest Rates (as defined in the accompanying Prospectus), set
forth in the table below.
(CONTINUED ON PAGE S-2)
<TABLE>
<CAPTION>
INITIAL RATING
CLASS OF SERIES - AGGREGATE BOND ASSUMED FINAL ([IDENTIFY
COLLATERALIZED MORTGAGE BOND PRINCIPAL INTEREST PAYMENT RATING
OBLIGATIONS AMOUNT (A) RATE STATED MATURITY DATE(B) AGENCIES])(C)(D)
<S> <C> <C> <C> <C> <C>
[Class A-1............... $ %
Class A-2................ $ %
Class B.................. $ %
Class C.................. $ %
Class D]................. $ %
</TABLE>
(FOOTNOTES TO TABLE ON PAGE S-2)
------------------------
FOR A DISCUSSION OF MATERIAL RISKS TO BE CONSIDERED IN PURCHASING THE
OFFERED BONDS, SEE "RISK FACTORS" BEGINNING ON PAGE __
HEREIN AND ON PAGE __ IN THE PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON OR
ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
------------------------
The Offered Bonds will be purchased from the [Issuer] by Lehman Brothers
Inc. (the "Underwriter") and will be offered by the Underwriter from time to
time in negotiated transactions or otherwise at varying prices to be determined
at the time of sale. Proceeds to the [Issuer] from the sale of the Offered
Bonds, before deducting expenses payable by the [Issuer] estimated to be
approximately $____________ , will be ____% of the initial aggregate Bond
Principal Amount of the Offered Bonds [, plus accrued interest on the Offered
Bonds from _________, __]. The Offered Bonds are offered by the Underwriter
subject to prior sale, when, as and if delivered to and accepted by the
Underwriter and subject to certain other conditions. It is expected that the
Offered Bonds will be delivered in book-entry form through the Same-Day Funds
Settlement System of DTC on or about ____________, ____ (the "Closing Date"),
against payment therefor in immediately available funds.
------------------------
LEHMAN BROTHERS
------------------------
The date of this Prospectus Supplement is _________ , ___.
<PAGE>
The footnotes to the table on the previous page are as follows:
(a) The initial aggregate Bond Principal Amount of each Class of Offered
Bonds is subject to a permitted variance of plus or minus __%.
(b) The "Assumed Final Payment Date" with respect to any Class of Bonds is
the Payment Date (as defined herein) on which the final payment would
occur for such Class of Bonds based upon the assumption that no Mortgage
Loan is prepaid prior to its stated maturity and otherwise based on the
Modeling Assumptions (as described herein). The actual performance and
experience of the Mortgage Loans will likely differ from such
assumptions. See "Yield and Maturity Considerations" herein.
(c) It is a condition to their issuance that the respective Classes of
Offered Bonds be assigned ratings by ___________________ ("___") and/or
___________________ ("______"; and together with ______, the "Rating
Agencies") no less than those set forth above. The ratings on the Offered
Bonds address the timely payment thereon of interest and the ultimate
payment thereon of principal on or before Stated Maturity. See "Ratings"
herein.
(d) The ratings on the Offered Bonds do not represent any assessment of (i)
the likelihood or frequency of principal prepayments on the Mortgage
Loans, (ii) the degree to which such prepayments might differ from those
originally anticipated or (iii) whether and to what extent Prepayment
Premiums (as defined herein) will be received. Also a security rating
does not represent any assessment of the yield to maturity that investors
may experience. See "Ratings" herein.
------------------------
(CONTINUED FROM COVER PAGE)
See "Index of Principal Definitions" herein for the location of meanings of
capitalized terms used and defined herein. See the Glossary at the end of the
accompanying Prospectus for the meanings of capitalized terms used but not
defined herein.
There is currently no secondary market for the Offered Bonds. The
Underwriter intends to make a secondary market in the Offered Bonds, but is not
obligated to do so. There can be no assurance that a secondary market for the
Offered Bonds will develop or, if one does develop, that it will continue. See
"Risk Factors--Limited Liquidity" herein. The Offered Bonds will not be listed
on any securities exchange.
The Bonds will be secured by a pledge of collateral (the "Collateral") which
consists primarily of a segregated pool (the "Mortgage Pool") of approximately
__ [describe general characteristics of Mortgage Loans] mortgage loans (the
"Mortgage Loans"). As of ____________, __ (the "Cut-off Date"), the Mortgage
Loans had an aggregate principal balance, after taking into account all payments
of principal due on or before such date, whether or not received, of
$____________ (the "Initial Pool Balance")[, subject to a permitted variance of
plus or minus __%.]
The Bonds will be issued pursuant to a trust indenture to be dated as of
____________, __ (the "[Trust] Indenture"), between [the Company]
[____________(the "Owner Trustee")], on behalf of the Issuer, and
___________________ as indenture trustee (the "Trustee"), on behalf of the
holders of the Bonds (the "Bondholders") [and a supplemental indenture (the
"Indenture Supplement") between [the Company] [____________(the "Owner
Trustee")], on behalf of the Issuer, and the Trustee (collectively, the Trust
Indenture and the Indenture Supplement are referred to herein as the
"Indenture")]. Certain duties and obligations of the Issuer under the Indenture
will be performed on behalf of the Issuer by ___________________ (the "General
Administrator") in accordance with a General Administration Agreement, to be
dated as of ____________, __ (the "General Administration Agreement"), between
the Owner Trustee, on behalf of the Issuer, and the General Administrator.
S-2
<PAGE>
Payments of interest on and principal of the Bonds will be made to holders
thereof, to the extent of available funds, on the __ day of each month or, if
any such day is not a business day, then on the next succeeding business day,
commencing in ____________, __ (each, a "Payment Date"). As and to the extent
described herein, payments of interest accrued on each Class of Bonds will be
made on each Payment Date based on the Bond Interest Rate applicable to such
Class and the aggregate Bond Principal Amount of such Class outstanding
immediately prior to such Payment Date. To the extent there are deficiencies in
the interest payment on a Class of Bonds on any Payment Date, such deficiencies
will be deferred to succeeding Payment Dates. Principal payments on the Bonds
will be made on each Payment Date to the extent funds are available therefor in
the amounts and in accordance with the priorities described herein. See
"Description of the Bonds--Payments on the Bonds" herein.
[AS AND TO THE EXTENT SET FORTH HEREIN, THE ISSUER'S EQUITY (AS DEFINED
HEREIN) AND THE CLASS E AND CLASS F BONDS (COLLECTIVELY, THE "PRIVATE BONDS")
WILL BE SUBORDINATE TO THE OFFERED BONDS; THE CLASS D BONDS WILL BE SUBORDINATE
TO THE CLASS A, CLASS B AND CLASS C BONDS; THE CLASS C BONDS WILL BE SUBORDINATE
TO THE CLASS A AND CLASS B BONDS; AND THE CLASS B BONDS WILL BE SUBORDINATE TO
THE CLASS A BONDS. SEE "DESCRIPTION OF THE BONDS--PAYMENTS ON THE BONDS" AND
"--SUBORDINATION" HEREIN.]
The yield to maturity of each Class of Offered Bonds will depend on, among
other things, the rate and timing of principal payments (including by reason of
prepayments, loan extensions, defaults and liquidations) and losses on the
Mortgage Loans. See "Risk Factors" and "Yield and Maturity Considerations"
herein.
As described herein, a "real estate mortgage investment conduit" ("REMIC")
election will be made with respect to the Collateral for federal income tax
purposes. The Offered Bonds will constitute "regular interests" in the REMIC.
See "Certain Federal Income Tax Consequences" herein and "Federal Income Tax
Considerations" in the Prospectus.
[inside front cover]
THE OFFERED BONDS REPRESENT NON-RECOURSE OBLIGATIONS OF THE ISSUER AND WILL
BE PAID SOLELY FROM THE COLLATERAL SECURING THE OFFERED BONDS. NEITHER THE
OFFERED BONDS NOR THE MORTGAGE LOANS ARE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY OTHER PERSON. ACCORDINGLY, IF
THE COLLATERAL IS INSUFFICIENT TO PROVIDE PAYMENTS ON THE OFFERED BONDS, NO
OTHER ASSETS WILL BE AVAILABLE FOR PAYMENT OF THE DEFICIENCY. PROSPECTIVE
INVESTORS SHOULD MAKE AN INVESTMENT DECISION BASED UPON AN ANALYSIS OF THE
SUFFICIENCY OF THE MORTGAGE LOANS TO MAKE PAYMENTS ON THE OFFERED BONDS.
THE BONDS OFFERED BY THIS PROSPECTUS SUPPLEMENT CONSTITUTE PART OF A
SEPARATE SERIES OF SECURITIES ISSUED BY THE COMPANY OR TRUSTS ESTABLISHED
THEREBY AND ARE BEING OFFERED PURSUANT TO ITS PROSPECTUS DATED ____________,
____ (THE "PROSPECTUS"), OF WHICH THIS PROSPECTUS SUPPLEMENT IS A PART AND WHICH
ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS IMPORTANT
INFORMATION REGARDING THIS OFFERING THAT IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL. SALES OF THE OFFERED BONDS MAY NOT BE CONSUMMATED UNLESS THE
PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
UNTIL NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED BONDS, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS TO WHICH IT RELATES. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
S-3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
TRANSACTION OVERVIEW...................................................................................... 6
SUMMARY OF PROSPECTUS SUPPLEMENT.......................................................................... 7
RISK FACTORS.............................................................................................. 23
DESCRIPTION OF THE MORTGAGE POOL.......................................................................... 28
General............................................................................................... 28
Certain Payment Characteristics....................................................................... 28
The Index............................................................................................. 29
[Delinquent and Nonperforming Mortgage Loans]......................................................... 29
Additional Mortgage Loan Information.................................................................. 29
The Mortgage Loan Seller.............................................................................. 34
Underwriting of the Mortgage Loans.................................................................... 35
Representations and Warranties with respect to the Mortgage Loans; Repurchases........................ 35
Changes in Mortgage Pool Characteristics.............................................................. 35
SERVICING OF THE MORTGAGE LOANS........................................................................... 36
General............................................................................................... 36
The Master Servicer................................................................................... 37
The Special Servicer.................................................................................. 38
Sub-Servicers......................................................................................... 38
Custodial Account..................................................................................... 38
Servicing and Other Compensation and Payment of Expenses.............................................. 41
Modifications, Waivers, Amendments and Consents....................................................... 44
Inspections; Collection of Operating Information...................................................... 44
[Termination of [Special Servicer] [Master Servicer] Without Cause]................................... 45
DESCRIPTION OF THE BONDS.................................................................................. 45
General............................................................................................... 46
Registration and Denominations........................................................................ 46
Collection Account.................................................................................... 47
Payments on the Bonds................................................................................. 47
Subordination......................................................................................... 53
P&I and Other Advances................................................................................ 55
[Appraisal Reductions]................................................................................ 56
Reports to Bondholders; Certain Available Information................................................. 56
Voting Rights......................................................................................... 58
The Trustee........................................................................................... 58
[Optional Redemption]................................................................................. 58
Additional Information................................................................................ 58
THE ISSUER................................................................................................ 59
THE OWNER TRUSTEE......................................................................................... 59
THE GENERAL ADMINISTRATOR................................................................................. 59
YIELD AND MATURITY CONSIDERATIONS......................................................................... 60
Yield Considerations.................................................................................. 60
Weighted Average Life................................................................................. 61
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................................................... 63
General............................................................................................... 63
Discount and Premium; Prepayment Premiums and Yield Maintenance Charges............................... 63
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----------
<S> <C>
Characterization of Investments in Offered Bonds...................................................... 64
Possible Taxes on Income from Foreclosure Property and Other Taxes.................................... 65
Reporting and Other Administrative Matters............................................................ 65
METHOD OF DISTRIBUTION.................................................................................... 66
LEGAL MATTERS............................................................................................. 67
ERISA CONSIDERATIONS...................................................................................... 67
LEGAL INVESTMENT.......................................................................................... 69
RATINGS................................................................................................... 69
</TABLE>
S-5
<PAGE>
TRANSACTION OVERVIEW
Prospective investors in the Offered Bonds are advised to carefully read,
and should rely solely on, the detailed information appearing elsewhere in this
Prospectus Supplement and the Prospectus in making their investment decision.
The following Transaction Overview does not include all relevant information
relating to the Offered Bonds or the Mortgage Loans, particularly with respect
to the risks and special considerations involved with an investment in the
Offered Bonds, and is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
Prospectus. Prior to making any investment decision, a prospective investor
should carefully review this Prospectus Supplement and the Prospectus.
$____________
(APPROXIMATE)
STRUCTURED ASSET SECURITIES CORPORATION TRUST [I]
COLLATERALIZED MORTGAGE OBLIGATIONS
SERIES __-__
<TABLE>
<CAPTION>
INITIAL
AGGREGATE BOND
BOND PRINCIPAL INTEREST
AMOUNT(1) CLASS(2) RATING(3) RATE
- - --------------- ------------------------------ ------------ -----------
<C> <S> <C> <C>
$ [Class A-1] %
$ [Class A-2] %
$ [Class B] %
$ [Class C] %
$ [Class D] %
$ [Class E] %
$ [Class F] %
$ (4) Issuer's(5) Equity Not Rated N/A(6)
</TABLE>
- - ------------------------
(1) Subject to a variance of plus or minus 5%.
(2) Only the Class A-1, Class A-2, Cass B, Class C and Class D Bonds are offered
hereby. The Class E and Class F Bonds will initially be issued to and held
by one or more affiliates of the Issuer and are not offered hereby. The
Issuer's Equity is not a Class of Bonds, nor is it offered hereby.
(3) By each of _________ and _________.
(4) Reflects portion of the Initial Pool Balance that is in excess of the
initial aggregate Bond Principal Amount of all the Bonds. The Issuer's
Equity does not have a Bond Principal Amount.
(5) The Issuer's Equity is represented by a single class of owner trust
certificates.
(6) The Issuer's Equity does not have a Bond Interest Rate.
S-6
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND IN
THE ACCOMPANYING PROSPECTUS. CERTAIN CAPITALIZED TERMS THAT ARE USED IN THIS
SUMMARY MAY BE DEFINED ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT OR IN THE
PROSPECTUS. AN INDEX OF PRINCIPAL DEFINITIONS IS INCLUDED AT THE END OF THIS
PROSPECTUS SUPPLEMENT, AND A GLOSSARY IS INCLUDED AT THE END OF THE PROSPECTUS.
TERMS THAT ARE USED BUT NOT DEFINED IN THIS PROSPECTUS SUPPLEMENT WILL HAVE THE
MEANINGS SPECIFIED IN THE PROSPECTUS.
<TABLE>
<S> <C>
ISSUER.................................. Structured Asset Securities Corporation Trust [I] (the "Issuer") is a trust
established under the laws of the State of ______ by Structured Asset Securities
Corporation (the "Company"), a Delaware corporation, pursuant to a Deposit Trust
Agreement, to be dated as of ______, ___ (the "Deposit Trust Agreement"),
between the Company and __________ as owner trustee (the "Owner Trustee"). The
Company is a wholly-owned special purpose subsidiary of Lehman Commercial Paper
Inc. which, in turn, is a wholly owned subsidiary of [the Underwriter]. The
Company initially will own 100% of the beneficial interests in the Issuer, but
may transfer a portion of such beneficial interests to an affiliate. None of the
Company, [the Underwriter], or any affiliate of either of them has guaranteed or
insured the Offered Bonds or the Mortgage Loans.
The Owner Trustee maintains its principal corporate trust office at
______________ __________, telephone (___) _______. See "The Issuer" and "The
Owner Trustee" herein and "The Issuer" in the Prospectus.
BONDS................................... The Issuer is issuing approximately $_______ aggregate Bond Principal Amount of
its Series ___-___Collateralized Mortgage Obligations (the "Bonds"). The Bonds
will be issued on the Closing Date in [seven] classes (each, a "Class") to be
designated as: [(i) the Class A-1 and Class A-2 Bonds (collectively, the "Class
A Bonds" or the "Senior Bonds"); (ii) the Class B, Class C and Class D Bonds
(collectively with the Class A Bonds, the "Offered Bonds"); and (iii) the Class
E and Class F Bonds (collectively, the "Private Bonds"; and collectively with
the Class B, Class C and Class D Bonds, the "Subordinate Bonds")]. Only the
Offered Bonds are offered hereby.
The Private Bonds have not and will not be registered under the Securities Act
of 1933, as amended (the "Securities Act") and are not offered hereby. The
Private Bonds will initially be issued to and held by one or more affiliates of
the Issuer and are not offered hereby. To the extent this Prospectus Supplement
contains information regarding the Private Bonds, such information is provided
because of its potential relevance to a prospective purchaser of an Offered
Bond.
The Bonds will be issued pursuant to a trust indenture, to be dated as of
______, ___ (the "[Trust] Indenture"), between [the Company] [___(the "Owner
Trustee")], on behalf of the Issuer, and the Trustee, on behalf of the holders
of the Bonds (the
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
"Bondholders") [and a supplemental indenture (the "Indenture Supplement")
between [the Company] [___ (the "Owner Trustee")], on behalf of the Issuer, and
the Trustee (collectively, the Trust Indenture and the Indenture Supplement are
referred to herein as the "Indenture")].
The Bonds will be non-recourse obligations of the Issuer. The Bonds are not
insured or guaranteed by any governmental agency or instrumentality or by any
other person.
The respective Classes of Bonds will be issued in the initial aggregate Bond
Principal Amount (in each case, subject to a variance of plus or minus 5%), and
will accrue interest at the Bond Interest Rates, set forth below:
</TABLE>
<TABLE>
<CAPTION>
INITIAL
AGGREGATE
BOND PRINCIPAL BOND
CLASS AMOUNT INTEREST RATE
------------------------------------------- --------------- ---------------
<S> <C> <C> <C>
[Class A-1] $ %
[Class A-2] $ %
[Class B] $ %
[Class C] $ %
[Class D] $ %
[Class E] $ %
[Class F] $ %
</TABLE>
<TABLE>
<S> <C>
The "Issuer's Equity" represents the right of the Issuer
or its designee (i) to receive all payments on and
proceeds of the Collateral not otherwise allocable to pay
interest, principal and other amounts on the Bonds in
accordance with their terms or expenses of the Trust
Estate (as defined herein) and (ii) to have the remaining
Collateral returned to it after the Indenture is satisfied
and discharged. The principal amount of the Issuer's
Equity as of any date of determination is the amount (the
"Overcollateralization Amount"), if any, by which the then
aggregate Stated Principal Balance (as defined herein) of
the Mortgage Pool (initially equal to the Initial Pool
Balance) exceeds the then aggregate Bond Principal Amount
of all the Bonds. As of the Closing Date, the
Overcollateralization Amount will equal approximately
$_______. The Issuer's Equity will be represented by a
single class of owner trust certificates (the "Owner Trust
Certificates").
TRUSTEE......................... __________, a ________. See "Description of the Bonds--The
Trustee" herein.
GENERAL ADMINISTRATOR........... ___________ (the "General Administrator") will perform
certain functions as agent on behalf of the Issuer
pursuant to a General Administration Agreement, to be
dated as of ___, ___ (the "General Administration
Agreement"), between the Manager and the Owner Trustee, on
behalf of the Issuer.
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
MASTER SERVICER................. __________. See "Servicing of the Mortgage Loans--The
Master Servicer" herein.
SPECIAL SERVICER................ __________. See "Servicing of the Mortgage Loans--The
Special Servicer" herein.
MORTGAGE LOAN SELLER............ __________ (the "Mortgage Loan Seller"). See "Description
of the Mortgage Pool--The Mortgage Loan Seller" herein.
CUT-OFF DATE.................... _______, ______.
CLOSING DATE.................... On or about _______, ______.
ACCRUAL DATE.................... _______, ______, the date as of which interest begins to
accrue on the Bonds.
PAYMENT DATE.................... The ___th day of each month or, if any such ___th day is
not a business day, then the next succeeding business day,
commencing in _______, ___.
COLLECTION PERIOD............... As to any Payment Date, the period commencing immediately
following the Determination Date in the month immediately
preceding the month in which such Distribution Date occurs
(or, in the case of the initial Payment Date, commencing
immediately following the Cut-off Date) and ending on and
including the related Determination Date.
DETERMINATION DATE.............. As to any Payment Date, the ___th day of the month in
which such Payment Date occurs, or if such ___th day is
not a business day, the immediately preceding business
day. Record Date As to any Payment Date, the last business
day of the month immediately preceding the month in which
such Payment Date occurs.
RECORD DATE..................... As to any Payment Date, the last business day of the month
immediately preceeding the month in which such Payment
Date occurs.
INTEREST ACCRUAL PERIOD......... As to any Payment Date, the calendar month preceding the
month in which such Payment Date occurs.
BOOK-ENTRY REGISTRATION......... Each Class of Offered Bonds will initially be issued in
book-entry form through the facilities of DTC and,
accordingly, will constitute "Book-Entry Bonds" and
"Bond-Entry Securities". No person acquiring an interest
in a Book-Entry Bond (any such person, a "Bond Owner")
will be entitled to receive a fully registered physical
security (a "Definitive Bond") evidencing such interest,
except under the limited circumstances described in the
Prospectus. See "Description of the Bonds--Registration
and Denominations" herein and "Description of the
Securities--Book-Entry Registration" in the Prospectus.
DENOMINATIONS................... The Offered Bonds will each be issued in minimum
denominations of $______ initial Bond Principal Amount and
in any whole dollar in excess thereof.
SECURITY FOR THE BONDS.......... The Bonds will be secured by a pledge of the Trust Estate.
The "Trust Estate" will consist of all rights, money,
instruments, securities and other property, including all
proceeds thereof, which
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
are subject to, or intended to be subject to, the lien of
the Indenture for the benefit of the Bondholders,
including without limitation the Collateral. The
"Collateral" will consist of the Mortgage Loans, any REO
Properties (as defined herein) acquired in respect
thereof, the Custodial Account (as defined herein) and the
Collection Account (as defined herein), all of which is
more specifically described under "Description of the
Mortgage Pool", "Servicing of the Mortgage
Loans--Custodial Account" and "Description of the
Bonds--Collection Account" herein.
A. THE MORTGAGE POOL............ The Mortgage Pool will consist of ____ [describe general
characteristics of Mortgage Loans] mortgage loans (the
"Mortgage Loans") with an aggregate Cut-off Date Balance
of $______ (the "Initial Pool Balance") [, subject to a
permitted variance of plus or minus ___%]. The "Cut-off
Date Balance" of each Mortgage Loan is the unpaid
principal balance thereof as of the Cut-off Date, after
application of all payments due on or before such date,
whether or not received. ALL NUMERICAL INFORMATION
PROVIDED HEREIN WITH RESPECT TO THE MORTGAGE LOANS IS
PROVIDED ON AN APPROXIMATE BASIS. ALL WEIGHTED AVERAGE
INFORMATION PROVIDED HEREIN WITH RESPECT TO THE MORTGAGE
LOANS REFLECTS THE WEIGHTING OF THE MORTGAGE LOANS BY
THEIR CUT-OFF DATE BALANCES.
Each Mortgage Loan is evidenced by a note or bond (a
"Mortgage Note") and is secured by a [first] mortgage,
deed of trust or similar security instrument (a
"Mortgage") on the fee simple (or, in ___ cases,
representing ___% of the Initial Pool Balance, the
leasehold) interest of the related mortgagor (the
"Mortgagor") in real property used for commercial or
multifamily purposes, all buildings and improvements
thereon and certain personal property located thereon
(each, a "Mortgaged Property") and security interests in
certain funds and accounts and other collateral described
herein.
The Mortgage Loans are non-recourse obligations of the
related Mortgagors. No Mortgage Loan will be insured or
guaranteed by any governmental entity or private insurer
or by any other person.
Set forth below are the number of Mortgage Loans, and the
approximate percentage of the Initial Pool Balance
represented by such Mortgage Loans, that are secured by
Mortgaged Properties located in the ___ states with the
highest concentrations:
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
STATE MORTGAGE LOANS INITIAL POOL BALANCE
----------------------------------- ------------------- ---------------------
<S> <C> <C> <C>
</TABLE>
<TABLE>
<S> <C>
[Identify states representing 10% or more of the Initial
Pool Balance.]
The remaining Mortgaged Properties are located throughout
___ other states.
Set forth below are the number of Mortgage Loans, and the
approximate percentage of the Initial Pool Balance
represented by
</TABLE>
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<S> <C>
such Mortgage Loans, that are secured by Mortgaged
Properties operated for each indicated purpose:
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
STATE MORTGAGE LOANS INITIAL POOL BALANCE
----------------------------------- ------------------- ---------------------
<S> <C> <C> <C>
</TABLE>
<TABLE>
<S> <C>
[Identify particular property types representing 10% or
more of the Initial Pool Balance.]
___ of the Mortgage Loans, which represent ___% of the
Initial Pool Balance, provide for scheduled payments of
principal and/or interest ("Monthly Payments") to be due
on the ___ day of each month; the remainder of the
Mortgage Loans provide for Monthly Payments to be due on
the ___, ___, ___ or ___ day of each month (the date in
any month on which a Monthly Payment on a Mortgage Loan is
first due, the "Due Date"). [The annualized rate at which
interest accrues (the "Mortgage Rate") on ___ of the
Mortgage Loans (the "ARM Loans"), which represent ___% of
the Initial Pool Balance, is subject to adjustment on
specified Due Dates (each such date of adjustment, an
"Interest Rate Adjustment Date") by adding a fixed number
of basis points (a "Gross Margin") to the value of a base
index (an "Index"), subject, in ___ cases, to lifetime
maximum and/or minimum Mortgage Rates, and in ___ cases,
to periodic maximum and/or minimum Mortgage Rates, in each
case as described herein; and the remaining Mortgage Loans
(the "Fixed Rate Loans") bear interest at fixed Mortgage
Rates. ___ of the ARM Loans, which represent ___% of the
Initial Pool Balance, provide for Interest Rate Adjustment
Dates that occur monthly, while the remainder of the ARM
Loans provide for adjustments of the Mortgage Rate to
occur semi-annually or annually. [Identify Mortgage Loan
Index].] See "Description of the Mortgage Pool--Certain
Payment Characteristics" herein.
[If there are ARM Loans: The amount of the Monthly Payment
on all of the ARM Loans is subject to adjustment on
specified Due Dates (each such date, a "Payment Adjustment
Date") to an amount [that would amortize the outstanding
principal balance of the Mortgage Loan over its then
remaining amortization schedule and pay interest at the
then applicable Mortgage Rate]. [Discuss frequency of
Payment Adjustment Dates and possibility of negative
amortization of interest.]]
___ of the Mortgage Loans (the "Balloon Loans"),
representing ___% of the Initial Pool Balance, provide for
monthly payments of principal based on amortization
schedules significantly longer than the remaining terms of
such Mortgage Loans, thereby leaving substantial principal
amounts due and payable (each such payment, together with
the corresponding interest payment, a "Balloon Payment")
on their respective maturity dates (each, a "Maturity
Date"), unless prepaid prior thereto. The remaining
Mortgage Loans are fully amortizing.
</TABLE>
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[All the Mortgage Loans provided at origination for,
sequentially, a period (a "Lockout Period") during which
voluntary prepayments of principal (each, a "Principal
Prepayment") are prohibited, then a period during which
Principal Prepayments are permitted but are required to be
accompanied by an additional amount (a "Prepayment
Premium") the greater of a specified percentage of the
principal amount being prepaid and a premium calculated on
the basis of a yield maintenance formula, and then,
commencing on a specified date prior to maturity, a period
(the related "Open Period") during which Principal
Prepayments may be made without payment of any Prepayment
Premium.]
On or prior to the Closing Date, the Company will acquire
the Mortgage Loans from the Mortgage Loan Seller pursuant
to a Mortgage Loan Purchase Agreement dated as of ______
(the "Mortgage Loan Purchase Agreement") between the
Company and the Mortgage Loan Seller. In the Mortgage Loan
Purchase Agreement, the Mortgage Loan Seller has made
certain representations and warranties to the Company
regarding the characteristics and quality of the Mortgage
Loans and, as more particularly described herein, has
agreed to cure any material breach thereof or repurchase
the affected Mortgage Loan. In connection with the
creation of, and the assignment of its interests in the
Mortgage Loans to, the Issuer, the Company will also
assign its rights under the Mortgage Loan Purchase
Agreement insofar as they relate to or arise out of the
Mortgage Loan Seller's representations and warranties
regarding the Mortgage Loans. The Issuer will, in turn,
pledge such rights under the Mortgage Loan Purchase
Agreement so assigned to it as part of the Trust Estate to
secure the Bonds. See "Description of the Mortgage Pool--
Representations and Warranties with respect to the
Mortgage Loans; Repurchases" herein.
The Mortgage Loans will be serviced and administered by
the Master Servicer and, under the circumstances described
herein, the Special Servicer pursuant to [the Servicing
and Administration Agreement dated as of ______, ___ (the
"S&A Agreement"), among the Owner Trustee on behalf of the
Issuer, the Trustee on behalf of the Bondholders, the
Master Servicer and the Special Servicer.] See "Servicing
of the Mortgage Loans" herein and "Servicing of Mortgage
Loans" in the Prospectus.
B. THE CUSTODIAL AND COLLECTION
ACCOUNTS...................... All collections on or in respect of the Mortgage Loans
will be deposited in the Custodial Account and, as and to
the extent described herein, will be remitted to the
Collection Account for application to payments on the
Bonds on the related Payment Date and for payment of
certain related servicing and administrative fees and
expenses. See "Description of the Bonds--Collection
Account" and "Servicing of the Mortgage Loans--Custodial
Account" herein and "Servicing of Mortgage Loans" in the
Prospectus.
</TABLE>
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PAYMENTS ON THE BONDS-GENERAL... Payments will be made by or on behalf of the Trustee on
each Payment Date to the Bondholders of record at the
close of business on the related Record Date; except in
the case of the final payment on any Class of Bonds which
will require presentation and surrender of such Bonds. All
payments made with respect to any Class of Bonds will be
allocated pro rata among the outstanding Bonds of such
Class based on the respective Bond Principal Amounts
thereof.
PAYMENTS OF INTEREST AND
PRINCIPAL ON THE BONDS........ [On each Payment Date, unless the Bonds have been declared
due and payable following an Event of Default (as defined
in the Prospectus) and such declaration and its
consequences have not been rescinded and annulled, the
Available Payment Amount (as defined in "Description of
the Bonds--Payment on the Bonds-- Funds Available for
Payments on the Bonds" herein) for such date, which will
not include Prepayment Premiums under such circumstances,
will be applied to make payments among the respective
Classes of Bondholders for the following purposes and in
the following order of priority, in each case to the
extent of remaining funds:
(i) to the holders of the Class A Bonds in respect of
interest, pro rata between the two Classes of Class A
Bondholders based on entitlement, up to an amount
equal to all Accrued Bond Interest (as defined below)
in respect of each such Class of Bonds for the related
Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(ii) to the holders of the Class A Bonds in respect of
principal, allocable as between the two Classes of
Class A Bondholders as described herein, up to an
amount equal to the lesser of (a) the then aggregate
Bond Principal Amount of the Class A Bonds and (b) the
Principal Payment Amount (as defined below) for such
Payment Date;
(iii) to the holders of the Class B Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(iv) after the aggregate Bond Principal Amount of the
Class A Bonds has been reduced to zero, to the holders
of the Class B Bonds in respect of principal, up to an
amount equal to the lesser of (a) the then aggregate
Bond Principal Amount of the Class B Bonds and (b) the
excess, if any, of the Principal Payment Amount for
such Payment Date over any amounts paid on such
Payment Date in retirement of the Class A Bonds
pursuant to clause (ii) above;
</TABLE>
S-13
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<S> <C>
(v) to the holders of the Class C Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(vi) after the aggregate Bond Principal Amount of the
Class A and Class B Bonds has been reduced to zero, to
the holders of the Class C Bonds in respect of
principal, up to an amount equal to the lesser of (a)
the then aggregate Bond Principal Amount of the Class
C Bonds and (b) the excess, if any, of the Principal
Payment Amount for such Payment Date over any amounts
paid on such Payment Date in retirement of the Class A
and/ or Class B Bonds pursuant to clauses (ii) and
(iv) above;
(vii) to the holders of the Class D Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(viii) after the aggregate Bond Principal Amount of the
Class A, Class B and Class C Bonds has been reduced to
zero, to the holders of the Class D Bonds in respect
of principal, up to an amount equal to the lesser of
(a) the then aggregate Bond Principal Amount of the
Class D Bonds and (b) the excess, if any, of the
Principal Payment Amount for such Payment Date over
any amounts paid on such Payment Date in retirement of
the Class A, Class B and/or Class C Bonds pursuant to
clauses (ii), (iv) and (vi) above;
(ix) to the holders of the Class E Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
(x) after the aggregate Bond Principal Amount of the
Class A, Class B, Class C and Class D Bonds has been
reduced to zero, to the holders of the Class E Bonds
in respect of principal, up to an amount equal to the
lesser of (a) the then aggregate Bond Principal Amount
of the Class E Bonds and (b) the excess, if any, of
the Principal Payment Amount for such Payment Date
over any amounts paid on such Payment Date in
retirement of the Class A, Class B, Class C and/or
Class D Bonds pursuant to clauses (ii), (iv), (vi) and
(viii) above;
(xi) to the holders of the Class F Bonds in respect of
interest, up to an amount equal to all Accrued Bond
Interest in respect of such Class of Bonds for the
related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual
Periods;
</TABLE>
S-14
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<TABLE>
<S> <C>
(xii) after the aggregate Bond Principal Amount of the
Class A, Class B, Class C, Class D and Class E Bonds
has been reduced to zero, to the holders of the Class
F Bonds in respect of principal, up to an amount equal
to the lesser of (a) the then aggregate Bond Principal
Amount of the Class F Bonds and (b) the excess, if
any, of the Principal Payment Amount for such Payment
Date over any amounts paid on such Payment Date in
retirement of the Class A, Class B, Class C, Class D
and/or Class E Bonds pursuant to clauses (ii), (iv),
(vi), (viii) and (x) above; and
(xiii) if, after giving effect to the payments of
principal on the Bonds contemplated by clauses (ii),
(iv), (vi), (viii), (x) and (xii) above, the aggregate
Bond Principal Amount of all the Bonds still exceeds
the aggregate Stated Principal Balance of the Mortgage
Pool that will be outstanding immediately following
such Payment Date, then to the holders of the Class A
Bonds (allocable as between the two Classes of Class A
Bondholders as described herein), the Class B Bonds,
the Class C Bonds, the Class D Bonds, the Class E
Bonds and the Class F Bonds, in that order, until (in
the case of each Class of Bonds on which payments of
principal are so made) such excess (or the aggregate
Bond Principal Amount of such Class of Bonds) is
reduced to zero (whichever occurs first).]
[Except under the limited circumstances described herein,
payments of principal on the Class A Bonds as described
above will be paid, first, to the holders of the Class A-1
Bonds, until the aggregate Bond Principal Amount of such
Class of Bonds is reduced to zero, and thereafter, to the
holders of the Class A-2 Bonds, until the aggregate Bond
Principal Amount of such Class of Bonds is reduced to
zero.]
[Any portion of the Available Payment Amount for any
Payment Date that is not applied to make payments of
interest and principal on the Bonds as described above
will be paid in respect of the Owner Trust Certificates on
such Payment Date.]
[The "Accrued Bond Interest" in respect of any Class of
Bonds for any Interest Accrual Period will equal one
month's interest at the applicable Bond Interest Rate
accrued on the aggregate Bond Principal Amount of such
Class of Bonds outstanding immediately prior to the
related Payment Date. Accrued Bond Interest will be
calculated on the basis of a 360-day year consisting of
twelve 30-day months.]
[The "Principal Payment Amount" for any Payment Date will,
in general, equal the aggregate of the following:
(a) the principal portions of all Scheduled Payments
(other than Balloon Payments) and any Assumed
Scheduled Payments due or deemed due, as the case may
be, in respect of the Mortgage Loans for their
respective Due Dates occurring during the related
Collection Period;
</TABLE>
S-15
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<S> <C>
(b) all payments (including Principal Prepayments and
Balloon Payments) and other collections (including
Liquidation Proceeds, Condemnation Proceeds and
Insurance Proceeds (each as defined in the
Prospectus)) that were received on or in respect of
the Mortgage Loans during the related Collection
Period and that were identified and applied by the
Master Servicer as recoveries of principal thereof, in
each case net of any portion of such payment or other
collection that represents a recovery of the principal
portion of any Scheduled Payment (other than a Balloon
Payment) due, or the principal portion of any Assumed
Scheduled Payment deemed due, in respect of the
related Mortgage Loan on a Due Date during or prior to
the related Collection Period and not previously
recovered; and
(c) if such Payment Date is subsequent to the initial
Payment Date, the excess, if any, of (i) the Principal
Payment Amount for the immediately preceding Payment
Date, over (ii) the aggregate payments of principal
made in respect of the Bonds on such immediately
preceding Payment Date.]
[The "Scheduled Payment" due in respect of any Mortgage
Loan on any related Due Date will be the amount of the
Monthly Payment that is scheduled to be due in respect
thereof on such date in accordance with the terms of such
Mortgage Loan in effect on the Closing Date, without
regard to any waiver, modification or amendment of such
Mortgage Loan subsequent to the Closing Date, and assuming
that each prior Scheduled Payment has been made in a
timely manner.]
[The "Assumed Scheduled Payment" is an amount deemed due
in respect of any Balloon Loan that is delinquent in
respect of its Balloon Payment beyond the first
Determination Date that follows its original stated
maturity date. The Assumed Scheduled Payment deemed due on
any such Mortgage Loan on its original stated maturity
date and on each successive Due Date that it remains or is
deemed to remain outstanding shall equal the Scheduled
Payment that would be due in respect thereof on such date
if the related Balloon Payment had not come due but rather
such Mortgage Loan had continued to amortize in accordance
with such Mortgage Loan's amortization schedule in effect
as of the Closing Date.]
[PAYMENTS OF YIELD MAINTENANCE
AMOUNTS ON THE BONDS.......... On each Payment Date, unless the Bonds have been declared
due and payable following an Event of Default and such
declaration and its consequences have not been rescinded
and annulled, the aggregate of all Prepayment Premiums
that were received on the Mortgage Loans during the
related Collection Period will be applied to make payments
among the respective Classes of Bondholders in
alphabetical order of Class designation (with the Class
A-1 and Class A-2 Bondholders having a PARI PASSU right to
payment), in each case, up to the related Yield
Maintenance Amount (if any) for their Bonds.
</TABLE>
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<S> <C>
If and to the extent that the aggregate Prepayment
Premiums received on the Mortgage Loans during any
Collection Period exceed the aggregate Yield Maintenance
Amount in respect of the Bonds for the related Payment
Date, then such excess will be paid on such Payment Date
in respect of the Owner Trust Certificates. See
"Description of the Bonds--Payments on the Bonds" herein.]
SUBORDINATION................... [As and to the extent set forth herein, the rights of the
Company and its successors and assigns to receive payments
of amounts received on the Mortgage Loans in respect of
the Owner Trust Certificates will be subordinated to the
rights of the Bondholders to receive such amounts in
respect of interest, principal and other amounts due and
owing on their Bonds from time to time. In addition, as
and to the extent set forth herein, for purposes of
receiving payments of interest, principal and other
amounts due and owing thereon from time to time out of
collections on the Mortgage Loans, the Private Bonds will
be subordinate to the Offered Bonds, the Class D Bonds
will be subordinate to the Class A, Class B and Class C
Bonds, the Class C Bonds will be subordinate to the Class
A and Class B Bonds, and the Class B Bonds will be
subordinate to the Class A Bonds. See "Description of the
Bonds--Payments on the Bonds" and "--Subordination"
herein. Such subordination will be accomplished by, among
other things, the application of the Available Payment
Amount on each Payment Date in the order described above
in this Summary under "Payments of Interest and Principal
on the Bonds".
Realized Losses (as defined herein), Net Aggregate
Prepayment Interest Shortfalls (also as defined herein)
and other shortfalls in respect of the Mortgage Loans and
Extraordinary Expenses (also as defined herein) will, in
each case, be borne by the holders of the Owner Trust
Certificates and the Private Bonds (to the extent of
amounts otherwise payable in respect the Owner Trust
Certificates and the Private Bonds, respectively) prior to
any such losses, shortfalls and/or expenses being borne by
the holders of the Offered Bonds. If and to the extent
that Realized Losses, together with any Net Aggregate
Prepayment Interest Shortfalls and Extraordinary Expenses,
exceed the sum of the initial Overcollateralization Amount
and the initial aggregate Bond Principal Amount of the
Private Bonds, it is likely that the holders of one or
more Classes of Offered Bonds will not receive the full
Bond Principal Amount of their Bonds. See "Description of
the Bonds--Subordination" herein.]
TREATMENT OF REO PROPERTIES..... Notwithstanding that a Mortgaged Property securing any
Mortgage Loan may be acquired as part of the Trust Estate
through foreclosure, deed in lieu of foreclosure or
otherwise (upon acquisition, an "REO Property"), such
Mortgage Loan will, for purposes of, among other things,
determining payments of principal on the Bonds, as well as
Master Servicing Fees, Property Servicing Fees, Special
Servicing Fees, Workout Fees and Trustee Fees (each as
defined herein), generally be treated as having remained
outstanding until such REO Property is liquidated. In
</TABLE>
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connection therewith, operating revenues and other
proceeds derived from such REO Property (exclusive of
related operating costs, including certain reimbursements
payable to the Master Servicer and/or Special Servicer in
connection with the operation and disposition of such REO
Property) will be "applied" or treated by the Master
Servicer as principal, interest and other amounts "due" on
such Mortgage Loan; and, subject to a recoverability
determination as more fully described herein (see
"Description of the Bonds--P&I and Other Advances"), the
Master Servicer will be required to make P&I Advances, as
described below, in respect of such Mortgage Loan as if it
had remained outstanding.
[P&I ADVANCES................... Subject to a recoverability determination as described
herein, and further subject to the reduced advancing
obligations in respect of certain modified Mortgage Loans
and Mortgage Loans as to which the related Mortgaged
Property has declined in value as described herein, the
Master Servicer will be required to make advances (each, a
"P&I Advance") with respect to each Payment Date in an
amount that is generally equal to the aggregate of all
Scheduled Payments (other than Balloon Payments) and any
Assumed Scheduled Payments, net of related Master
Servicing Fees and Workout Fees, due or deemed due, as the
case may be, on or in respect of the Mortgage Loans during
the related Collection Period, in each case to the extent
that such amount was not paid by or on behalf of the
related Mortgagor or otherwise collected as of the close
of business on the last day of the related Collection
Period.
If the Master Servicer fails to make a required P&I
Advance, the Trustee will be required to make such P&I
Advance. The Special Servicer shall have no obligation to
make any P&I Advance.
As more fully described herein, the Master Servicer and
the Trustee will each be entitled to interest on any P&I
Advance made by it, and the Master Servicer, the Special
Servicer and the Trustee will each be entitled to interest
on certain reimbursable servicing expenses incurred by it.
Such interest will accrue from the date any such P&I
Advance is made or such servicing expense is incurred at a
rate per annum equal to [specify applicable rate] (the
"Reimbursement Rate"), and will be paid: first, out of
Default Interest (as defined herein) and late payment
charges collected in respect of the related Mortgage Loan;
and, second, if such P&I Advance or servicing expense has
been reimbursed, out of general collections on the
Mortgage Pool. See "Description of the Bonds-- P&I and
Other Advances" herein.]
</TABLE>
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[COMPENSATING INTEREST PAYMENTS... To the extent of the aggregate of all Master Servicing
Fees and Prepayment Interest Excesses paid to the Master
Servicer as servicing compensation for the related
Collection Period, the Master Servicer is required to
make a non-reimbursable payment (a "Compensating
Interest Payment") with respect to each Payment Date to
cover the aggregate of any Prepayment Interest
Shortfalls incurred during such Collection Period. A
"Prepayment Interest Shortfall" is a shortfall in the
collection of a full month's interest (net of related
Master Servicing Fees and Property Servicing Fees (as
defined herein), and without regard to any Prepayment
Premium actually collected) on any Mortgage Loan by
reason of a full or partial voluntary principal
prepayment being made and applied to such Mortgage Loan
prior to the related Due Date in any Collection Period.
A "Prepayment Interest Excess" is a payment of interest
(net of related Master Servicing Fees and Property
Servicing Fees and exclusive of any Prepayment Premium
actually collected) made in connection with any full or
partial prepayment of a Mortgage Loan being made and
applied to such Mortgage Loan after the related Due Date
in any Collection Period, which payment of interest is
intended to cover the period from such Due Date to the
date of prepayment. The "Net Aggregate Prepayment
Interest Shortfall" for any Payment Date will be the
amount, if any, by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred during the
related Collection Period exceeds (b) any Compensating
Interest Payment made by the Master Servicer with
respect to such Payment Date. See "Servicing of the
Mortgage Loans--Servicing and Other Compensation and
Payment of Expenses" herein.]
[OPTIONAL REDEMPTION.............. The Issuer may, at its option, redeem any Class of
Offered Bonds, in whole but not in part, on any Payment
Date, if the then aggregate Bond Principal Amount of
such Class of Offered Bonds is less than ___% of the
initial aggregate Bond Principal Amount thereof and no
Event of Default has occurred and is continuing. Such
redemption will be at a price (calculated after taking
into account payments made on the Bonds out of the
Available Payment Amount for the applicable Payment
Date) equal to 100% of the aggregate unpaid Bond
Principal Amount of the Bonds redeemed, plus accrued and
unpaid interest through the end of the related Interest
Accrual Period. Notice of any such optional redemption
must be mailed by the Issuer or the Trustee at least ___
days prior to the date set for optional redemption. No
Yield Maintenance Amount will be payable in connection
with such optional redemption. See "Description of the
Bonds--Optional Redemption" herein.]
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CERTAIN INVESTMENT The yield on any Offered Bond will depend on (a) the
CONSIDERATIONS.................. price at which such Bond is purchased by an investor and
(b) the rate, timing and amount of payments on such
Bond. The rate, timing and amount of payments on any
Offered Bond will in turn depend on, among other things,
(i) the Bond Interest Rate for such Bond, (ii) the rate
and timing of principal payments (including principal
prepayments) and other principal collections on the
Mortgage Loans, (iii) the rate, timing and severity of
Realized Losses, Net Aggregate Prepayment Interest
Shortfalls and Extraordinary Expenses and (iv) the
priority of such Bond to receive payments.
The yield to maturity on any Offered Bond purchased at a
discount or premium will be affected by the rate and
timing of principal payments thereon. Principal payments
on the Offered Bonds will, in turn, be affected by
payments and other collections of principal on or in
respect of the Mortgage Loans. An investor should
consider, in the case of any Offered Bond purchased at a
discount, the risk that a slower than anticipated rate
of principal payments thereon could result in a lower
than anticipated yield and, in the case of any Offered
Bond purchased at a premium, the risk that a faster than
anticipated rate of principal payments thereon could
result in a lower than anticipated yield. See "Yield and
Maturity Considerations" herein and "Yield and
Prepayment Considerations" in the Prospectus. The full
or partial, as applicable, allocation of Prepayment
Premiums actually collected on the Mortgage Loans to
make payments to the holders of any particular Class of
Bonds in respect of the related Yield Maintenance Amount
may be insufficient to offset fully any adverse effects
on the yield of such Class of Bonds that the related
prepayments may otherwise have.
CERTAIN FEDERAL INCOME TAX A "real estate mortgage investment conduit" ("REMIC")
CONSEQUENCES.................... election will be made with respect to the Collateral and
certain related assets for federal income tax purposes.
For federal income tax purposes, the Bonds will
constitute the "regular interests" in the REMIC, and
generally will be treated as debt instruments thereof,
and the Owner Trust Certificates will be the sole class
of "residual interests" in the REMIC.
The [identify Classes, if any] Bonds will not, and the
Class ___ and Class ___ Bonds will, be treated as having
been issued with original issue discount for federal
income tax reporting purposes. The prepayment assumption
that will be used for purposes of computing the accrual
of original issue discount, market discount and premium,
if any, for federal income tax purposes will be that the
Mortgage Loans will not prepay (that is, a CPR of 0%).
However, no representation is made that the Mortgage
Loans will prepay at that rate or at any other rate.]
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[The Offered Bonds will be treated as "real estate
assets" within the meaning of Section 856(c)(5)(A) of
the Code. In addition, interest (including original
issue discount) on the Offered Bonds will be interest
described in Section 856(c)(3)(B) of the Code. However,
the Offered Bonds will generally only be considered
assets described in Section 7701(a)(19)(C) of the Code
to the extent that the Mortgage Loans are secured by
residential property and, accordingly, an investment in
the Offered Bonds may not be suitable for certain thrift
institutions.]
For further information regarding the federal income tax
consequences of investing in the Offered Bonds, see
"Certain Federal Income Tax Consequences" herein and
"Federal Income Tax Considerations" in the Prospectus.
ERISA CONSIDERATIONS.............. A fiduciary of any employee benefit plan or other
retirement arrangement subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), or Section 4975 of the Code (a "Plan") should
review carefully with its legal counsel whether the
purchase or holding of Offered Bonds or an interest
therein could give rise to a transaction that is
prohibited or is not otherwise permitted either under
ERISA or Section 4975 of the Code or whether there
exists any statutory or administrative exemption
applicable to an investment therein.
The Department of Labor ("DOL") has granted a number of
administrative exemptions which provide relief from
certain of the prohibited transaction provisions of
ERISA and the related excise tax provisions of the Code.
There can be no assurance that any exemption granted by
the DOL will provide relief from the prohibited
transaction provisions of ERISA and the Code with
respect to the purchase, sale or holding of the Offered
Bonds.
Any Plan fiduciary considering whether to purchase any
Offered Bonds or an interest therein on behalf of a Plan
should consult with its counsel regarding the
applicability of the fiduciary responsibility and
prohibited transaction provisions of ERISA and the Code.
See "ERISA Considerations" herein and in the Prospectus.
RATINGS........................... It is a condition to their issuance that the respective
Classes of Offered Bonds receive the following credit
ratings from _______ ("________") and/or __________
("____"; together with ____, the "Rating Agencies"):
</TABLE>
S-21
<PAGE>
<TABLE>
<CAPTION>
[RATING [RATING
CLASS AGENCY] AGENCY]
- - ---------------------------------------- ---------------------- ----------------------
<S> <C> <C>
[Class A-1..............................
Class A-2...............................
Class B.................................
Class C.................................
Class D]................................
</TABLE>
<TABLE>
<S> <C>
The foregoing ratings of the Offered Bonds address the
timely payment thereon of interest and the ultimate
payment thereon of principal on or before their Stated
Maturity. The foregoing ratings of the Offered Bonds do
not address the tax attributes of the Offered Bonds, the
Issuer or the Trust Estate. The ratings of the Offered
Bonds do not address certain other matters as described
under "Ratings" herein. There is no assurance that any
such rating will not be lowered, qualified or withdrawn
by a Rating Agency, if, in its judgment, circumstances
so warrant. There can be no assurance whether any other
rating agency will rate any of the Offered Bonds, or if
one does, what rating such agency would assign. A
security rating is not a recommendation to buy, sell or
hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency.
LEGAL INVESTMENT.................. [The Offered Bonds will not constitute "mortgage related
securities" for purposes of the Secondary Mortgage
Market Enhancement Act of 1984 ("SMMEA"). In addition,
institutions whose investment activities are subject to
review by certain regulatory authorities may be or may
become subject to restrictions on the investment by such
institutions in certain forms of mortgage derivative
securities. Any such restrictions enacted or adopted
after the date hereof could alter the extent to which
such an institution may continue to hold a particular
investment. Accordingly, investors should consult their
own legal advisors to determine whether and to what
extent the Offered Bonds may be purchased by such
investors. See "Legal Investment" herein and in the
Prospectus.]
</TABLE>
S-22
<PAGE>
RISK FACTORS
Prospective purchasers of Offered Bonds should consider, among other things,
the following risk factors (as well as the risk factors set forth under "Risk
Factors" in the Prospectus) in connection with an investment therein. [The
following risks are subject to modification to reflect the actual circumstances
relating to any series of Bonds.]
CERTAIN YIELD AND MATURITY CONSIDERATIONS. As a result of, among other
things, prepayments, defaults and losses on the Mortgage Loans, the amount and
timing of payments of principal and/or interest on the Bonds may be highly
unpredictable. Prepayments on the Mortgage Loans will result in a faster rate of
principal payments on the Bonds than if payments on such Mortgage Loans were
made as scheduled. Defaults and losses on the Mortgage Loans may delay and/or
reduce the principal payments on the Bonds. Thus, the prepayment, default and
loss experience on the Mortgage Loans may affect the aggregate payments on and
the yield to maturity and average life of one or more Classes of Bonds,
including one or more Classes of the Offered Bonds. The rate of principal
payments and defaults and severity of losses on pools of multifamily and
commercial mortgage loans varies among pools and from time to time is influenced
by a variety of economic, demographic, geographic, social, tax and legal
factors, as well as acts of God. For example, if prevailing interest rates fall
significantly below the Mortgage Rates borne by the Mortgage Loans, principal
prepayments thereon are likely to be higher than if prevailing interest rates
remain at or above the rates borne by those Mortgage Loans. Conversely, if
prevailing interest rates rise significantly above the Mortgage Rates borne by
such Mortgage Loans, principal prepayments thereon are likely to be lower than
if prevailing interest rates remain at or below the rates borne by those
Mortgage Loans. The foregoing is subject, however, to, among other things, the
particular terms of the Mortgage Loans (E.G., provisions which prohibit
voluntary prepayments during specified periods or impose penalties in connection
therewith) and the ability of Mortgagors to obtain new financing. There can be
no assurance as to the actual rate of prepayment or default or the severity of
losses on the Mortgage Loans. The extent to which prepayments on Mortgage Loans
ultimately affect the yield to maturity and average life of any Class of Offered
Bonds, will depend on the terms of such Bonds.
The extent to which the yield to maturity of any Class of Offered Bonds may
vary from the anticipated yield will depend upon the degree to which they are
purchased at a discount or premium and the amount and timing of payments
thereon. An investor should consider, in the case of any Offered Bond purchased
at a discount, the risk that a slower than anticipated rate of principal
payments thereon could result in an actual yield to such investor that is lower
than the anticipated yield and, in the case of any Offered Bond purchased at a
premium, the risk that a faster than anticipated rate of principal payments
thereon could result in an actual yield to such investor that is lower than the
anticipated yield.
When considering the effects of prepayments on the average life and yield of
a Bond, an investor should also consider provisions of the Indenture that permit
the optional redemption of the Bonds. [The Issuer may, at its option, redeem any
Class of Offered Bonds, in whole but not in part, on any Payment Date, if the
then aggregate Bond Principal Amount of such Class of Bonds is less than __% of
the initial aggregate Bond Principal Amount thereof.] See "Yield and Maturity
Considerations" herein.
[OPTIONAL REDEMPTION OF BONDS. The Issuer may, at its option, redeem any
Class of Offered Bonds, in whole but not in part, on any Payment Date, if the
then aggregate Bond Principal Amount of such Class of Offered Bonds is less than
__% of the initial aggregate Bond Principal Amount thereof and no Event of
Default has occurred and is continuing. No Yield Maintenance Amount will be
payable in connection with such optional redemption. See "Description of the
Bonds--Optional Redemption" herein.]
SUBORDINATION OF SUBORDINATED BONDS. As and to the extent described herein,
the rights of the Issuer or its designee to receive payments of amounts received
on the Mortgage Loans in respect of the Issuer's Equity will be subordinated to
the rights of the Bondholders to receive such amounts on their Bonds, and the
rights of the holders of the respective Classes of Subordinate Bonds, including
the Class B, Class C and
S-23
<PAGE>
Class D Bonds, to receive payments of amounts collected in respect of the
Mortgage Loans will be subordinated to those of the holders of the Class A Bonds
and to those of the holders of each other Class of Bonds with an earlier
alphabetical class designation. Although such subordination (whether of the
Issuer's Equity or Subordinate Bonds) is, in varying degrees depending on the
Class, intended to reduce the likelihood of temporary shortfalls and ultimate
losses to holders of the respective Classes of Offered Bonds, the amount of
subordination afforded to any particular Class of Offered Bonds will be limited
and may decline under certain circumstances. In addition, the impact of losses
and shortfalls experienced with respect to the Mortgage Loans may fall primarily
upon those Classes of Bonds having a later right of payment.
The amount of any applicable credit support provided by the Issuer's Equity
in the Collateral to the Bonds, by the Private Bonds to the Offered Bonds, by
the Class D Bonds to the Class A, Class B and Class C Bonds, by the Class C
Bonds to the Class A and Class B Bonds, and by the Class B Bonds to the Class A
Bonds, has been determined on the basis of criteria established by each Rating
Agency that take into account an assumed level of defaults, delinquencies and
losses on the Mortgage Loans. There can be no assurance, however, that the loss
experience on the Mortgage Loans will not exceed such assumed levels. See
"Description of the Bonds--Subordination" herein.
LIMITED RECOURSE NATURE OF MORTGAGE LOANS; RECOURSE GENERALLY LIMITED TO
MORTGAGED PROPERTY. The Mortgage Loans are nonrecourse obligations of the
Mortgagors and, accordingly, in the case of default, recourse will be limited to
the related Mortgaged Property securing the defaulted Mortgage Loan.
Consequently, payment on each Mortgage Loan prior to maturity is dependent
primarily on the sufficiency of the net operating income of the related
Mortgaged Property and, at maturity (whether at scheduled maturity or, in the
event of a default under the related Mortgage Loan, upon the acceleration of
such maturity), upon the then market value of the related Mortgaged Property or
the ability of the related Mortgagor to refinance the Mortgaged Property. None
of the Mortgage Loans is insured or guaranteed by any governmental entity or
private mortgage insurer or by any other person. However, as more fully
described under "Description of the Mortgage Pool--Representations and
Warranties with respect to the Mortgage Loans; Repurchases" herein, the Mortgage
Loan Seller will be obligated to repurchase those Mortgage Loans as to which
there is a material breach of its representations and warranties, which breach
cannot be cured in a timely manner.
RISKS PARTICULAR TO _________ PROPERTIES. [Add disclosure regarding risks
particular to Mortgage Loans secured by any property type that represents 10% or
more of the Initial Pool Balance.]
[INCREASED RISK OF DEFAULT ASSOCIATED WITH ADJUSTABLE RATE MORTGAGE
LOANS. _________ of the Mortgage Loans, which represent __% of the Initial Pool
Balance, are ARM Loans. Increases in the required Monthly Payments on ARM Loans
in excess of those assumed in the original underwriting of such loans may result
in a default rate higher than that on mortgage loans with fixed mortgage rates.]
INCREASED RISK OF DEFAULT ASSOCIATED WITH BALLOON PAYMENTS. [None] [Only
____] of the Mortgage Loans [is][are] fully amortizing over [its term] [their
respective terms] to maturity. Thus, [each] [most] of the Mortgage Loans will
have a substantial payment (that is, a Balloon Payment) due at its stated
maturity unless prepaid prior thereto. Mortgage Loans with Balloon Payments
involve a greater likelihood of default than self-amortizing loans because the
ability of a borrower to make a Balloon Payment typically will depend upon its
ability either to refinance the loan or to sell the related mortgaged property.
See "Risk Factors--Limited Nature of Rating", "--Certain Mortgage Loans and
Mortgage Property; Obligor Default" and"--Delinquent and Non-Performing Loans"
in the Prospectus.
EXTENSION RISK ASSOCIATED WITH MODIFICATION OF MORTGAGE LOANS WITH BALLOON
PAYMENTS. In order to maximize recoveries on defaulted Mortgage Loans, the S&A
Agreement enables the Special Servicer to extend and modify Mortgage Loans that
are in material default or as to which a payment default (including the failure
to make a Balloon Payment) is reasonably foreseeable; subject, however, to the
limitations
S-24
<PAGE>
described under "Servicing of the Mortgage Loans--Modifications, Waivers,
Amendments and Consents" herein. There can be no assurance, however, that any
such extension or modification will increase the present value of recoveries in
a given case. Any delay in collection of a Balloon Payment that would otherwise
be payable in respect of a Class of Offered Bonds, whether such delay is due to
borrower default or to modification of the related Mortgage Loan by the Special
Servicer, will likely extend the weighted average life of such Class of Offered
Bonds. See "Yield and Maturity Considerations" herein and "Yield and Prepayment
Considerations" in the Prospectus.
EXPOSURE OF THE MORTGAGE POOL TO ADVERSE ECONOMIC OR OTHER DEVELOPMENTS
BASED ON GEOGRAPHIC CONCENTRATION. __ Mortgage Loans, which represent __% of
the Initial Pool Balance, are secured by liens on Mortgaged Properties located
in _________. In general, that concentration increases the exposure of the
Mortgage Pool to any adverse economic or other developments that may occur in
_________. In recent periods, ____________ (along with other regions of the
United States) has experienced a significant downturn in the market value of
real estate.
INCREASED RISK OF LOSS ASSOCIATED WITH CONCENTRATION OF MORTGAGE LOANS AND
BORROWERS. Several of the Mortgage Loans have Cut-off Date Balances (as defined
herein) that are substantially higher than the average Cut-off Date Balance. In
general, concentrations in a mortgage pool of loans with larger-than-average
balances can result in losses that are more severe, relative to the size of the
pool, than would be the case if the aggregate balance of the pool were more
evenly distributed. In addition, in several cases, multiple Mortgage Loans have
been made to the same Mortgagor or to a group of affiliated Mortgagors that are
under common control. Concentration of borrowers also poses increased risks. For
instance, if a borrower that owns several Mortgaged Properties experiences
financial difficulty at one Mortgaged Property, or at another income-producing
property that it owns, it could attempt to avert foreclosure by filing a
bankruptcy petition that might have the effect of interrupting Monthly Payments
for an indefinite period on all of the related Mortgage Loans.
RISKS ASSOCIATED WITH CHANGES IN CONCENTRATIONS. If and as payments in
respect of principal (including voluntary prepayments and prepayments resulting
from casualty or condemnation, defaults and liquidations and repurchases due to
breaches of representations and warranties) are received with respect to the
Mortgage Loans, the remaining Mortgage Loans as a group may exhibit increased
concentration with respect to the type of properties, property characteristics,
number of Mortgagors and affiliated Mortgagors and geographic location. [Because
unscheduled collections of principal on the Mortgage Loans are payable on the
respective Classes of Bonds in sequential order, such Classes that have a lower
sequential priority are relatively more likely to be exposed to any risks
associated with changes in concentrations of loan or property characteristics.]
[INCLUSION OF DELINQUENT, UNDER-PERFORMING AND NON-PERFORMING MORTGAGE
LOANS. The Mortgage Pool will include ___ Mortgage Loans, representing ___% of
the Initial Pool Balance, that [describe generally the characteristics of those
delinquent, under-performing and non-performing Mortgage Loans, if any, included
in the Mortgage Pool]. The amount of any applicable credit support provided to a
Class of Bonds as described under "--SUBORDINATION OF SUBORDINATED BONDS" may
not cover all losses and shortfalls related to such delinquent, under-performing
and non-performing Mortgage Loans, and investors should consider the risk that
the inclusion of such Mortgage Loans in the Mortgage Pool may adversely affect
the rate of defaults and prepayments in respect of the Mortgage Pool and the
yield on the Offered Bonds. See "Risk Factors--Limited Nature of Rating",
"--Certain Mortgage Loans and Mortgage Property; Obligor Default"
and"--Delinquent and Non-Performing Loans" in the Prospectus.]
POTENTIAL LIABILITY TO THE TRUST ESTATE RELATING TO A MATERIALLY ADVERSE
ENVIRONMENTAL CONDITION. [An environmental site assessment was performed at
[each][all but __] of the Mortgaged Properties during the __ month period prior
to the Cut-off Date. [Note any special environmental problems.] [Otherwise,] no
such environmental assessment revealed any material adverse environmental
condition or circumstance at any Mortgaged Property[, except for (i) those cases
in which the condition or circumstance was remediated
S-25
<PAGE>
or an escrow for such remediation has been established and (ii) those cases in
which an operations and maintenance plan or periodic monitoring of nearby
properties was recommended, which recommendations are consistent with
industry-wide practices].
[The S&A Agreement requires that the Special Servicer obtain an
environmental site assessment of a Mortgaged Property securing a defaulted
Mortgage Loan prior to acquiring title thereto or assuming its operation. Such
prohibition effectively precludes enforcement of the security for the related
Mortgage Note until a satisfactory environmental site assessment is obtained (or
until any required remedial action is thereafter taken), but will decrease the
likelihood that the Issuer or the Trust Estate will become liable for a material
adverse environmental condition at the Mortgaged Property. However, there can be
no assurance that the requirements of the S&A Agreement will effectively
insulate the Issuer and the Trust Estate from potential liability for a
materially adverse environmental condition at any Mortgaged Property.] See
"Servicing of Mortgage Loans--Maintenance of Insurance Policies and Other
Servicing Procedures--Presentation of Claims; Realization Upon Defaulted
Mortgage Loans", "Risk Factors--Certain Mortgage Loans and Mortgaged Property;
Obligor Default", "--Environmental Risks" and "Certain Legal Aspects of Mortgage
Loans--Environmental Matters" in the Prospectus.
LIMITED LIQUIDITY. There is currently no secondary market for the Offered
Bonds. The Underwriter has indicated its intention to make a secondary market in
the Offered Bonds, but it is not obligated to do so. There can be no assurance
that a secondary market for the Offered Bonds will develop or, if one does
develop, that it will provide holders of Offered Bonds with liquidity of
investment or that it will continue for the life of the Offered Bonds. The
Offered Bonds will not be listed on any securities exchange. See "Risk
Factors--Limited Liquidity" in the Prospectus.
LIMITED ASSETS FOR PAYMENT OF OFFERED BONDS. The Offered Bonds will not be
guaranteed or insured by the Company or any of its affiliates, by the United
States or any governmental agency or instrumentality, or by any other person.
The Offered Bondholders will have no recourse to the Issuer in the event of a
default on the Offered Bonds, and each Offered Bondholder will be deemed to have
agreed by the acceptance of its Offered Bond not to file a bankruptcy petition
or commence similar proceedings in respect of the Issuer. Accordingly, if the
Collateral is insufficient to provide payments on the Offered Bonds, no other
assets will be available for payment of the deficiency. Additionally, certain
amounts on deposit from time to time in the Collection Account may be withdrawn
under certain conditions, as described herein and the Prospectus, for purposes
other than the payment of principal of or interest on the Bonds. To the extent
that Realized Losses, Net Aggregate Prepayment Interest Shortfalls and
Extraordinary Expenses exceed the sum of the initial Overcollateralization
Amount and the aggregate Bond Principal Amount of the Private Bonds, it is
unlikely the amounts received on the remaining Mortgage Loans will be sufficient
to make full and timely payment on the Offered Bonds. [Furthermore,
notwithstanding the Mortgage Rates on the Mortgage Loans, the Bond Interest Rate
on each Class of Offered Bonds is a fixed rate set forth in the table on the
cover page hereof. In certain limited circumstances, the Mortgage Rate on one or
more of the Mortgage Loans may be less than the Bond Interest Rate on one or
more Classes of the Offered Bonds. However, holders of the Offered Bonds would
not receive the full Bond Principal Amount of their Bonds, together with Accrued
Bond Interest thereon, generally only if (i) the aggregate Stated Principal
Balance of the Mortgage Pool is less than the aggregate Bond Principal Amount of
the Offered Bonds and/or (ii) the aggregate interest collected in respect of the
Mortgage Loans (net of certain fees and expenses payable therefrom under the
Indenture and the S&A Agreement) is less than the aggregate interest payable on
the Offered Bonds.] See "Description of the Bonds--Subordination" and
"Description of the Bonds-Collection Account" herein.
LIMITED EVENTS OF DEFAULT. With certain exceptions described herein and in
the Prospectus, the Bondholders will have no independent ability to declare a
default unless the Issuer shall fail to pay the Bonds in full by their Stated
Maturity, which with respect to each Class of Offered Bonds is the Payment Date
in ____________. Interest will be payable on the respective Classes of Bonds on
each Payment Date
S-26
<PAGE>
only to the extent that there are funds available for such purpose in the
Collection Account. The Issuer's failure to pay interest on the Bonds on a
current basis will not constitute an Event of Default. In addition, it will not
be an Event of Default if the Stated Principal Balance of the Mortgage Pool
declines below the aggregate Bond Principal Amount of the Bonds or of any
particular Class or Classes thereof. See "The Indenture--Events of Default" in
the Prospectus.
BONDHOLDERS HAVE LIMITED ABILITY TO FORCE SALE OF COLLATERAL FOLLOWING
NON-PAYMENT OF PRINCIPAL OR INTEREST. [Following an Event of Default, the
Indenture Trustee may (and, at the direction of the holders of Bonds
representing more than 50% of the aggregate Bond Principal Amount of each Class
of Bonds, the Indenture Trustee shall) declare all the Bonds to be due and
payable. In connection with any such declaration of acceleration, the Indenture
Trustee may liquidate the Mortgage Collateral generally only with the consent or
at the direction of the holders of Bonds representing an even greater percentage
of the aggregate Bond Principal Amount of each Class of Bonds. Such declaration
of acceleration and its consequences may be rescinded and annulled under certain
circumstances by the holders of Bonds representing more than 50% of the
aggregate Bond Principal Amount of each Class of Bonds. For purposes of the
foregoing, Bonds held by the Issuer, the Company or any affiliate thereof will
be deemed not to be outstanding. See "The Indenture--Events of Default" in the
Prospectus.
The market value of the Mortgage Loans will fluctuate as general interest
rates fluctuate, among other things. Following an Event of Default, there is no
assurance that the market value of the Mortgage Loans will be equal to or
greater than the unpaid principal and accrued interest due on the Bonds,
together with any other expenses or liabilities payable from the sales proceeds.
Certain Classes of Bondholders may have a disincentive to authorize the sale of
Bonds following an Event of Default because the net proceeds of such sale may be
insufficient to pay in full the principal of and interest on their Bonds.
The inability of a particular Class of Bondholders independently to force
the sale of the Mortgage Loans even though an Event of Default has occurred, and
the inability of Bondholders to generally force a sale of the Mortgage Loans
regardless of a substantial decline in the aggregate Stated Principal Balance of
the Mortgage Pool and notwithstanding that interest may not have been timely
paid on a Class of Bonds, may adversely affect the holders of one or more
Classes of Offered Bonds.]
RISKS RELATING TO LACK OF BONDHOLDER CONTROL OVER TRUST ESTATE. Bondholders
generally do not have a right to vote, except in connection with Events of
Default and certain amendments to the Indenture and the S&A Agreement (as
defined herein). Furthermore, Bondholders will generally not have the right to
make decisions with respect to the administration of the Mortgage Loans. Such
decisions are generally made, subject to the express terms of the Indenture and
the S&A Agreement, by the Master Servicer, the Special Servicer or the Trustee,
as applicable. Any decision made by one of those parties in respect of the
Mortgage Loans, even if made in the best interests of the Bondholders (as
determined by such party in its good faith and reasonable judgment), may be
contrary to the decision that would have been made by the holders of any
particular Class of Offered Bonds and may negatively affect the interests of
such holders.
S-27
<PAGE>
DESCRIPTION OF THE MORTGAGE POOL
GENERAL
The "Mortgage Pool" will be a segregated pool of __ [describe general
characteristics of the Mortgage Loans] mortgage loans (the "Mortgage Loans")
with an aggregate Cut-off Date Balance of $_________ (the "Initial Pool
Balance")[, subject to a permitted variance of plus or minus __%]. The "Cut-off
Date Balance" of each Mortgage Loan is the unpaid principal balance thereof as
of the Cut-off Date, after application of all payments due on or before such
date, whether or not received. ALL NUMERICAL INFORMATION PROVIDED HEREIN WITH
RESPECT TO THE MORTGAGE LOANS IS PROVIDED ON AN APPROXIMATE BASIS. ALL WEIGHTED
AVERAGE INFORMATION PROVIDED HEREIN WITH RESPECT TO THE MORTGAGE LOANS REFLECTS
THE WEIGHTING OF THE MORTGAGE LOANS BY THEIR CUT-OFF DATE BALANCES.
Each Mortgage Loan is evidenced by a note or bond (a "Mortgage Note") and is
secured by a [first] mortgage, deed of trust or similar security instrument (a
"Mortgage") on the fee simple (or, in __ cases, representing __% of the Initial
Pool Balance, the leasehold) interest of the related mortgagor (the "Mortgagor")
in real property used for commercial or multifamily purposes, all buildings and
improvements thereon and certain personal property located thereon (each, a
"Mortgaged Property") and security interests in certain funds and accounts and
other collateral described herein.
The Mortgage Loans are not insured or guaranteed by the Issuer, the Company
or the Mortgage Loan Seller, by any governmental entity or private mortgage
insurer or by any other person. All of the Mortgage Loans are nonrecourse loans
as to which recourse in the case of default will be limited to the specific
property and such other assets, if any, as were pledged to secure a Mortgage
Loan.
On or prior to the Closing Date, the Company will acquire the Mortgage Loans
from the Mortgage Loan Seller pursuant to the Mortgage Loan Purchase Agreement
dated as of _________, __ (the "Mortgage Loan Purchase Agreement"), between the
Company and the Mortgage Loan Seller, and the Company will thereupon assign its
interests in the Mortgage Loans, without recourse, to the Issuer. The Issuer
will pledge the Mortgage Loans and the other assets in the Trust Estate to
secure the Bonds. See "-- The Mortgage Loan Seller" herein and "Security for the
Bonds and Certificates" in the Prospectus.
[The Mortgage Loans were originated during the period from ____________ to
____________, generally in accordance with the underwriting criteria described
below under "--Underwriting of the Mortgage Loans". The Mortgage Loan Seller
originated __ of the Mortgage Loans, which represent __% of the Initial Pool
Balance, and acquired the remaining Mortgage Loans from the respective
originators thereof.]
CERTAIN PAYMENT CHARACTERISTICS
__ of the Mortgage Loans, which represent __% of the Initial Pool Balance,
have Due Dates that occur on the __ day of each month. The remaining Mortgage
Loans have Due Dates that occur on the __(__% of the Mortgage Loans), __ (__% of
the Mortgage Loans), __ (__% of the Mortgage Loans), and __ (__% of the Mortgage
Loans) day of each month.
[____________ of the Mortgage Loans, which represent __% of the Initial Pool
Balance, are ARM Loans. The ARM Loans bear interest at Mortgage Rates that are
subject to adjustment on periodically occurring Interest Rate Adjustment Dates
by adding the related Gross Margin to the applicable value of the related Index,
subject in ___ cases to rounding conventions and lifetime minimum and/or maximum
Mortgage Rates and, in the case of _______ Mortgage Loans, which represent __%
of the Initial Pool Balance, to periodic minimum and/or maximum Mortgage Rates.
The remaining Mortgage Loans are Fixed Rate Loans. None of the ARM Loans is
convertible into a Fixed Rate Loan.]
[If there are ARM Loans: [Identify Mortgage Loan Index]. The adjustments to
the Mortgage Rates on the ARM Loans may in each case be based on the value of
the related Index as available a specified
S-28
<PAGE>
number of days prior to an Interest Rate Adjustment Date, or may be based on the
value of the related Index as most recently published as of an Interest Rate
Adjustment Date or as of a designated date preceding an Interest Rate Adjustment
Date. __ of the ARM Loans, which represent __% of the Initial Pool Balance,
provide for Interest Rate Adjustment Dates that occur monthly; __ of the ARM
Loans, which represent __% of the Initial Pool Balance, provide for Interest
Rate Adjustment Dates that occur semi-annually; and the remaining ARM Loans
provide for Interest Rate Adjustment Dates that occur annually.]
[If there are ARM Loans: The Monthly Payments on each ARM Loan are subject
to adjustment on each Payment Adjustment Date to an amount [that would amortize
fully the principal balance of the Mortgage Loan over its then remaining
amortization schedule and pay interest at the then applicable Mortgage Rate].
[Discuss frequency of Payment Adjustment Dates and possibility of negative
amortization of interest.]]
____ of the Mortgage Loans, representing __% of the Initial Pool Balance,
are Balloon Loans that provide for monthly payments of principal based on
amortization schedules significantly longer than the remaining terms of such
Mortgage Loans. Thus, each such Mortgage Loan will have a Balloon Payment due at
its stated maturity date, unless prepaid prior thereto. The remaining Mortgage
Loans are fully amortizing.
[All the Mortgage Loans provided at origination for, sequentially, a period
(a "Lockout Period") during which voluntary prepayments of principal (each, a
"Principal Prepayment") are prohibited, then a period during which Principal
Prepayments are permitted but are required to be accompanied by an additional
amount (a "Prepayment Premium") equal to the greater of a specified percentage
of the principal amount being prepaid or a premium calculated on the basis of a
yield maintenance formula, and then, commencing on a specified date prior to
maturity, a period (the related "Open Period") during which Principal
Prepayments may be made without payment of any Prepayment Premium.]
[THE INDEX]
[Describe Index.]
[DELINQUENT AND NONPERFORMING MORTGAGE LOANS]
[Describe those delinquent and nonperforming Mortgage Loans, if any,
included in the Mortgage Pool.]
ADDITIONAL MORTGAGE LOAN INFORMATION
The following tables set forth the specified characteristics of [, in each
case as indicated, the ARM Loans, the Fixed Rate Loans or] all the Mortgage
Loans. The sum in any column may not equal the indicated total due to rounding.
S-29
<PAGE>
MORTGAGE RATES AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENT BY
NUMBER OF AGGREGATE AGGREGATE
MORTGAGE CUT-OFF DATE CUT-OFF DATE
RANGE OF MORTGAGE RATES(%) LOANS BALANCE BALANCE
- - -------------------------------------------------------------------------- ------------- --------------- ---------------
<S> <C> <C> <C>
Total.....................................................................
Weighted Average Mortgage Rate
(All Mortgage Loans): ___% per annum
[Weighted Average Mortgage Rate
(ARM Loans): ___% per annum
Weighted Average Mortgage Rate
(Fixed Rate Loans): ___% per annum]
</TABLE>
[GROSS MARGINS FOR THE ARM LOANS]
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER OF CUT-OFF DATE CUT-OFF DATE
[RANGE OF GROSS MARGINS(%) ARM LOANS BALANCE BALANCE
- - -------------------------------------------------------------------------- ------------- --------------- ---------------
<S> <C> <C> <C>
Total.....................................................................
Weighted Average Gross Margin: ___%]
</TABLE>
[FREQUENCY OF ADJUSTMENTS TO MORTGAGE RATES AND MONTHLY PAYMENTS FOR THE ARM
LOANS
<TABLE>
<CAPTION>
MONTHLY PERCENT BY
MORTGAGE RATE PAYMENT NUMBER OF AGGREGATE AGGREGATE
ADJUSTMENT ADJUSTMENT MORTGAGE CUT-OFF DATE CUT-OFF DATE
FREQUENCY FREQUENCY LOANS BALANCE BALANCE
--------------- --------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Total...........................................
</TABLE>
MAXIMUM LIFETIME MORTGAGE RATES FOR THE ARM LOANS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
RANGE OF MAXIMUM NUMBER OF CUT-OFF DATE CUT-OFF DATE
LIFETIME MORTGAGE RATES(%) ARM LOANS BALANCE BALANCE
- - ------------------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Total....................................................................
Weighted Average Maximum Lifetime Mortgage Rate
(ARM Loans): ___% per annum (A)
</TABLE>
- - ------------------------
(A) This calculation does not include the ____________ ARM Loans without maximum
lifetime Mortgage Rates.
S-30
<PAGE>
MINIMUM LIFETIME MORTGAGE RATES FOR THE ARM LOANS
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
RANGE OF MINIMUM NUMBER OF CUT-OFF DATE CUT-OFF DATE
LIFETIME MORTGAGE RATES(%) ARM LOANS BALANCE BALANCE
- - ------------------------------------------------------------------------- --------------- --------------- ---------------
<S> <C> <C> <C>
Total....................................................................
Weighted Average Minimum Lifetime Mortgage Rate
(ARM Loans): ___% per annum (A)
</TABLE>
- - ------------------------
(A) This calculation does not include the ____________ ARM Loans without minimum
lifetime Mortgage Rates. ]
CUT-OFF DATE BALANCES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
CUT-OFF DATE NUMBER OF CUT-OFF DATE CUT-OFF DATE
BALANCE RANGE ($) MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- ------------------- --------------- ---------------
<S> <C> <C> <C>
Total................................................................
Average Cut-off Date Balance
(All Mortgage Loans): $_______
[Average Cut-off Date Balance
(ARM Loans): $_______
Average Cut-off Date Balance
(Fixed Rate Loans): $_______]
</TABLE>
TYPES OF MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER OF CUT-OFF DATE CUT-OFF DATE
PROPERTY TYPE MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- ------------------- --------------- ---------------
<S> <C> <C> <C>
Total................................................................
</TABLE>
GEOGRAPHIC DISTRIBUTION OF THE MORTGAGED PROPERTIES
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
NUMBER OF CUT-OFF DATE CUT-OFF DATE
STATE MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- ------------------- --------------- ---------------
<S> <C> <C> <C>
Total................................................................
</TABLE>
S-31
<PAGE>
ORIGINAL TERM TO STATED MATURITY (IN MONTHS)
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
RANGE OF ORIGINAL NUMBER OF CUT-OFF DATE CUT-OFF DATE
TERMS (IN MONTHS) MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- ------------------- --------------- ---------------
<S> <C> <C> <C>
Total................................................................
Weighted Average Original Term to Stated Maturity
(All Mortgage Loans): ___ months
[Weighted Average Original Term to Stated Maturity
(ARM Loans): ___ months
Weighted Average Original Term to Stated Maturity
(Fixed Rate Loans): ___ months]
</TABLE>
REMAINING TERM TO STATED MATURITY (IN MONTHS)
AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENT BY
AGGREGATE AGGREGATE
RANGE OF REMAINING NUMBER OF CUT-OFF DATE CUT-OFF DATE
TERMS (IN MONTHS) MORTGAGE LOANS BALANCE BALANCE
- - --------------------------------------------------------------------- ------------------- --------------- ---------------
<S> <C> <C> <C>
Total................................................................
Weighted Average Remaining
Term to Stated Maturity
(All Mortgage Loans): ___ months
[Weighted Average Remaining
Term to Stated Maturity
(ARM Loans): ___ months
Weighted Average Remaining
Term to Stated Maturity
(Fixed Rate Loans): ___ months]
</TABLE>
The following table sets forth a range of Debt Service Coverage Ratios for
the Mortgage Loans. The "Debt Service Coverage Ratio" set forth in the following
table for any Mortgage Loan is [the ratio of (i) Net Operating Income produced
by the related Mortgaged Property for the period (annualized if the period was
less than one year) covered by the most recent operating statement available to
the Company to (ii) the amount of the Monthly Payment in effect as of the
Cut-off Date multiplied by 12. "Net Operating Income" is the revenue derived
from the use and operation of a Mortgaged Property (consisting primarily of
rental income and deposit forfeitures), less operating expenses (such as
utilities, general administrative expenses, management fees, advertising,
repairs and maintenance), and further less fixed expenses (such as insurance and
real estate taxes). Net Operating Income generally does not reflect capital
expenditures. The following table was prepared using operating statements
obtained from the respective Mortgagors or the related property managers. In
each case, the information contained in such operating statements was unaudited,
and neither the Issuer nor the Company has made any attempt to verify its
accuracy. In the case of __ Mortgage Loans [(__ ARM Loans and __ Fixed Rate
Loans)], representing __% of the Initial Pool Balance, operating statements
could not be obtained, and accordingly, Debt Service Coverage Ratios for those
Mortgage Loans were not calculated. The last day of the period (which may not
correspond to the
S-32
<PAGE>
most recently ended calendar year) covered by each operating statement from
which a Debt Service Coverage Ratio was calculated is set forth in [Annex A]
with respect to the related Mortgage Loan.]
DEBT SERVICE COVERAGE RATIOS(A)
<TABLE>
<CAPTION>
PERCENT BY
RANGE OF NUMBER OF AGGREGATE
DEBT SERVICE MORTGAGE AGGREGATE CUT-OFF CUT-OFF DATE
COVERAGE RATIOS (X) LOANS DATE BALANCE BALANCE
- - ---------------------------------------------------------------------- ------------- ------------------- ---------------
<S> <C> <C> <C>
Not Calculated(B).....................................................
Total.................................................................
Weighted Average
Debt Service Coverage Ratio
(All Mortgage Loans): ___x(C)
[Weighted Average
Debt Service Coverage Ratio
(ARM Loans): ___x(D)
Weighted Average
Debt Service Coverage Ratio
(Fixed Rate Loans): ___x(E)]
</TABLE>
- - ------------------------
(A) The Debt Service Coverage Ratios are based on the most recently available
operating statements obtained from the respective mortgagors or the related
property managers.
(B) The Debt Service Coverage Ratios for these Mortgage Loans were not
calculated due to a lack of available operating statements.
(C) This calculation does not include the ____ Mortgage Loans as to which Debt
Service Coverage Ratios were not calculated.
[(D) This calculation does not include the ____ ARM Loans as to which Debt
Service Coverage Ratios were not calculated.
(E) This calculation does not include the ____ Fixed Rate Loans as to which Debt
Service Coverage Ratios were not calculated.]
The following tables set forth the range of LTV Ratios of the Mortgage Loans
at the Cut-off Date. The "LTV Ratio" set forth in the following table for any
Mortgage Loan is [a fraction, expressed as a percentage, the numerator of which
is the Cut-off Date Balance of such Mortgage Loan, and the denominator of which
is the appraised value of the related Mortgaged Property as determined by an
appraisal thereof obtained in connection with the origination of such Mortgage
Loan. Because it is based on the value of a Mortgaged Property determined as of
loan origination, the information set forth in the table below is not
necessarily a reliable measure of the related borrower's current equity in each
Mortgaged Property. In a declining real estate market, the fair market value of
a Mortgaged Property could have decreased from the value determined at
origination, and the current actual loan-to-value ratio of a Mortgage Loan may
be higher than its LTV Ratio as reflected in the table set forth below.]
S-33
<PAGE>
LTV RATIOS AT CUT-OFF DATE
<TABLE>
<CAPTION>
PERCENT BY
NUMBER OF AGGREGATE
RANGE OF LTV RATIOS(%) MORTGAGE AGGREGATE CUT-OFF CUT-OFF DATE
AS OF CUT-OFF DATE LOANS DATE BALANCE BALANCE
- - ---------------------------------------------------------------------- ------------- ------------------- ---------------
<S> <C> <C> <C>
Total.................................................................
Weighted Average LTV
Ratios as of Cut-off Date
(All Mortgage Loans): ___%
[Weighted Average LTV
Ratio as of Cut-off Date
(ARM Loans): ___%
Weighted Average LTV
Ratio as of Cut-off Date
(Fixed Rate Loans): ___%]
</TABLE>
OCCUPANCY RATES
<TABLE>
<CAPTION>
PERCENT BY
NUMBER OF AGGREGATE
RANGE OF MORTGAGE AGGREGATE CUT-OFF CUT-OFF DATE
OCCUPANCY RATES(A) LOANS DATE BALANCE BALANCE
- - ---------------------------------------------------------------------- ------------- ------------------- ---------------
<S> <C> <C> <C>
Total.................................................................
Weighted Average Occupancy Rate
(All Mortgage Loans)(A): ___%
[Weighted Average Occupancy Rate
(ARM Loans)(A): ___%
Weighted Average Occupancy Rate
(Fixed Rate Loans)(A): ___%]
</TABLE>
- - ------------------------
(A) Physical occupancy rates calculated based on rent rolls provided by the
respective Mortgagors or related property managers as of a date no more than
__ months prior to the Cut-off Date.
Specified in [Annex A] to this Prospectus Supplement are the foregoing and
certain additional characteristics of the Mortgage Loans set forth on a
loan-by-loan basis. Certain additional information regarding the Mortgage Loans
is contained herein under "--Underwriting of the Mortgage Loans" and
"--Representations and Warranties with respect to the Mortgage Loans;
Repurchases" and in the Prospectus under "Security for the Bonds and
Certificates--Mortgage Loans" and "Certain Legal Aspects of Mortgage Loans".
[DELINQUENCIES. As of the Cut-off Date, [no] Mortgage Loan was more than 30
days delinquent in respect of any Monthly Payment.]
THE MORTGAGE LOAN SELLER
GENERAL. [The Mortgage Loan Seller [, a wholly-owned subsidiary of
____________,] is a ___________________ organized in 19__ under the laws of
___________________. [Specify additional information regarding the Mortgage Loan
Seller's multifamily and commercial portfolio.]
The information set forth herein concerning the Mortgage Loan Seller and the
underwriting of the Mortgage Loans has been provided by the Mortgage Loan
Seller, and none of the Issuer, the Company or
S-34
<PAGE>
the Underwriter makes any representation or warranty as to the accuracy or
completeness of such information.
UNDERWRITING OF THE MORTGAGE LOANS
[All of the Mortgage Loans were originated generally in accordance with the
underwriting criteria described herein.]
[Description of underwriting.]
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE MORTGAGE LOANS; REPURCHASES
In the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller has
represented and warranted with respect to each Mortgage Loan, as of [the Closing
Date], or as of such other date specifically provided in the representation and
warranty, among other things, that:
[Specify significant representations and warranties.]
If the Mortgage Loan Seller has been notified of a material breach of any of
the foregoing representations and warranties and if the Mortgage Loan Seller
cannot cure such breach within a period of __days following its receipt of such
notice, then the Mortgage Loan Seller will be obligated pursuant to the Mortgage
Loan Purchase Agreement (the relevant rights under which will be assigned,
together with the Mortgage Loans, by the Company to the Issuer and, further,
will be pledged, together with the Mortgage Loans, by the Issuer to secure the
Bonds) to repurchase the affected Mortgage Loan within such __-day period at a
price (the "Purchase Price") equal to [the sum of (i) the unpaid principal
balance of such Mortgage Loan, (ii) unpaid accrued interest on such Mortgage
Loan at the related Mortgage Rate from the date to which interest was last paid
to the Due Date in the Due Period in which the purchase is to occur, and (iii)
certain servicing expenses that are reimbursable to the Master Servicer and the
Special Servicer].
The foregoing repurchase obligation will constitute the sole remedy
available to the Bondholders and the Trustee for any breach of the Mortgage Loan
Seller's representations and warranties regarding the Mortgage Loans. The
Mortgage Loan Seller will be the sole Warranting Party in respect of the
Mortgage Loans, and none of the Issuer, the Company, the Master Servicer, the
Special Servicer or any of their affiliates [(other than the Mortgage Loan
Seller)] will be obligated to repurchase any affected Mortgage Loan in
connection with a breach of the Mortgage Loan Seller's representations and
warranties if the Mortgage Loan Seller defaults on its obligation to do so.
CHANGES IN MORTGAGE POOL CHARACTERISTICS
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Bonds are issued, as adjusted for the
scheduled principal payments due on or before the Cut-off Date. Prior to the
issuance of the Offered Bonds, a Mortgage Loan may be removed from the Mortgage
Pool if the Company deems such removal necessary or appropriate or if it is
prepaid. A limited number of other mortgage loans may be included in the
Mortgage Pool prior to the issuance of the Offered Bonds, unless including such
mortgage loans would materially alter the characteristics of the Mortgage Pool
as described herein. The Company believes that the information set forth herein
will be representative of the characteristics of the Mortgage Pool as it will be
constituted at the time the Offered Bonds are issued, although the range of
Mortgage Rates and maturities and certain other characteristics of the Mortgage
Loans in the Mortgage Pool may vary.
S-35
<PAGE>
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Bonds on or shortly after the Closing Date and will be
filed [, together with the Indenture Supplement,] with the Commission within
fifteen days after the initial issuance of the Offered Bonds. In the event
Mortgage Loans are removed from or added to the Mortgage Pool as set forth in
the preceding paragraph, such removal or addition will be noted in the Form 8-K.
SERVICING OF THE MORTGAGE LOANS
GENERAL
The servicing and administration of the Mortgage Pool will be governed by
the terms of the Servicing and Administration Agreement dated as of
___________________, ____ (the "S&A Agreement"), among the Owner Trustee on
behalf of the Issuer, the Trustee on behalf of the Bondholders, the Master
Servicer and the Special Servicer. The Master Servicer and the Special Servicer,
either directly or through sub-servicers, will be required to service and
administer the Mortgage Loans, for the benefit of the Bondholders and the
Issuer, in accordance with applicable law, the terms of the S&A Agreement and
the terms of the respective Mortgage Loans and, to the extent consistent with
the foregoing, [in accordance with the following standards (collectively, the
"Servicing Standard"): (a) with the same care, skill and diligence with which
prudent institutional commercial mortgage lenders and loan servicers service
comparable mortgage loans or, if higher, with the same care, skill and diligence
with which the Master Servicer or Special Servicer, as the case may be,
generally services comparable mortgage loans owned by it; (b) with a view to the
timely collection of all scheduled payments of principal and interest under the
Mortgage Loans or, if a Mortgage Loan comes into and continues in default and no
satisfactory arrangements can be made for the collection of the delinquent
payments, the maximization of the net recovery on such Mortgage Loan on a
present value basis; and (c) without regard to: (i) any relationship that it or
any of its affiliates may have with the related Mortgagor or any other party to
the S&A Agreement; (ii) its ownership (or that of an affiliate) of any Bond;
(iii) any obligation to make Advances (as defined below); and (iv) its right or
the right of any affiliate to receive compensation for its services or
reimbursement of costs under the S&A Agreement or with respect to any particular
transaction].
The Master Servicer initially will, except for certain limited duties, be
responsible for the master servicing and administration of the entire Mortgage
Pool. [The Special Servicer will be responsible for property level servicing and
administration of the entire Mortgage Pool, including: (i) conducting (or
retaining a third party to conduct) inspections of each Mortgaged Property at
least once every __ years; and (ii) collecting and making certain calculations
based on annual operating statements and rent rolls with respect to each
Mortgaged Property.] The Special Servicer will also be responsible for special
servicing and administering any Mortgage Loan as to which any of the following
events (each, a "Servicing Transfer Event") occurs: [(a) the related Mortgagor
fails to make when due any Balloon Payment, which failure continues unremedied,
or the Master Servicer determines, in its reasonable good faith judgment, will
continue unremedied, for 30 days; (b) the related Mortgagor fails to make when
due any other Monthly Payment or any other payment required under the related
Mortgage Note and Mortgage, which failure continues unremedied, or the Master
Servicer determines, in its reasonable good faith judgment, will continue
unremedied, for 60 days; (c) the Master Servicer determines, in its reasonable
good faith judgment, that a default in making any Monthly Payment (including a
Balloon Payment) or any other payment required under the related Mortgage Note
and Mortgage is likely to occur within 30 days and is likely to remain
unremedied for at least 60 days or, in the case of a Balloon Payment, for at
least 30 days; (d) the Master Servicer determines, in its reasonable good faith
judgment, that a default (other than as described in clause (a) or (b) above)
has occurred that may materially impair the value of the related Mortgaged
Property as security for the Mortgage Loan and such default continues unremedied
for the applicable cure period under the terms of the Mortgage Loan (or, if no
cure period is specified, for 30 days); (e) certain events of insolvency,
readjustment of debt, marshaling of assets and liabilities, or similar
proceedings occur in respect of the related Mortgagor or the related Mortgaged
Property, or the related Mortgagor takes certain actions indicating its
insolvency or its inability to pay its obligations, or (f) the
S-36
<PAGE>
Master Servicer receives notice of the commencement of foreclosure or similar
proceedings with respect to the related Mortgaged Property].
If a Servicing Transfer Event occurs with respect to any Mortgage Loan, the
Master Servicer is required to use reasonable efforts to effect or to cooperate
in effecting the transfer of the servicing responsibilities with respect thereto
to the Special Servicer within __ business days. Notwithstanding such transfer,
the Master Servicer will continue to receive payments on such Mortgage Loan
(including amounts collected by the Special Servicer), to make certain
calculations with respect to such Mortgage Loan, and to make remittances to
(including, if necessary, P&I Advances) and prepare certain reports for, the
Trustee with respect to such Mortgage Loan. If title to the related Mortgaged
Property is acquired as part of the Trust Estate (upon acquisition, an "REO
Property"), whether through foreclosure, deed in lieu of foreclosure or
otherwise, the Special Servicer will continue to be responsible for the
operation and management thereof. Mortgage Loans serviced by the Special
Servicer are referred to herein as "Specially Serviced Mortgage Loans". The
Master Servicer will have no responsibility for the Special Servicer's
performance of its duties under the S&A Agreement.
A Mortgage Loan will cease to be a Specially Serviced Mortgage Loan (and
will become a "Corrected Mortgage Loan" as to which the Master Servicer will
re-assume servicing responsibilities) at such time as no circumstance identified
in clauses (a) through (f) of the second preceding paragraph exists that would
cause the Mortgage Loan to continue to be characterized as a Specially Serviced
Mortgage Loan and such of the following as are applicable occur:
(w) with respect to the circumstances described in clause (a) and (b) of
the second preceding paragraph, the related Mortgagor has made three
consecutive full and timely Monthly Payments under the terms of such
Mortgage Loan (as such terms may be changed or modified in connection with a
bankruptcy or similar proceeding involving the related Mortgagor or by
reason of a modification, waiver or amendment granted or agreed to by the
Special Servicer);
(x) with respect to the circumstances described in clauses (c) and (e)
of the second preceding paragraph, such circumstances cease to exist in the
reasonable good faith judgment of the Special Servicer;
(y) with respect to the circumstances described in clause (d) of the
second preceding paragraph, such default is cured; and
(z) with respect to the circumstances described in clause (f) of the
second preceding paragraph, such proceedings are terminated.
Set forth below is a description of certain pertinent provisions of the S&A
Agreement relating to the servicing of the Mortgage Loans. Reference is also
made to the Prospectus, in particular to the section captioned "Servicing of
Mortgage Loans" for additional important information.
THE MASTER SERVICER
[___________________________________________ (the "Master Servicer") will
act as Master Servicer with respect to the Mortgage Pool. The offices of the
Master Servicer that will be primarily responsible for servicing and
administering the Mortgage Pool are located
at___________________________________________. As of___________________, ____,
the Master Servicer had a net worth of approximately $___________________ and
was the servicer of a portfolio of multifamily and commercial mortgage loans in
__ states totaling approximately $___________________ in aggregate outstanding
principal amount.]
The foregoing information has been provided by the Master Servicer. None of
the Issuer, the Company, the Underwriter, the Trustee, the Special Servicer or
any of their respective affiliates takes any responsibility therefor or makes
any representation or warranty as to the accuracy or completeness thereof.
The Master Servicer will have no responsibility for, and makes no
representation with respect to, the origination of the Mortgage Loans, the
management of the Mortgaged Properties, the validity or sufficiency of the
security arrangements described herein with respect to the Mortgage Loans or the
collectability of amounts due under the Mortgage Loans.
S-37
<PAGE>
THE SPECIAL SERVICER
[____________________________ will act as Special Servicer with respect to
the Mortgage Pool. The principal offices of the Special Servicer are located at
____________________________. As of _________, _________, the Special Servicer
was responsible for the servicing of approximately _________ commercial and
multifamily loans with an aggregate principal balance of approximately
$_________ , the collateral for which is located in __ states.]
The foregoing information has been provided by the Special Servicer. None of
the Issuer, the Company, the Underwriter, the Trustee, the Master Servicer or
any of their respective affiliates takes any responsibility therefor or makes
any representation or warranty as to the accuracy or completeness of such
information.
The Special Servicer will have no responsibility for, and makes no
representation with respect to, the origination of the Mortgage Loans, the
management of the Mortgaged Properties, the validity or sufficiency of the
security arrangements described herein with respect to the Mortgage Loans or the
collectability of amounts due under the Mortgage Loans.
SUB-SERVICERS
The Master Servicer and Special Servicer may each delegate its servicing
obligations in respect of the Mortgage Loans serviced thereby to one or more
third-party servicers (each, a "Sub-Servicer"); provided that the Master
Servicer or Special Servicer, as the case may be, will remain obligated under
the S&A Agreement. Each sub-servicing agreement between the Master Servicer or
Special Servicer, as the case may be, and a Sub-Servicer (a "Sub-Servicing
Agreement") must be consistent with the S&A Agreement and must provide, among
other things, that, if for any reason such Master Servicer or Special Servicer
is no longer acting in such capacity, the Trustee or any successor to such
Master Servicer or Special Servicer may assume such party's rights and
obligations under such Sub-Servicing Agreement. The Master Servicer and Special
Servicer will each be required to monitor the performance of Sub-Servicers
retained by it.
The Master Servicer or Special Servicer will be solely liable for all fees
owed by it to any Sub-Servicer. Each Sub-Servicer retained thereby will be
reimbursed by the Master Servicer or Special Servicer, as the case may be, for
certain expenditures which it makes, generally to the same extent the Master
Servicer or Special Servicer would be reimbursed under the S&A Agreement. See
"--Custodial Account" and "Servicing of Mortgage Loans--Servicing Compensation
and Payment of Expenses" in the Prospectus and "--Servicing and Other
Compensation and Payment of Expenses" below.
CUSTODIAL ACCOUNT
GENERAL. The Master Servicer will be required to establish and maintain in
the name of the Trustee one or more separate accounts for the collection of
payments on the Mortgage Loans (collectively, the "Custodial Account"), which
will be established in such manner and/or with such a depository as are
specified in the Servicing and Administration Agreement or, as confirmed in
writing by each Rating Agency, as would not cause a qualification, downgrade or
withdrawal of any of the ratings then assigned by it to any Class of Bonds (and,
accordingly, which constitute an "Eligible Account"). The funds held in the
Custodial Account may be held as cash or invested in Eligible Investments.
Any interest or other income earned on funds in the Custodial Account will
be paid to the Master Servicer as additional compensation subject to the
limitations set forth in the Servicing and Administration Agreement. See
"--Servicing and Other Compensation and Payment of Expenses" below.
DEPOSITS. The Master Servicer will be required to deposit or cause to be
deposited in the Custodial Account upon receipt (in the case of collections and
payments on the Mortgage Loans) or as otherwise required under the Servicing and
Administration Agreement, the following payments and collections received or
made by or on behalf of the Master Servicer subsequent to the Closing Date
(other than in
S-38
<PAGE>
respect of scheduled payments of principal and interest due on the Mortgage
Loans on or before the Cut-off Date, which belong to the 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;
(iii) all Prepayment Premiums;
(iv) (A) all proceeds received under any hazard, flood, title or other
insurance policy that provides coverage with respect to a Mortgaged Property
or the related Mortgage Loan (collectively with any comparable amounts
received with respect to an REO Property, "Insurance Proceeds"), other than
any such proceeds applied to the restoration of the property or otherwise
released to the borrower or another appropriate person, (B) all proceeds
received in connection with the condemnation or the taking by right of
eminent domain of a Mortgaged Property (collectively with any comparable
amounts received with respect to an REO Property, "Condemnation Proceeds"),
other than any such proceeds applied to the restoration of the property or
otherwise released to the borrower or another appropriate person, and (C)
all other amounts received and retained in connection with the liquidation
of defaulted Mortgage Loans by foreclosure or otherwise (collectively with
any amounts received in connection with the sale of an REO Property and the
amounts described in clause (v) below, "Liquidation Proceeds");
(v) insofar as they do not constitute escrow payments, any amounts paid
by a Mortgagor specifically to cover items for which a Servicing Advance has
been made;
(vi) any amounts required to be deposited by the Master Servicer in
connection with losses incurred with respect to Eligible Investments of
funds held in the Custodial Account;
(vii) all payments required to be deposited by the Master Servicer or
the Special Servicer in the Custodial Account with respect to any deductible
clause in any blanket insurance policy;
(viii) any amount required to be transferred from any separate account
or accounts maintained by the Special Servicer with respect to REO Property
(collectively, the "REO Account"); and
(ix) any other amounts required to be so deposited under the Servicing
and Administration Agreement.]
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 generally required to promptly remit such amounts to the Master Servicer for
deposit in the Custodial Account.
WITHDRAWALS. The Master Servicer may make withdrawals from the Custodial
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 on or before the Payment Date each month an
amount generally equal to that portion of the Available Payment Amount for
the related Payment Date (together with any amounts to be paid or reimbursed
from the Collection Account by the Trustee) then on deposit in the Custodial
Account, together with any Prepayment Premiums received during the related
Collection Period;
(ii) to apply amounts held for future distribution on the Bonds to make
P&I Advances;
(iii) to reimburse the Trustee or itself (in that order), as applicable,
for unreimbursed P&I Advances (other than P&I Advances that constitute
Nonrecoverable Advances (as defined below), which are reimbursable as
described in clause (viii) below) made thereby (in each case, with its own
funds), such reimbursement to be made out of amounts received which were
identified and applied by the Master Servicer as late collections of
interest and principal (net of related Master Servicing Fees
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<PAGE>
and any related Workout Fees and/or Liquidation Fees) on the particular
Mortgage Loan (including an REO Mortgage Loan) as to which each such P&I
Advance was made;
(iv) to pay itself earned and unpaid Master Servicing Fees in respect of
each Mortgage Loan (including each Specially Serviced Mortgage Loan and each
REO Mortgage Loan), such payment being limited to amounts received on or in
respect of such Mortgage Loan that are allocable as a recovery of interest
thereon;
(v) to pay the Special Servicer, out of general collections on the
Mortgage Loans, Property Servicing Fees in respect of each and every
Mortgage Loan and Special Servicing Fees in respect of each Specially
Serviced Mortgage Loan and each REO Mortgage Loan; (vi) to pay the Special
Servicer earned and unpaid Workout Fees and Liquidation Fees to which it is
entitled as and from the sources described above under "--Servicing and
Other Compensation and Payment of Expenses";
(vii) to reimburse the Trustee, itself or the Special Servicer, as
applicable, for any unreimbursed Servicing Advances made thereby (in each
case, with its own funds), such reimbursement to be made out of Related
Proceeds;
(viii) to reimburse the Trustee, itself or the Special Servicer, as
applicable, out of general collections on the Mortgage Loans and REO
Properties, for any unreimbursed Advances made thereby (in each case, with
its own funds) that have been determined not to be ultimately recoverable
from Related Proceeds (any such Advance, a "Nonrecoverable Advance");
(ix) at or following such time as it reimburses the Trustee, the Special
Servicer or itself, as applicable, for any unreimbursed Advance as described
in clause (iii), (vii) or (viii) above, to pay the Trustee, the Special
Servicer or itself (in that order), as the case may be, out of general
collections on the Mortgage Loans and any REO Properties, any interest at
the Reimbursement Rate accrued and payable on such Advance;
(x) to pay, out of general collections on the Mortgage Loans and any REO
Properties, to itself, the Special Servicer or any of their respective
directors, officers, employees and agents, as the case may be, any amounts
payable to such person pursuant to the limitation on liability and
indemnification provisions of the Servicing and Administration Agreement;
(xi) to pay itself or the Special Servicer, as additional servicing
compensation, (A) interest and investment income earned in respect of
amounts held in the Custodial Account, (B) any Prepayment Interest Excesses
and (C) Default Interest in respect of Mortgage Loans that are not Specially
Serviced Mortgage Loans or REO Mortgage Loans, as and to the extent
described under "--Servicing and Other Compensation and Payment of
Expenses";
(xii) to pay, out of general collections on the Mortgage Loans and any
REO Properties, for the cost of an independent appraiser or other expert in
real estate matters as required under the Servicing and Administration
Agreement.
(xiii) to pay, out of general collections on the Mortgage Loans and any
REO Properties, for the cost of certain advice of counsel and tax
accountants, the cost of certain opinions of counsel and the cost of
recording the Servicing and Administration Agreement, all as set forth in
the Servicing and Administration Agreement;
(xiv) with respect to each Mortgage Loan purchased pursuant to or as
contemplated by the Servicing and Administration Agreement, to pay to the
purchaser thereof all amounts received thereon subsequent to the date of
purchase;
(xv) to pay certain servicing expenses that would, if advanced,
constitute Nonrecoverable Advances, but the payment of which is determined
nonetheless to be in the best interests of the Bondholders;
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(xvi) to make such other withdrawals as are permitted under the
Servicing and Administration Agreement; and
(xvii) to clear and terminate the Custodial Account upon the termination
of the Servicing and Administration Agreement.]
SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES
[The principal compensation to be paid to the Master Servicer in respect of
its servicing activities will be the Master Servicing Fee. The "Master Servicing
Fee" will be payable monthly on a loan-by-loan basis from amounts received in
respect of interest on each Mortgage Loan (including Specially Serviced Mortgage
Loans and Mortgage Loans as to which the related Mortgaged Property has become
an REO Property), will accrue at ____% per annum (the "Master Servicing Fee
Rate") and will be computed on the basis of the same principal amount and for
the same period respecting which any related interest payment on the Mortgage
Loan is computed. As additional servicing compensation, the Master Servicer will
be entitled to (x) Prepayment Interest Excesses (as defined below) actually
collected on the Mortgage Loans and (y) any Default Interest (that is, interest
in excess of interest at the related Mortgage Rate, accrued on any Mortgage Loan
by reason of a default thereunder) and late payment charges actually collected
on the Mortgage Loans, but only to the extent that such items (i) are allocable
to the period when the related Mortgage Loan did not constitute a Specially
Serviced Mortgage Loan or REO Property and (ii) are not allocable to pay any
portion of a Workout Fee or Liquidation Fee (each as defined below) payable to
the Special Servicer with respect to the related Mortgage Loan or to cover
interest payable to the Master Servicer, Special Servicer or Trustee with
respect to any Advances made in respect of the related Mortgage Loan. In
addition, the Master Servicer will be authorized to invest or direct the
investment of funds held in the Custodial Account in Eligible Investments (as
defined in the Prospectus), and the Master Servicer will be entitled to retain
any interest or other income earned on such funds, but will be required to cover
any losses from its own funds without any right to reimbursement. See "--
Custodial Account" above.]
[If a Mortgagor prepays a Mortgage Loan in whole or in part prior to the
related Due Date in any Collection Period, the amount of interest (net of
related Master Servicing Fees and Property Servicing Fees) that would have
accrued on the amount of such Principal Prepayment from the date of such
Principal Prepayment to, but not including, such Due Date, to the extent not
collected (without regard to any related Prepayment Premium), will constitute a
"Prepayment Interest Shortfall". If such a Principal Prepayment is made after
the related Due Date in any Collection Period, the amount of interest (net of
related Master Servicing Fees and Property Servicing Fees) that accrues on the
amount of such Principal Prepayment from such Due Date to, but not including,
the date of such Principal Prepayment, to the extent collected (exclusive of any
related Prepayment Premium), will constitute a "Prepayment Interest Excess". Any
Prepayment Interest Excesses collected will be paid to the Master Servicer as
additional servicing compensation. However, with respect to each Payment Date,
the Master Servicer will be required to deposit into the Custodial Account (such
deposit, a "Compensating Interest Payment"), without any right of reimbursement
therefor, an amount equal to the lesser of (i) the aggregate Master Servicing
Fees for the related Collection Period, plus any Prepayment Interest Excesses
received during such Collection Period, and (ii) the aggregate of any Prepayment
Interest Shortfalls experienced during the related Collection Period. The Master
Servicer is not required to make Compensating Interest Payments to cover
comparable shortfalls in Mortgage Loan interest accruals that result from any
liquidation of a defaulted Mortgage Loan or an REO Property acquired in respect
thereof. If the aggregate of any Prepayment Interest Shortfalls experienced
during any Collection Period exceed any Compensating Interest Payment made in
respect thereof, the difference will constitute the "Net Aggregate Prepayment
Interest Shortfall" for the related Payment Date.]
[The principal compensation to be paid to the Special Servicer in respect of
its property level servicing activities will be the Property Servicing Fee. The
"Property Servicing Fee" will accrue with respect to each
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Mortgage Loan (including Specially Serviced Mortgage Loans and Mortgage Loans as
to which the related Mortgaged Property has become an REO Property) at a rate
equal to ____% per annum (the "Property Servicing Fee Rate") and will be
computed on the basis of the same principal amount and for the same period
respecting which any related interest payment on any such Mortgage Loan is
computed. Earned but unpaid Property Servicing Fees will be payable monthly out
of general collections on the Mortgage Loans and any REO Properties on deposit
in the Custodial Account.]
[The principal compensation to be paid to the Special Servicer in respect of
its special servicing activities will be the Special Servicing Fee, the Workout
Fee and the Liquidation Fee. Solely as to Specially Serviced Mortgage Loans and
Mortgage Loans as to which the related Mortgaged Property has become an REO
Property, and in addition to the Property Servicing Fee for such Mortgage Loans,
the Special Servicer shall be entitled to the "Special Servicing Fee" which will
accrue at a rate equal to __% per annum (the "Special Servicing Fee Rate") and
will be computed on the basis of the same principal amount and for the same
period respecting which any related interest payment on any such Mortgage Loan
is computed. The Special Servicing Fee with respect to any such Mortgage Loan
will cease to accrue if such loan (or the related REO Property) is liquidated or
if, in the case of a Specially Serviced Mortgage Loan, it becomes a Corrected
Mortgage Loan. Earned but unpaid Special Servicing Fees will be payable monthly
out of general collections on the Mortgage Loans and any REO Properties on
deposit in the Custodial Account. A "Workout Fee" will generally be payable with
respect to each Corrected Mortgage Loan. As to each Corrected Mortgage Loan, the
Workout Fee will be payable out of, and will be calculated by application of a
"Workout Fee Rate" of __% to, each collection of interest and principal (net of
related unpaid or unreimbursed Master Servicing Fees, Property Servicing Fees,
Special Servicing Fees and Advances) and each collection of a Prepayment
Premium, received on such Mortgage Loan for so long as it remains a Corrected
Mortgage Loan. The Workout Fee with respect to any Corrected Mortgage Loan will
cease to be payable if such loan again becomes a Specially Serviced Mortgage
Loan or if the related Mortgaged Property becomes an REO Property; provided that
a new Workout Fee will become payable if and when such Mortgage Loan again
becomes a Corrected Mortgage Loan. If the Special Servicer is terminated other
than for cause, or resigns, it shall retain the right to receive any and all
Workout Fees payable in respect of Mortgage Loans that became Corrected Mortgage
Loans during the period that it acted as Special Servicer and were still such at
the time of such termination or resignation (and the successor Special Servicer
shall not be entitled to any portion of such Workout Fees), in each case until
the Workout Fee for any such loan ceases to be payable in accordance with the
preceding sentence. A "Liquidation Fee" will be payable with respect to each
Specially Serviced Mortgage Loan or REO Property as to which the Special
Servicer receives any full or discounted payoff from the related Mortgagor or
any Liquidation Proceeds, Condemnation Proceeds or Insurance Proceeds (other
than as a result of the purchase of any such Specially Serviced Mortgage Loan or
REO Property by the Mortgage Loan Seller in connection with a material breach of
representation or warranty or any purchase thereof by the Special Servicer or
the Master Servicer). As to each such Specially Serviced Mortgage Loan or REO
Property, the Liquidation Fee shall be payable out of, and shall be calculated
by application of a "Liquidation Fee Rate" of__% to, such full or discounted
payoff, Liquidation Proceeds, Condemnation Proceeds and/or Insurance Proceeds,
in each case net of any portion of such payment or proceeds payable or
reimbursable to the Master Servicer or the Special Servicer to cover related
unpaid or unreimbursed Master Servicing Fees, Property Servicing Fees, Special
Servicing Fees and Advances. The Liquidation Fee with respect to any such
Specially Serviced Mortgage Loan will not be payable if such Mortgage Loan
becomes a Corrected Mortgage Loan. Notwithstanding anything herein to the
contrary, no Liquidation Fee will be payable in connection with the receipt of,
or out of, Liquidation Proceeds collected as a result of the purchase of any
Specially Serviced Mortgage Loan or REO Property by the Mortgage Loan Seller in
connection with a material breach of representation or warranty or any purchase
thereof by the Special Servicer or the Master Servicer. As additional servicing
compensation, the Special Servicer will be entitled to Default Interest and late
payment charges actually collected on the Specially Serviced Mortgage Loans, but
only to the extent that such items are not allocable to pay any portion of a
Workout Fee or Liquidation Fee
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payable to the Special Servicer with respect to the related Mortgage Loan or to
cover interest payable to the Master Servicer, Special Servicer or Trustee with
respect to any Advances made in respect of the related Mortgage Loan.]
[In addition, the Special Servicer will be authorized to invest or direct
the investment of funds held in the REO Account in Eligible Investments, and the
Special Servicer will be entitled to retain any interest or other income earned
on such funds, but will be required to cover any losses from its own funds
without any right to reimbursement.]
[Assumption fees and modification fees actually collected on or with respect
to the Mortgage Loans will allocated between the Master Servicer and the Special
Servicer as provided in the S&A Agreement and will be paid to each as additional
servicing compensation.]
The Master Servicer and the Special Servicer will, in general, each be
required to pay all ordinary expenses incurred by it in connection with its
servicing activities under the S&A Agreement, including the fees of any
Sub-Servicers retained by it, and will not be entitled to reimbursement therefor
except as expressly provided in the S&A Agreement. In general, customary,
reasonable and necessary "out of pocket" costs and expenses required to be
incurred by the Master Servicer or Special Servicer in connection with the
servicing of a Mortgage Loan after a default, delinquency or other unanticipated
event, or in connection with the administration of any REO Property, will
constitute "Servicing Advances" (Servicing Advances and P&I Advances,
collectively, "Advances") and, in all cases, will be reimbursable from future
payments and other collections, including in the form of Insurance Proceeds,
Condemnation Proceeds and Liquidation Proceeds, on or in respect of the related
Mortgage Loan or REO Property ("Related Proceeds"). Notwithstanding the
foregoing, the Master Servicer and the Special Servicer will each be permitted
to pay, or to direct the payment of, certain servicing expenses directly out of
the Custodial Account and at times without regard to the relationship between
the expense and the funds from which it is being paid. [In addition, if the
Special Servicer is required under the S&A Agreement to make any Servicing
Advance but does not desire to do so, the Special Servicer may, in its sole
discretion, with limited exception, request that the Master Servicer make such
Advance, such request to be made in writing and in a timely manner that does not
adversely affect the interests of the Issuer or any Bondholder. The Master
Servicer will be required to make any such Servicing Advance that it is
requested by the Special Servicer to so make within __ days of the Master
Servicer's receipt of such request. The Special Servicer will, with limited
exception, be relieved of any obligations with respect to any Servicing Advance
that it so requests the Master Servicer to make (regardless of whether or not
the Master Servicer makes that Advance).]
[If the Master Servicer or Special Servicer is required under the S&A
Agreement to make a Servicing Advance, but neither does so within __ days after
such Servicing Advance is required to be made, then the Trustee will, if it has
actual knowledge of such failure, be required to give the defaulting party
notice of such failure and, if such failure continues for __ more days, the
Trustee will be required to make such Servicing Advance.]
The Master Servicer, the Special Servicer and the Trustee will each be
obligated to make Servicing Advances only to the extent that such Servicing
Advances are, in its reasonable good faith judgment, ultimately recoverable from
Related Proceeds. With respect to any Servicing Advance, the Trustee is entitled
to conclusively rely on the non-recoverability determination made by the Master
Servicer or Special Servicer.
As and to the extent described herein, the Master Servicer, the Special
Servicer and the Trustee are each entitled to receive interest on Servicing
Advances made thereby. See "Description of the Bonds--P&I and Other Advances"
herein.
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MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS
[The Special Servicer may, consistent with the Servicing Standard (but the
Master Servicer may not), agree to any modification, waiver or amendment of any
term of, forgive interest (including, without limitation, Default Interest and
late payment fees) on and principal of, capitalize interest on, permit the
release, addition or substitution of collateral securing, and/or permit the
release of the Mortgagor on or any guarantor of any Mortgage Loan it is required
to service and administer, without the consent of the Trustee or any Bondholder,
subject, however, to each of the following limitations, conditions and
restrictions:
(i) with limited exception, the Special Servicer may not agree to any
modification, waiver or amendment of any term of, or take any of the other
above referenced actions with respect to, any Mortgage Loan it is required
to service and administer that would affect the amount or timing of any
related payment of principal, interest or other amount payable thereunder
or, in the Special Servicer's reasonable good faith judgment, would
materially impair the security for such Mortgage Loan or reduce the
likelihood of timely payment of amounts due thereon, unless a material
default on such Mortgage Loan has occurred or, in the Special Servicer's
reasonable good faith judgment, a default in respect of payment on such
Mortgage Loan is reasonably foreseeable, and such modification, waiver,
amendment or other action is reasonably likely to produce a greater net
recovery on a present value basis than would liquidation;
(ii) the Special Servicer may not extend the date on which any Balloon
Payment is scheduled to be due on any Balloon Loan for more than __ years
beyond its stated maturity date as set forth in the related Mortgage Note as
in effect on the Closing Date;
(iii) the Special Servicer may not permit any Mortgagor to add or
substitute any collateral unless the Special Servicer shall have first
determined in accordance with the Servicing Standard, based upon an
environmental assessment prepared by an independent person who regularly
conducts environmental assessments, at the expense of the Mortgagor, that
such additional or substitute collateral is in compliance with applicable
environmental laws and regulations and that there are no circumstances or
conditions present with respect to such new collateral relating to the use,
management or disposal of any hazardous materials for which investigation,
testing, monitoring, containment, clean-up or remediation would be required
under any then applicable environmental laws and/or regulations; and
(iv) with limited exceptions, the Special Servicer may not release any
collateral securing an outstanding Mortgage Loan;
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (iv) above will not apply to any modification of any term of
any Mortgage Loan that is required under the terms of such Mortgage Loan as in
effect on the Closing Date or that is solely within the control of the related
Mortgagor; and (y) notwithstanding clauses (i) through (iv) above, neither the
Master Servicer nor the Special Servicer will be required to oppose the
confirmation of a plan in any bankruptcy or similar proceeding involving a
Mortgagor if in its reasonable good faith judgment such opposition would not
ultimately prevent the confirmation of such plan or one substantially similar.]
INSPECTIONS; COLLECTION OF OPERATING INFORMATION
[As a part of its property level servicing duties, the Special Servicer will
be required to perform a physical inspection of each Mortgaged Property at least
once per calendar year and as soon as practicable after the related Mortgage
Loan becomes a Specially Serviced Mortgage Loan. The Special Servicer will be
required to prepare a written report of each such inspection performed by it
that describes the condition of the Mortgaged Property and that specifies (i)
any sale, transfer or abandonment of the property or (ii) any change in the
property's condition, occupancy or value that the Special Servicer considers
material.
Also as part of its property level servicing duties, the Special Servicer
will be required, with respect to each Mortgage Loan, to use reasonable efforts
to collect from the related Mortgagor and review the annual operating
statements, budgets and rent rolls of the related Mortgaged Property, and the
financial statements of such Mortgagor, and the Special Servicer will be
required to cause annual operating statements, budgets and rent rolls to be
prepared for each REO Property. However, there can be no assurance that any
operating statements required to be delivered will in fact be delivered, nor is
the Special Servicer likely to have any practical means of compelling such
delivery.]
[TERMINATION OF [SPECIAL SERVICER] [MASTER SERVICER] WITHOUT CAUSE]
[Specify circumstances in which the Master Servicer or the Special Servicer
may be terminated without cause.]
DESCRIPTION OF THE BONDS
GENERAL
The Issuer's Series _______-__ Collateralized Mortgage Obligations (the
"Bonds") will be issued on or about ____________, _______ (the "Closing Date")
in an aggregate Bond Principal Amount of approximately $____________ , pursuant
to a trust indenture, to be dated as of ____________, _______ (the
"[Trust]Indenture"), between [the Company] [____ (the 'Owner Trustee")], on
behalf of the Issuer, and the Trustee, on behalf of the holders of the Bonds
(the "Bondholders") [and a supplemental indenture (the "Indenture Supplement")
between [the Company] [__ (the "Owner Trustee")], on behalf of the Issuer, and
the Trustee (collectively, the Trust Indenture and the Indenture Supplement are
referred to herein as the "Indenture")]. The Bonds will be issued in [seven]
classes (each, a "Class") to be designated as: [(i) the Class A-1 and Class A-2
Bonds (collectively, the "Class A Bonds" or the "Senior Bonds"); (ii) the Class
B, Class C and Class D Bonds (collectively with the Class A Bonds, the "Offered
Bonds"); and (iii) the Class E and Class F Bonds (collectively, the "Private
Bonds"; and, collectively with the Class B, Class C and Class D Bonds, the
"Subordinate Bonds")]. The Bonds will be secured by the Trust Estate. The "Trust
Estate" will consist of all rights, money, instruments, securities and other
property, including all proceeds thereof, which are subject to, or intended to
be subject to, the lien of the Indenture for the benefit of the Bondholders,
including without limitation the Collateral. The "Collateral" will consist of
the Mortgage Loans, any REO Properties, the Custodial Account and the Collection
Account, all of which is more specifically described under "Description of the
Mortgage Pool", "Servicing of the Mortgage Loans--Custodial Account" and
"Description of the Bonds--Collection Account" herein and "Security for the
Bonds and Certificates" and "Servicing of the Mortgage Loans" in the Prospectus.
Only the Offered Bonds are offered hereby. The Private Bonds will initially
be issued to and held by an affiliate of the Issuer and are not offered hereby.
The Offered Bonds will be non-recourse obligations of the Issuer. The
holders and beneficial owners of the Offered Bonds will be deemed to have agreed
that they have no rights or claims against the Issuer directly and may only look
to the Collateral to satisfy the Issuer's obligations under the Indenture. Each
holder and beneficial owner of an Offered Bond will also be deemed, by the
acceptance of its Bond or interest therein, to have agreed not to file or cause
a filing against the Issuer of an involuntary petition under any bankruptcy or
receivership law.
[The Offered Bonds are not insured or guaranteed by any government agency or
instrumentality or by any other person.
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The respective Classes of Bonds will be issued in the initial aggregate Bond
Principal Amounts (in each case, subject to a variance of plus or minus 5%), and
will accrue interest at the Bond Interest Rates set forth below:
<TABLE>
<CAPTION>
INITIAL
AGGREGATE BOND BOND
CLASS PRINCIPAL AMOUNT INTEREST RATE
- - ------------------------------------------------------------- ----------------------- -------------------
<S> <C> <C>
Class A-1.................................................... $ %
Class A-2.................................................... $ %
Class B...................................................... $ %
Class C...................................................... $ %
Class D...................................................... $ %
Class E...................................................... $ %
Class F...................................................... $ %
</TABLE>
The "Issuer's Equity" represents the right of the Issuer or its designee (i)
to receive all payments on and proceeds of the Collateral not otherwise
allocable to pay interest, principal or other amounts on the Bonds in accordance
with their terms or expenses of the Trust Estate and (ii) to have the remaining
Collateral returned to it after the Indenture is satisfied and discharged. The
principal amount of the Issuer's Equity as of any date of determination is the
amount (the "Overcollateralization Amount"), if any, by which the then aggregate
Stated Principal Balance of the Mortgage Pool (initially equal to the Initial
Pool Balance) exceeds the then aggregate Bond Principal Amount of all the Bonds.
As of the Closing Date, the Overcollateralization Amount will equal
approximately $____________ . The Issuer's Equity will be evidenced by a single
class of owner trust certificates (the "Owner Trust Certificates").
The "Stated Principal Balance" of each Mortgage Loan will generally equal
the Cut-off Date Balance thereof, reduced (to not less than zero) on each
Payment Date by (i) any payments or other collections (or advances in lieu
thereof) of principal of such Mortgage Loan that have been (or, if they had not
been applied to cover Extraordinary Expenses, would have been) applied to make
payments to Bondholders and/or the Issuer on such date and (ii) the principal
portion of any Realized Loss incurred in respect of such Mortgage Loan during
the related Collection Period.
The "Collection Period" with respect to any Payment Date will be the period
commencing immediately following the Determination Date in the month immediately
preceding the month in which such Payment Date occurs (or, in the case of the
initial Collection Period, commencing immediately following the Cut-off Date)
and ending on and including the Determination Date in the month in which such
Payment Date occurs.
The "Determination Date" with respect to any Payment Date will be the __th
day of the month in which such Payment Date occurs, of if such __th day is not a
business day, the immediately preceding business day.]
REGISTRATION AND DENOMINATIONS
The Offered Bonds will be issued in denominations of not less than $_______
initial Bond Principal Amount and in any whole dollar denomination in excess
thereof.
Each Class of Offered Bonds will initially be issued in book-entry form
through the facilities of The Depository Trust Company ("DTC") and, accordingly,
will constitute "Book-Entry Bonds" and "Book-Entry Securities". In connection
therewith, each Class of Offered Bonds will initially be represented by one or
more fully registered physical securities registered in the name of the nominee
of DTC. The Company has been informed by DTC that DTC's nominee will be Cede &
Co. No beneficial owner of a Book-Entry Bond (each, a "Bond Owner") will be
entitled to receive a fully registered physical security (a "Definitive Bond")
representing its interest in such Bond, except under the limited circumstances
described under
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"Description of the Securities--Book-Entry Registration" in the Prospectus.
Unless and until Definitive Bonds are issued in respect of the Offered Bonds,
beneficial ownership interests in each such Class of Bonds will be maintained
and transferred on the book-entry records of DTC and its participating
organizations (the "DTC Participants"), and all references to actions by holders
of each such Class of Bonds will refer to actions taken by DTC upon instructions
received from the related Bond Owners through the DTC Participants in accordance
with DTC procedures, and all references herein to payments, notices, reports and
statements to the holders of each such Class of Bonds will refer to payments,
notices, reports and statements to DTC or Cede & Co., as the registered holder
thereof, for payment to the related Bond Owners through the DTC Participants in
accordance with DTC procedures. The form of such payments and transfers may
result in certain delays in receipt of payments by an investor and may restrict
an investor's ability to pledge its securities. See "Description of the
Securities--Book-Entry Registration" in the Prospectus.
The Trustee will initially serve as registrar (in such capacity, the "Bond
Registrar") for purposes of recording and otherwise providing for the
registration of the Offered Bonds and, if and to the extent Definitive Bonds are
issued in respect thereof, of transfers and exchanges of the Offered Bonds.
COLLECTION ACCOUNT
GENERAL. The Trustee will be required to establish and maintain one or more
accounts (collectively, the "Collection Account") for the distribution of
payments to the Bondholders. Each such account is to be an Eligible Account. The
funds held in the Collection Account may be invested at the direction of the
Master Servicer (or as otherwise provided in the Servicing and Administration
Agreement) in Eligible Investments.
DEPOSITS. [On or before the business day prior to each Payment Date, the
Master Servicer will be required to deliver to the Trustee, for deposit in the
Collection Account, in immediately available funds, the amounts described in
clause (i) under "Servicing of the Mortgage Loans--Custodial Account --
Withdrawals". In addition, the Master Servicer will be required, as and when
provided in the Servicing and Administration Agreement, to deliver to the
Trustee for deposit in the Collection Account, any P&I Advances and/or
Compensating Interest Payment with respect to each Payment Date.
WITHDRAWALS. The Trustee may, from time to time, make withdrawals from the
Collection Account for any of the following purposes, among others: [(i) to make
distributions to the Bondholders on each Payment Date; (ii) to pay itself the
Trustee Fee each month; (iii) to reimburse and/or indemnify itself and certain
related persons for any out-of-pocket costs, expenses and liabilities relating
to the performance of its duties under the Indenture, except to the extent that
such costs, expenses and liabilities arose out of the Trustee's bad faith,
willful misfeasance or negligence; (iv) to pay the Master Servicer, as
additional servicing compensation, interest and other investment income earned
in respect of amounts held in the Collection Account; (v) to pay for the cost of
certain opinions of counsel required under the Indenture; (vi) to pay any
federal, state and local taxes imposed on the Trust Estate, its assets and/or
transactions, together with all incidental costs and expenses, to the extent
required to be borne by the Trust Estate, all as described under "Certain
Federal Income Tax Consequences" herein and as provided in the Servicing and
Administration Agreement; and (vii) to clear and terminate the Collection
Account upon termination of the Trust Estate.]
PAYMENTS ON THE BONDS
GENERAL. Payments on the Bonds will be made by or on behalf of the
[Trustee], to the extent of available funds, on the __th day of each month or,
if any such __th day is not a business day, then on the next succeeding business
day, commencing in ____________, ____ (each, a "Payment Date"). Except as
described below, all such payments will be made to the Bondholders of record at
the close of business on the last business day of the month preceding the month
in which the related Payment Date occurs (each, a
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"Record Date"). [As to each such Bondholder, such payments will be made by wire
transfer in immediately available funds to the account specified by the
Bondholder at a bank or other entity having appropriate facilities therefor, if
such Bondholder will have provided the Trustee with wiring instructions no less
than __business days prior to the related Record Date and is the registered
owner of Bonds with an aggregate initial Bond Principal Amount of at least
$[5,000,000], or otherwise by check mailed to such Bondholder.] Until Definitive
Bonds are issued in respect thereof, Cede & Co. will be the registered holder of
the Offered Bonds. See "--Registration and Denominations" above. The final
payment on any Bond will be made only upon presentation and surrender of such
Bond at the location that will be specified in a notice of the pendency of such
final payment. All payments made with respect to a Class of Bonds will be
allocated PRO RATA among the outstanding Bonds of such Class based on the
respective Bond Principal Amounts thereof.
FUNDS AVAILABLE FOR PAYMENTS ON THE BONDS. With respect to any Payment
Date, payments of interest and principal on the Bonds will be made from the
Available Payment Amount for such date. [The "Available Payment Amount" for any
Payment Date will, in general, equal (a) all amounts on deposit in the Custodial
Account and the Collection Account as of the close of business on the related
Determination Date, exclusive of any portion thereof that represents one or more
of the following:
(i) Monthly Payments collected but due on a Due Date subsequent to the
related Collection Period;
(ii) Prepayment Premiums (however, Prepayment Premiums will be excluded
from the Available Payment Amount only if the Bonds have not been declared
due and payable following an Event of Default or if any such declaration and
its consequences have been rescinded and annulled);
(iii) amounts that are payable or reimbursable to any person other than
the Bondholders in respect of their Bonds or the Owner Trust
Certificateholders in respect of their Owner Trust Certificates (including
amounts payable to the Master Servicer, the Special Servicer, any Sub-
Servicers or the Trustee as compensation (including Trustee Fees, Master
Servicing Fees, Property Servicing Fees, Special Servicing Fees, Workout
Fees, Liquidation Fees, Default Interest and late payment charges (to the
extent not otherwise applied to cover interest on Advances), and assumption
fees and modification fees), amounts payable in reimbursement of outstanding
Advances, together with interest thereon, and amounts payable in respect of
other Extraordinary Expenses); and
(iv) amounts deposited in the Collection Account in error; plus
(b) to the extent not already included in clause (a), any P&I Advances
and/or Compensating Interest Payment made in respect of such Payment Date.]
[With respect to any Payment Date, payments of Yield Maintenance Amounts on
the Bonds will be made from Prepayment Premiums actually collected on the
Mortgage Loans during the related Collection Period.]
PRIORITY OF PAYMENTS. On each Payment Date, UNLESS THE BONDS HAVE BEEN
DECLARED DUE AND PAYABLE FOLLOWING AN EVENT OF DEFAULT AND SUCH DECLARATION AND
ITS CONSEQUENCES HAVE NOT BEEN RESCINDED AND ANNULLED, the Available Payment
Amount for such date will be applied to make payments to the respective Classes
of Bondholders and the Issuer for the following purposes and in the following
order of priority, in each case to the extent of remaining funds:
[(i) to the holders of the Class A Bonds in respect of interest, pro
rata as between the two Classes of Class A Bondholders based on entitlement,
up to an amount equal to all Accrued Bond Interest (as defined below) in
respect of each such Class of Bonds for the related Interest Accrual Period
and, to the extent not previously paid, for all prior Interest Accrual
Periods;
(ii) to the holders of the Class A Bonds in respect of principal,
allocable as between the two Classes of Class A Bondholders as described
below, up to an amount equal to the lesser of (a) the
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then aggregate Bond Principal Amount of the Class A Bonds and (b) the
Principal Payment Amount (as defined below) for such Payment Date;
(iii) to the holders of the Class B Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(iv) after the aggregate Bond Principal Amount of the Class A Bonds has
been reduced to zero, to the holders of the Class B Bonds in respect of
principal, up to an amount equal to the lesser of (a) the then aggregate
Bond Principal Amount of the Class B Bonds and (b) the excess, if any, of
the Principal Payment Amount for such Payment Date over any amounts paid on
such Payment Date in retirement of the Class A Bonds pursuant to clause (ii)
above;
(v) to the holders of the Class C Bonds in respect of interest, up to an
amount equal to all Accrued Bond Interest in respect of such Class of Bonds
for the related Interest Accrual Period and, to the extent not previously
paid, for all prior Interest Accrual Periods;
(vi) after the aggregate Bond Principal Amount of the Class A and Class
B Bonds has been reduced to zero, to the holders of the Class C Bonds in
respect of principal, up to an amount equal to the lesser of (a) the then
aggregate Bond Principal Amount of the Class C Bonds and (b) the excess, if
any, of the Principal Payment Amount for such Payment Date over any amounts
paid on such Payment Date in retirement of the Class A and/or Class B Bonds
pursuant to clauses (ii) and (iv) above;
(vii) to the holders of the Class D Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(viii) after the aggregate Bond Principal Amount of the Class A, Class B
and Class C Bonds has been reduced to zero, to the holders of the Class D
Bonds in respect of principal, up to an amount equal to the lesser of (a)
the then aggregate Bond Principal Amount of the Class D Bonds and (b) the
excess, if any, of the Principal Payment Amount for such Payment Date over
any amounts paid on such Payment Date in retirement of the Class A, Class B
and/or Class C Bonds pursuant to clauses (ii), (iv) and (vi) above;
(ix) to the holders of the Class E Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(x) after the aggregate Bond Principal Amount of the Class A, Class B,
Class C and Class D Bonds has been reduced to zero, to the holders of the
Class E Bonds in respect of principal, up to an amount equal to the lesser
of (a) the then aggregate Bond Principal Amount of the Class E Bonds and (b)
the excess, if any, of the Principal Payment Amount for such Payment Date
over any amounts paid on such Payment Date in retirement of the Class A,
Class B, Class C and/or Class D Bonds pursuant to clauses (ii), (iv), (vi)
and (viii) above;
(xi) to the holders of the Class F Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(xii) after the aggregate Bond Principal Amount of the Class A, Class B,
Class C, Class D and Class E Bonds has been reduced to zero, to the holders
of the Class F Bonds in respect of principal, up to an amount equal to the
lesser of (a) the then aggregate Bond Principal Amount of the Class F Bonds
and (b) the excess, if any, of the Principal Payment Amount for such Payment
Date over any amounts paid on such Payment Date in retirement of the Class
A, Class B, Class C, Class D and/or Class E Bonds pursuant to clauses (ii),
(iv), (vi), (viii) and (x) above;
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(xiii) if, after giving effect to the payments of principal on the Bonds
contemplated by clauses (ii), (iv), (vi), (viii), (x) and (xii) above, the
aggregate Bond Principal Amount of all the Bonds still exceeds the aggregate
Stated Principal Balance of the Mortgage Pool that will be outstanding
immediately following such Payment Date, then to the holders of the Class A
Bonds (allocable as between the two Classes of Class A Bondholders as
described below), the Class B Bonds, the Class C Bonds, the Class D Bonds,
the Class E Bonds and the Class F Bonds, in that order, in respect of
principal, until (in the case of each Class of Bonds on which payments of
principal are so made) such excess (or the aggregate Bond Principal Amount
of such Class of Bonds) is reduced to zero (whichever occurs first); and
(xiv) to the holders of the Owner Trust Certificates to the extent of
any remaining portion of the Available Payment Amount for such Payment
Date.]
[On each Payment Date prior to the Class A Principal Payment Cross-Over
Date, if any, all payments of principal on the Class A Bonds described above
will be paid, first, to the holders of the Class A-1 Bonds, until the aggregate
Bond Principal Amount of such Class of Bonds is reduced to zero, and thereafter,
to the holders of the Class A-2 Bonds, until the aggregate Bond Principal Amount
of such Class of Bonds is reduced to zero. On each Payment Date on and after the
Class A Principal Payment Cross-Over Date, all payments of principal on the
Class A Bonds described above will be paid to the holders of such two Classes of
Bonds, pro rata, in accordance with their respective aggregate Bond Principal
Amounts immediately prior to such Payment Date, until the aggregate Bond
Principal Amount of each such Class of Bonds is reduced to zero. Provided that
both the Class A-1 Bonds and the Class A-2 Bonds are still outstanding, the
"Class A Principal Payment Cross-Over Date" will be the first Payment Date as of
which the aggregate Bond Principal Amount of the Class A Bonds immediately prior
thereto equals or exceeds the sum of (a) the aggregate Stated Principal Balance
of the Mortgage Pool that will be outstanding immediately following such Payment
Date, plus (b) the lesser of (i) the Principal Payment Amount for such Payment
Date and (ii) the Available Payment Amount Funds for such Payment Date that will
be remaining following the payment of all Accrued Bond Interest payable on the
Class A Bonds on such Payment Date.]
On each Payment Date, UNLESS THE BONDS HAVE BEEN DECLARED DUE AND PAYABLE
FOLLOWING AN EVENT OF DEFAULT AND SUCH DECLARATION HAS NOT BEEN RESCINDED OR
ANNULLED, any Prepayment Premiums actually collected during the related
Collection Period will be applied to make payments to the respective Classes of
Bondholders and the Issuer for the following purposes and in the following order
of priority, in each case to the extent of remaining funds:
[(i) to the holders of the Class A Bonds in respect of additional
interest, pro rata as between the two Classes of Class A Bondholders based
on entitlement, up to an amount equal to the Yield Maintenance Amount (as
defined below) for each such Class of Bonds for such Payment Date;
(ii) to the holders of the Class B Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(iii) to the holders of the Class C Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(iv) to the holders of the Class D Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(v) to the holders of the Class E Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date;
(vi) to the holders of the Class F Bonds in respect of additional
interest, up to an amount equal to the Yield Maintenance Amount for such
Class of Bonds for such Payment Date; and
(vii) to the holders of the Owner Trust Certificates to the extent of
any remaining Prepayment Premiums actually collected during the related
Collection Period.]
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On each Payment Date, IF THE BONDS HAVE BEEN DECLARED DUE AND PAYABLE
FOLLOWING AN EVENT OF DEFAULT AND SUCH DECLARATION AND ITS CONSEQUENCES HAVE NOT
BEEN RESCINDED AND ANNULLED, the Available Payment Amount (which will, under
such circumstances, include Prepayment Premiums) for such date will be applied
to make payments to the respective Classes of Bondholders and the Issuer for the
following purposes and in the following order of priority, in each case to the
extent of remaining funds:
[(i) to the holders of the Class A-1 and Class A-2 Bonds in respect of
interest, pro rata based on entitlement up to an amount equal to all Accrued
Bond Interest in respect of each such Class of Bonds for the related
Interest Accrual Period and, to the extent not previously paid, for all
prior Interest Accrual Periods;
(ii) to the holders of the Class A-1 and Class A-2 Bonds in respect of
principal, pro rata based on their respective aggregate Bond Principal
Amounts, until such Bonds are retired;
(iii) to the holders of the Class B Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(iv) after the aggregate Bond Principal Amount of the Class A Bonds has
been reduced to zero, to the holders of the Class B Bonds in respect of
principal, until such Bonds are retired;
(v) to the holders of the Class C Bonds in respect of interest, up to an
amount equal to all Accrued Bond Interest in respect of such Class of Bonds
for the related Interest Accrual Period and, to the extent not previously
paid, for all prior Interest Accrual Periods;
(vi) after the aggregate Bond Principal Amount of the Class A and Class
B Bonds has been reduced to zero, to the holders of the Class C Bonds in
respect of principal, until such Bonds are retired;
(vii) to the holders of the Class D Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(viii) after the aggregate Bond Principal Amount of the Class A, Class B
and Class C Bonds has been reduced to zero, to the holders of the Class D
Bonds in respect of principal, until such Bonds are retired; and
(ix) to the holders of the Class E Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(x) after the aggregate Bond Principal Amount of the Class A, Class B,
Class C and Class D Bonds has been reduced to zero, to the holders of the
Class E Bonds in respect of principal, until such Bonds are retired;
(xi) to the holders of the Class F Bonds in respect of interest, up to
an amount equal to all Accrued Bond Interest in respect of such Class of
Bonds for the related Interest Accrual Period and, to the extent not
previously paid, for all prior Interest Accrual Periods;
(xii) after the aggregate Bond Principal Amount of the Class A, Class B,
Class C, Class D and Class E Bonds has been reduced to zero, to the holders
of the Class F Bonds in respect of principal, until such Bonds are retired;
and
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(xiii) after the aggregate Bond Principal Amount of all the Bonds has
been reduced to zero, to the holders of the Owner Trust Certificates to the
extent of any remaining portion of the Available Payment Amount for such
Payment Date.]
ACCRUED BOND INTEREST. [The "Accrued Bond Interest" in respect of any Class
of Bonds for any Interest Accrual Period will equal one month's interest at the
applicable Bond Interest Rate accrued on the aggregate Bond Principal Amount of
such Class of Bonds outstanding immediately prior to the related Payment Date.
Accrued Bond Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.]
[If the portion of the Available Payment Amount payable in respect of
interest on any Class of Offered Bonds on any Payment Date is less than the
Accrued Bond Interest then payable for such Class, the shortfall will be payable
to holders of such Class of Bonds on subsequent Payment Dates, to the extent of
available funds. Any such shortfall will not bear interest, however, and will
therefore negatively affect the yield to maturity of such Class of Bonds for so
long as it is outstanding. THE FAILURE TO PAY THE FULL AMOUNT OF ACCRUED BOND
INTEREST IN RESPECT OF ANY CLASS OF BONDS ON ANY PAYMENT DATE WILL NOT BE AN
EVENT OF DEFAULT (UNLESS, AND EXCEPT TO THE EXTENT, ANY BOND IS NOT PAID IN FULL
BY ITS STATED MATURITY.]
[As to each Class of Bonds for any Payment Date, the "Interest Accrual
Period" will be the calendar month preceding the month in which such Payment
Date occurs.]
PRINCIPAL PAYMENT AMOUNT. [The "Principal Payment Amount" for any Payment
Date will, in general, equal the aggregate of the following:
(a) the principal portions of all Scheduled Payments (other than Balloon
Payments) and any Assumed Scheduled Payments due or deemed due, as the case
may be, in respect of the Mortgage Loans for their respective Due Dates
occurring during the related Collection Period;
(b) all payments (including Principal Prepayments and Balloon Payments)
and other collections (including Liquidation Proceeds, Condemnation Proceeds
and Insurance Proceeds) that were received on or in respect of the Mortgage
Loans during the related Collection Period and that were identified and
applied by the Master Servicer as recoveries of principal thereof, in each
case net of any portion of such payment or other collection that represents
a recovery of the principal portion of any Scheduled Payment (other than a
Balloon Payment) due, or the principal portion of any Assumed Scheduled
Payment deemed due, in respect of the related Mortgage Loan on a Due Date
during or prior to the related Collection Period and not previously
recovered; and
(c) if such Payment Date is subsequent to the initial Payment Date, the
excess, if any, of (i) the Principal Payment Amount for the immediately
preceding Payment Date, over (ii) the aggregate payments of principal made
in respect of the Bonds on such immediately preceding Payment Date.]
[The "Scheduled Payment" due in respect of any Mortgage Loan on any related
Due Date will be the amount of the Monthly Payment that is scheduled to be due
in respect thereof on such date in accordance with the terms of such Mortgage
Loan in effect on the Closing Date, without regard to any waiver, modification
or amendment of such Mortgage Loan subsequent to the Closing Date, and assuming
that each prior Scheduled Payment has been made in a timely manner.]
[The "Assumed Scheduled Payment" is an amount deemed due in respect of any
Balloon Loan that is delinquent in respect of its Balloon Payment beyond the
first Determination Date that follows its original stated maturity date. The
Assumed Scheduled Payment deemed due on any such Mortgage Loan on its original
stated maturity date and on each successive Due Date that it remains or is
deemed to remain outstanding shall equal the Scheduled Payment that would be due
in respect thereof on such date if the related Balloon Payment had not come due
but rather such Mortgage Loan had continued to amortize in accordance with such
Mortgage Loan's amortization schedule in effect as of the Closing Date.]
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[THE FAILURE TO PAY THE FULL PRINCIPAL PAYMENT AMOUNT ON THE BONDS ON ANY
PAYMENT DATE WILL NOT BE AN EVENT OF DEFAULT EXCEPT TO THE EXTENT THAT ANY BOND
IS NOT RETIRED BY STATED MATURITY.]
[YIELD MAINTENANCE AMOUNT. The "Yield Maintenance Amount" will equal: (a)
with respect to any Class of Bonds, for any Payment Date on which any portion of
the Principal Prepayment Amount, if any, is paid thereon on such Payment Date,
an amount equal to the present value of a series of equal monthly payments
deemed payable on each future Payment Date up to and including the Assumed Final
Payment Date for such Class of Bonds, each such monthly payment to be equal to
the related Interest Payment Adjustment and to be discounted from the applicable
future Payment Date to the then current Payment Date at a per annum rate equal
to the sum of (i) the yield per annum on United States treasury securities
having a maturity closest to the Assumed Final Payment Date for such Class of
Bonds, plus (ii) __ basis points; and (b) with respect to any Class of Bonds for
any Payment Date on which no portion of a Principal Prepayment Amount is paid
thereon on such Payment Date, zero. For purposes of the foregoing, the "related
Interest Payment Adjustment" will equal one-twelfth of the product of the Bond
Interest Rate for the subject Class of Bonds, multiplied by the portion of the
Principal Prepayment Amount for such Payment Date payable on such Class of
Bonds. The "Principal Prepayment Amount" for any Payment Date will be that
portion of the Principal Payment Amount for such Payment Date that represents
voluntary principal prepayments and other early collections of principal on or
in respect of the Mortgage Loans received in advance of their respective stated
maturity dates as of the Closing Date.]
[FAILURE TO PAY THE FULL YIELD MAINTENANCE AMOUNT IN RESPECT OF ANY CLASS OF
BONDS ON ANY PAYMENT DATE WILL NOT BE AN EVENT OF DEFAULT AND THE SHORTFALL WILL
NOT BE CARRIED FORWARD TO ANY SUBSEQUENT PAYMENT DATE.]
TREATMENT OF REO PROPERTIES. Notwithstanding that any Mortgaged Property
may be acquired as part of the Trust Estate through foreclosure, deed in lieu of
foreclosure or otherwise, the related Mortgage Loan will, for purposes of, among
other things, determining payments of principal on the Bonds, as well as the
amount of Master Servicing Fees, Property Servicing Fees, Special Servicing
Fees, Workout Fees and Trustee Fees payable under the Indenture and the S&A
Agreement, be treated as having remained outstanding until such REO Property is
liquidated. In connection therewith, operating revenues and other proceeds
derived from such REO Property (exclusive of related operating costs) will be
"applied" by the Master Servicer as principal, interest and other amounts "due"
on such Mortgage Loan; and, subject to the recoverability determination
described below (see "--P&I and Other Advances"), the Master Servicer will be
required to make P&I Advances in respect of such Mortgage Loan as if it had
remained outstanding. References to "Mortgage Loan" and "Mortgage Loans" in the
definitions of "Principal Payment Amount" and "Principal Prepayment Amount" are
intended to include any Mortgage Loan or Mortgage Loans as to which the related
Mortgaged Property has become an REO Property (each, an "REO Mortgage Loan").
SUBORDINATION
[As and to the extent described herein, the rights of the Company and its
successors and assigns to receive payments of amounts received on the Mortgage
Loans in respect of the Owner Trust Certificates will be subordinated to the
rights of holders of the Bonds to receive such amounts in respect of interest,
principal and other amounts due and owing on their Bonds from time to time. In
addition, as and to the extent described herein, the rights of holders of the
Subordinate Bonds (including the Class B, Class C and Class D Bonds) to receive
payments of amounts received on the Mortgage Loans in respect of interest,
principal and other amounts due and owing on their Bonds from time to time will,
in the case of each Class thereof, be subordinated to such rights of the holders
of the Class A Bonds and the holders of each other Class of Subordinate Bonds
with an earlier alphabetical Class designation. This subordination is intended
to enhance the likelihood of timely receipt by the holders of the Class A Bonds
of the full amount of Accrued Bond Interest payable in respect of such Bonds on
each Payment Date, and the ultimate receipt by the holders of such Bonds of
principal in an amount equal to the entire aggregate Bond
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Principal Amount thereof. Similarly, but to decreasing degrees, this
subordination is also intended to enhance the likelihood of timely receipt by
the holders of the other Classes of Offered Bonds of the full amount of Accrued
Bond Interest payable in respect of such Bonds on each Payment Date, and the
ultimate receipt by the holders of such Bonds of principal equal to the entire
aggregate Bond Principal Amount thereof. This subordination will be accomplished
by, among other things, the application of the Available Payment Amount on each
Payment Date in accordance with the order of priority described under
"--Payments on the Bonds--Priority of Payments" above. No other form of Credit
Support will be available for the benefit of any Class of Offered Bondholders.
Realized Losses, Net Aggregate Prepayment Interest Shortfalls and other
shortfalls in respect of the Mortgage Loans and Extraordinary Expenses will, in
each case, be borne by the holders of the Owner Trust Certificates and the
Private Bonds (to the extent of amounts otherwise payable in respect of the
Owner Trust Certificates and the Private Bonds, respectively) prior to any such
losses, shortfalls and/or expenses being borne by the Offered Bondholders. If
and to the extent that Realized Losses, together with any Net Aggregate
Prepayment Interest Shortfalls and/or Extraordinary Expenses, exceed the sum of
the initial Overcollateralization Amount and the initial aggregate Bond
Principal Amount of the Private Bonds, it is likely that the holders of one or
more Classes of Offered Bonds will not receive the full Bond Principal Amount of
their Bonds.
"Realized Losses" are losses arising from the inability of the Master
Servicer and Special Servicer to collect all amounts due and owing under any
defaulted Mortgage Loan, including by reason of fraud or bankruptcy of the
related Mortgagor or a casualty of any nature at the related Mortgaged Property,
to the extent not covered by insurance. The Realized Loss, if any, in respect of
a liquidated Mortgage Loan (or related REO Property) will generally equal the
excess, if any, of (a) the outstanding principal balance of such Mortgage Loan
as of the date of liquidation, together with all accrued and unpaid interest
thereon at the related Mortgage Rate and all related unreimbursed Servicing
Advances, over (b) the aggregate amount of Liquidation Proceeds, if any,
recovered in connection with such liquidation (net of any portion of such
Liquidation Proceeds that is payable or reimbursable in respect of related
unpaid liquidation expenses). If the Mortgage Rate on any Mortgage Loan is
reduced or a portion of the debt due under any Mortgage Loan is forgiven,
whether in connection with a modification, waiver or amendment granted or agreed
to by the Special Servicer or in connection with a bankruptcy or similar
proceeding involving the related Mortgagor, the resulting reduction in interest
paid or the amount so forgiven, as the case may be, also will be treated as a
Realized Loss.
"Extraordinary Expenses" are any expenses of the Trust Estate not
specifically included in the calculation of a "Realized Loss," that would result
in the Bondholders (in respect of their Bonds) and the Owner Trust
Certificateholders (in respect of the Owner Trust Certificates) receiving less
than the full amount of principal and/or interest to which they are entitled on
any Payment Date. Extraordinary Expenses include, among other things: (i) any
interest paid to the Master Servicer, Special Servicer and/or Trustee in respect
of unreimbursed Advances (to the extent not paid out of late payment charges and
Default Interest actually collected on the related Mortgage Loan); (ii) all
Special Servicing Fees, Workout Fees and Liquidation Fees payable to the Special
Servicer; (iii) any of certain unanticipated, non-Mortgage Loan specific
expenses of the Trust Estate, including, but not limited to, [specify such
expenses]; and (iv) any other expense of the Trust Estate not specifically
included in the calculation of "Realized Loss" for which there is no
corresponding collection from a Mortgagor.]
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P&I AND OTHER ADVANCES
[On or about each Payment Date, the Master Servicer will be obligated,
subject to the recoverability determination described in the next paragraph, to
make advances (each, a "P&I Advance") out of its own funds or, subject to the
replacement thereof as provided in the S&A Agreement, from funds held in the
Custodial Account that are not required to be paid to Bondholders and/or the
Issuer on such Payment Date, in an amount that is generally equal to the
aggregate of all Scheduled Payments (other than Balloon Payments) and any
Assumed Scheduled Payments, net of related Master Servicing Fees and Workout
Fees, due or deemed due, as the case may be, in respect of the Mortgage Loans
during the related Collection Period, in each case to the extent such amount was
not paid by or on behalf of the related Mortgagor or otherwise collected as of
the close of business on the related Determination Date. Notwithstanding the
foregoing, if the Monthly Payment on any Mortgage Loan has been reduced in
connection with a bankruptcy or similar proceeding or a modification, waiver or
amendment granted or agreed to by the Special Servicer, the Master Servicer will
be required in the event of subsequent delinquencies to advance in respect of
such Mortgage Loan only the amount of the reduced Monthly Payment (net of
related Master Servicing Fees and Workout Fees). In addition, if it is
determined that an Appraisal Reduction Amount exists with respect to any
Required Appraisal Loan (as defined below), then, with respect to the Payment
Date immediately following the date of such determination and with respect to
each subsequent Payment Date for so long as such Appraisal Reduction Amount
exists, in the event of subsequent delinquencies thereon, the interest portion
of the P&I Advance in respect of such Mortgage Loan will be reduced (no
reduction to be made in the principal portion, however) to equal to the product
of (i) the amount of the interest portion of such P&I Advance that would
otherwise be required to be made for such Payment Date without regard to this
sentence, multiplied by (ii) a fraction (expressed as a percentage), the
numerator of which is equal to the Stated Principal Balance of such Mortgage
Loan, net of such Appraisal Reduction Amount, and the denominator of which is
equal to the Stated Principal Balance of such Mortgage Loan. See "--Appraisal
Reductions" below.
If the full amount of all P&I Advances, if any, required to be made in
respect of any Payment Date is not deposited in the Collection Account, then the
Trustee will be required to make the portion of such P&I Advances that was
required to be, but not, made by the Master Servicer. See "--The Trustee" below.
The Master Servicer and the Trustee will each be entitled to recover any P&I
Advance made out of its own funds from any Related Proceeds collected in respect
of the Mortgage Loan as to which such P&I Advance was made; provided that
neither the Master Servicer nor the Trustee will be obligated to make any P&I
Advance that it determines, in its reasonable good faith judgment, would, if
made, constitute a Nonrecoverable Advance, and the Master Servicer and the
Trustee will each be entitled to recover any P&I Advance made by it that it
later determines to be a Nonrecoverable Advance out of general funds on deposit
in the Custodial Account. With respect to any P&I Advance, the Trustee is
entitled to conclusively rely on the non-recoverability determination made by
the Master Servicer.]
[The Master Servicer and the Trustee will each be entitled, with respect to
any Advance made thereby, and the Special Servicer will be entitled, with
respect to any Servicing Advance made thereby, to interest accrued on the amount
of such Advance for so long as it is outstanding at a per annum rate (the
"Reimbursement Rate") equal to [specify applicable rate]. Such interest on any
Advance will be payable to the Master Servicer, the Special Servicer or the
Trustee, as the case may be, FIRST, out of Default Interest and late payment
charges collected in respect of the related Mortgage Loan, and SECOND, if such
Advance has been reimbursed, out of any amounts then on deposit in the Custodial
Account.]
[In addition to the foregoing, the Trustee will be required to advance, to
the extent known to it, any amounts collected on or in respect of the Mortgage
Pool that the Master Servicer is required but fails to remit to the Trustee for
payment to Bondholders and/or the Issuer by a specified time on or about the
related Distribution Date. The Trustee will be entitled to interest accrued on
the amount of such advance for so long as it is outstanding at the Reimbursement
Rate.]
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<PAGE>
[APPRAISAL REDUCTIONS]
[Promptly (and, in any event, within 60 days) following the earliest of (i)
the date on which any Mortgage Loan becomes a Modified Mortgage Loan (as defined
below), (ii) the 60th day (or, in the case of a Modified Mortgage Loan, the 30th
day) after the occurrence of any uncured delinquency in Monthly Payments with
respect to any Mortgage Loan, (iii) the date on which a receiver is appointed
and continues in such capacity in respect of the Mortgaged Property securing any
Mortgage Loan and (iv) the date on which the Mortgaged Property securing any
Mortgage Loan becomes an REO Property (each such Mortgage Loan, a "Required
Appraisal Loan"), the Special Servicer will be required to obtain an appraisal
of the related Mortgaged Property from an independent MAI-designated appraiser,
unless such an appraisal had previously been obtained within the prior twelve
months. The cost of such appraisal will be a Servicing Advance. As a result of
any such appraisal, it may be determined that an "Appraisal Reduction Amount"
exists with respect to the related Required Appraisal Loan. The Appraisal
Reduction Amount for any Required Appraisal Loan will, in general, be an amount,
determined as of the Determination Date immediately succeeding the date on which
the related appraisal is obtained (or, if based on an earlier appraisal, as of
the Determination Date immediately succeeding the earliest of the relevant dates
described in the first sentence of this paragraph), equal to the excess, if any,
of (a) the sum of (i) the Stated Principal Balance of such Required Appraisal
Loan, (ii) to the extent not previously advanced by the Master Servicer or the
Trustee, all unpaid interest on the Required Appraisal Loan through the most
recent Due Date prior to such Determination Date at a per annum rate equal to
the sum of the related Net Mortgage Rate and the Trustee Fee Rate (as defined
below), (iii) all accrued but unpaid Master Servicing Fees, Property Servicing
Fees and Special Servicing Fees in respect of such Required Appraisal Loan, (iv)
all related unreimbursed Advances made by or on behalf of the Master Servicer,
the Special Servicer or the Trustee with respect to such Required Appraisal Loan
plus interest accrued thereon at the Reimbursement Rate and (v) all currently
due and unpaid real estate taxes and assessments, insurance premiums, and, if
applicable, ground rents in respect of the related Mortgaged Property or REO
Property (net of any escrow reserves held by the Master Servicer or the Special
Servicer with respect to any such item), over (b) 90% of the appraised value (as
is) of the related Mortgaged Property or REO Property as determined by such
appraisal (net of any mortgage liens that are prior to the lien of such Mortgage
Loan).
With respect to each Required Appraisal Loan (unless such Mortgage Loan has
become a Corrected Mortgage Loan and has remained current for twelve consecutive
Monthly Payments, and no other Servicing Transfer Event has occurred with
respect thereto during the preceding twelve months), the Special Servicer is
required, within 30 days of each anniversary of such loan's becoming a Required
Appraisal Loan, to order an update of the prior appraisal (the cost of which
will be a Servicing Advance). Based upon such appraisal, the Special Servicer
will be required to redetermine and report to the Trustee the Appraisal
Reduction Amount, if any, with respect to such Mortgage Loan.
A "Modified Mortgage Loan" is any Mortgage Loan as to which any Servicing
Transfer Event has occurred and which has been modified by the Special Servicer
in a manner that: (A) affects the amount or timing of any payment of principal
or interest due thereon (other than, or in addition to, bringing current Monthly
Payments with respect to such Mortgage Loan); (B) except as expressly
contemplated by the related Mortgage, results in a release of the lien of the
Mortgage on any material portion of the related Mortgaged Property without a
corresponding Principal Prepayment in an amount not less than the fair market
value (as is) of the property to be released; or (C) in the reasonable good
faith judgment of the Special Servicer, otherwise materially impairs the
security for such Mortgage Loan or reduces the likelihood of timely payment of
amounts due thereon.]
REPORTS TO BONDHOLDERS; CERTAIN AVAILABLE INFORMATION
[TRUSTEE REPORTS; SPECIAL SERVICER REPORTS. Based on information provided
in monthly reports prepared by the Master Servicer and the Special Servicer and
delivered to the Trustee, the Trustee will prepare and forward on each Payment
Date to each Bondholder a statement (the "Trustee Report") substantially
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in the form of Annex __ hereto, detailing the payments on the Bonds on such
Payment Date and the performance, both in the aggregate and individually to the
extent available, of the Mortgage Loans and Mortgaged Properties. [Investors and
any other interested party may obtain Trustee Reports via the Trustee's
electronic bulletin board by dialing ____________ and selecting the applicable
statement. In addition, investors and other interested parties who have obtained
approval from the Company, confirmation of which approval has been furnished to
the Trustee, may obtain certain Mortgage Loan information via the Trustee's
restricted electronic bulletin board by contacting the Trustee at ____________.]
With respect to each Determination Date, the Special Servicer will be
required to prepare a report (the "Special Servicer Report") generally
containing the information described in Annex __ hereto with respect to
Specially Serviced Mortgage Loans. The Special Servicer Reports will be
delivered to the Trustee and the Master Servicer, and the Trustee will
distribute such reports to the Bondholders.
Until such time as Definitive Bonds are issued in respect of the Offered
Bonds, the foregoing information will be available to the Bond Owners through
DTC and the DTC Participants. Any Bond Owner of a Book-Entry Bond who does not
receive information through DTC or the DTC Participants may request that Trustee
Reports, Special Servicer Reports and accompanying documentation be mailed
directly to it (at its cost) by written request (accompanied by verification of
such Bond Owner's ownership interest) to the Trustee at the Trustee's corporate
trust office primarily responsible for administering the Trust Estate (the
"Corporate Trust Office"). The manner in which notices and other communications
are conveyed by DTC to DTC Participants, and by DTC Participants to the Bond
Owners of Book-Entry Bonds, will be governed by arrangements among them, subject
to any statutory or regulatory requirements as may be in effect from time to
time. The Master Servicer, the Special Servicer, the Trustee, the Company and
the Issuer are required to recognize as Bondholders only those persons in whose
names the Bonds are registered on the books and records of the Bond Registrar.
OTHER INFORMATION. [The Indenture requires that the [Trustee make available
at its Corporate Trust Office], during normal business hours, upon reasonable
advance written notice, for review by any holder or Bond Owner of an Offered
Bond or any person identified to the Trustee by any such holder or Bond Owner as
a prospective transferee of an Offered Bond or any interest therein, subject to
the discussion in the following paragraph, originals or copies of, among other
things, the following items: (a) the Indenture, the S&A Agreement and any
amendments or supplements to either of the foregoing, (b) all Trustee Reports
and Special Servicer Reports delivered to holders of the relevant Class of
Offered Bonds since the Closing Date, (c) all officer's certificates delivered
to the Trustee by the Master Servicer and/or Special Servicer since the Closing
Date as described under "Servicing of Mortgage Loans--Evidence as to Compliance"
in the Prospectus, (d) all accountant's reports delivered to the Trustee in
respect of the Master Servicer and/or Special Servicer since the Closing Date as
described under "Servicing of Mortgage Loans--Evidence as to Compliance" in the
Prospectus, and (e) [other available items to be specified]. Copies of any and
all of the foregoing items will be available from the [Trustee] upon request;
however, the [Trustee] will be permitted to require payment of a sum sufficient
to cover the reasonable costs and expenses of providing such services.]
[The Trustee will make available, upon reasonable advance written notice and
at the expense of the requesting party, originals or copies of the items
referred to in the prior paragraph that are maintained thereby, to Bondholders,
Bond Owners and prospective purchasers of Bonds and interests therein; provided
that the Trustee may require (a) in the case of a Bond Owner of an Offered Bond,
a written confirmation executed by the requesting person or entity, in a form
reasonably acceptable to the Trustee, generally to the effect that such person
or entity is a beneficial owner of Offered Bonds, is requesting the information
for use by it or another party in evaluating an investment in the Offered Bonds
and will otherwise keep such information confidential and (b) in the case of a
prospective purchaser of an Offered Bond, confirmation executed by the
requesting person or entity, in a form reasonably acceptable to the Trustee,
generally to the effect that such person or entity is a prospective purchaser of
Offered Bonds or an interest therein, is requesting the information for use in
evaluating a possible investment in the Offered
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Bonds and will otherwise keep such information confidential. Bondholders, by the
acceptance of their Bonds, will be deemed to have agreed to keep such
information confidential.]
VOTING RIGHTS
[At all times during the term of the Indenture, __% of the voting rights for
the series offered hereby (the "Voting Rights") will be allocated among the
holders of the respective Classes of Bonds in proportion to the aggregate Bond
Principal Amounts of such Classes. Voting Rights allocated to a Class of
Bondholders will be allocated among such Bondholders in proportion to the
respective Bond Principal Amounts of their Bonds.]
THE TRUSTEE
___________________________________________ will be the Trustee under the
Indenture. The Trustee is at all times to be, and will be required to resign if
it fails to be, [specify eligibility requirements for Trustee, including
qualification under the Trust Indenture Act of 1939, as amended]. The Corporate
Trust Office is located at ___________________________________________.
The Company, the Master Servicer, the Special Servicer and their respective
affiliates may from time to time enter into normal banking and trustee
relationships with the Trustee and its affiliates. The Trustee and any of its
respective affiliates may hold Bonds in their own names. In addition, for
purposes of meeting the legal requirements of certain local jurisdictions, the
Trustee may appoint a co-trustee or separate trustee of all or any part of the
Trust Estate. In the event of such appointment, all rights, powers, duties and
obligations conferred or imposed upon the Trustee and such separate trustee or
co-trustee jointly, or, in any jurisdiction in which the Trustee shall be
incompetent or unqualified to perform certain acts, singly upon such separate
trustee or co-trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the Trustee.
[Pursuant to the Indenture, the Trustee will be entitled to receive a
monthly fee (the "Trustee Fee") generally equal to one month's interest in
respect of each Mortgage Loan (including each Mortgage Loan as to which the
related Mortgaged Property became an REO Property) accrued at ____% per annum
(the "Trustee Fee Rate") on the unpaid principal balance of such Mortgage Loan
from time to time.]
[OPTIONAL REDEMPTION]
[Any Class of Offered Bonds may be redeemed in whole but not in part, at the
Issuer's option, on any Payment Date, if the then aggregate Bond Principal
Amount of such Class of Bonds is less than __% of the initial aggregate Bond
Principal Amount of such Class of Bonds and no Event of Default has occurred and
is continuing. Such redemption will be at a price (calculated after taking into
account payments made on the Bonds out of the Available Payment Amount on the
applicable Payment Date) equal to 100% of the unpaid aggregate Bond Principal
Amount of the Bonds to be redeemed, plus accrued and unpaid interest thereon to
the last day of the related Interest Accrual Period. Notice of any optional
redemption must be mailed by the Issuer or the Indenture Trustee at least __
days prior to the date set for optional redemption. No Yield Maintenance Amount
will be payable in connection with any such optional redemption. See "Yield and
Maturity Considerations" herein.]
ADDITIONAL INFORMATION
Prospective investors should carefully review the Prospectus, in particular
the sections captioned "Description of the Securities" and "The Indenture", for
important additional information regarding the Bonds and the Indenture.
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<PAGE>
THE ISSUER
Structured Asset Securities Corporation Trust [I] (the "Issuer") is an owner
trust formed under the laws of the State of ____________, pursuant to the
Deposit Trust Agreement, to be dated as of ____________, ____ (the "Deposit
Trust Agreement"), between Structured Asset Securities Corporation, (the
"Company") and the Owner Trustee, for the transactions described in this
Prospectus Supplement. The Deposit Trust Agreement constitutes the "governing
instrument" under the laws of the State of ____________ relating to owner
trusts. [Ownership of the Issuer will initially be evidenced by ____ classes of
ownership certificates, including the Owner Trust Certificates. The Company
initially will hold 100% of the beneficial ownership interests in the Issuer,
but may transfer some or all such ownership interests, including those evidenced
by the Owner Trust Certificates to one or more other persons or entities.] The
Company, a _______ corporation, is a wholly-owned subsidiary of Lehman
Commercial Paper Inc., which, in turn, is a wholly-owned subsidiary of [the
Underwriter].
After its formation, the Issuer will generally not engage in any activity
other than (i) acquiring, holding and, pursuant to the Indenture, pledging the
Mortgage Loans and the other assets of the Issuer and proceeds therefrom, (ii)
issuing the Bonds and the Ownership Certificates, (iii) making payments on the
Bonds and the Ownership Certificates and (iv) engaging in other activities that
are necessary, suitable or convenient to accomplish the foregoing or are
incidental thereto or connected therewith.
The assets of the Issuer will consist of the Mortgage Loans and certain
related assets.
The Issuer's principal offices are in ____________, in care of
___________________, as Owner Trustee, at the address listed below.
THE OWNER TRUSTEE
___________________ is the Owner Trustee under the Deposit Trust Agreement.
The Owner Trustee is a ___________________ and its principal offices are located
at ___________________.
As compensation for the performances of its duties, the Owner Trustee will
be paid $_________ per annum (the "Owner Trustee Fee"). ________________________
will be responsible for payment of the Owner Trustee Fee.
Neither the Owner Trustee nor any director, officer or employee of the Owner
Trustee will be under any liability to the Issuer or the Bondholders for any
action taken or for refraining from the taking of any action in good faith
pursuant to the Deposit Trust Agreement or for errors in judgment; provided that
none of the Owner Trustee and any director, officer or employee thereof will be
protected against any liability which would otherwise be imposed by reason of
gross negligence or willful misconduct in the performance of obligations and
duties under the Deposit Trust Agreement. All persons into which the Owner
Trustee may be merged or with which it may be consolidated or any person
resulting from such merger or consolidation shall be the successor of the Owner
Trustee under the Deposit Trust Agreement.
[THE GENERAL ADMINISTRATOR]
[___________________ (the "General Administrator") is a
________________________, and its principal offices are located at
____________________________.
The Owner Trustee, on behalf of the Issuer, and the General Administrator
will enter into a General Administration Agreement, to be dated as of
____________, ____ (the "General Administration Agreement"), pursuant to which
the General Administrator will be required to perform (without relieving the
Issuer from liability therefor) certain duties of the Issuer set forth in the
Indenture. As compensation for the performance of its duties, the General
Administrator will be paid a monthly fee on each Payment Date equal to
one-twelfth of __% of the aggregate Stated Principal Balance of the Mortgage
Pool immediately
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prior to such Payment Date (the "General Administration Fee").
________________________ will be responsible for payment of the General
Administration Fee.]
YIELD AND MATURITY CONSIDERATIONS
YIELD CONSIDERATIONS
GENERAL. The yield on any Offered Bond will depend on (a) the price at
which such Bond is purchased by an investor and (b) the rate, timing and amount
of payments on such Bond. The rate, timing and amount of payments on any Offered
Bond will in turn depend on, among other things, (i) the Bond Interest Rate for
such Bond, (ii) the rate and timing of principal payments (including principal
prepayments) and other principal collections on the Mortgage Loans, and (iii)
the rate, timing and severity of Realized Losses, Net Aggregate Prepayment
Interest Shortfalls and Extraordinary Expenses.
RATE AND TIMING OF PRINCIPAL PAYMENTS. The yield to holders of any Offered
Bonds purchased at a discount or premium will be affected by the rate and timing
of principal payments made in reduction of the Bond Principal Amounts of such
Bonds. [As described herein, the Principal Payment Amount for each Payment Date
will be payable entirely in respect of the Class A-1 and/or Class A-2 Bonds
until the aggregate Bond Principal Amounts thereof are reduced to zero, and will
thereafter be payable entirely in respect of the Class B Bonds, the Class C
Bonds, the Class D Bonds, the Class E Bonds and the Class F Bonds, in that
order, in each case until the aggregate Bond Principal Amount of such Class of
Bonds is reduced to zero. In addition, except under the limited circumstances
described herein, holders of the Class A-2 Bonds will not receive any payments
of principal for so long as the Class A-1 Bonds are outstanding.] Consequently,
the rate and timing of principal payments that are paid with respect to each
Class of Bonds will be directly related to the rate and timing of principal
payments on or in respect of the Mortgage Loans. The rate and timing of
principal payments of the Mortgage Loans are affected by the amortization
schedules of such Mortgage Loans, the dates on which Balloon Payments are due
and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in connection
with liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the Mortgaged Properties, or purchases of Mortgage Loans out of the
Trust Estate). Prepayments and, assuming the respective maturity dates therefor
have not occurred, liquidations of the Mortgage Loans will result in payments on
the Bonds of amounts that would otherwise be paid over the remaining terms of
the Mortgage Loans and will tend to shorten the weighted average lives of the
Bonds. Defaults on the Mortgage Loans, particularly at or near their maturity
dates, may result in significant delays in payments of principal on the Mortgage
Loans (and, accordingly, on the Bonds) while work-outs are negotiated or
foreclosures are completed, and such delays will tend to lengthen the weighted
average lives of those Bonds. See "Servicing of the Mortgage
Loans--Modifications, Waivers and Amendments" herein.
The extent to which the yield to maturity of any Class of Offered Bonds may
vary from the anticipated yield will depend upon the degree to which such Bonds
are purchased at a discount or premium and when, and to what degree, payments of
principal are made on such Bonds. An investor should consider, in the case of
any Offered Bond purchased at a discount, the risk that a slower than
anticipated rate of principal payments on such Bond, could result in an actual
yield to such investor that is lower than the anticipated yield and, in the case
of any Offered Bond purchased at a premium, the risk that a faster than
anticipated rate of principal payments on such Bond could result in an actual
yield to such investor that is lower than the anticipated yield. In general, the
earlier a payment of principal is made on any Offered Bond purchased at a
discount or premium, the greater will be the effect on an investor's yield to
maturity. As a result, the effect on an investor's yield of principal payments
on its Offered Bonds occurring at a rate higher (or lower) than the rate
anticipated by the investor during any particular period would not be fully
offset by a subsequent like reduction (or increase) in the rate of such
principal payments. As stated above, the rate of principal payments on the
Offered Bonds are ultimately dependent on the rate of principal
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payments on the Mortgage Loans. Because the rate of principal payments on the
Mortgage Loans will depend on future events and a variety of factors (as
described more fully below), no assurance can be given as to such rate or the
rate of principal prepayments in particular.
LOSSES AND SHORTFALLS. The yield to holders of the Offered Bonds will also
depend on the extent to which payments on the Bonds are adversely affected by
any losses and other shortfalls on the Mortgage Loans. Realized Losses, Net
Aggregate Prepayment Interest Shortfalls and other shortfalls in respect of the
Mortgage Loans and Extraordinary Expenses will, in each case, be borne by the
Issuer and the holders of the Private Bonds (to the extent of amounts otherwise
payable on or in respect of the Issuer's Equity and the Private Bonds,
respectively) prior to any such losses, shortfalls and/or expenses being borne
by the holders of the Offered Bonds. If and to the extent that Realized Losses,
together with any Net Aggregate Prepayment Interest Shortfalls and Extraordinary
Expenses, exceed the sum of the initial Overcollateralization Amount and the
initial aggregate Bond Principal Amount of the Private Bonds, it is likely that
the holders of one or more Classes of Offered Bonds will not receive the full
Bond Principal Amount of their Bonds.
CERTAIN RELEVANT FACTORS. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, provisions requiring Lockout Periods,
provisions requiring the payment of Prepayment Premiums and amortization terms
that require Balloon Payments), the demographics and relative economic vitality
of the areas in which the Mortgaged Properties are located and the general
supply and demand for rental units or comparable commercial space, as
applicable, in such areas, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
and other opportunities for investment. See "Risk Factors" herein and in the
Prospectus and "Description of the Mortgage Pool" herein.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a Mortgage
Rate, the related Mortgagor has an incentive to refinance its Mortgage Loan. A
requirement that a prepayment be accompanied by a Prepayment Premium may not
provide a sufficient economic disincentive to deter a Mortgagor from refinancing
at a more favorable interest rate.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some Mortgagors may sell or
refinance Mortgaged Properties in order to realize their equity therein, to meet
cash flow needs or to make other investments. In addition, some Mortgagors may
be motivated by federal and state tax laws (which are subject to change) to sell
Mortgaged Properties prior to the exhaustion of tax depreciation benefits.
Neither the Company nor the Issuer makes any representation as to the
particular factors that will affect the rate and timing of prepayments and
defaults on the Mortgage Loans, as to the relative importance of such factors,
as to the percentage of the principal balance of the Mortgage Loans that will be
prepaid or as to which a default will have occurred as of any date or as to the
overall rate of prepayment or default on the Mortgage Loans.
UNPAID ACCRUED BOND INTEREST. As described under "Description of the
Bonds--Payments on the Bonds" herein, if the portion of the Available Payment
Amount payable in respect of interest on any Class of Offered Bonds on any
Payment Date is less than the Accrued Bond Interest then payable for such Class,
the shortfall will be payable to holders of such Class of Bonds on subsequent
Payment Dates, to the extent of available funds. Any such shortfall will not
bear interest, however, and will therefore negatively affect the yield to
maturity of such Class of Bonds for so long as it is outstanding.
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WEIGHTED AVERAGE LIFE
Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security to the date of payment to the investor
of each dollar payable in reduction of principal of such security (assuming no
losses). The weighted average life of any Offered Bonds will be influenced by,
among other things, the rate at which principal of the Mortgage Loans is paid,
which may be in the form of scheduled amortization, Balloon Payments,
prepayments or liquidations and any extensions or modifications made by the
Special Servicer with respect to Specially Serviced Mortgage Loans as described
herein. The weighted average life of any Offered Bond may also be affected to
the extent that additional payments in reduction of the Bond Principal Amount of
such Bond occur as a result of the purchase of a Mortgage Loan out of the Trust
Estate or any optional redemption of such Bond as described under "Description
of the Bonds--Optional Redemption" herein.
[The table set forth below has been prepared on the basis of the following
assumptions (the "Modeling Assumptions") regarding the characteristics of the
Bonds and the Mortgage Loans and the performance thereof: (i) as of the date of
issuance of the Bonds, the Mortgage Loans have the terms as identified in the
tables titled [identify tables]; (ii) the monthly cash flow of each Mortgage
Loan (except for the Balloon Payment) is a monthly payment of principal and
interest calculated based upon [specify applicable information], and no Mortgage
Loan is voluntarily prepaid; (iii) no Mortgage Loan is repurchased as a result
of a material breach of a representation or warranty, and there is no optional
redemption of Bonds; (iv) there are no delinquencies or Realized Losses on the
Mortgage Loans, and there is no extension of the maturity date of any Mortgage
Loan; (v) all Mortgage Loans accrue interest on the basis of a 360-day year
consisting of twelve 30-day months; (vi) payments on the Bonds will be made on
the __th day of each month, commencing in _________, __; (vii) payments on the
Mortgage Loans earn no reinvestment return; (viii) there are no additional
ongoing expenses payable out of the Trust Estate other than the Master Servicing
Fee, the Property Servicing Fee and the Trustee Fee, and there are no
Extraordinary Expenses; (ix) the respective Classes of Offered Bonds will be
issued in the initial aggregate Bond Principal Amounts and will accrue interest
at the Bond Interest Rates set forth in the table on the cover page hereof; (x)
the Offered Bonds will be settled on _________, ____ (the "Assumed Settlement
Date"); and (xi) no Prepayment Premiums are collected on the Mortgage Loans.]
THE ACTUAL CHARACTERISTICS AND PERFORMANCE OF THE MORTGAGE LOANS WILL DIFFER
FROM THE MODELING ASSUMPTIONS USED IN CALCULATING THE TABLE SET FORTH BELOW,
WHICH IS HYPOTHETICAL IN NATURE AND IS PROVIDED ONLY TO GIVE A GENERAL SENSE OF
HOW THE PRINCIPAL CASH FLOWS MIGHT BEHAVE UNDER THE ASSUMED PREPAYMENT AND LOSS
SCENARIO. ANY DIFFERENCE BETWEEN SUCH ASSUMPTIONS AND THE ACTUAL CHARACTERISTICS
AND PERFORMANCE OF THE MORTGAGE LOANS, OR ACTUAL PREPAYMENT OR LOSS EXPERIENCE,
WILL AFFECT THE PERCENTAGES OF INITIAL AGGREGATE BOND PRINCIPAL AMOUNTS
OUTSTANDING OVER TIME AND THE WEIGHTED AVERAGE LIVES OF THE RESPECTIVE CLASSES
OF OFFERED BONDS.
Subject to the foregoing discussion and assumptions, the following table
indicates the weighted average life of each Class of the Offered Bonds, and sets
forth the percentages of the initial aggregate Bond Principal Amount of each
such Class that would be outstanding after each of the Payment Dates shown.
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PERCENT OF INITIAL AGGREGATE BOND PRINCIPAL AMOUNTS OUTSTANDING
<TABLE>
<CAPTION>
CLASS CLASS CLASS CLASS CLASS
DATE A-1 A-2 B C D
- - ------------------------------------------------------------------------------------------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Closing Date.............................................................................. % % % % %
_______, 1998............................................................................. % % % % %
_______, 1999............................................................................. % % % % %
_______, 2000............................................................................. % % % % %
_______, 2001............................................................................. % % % % %
_______, 2002............................................................................. % % % % %
_______, 2003............................................................................. % % % % %
_______, 2004............................................................................. % % % % %
_______, 2005............................................................................. % % % % %
_______, 2006............................................................................. % % % % %
_______, 2007............................................................................. % % % % %
_______, 2008............................................................................. % % % % %
_______, 2009............................................................................. % % % % %
_______, 2010............................................................................. % % % % %
_______, 2011............................................................................. % % % % %
_______, 2012............................................................................. % % % % %
_______, 2013............................................................................. % % % % %
_______, 2014............................................................................. % % % % %
_______, 2015............................................................................. % % % % %
_______, 2016............................................................................. % % % % %
_______, 2017............................................................................. % % % % %
Weighted Average Life (years).............................................................
</TABLE>
For purposes of the foregoing table, the weighted average life of an Offered
Bond is determined by (i) multiplying the amount of each principal payment
thereon by the number of years from [the Assumed Settlement Date] to the related
Payment Date, (ii) summing the results and (iii) dividing the sum by the
aggregate amount of the reductions in the Bond Principal Amount of such Offered
Bond.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
[Upon the issuance of the Offered Bonds, ____________, counsel to the Issuer
and the Company, will deliver its opinion generally to the effect that, assuming
compliance with all provisions of the Indenture, for federal income tax
purposes, the Collateral and certain related assets, will qualify as a REMIC
under the Code. For federal income tax purposes, the Bonds will be the "regular
interests" in the REMIC, and generally will be treated as debt instruments
thereof, and the Owner Trust Certificates will be the sole class of "residual
interests" in the REMIC.]
DISCOUNT AND PREMIUM; PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES
[The Class _______, Class _______ and Class _______ Bonds will not, and the
Class _______ and Class _______ Bonds will, be treated as having been issued
with original issue discount for federal income tax reporting purposes. The
prepayment assumption that will be used in determining the rate of accrual of
original issue discount, market discount and premium, if any, for federal income
tax purposes will be based on the assumption that subsequent to the date of any
determination the Mortgage Loans will prepay at a rate equal to a CPR of 0%. No
representation is made as to how the Mortgage Loans will prepay, if at all. See
"Federal Income Tax Considerations" in the Prospectus.]
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<PAGE>
The Internal Revenue Service (the "IRS") has issued regulations (the "OID
Regulations") under Sections 1271 to 1275 of the Code generally addressing the
treatment of debt instruments issued with original issue discount. The OID
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 the holder of an Offered Bond may
be able to select a method for recognizing original issue discount that differs
from that used by the Trustee in preparing reports to the Bondholders and the
IRS. Prospective purchasers of Offered Bonds are advised to consult their tax
advisors concerning the tax treatment of such Bonds.
Certain Classes of the Offered Bonds may be treated for federal income tax
purposes as having been issued at a premium. Whether any holder of such a Class
of Bonds will be treated as holding a Bond with amortizable bond premium will
depend on such Bondholder's purchase price and the distributions remaining to be
made on such Bond at the time of its acquisition by such Bondholder. Holders of
such Classes of Bonds should consult their own tax advisors regarding the
possibility of making an election to amortize such premium. See "Federal Income
Tax Considerations--Taxation of Regular Interest Securities--Market Discount and
Premium" in the Prospectus.
Prepayment Premiums actually collected will be distributed to the holders of
the Bonds as and to the extent described herein. It is not entirely clear under
the Code when the amount of a Prepayment Premium should be taxed to the holder
of an Offered Bond entitled to a portion thereof, but it is not expected, for
federal income tax reporting purposes, that Prepayment Premiums will be treated
as giving rise to any income to the holders of the Offered Bonds prior to the
Master Servicer's actual receipt of any Prepayment Premium. It appears that
Prepayment Premiums, if any, will be treated as ordinary income rather than
capital gain. However, that is not entirely clear and Bondholders should consult
their own tax advisors concerning the treatment of Prepayment Premiums.
CHARACTERIZATION OF INVESTMENTS IN OFFERED BONDS
[In general, except to the extent noted below, the Offered Bonds will be
"real estate assets" within the meaning of Section 856(c)(5)(A) of the Code in
the same proportion that the assets constituting the Collateral would be so
treated. The Offered Bonds will generally only be considered assets described in
Section 7701(a)(19)(C) of the Code to the extent that the Mortgage Loans are
secured by residential property and, accordingly, investment in the Offered
Bonds may not be suitable for certain thrift institutions. Moreover, if __% or
more of the assets constituting the Collateral qualify for any of the foregoing
characterizations at all times during a calendar year, the Offered Bonds will
qualify for the corresponding status in their entirety for that calendar year.
Interest (including original issue discount) on the Offered Bonds will be
interest described in Section 856(c)(3)(B) of the Code to the extent that such
Bonds are treated as "real estate assets" within the meaning of Section
856(c)(5)(A) of the Code. In addition, the Offered Bonds will be "qualified
mortgages" within the meaning of Section 860G(a)(3) of the Code. The
determination as to the percentage of the Collateral that constitutes assets
described in the foregoing sections of the Code will be made with respect to
calendar quarter based on the average adjusted basis of each category of the
assets included as part of the Collateral during such calendar quarter.]
[However, the Collateral will include, in addition to the Mortgage Loans,
payments on Mortgage Loans held pending payment on the Bonds, certain amounts in
reserve accounts and property acquired by foreclosure held pending sale. It is
unclear whether property acquired by foreclosure held pending sale would be
considered to be part of the Mortgage Loans, or whether such assets (to the
extent not invested in assets described in the foregoing sections of the Code)
otherwise would receive the same treatment as the Mortgage Loans for purposes of
all of the foregoing sections of the Code. In addition, to the extent an Offered
Bond represents ownership of an interest in any Mortgage Loan which is secured
in part by the related borrower's interest in an account containing a holdback
of loan proceeds, a portion of such Bond may not represent ownership of assets
described in Section 7701(a)(19)(C) of the Code and "real estate assets" under
Section 856(c)(5)(A) of the Code and the interest thereon may not constitute
"interest on
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<PAGE>
obligations secured by mortgages on real property" within the meaning of Section
856(c)(3)(B) of the Code. The REMIC Regulations (as defined in the Prospectus)
do provide, however, that cash received from payments on Mortgage Loans held
pending distribution are considered part of the Mortgage Loans for purposes of
Section 856(c)(5)(A) of the Code.]
See "Description of the Mortgage Pool" herein.
POSSIBLE TAXES ON INCOME FROM FORECLOSURE PROPERTY AND OTHER TAXES
In general, the Special Servicer will be obligated to operate and manage any
Mortgaged Property acquired as REO Property in a manner that (i) maintains its
status as "foreclosure property" under the REMIC Provisions and (ii) would, to
the extent commercially reasonable and consistent with the foregoing clause (i),
maximize the Trust Estate's net after-tax proceeds from such property. After the
Special Servicer reviews the operation of such property and consults with the
Trustee or other REMIC administrator to determine the Trust Estate's federal
income tax reporting position with respect to income it is anticipated that the
Trust Estate would derive from such property, the Special Servicer could
determine that it would not be commercially reasonable to manage and operate
such property in a manner that would avoid the imposition of a tax on "net
income from foreclosure property" within the meaning of the REMIC Regulations or
a tax on "prohibited transactions" under Section 860F of the Code (either such
tax referred to herein as an "REO Tax"). To the extent that income the Trust
Estate receives from an REO Property is subject to (i) a tax on "net income from
foreclosure property", such income would be subject to federal tax at the
highest marginal corporate tax rate (currently 35%) and (ii) a tax on
"prohibited transactions", such income would be subject to federal tax at a 100%
rate. The determination as to whether income from an REO Property would be
subject to an REO Tax will depend on the specific facts and circumstances
relating to the management and operation of each REO Property. Generally, income
from an REO Property that is directly operated by the Special Servicer would be
apportioned and classified as "service" or "non-service" income. The "service"
portion of such income could be subject to federal tax either at the highest
marginal corporate tax rate or at the 100% rate on "prohibited transactions",
and the "non-service" portion of such income could be subject to federal tax at
the highest marginal corporate tax rate or, although it appears unlikely, at the
100% rate applicable to "prohibited transactions". Any REO Tax imposed on the
Trust Estate's income from an REO Property would reduce the amount available for
payment to Bondholders. Bondholders are advised to consult their own tax
advisors regarding the possible imposition of REO Taxes in connection with the
operation of commercial REO Properties by REMICs.
To the extent permitted by then applicable laws, any tax on "prohibited
transactions", tax on non-permitted contributions or tax on "net income from
foreclosure property" that may be imposed on the REMIC will be borne by the
Trustee, the Master Servicer or the Special Servicer, in any case out of its own
funds, provided that such person has sufficient assets to do so, and provided
further that such tax arises out of a breach of such person's obligations under
the Indenture or the Servicing and Administration Agreement. Any such tax not
borne by the Trustee, the Master Servicer or the Special Servicer will be
charged against the Trust Estate resulting in a reduction in amounts available
for distribution to the Certificateholders. See "Federal Income Tax
Considerations--Taxation of the REMIC--Prohibited Transactions and Contributions
Tax" in the Prospectus.
REPORTING AND OTHER ADMINISTRATIVE MATTERS
Reporting of interest income, including any original issue discount, if any,
with respect to the Bonds is required annually, and may be required more
frequently under Treasury regulations. These information reports generally are
required to be sent to individual holders of the Bonds and the IRS; holders of
the Bonds that are corporations, trusts, securities dealers and certain other
non-individuals will be provided interest and original issue discount income
information and the information set forth in the following paragraph upon
request in accordance with the requirements of the applicable regulations. The
information must be provided by the later of 30 days after the end of the
quarter for which the information was
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<PAGE>
requested, or two weeks after the receipt of the request. The REMIC must also
comply with rules requiring a Bond issued with original issue discount to
disclose on its face the amount of original issue discount and the issue date,
and requiring such information to be reported to the Internal Revenue Service.
As applicable, the Bond information reports will include a statement of the
adjusted issue price of the Bond at the beginning of each accrual period. In
addition, the reports will include information required by regulations with
respect to computing the accrual of any market discount. Because exact
computation of the accrual of market discount on a constant yield method would
require information relating to the holder's purchase price that the REMIC may
not have, such regulations only require that information pertaining to the
appropriate proportionate method of accruing market discount be provided.
The "tax matters person" for each REMIC will be the holder of Owner Trust
Certificates evidencing the largest percentage interest in the Owner Trust
Certificates. All holders of Owner Trust Certificates will irrevocably designate
the Trustee (or other REMIC administrator appointed by the Trustee) as agent for
such "tax matters person" in all respects.
For further information regarding the federal income tax consequences of
investing in the Offered Bonds, see "Federal Income Tax Considerations" in the
Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in an Underwriting Agreement
dated ____________, ____(the "Underwriting Agreement") between the [Owner
Trustee, on behalf of the Issuer,] and the Underwriter, the Underwriter has
agreed to purchase and the [Issuer] has agreed to sell to the Underwriter each
Class of the Offered Bonds. It is expected that delivery of the Offered Bonds
will be made only in book-entry form through the Same Day Funds Settlement
System of DTC on or about ____________, _______, against payment therefor in
immediately available funds.
The Underwriting Agreement provides that the obligation of the Underwriter
to pay for and accept delivery of the Offered Bonds is subject to, among other
things, the receipt of certain legal opinions and to the conditions, among
others, that no stop order suspending the effectiveness of the Company's
Registration Statement shall be in effect, and that no proceedings for such
purpose shall be pending before or threatened by the Commission.
The distribution of the Offered Bonds by the Underwriter may be effected
from time to time in one or more negotiated transactions, or otherwise, at
varying prices to be determined at the time of sale. Proceeds to the [Issuer]
from the sale of the Offered Bonds, before deducting expenses payable by the
[Issuer], will be approximately ___% of the aggregate Bond Principal Amount of
the Offered Bonds plus accrued interest thereon from the Accrual Date. The
Underwriter may effect such transactions by selling the Offered Bonds to or
through dealers, and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter for whom
they act as agent. In connection with the sale of the Offered Bonds, the
Underwriter may be deemed to have received compensation from the [Issuer] in the
form of underwriting compensation. The Underwriter and any dealers that
participate with such Underwriter in the distribution of the Offered Bonds may
be deemed to be underwriters and any profit on the resale of the Offered Bonds
positioned by them may be deemed to be underwriting discounts and commissions
under the Securities Act.
The Underwriting Agreement provides that the [Issuer] will indemnify the
Underwriter, and that under limited circumstances the Underwriter will indemnify
the [Issuer], against certain civil liabilities under the Securities Act or
contribute to payments required to be made in respect thereof.
The [Issuer] has also been advised by the Underwriter that the Underwriter
presently intends to make a market in the Offered Bonds; however, the
Underwriter has no obligation to do so, any market making may be discontinued at
any time and there can be no assurance that an active public market for the
Offered Bonds will develop. See "Risk Factors--Limited Liquidity" herein and
"Risk Factors--Limited Liquidity" in the Prospectus.
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<PAGE>
LEGAL MATTERS
Certain legal matters relating to the Bonds will be passed upon for the
Underwriter by ______________]. Certain federal income tax matters and other
legal matters will be passed upon for the Issuer by ________________].
ERISA CONSIDERATIONS
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to ERISA, or Section 4975 of the Code (each, a "Plan")
should review with its legal advisors whether the purchase or holding of Offered
Bonds could give rise to a transaction that is prohibited or is not otherwise
permitted either under ERISA or Section 4975 of the Code or whether there exists
any statutory or administrative exemption applicable thereto.
Certain transactions involving the Issuer might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Plan that
purchases an Offered Bond, if the assets of the Issuer are deemed to be assets
of the Plan. For example, if the assets of an investing Plan were deemed to
include assets of the Issuer and if any of the Mortgage Loans constitute
obligations of or are purchased from or sold to a Party in Interest (as defined
in the Prospectus) with respect to such Plan, an indirect prohibited transaction
in the nature of an extension of credit or a purchase or sale of assets between
such Plan and such Party in Interest might be deemed to occur. Under regulations
issued by the United States Department of Labor, set forth in 29 C.F.R. Section
2510.3-101 (the "DOL Regulations"), the assets of the Issuer would be treated as
plan assets of a Plan for the purposes of ERISA and Section 4975 of the Code
only if the Plan acquires an equity interest in the Issuer and none of the
exceptions contained in the DOL Regulations is applicable. An equity interest is
defined under the DOL Regulations as an interest in an entity other than an
instrument which is treated as indebtedness under applicable local law and which
has no substantial equity features. Although there is no authority directly on
point, it is anticipated that the Offered Bonds should be treated as
indebtedness under local law without any substantial equity features for
purposes of the DOL Regulations. However, there is no assurance that the Offered
Bonds will not be characterized as equity interests for purposes of the DOL
Regulations.
Nevertheless, without regard to whether the Offered Bonds are treated as
equity interests for such purposes, the acquisition or holding of an Offered
Bond by or on behalf of a Plan could be considered to give rise to a prohibited
transaction if the Issuer, the Company, the Master Servicer, the Special
Servicer, the Trustee, the Owner Trustee, the General Administrator, the
Underwriter or any of their respective affiliates is or becomes a Party in
Interest with respect to such Plan. In this event, certain exemptions from the
prohibited transaction rules could be applicable depending on the type and
circumstances of the fiduciary making the decision to acquire an Offered Bond.
Included among these exemptions are Prohibited Transaction Class Exemption
("PTCE") 75-1, which exempts certain transactions involving Plans and certain
broker-dealers, reporting dealers and banks, PTCE 90-1, which exempts certain
transactions between insurance company separate accounts and Parties in
Interest, PTCE 91-38, which exempts certain transactions between bank collective
investment funds and Parties in Interest, PTCE 84-14, which exempts certain
transactions effected on behalf of a Plan by a "qualified professional asset
manager", PTCE 95-60, which exempts certain transactions between insurance
company general accounts and Parties in Interest, and PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset manager"
(collectively, the "Class Exemptions"). Even if the conditions specified in one
or more of the Class Exemptions are met, the scope of the relief provided by the
Class Exemptions might not cover all acts which might be construed as prohibited
transactions.
[In addition to the above-described Class Exemptions, the DOL issued an
individual administrative exemption, Prohibited Transaction Exemption __ (the
"Private Exemption"), to the Underwriter, which
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<PAGE>
generally exempts from the application of the prohibited transaction provisions
of Section 406 of ERISA, and the excise taxes imposed on such prohibited
transactions pursuant to Section 4975 (a) and (b) of the Code, certain
transactions, among others, relating to the servicing and operation of mortgage
pools and the purchase, sale and holding of "certificates" (within the meaning
of the Private Exemption) evidencing interests in a mortgage trust, which
certificates have been underwritten or placed by (i) the Underwriter, (ii) any
person directly or indirectly, through one or more intermediaries, controlling,
controlled by or under common control with the Underwriter and (iii) any member
of an underwriting syndicate or selling group of which the Underwriter or a
person described in (ii) is a manager or co-manager, provided that certain
conditions set forth in the Private Exemption are satisfied. If the Bonds were
determined to represent equity interests in the Issuer or the Trust Estate, the
Class A Bonds may, but the other Offered Bonds would not, be eligible for the
exemptive relief provided by the Private Exemption, provided that the general
and other conditions set forth in the Private Exemption and the other
requirements set forth in the Private Exemption would be satisfied at the time
of such purchase. The Private Exemption is set forth in volume __of the Federal
Register at page __.]
A Plan fiduciary considering an investment in an Offered Bond should also
consider that if the Offered Bonds are determined to be equity interests for
purposes of the DOL Regulations, the underlying assets of the Issuer will be
treated for purposes of ERISA and Section 4975 of the Code to be Plan assets. As
a result, the Issuer, the Company, the Master Servicer, the Special Servicer,
the Trustee, the Owner Trustee, the General Administrator, the Underwriter or
any of their respective affiliates may be considered to be or may become Parties
in Interest with respect to investing Plans. Therefore, the acquisition and
continued holding of an Offered Bond by or on behalf of a Plan could give rise
to a prohibited transaction within the meaning of ERISA and Section 4975 of the
Code unless one or more statutory or administrative exemptions is available.
Although the Class Exemptions described above may provide an exemption for the
purchase of an Offered Bond, it is expected that only the Private Exemption may
provide an exemption for the transactions relating to the operation of the
Issuer. However, the Private Exemption is potentially available only with
respect to the Class A Bonds and only if the requirements of the Private
Exemption are satisfied.
In any event, a Plan generally should not purchase an Offered Bond if the
Issuer, the Company, the Master Servicer, the Special Servicer, the Trustee, the
Owner Trustee, the General Administrator, the Underwriter or any of their
respective affiliates either (a) has investment discretion with respect to the
investment of assets of such Plan; (b) has authority or responsibility to give
or regularly gives investment advice with respect to assets of such Plan, for a
fee, and pursuant to an agreement or understanding that such advice will serve
as a primary basis for investment decisions with respect to such assets and that
such advice will be based on the particular investment needs of such Plan; or
(c) is an employer maintaining or contributing to such Plan. A party that is
described in clause (a) or (b) of the preceding sentence is a fiduciary under
ERISA with respect to the Plan and any such purchase might result in a
"prohibited transaction" under ERISA or the Code.
EACH PERSON OR ENTITY THAT ACQUIRES ANY OFFERED BOND OR INTEREST THEREIN
SHALL BE DEEMED TO HAVE REPRESENTED THAT EITHER (I) IT IS NOT A PLAN AND IS NOT
DIRECTLY OR INDIRECTLY PURCHASING SUCH BOND OR INTEREST THEREIN ON BEHALF OF, AS
NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF A PLAN OR (II) ITS PURCHASE
AND HOLDING OF SUCH BOND OR INTEREST THEREIN WILL NOT GIVE RISE TO A PROHIBITED
TRANSACTION UNDER ERISA OR ANY EXCISE TAX UNDER SECTION 4975 OF THE CODE.
Any Plan fiduciary considering whether to purchase an Offered Bond on behalf
of a Plan should consult with its counsel regarding the applicability of the
fiduciary responsibility and prohibited transaction provisions of ERISA and the
Code to such investment.
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<PAGE>
LEGAL INVESTMENT
[The Offered Bonds will not be "mortgage related securities" for purposes of
SMMEA. As a result, the appropriate characterization of the Offered Bonds under
various legal investment restrictions, and thus the ability of investors subject
to these restrictions to purchase the Offered Bonds, is subject to significant
interpretive uncertainties. Neither the Issuer nor the Company makes any
representation as to the ability of particular investors to purchase the Offered
Bonds under applicable legal investment or other restrictions. All institutions
whose investment activities are subject to legal investment laws and
regulations, regulatory capital requirements or review by regulatory authorities
should consult with their own legal advisors in determining whether and to what
extent the Offered Bonds constitute legal investments for them or are subject to
investment, capital or other restrictions.]
All depository institutions considering an investment in the Offered Bonds
should review the Federal Financial Institutions Examination Council's
Supervisory Policy Statement on the Selection of Securities Dealers and
Unsuitable Investment Practices (to the extent adopted by their respective
regulatory authorities), setting forth, in relevant part, certain investment
practices deemed to be unsuitable for an institution's investment portfolio, as
well as guidelines for investing in certain types of mortgage related
securities.
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits and provisions
which may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying".
There may be other restrictions on the ability of certain investors,
including depository institutions, either to purchase Offered Bonds or to
purchase Offered Bonds representing more than a specified percentage of the
investor's assets. Investors should consult their own legal advisors in
determining whether and to what extent the Offered Bonds constitute legal
investments for such investors.
See "Legal Investment" in the Prospectus.
RATINGS
It is a condition to the issuance of the Offered Bonds that the respective
Classes thereof receive the following credit ratings from ___________________
("____") and/or ___________________ ("_________"; and together with _________,
the "Rating Agencies"):
<TABLE>
<CAPTION>
CLASS [RATING AGENCY] [RATING AGENCY]
- - ------------------------------------------------------------ ----------------------- -----------------------
<S> <C> <C>
[Class A-1..................................................
Class A-2...................................................
Class B.....................................................
Class C.....................................................
Class D]....................................................
</TABLE>
The ratings on the Offered Bonds address the likelihood of the timely
receipt by holders thereof of all payments of interest to which they are
entitled on each Payment Date and the ultimate receipt by the holders thereof of
all payments of principal to which they are entitled on or before their Stated
Maturity. The ratings take into consideration the credit quality of the Mortgage
Pool, structural and legal aspects associated with the Offered Bonds, and the
extent to which the payment stream from the Mortgage Pool is adequate to make
payments of principal and interest required under the Offered Bonds. The ratings
on the respective Classes of Offered Bonds do not represent any assessment of
(i) the likelihood or frequency of principal prepayments on the Mortgage Loans,
(ii) the degree to which such prepayments might differ from those originally
anticipated or (iii) whether and to what extent Prepayment Premiums will be
received or that Yield Maintenance Amounts will be paid. Also a security rating
does not represent any assessment
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<PAGE>
of the yield to maturity that investors may experience. In general, the ratings
address credit risk and not prepayment risk.
There can be no assurance as to whether any rating agency not requested to
rate the Offered Bonds will nonetheless issue a rating to any Class thereof and,
if so, what such rating would be. A rating assigned to any Class of Offered
Bonds by a rating agency that has not been requested by the Company to do so may
be lower than the rating assigned thereto by either Rating Agency.
The ratings on the Offered Bonds should be evaluated independently from
similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating organization. Each security
rating should be evaluated independently of any other security rating.
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<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
<TABLE>
<S> <C>
Accrued Bond Interest........ S-15, S-52
Advances..................... S-43
Appraisal Reduction Amount... S-56
ARM Loans.................... S-11
Assumed Final Distribution
Date....................... S-2
Assumed Final Payment Date... S-53
Assumed Scheduled Payment.... S-16
Assumed Settlement Date...... S-62
Available Payment Amount..... S-48
Balloon Loans................ S-11
Balloon Payment.............. S-11
Bond Interest Rate........... S-48, S-7
Bond Owner................... S-9, S-46
Bond Principal Amount........ S-7
Bond Registrar............... S-47
Bond-Entry Securities........ S-9
Bondholders.................. S-2, S-7,
S-46
Bonds........................ S-1, S-7,
S-45
Book-Entry Bonds............. S-9
Certificate Principal
Balance.................... S-48
Class........................ S-1, S-7,
S-45
Class A Bonds................ S-1, S-7,
S-45
Class A Principal Payment
Cross-Over Date............ S-50
Class Exemptions............. S-67
Closing Date................. S-1, S-45
Collateral................... S-2, S-9,
S-45
Collection Account........... S-47
Collection Period............ S-46
Company...................... S-1, S-7,
S-59
Compensating Interest
Payment ................... S-19, S-41
Condemnation Proceeds........ S-39
Corporate Trust Office....... S-57
Corrected Mortgage Loan...... S-37
Custodial Account............ S-38
Cut-off Date................. S-2
Cut-off Date Balance......... S-10, S-28
Debt Service Coverage
Ratio...................... S-32
Definitive Bond.............. S-9, S-46
Deposit Trust Agreement...... S-7, S-59
Determination Date........... S-46
DOL.......................... S-21
DOL Regulations.............. S-67
DTC.......................... S-46
DTC Participants............. S-47
Due Date..................... S-11
Eligible Account............. S-38
ERISA........................ S-21
Extraordinary Expenses....... S-54
Fixed Rate Loans............. S-11
Form 8-K..................... S-36
General Administration
Agreement.................. S-2, S-8,
S-59
General Administration Fee... S-59
General Administrator........ S-2, S-8,
S-59
Gross Margin................. S-11
Indenture.................... S-2, S-8
Index........................ S-11
Initial Pool Balance......... S-2, S-10,
S-28
Insurance Proceeds........... S-39
Interest Accrual Period...... S-52
Interest Rate Adjustment
Date ...................... S-11
IRS.......................... S-64
Issuer....................... S-1, S-7,
S-59
Issuer's Equity.............. S-8, S-46
Liquidation Fee.............. S-42
Liquidation Fee Rate......... S-42
Liquidation Proceeds......... S-39
Lockout Period............... S-11, S-29
LTV Ratio.................... S-33
Master Servicer.............. S-37
Master Servicing Fee......... S-41
Master Servicing Fee Rate.... S-41
Maturity Date................ S-11
Modeling Assumptions......... S-62
Modified Mortgage Loan....... S-56
Monthly Payments............. S-11
Mortgage..................... S-10, S-28
Mortgage Loan Purchase
Agreement.................. S-12, S-28
Mortgage Loan Seller......... S-9
Mortgage Loans............... S-2, S-10,
S-28
Mortgage Note................ S-10, S-28
Mortgage Pool................ S-2, S-28
Mortgage Rate................ S-11
Mortgaged Property........... S-10, S-28
Mortgagor.................... S-10, S-28
Net Aggregate Prepayment
Interest Shortfall......... S-19, S-41
Net Operating Income......... S-32
Nonrecoverable Advance....... S-40
Offered Bonds................ S-1, S-7,
S-45
OID Regulations.............. S-64
Open Period.................. S-12, S-29
Overcollateralization
Amount..................... S-8, S-46
Owner Trustee................ S-2, S-7
Owner Trustee Fee............ S-59
</TABLE>
S-71
<PAGE>
<TABLE>
<S> <C>
Ownertrust Certificates...... S-8, S-46
P&I Advance.................. S-18, S-55
Payment Adjustment Date...... S-11
Payment Date................. S-3, S-47
Plan......................... S-21, S-67
Prepayment Interest Excess... S-19, S-41
Prepayment Interest
Shortfall.................. S-19, S-41
Prepayment Premium........... S-12, S-29
Principal Payment Amount..... S-15, S-16,
S-53
Principal Prepayment......... S-12, S-29
Principal Prepayment
Amount .................... S-52
Private Bonds................ S-3, S-7,
S-45
Private Exemption............ S-67
Property Servicing Fee....... S-41
Property Servicing Fee
Rate....................... S-42
Prospectus................... S-3
PTCE......................... S-67
Purchase Agreement........... S-12
Purchase Price............... S-35
Rating Agencies.............. S-2, S-22,
S-69
Realized Losses.............. S-54
Record Date.................. S-48
Reimbursement Rate........... S-18, S-55
Related Proceeds............. S-43
REO Property................. S-17, S-37
REO Tax...................... S-65
Required Appraisal Loan...... S-56
S&A Agreement................ S-12, S-36
Scheduled Payment............ S-16, S-52
Securities Act............... S-7
Senior Bonds................. S-1, S-7,
S-45
Servicing Advances........... S-43
Servicing Standard........... S-36
Servicing Transfer Event..... S-36
SMMEA........................ S-22
Special Servicer Report...... S-57
Special Servicing Fee........ S-42
Special Servicing Fee Rate... S-42
Specially Serviced Mortgage
Loans...................... S-37
Stated Principal Balance..... S-46
Sub-Servicer................. S-38
Sub-Servicing Agreement...... S-38
Subordinate Bonds............ S-1, S-7,
S-45
Trust Estate................. S-9, S-45
Trustee...................... S-2
Trustee Fee.................. S-58
Trustee Fee Rate............. S-58
Trustee Report............... S-56
Underwriter.................. S-1
Underwriting Agreement....... S-66
Voting Rights................ S-58
Workout Fee.................. S-42
Workout Fee Rate............. S-42
Yield Maintenance Amount..... S-53
</TABLE>
S-72
<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR BY THE UNDERWRITER. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
SECURITIES OFFERED HEREBY TO ANYONE IN ANY JURISDICTION IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM
IT IS UNLAWFUL TO MAKE ANY SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT INFORMATION HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SINCE THE DATE OF THIS PROSPECTUS SUPPLEMENT
OR THE PROSPECTUS.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PROSPECTUS SUPPLEMENT
Transaction Overview...........................
Summary of Prospectus Supplement...............
Risk Factors...................................
Description of the Mortgage Pool...............
Servicing of the Mortgage Loans................
Description of the Bonds.......................
The Issuer.....................................
The Owner Trustee..............................
The General Administrator......................
Yield and Maturity Considerations..............
Certain Federal Income Tax Consequences........
Method of Distribution.........................
Legal Matters..................................
ERISA Considerations...........................
Legal Investment...............................
Ratings........................................
PROSPECTUS
Prospectus Supplement..........................
Additional Information.........................
Incorporation of Certain Documents by
Reference......................................
Summary of Terms...............................
Risk Factors...................................
Description of the Securities..................
Yield and Prepayment Considerations............
Security for the Bonds and Certificates........
Servicing of Mortgage Loans....................
Enhancement....................................
Description of Insurance on the Mortgage
Loans..........................................
Certain Legal Aspects of Mortgage Loans........
The Indenture..................................
The Trust Agreement............................
The Issuer.....................................
Use of Proceeds................................
Limitations on Issuance of Bearer Securities...
Federal Income Tax Considerations..............
State and Local Tax Considerations.............
ERISA Considerations...........................
Legal Investment...............................
Plan of Distribution...........................
Legal Matters..................................
Glossary.......................................
</TABLE>
$
(APPROXIMATE)
STRUCTURED ASSET
SECURITIES CORPORATION TRUST [I]
(ISSUER)
COLLATERALIZED MORTGAGE OBLIGATIONS
SERIES __-_
[CLASS A-1, CLASS A-2, CLASS B,
CLASS C AND CLASS D]
------------------------
PROSPECTUS SUPPLEMENT
------------------------
LEHMAN BROTHERS
DATED ____________, __
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted without the delivery of a final form of this
prospectus supplement and the prospectus to which it relates. This prospectus
supplement and the prospectus to which it relates shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale of
these securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of any
such State.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 20, 1998
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE-BACKED SECURITIES, ISSUABLE IN SERIES
This Prospectus relates to Collateralized Mortgage Obligations (the "Bonds") and
Mortgage-Backed Certificates (the "Certificates," together with the Bonds, the
"Securities") which may be issued from time to time in one or more series
("Series") under this Prospectus and the supplements hereto (each, a "Prospectus
Supplement"). As specified in the related Prospectus Supplement, the Securities
of each Series will be either Bonds issued pursuant to an Indenture and
representing indebtedness of Structured Asset Securities Corporation (the
"Company") or an owner trust (the "Owner Trust") established by it, or
Certificates which will evidence a beneficial ownership interest in assets
deposited into a trust (a "Trust Fund") by the Company as depositor pursuant to
a Trust Agreement, as described herein. The issuer (the "Issuer") with respect
to a Series of Bonds will be the Company or the Owner Trust established to issue
such Bonds, and, with respect to a Series of Certificates, will be the Trust
Fund established in respect of such Certificates. Capitalized terms not
otherwise defined herein or the related Prospectus Supplement have the meanings
specified in the Glossary attached hereto.
The Securities will be sold from time to time under this Prospectus on terms
determined for each Series at the time of the sale and as described in the
related Prospectus Supplement. Each Series will consist of one or more Classes,
one or more of which may be Compound Interest Securities, Variable Interest
Securities, Individual Investor Securities, Planned Amortization Class ("PAC")
Securities, Zero Coupon Securities, Principal Only Securities, Interest Only
Securities, Participating Securities or another particular Class of Securities,
if any, included in such Series of Securities. Zero Coupon Securities and
Principal Only Securities will not accrue and will not be entitled to receive
any interest. Payments or distributions of interest on each Class of Securities,
other than Zero Coupon Securities, Principal Only Securities and Compound
Interest Securities will be made on each Payment Date or Distribution Date as
specified in the related Prospectus Supplement. Interest will not be paid or
distributed on Compound Interest Securities on a current basis until all
Securities of the related Series having a Stated Maturity or Final Scheduled
Distribution Date prior to the Stated Maturity or Final Scheduled Distribution
Date of such Class of Compound Interest Securities have been paid in full or
until such other date or period as may be specified in the related Prospectus
Supplement. Prior to such time, interest on such Class of Compound Interest
Securities will accrue and the amount of interest so accrued will be added to
the principal thereof on each Payment Date or Distribution Date. The amount of
principal and interest available and payable on each Series on each Payment Date
or Distribution Date will be applied to the Classes of such Series in the order
and as otherwise specified in the related Prospectus Supplement. Principal
payments or distributions on each Class of a Series will be made on either a pro
rata or a random lot basis among Securities of such Class, as specified in the
related Prospectus Supplement Any Series may include one or more Classes of
"Subordinate Securities," which are subordinated in right and priority to the
extent described in the related Prospectus Supplement to payment of principal
and interest, and may be allocated losses and shortfalls prior to the allocation
thereof to all other Classes of Securities of such Series (the "Senior
Securities"). Securities of a Series will be subject to redemption or repurchase
only under the circumstances and according to the priorities described herein
and in the related Prospectus Supplement.
Each Series will be secured by or offer a beneficial interest in one or more
types of mortgage assets ("Mortgage Assets") and other assets, including any
reserve funds established with respect to such Series, insurance policies or
other enhancement described in the related Prospectus Supplement. The Mortgage
Assets may consist of a pool of multifamily or commercial mortgage loans or
participation interests therein (collectively, "Mortgage Loans") and may include
FHA Loans. Mortgage Assets may also consist of mortgage participations or
pass-through certificates or collateralized mortgage obligations ("Private
Mortgage-Backed Securities") issued with respect to or secured by a pool of
Mortgage Loans. The Private Mortgage-Backed Securities and Mortgage Loans
securing a Series will not be guaranteed or insured by any agency or
instrumentality of the United States Government unless otherwise stated in the
related Prospectus Supplement. Some Mortgage Loans comprising or underlying the
Mortgage Assets may be delinquent or non-performing as specified in the related
Prospectus Supplement. The Mortgage Assets securing a Series or comprising the
Trust Fund may consist of a single Mortgage Loan or obligations of a single
obligor or related obligors as specified in the related Prospectus Supplement.
The Mortgage Loans underlying or comprising the Mortgage Assets may be
originated by or acquired from an affiliate of the Issuer and an affiliate of
the Issuer may be an obligor with respect to any such Mortgage Loans. See
"SECURITY FOR THE BONDS AND CERTIFICATES."
Bonds of a Series constitute non-recourse obligations of the Issuer, and
Certificates of a Series evidence an interest in the related Trust Fund only.
Neither the Bonds or Certificates of a Series are insured or guaranteed by any
governmental agency or instrumentality, by any person or entity affiliated with
the Company or Issuer, or, unless otherwise specified in the related Prospectus
Supplement, by any other person or entity. The Issuer has no significant assets
other than the Mortgage Assets and certain other assets pledged to secure the
Bonds or in which the Certificates represent a beneficial interest. See "RISK
FACTORS."
An election may be made, with respect to any Series of Securities, to treat
all or a specified portion of the assets securing such Series or comprising the
Trust Fund as a "real estate mortgage investment conduit" (a "REMIC"), or an
election may be made to treat the arrangement by which a Series of Securities is
issued as a REMIC. If such an election is made, each Class of Securities of a
Series will be either Regular Interest or Residual Interest, as specified in the
related Prospectus Supplement. See "FEDERAL INCOME TAX CONSIDERATIONS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Securities offered by this Prospectus and by the related Prospectus
Supplement are offered by Lehman Brothers and the other underwriters, if any,
subject to prior sale, to withdrawal, cancellation or modification of the offer
without notice, to delivery to and acceptance by Lehman Brothers and the other
underwriters, if any, and certain further conditions. Retain this Prospectus for
future reference. This Prospectus may not be used to consummate sales of the
securities offered hereby unless accompanied by a Prospectus Supplement.
LEHMAN BROTHERS
_____ __, ____
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PAGE
-----------
PROSPECTUS SUPPLEMENT..................................................................................... 5
ADDITIONAL INFORMATION.................................................................................... 5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE........................................................... 6
SUMMARY OF TERMS.......................................................................................... 7
RISK FACTORS.............................................................................................. 25
DESCRIPTION OF THE SECURITIES............................................................................. 31
General............................................................................................... 31
The Bonds--General.................................................................................... 31
The Certificates--General............................................................................. 32
Bearer Securities and Registered Securities........................................................... 33
Book-Entry Registration............................................................................... 34
Valuation of Mortgage Assets.......................................................................... 35
Payments or Distributions of Interest................................................................. 36
Payments or Distributions of Principal................................................................ 37
Special Redemption.................................................................................... 38
Optional Redemption................................................................................... 39
Mandatory Redemption.................................................................................. 39
Optional Termination.................................................................................. 39
Optional Repurchase of Certificates................................................................... 40
Other Repurchases..................................................................................... 40
YIELD AND PREPAYMENT CONSIDERATIONS....................................................................... 40
Timing of Payment or Distribution of Interest and Principal........................................... 40
Principal Prepayments................................................................................. 40
Prepayments and Weighted Average Life................................................................. 41
Other Factors Affecting Weighted Average Life......................................................... 42
SECURITY FOR THE BONDS AND CERTIFICATES................................................................... 43
General............................................................................................... 43
Mortgage Loans........................................................................................ 44
Private Mortgage-Backed Securities.................................................................... 48
Substitution of Mortgage Assets....................................................................... 50
Collection Account.................................................................................... 50
Other Funds or Accounts............................................................................... 51
Investment of Funds................................................................................... 51
Guaranteed Investment Contract........................................................................ 51
Enhancement........................................................................................... 51
SERVICING OF MORTGAGE LOANS............................................................................... 52
General............................................................................................... 52
Collection Procedures................................................................................. 52
Payments on Mortgage Loans; Deposits to Custodial Accounts............................................ 53
Advances.............................................................................................. 53
Maintenance of Insurance Policies and Other Servicing Procedures...................................... 54
Enforcement of Due-On-Sale Clauses.................................................................... 55
Modification; Waivers................................................................................. 55
Servicing Compensation and Payment of Expenses........................................................ 55
Evidence as to Compliance............................................................................. 55
Certain Matters Regarding the Master Servicer and Special Servicer.................................... 56
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
PAGE
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ENHANCEMENT............................................................................................... 56
General............................................................................................... 56
Subordinate Securities................................................................................ 57
Cross-Support Features................................................................................ 58
Insurance on the Mortgage Loans....................................................................... 58
Letter of Credit...................................................................................... 58
Bond Guarantee Insurance.............................................................................. 58
Reserve Funds......................................................................................... 59
DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS............................................................ 59
General............................................................................................... 59
Hazard Insurance on the Mortgage Loans................................................................ 60
FHA Insurance......................................................................................... 60
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS................................................................... 60
Mortgages............................................................................................. 61
Interest in Real Property............................................................................. 61
Junior Mortgages; Rights of Senior Mortgages or Beneficiaries......................................... 61
Foreclosure of Mortgage............................................................................... 63
Leasehold Risks....................................................................................... 65
Rights of Redemption.................................................................................. 65
Environmental Matters................................................................................. 66
Certain Laws and Regulations.......................................................................... 68
Leases and Rents...................................................................................... 68
Personalty............................................................................................ 68
Anti-Deficiency Legislation and Other Limitations on Lenders.......................................... 69
Federal Bankruptcy and other Loans affecting Creditors' Rights........................................ 69
Due-on-Sale Clauses in Mortgage Loans................................................................. 71
Enforceability of Prepayment and Late Payment Fees.................................................... 71
Equitable Limitations on Remedies..................................................................... 72
Applicability of Usury Laws........................................................................... 72
Alternative Mortgage Instruments...................................................................... 72
Secondary Financing; Due-on-Encumbrance Provisions.................................................... 73
Americans with Disabilities Act....................................................................... 73
Soldiers' and Sailors' Civil Relief Act of 1940....................................................... 74
Forfeitures in Drug and RICO Proceedings.............................................................. 74
THE INDENTURE............................................................................................. 74
Certain Covenants..................................................................................... 74
Modification of Indenture............................................................................. 75
Events of Default..................................................................................... 76
Authentication and Delivery of Bonds.................................................................. 78
Satisfaction and Discharge of the Indenture........................................................... 78
Issuer's Annual Compliance Statement.................................................................. 78
List of Bondholders................................................................................... 78
Meetings of Bondholders............................................................................... 78
Fiscal Year........................................................................................... 79
Trustee's Annual Report............................................................................... 79
The Trustee........................................................................................... 79
THE TRUST AGREEMENT....................................................................................... 79
Assignment of Mortgage Assets......................................................................... 79
Repurchase of Non-Conforming Loans.................................................................... 80
Reports to Certificateholders......................................................................... 81
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
PAGE
-----------
Event of Default...................................................................................... 82
Rights Upon Event of Default.......................................................................... 82
The Trustee........................................................................................... 83
Duties of the Trustee................................................................................. 83
Resignation of Trustee................................................................................ 84
Amendment of Trust Agreement.......................................................................... 84
Voting Rights......................................................................................... 85
List of Certificateholders............................................................................ 85
REMIC Administrator................................................................................... 85
Termination........................................................................................... 85
THE ISSUER................................................................................................ 86
The Company........................................................................................... 86
Owner Trust........................................................................................... 86
Administrator......................................................................................... 86
USE OF PROCEEDS........................................................................................... 87
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES.............................................................. 87
FEDERAL INCOME TAX CONSIDERATIONS......................................................................... 88
General............................................................................................... 88
Characterization of Securities........................................................................ 88
Taxation of Regular Interest Securities............................................................... 89
Sale or Exchange of Regular Interest Securities....................................................... 94
REMIC Expenses........................................................................................ 95
Taxation of the REMIC................................................................................. 95
Taxation of Holders of Residual Interest Securities................................................... 97
Excess Inclusion Income............................................................................... 98
Restrictions on Ownership and Transfer of Residual Interest Securities................................ 98
Administrative Matters................................................................................ 99
Tax Status as a Grantor Trust......................................................................... 99
Miscellaneous Tax Aspects............................................................................. 103
Tax Treatment of Foreign Investors.................................................................... 103
STATE AND LOCAL TAX CONSIDERATIONS........................................................................ 104
ERISA CONSIDERATIONS...................................................................................... 104
LEGAL INVESTMENT.......................................................................................... 107
PLAN OF DISTRIBUTION...................................................................................... 109
LEGAL MATTERS............................................................................................. 110
GLOSSARY.................................................................................................. 111
</TABLE>
4
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series to be offered thereby and
hereby will, among other things, set forth with respect to such Series: (a)
whether such Securities are Bonds or Certificates, (b) the initial aggregate
principal amount, the Bond Interest Rate or Certificate Interest Rate (or method
for determining it) and authorized denominations of each Class of such Series;
(c) certain information concerning the Primary Assets securing such Series or
assets comprising the Trust Fund, including the principal amount, type and
characteristics of the Primary Assets securing such Bonds or assets comprising
the Trust Fund on the date of issue, and, if applicable, the amount of any
Reserve Funds for such Series; (d) in the case of Mortgage Assets consisting in
whole or in part of Private Mortgage-Backed Securities, information concerning
the issuer thereof or sponsor thereof, the PMBS Trustee, the Master Servicer, if
any, and the Underlying Collateral; (d) the circumstances, if any, under which
the Securities of such Series are subject to redemption prior to maturity or
repurchase prior to the Final Scheduled Distribution Date; (e) the Stated
Maturity of each Class of Bonds or Final Scheduled Distribution Date of the
Certificates; (f) the method used to calculate the aggregate amount of principal
available and required to be applied to the Securities of such Series on each
Payment Date or Distribution Date, as applicable, the timing of the application
of principal and the order of priority of the application of such principal to
the respective classes and the allocation of the principal to be so applied; (g)
the extent of subordination of any Subordinate Securities; (h) the identity of
each Class of Compound Interest Securities, Variable Interest Securities,
Planned Amortization Class Securities, Subordinate Securities, Individual
Investor Securities, Zero Coupon Securities, Principal Only Securities, Interest
Only Securities and Participating Securities included in such Series, if any, or
such other type of Class of Securities; (i) the principal amount of each Class
of such Series that would be outstanding on specified Payment Dates or
Distribution Dates, if the Mortgage Loans underlying or comprising the Mortgage
Assets pledged as security for such Series or comprising the Trust Fund were
prepaid at various assumed rates; (j) the Payment Dates or Distribution Dates,
as applicable for the respective Classes; (k) the Assumed Reinvestment Rate, if
any, and (if applicable) the percentage of Excess Cash Flow to be applied to
payments of principal of the Series; (l) relevant financial information with
respect to the Mortgagor(s) and the Mortgaged Property underlying the Mortgage
Assets, if applicable; (m) information with respect to any required Insurance
Policies relating to any Mortgage Loans comprising Mortgage Assets or Underlying
Collateral; (n) additional information with respect to any Enhancement,
Guaranteed Investment Contract or other agreement relating to the Series; (o)
the plan of distribution of such Series; and (p) whether the Securities are to
be issuable in registered form or bearer form or both, and if bearer securities
are issued, whether bearer securities may be exchanged for registered securities
and the circumstances and places for such exchange, if permitted.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Securities. This Prospectus, which forms a part of
the Registration Statement, omits certain information contained in such
Registration Statement pursuant to the Rules and Regulations of the Commission.
The Registration Statement and the exhibits thereto can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at certain of its Regional Offices
located as follows: Chicago Regional Office, Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and New York
Regional Office, 75 Park Place, 14th Floor, New York, New York 10007. Copies of
such material can also be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Issuer and Company do not intend to send any financial reports to holders of
Securities.
5
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Securities offered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any and all of the documents incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to the office of the Secretary, Structured Asset Securities
Corporation, 200 Vesey Street, New York, New York 10285, telephone number (212)
526-5594.
6
<PAGE>
SUMMARY OF TERMS
The following is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and in the Prospectus
Supplement with respect to the Series offered thereby and to the Trust Indenture
(the "Trust Indenture") or Trust Agreement (the "Trust Agreement"), as
applicable, and the supplemental or terms indenture or agreement with respect to
such Series (the "Series Supplement") between the Company or a trust established
by the Company and LaSalle National Bank, a national banking association, or
Marine Midland Bank, N.A., a national banking association (or another bank or
trust company qualified under the TIA and named in the Prospectus Supplement for
the related Series), as trustee (the "Trustee") or a Trust and the Trustee
(collectively, the Trust Indenture and any Series Supplement relating to Bonds
are sometimes referred to as the "Indenture," and the Trust Agreement and any
Series Supplement relating to Certificates are sometimes referred to as the
"Trust Agreement").
<TABLE>
<S> <C>
SECURITIES OFFERED
A. THE BONDS............... Collateralized Mortgage Obligations (the "Bonds"). The Bonds
may be issued from time to time in separately secured Series
pursuant to the Indenture and a related Series Supplement.
Each Series will consist of one or more Classes, one or
more of which may be Classes of Compound Interest
Securities, Planned Amortization Class ("PAC") Securities,
Variable Interest Securities, Zero Coupon Securities,
Principal Only Securities, Interest Only Securities,
Participating Securities, Senior Securities or Subordinate
Securities. Each Class may differ in, among other things,
the amounts allocated to and the priority of principal and
interest payments, maturity date, Payment Dates and Bond
Interest Rate. Additionally, one or more Classes may
consist of Subordinate Securities which are subordinated
to other Classes of Bonds with respect to the right to
receive payments of principal, interest, or both, and may
be allocated losses and shortfalls prior to the allocation
thereof to other Classes of Bonds under the circumstances
and in such amounts as described herein and in the related
Prospectus Supplement. Unless otherwise specified in the
related Prospectus Supplement, the Bonds of each Class
will be issued in fully registered form in the minimum
denominations specified in the related Prospectus Sup-
plement. If so specified in the related Prospectus
Supplement, the Bonds or certain Classes of such Bonds
offered thereby may be available in book-entry form only.
The Bonds may be issued in registered form or bearer form
with coupons attached. Bonds in bearer form will be
offered only outside the United States to non- United
States persons and to offices located outside the United
States of certain United States financial institutions.
See "DESCRIPTION OF THE SECURITIES--The Bonds--General"
and "ENHANCEMENT--Subordinate Securities."
B. THE CERTIFICATES........ Mortgage-Backed Certificates (the "Certificates"). The
Certificates are issuable from time to time in separate
Series pursuant to separate Trust Agreements and a related
Series Supplement. Each Certificate of a Series will
evidence a beneficial ownership interest in the Trust Fund
for such Series. Each Series of Certificates will consist
of one or more Classes of Certificates, one or more of
which may be Classes of Compound Interest Securities, PAC
Securities, Variable Interest Securities, Zero Coupon
Securities, Principal Only
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Securities, Interest Only Securities, Participating
Securities, Subordinate Securities or Senior Securities.
If a Series consists of multiple Classes, the respective
Classes may differ with respect to the amount, percentage
and timing of distributions of principal, interest or
both. Additionally, one or more Classes may consist of
Subordinate Securities which are subordinated to other
Classes of Certificates with respect to the right to
receive distributions of principal, interest, or both
under the circumstances and in such amounts as described
herein and in the related Prospectus Supplement. The
Certificates will be issuable in fully registered form in
the authorized minimum denominations and multiples thereof
specified in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement, the
Certificates or certain Classes of such Certificates
offered thereby may be available in book-entry form only.
ISSUER....................... The Issuer with respect to a Series of Bonds will be
Structured Asset Securities Corporation (the "Company") or
an owner trust established by it ("Owner Trust") for the
purpose of issuing one or more Series of Bonds. Each such
Owner Trust will be created by an agreement (the "Deposit
Trust Agreement") between the Company, acting as
depositor, and a bank, trust company or other fiduciary,
acting as owner trustee (the "Owner Trustee"). The Bonds
will be non-recourse obligations of the Issuer. The Series
Supplement for a particular Series of Bonds may permit the
assets pledged to secure the related Bonds to be
transferred by the Issuer to a trust or other limited
purpose affiliate of the Company, subject to the
obligations of the Bonds of such Series, thereby relieving
the Issuer of its obligations with respect to such Bonds.
The Issuer with respect to a Series of Certificates will be
a trust fund (the "Trust Fund") established by the Company
for the purpose of issuing one or more Series of
Certificates. Such Trust Fund will be created by an
agreement (the "Trust Agreement") between the Company,
acting as depositor, and a bank, trust company or other
fiduciary, acting as trustee (the "Trustee").
The Issuer will not have, nor be expected in the future to
have, any significant assets available for payments on a
Series of Bonds or distributions on a Series of
Certificates, other than the assets pledged as security
for a specific Series of Bonds issued by it, or assets
deposited into a Trust Fund, the Certificates issued by
such Trust Fund as Issuer representing a beneficial
ownership interest in such assets. Unless otherwise
specified in the related Prospectus Supplement, (i) each
Series of Bonds will be separately secured and no Series
of Bonds will have any claim against or security interest
in the assets pledged to secure any other Series, and (ii)
no Series of Certificates will have a beneficial ownership
interest in any other Series.
The Company, a Delaware corporation, is a limited-purpose
finance subsidiary organized for the purpose of issuing
one or more Series and other similar obligations directly
or through one or more
</TABLE>
8
<PAGE>
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Trust Funds established by it. Although all of the
outstanding capital stock of the Company is owned by
Lehman Commercial Paper Inc. ("LCPI"), a wholly owned
subsidiary of Lehman Brothers Inc. ("Lehman Brothers"),
neither LCPI nor Lehman Brothers nor any of their
affiliates has guaranteed or is otherwise obligated with
respect to any Series, except with respect to any
representations and warranties given by any such affiliate
as originator, seller or servicer of Mortgage Assets
relating to a Series.
The Company's principal office is located at 200 Vesey
Street, New York, New York 10285 and its telephone number
is (212) 526-5594. See "RISK FACTORS" and "THE ISSUER."
INTEREST PAYMENTS ON
THE BONDS.................. Each Class of a Series of Bonds (other than a Class of Zero
Coupon Securities or Principal Only Securities) will accrue
interest at the rate set forth in (or, in the case of
Variable Interest Securities, as determined by the method
described in) the related Prospectus Supplement (the "Bond
Interest Rate"). Interest on all Bonds which bear
interest, other than Compound Interest Securities, will be
due and payable on the Payment Dates specified in the
related Prospectus Supplement. However, failure to pay
interest on a current basis may not necessarily be an
Event of Default with respect to a particular Series of
Bonds. Payments of interest on a Class of Variable
Interest Securities will be made on the dates set forth in
the related Prospectus Supplement (the "Variable Interest
Payment Dates"). Interest on any Class of Compound
Interest Securities will not be paid currently, but will
accrue and the amount of interest so accrued will be added
to the principal thereof on each Payment Date through the
Accrual Termination Date specified in the related
Prospectus Supplement. Following the applicable Accrual
Termination Date, interest payments on such Bonds will be
made on the Compound Value thereof. Interest Only Bonds
may be assigned a "Notional Amount" which is used solely
for convenience in expressing the calculation of interest
and for certain other purposes. Unless otherwise specified
in the related Prospectus Supplement, the Notional Amount
will be determined at the time of issuance of such Bonds
based on the principal balances or Bond Value of the
Mortgage Loans attributable to the Bonds of a Series
entitled to receive principal, and will be adjusted
monthly over the life of the Bonds based upon adjustments
to the Bond Value of such Mortgage Loans. Reference to the
Notional Amount is solely for convenience in certain
calculations and does not represent the right to receive
any distributions allocable to principal. Zero Coupon
Securities and Principal Only Securities will not accrue,
and will not be entitled to receive, any interest.
Each payment of interest on each Class of Bonds (or addition
to principal of a Class of Compound Interest Securities)
on a Payment Date will include all interest accrued during
the Interest Accrual Period specified in the related
Prospectus Supplement preceding such Payment Date. If the
Interest Accrual Period for a Series ends on a date other
than a Payment Date for such Series, the yield
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realized by the Holders of such Bonds may be lower than
the yield that would result if the Interest Accrual Period
ended on such Payment Date. Additionally, if so specified
in the related Prospectus Supplement, interest accrued for
an Interest Accrual Period for one or more Classes may be
calculated on the assumption that principal payments (and
additions to principal of the Bonds), and allocations of
losses on the Mortgage Assets (if so specified in the
related Prospectus Supplement), are made on the first day
of the preceding Interest Accrual Period and not on the
Payment Date for such preceding Interest Accrual Period
when actually made or added. Such method would produce a
lower effective yield than if interest were calculated on
the basis of the actual principal amount outstanding. See
"YIELD AND PREPAYMENT CONSIDERATIONS."
With respect to any Class of Variable Interest Securities,
the related Prospectus Supplement will set forth: (a) the
initial Bond Interest Rate (or the manner of determining
the initial Bond Interest Rate); (b) the formula, index or
other method by which the Bond Interest Rate will be
determined from time to time; (c) the periodic intervals
at which such determination will be made; (d) the interest
rate cap (the "Maximum Variable Interest Rate") or the
interest rate floor (the "Minimum Variable Interest Rate")
on the Bond Interest Rate, if any, for such Variable
Interest Securities; and (e) the Variable Interest Period
and any other terms relevant to such Class of Bonds. See
"DESCRIPTION OF THE SECURITIES-- Payments or Distributions
of Interest."
INTEREST DISTRIBUTIONS ON THE
CERTIFICATES............... Interest distributions on the Certificates of a Series
(other than Certificates that are Zero Coupon Securities or
Principal Only Securities) will be made from amounts
available therefor on each Distribution Date at the
applicable rate specified in (or determined in the manner
set forth in) the related Prospectus Supplement. The
interest rate on Certificates of a Series may be variable
or change with changes in the mortgage rates or annual
percentage rates of the Mortgage Assets included in the
related Trust Fund and/or as prepayments occur with
respect to such Mortgage Assets. Zero Coupon Securities
and Principal Only Securities may not be entitled to
receive any interest distributions or may be entitled to
receive only nominal interest distributions. Compound
Interest Securities will not receive distributions of
interest but accrued interest will be added to the
principal balance thereof on each Distribution Date until
the Accrual Termination Date. Following the Accrual
Termination Date, interest distributions with respect to
such Compound Interest Securities will be made on the
basis of their Compound Value.
PRINCIPAL PAYMENTS ON THE
BONDS...................... All payments of principal of a Series will be allocated
among the Classes of such Series in the order and amounts,
and will be applied either on a pro rata or a random lot
basis among all Bonds of any such Class, as specified in
the related Prospectus Supplement.
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Except with respect to Zero Coupon Securities, Compound
Interest Securities and Interest Only Securities, unless
specified otherwise in the related Prospectus Supplement,
on each Payment Date principal payments will be made on
the Bonds of each Series in an amount (the "Principal
Payment Amount") as determined by a formula specified in
the related Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, if the
Series of Bonds has a Class of Compound Interest
Securities, additional principal payments on the Bonds
will be made on each Payment Date in an amount equal to
the interest accrued, but not then payable, on such Bonds
for the related Interest Accrual Period. If the Series of
Bonds has a Class of PAC Securities, such PAC Securities
will have certain priorities of payment with respect to
principal to the extent of certain targeted amounts with
respect to each Payment Date, as set forth in the related
Prospectus Supplement.
PRINCIPAL DISTRIBUTIONS ON
THE CERTIFICATES........... Principal distributions on the Certificates of a Series will
be made from amounts available therefor on each Distribution
Date, unless otherwise specified in the related Prospectus
Supplement, in an aggregate amount determined as set forth
in the related Prospectus Supplement and will be allocated
among the respective Classes of a Series of Certificates
at the times, in the manner and in the priority (which
may, in certain cases, include allocation by random lot)
set forth in the related Prospectus Supplement.
Except with respect to Zero Coupon Securities, Compound
Interest Securities and Interest Only Securities, unless
specified otherwise in the related Prospectus Supplement,
on each Distribution Date principal payments will be made
on the Certificates of each Series in the Principal
Payment Amount as determined by a formula specified in the
related Prospectus Supplement. Unless otherwise specified
in the related Prospectus Supplement, if the Series of
Certificates has a Class of Compound Interest Securities,
additional principal payments on the Certificates will be
made on each Distribution Date in an amount equal to the
interest accrued, but not then payable, on such
Certificates for the related Interest Accrual Period. If
the Series of Certificates has a Class of PAC Securities,
such PAC Securities will have certain priorities of
distribution with respect to principal to the extent of
certain targeted amounts with respect to each Distribution
Date, as set forth in the related Prospectus Supplement.
ALLOCATION OF LOSSES......... If so specified in the related Prospectus Supplement, on any
Payment Date or Distribution Date, as applicable, on which
the principal balance of the Mortgage Assets is reduced
due to losses on the Mortgage Assets, (i) the amount of
such losses will be allocated first, to reduce the
Aggregate Outstanding Principal of the Subordinate
Securities or other subordination, if any, and, thereaf-
ter, to reduce the Aggregate Outstanding Principal of the
remaining Securities in the priority and manner specified
in such Prospectus Supplement until the Aggregate
Outstanding Principal of each
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Class of Securities so specified has been reduced to zero
or paid in full, thus reducing the amount of principal
payable or distributable on each such Class of Securities
or (ii) such losses may be allocated in any other manner
set forth in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement,
such reductions of principal of a Class or Classes of
Securities shall be allocated to the Holders of the
Securities of such Class or Classes pro rata in the
proportion which the outstanding principal of each Bond or
Certificate of such Class or Classes bears to the
Aggregate Outstanding Principal of all Securities of such
Class. See "DESCRIPTION OF THE SECURITIES--Payments or
Distributions of Principal."
STATED MATURITY OF THE
BONDS...................... The "Stated Maturity" for each Class of a Series is the date
specified in the related Prospectus Supplement no later than
which all the Bonds of such Class will be fully paid,
calculated on the basis of the assumptions set forth in
the related Prospectus Supplement. However, the actual
maturity of the Bonds is likely to occur earlier and may
occur significantly earlier than their Stated Maturity.
The rate of prepayments on the Mortgage Assets pledged as
security for any Series will depend on a variety of
factors, including the characteristics of the Mortgage
Loans underlying or comprising the Mortgage Assets and the
prevailing level of interest rates from time to time, as
well as on a variety of economic, demographic, geographic,
tax, legal and other factors. No assurance can be given as
to the actual prepayment experience of such Mortgage
Assets. See "YIELD AND PREPAYMENT CONSIDERATIONS."
FINAL SCHEDULED DISTRIBUTION
DATE OF THE CERTIFICATES... The Final Scheduled Distribution Date for each Class of
Certificates of a Series is the date after which no
Certificates of such Class will remain outstanding,
assuming timely payments or distributions are made on the
Mortgage Assets in the related Trust Fund in accordance
with their terms. The Final Scheduled Distribution Date of
a Class may equal the maturity date of the Mortgage Asset
in the related Trust Fund which has the latest stated
maturity or will be determined as described herein and in
the related Prospectus Supplement.
The actual maturity date of the Certificates of a Series
will depend primarily upon the level of prepayments with
respect to the Mortgage Loans comprising the Mortgage
Assets in the related Trust Fund. The actual maturity of
any Certificate is likely to occur earlier and may occur
substantially earlier than its Final Scheduled Distri-
bution Date as a result of the application of prepayments
to the reduction of the principal balances of the
Certificates. The rate of prepayments on the Mortgage
Loans comprising Mortgage Assets in the Trust Fund for a
Series will depend on a variety of factors, including
certain characteristics of such Mortgage Loans and the
prevailing level of interest rates from time to time, as
well as on a variety of economic, demographic, tax, legal,
social and other factors. No assurance can be given as to
the actual prepayment experience with respect to a Series.
See "RISK FACTORS" and "YIELD
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AND PREPAYMENT CONSIDERATIONS--Prepayments and Weighted
Average" herein.
REDEMPTION OF BONDS.......... The Bonds will be redeemable only as follows:
A. SPECIAL REDEMPTION
If specified in the related Prospectus Supplement, Bonds of
a Series will be subject to special redemption, in whole
or in part, if, as a result of principal payments on the
Mortgage Assets securing such Series or low reinvestment
yields or both, the Trustee determines (based on
assumptions, if any, specified in the Indenture and after
giving effect to the amounts, if any, available to be
withdrawn from any Reserve Fund for such Series) that the
amount anticipated to be available in the Collection
Account for such Series on the date specified in the
related Prospectus Supplement will be insufficient to meet
debt service requirements on any portion of the Bonds. Any
such redemption would be limited to the aggregate amount
of all scheduled principal payments and prepayments on the
Mortgage Assets received since the last Payment Date or
Special Redemption Date, whichever is later, and may
shorten the maturity of any Bond so redeemed by no more
than the period between the date of such special
redemption and the next Payment Date. Unless otherwise
specified in the related Prospectus Supplement, special
redemptions of Bonds of a Series will be made in the same
priority and manner as principal payments are made on a
Payment Date. Bonds subject to special redemption shall be
redeemed on the applicable Special Redemption Date at 100%
of their unpaid principal amount plus accrued interest on
such principal to the date specified in the related
Prospectus Supplement. To the extent described in the
related Prospectus Supplement, Bonds of a Series may be
subject to special redemption in whole or in part
following certain defaults under an Enhancement Agreement
or other agreement, and in certain other events at the
Redemption Price. See "DESCRIPTION OF THE
SECURITIES--Special Redemption."
B. OPTIONAL REDEMPTION
To the extent specified in the related Prospectus
Supplement, one or more Classes of any Series may be
redeemed in whole, or in part, at, unless otherwise
specified in the related Prospectus Supplement, the
Issuer's option on any Payment Date on or after the date
specified in the related Prospectus Supplement and at the
Redemption Price. See "DESCRIPTION OF THE SECURITIES--
Optional Redemption."
C. MANDATORY REDEMPTION
If specified in the related Prospectus Supplement for a
Series, the Bonds of one or more Classes ("Individual
Investor Bonds") may be subject to mandatory redemptions
by lot or by such other method set forth in the Prospectus
Supplement. The related Prospectus Supplement relating to
a Series of Bonds with Individual Investor Securities will
set forth Class priorities, if any, and conditions with
respect to redemptions. Individual Investor Securities to
be redeemed shall be selected by random lot in $1,000
units, after
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making all permitted redemptions requested by holders of
Individual Investor Securities or by such other method set
forth in the Prospectus Supplement. See "DESCRIPTION OF
THE SECURITIES--Mandatory Redemption."
OPTIONAL TERMINATION OF TRUST
FUND....................... If so specified in the related Prospectus Supplement, the
Company, as depositor of the Primary Assets into the Trust
Fund (acting in such capacity, and in such capacity in
respect of an Owner Trust, the "Depositor"), the Servicer,
or such other entity that is specified in the related
Prospectus Supplement, may, at its option, cause an early
termination of the related Trust Fund by repurchasing all
of the Primary Assets remaining in the Trust Fund on or
after a specified date, or on or after such time as the
aggregate principal balance of the Certificates of any
Class of the Series is less than the amount or percentage
specified in the related Prospectus Supple-ment. See
"DESCRIPTION OF THE SECURITIES--Optional Termination."
REPURCHASES OF
CERTIFICATES............... If so specified in the related Prospectus Supplement, one or
more classes of the Certificates of such Series may be
repurchased, in whole or in part, at the option of the
Depositor, at such times and under the circumstances
specified in such Prospectus Supplement and at the
repurchase price set forth therein. See "DESCRIPTION OF
THE SECURITIES--Optional Repurchase of Certificates"
herein.
If so specified in the related Prospectus Supplement, any
Class of the Certificates may be subject to repurchase at
the request of the holders of such Class or to mandatory
repurchase by the Depositor (including by random lot). See
"DESCRIPTION OF THE SECURITIES--Other Repurchases" herein.
SECURITY FOR THE BONDS,
OR THE TRUST FUND FOR THE
CERTIFICATES............... Each Series of Bonds will be separately secured by Primary
Assets consisting of one or more of the assets described
below, as specified in the Prospectus Supplement. The
Trust Fund for a Series of Certificates will consist of
one or more of the assets described below, as specified in
the related Prospectus Supplement.
A. MORTGAGE ASSETS
The Primary Assets for a Series may consist of any
combination of the following, to the extent and as
specified in the related Prospectus Supplement:
(1) Mortgage Loans
Mortgage Assets for a Series may consist, in whole or in
part, of Mortgage Loans, including participation interests
therein owned by the Issuer. Some Mortgage Loans or
Mortgage Loans underlying such participation interests may
be delinquent or non-performing as specified in the
related Prospectus Supplement. The Mortgage Assets may
consist of a single Mortgage Loan or obligations of a
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single obligor or related obligors as specified in the
related Prospectus Supplement. Mortgage Loans comprising
or underlying the Mortgage Assets may be originated by or
acquired from an affiliate of the Issuer and an affiliate
of the Issuer may be an obligor with respect to any such
Mortgage Loan. Payments on such Mortgage Loans will be
collected by the Trustee or by the Servicer or Master
Servicer with respect to a Series and remitted to the
Trustee as described in the related Prospectus Supplement
and will be available in the priority described in the
related Prospectus Supplement to make payments on the
Bonds of that Series. To the extent specified in the
related Prospectus Supplement, Mortgage Loans owned by the
Issuer will be serviced by Servicers, and, if applicable,
a Master Servicer, either of which may be affiliates or
shareholders of the Issuer.
Mortgaged Properties securing Mortgage Loans may consist of
multifamily residential rental property or cooperatively
owned multifamily property consisting of five or more
dwelling units, mixed multifamily/commercial property or
commercial property. Mortgage Loans secured by Multifamily
Property may consist of FHA Loans. Mortgage Loans may, as
specified in the related Prospectus Supplement, have
various payment characteristics and may consist of fixed
rate loans or ARMs or Mortgage Loans having balloon or
other irregular payment features. Unless otherwise
specified in the related Prospectus Supplement, the
Mortgage Loans will be secured by first mortgages or deeds
of trust or other similar security instruments creating a
first lien on Mortgaged Property. If so specified in the
related Prospectus Supplement, Mortgage Loans relating to
real estate projects under construction may be included in
the Mortgage Assets for a Series. The related Prospectus
Supplement will describe certain characteristics of the
Mortgage Loans comprising the Mortgage Assets for a
Series, including, without limitation, (a) the aggregate
unpaid principal balance of the Mortgage Loans comprising
the Mortgage Assets; (b) the weighted average Mortgage
Rate on the Mortgage Loans, and, in the case of adjustable
Mortgage Rates, the weighted average of the current
adjustable Mortgage Rates, the minimum and maximum
permitted adjustable Mortgage Rates, if any, and the
weighted average thereof; (c) the average outstanding
principal balance of the Mortgage Loans; (d) the weighted
average remaining scheduled term to maturity of the
Mortgage Loans and the range of remaining scheduled terms
to maturity; (e) the range of Loan-to-Value Ratios of the
Mortgage Loans; (f) the relative percentage (by principal
balance as of the Cut-off Date) of Mortgage Loans that are
ARMs, fixed interest rate, FHA Loans or other types of
Mortgage Loans; (g) any enhancement relating to the
Mortgage Assets; (h) the relative percentage (by principal
balance as of the Cut-Off Date) of Mortgage Loans that are
secured by Multifamily Property or Commercial Property;
(i) the geographic dispersion of Mortgaged Properties
securing the Mortgage Loans; and (j) the use or type of
each Mortgaged Property securing a Mortgage Loan.
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If permitted by applicable law, the Mortgage Pool may also
include Mortgaged Properties acquired by foreclosure or by
deed-in-lieu of foreclosure ("REO Property"). To the
extent specified in the related Prospectus Supplement, the
Servicer or the Master Servicer or the Special Servicer,
if any, may establish and maintain a trust account or
accounts to be used in connection with REO Properties and
other Mortgaged Properties being operated by it or on its
behalf on behalf of the Trust Estate, by the mortgagor as
debtor-in- possession or otherwise. See "SECURITY FOR THE
BONDS AND CERTIFICATES--Mortgage Loans" and "SERVICING OF
MORTGAGE LOANS--Maintenance of Insurance Policies and
Other Servicing Procedures--Presentation of Claims;
Realization Upon Defaulted Mortgage Loans."
(2) Private Mortgage-Backed Securities
Private Mortgage-Backed Securities may include (a) mortgage
participations or pass-through certificates representing
beneficial interests in certain Mortgage Loans, (b) debt
obligations interest payments on which may be tax-exempt
in whole or in part secured by mortgages or (c)
participations or other interests in any of the foregoing.
Although individual Mortgage Loans underlying a Private
Mortgage-Backed Security may be insured or guaranteed by
the United States or an agency or instrumentality thereof,
they need not be, and the Private Mortgage-Backed
Securities themselves will not be, so insured or
guaranteed. Unless otherwise specified in the Prospectus
Supplement relating to a Series, payments on the Private
Mortgage-Backed Securities will be distributed directly to
the Trustee (on behalf of the Trust Estate) as registered
owner of such Private Mortgage-Backed Securities. Unless
otherwise specified in the Prospectus Supplement relating
to a Series, if payments with respect to interest on the
underlying obligations are tax-exempt, such Prospectus
Supplement will disclose the relevant federal income tax
characteristics relating to the tax-exempt status of such
obligations.
The related Prospectus Supplement for a Series will specify,
to the extent applicable, (i) the aggregate approximate
principal amount and type of any Private Mortgage-Backed
Securities to be included in the Trust Estate or Trust
Fund for such Series; (ii) certain characteristics of the
Mortgage Loans, participations or other interests which
comprise the underlying assets for the Private Mortgage-
Backed Securities including (A) the payment features of
such Mortgage Loans, participations or other interests
(i.e., whether they are fixed interest rate or adjustable
rate and whether they provide for fixed level payments,
negative amortization, or other payment features), (B) the
approximate aggregate principal amount, if known, of the
underlying Mortgage Loans, participations or other
interests which are insured or guaranteed by a
governmental entity, (C) the servicing fee or range of
servicing fees with respect to the Mortgage Loans, and (D)
the stated maturities of the Mortgage Loans, partic-
ipations or other interests at origination; (iii) the
maximum original term-to-stated maturity of the Private
Mortgage-Backed Securities;
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(iv) the weighted average term-to-stated maturity of the
Private Mortgage-Backed Securities; (v) the pass-through
or bond rate or ranges thereof for the Private
Mortgage-Backed Securities or formula therefor; (vi) the
weighted average pass-through or certificate rate of the
Private Mortgage-Backed Securities or formula therefor;
(vii) the issuer of the Private Mortgage-Backed Securities
(the "PMBS Issuer"), the Servicer or Master Servicer of
the Private Mortgage-Backed Securities and the trustee of
the Private Mortgage-Backed Securities (the "PMBS
Trustee"); (viii) certain characteristics of credit
support, if any, such as reserve funds, insurance
policies, letters of credit, guarantees or
overcollateralization, relating to the Mortgage Loans
underlying the Private Mortgage-Backed Securities, or to
such Private Mortgage-Backed Securities themselves; (ix)
the terms on which underlying Mortgage Loans, partici-
pations or other interests for such Private
Mortgage-Backed Securities or the Private Mortgage-Backed
Securities themselves may, or are required to, be
repurchased prior to maturity; and (x) the terms on which
substitute Mortgage Loans, participations or other inter-
ests may be delivered to replace those initially deposited
with the PMBS Trustee.
(3) Determination of Asset Value
If provided in the applicable Prospectus Supplement, each
item of Mortgage Assets for a Series will be assigned an
Asset Value. Unless otherwise specified in the related
Prospectus Supplement, the aggregate of the Asset Values
of the Primary Assets securing a Series of Bonds or
comprising a Trust Fund will equal not less than the
original Aggregate Outstanding Principal of such Series.
The Asset Value of an item of Primary Assets securing any
Series of Bonds or comprising a Trust Fund is intended to
represent the principal amount of Securities of such
Series that, based on certain assumptions stated in the
related Series Supplement, can be supported by payments on
such item of Primary Assets, irrespective of prepayments
thereon, together with, depending on the type of Primary
Assets and method used to determine its Asset Value,
reinvestment earnings at the related Assumed Reinvestment
Rate, if any, and amounts in any Reserve Fund established
for that Series. In such a case, the related Prospectus
Supplement will set forth the method or methods and
related assumptions used to determine Asset Value, if such
method is used, for the Primary Assets securing the
related Series. See "DESCRIPTION OF THE SECURITIES--
Valuation of Mortgage Assets."
B. COLLECTION ACCOUNT
Unless otherwise provided in the related Prospectus
Supplement, all payments on the Primary Assets pledged as
security for a Series or comprising the assets of a Trust
Fund will be remitted to a Collection Account to be
established with the Trustee, or if the Trustee is not
also the Paying Agent, with the Paying Agent, for such
Series. Unless otherwise provided in the related
Prospectus Supplement, such payments, together with the
Reinvestment Income thereon, if any, the amount of cash,
if any, initially deposited in the Collection
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Account by the Issuer together with Reinvestment Income
thereon, if any, and any amounts withdrawn from any
Reserve Fund established for such Series, will be
available to make payments or distributions of principal
of and interest on such Series on the next Payment Date or
Distribution Date, as applicable. Any funds remaining in
the Collection Account for a Series immediately following
a Payment Date or Distribution Date, as applicable (unless
required to be deposited into one or more Reserve Funds,
as described below, or applied to pay certain expenses or
other payments provided for in the Indenture or Trust
Agreement, as applicable) will be promptly paid as
provided in the Indenture or Trust Agreement to the Issuer
or, in certain circumstances, to owners of residual
interests and, upon such payment, will be released from
the lien of the Indenture or Trust Agreement, as
applicable. See "SECURITY FOR THE BONDS AND
CERTIFICATES--Collection Account."
C. GUARANTEED INVESTMENT CONTRACTS AND OTHER AGREEMENTS
The Issuer may obtain and deliver to the Trustee Guaranteed
Investment Contracts pursuant to which moneys held in the
funds and accounts established for such Series will be
invested at a specified rate for the Series. The Issuer
may also obtain and deliver to the Trustee certain other
agreements such as interest rate swap agreements, interest
rate cap or floor agreements or similar agreements issued
by a bank, insurance company, savings bank, savings and
loan association or other entity which reduce the effects
of interest rate fluctuations on the Mortgage Assets or
the Securities. The principal terms of any such Guaranteed
Investment Contract or other agreement, including, without
limitation, provisions relating to the timing, manner and
amount of payments thereunder and provisions relating to
the termination thereof, will be described in the Prospec-
tus Supplement for the related Series. Additionally, the
related Prospectus Supplement will provide certain
information with respect to the issuer of such Guaranteed
Investment Contract or other agreement.
ENHANCEMENT.................. Enhancement in the form of reserve funds, subordination,
overcollateralization, insurance policies, letters of credit
or other types of credit support may be provided with
respect to the Mortgage Assets or with respect to one or
more Classes of Securities of a Series. If the Mortgage
Assets are divided into separate Mortgage Groups, each
securing or supporting a separate Class or Classes of a
Series, credit support may be provided by a cross-support
feature which requires that distributions be made with
respect to Securities secured by one Mortgage Group prior
to distributions to Subordinate Securities secured by
another Mortgage Group within the Trust Estate or Trust
Fund.
The type, characteristics and amount of enhancement will be
determined based on the characteristics of the Mortgage
Loans underlying or comprising the Mortgage Assets and
other factors and will be established on the basis of
requirements of each Rating Agency rating the Securities
of such Series. If so specified in the related
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Prospectus Supplement, any such enhancement may apply only
in the event of certain types of losses or delinquencies
and the protection against losses or delinquencies
provided by such enhancement will be limited. See
"ENHANCEMENT" and "RISK FACTORS" herein.
A. SUBORDINATE SECURITIES
A Series of Securities may include one or more Classes of
Subordinate Securities. The rights of holders of such
Subordinate Securities to receive distributions on any
Payment Date or Distribution Date, as applicable, will be
subordinate in right and priority to the rights of holders
of Senior Securities of the Series, but only to the extent
described in the related Prospectus Supplement. If so
specified in the related Prospectus Supplement,
subordination may apply only in the event of certain types
of losses not covered by other enhancement. Unless
otherwise specified in the related Prospectus Supplement,
such subordination will be in lieu of providing insurance
policies or other credit support with respect to losses
arising from such events. Unless otherwise specified in
the related Prospectus Supplement, the related Series
Supplement may require a trustee that is not the Trustee
to be appointed to act on behalf of holders of Subordinate
Securities.
The related Prospectus Supplement will set forth information
concerning the amount of subordination of a Class or
Classes of Subordinate Securities in a Series, the
circumstances in which such subordination will be
applicable, the manner, if any, in which the amount of
subordination will decrease over time, the manner of
funding any related Reserve Fund and the conditions under
which amounts in any related Reserve Fund will be used to
make distributions to holders of Senior Securities and/or
to holders of Subordinate Securities or be released from
the related Trust Estate or Trust Fund. If cash flows
otherwise distributable to holders of Subordinate
Securities secured by a Mortgage Group will be used as
credit support for Senior Securities secured by another
Mortgage Group within the Trust Estate or Trust Fund, the
related Prospectus Supplement will specify the manner and
conditions for applying such a cross-support feature. See
"ENHANCEMENT-- Subordinate Securities."
B. INSURANCE
If so specified in the related Prospectus Supplement,
certain insurance policies will be required to be
maintained with respect to the Mortgage Loans included in
the Trust Estate or Trust Fund for a Series. Such
insurance policies may include, but are not limited to, a
standard hazard insurance policy or, with respect to FHA
Loans, FHA Insurance. See "ENHANCEMENT" and "DESCRIPTION
OF INSURANCE ON THE MORTGAGE LOANS" herein. The Prospectus
Supplement for a Series will provide information con-
cerning any such insurance policies, including (a) the
types of coverage provided by each, (b) the amount of such
coverage and (c) conditions to payment under each. To the
extent described in
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the related Prospectus Supplement, certain insurance
policies to be maintained with respect to the Mortgage
Loans may be terminated, reduced or replaced following the
occurrence of certain events affecting the authority or
creditworthiness of the insurer. Additionally, such
insurance policies may be terminated, reduced or replaced
by the Servicer or Master Servicer, if any, provided that
no rating assigned to Securities of the related Series
offered hereby and by the related Prospectus Supplement is
adversely affected and such insurance policies may apply
only in the event of certain types of losses, all as set
forth in the related Prospectus Supplement.
C. LETTER OF CREDIT
If so specified in the related Prospectus Supplement, credit
support may be provided by one or more letters of credit.
A letter of credit may provide limited protection against
certain losses in addition to or in lieu of other credit
support. The issuer of the letter of credit (the "L/C
Bank") will be obligated to honor demands with respect to
such letter of credit, to the extent of the amount
available thereunder, to provide funds under the
circumstances and subject to such conditions as are
specified in the related Prospectus Supplement. The
liability of the L/C Bank under its letter of credit may
be reduced by the amount of unreimbursed payments
thereunder.
The maximum liability of an L/C Bank under its letter of
credit will be an amount equal to a percentage specified
in the related Prospectus Supplement of the initial
aggregate outstanding principal balance of the Mortgage
Loans in the Trust Estate or Trust Fund or one or more
Classes of Securities of the related Series (the "L/C
Percentage"). The maximum amount available at any time to
be paid under a letter of credit will be determined in the
manner specified therein and in the related Prospectus
Supplement. See "ENHANCEMENT--Letter of Credit."
D. BOND GUARANTEE INSURANCE
If so specified in the related Prospectus Supplement, credit
support for a Series may be provided by an insurance
policy (the "Bond Guarantee Insurance") issued by one or
more insurance companies. Such Bond Guarantee Insurance
may guarantee timely distributions of interest and full
distributions of principal on the basis of a schedule of
principal distributions set forth in or determined in the
manner specified in the related Prospectus Supplement. See
"ENHANCEMENT--Bond Guarantee Insurance."
E. RESERVE FUNDS
The Issuer may deposit in one or more reserve funds
(collectively, the "Reserve Funds") for any Series cash,
Eligible Investments, demand notes or a combination
thereof in the aggregate amount, if any, specified in the
related Prospectus Supplement. Any Reserve Funds for a
Series may also be funded over time through application of
a specified amount of cash flow, to the extent described
in the related Prospectus Supplement. Such a Reserve Fund
may be established to increase the likelihood of the
timely distributions on the Securities of such Series or
to reduce the likelihood of a special
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redemption with respect to any Series. Reserve Funds may
be established to provide protection against certain
losses or delinquencies in addition to or in lieu of other
credit support. Amounts on deposit in the Reserve Funds
for a Series, together with (unless otherwise specified in
the related Prospectus Supplement) the reinvestment income
thereon, if any, will be applied for the purposes, in the
manner and to the extent provided by the related
Prospectus Supplement.
On each Payment Date or Distribution Date, as applicable,
for a Series, all amounts on deposit in any Reserve Funds
for the Series in excess of the amounts required to be
maintained therein by the related Indenture or Trust
Agreement, as applicable, and specified in the related
Prospectus Supplement may be released from the Reserve
Funds and will not be available for future payments or
distributions on the Securities of such Series.
Additional information concerning any Reserve Funds,
including whether any such Reserve Fund is a part of the
Trust Estate or Trust Fund, the circumstances under which
moneys therein will be applied to make distributions to
Bondholders or Certificateholders, the balance required to
be maintained in such Reserve Funds, the manner in which
such required balance will decrease over time and the
manner of funding any such Reserve Fund, will be set forth
in the related Prospectus Supplement. See "ENHANCEMENT--
Reserve Funds."
F. OVERCOLLATERALIZATION
To the extent applicable and as specified in the related
Prospectus Supplement, a Series may be structured such
that the outstanding principal balances or Aggregate Asset
Value of the Mortgage Assets securing a Series may exceed
the Aggregate Outstanding Principal of such Series,
thereby resulting in overcollateralization. See
"DESCRIPTION OF THE SECURITIES--Valuation of Mortgage
Assets."
SERVICING AGREEMENTS......... Various Servicers will perform certain servicing functions
with respect to any Mortgage Loans comprising Mortgage
Assets or Underlying Collateral for a Series. In addition,
if so specified in the related Prospectus Supplement, a
Master Servicer identified in the related Prospectus
Supplement may service Mortgage Loans directly or
administer and supervise the performance by the Servicers
of their duties and responsibilities under separate
servicing agreements. Each Servicer must meet the
requirements of the Master Servicer, if any, and be
approved by the Issuer, and, if specified in the related
Prospectus Supplement, the Master Servicer and each
Servicer must be approved by either FNMA or FHLMC as a
seller-servicer of mortgage loans and, in the case of FHA
Loans, by HUD as an FHA mortgagee. Each Servicer will be
obligated under a servicing agreement to perform customary
servicing functions and may be obligated to advance funds
to cover certain payments not made by the
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Mortgagors to the extent described herein and in the
related Prospectus Supplement. The Master Servicer, if
any, may, if so specified in the related Prospectus
Supplement, be obligated to advance funds to cover any
required Advances not made by the Servicers to the extent
that, in the judgment of the Master Servicer, such
Advances are recoverable under the Insurance Policies, any
Enhancement or from the proceeds of liquidation of the
Mortgage Loans or as provided in the related Prospectus
Supplement. The related Prospectus Supplement will specify
the conditions to and any limitations on such Advances and
the conditions under which such Advances will be
recoverable. With respect to any such Series, the Issuer
may (i) enter into a standby agreement with an indepen-
dent standby Servicer acceptable to each Rating Agency
rating such Securities providing that such standby
Servicer will assume the Servicer's or Master Servicer's
obligations in the event of a default by the Master
Servicer or Servicer or (ii) obtain a servicer perform-
ance bond acceptable to each Rating Agency rating such
Securities that will guarantee certain of the Servicer's
or Master Servicer's obligations. The Issuer will assign
to the Trustee its rights under any Master Servicing
Agreement and any servicing agreements so provided with
respect to a Series as security for the Series. See "SER-
VICING OF MORTGAGE LOANS" and "SECURITY FOR THE BONDS AND
CERTIFICATES--Mortgage Loans" herein.
SPECIAL SERVICER............. If so specified in the related Prospectus Supplement, to the
extent a Mortgage Loan on or after the Closing Date meets
certain criteria set forth in the related Prospectus
Supplement, (i) all or a portion of the servicing
responsibilities with respect to such Mortgage Loan may be
transferred to a Special Servicer or (ii) the Special
Servicer will provide advisory services with respect to
the servicing of such Mortgage Loan. See "SERVICING OF
MORTGAGE LOANS" herein.
FEDERAL INCOME TAX
CONSIDERATIONS............. Unless otherwise stated in the applicable Prospectus
Supplement, a real estate mortgage investment conduit (a
"REMIC") election will be made with respect to each Series
of Securities. Securities of such Series will be
designated as "regular interests" in a REMIC ("Regular
Interest Securities") or as "residual interests" in a
REMIC ("Residual Interest Securities").
If the applicable Prospectus Supplement so specifies with
respect to a Series of Securities, the Securities of such
Series will not be treated as regular or residual
interests in a REMIC for federal income tax purposes but
instead will be treated as (i) indebtedness of the Issuer,
(ii) an undivided beneficial ownership interest in the
Mortgage Loans (and the arrangement pursuant to which the
Mortgage Loans will be held and the Securities will be
issued will be treated as a grantor trust under Subpart E,
part I of subchapter J of the Code and not as an
association taxable as a corporation for federal income
tax purposes); (iii) equity interests in an association
that will satisfy the requirements for qualification as a
real estate investment trust; (iv) interests in an entity
that will be treated as a partnership
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for federal income tax purposes; or (v) interests in an
entity or a pool of assets that will satisfy the
requirements for qualification as a financial asset
securitization investment trust (a "FASIT") for federal
income tax purposes. Federal income tax consequences to
Bondholders or Certificateholders of any such Series will
be described in the applicable Prospectus Supplement.
Compound Interest Securities, Interest Weighted Securities
and Zero Coupon Securities will, and certain other Classes
of Securities may, be issued with original issue discount
that is not DE MINIMIS. In such cases, the Bondholder or
Certificateholder will be required to include the original
issue discount in gross income as it accrues, which may be
prior to the receipt of cash attributable to such income.
If a Security is issued at a premium, the holder will be
entitled to make an election to amortize such premium on a
constant yield method. Securities constituting regular or
residual interests in a REMIC will generally represent
"loans secured by an interest in real property" for
domestic building and loan associations and "real estate
assets" for real estate investment trusts to the extent
that the underlying mortgage loans and interest thereon
qualify for such treatment. Non-REMIC Securities (other
than interests in grantor trusts and certain interests in
a FASIT) will not qualify for such treatment.
A holder of a Residual Interest Security will be required to
include in its income its pro rata share of the taxable
income of the REMIC. In certain circumstances, the holder
of a Residual Interest Security may have REMIC taxable
income or tax liability attributable to REMIC taxable
income for a particular period in excess of cash
distributions for such period or have an after-tax return
that is less than the after-tax return on comparable debt
instruments. Accordingly, a Residual Interest Security may
have a negative "value". In addition, a portion (or all)
of the income from a Residual Interest Security (i) is not
subject to offset by losses from other activities, (ii)
for a holder that is subject to tax under the Code on
unrelated business taxable income, is treated as unrelated
business taxable income and (iii) for a foreign holder,
does not qualify for exemption from or reduction of
withholding. Further, individual holders are subject to
limitations on the deductibility of expenses of the REMIC.
See "FEDERAL INCOME TAX CONSIDERATIONS."
ERISA CONSIDERATIONS......... A fiduciary of any employee benefit plan or other retirement
arrangement subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Code, should carefully review with its
own legal advisors whether the purchase or holding of
Securities could give rise to a transaction prohibited or
otherwise impermissible under ERISA or the Code. See
"ERISA CONSIDERATIONS."
LEGAL INVESTMENT............. The related Prospectus Supplement will specify whether any
Class of the Securities of the particular Series offered by
this Prospectus and the related Prospectus Supplement will
constitute "mortgage related securities" under the
Secondary Mortgage Market Enhancement Act of 1984, as
amended ("SMMEA"). Investors
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whose investment authority is subject to legal
restrictions should consult their own legal advisors to
determine whether and to what extent the Securities
constitute legal investments for them. See "LEGAL
INVESTMENT."
USE OF PROCEEDS.............. The Issuer will use the net proceeds from the sale of each
Series to (i) purchase Mortgage Loans and/or Private
Mortgage-Backed Securities comprising the Mortgage Assets
securing such Securities, (ii) repay indebtedness which
has been incurred to acquire Mortgage Assets to be pledged
by the Issuer as security for the Bonds or to be deposited
into a Trust Fund, (iii) establish any Reserve Funds
described in the related Prospectus Supplement, or (iv)
pay costs of structuring, guaranteeing and issuing such
Securities. If so specified in the related Prospectus
Supplement, the purchase of the Mortgage Assets for a
Series may be effected by an exchange of Securities with
the seller of such Mortgage Assets. See "USE OF PRO-
CEEDS."
RATINGS...................... It will be a condition to the issuance of any Securities
offered by this Prospectus and the related Prospectus
Supplement that they be rated in one of the four highest
applicable rating categories by at least one Rating
Agency. The rating or ratings applicable to Securities of
each Series will be as set forth in the related Prospectus
Supplement.
A security rating should be evaluated independently of
similar ratings of different types of securities. A
security rating does not address the effect that the rate
of prepayment on Mortgage Loans comprising or underlying
the Mortgage Assets or the effect that reinvestment rates
may have on the yield to investors in the Securities. A
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 rating
should be evaluated independently of any other rating. See
"RISK FACTORS."
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RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Securities.
LIMITED LIQUIDITY. There can be no assurance that a secondary market for
the Securities of any Series will develop or, if it does develop, that it will
provide holders with liquidity of investment or will continue while Securities
of such Series remain outstanding. The market value of Securities will fluctuate
with changes in prevailing rates of interest. Consequently, sale of the
Securities by a holder in any secondary market which may develop may be at a
discount from par value or from their purchase price. Furthermore, secondary
purchasers may look only to the Prospectus Supplement attached hereto and to the
reports to Bondholders or Certificateholders, as applicable, delivered pursuant
to the Indenture or Trust Agreement, as applicable and as described herein under
the heading "DESCRIPTION OF THE SECURITIES--General," "--The Bonds--General,"
and "--The Certificates--General" for information concerning the Securities.
Except to the extent described in the related Prospectus Supplement, Bondholders
or Certificateholders, as applicable, will have no optional redemption or early
termination rights, respectively. The Bonds are subject to redemption, and the
Certificates are subject to early termination or repurchase, by the Issuer only
under certain specified circumstances described herein and in the related
Prospectus Supplement. See "DESCRIPTION OF THE SECURITIES--Special Redemption,"
"--Optional Redemption," "--Optional Termination," "--Optional Repurchase of
Certificates," and "--Other Repurchases." Lehman Brothers Inc. ("Lehman
Brothers"), through one or more of its affiliates, and the other underwriters,
if any, presently expect to make a secondary market in the Securities, but have
no obligation to do so.
LIMITED ASSETS. The Issuer will not have, nor be expected in the future to
have, any significant assets available for payments on a Series of Securities
other than the assets pledged as security or deposited into a Trust Fund for a
specific Series. The Bonds will be non-recourse obligations of the Issuer and
each Series of Bonds will be separately secured. Unless otherwise specified in
the related Prospectus Supplement, no Series will have any claim against or
security interest in the Primary Assets pledged to secure any other Series. If
the Primary Assets securing a Series of Bonds is insufficient to make payments
on such Bonds, no other assets of the Issuer will be available for payment of
the deficiency.
Unless otherwise set forth in the Prospectus Supplement for a Series of
Certificates, the Trust Fund for such Series will be the only available source
of funds to make distributions on the Certificates of such Series. The only
obligations, if any, of the Depositor with respect to the Certificates of any
Series will be pursuant to certain representation and warranties. The Depositor
does not have, and is not expected in the future to have, any significant assets
with which to meet any obligation to repurchase Mortgage Assets with respect to
which there has been a breach of any representation or warranty. If, for
example, the Depositor were required to repurchase a Mortgage Loan which
constitutes a Mortgage Asset, its only sources of funds to make such repurchase
would be from funds obtained from the enforcement of a corresponding obligation,
if any, on the part of the originator of the Mortgage Loans or the Servicer, as
the case may be, or from a reserve fund established to provide funds for such
repurchases.
Additionally, certain amounts remaining in certain funds or accounts,
including the Collection Account and any Reserve Funds, may be withdrawn under
certain conditions and circumstances described in the related Prospectus
Supplement. In the event of such withdrawal, such amounts will not be pledged
to, or available for, future payment or distribution of principal of or interest
on the Securities. If so specified in the related Prospectus Supplement, on any
Payment Date or Distribution Date on which the principal balance of the Mortgage
Assets is reduced due to losses on the Mortgage Assets, (i) the amount of such
losses will be allocated first, to reduce the Aggregate Outstanding Principal of
the Subordinate Securities or other subordination, if any, and, thereafter, to
reduce the Aggregate Outstanding Principal of the remaining Securities in the
priority and manner specified in such Prospectus Supplement until the Aggregate
Outstanding Principal of each Class of Securities so specified has been reduced
to zero or paid in full, thus, reducing the amount of principal payable on each
such Class of Securities or (ii) such losses
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may be allocated in any other manner set forth in the related Prospectus
Supplement. Unless otherwise specified in the related Prospectus Supplement,
such reductions of principal of a Class or Classes of Securities shall be
allocated to the Holders of the Securities of such Class or Classes pro rata in
the proportion which the outstanding principal of each Security of such Class or
Classes bears to the Aggregate Outstanding Principal of all Securities of such
Class.
YIELD AND PREPAYMENT CONSIDERATIONS. Prepayments on the Mortgage Loans
comprising or underlying the Mortgage Assets securing a Series or deposited into
a Trust Fund, as the case may be, generally will result in a faster rate of
principal payments on such Securities than if payments on such Mortgage Assets
were made as scheduled. Thus, the prepayment experience on the Mortgage Loans
comprising or underlying the Mortgage Assets will affect the average life of
each Class secured thereby and the extent to which each such Class is paid prior
to its Stated Maturity or Final Scheduled Distribution Date. The rate of
principal payments on pools of mortgage loans varies between pools and from time
to time is influenced by a variety of economic, demographic, geographic, social,
tax, legal and other factors. There can be no assurance as to the rate of
prepayment on the Mortgage Assets securing any Series of Bonds or deposited into
a Trust Fund, as the case may be, or that the rate of payments will conform to
any model described herein or in any Prospectus Supplement. If prevailing
interest rates fall significantly below the applicable mortgage rates, principal
prepayments are likely to be higher than if prevailing rates remain at or above
the rates borne by the Mortgage Loans comprising or underlying the Primary
Assets securing a Series of Bonds or deposited into a Trust Fund, as the case
may be. As a result, the actual maturity of or final distribution on any Class
could occur significantly earlier than its Stated Maturity or Final Scheduled
Distribution Date. The actual maturity of the Bonds or final distribution on the
Certificates will also be affected by the extent to which Excess Cash Flow is
applied to payments or distributions of principal on the Securities. A Series of
Securities may include Classes of PAC Securities or other Securities with
priorities of payment and, as a result, yields on other Classes of Securities of
such Series may be more sensitive to prepayments on Mortgage Loans. A Series may
include a Class offered at a significant premium or discount. Yields on such
Class of Securities will be sensitive, and in some cases extremely sensitive, to
prepayments on Mortgage Loans and, in the case of a premium Class, where the
amount of interest payable with respect to such Class is extremely
disproportionate to principal, a holder might, in some prepayment scenarios,
fail to recoup its original investment. See "YIELD AND PREPAYMENT
CONSIDERATIONS."
LIMITED NATURE OF RATING. Any rating assigned to the Securities by a Rating
Agency will reflect such Rating Agency's assessment solely of the likelihood
that holders of such Securities will receive payments required to be made under
the Indenture or Trust Agreement, as the case may be. Such rating will not
constitute an assessment of the likelihood that principal prepayments on the
Mortgage Loans underlying or comprising the Mortgage Assets will be made by
Mortgagors or of the degree to which the rate of such prepayments might differ
from that originally anticipated. Such rating will not address the possibility
that prepayment at higher or lower rates than anticipated by an investor may
cause such investor to experience a lower than anticipated yield or that
investors purchasing a Security at a significant premium might fail to recoup
their initial investment under certain prepayment scenarios.
The amount of Primary Assets, including any applicable Enhancement, required
to support a Series of Securities will be determined on the basis of criteria
established by each Rating Agency rating such Series. Such criteria are
sometimes based upon actuarial analysis of the behavior of mortgage loans in a
larger group. Such analysis is often the basis upon which each Rating Agency
determines the amount of Enhancement required with respect to each Series of
Securities. There can be no assurance that the historical data supporting such
actuarial analysis will accurately reflect future experience generally nor any
assurance that the data derived from a large pool of mortgages will accurately
predict the delinquency, foreclosure or loss experience of any particular pool
of Mortgage Loans. In other cases, such analysis may be based upon the value of
the property underlying the Mortgage Assets. There can be no assurance that such
value will accurately reflect the future value of the property and, therefore,
whether or not the Securities will be paid in full.
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CERTAIN MORTGAGE LOANS AND MORTGAGED PROPERTY; OBLIGOR DEFAULT. Mortgage
Loans made with respect to Multifamily or Commercial Property may entail risks
of loss in the event of delinquency and foreclosure that are greater than
similar risks associated with traditional single-family property. Many of the
Mortgage Loans may be nonrecourse loans as to which, in the event of an obligor
default, recourse may be had only against the specific Commercial or Multifamily
Property and such limited other assets as have been pledged to secure such
Mortgage Loan, and not against the obligor's other assets. Furthermore, the
repayment of loans secured by income producing properties is typically dependent
upon the successful operation of the related real estate project rather than
upon the liquidation value of the underlying real estate. If the net operating
income from the project is reduced (for example, if rental or occupancy rates
decline or real estate and personal property tax rates or other operating
expenses increase), the obligor's ability to repay the loan may be impaired. A
number of the Mortgage Loans may be secured by owner-occupied Mortgaged
Properties or Mortgaged Properties leased to a single tenant. Accordingly, a
decline in the financial condition of the obligor or single tenant, as
applicable, may have a disproportionately greater effect on the net operating
income from such Mortgaged Properties than would be the case with respect to
Mortgaged Properties with multiple tenants. Furthermore, the liquidation value
of any Mortgaged Property may be adversely affected by risks generally incident
to interests in real property, including changes in general or local economic
conditions and/or specific industry segments; declines in real estate values;
declines in rental or occupancy rates; increases in interest rates, real estate
and personal property tax rates and other operating expenses including energy
costs; changes in governmental rules, regulations and fiscal policies, including
environmental legislation; acts of God; and other factors which are beyond the
Master Servicer's or the Special Servicer's, if any, control. Although the
Servicer or the Master Servicer is obligated to cause standard hazard insurance
to be maintained with respect to each Mortgage Loan, insurance with respect to
extraordinary hazards such as earthquakes and floods is generally not required
to be maintained, and insurance is not available with respect to many of the
other risks listed above.
Certain of the Mortgage Loans as of the Cut-Off Date may not be fully
amortizing over their terms to maturity, and, thus, will have substantial
principal balances due at their stated maturity. Mortgage Loans with balloon
payments involve a greater degree of risk because the ability of an obligor to
make a balloon payment typically will depend upon its ability either to
refinance the loan or to sell the related Mortgaged Property. The ability of an
obligor to accomplish either of these goals will be affected by a number of
factors, including the level of available mortgage rates at the time of sale or
refinancing, the obligor's equity in the related Mortgaged Property, the
financial condition and operating history of the obligor and the related
Mortgaged Property, tax laws, prevailing general economic conditions and the
availability of credit for commercial or multifamily, as the case may be, real
estate projects generally.
If so specified in the related Prospectus Supplement, in order to maximize
recoveries on defaulted Mortgage Loans, the Special Servicer, if any, will have
considerable flexibility under the Special Servicing Agreement to extend and
modify Mortgage Loans which are in default or as to which a payment default is
reasonably foreseeable, including in particular with respect to balloon
payments. In addition, the Special Servicer may receive a workout fee based on
receipts from or proceeds of such Mortgage Loans. While the Special Servicer
generally will be required to determine that any such extension or modification
is likely to produce a greater recovery on a present value basis than
liquidation, there can be no assurance that such flexibility with respect to
extensions or modifications or payment of a workout fee to the Special Servicer
will increase the present value of receipts from or proceeds of Mortgage Loans
which are in default or as to which a default is reasonably foreseeable. To the
extent losses on such Mortgage Loans exceed levels of available enhancement, the
Holders of the Bonds of a Series may experience a loss. See "SERVICING OF
MORTGAGE LOANS--Maintenance of Insurance Policies and Other Servicing
Procedures" and "ENHANCEMENT."
ENHANCEMENT LIMITATIONS. The amount, type and nature of Insurance Policies,
subordination, Bond Guarantee Insurance, letters of credit,
overcollateralization, Reserve Funds and other enhancement, if any, required
with respect to a Series will be determined on the basis of criteria established
by each Rating Agency rating such Series. Such criteria are sometimes based upon
an actuarial analysis of the behavior of
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mortgage loans in a larger group. Such analysis is often the basis upon which
each Rating Agency determines the amount of Enhancement required with respect to
each Series of Securities. There can be no assurance that the historical data
supporting any such actuarial analysis will accurately reflect future experience
nor any assurance that the data derived from a large pool of mortgage loans
accurately predicts the delinquency, foreclosure or loss experience of any
particular pool of Mortgage Loans.
In addition, if principal payments on Securities of a Series are made in a
specified order of priority, any limits with respect to the aggregate amount of
claims under any related insurance policy, letters of credit or other
enhancement may be exhausted before the principal of the lower priority Classes
has been repaid. As a result, the impact of significant losses on the Mortgage
Loans may bear primarily upon the Securities of the later maturing Classes.
The Prospectus Supplement for a Series will describe any Reserve Funds,
Insurance Policies, letter of credit, subordination, Bond Guarantee Insurance,
over collateralization or other credit support relating to the Mortgage Assets
or to the Securities of such Series. Use of such Reserve Funds and payments
under such Insurance Policies, Bond Guarantee Insurance, letter of credit or
other third-party credit support will be subject to the conditions and
limitations described herein and in the related Prospectus Supplement. Moreover,
such Reserve Funds, Insurance Policies, letter of credit or other credit support
may not cover all potential losses or risks; for example, Enhancement may or may
not cover fraud or negligence by the Issuer, the Master Servicer or other
parties. Moreover, if a form of enhancement covers more than one Series of
Securities (each, a "Covered Trust"), holders of Securities issued by any of
such Covered Trusts will be subject to the risk that such credit support will be
exhausted by the claims of other Covered Trusts prior to such Covered Trust
receiving any of its intended share of such coverage. The obligations of the
issuers of any credit support will not be guaranteed or insured by the United
States, or by any agency or instrumentality thereof. A Series of Bonds may
include a Class or multiple Classes of Subordinate Securities to the extent
described in the related Prospectus Supplement. Although such subordination is
intended to reduce the risk of delinquent distributions or ultimate losses to
Holders of Senior Securities, the amount of subordination will be limited and
will decline under certain circumstances and any related Reserve Fund could be
depleted in certain circumstances. See "DESCRIPTION OF THE SECURITIES,"
"SECURITY FOR THE BONDS AND CERTIFICATES" and "ENHANCEMENT."
OVERCOLLATERALIZATION AND SUBORDINATION. To provide Bondholders and
Certificateholders with a degree of protection against loss, Mortgage Assets
having an Asset Value in excess of the aggregate principal amount of the
Securities may be pledged to secure a Series or deposited into the related Trust
Fund, as the case may be, or Excess Cash Flow may be applied to create
overcollateralization. Alternatively, a Series of Securities may include one or
more Classes of Subordinate Securities to the extent described in the related
Prospectus Supplement. Such overcollateralization or subordination will be at
amounts established by the Rating Agency rating the Series based on an assumed
level of defaults, delinquencies, other losses, application of Excess Cash Flow
or other factors. There can, however, be no assurance that the loss experience
on the Mortgage Assets securing the Securities will not exceed such assumed
levels, adversely affecting the ability of the Issuer to meet debt service or
distribution requirements on the Securities.
Although overcollateralization and subordination are intended to reduce the
risk of delinquent payments or losses to holders of Senior Securities, the
amount of overcollateralization or subordination, as the case may be, will be
limited and will decline under certain circumstances and any related Reserve
Fund could be depleted in certain circumstances.
DELINQUENT AND NON-PERFORMING MORTGAGE LOANS. As set forth in the related
Prospectus Supplement, the Mortgage Pool for a particular Series may include, as
of the Cut-Off Date, REO Properties or Mortgage Loans that are past due or are
non-performing. If so specified in the related Prospectus Supplement, management
of such REO Properties or servicing with respect to such Mortgage Loans will be
transferred to the Special Servicer as of the Closing Date. Enhancement provided
with respect to a particular Series may not cover all losses related to such
delinquent or non-performing Mortgage Loans or to such REO Properties. Investors
should consider the risk that the inclusion of such Mortgage Loans or
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such REO Properties in the Mortgage Pool may affect the rate of defaults and
prepayments on such Mortgage Pool and the yield on the Securities of such
Series. See "SECURITY FOR THE BONDS AND CERTIFICATES--Mortgage Loans."
REMEDIES FOLLOWING DEFAULT. The market value of the Mortgage Assets
securing a Series will fluctuate as general interest rates fluctuate. Following
an Event of Default with respect to a Series of Bonds, there is no assurance
that the market value of the Mortgage Assets securing the Series, will be equal
to or greater than the unpaid principal and accrued interest due on the Bonds of
such Series, together with any other expenses or liabilities payable thereon. If
the Mortgage Assets securing a Series are sold by the Trustee following an Event
of Default, the proceeds of such sale may be insufficient to pay in full the
principal of and interest on such Bonds. However, in certain events the Trustee
may be restricted from selling the Mortgage Assets securing a Series. See "THE
INDENTURE--Events of Default."
In addition, upon an Event of Default with respect to a Series and a
resulting sale of the Mortgage Assets securing such Bonds, unless otherwise
specified in the related Prospectus Supplement, the proceeds of such sale will
be applied, first, to the payment of certain amounts due to the Trustee, second,
to the payment of accrued interest on, and then to the payment of the then
Aggregate Outstanding Principal of, such Bonds (including interest on and the
Aggregate Outstanding Principal of any Residual Interest Bond) (as specified in
the related Prospectus Supplement), third, to the payment of the remaining
Administration Fee, if any, and, fourth, to the payment of any additional
amounts due the Issuer or to the holders of the Residual Interest Bonds as
applicable. Consequently, in the event of any such Event of Default and sale of
Mortgage Assets, any Classes on which principal payments have previously been
made may have, in the aggregate, a greater proportion of their principal repaid
than will Classes on which principal payments have not previously been made.
In the event the principal of the Securities of a Series is declared due and
payable, the holders of any such Securities issued at a discount from par
("original issue discount") may be entitled, under applicable provisions of the
federal Bankruptcy Code, to receive no more than an amount equal to the unpaid
principal amount thereof less unamortized original issue discount ("accreted
value"). There is no assurance as to how such accreted value would be determined
if such event occurred.
ENFORCEABILITY. As specified in the related Prospectus Supplement, the
Mortgages may contain due-on-sale clauses, which permit the lender to accelerate
the maturity of the Mortgage Loan if the borrower sells, transfers or conveys
the related Mortgaged Property or its interest in the Mortgaged Property. Such
clauses are generally enforceable subject to certain exceptions.
As specified in the related Prospectus Supplement, the Mortgage Loans may
include a debt-acceleration clause, which permits the lender to accelerate the
debt upon a monetary or non-monetary default of the borrower. The courts of all
states will enforce clauses providing for acceleration in the event of a
material payment default. The equity courts of any state, however, may refuse to
foreclose a mortgage or deed of trust when an acceleration of the indebtedness
would be inequitable or unjust or the circumstances would render the
acceleration unconscionable.
To the extent specified in the related Prospectus Supplement, the Mortgage
Loans will be secured by an assignment of leases and rents pursuant to which the
obligor typically assigns its right, title and interest as landlord under the
leases on the related Mortgaged Property and the income derived therefrom to the
lender as further security for the related Mortgage Loan, while retaining a
license to collect rents for so long as there is no default. In the event the
obligor defaults, the license terminates and the lender is entitled to collect
rents. Such assignments must usually be recorded to be perfected as security
interests. In addition, some state laws require that the lender take possession
of the Mortgaged Property and/or obtain a judicial appointment of a receiver
before becoming entitled to collect the rents. See also "CERTAIN LEGAL ASPECTS
OF THE MORTGAGE LOANS--Anti-Deficiency Legislation and Other Limitations on
Lenders."
ENVIRONMENTAL RISKS. Real property pledged as security to a lender may be
subject to certain environmental risks. Under the laws of certain states,
contamination of a property may give rise to a lien on the property to assure
the costs of clean-up. In several states, such a lien has priority over the lien
of an
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existing mortgage against such property. In addition, under the laws of some
states and under the federal Comprehensive Environmental Response, Compensation,
and Liability Act of 1980 ("CERCLA"), a lender may be liable, as an "owner" or
"operator," for costs of addressing releases or threatened releases of hazardous
substances that require remedy at a property, if agents or employees of the
lender have become sufficiently involved in the operations of the borrower,
regardless of whether or not the environmental damage or threat was actually
caused or exacerbated by the lender's agents or employees. A lender also risks
such liability on and following foreclosure of the Mortgaged Property. Unless
otherwise specified in the related Prospectus Supplement, the Servicing
Agreement, Master Servicing Agreement or Special Servicing Agreement, as
applicable, provides that the Servicer, the Master Servicer or the Special
Servicer, as applicable, acting on behalf of the Trust Estate, may not acquire
title to a Mortgaged Property underlying a Mortgage Loan or take over its
operation unless the Servicer, the Master Servicer or the Special Servicer, as
applicable, has previously determined, based upon a report prepared by a person
who regularly conducts environmental audits, that (i) the Mortgaged Property is
in compliance with applicable environmental laws and regulations or, if not,
that taking such actions as are necessary to bring the Mortgaged Property in
compliance therewith is reasonably likely to produce a greater recovery on a
present value basis than not taking such actions and (ii) there are no
circumstances or conditions present that have resulted in any contamination or
if such circumstances or conditions are present for which sch action could be
required, taking such actions with respect to the affected Mortgaged Property is
reasonably likely to produce a greater recovery on a present value basis than
not taking such actions. See "CERTAIN LEGAL ASPECTS OF MORTGAGE
LOANS--Environmental Matters."
ERISA CONSIDERATIONS. Generally, ERISA applies to investments made by
employee benefit plans and transactions involving the assets of such plans. Due
to the complexity of regulations which govern such plans, prospective investors
that are subject to ERISA are urged to consult their own counsel regarding
consequences under ERISA of acquisition, ownership and disposition of the
Securities of any Series. See "ERISA CONSIDERATIONS."
CERTAIN FEDERAL TAX CONSIDERATIONS REGARDING RESIDUAL INTEREST BONDS AND
RESIDUAL INTEREST CERTIFICATES. Holders of Residual Interest Bonds and Residual
Interest Certificates will be required to report on their federal income tax
returns as ordinary income their pro rata share of the taxable income of the
REMIC regardless of the amount or timing of their receipt of cash payments as
described in "FEDERAL INCOME TAX CONSIDERATIONS--Taxation of Holders of Residual
Interest Securities." Accordingly, under certain circumstances, holders of
Securities which constitute Residual Interest Bonds and Residual Interest
Certificates may have taxable income and tax liabilities arising from such
investment during a taxable year in excess of the cash received during such
period. The requirement that holders of Residual Interest Bonds and Residual
Interest Certificates report their pro rata share of the taxable income and net
loss of the REMIC will continue until the principal balances of all Classes of
Bonds or Certificates of the related Series have been reduced to zero, even
though holders of Residual Interest Bonds and Residual Interest Certificates
have received full payment of their stated interest and principal (if any). A
portion (or all) of a holder of a Residual Interest Bond's or Residual Interest
Certificate's share of the REMIC taxable income may be treated as "excess
inclusion" income to such holder which (i) generally, will not be subject to
offset by losses from other activities, (ii) for a tax-exempt holder, will be
treated as unrelated business taxable income and (iii) for a foreign holder,
will not qualify for exemption from withholding tax. Individual holders of
Securities constituting Residual Interest Bonds and Residual Interest
Certificates may be limited in their ability to deduct servicing fees and other
expenses of the REMIC. In addition, Residual Interest Bonds and Residual
Interest Certificates are subject to certain restrictions on transfer. Because
of the special tax treatment of Residual Interest Bonds and Residual Interest
Certificates, the taxable income arising in a given year on a Residual Interest
Bond or a Residual Interest Certificate will not be equal to the taxable income
associated with investment in a corporate bond or stripped instrument having
similar cash flow characteristics and pre-tax yield. Therefore, the after-tax
yield on the Residual Interest Bond and Residual Interest Certificates may be
significantly less than that of a corporate bond or stripped instrument having
similar cash flow characteristics, or may be negative.
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DESCRIPTION OF THE SECURITIES
GENERAL
The following summaries describe certain provisions common to each Series.
The summaries do not purport to be complete and are subject to, and are
qualified in their entirety by reference to, the provisions of the Indenture or
Trust Agreement and the Prospectus Supplement relating to each Series. When
particular provisions or terms used in the Indenture or Trust Agreement are
referred to, such provisions or terms shall be as specified in the Indenture or
Trust Agreement.
THE BONDS--GENERAL
The Bonds will be issued in Series pursuant to a Trust Indenture between the
Company and LaSalle National Bank (or another bank or trust company qualified
under the TIA and named in the related Prospectus Supplement for a Series), as
Trustee, or a Trust and the Trustee, each as supplemented by or as incorporated
by reference by a Series Supplement with respect to each Series. A copy of the
form of Trust Indenture has been filed with the Commission as an exhibit to the
Registration Statement of which the Prospectus forms a part. A copy of the
Series Supplement for a Series, if any, will be filed with the Commission as an
exhibit to a Current Report on Form 8-K to be filed with the Commission within
15 days of issuance of the Bonds of the related Series.
The Indenture does not limit the amount of Bonds that can be issued
thereunder and provides that any Series may be issued thereunder up to the
aggregate principal amount specified in the related Series Supplement that may
be authorized from time to time by the Issuer. Each Series will consist of one
or more Classes, one or more of which may be Compound Interest Securities,
Variable Interest Securities, Individual Investor Securities, Planned
Amortization Class Securities, Zero Coupon Securities, Principal Only
Securities, Interest Only Securities or Participating Securities. A Series may
also include one or more Classes of Subordinate Securities. If so specified in
related Prospectus Supplement, such Subordinate Securities may be offered hereby
and by the related Prospectus Supplement. Each Class of a Series will be issued
in registered or bearer form, as designated in the related Prospectus Supplement
for a Series, in the minimum denominations specified in the related Prospectus
Supplement. See "--Bearer Securities and Registered Securities." Bonds of a
Series may be issued in whole or part in book-entry form. The transfer of the
Bonds may be registered and the Bonds may be exchanged without the payment of
any service charge payable in connection with such registration of transfer or
exchange.
Payments of principal of and interest on the Bonds which are registered
securities will be made by the Trustee, or if the Trustee is not the paying
agent, the Paying Agent. Payments of principal of and interest on a Series will
be made on the Payment Dates specified in the related Prospectus Supplement, to
Bondholders of such Series registered as such on the close of business on the
record date specified in the related Prospectus Supplement at their addresses
appearing on the Bond Register. All payments will be made by check mailed to the
Bondholder or by wire transfer to accounts maintained by such Bondholder as
specified in the related Prospectus Supplement, except that final payments of
principal in retirement of each Bond will be made only upon presentation and
surrender of such Bond at the office of the New York Presenting Agent. Notice
will be mailed to the holder of such Bond before the Payment Date on which the
final principal payment in retirement of the Bond is expected to be made.
The Trustee will include with each payment on a Bond a statement showing
among other things, the allocation of such payment to interest, if any, and
principal, if any, and the remaining unpaid principal amount of a Bond of each
Class having the minimum denomination for Bonds of such Class of that Series,
the amount of Advances made by the Primary Servicer, the amount of servicing
compensation paid with respect to the Mortgage Assets, the aggregate principal
balance of delinquent, foreclosed Mortgage Loans and REO Property, the realized
losses for the Mortgage Assets, if applicable, the number and aggregate
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principal balance of Deleted and Substitute Mortgage Loans, and on each Payment
Date prior to the commencement of principal payments on a Class of Compound
Interest Bonds, the aggregate unpaid principal amount of each Class of Bonds,
the interest accrued since the prior Payment Date and added to the principal of
a Compound Interest Bond having the minimum denomination for Bonds of such Class
and the new principal balance of such Bond.
THE CERTIFICATES--GENERAL
The Certificates will be issued in Series pursuant to separate Trust
Agreements between the Depositor and LaSalle National Bank (or another bank or
trust company named in the related Prospectus Supplement). A form of Trust
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus forms a part. The Trust Agreement relating to each Series of
Certificates will be filed as an exhibit to a report on Form 8-K to be filed
with the Commission within 15 days following the issuance of such Series of
Certificates. The following summaries describe certain provisions common to each
Series of Certificates. The summaries do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the provisions
of the Trust Agreement and the Prospectus Supplement relating to each Series of
Certificates. When particular provisions or terms used in the Trust Agreement
are referred to, such provisions or terms shall be as specified in the Trust
Agreement.
Each Series of Certificates will consist of one or more Classes, one or more
of which may consist of Compound Interest Securities, Variable Interest
Securities, Interest Only Certificates, Principal Only Certificates, Zero Coupon
Securities or Planned Amortization Class Securities ("PACs"). A Series of
Certificates may also include one or more Classes of Subordinate Securities.
Each Series will be issued in fully registered form or bearer form, in the
minimum original amount or notional amount for Certificates of each Class
specified in the related Prospectus Supplement. The transfer of the Certificates
may be registered, and the Certificates may be exchanged, without the payment of
any service charge payable in connection with such registration of transfer or
exchange. If specified in the related Prospectus Supplement, one or more Classes
of a Series may be available in book-entry form only. See "--Bearer Securities
and Registered Securities."
Commencing on the date specified in the related Prospectus Supplement,
distributions of principal and interest on the Certificates will be made on each
Distribution Date as set forth in the related Prospectus Supplement.
Distributions of principal of and interest on Certificates of a Series in
registered form will be made by check mailed to Certificateholders of such
Series registered as such on the close of business on the record date specified
in the related Prospectus Supplement at their addresses appearing on the
Certificate Register, except that (a) distributions may be made by wire transfer
(at the expense of the Certificateholder requesting payment by wire transfer) in
certain circumstances described in the related Prospectus Supplement and (b) the
final distribution in retirement of a Certificate will be made only upon
presentation and surrender of such Certificate at the corporate trust office of
the Trustee for such Series or such other office of the Trustee as specified in
the Prospectus Supplement. Notice of the final distribution on a Certificate
will be mailed to the Holder of such Certificate before the Distribution Date on
which such final distribution in retirement of the Certificate is expected to be
made.
The Trustee will include with each distribution on a Certificate a statement
showing among other things, the allocation of such payment to interest, if any,
and principal, if any, and the remaining unpaid principal amount of a
Certificate of each Class having the minimum denomination for Certificates of
such Class of that Series, the amount of Advances made by the Primary Servicer,
the amount of servicing compensation paid with respect to the Mortgage Assets,
the aggregate principal balance of delinquent, foreclosed Mortgage Loans and REO
Property, the realized losses for the Mortgage Assets, if applicable,
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the number and aggregate principal balance of Deleted and Substitute Mortgage
Loans, and on each Distribution Date prior to the commencement of principal
payments on a Class of Compound Interest Securities, the aggregate unpaid
principal amount of each Class of Certificates, the interest accrued since the
prior Distribution Date and added to the principal of a Compound Interest
Certificate having the minimum denomination for Certificates of such Class and
the new principal balance of such Certificate. See "THE TRUST AGREEMENT--Reports
to Certificateholders."
BEARER SECURITIES AND REGISTERED SECURITIES
Unless otherwise provided with respect to a Series of Securities, the
Securities will be issuable as registered securities without coupons. If so
provided with respect to a Series of Securities, Securities of such Series will
be issuable solely as bearer securities with coupons attached or as both
registered securities and bearer securities. Any such bearer securities will be
issued in accordance with U.S. tax and securities laws then applicable to the
sale of such securities.
Unless applicable law at the time of issuance of any bearer securities
provides otherwise, in connection with the sale during the "restricted period'
as defined in Section 1.163-5(c)(2)(i)(D)(7) of the United States Treasury
Regulations (generally, the first 40 days after the Closing Date and, with
respect to unsold allotments, until sold) no bearer security shall be mailed or
otherwise delivered to any location in the United States (as defined under
"LIMITATIONS ON ISSUANCE OF BEARER SECURITIES"). A bearer security in definitive
form may be delivered only if the Person entitled to receive such bearer
security furnishes written certification, in the form required by the Indenture,
to the effect that such bearer security is not owned by or on behalf of a United
States person (as defined under "LIMITATIONS ON ISSUANCE OF BEARER SECURITIES"),
or, if a beneficial interest in such bearer security is owned by or on behalf of
a United States person, that such United States person (i) acquired and holds
the bearer security through a foreign branch of a United States financial
institution, (ii) is a foreign branch of a United States financial institution
purchasing for its own account or resale (and in either case (i) or (ii), such
financial institution agreed to comply with the requirements of Section
165(j)(3)(A), (B), or (C) of the Internal Revenue Code of 1986, as amended, and
the regulations thereunder) or (iii) is a financial institution purchasing for
resale during the restricted period only to non-United States persons outside
the United States. See "LIMITATIONS ON ISSUANCE OF BEARER SECURITIES."
Registered securities of any Series (other than in book-entry form) will be
exchangeable for other registered securities of the same Series and of a like
aggregate principal amount and tenor but of different authorized denominations.
In addition, if specified in the related Prospectus Supplement, if Securities of
any Series are issuable as both registered securities and as bearer securities,
at the option of the Holder, upon request confirmed in writing, and subject to
the terms of the Indenture or Trust Agreement, as the case may be, bearer
securities (with all unmatured coupons, except as provided below, and all
matured coupons in default) of such Series will be exchangeable into registered
securities of the same Series of any authorized denominations and of a like
aggregate principal amount and tenor. Unless otherwise indicated in an
applicable Prospectus Supplement, any bearer security surrendered in exchange
for a registered security between the relevant record date and the relevant date
for payment of interest shall be surrendered without the coupon relating to such
date for payment of interest and interest will not be payable in respect of the
registered security issued in exchange for such bearer security, but will be
payable only to the holder of such coupon when due in accordance with the terms
of the Indenture or Trust Agreement, as the case may be. Except as provided in
an applicable Prospectus Supplement, bearer securities will not be issued in
exchange for registered securities. If Securities of a Series are issuable as
bearer securities, the Issuer will be required to maintain a transfer agent for
such Series outside the United States.
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Unless otherwise indicated in an applicable Prospectus Supplement, payment
or distribution of principal of and interest on bearer securities will be
payable or distributable, subject to any applicable laws and regulations, at the
offices of such Paying Agents outside the United States as the Issuer may
designate from time to time by check or by wire transfer, at the option of the
holder, to an account maintained by the payee with a bank located outside the
United States. Unless otherwise indicated in an applicable Prospectus
Supplement, payment or distribution of interest on bearer securities on any
Payment Date or Distribution Date, as applicable, will be made only against
surrender of the coupon relating to such Payment Date or Distribution Date, as
applicable. No payment or distribution of interest on a bearer security will be
made unless on the earlier of the date of the first such payment by the Paying
Agent or the delivery by the Issuer of the bearer security in definitive form
(the "Certification Date"), a written certificate in the form and to the effect
described above is provided to the Issuer. No payment or distribution with
respect to any bearer security will be made at any office or agency in the
United States or by check mailed to any address in the United States or by
transfer to an account maintained with a bank located in the United States.
Notwithstanding the foregoing, payment or distribution of principal of and
interest on bearer securities denominated and payable in U.S. dollars will be
made at the office of the Issuer's Paying Agent in the Borough of Manhattan, The
City of New York if, and only if, payment of the full amount thereof in U.S.
dollars at all offices or agencies outside the United States is illegal or
effectively precluded by exchange controls or other similar restrictions.
BOOK-ENTRY REGISTRATION
If so specified in the related Prospectus Supplement, the Securities will be
issued in book-entry form in the minimum denominations specified in such
Prospectus Supplement and integral multiples thereof, and each Class will be
represented by one or more single Securities registered in the name of the
nominee of the depository, The Depository Trust Company ("DTC"), a
limited-purpose trust company organized under the laws of the State of New York.
Unless otherwise specified in the related Prospectus Supplement, no person
acquiring an interest in book-entry Securities (a "Securities Owner") will be
entitled to receive Securities representing such person's interest in the
Securities except in the event that Definitive Securities (as defined herein)
are issued under the limited circumstances set forth below. Unless and until
Definitive Securities are issued, it is anticipated that the only holder of
book-entry Securities will be Cede & Co., as nominee of DTC. Securities Owners
will not be "Holders," "Bondholders" or "Certificateholders" under the Indenture
or Trust Agreement, as applicable, and Securities Owners will only be permitted
to exercise the rights of Bondholders or Certificateholders, as applicable,
indirectly through DTC and its Participants.
DTC was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entry changes in
accounts of its Participants. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system also is available
to entities that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("Indirect Participants").
Securities Owners that are not Participants or Indirect Participants but
desire to purchase, sell or otherwise transfer ownership of book-entry
Securities may do so only through Participants and Indirect Participants.
Because DTC can only act on behalf of Participants and Indirect Participants,
the ability of a Securities Owner to pledge such owner's interest in a
book-entry Security to persons or entities that do not participate in the DTC
system, or otherwise take actions in respect of such interest in a book-entry
Security, may be limited. In addition, under a book-entry format, Securities
Owners may experience some delay in their receipt of principal and interest
distributions with respect to the book-entry Securities since such distributions
will be forwarded to DTC and DTC will then forward such distributions to its
Participants which in turn will forward them to Indirect Participants or
Securities Owners.
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Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers among
Participants on whose behalf it acts with respect to the book-entry Securities
and is required to receive and transmit principal and interest distributions and
other distributions with respect to the book-entry Securities. Participants and
Indirect Participants with which Securities Owners have accounts with respect to
book-entry Securities similarly are required to make book-entry transfers and
receive and transmit such distributions on behalf of their respective Securities
Owners. Accordingly, although Securities Owners will not possess book-entry
Securities, the Rules provide a mechanism by which Securities Owners will
receive distributions and will be able to transfer their interests.
The Issuer understands that DTC will take any action permitted to be taken
by a Bondholder or Certificateholder under the Indenture or Trust Agreement, as
applicable, only at the direction of one or more Participants to whose account
with DTC ownership of the book-entry Securities is credited. Additionally, the
Issuer understands that DTC will take such actions with respect to Securities
Owners who are holders of a certain specified interest in book-entry Securities
or holders having a certain specified voting interest only at the direction of
and on behalf of Participants whose holdings represent that specified interest
or voting interest. DTC may take conflicting actions with respect to other
Securities Owners to the extent that such actions are taken on behalf of
Participants whose holdings represent that specified interest or voting
interest.
Unless otherwise specified in the related Prospectus Supplement, Securities
of a Series issued initially in book-entry form only will be issued in fully
registered, certificated form ("Definitive Securities") to Securities Owners,
rather than to DTC, only if (i) DTC advises the Trustee in writing that DTC is
no longer willing or able properly to discharge its responsibilities as
depository with respect to the Securities, and the Issuer is unable to locate a
qualified successor, (ii) the Issuer, at its sole option, elects to terminate
the book-entry system through DTC or (iii) after the occurrence of an Event of
Default under the Indenture or Trust Agreement, as applicable, Securities Owners
representing a majority of the aggregate outstanding principal amount of the
Securities advise DTC through Participants in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in the best
interests of Securities Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, DTC is required to notify all Participants of the
availability through DTC of Definitive Securities. Upon surrender by DTC of the
Securities registered in the name of its nominee and instructions for
registration, the Trustee will issue all, but not less than all, of the
principal amount of the formerly DTC-held Securities then outstanding in the
form of Definitive Securities, and thereafter the Trustee will recognize the
holders of such Definitive Securities as Bondholders under the Indenture, or
Certificateholders under the Trust Agreement, as applicable.
VALUATION OF MORTGAGE ASSETS
If stated in the applicable Prospectus Supplement, each item of Mortgage
Assets securing a Series, or comprising the Trust Fund, as the case may be, will
be assigned an initial Asset Value determined in the manner and subject to the
assumptions specified in the related Prospectus Supplement. If so specified in
the related Prospectus Supplement, the aggregate of the Asset Values of the
Mortgage Assets pledged to secure a Series or comprising the Trust Fund, as the
case may be, will not be less than the initial Aggregate Outstanding Principal
of the related Series at the date of issuance thereof.
With respect to the Mortgage Assets pledged to collateralize the Bonds of a
Series, or comprising the Trust Fund, as the case may be, as of any date, the
Aggregate Asset Value, unless otherwise specified in the related Prospectus
Supplement, shall be equal to the aggregate of the Asset Values for each
Mortgage Loan or Private Mortgage-Backed Security or other Mortgage Assets in
the Trust Estate or Trust Fund, as
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applicable, for a Series of Securities plus the amount, if any, remaining in the
Collection Account and any other Pledged Fund or Account subsequent to an
initial deposit therein on the Delivery Date, together with Reinvestment Income
thereon, if any, at the Assumed Reinvestment Rate, if any.
There are a number of alternative means of determining Asset Value of the
Mortgage Assets, including determinations based on the discounted present value
of the remaining scheduled payments on such Mortgage Assets, determinations
based on the relationship between the interest rate borne by such Mortgage
Assets and the Bond Interest Rate or Rates or Certificate Interest Rate or Rates
for the related Classes of Securities, or based upon the aggregate outstanding
principal balances of the Mortgage Assets. If applicable, the Prospectus
Supplement for a Series will specify the method or methods and summarize the
related assumptions used to determine the Asset Values of the Mortgage Assets
for such Series of Securities.
The Assumed Reinvestment Rate, if any, for a Series will be the rate on
which amounts deposited in the Collection Account will be assumed to accrue
interest or a rate insured or guaranteed by means of a surety bond, Guaranteed
Investment Contract, or similar arrangement. If the Assumed Reinvestment Rate is
insured or guaranteed, the related Prospectus Supplement will set forth the
terms of such arrangement.
PAYMENTS OR DISTRIBUTIONS OF INTEREST
Each Class of a Series (other than a Class of Zero Coupon Securities or
Principal Only Securities) will accrue interest at the rate per annum specified,
or in the manner determined and set forth, in the related Prospectus Supplement
(calculated on the basis of a 360-day year of twelve 30-day months, unless
otherwise specified in the related Prospectus Supplement). Interest on all
Securities which accrue interest, other than Compound Interest Securities, will
be due and payable on the Payment Dates or Distribution Dates specified in the
related Prospectus Supplement. However, failure to pay interest on a current
basis may not necessarily be an Event of Default with respect to a particular
Series of Securities. Unless otherwise specified in the related Prospectus
Supplement, payment of interest on a Class of Compound Interest Securities will
commence only following the Accrual Termination Date. Prior to such time,
interest on such Class of Compound Interest Securities will accrue and the
amount of interest so accrued will be added to the principal thereof on each
Payment Date or Distribution Date. Following the applicable Accrual Termination
Date, interest payments will be made on such Class on the Compound Value of such
Class. The Compound Value of a Class of Compound Interest Securities equals the
original principal amount of the Class, plus accrued and unpaid interest added
to such Class through the immediately preceding Payment Date or Distribution
Date, less any principal payments previously made on that Class, and if
specified in the related Prospectus Supplement, losses allocable thereto. Each
payment of interest on each Class of Securities (or addition to principal of a
Class of Compound Interest Securities) on a Payment Date or Distribution Date
will include all interest accrued during the related Interest Accrual Period
preceding such Payment Date or Distribution Date, which Interest Accrual Period
will end on the day preceding each Payment Date or Distribution Date or such
earlier date as may be specified in the related Prospectus Supplement. If the
Interest Accrual Period for a Series ends on a date other than a Payment Date or
Distribution Date for such Series, the yield realized by the holders of such
Securities may be lower than the yield that would result if the Interest Accrual
Period ended on such Payment Date or Distribution Date. Additionally, if so
specified in the related Prospectus Supplement, interest accrued for an Interest
Accrual Period for one or more Classes may be calculated on the assumption that
principal payments (and additions to principal of the Securities), and
allocations of losses on the Primary Assets (if so specified in the related
Prospectus Supplement), are made on the first day of the preceding Interest
Accrual Period and not on the Payment Date or Distribution Date for such
preceding Interest Accrual Period when actually made or added. Such method would
produce a lower effective yield than if interest were calculated on the basis of
the actual principal amount outstanding.
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To the extent provided in the related Prospectus Supplement, a Series may
include one or more Classes of Variable Interest Securities. The Variable
Interest Rate of Variable Interest Securities will be a variable or adjustable
rate, subject to a Maximum Variable Interest Rate and a Minimum Variable
Interest Rate. It is the Issuer's present intention, subject to changing market
conditions, that the Variable Interest Rate formula or index be based on an
established financial index in the national or international financial markets.
The Variable Interest Payment Dates or Variable Interest Distribution Dates, as
applicable, for Variable Interest Securities will be set forth in the related
Prospectus Supplement and need not be the same as the Payment Dates or
Distribution Dates for other Securities in such Series, but may be either more
or less frequent. Unless otherwise specified in the related Prospectus
Supplement or herein, references to Payment Date or Distribution Dates include
Variable Interest Payment Dates or Variable Interest Distribution Dates, as
applicable. For each Class of Variable Interest Securities, the related
Prospectus Supplement will set forth the initial Bond Interest Rate or
Certificate Interest Rate, as applicable, (or the method of determining it), the
Variable Interest Period and the formula, index or other method by which the
Bond Interest Rate or Certificate Interest Rate, as applicable, for each
Variable Interest Period will be determined.
Interest Only Securities or Interest Weighted Securities, among others, may
be assigned a "Notional Amount" which is used solely for convenience in
expressing the calculation of interest and for certain other purposes. Unless
otherwise specified in the related Prospectus Supplement, the Notional Amount
will be determined at the time of issuance of such Securities based on the
principal balances or Bond Value of the Mortgage Loans attributable to the
Securities of a Series entitled to receive principal, and will be adjusted
monthly over the life of the Securities based upon adjustments to the Asset
Value or principal amounts of such Mortgage Loans. Reference to the Notional
Amount is solely for convenience in certain calculations and does not represent
the right to receive any distributions allocable to principal.
If so specified in the related Prospectus Supplement, if funds in the
Collection Account are insufficient to make required payments of interest to
Bondholders or Certificateholders on any Payment Date or Distribution Date, as
applicable, amounts available for payment to the Bondholders or
Certificateholders of each Class will be allocated pro rata in the proportion in
which the outstanding principal balance of each Bond or Certificate bears to the
aggregate outstanding principal balance of all Bonds or Certificates of such
Class, except that Subordinate Bondholders or Subordinate Certificateholders, if
any, will not, unless otherwise specified in the related Prospectus Supplement,
receive any payments of interest on the Subordinate Bonds or Subordinate
Certificates until Senior Bondholders or Senior Certificateholders receive
payments of interest due them (in each case as described in the related
Prospectus Supplement).
PAYMENTS OR DISTRIBUTIONS OF PRINCIPAL
On each Payment Date or Distribution Date for a Series, the Issuer will make
principal payments to the holders of the Securities of such Series on which
principal is then due and payable. Payments of principal on a Series will be
allocated among Classes of such Series in the order of priority and amounts
specified in the related Prospectus Supplement. All payments or distributions of
principal of Securities of a Class will be applied either on a pro rata or
random lot basis, as specified in the related Prospectus Supplement.
Except as specified otherwise in the related Prospectus Supplement, the
total amount of principal payments or distributions required to be made on the
Securities of any Series on a Payment Date or Distribution Date (the "Principal
Payment Amount") will be determined as specified in the related Prospectus
Supplement. If the Series of Bonds has a Class of PAC Securities, such PAC
Securities will have certain priorities of payment with respect to principal to
the extent of certain targeted amounts with respect to each Payment Date or
Distribution Date, as set forth in the related Prospectus Supplement. There can
be no assurance that the Principal Payment Amount on any Payment Date or
Distribution Date
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will be sufficient to pay in full the PAC Amount payable on such Payment Date or
Distribution Date. The failure to pay in full the PAC Amount payable on a
Payment Date or Distribution Date shall not constitute an Event of Default under
the Indenture or Trust Agreement.
If so specified in the related Prospectus Supplement, on any Payment Date or
Distribution Date on which the principal balance of the Mortgage Assets is
reduced due to losses on the Mortgage Assets, (i) the amount of such losses will
be allocated first, to reduce the Aggregate Outstanding Principal of the
Subordinate Bonds or Subordinate Certificates or other subordination, if any,
and, thereafter, to reduce the Aggregate Outstanding Principal of the remaining
Securities in the priority and manner specified in such Prospectus Supplement
until the Aggregate Outstanding Principal of each Class of Securities so
specified has been reduced to zero or paid in full, thus, reducing the amount of
principal payable on each such Class of Securities or (ii) such losses may be
allocated in any other manner set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, such reductions
of principal of a Class or Classes of Securities shall be allocated to the
holders of the Securities of such Class or Classes pro rata in the proportion
which the outstanding principal of each Security of such Class or Classes bears
to the Aggregate Outstanding Principal of all Securities of such Class.
One or more Classes of a Series may consist of Subordinate Bonds or
Subordinate Certificates. Subordinate Bonds or Subordinate Certificates may be
included in a Series to provide credit support as described herein under
"ENHANCEMENT" in lieu of or in addition to other forms of credit support. The
extent of subordination of a Class of Subordinate Bonds or Subordinate
Certificates may be limited as described in the related Prospectus Supplement.
See "ENHANCEMENT." If the Mortgage Assets are divided into separate Mortgage
Groups securing separate Classes of a Series, credit support may be provided by
a cross-support feature which requires that distributions be made to Senior
Bonds or Senior Certificates secured by one Mortgage Group prior to making
distributions on Subordinate Bonds or Senior Certificates secured by another
Mortgage Group within the Trust Estate or Trust Fund. Subordinate Bonds or
Subordinate Certificates will be offered hereby and by the related Prospectus
Supplement so long as such Bonds or Certificates are rated in one of the four
highest rating categories by at least one Rating Agency.
SPECIAL REDEMPTION
If specified in the related Prospectus Supplement, the Bonds of a Series may
be subject to special redemption on the day of any month specified therein if,
as a result of the prepayment experience on the Mortgage Assets securing such
Bonds or the low yield available for reinvestment or both, the Trustee
determines (based on assumptions specified in the Indenture and after giving
effect to the amounts, if any, available to be withdrawn from any Reserve Fund
for such Series) that the amount anticipated to be available in the Collection
Account on the date specified in the related Prospectus Supplement for such
Series, is anticipated to be insufficient to pay debt service on the Bonds of
such Series on such Payment Date. The principal amount of Bonds of such Series
required to be so redeemed will not exceed the Principal Payment Amount
otherwise required to be paid on the next Payment Date. Therefore, the primary
result of such a special redemption of Bonds is payment of principal prior to
the next scheduled Payment Date.
To the extent described in the related Prospectus Supplement, Bonds of a
Series may be subject to special redemption in whole or in part following
certain defaults under an Enhancement Agreement and, in certain other events, at
the Redemption Price.
All payments of principal pursuant to any special redemption will be made in
the order of priority and in the manner specified in the related Prospectus
Supplement. Notice of any special redemption will be mailed by the Issuer or the
Trustee prior to the Special Redemption Date. Unless otherwise specified in the
related Prospectus Supplement, the Redemption Price for any Bonds so redeemed
will be equal to
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100% of the principal amount of such Bonds (or 100% of the Compound Value of any
Compound Interest Securities) or portions thereof so redeemed, together with
interest accrued thereon to the date specified in the related Prospectus
Supplement.
In the event that Mortgage Assets having an Aggregate Bond Value at least
equal to the original Aggregate Outstanding Principal of a Series is not pledged
and delivered to the Trustee on the related Closing Date, the Issuer will
deposit cash or Eligible Investments on an interim basis with the Trustee on
such Closing Date in lieu of such Undelivered Mortgage Assets. If Mortgage
Assets are not subsequently delivered within 90 days of issuance of the Bonds,
the amount of such deposit corresponding to principal may be used to pay a
corresponding amount of principal of the Bonds to the extent set forth, and on
the Payment Dates specified, in the Prospectus Supplement.
OPTIONAL REDEMPTION
The Issuer, or such other Person specified in the related Prospectus
Supplement, may, at its option and if so specified in the related Prospectus
Supplement, redeem, in whole or in part, one or more Classes of any Series on
any Payment Date for such Series on or after the dates, if any, specified in
such Prospectus Supplement. Notice of such redemption will be given by the
Issuer or Trustee prior to the Redemption Date. In the case of a REMIC, the
Issuer may effect an optional redemption only if it qualifies as a "qualified
liquidation" under Section 860F of the Code. The Redemption Price for any Bond
so redeemed will be equal to 100% of the outstanding principal amount of such
Bond, together with interest accrued thereon to the date specified in the
related Prospectus Supplement.
MANDATORY REDEMPTION
If specified in the related Prospectus Supplement, Bonds of one or more
Classes of a Series ("Individual Investor Bonds") may be subject to mandatory
redemption by lot or by such other method set forth in the Prospectus
Supplement. Except as otherwise specified in the related Prospectus Supplement,
no Bonds of a particular Class will be redeemed until all Bonds in each Class
having a higher priority of redemption have been paid in full. Residual Interest
Bonds will not be redeemed except in connection with the liquidation of the
applicable REMIC, in which event the Residual Interest Bonds of the applicable
Series will be redeemed in full.
Individual Investor Bonds within a Class will be selected for redemption by
random lot in $1,000 units after all redemptions requested by holders of
Individual Investor Bonds in the Class have been made or by such other method
set forth in the Prospectus Supplement. Procedures relating to optional
redemptions requested by holders of Individual Investor Bonds and to mandatory
redemptions by the Issuer of Individual Investor Bonds, and the Class
priorities, if any, and conditions with respect to such redemptions, will be
described in the related Prospectus Supplement.
OPTIONAL TERMINATION
If so specified in the related Prospectus Supplement for a Series, the
Depositor, the Servicer, or another entity designated in the related Prospectus
Supplement may, at its option, cause an early termination of a Trust Fund by
repurchasing all of the Mortgage Assets from such Trust Fund on or after a date
specified in the related Prospectus Supplement, or on or after such time as the
aggregate outstanding principal amount of the Certificates is less than a
specified percentage of their initial aggregate principal amount. In the case of
a Trust Fund for which one or more REMIC elections have been made, the Trustee
must conduct the optional termination so as to constitute a "qualified
liquidation" under Section 860F of the Code. See "THE TRUST
AGREEMENT--Termination."
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OPTIONAL REPURCHASE OF CERTIFICATES
If so specified in the related Prospectus Supplement for a Series, one or
more Classes of the Certificates of such Series may be repurchased, in whole or
in part, at the option of the Depositor, at such times and under the
circumstances specified in such Prospectus Supplement. Notice of any such
repurchase must be given by the Trustee prior to the optional repurchase date,
as specified in the related Prospectus Supplement. The repurchase price for any
Certificate so repurchased will be set forth in the related Prospectus
Supplement.
OTHER REPURCHASES
If so specified in the related Prospectus Supplement for a Series, any Class
of the Certificates of such Series may be subject to repurchase at the request
of the holders of such Class or to mandatory repurchase by the Depositor. Any
such redemption at the request of holders or mandatory repurchase with respect
to a Class of a Series of the Certificates will be described in the related
Prospectus Supplement and will be on such terms and conditions as described
therein.
YIELD AND PREPAYMENT CONSIDERATIONS
TIMING OF PAYMENT OR DISTRIBUTION OF INTEREST AND PRINCIPAL
Each payment or distribution of interest on the Securities (or addition to
principal of a Class of Compound Interest Securities) on a Payment Date or
Distribution Date will include all interest accrued during the Interest Accrual
Period specified in the related Prospectus Supplement preceding such Payment
Date or Distribution Date. If the Interest Accrual Period for a Series ends on a
date other than a Payment Date or Distribution Date for such Series, the yield
realized by the holders of such Securities may be lower than the yield that
would result if the Interest Accrual Period ended on such Payment Date or
Distribution Date. Additionally, if so specified in the related Prospectus
Supplement, interest accrued for an Interest Accrual Period for one or more
Classes may be calculated on the assumption that principal payments or
distributions (and additions to principal of the Securities) and allocations of
losses on the Mortgage Assets are made on the first day of the preceding
Interest Accrual Period and not on the Payment Date or Distribution Date with
respect to such preceding Interest Accrual Period. Such method would produce a
lower effective yield than if interest were calculated on the basis of the
actual principal amount outstanding during such Interest Accrual Period.
PRINCIPAL PREPAYMENTS
The yield to maturity or final distribution on the Securities will be
affected by the rate of principal payments on the Mortgage Loans (including
principal prepayments resulting from both voluntary prepayments by the
Mortgagors and involuntary liquidations). The rate at which principal
prepayments occur on the Mortgage Loans will be affected by a variety of
factors, including, without limitation, the terms of the Mortgage Loans, the
level of prevailing interest rates, the availability of mortgage credit and
economic, tax, legal and other factors. The rate of principal payments or
distributions on the Securities will correspond to the rate of principal
payments on the Mortgage Assets. Principal prepayments on the Mortgage Assets
are likely to be affected by the existence of provisions prohibiting prepayment
of a Mortgage Loan underlying or comprising the Mortgage Assets for a defined
period of time (a "Lock-Out Period") or provisions requiring the payment of a
prepayment premium in the event of a prepayment (a "Yield Maintenance Payment"),
and by the extent to which the Primary Servicer is able to enforce such
provisions. Mortgage Loans with a Lock-Out Period or a Yield Maintenance
Payment, to the extent enforceable, generally would be expected to experience a
lower rate of principal prepayments than otherwise identical Mortgage Loans
without such provisions, with shorter Lock-Out Periods or with lower Yield
Maintenance Payments.
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If the purchaser of a Security offered at a discount calculates its
anticipated yield to maturity or final distribution based on an assumed rate of
distributions of principal that is faster than that actually experienced on the
Mortgage Loans, the actual yield to maturity or final distribution will be lower
than that so calculated. Conversely, if the purchaser of a Security offered at a
premium calculates its anticipated yield to maturity or final distribution based
on an assumed rate of distributions of principal that is slower than that
actually experienced on the Mortgage Loans, the actual yield to maturity or
final distribution will be lower than that so calculated.
The timing of changes in the rate of principal prepayments on the Mortgage
Loans may significantly affect an investor's actual yield to maturity, even if
the average rate of distributions of principal is consistent with an investor's
expectation. In general, the earlier a principal prepayment is received on the
Mortgage Loans and paid on an investor's Securities, the greater the effect on
such investor's yield to maturity or final distribution. The effect on an
investor's yield of principal payments or distributions occurring at a rate
higher (or lower) than the rate anticipated by the investor during a given
period may not be offset by a subsequent like decrease (or increase) in the rate
of principal payments or distributions.
PREPAYMENTS AND WEIGHTED AVERAGE LIFE
The Stated Maturity for a Class is the date specified in the related
Prospectus Supplement, calculated on the basis of the assumptions applicable to
such Series set forth therein, no later than which the entire Aggregate
Outstanding Principal thereof will be fully paid.
The rate of return on reinvestment of distributions of principal and
interest on the Mortgage Assets securing a Series, the rates at which principal
payments are received on such Mortgage Assets and the rate at which payments are
made from any Reserve Fund or other Enhancement for such Series may affect the
ultimate maturity of each Class of such Series. Prepayments on the Mortgage
Assets will accelerate the rate at which principal is paid or distributed on the
Securities. High reinvestment rates tend to increase the amount of Excess Cash
Flow, which, to the extent applied to principal payments or distributions on the
Securities, will accelerate principal payments or distributions on such
Securities.
"Weighted average life" refers to the average amount of time that will
elapse from the date of issue of a security until each dollar of principal of
such security will be repaid to the investor. The weighted average life of the
Securities of a Series will be influenced by the rate at which principal on the
Mortgage Loans comprising or underlying the Mortgage Assets pledged as security
for such Bonds, or deposited in the Trust Fund, as the case may be, is paid,
which may be in the form of scheduled amortization or prepayments (for this
purpose, the term "prepayment" includes prepayments, in whole or in part, and
liquidations due to default).
The rate of principal prepayments on pools of mortgages is influenced by a
variety of economic, demographic, geographic, tax, legal and other factors. The
rate of prepayments of housing loans has fluctuated significantly in recent
years. In general, however, if prevailing interest rates fall significantly
below the interest rates on the Mortgage Loans comprising or underlying the
Mortgage Assets pledged as security for a Series, such Mortgage Loans are likely
to be the subject of higher principal prepayments than if prevailing rates
remain at or above the rates borne by such mortgages. In this regard, it should
be noted that certain Mortgage Assets pledged as security for a Series may be
backed by Mortgage Loans with different interest rates and the stated
pass-through or pay-through interest rate of certain Mortgage Assets may be a
number of percentage points less than the underlying Mortgage Loans. In
addition, the weighted average life of the Securities may be affected by the
varying maturities of the Mortgage Loans comprising or underlying the Mortgage
Assets. If any Mortgage Loans comprising or underlying the Mortgage Assets for a
Series have actual terms to maturity of less than those assumed in calculating
Stated Maturity or the Final Scheduled Distribution Date, one or more Classes of
the Series may be fully paid prior to their
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respective Stated Maturities or the Final Scheduled Distribution Dates, even in
the absence of prepayments and a reinvestment return higher than the Assumed
Reinvestment Rate, if any. Accordingly, the prepayment experience of the
Mortgage Assets will, to some extent, be a function of the mix of interest rates
and maturities of the Mortgage Loans comprising or underlying such Mortgage
Assets. See "SECURITY FOR THE BONDS AND CERTIFICATES."
Prepayments on loans are also 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, each as
described below. CPR represents a constant assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans for the
life of such loans. SPA represents an assumed rate of prepayment each month
relative to the then outstanding principal balance of a pool of loans. A
prepayment assumption of 100% of SPA assumes prepayment rates of 0.2% per annum
of the then outstanding principal balance of such loans in the first month of
the life of the loans and an additional 0.2% per annum in each month thereafter
until the thirtieth month. Beginning in the thirtieth month and in each month
thereafter during the life of the loans, 100% of SPA assumes a constant
prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption purports to
be a historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of loans, including the Mortgage
Loans underlying or comprising the Mortgage Assets. Thus, it is likely that
prepayment of any Mortgage Loans comprising or underlying the Mortgage Assets
for any Series will not conform to any particular level of CPR or SPA.
The Issuer is not aware of any publicly available statistics that set forth
prepayment experience or prepayment forecasts of commercial or multifamily
mortgage loans over an extended period of time.
Except with respect to Interest Only Securities, the Prospectus Supplement
will contain tables setting forth the projected weighted average life of each
Class of such Series and the percentage of the original principal amount of each
Class of such Series that would be outstanding on specified Payment Dates or
Distribution Dates for such Series based on the assumptions stated in such
Prospectus Supplement, including assumptions that prepayments on the Mortgage
Loans comprising or underlying the related Mortgage Assets are made at rates
corresponding to various percentages of CPR, SPA or at such other rates
specified in such Prospectus Supplement. Such tables and assumptions are
intended to illustrate the sensitivity of weighted average life of the
Securities to various prepayment rates and will not be intended to predict or to
provide information which will enable investors to predict the actual weighted
average life of the Securities or prepayment rates of the Mortgage Loans
comprising or underlying the related Mortgage Assets. It is unlikely that
prepayment of any Mortgage Loans comprising or underlying the Mortgage Assets
for any Series will conform to any particular level of CPR, SPA or any other
rate specified in the related Prospectus Supplement.
OTHER FACTORS AFFECTING WEIGHTED AVERAGE LIFE
TYPE OF MORTGAGE LOAN. Mortgage Loans comprising or underlying the Mortgage
Assets may consist of ARMs. The rate of principal prepayments with respect to
ARMs has fluctuated in recent years. ARMs may be subject to a greater rate of
principal prepayments in a declining interest rate environment. For example, if
prevailing interest rates fall significantly below the then current mortgage
interest rates on the Mortgage Loans, the rate of prepayment on the Mortgage
Loans would be expected to increase. Conversely, if prevailing interest rates
rise significantly above the then current mortgage interest rates on the
Mortgage Loans, the rate of prepayment on the Mortgage Loans would be expected
to decrease. No assurances can be given as to the rate of prepayments on the
Mortgage Loans in stable or changing interest rate environments.
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A number of Mortgage Loans may have balloon payments due at maturity, and
because the ability of a borrower to make a balloon payment typically will
depend upon its ability either to refinance the loan or to sell the related
Mortgaged Property, there is a risk that a number of Mortgage Loans having
balloon payments may default at maturity, or that the Servicer, the Master
Servicer or the Special Servicer, if any, may extend the maturity of such a
Mortgage Loan in connection with a workout. In the case of defaults, recovery of
proceeds may be delayed by, among other things, bankruptcy of the borrower or
adverse conditions in the market where the property is located. In order to
minimize losses on defaulted Mortgage Loans, the Servicer, the Master Servicer
or the Special Servicer, if any, may, to the extent and under the circumstances
set forth in the related Prospectus Supplement, be given considerable
flexibility to modify Mortgage Loans which are in default or as to which a
default is reasonably foreseeable. Any defaulted balloon payment or modification
which extends the maturity of a Mortgage Loan will tend to extend the weighted
average life of the Securities thereby lengthening the period of time elapsed
from the date of issuance of a Security until each dollar of principal will be
repaid or distributed to the investor.
FORECLOSURES AND PAYMENT PLANS. The number of foreclosures and the
principal amount of the Mortgage Loans comprising or underlying the Mortgage
Assets which are foreclosed in relation to the number of Mortgage Loans which
are repaid in accordance with their terms will affect the weighted average life
of the Mortgage Loans comprising or underlying the Mortgage Assets and that of
the related Series of Securities. Servicing decisions made with respect to the
Mortgage Loans, including the use of payment plans prior to a demand for
acceleration and the restructuring of Mortgage Loans in bankruptcy proceedings,
may also have an impact upon the payment patterns of particular Mortgage Loans.
The return to Holders of Securities may be adversely affected by servicing
policies and decisions relating to foreclosures.
DUE ON SALE CLAUSES. Acceleration of mortgage payments as a result of
certain transfers of underlying Mortgaged Property is another factor affecting
prepayment rates that may not be reflected in the prepayment standards or models
used in the relevant Prospectus Supplement. A number of the Mortgage Loans
underlying Private Mortgage-Backed Securities and Mortgage Loans in a Mortgage
Pool may include "due-on-sale" clauses which allow the holder of the Mortgage
Loans to demand payment in full of the remaining principal balance of the
Mortgage Loans upon sale or certain other transfers of the underlying Mortgaged
Property. Except as otherwise described in the Prospectus Supplement for a
Series, the Primary Servicer of Mortgage Loans comprising or underlying Mortgage
Assets securing such Series will not exercise its right to enforce any
"due-on-sale" clause applicable to the related Mortgage Loan so long as the new
mortgagor satisfies the applicable underwriting criteria for similar loans
serviced by the Primary Servicer. The Primary Servicer will not enforce such
clause to the extent enforcement would be unlawful or would prejudice recovery
under any applicable Insurance Policy. If the Primary Servicer determines not to
enforce such "due-on-sale" clause, it will enter into an assumption and
modification agreement with the person to whom the Mortgaged Property is to be
conveyed. FHA Loans are not permitted to contain "due-on-sale" clauses and are
freely assumable by qualified persons.
SINGLE MORTGAGE LOAN OR SINGLE OBLIGOR. The Mortgage Assets securing a
Series may consist of a single Mortgage Loan or obligations of a single obligor
or related obligors as specified in the related Prospectus Supplement.
Assumptions used with respect to the prepayment standards or models based upon
analysis of the behavior of mortgage loans in a larger group will not
necessarily be relevant in determining prepayment experience on a single
Mortgage Loan or with respect to a single obligor.
SECURITY FOR THE BONDS AND CERTIFICATES
GENERAL
Each Series of Bonds will be secured by a pledge by the Issuer to the
Trustee of all right, title and interest of the Issuer in the Primary Assets for
such Series, and each Series of Certificates will represent a
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beneficial interest in a Trust Fund comprised of Primary Assets transferred to
the Trustee by the Depositor. The Primary Assets may include (a) Mortgage Assets
directly owned by the Issuer, (b) amounts payable under the Mortgage Assets, (c)
funds, instruments or securities deposited or held from time to time in any
Reserve Fund, (d) funds, instruments or securities initially deposited in the
Collection Account for such Series, (e) an assignment of leases and rents, if
any, (f) reinvestment income, if any, on moneys deposited in any Pledged Fund or
Account, (g) Enhancement Agreements, if any, (h) Servicing Agreements, if any,
related to the Mortgage Loans of such Series, and (i) other funds, instruments
or securities specified as Primary Assets in the related Prospectus Supplement.
To the extent specified in the related Prospectus Supplement, certain
amounts received by the Trustee or a Servicer with respect to a Private
Mortgage-Backed Security or Mortgage Loan securing a Series may not be pledged
as Mortgage Assets for such Series or deposited into the Trust Fund for such
Series, as the case may be, but will be payable to the seller of such Private
Mortgage-Backed Security or Mortgage Loan or to a Servicer free and clear of the
lien of the Indenture, or interest granted under the Trust Agreement.
Mortgage Assets for a Series may consist of any combination of the following
to the extent and as specified in the related Prospectus Supplement: (a)
Mortgage Loans or participation interests therein and (b) Private
Mortgage-Backed Securities. Mortgage Loans for a Series will be purchased by the
Issuer directly or through an affiliate in the open market or in privately
negotiated transactions. Private Mortgage-Backed Securities will in turn be
secured by Underlying Collateral which will consist of Mortgage Loans.
Participation interests pledged as Mortgage Assets for a Series may be acquired
by the Issuer pursuant to a Participation Agreement or may be purchased in the
open market.
The Trustee or its agents or nominees will have possession of any Mortgage
Loans constituting Mortgage Assets and will be the registered owner of any
Private Mortgage-Backed Security which constitutes Mortgage Assets. The Trustee
will not, unless otherwise specified in the related Prospectus Supplement, be in
possession of or be the registered owner of any Underlying Collateral for any
Private Mortgage-Backed Security. See "--Private Mortgage-Backed Securities"
below.
Unless otherwise specified in the related Prospectus Supplement for a
Series, scheduled distributions of principal of and interest on the Mortgage
Assets pledged to secure a Series or deposited into the Trust Fund for such
Series, as the case may be, the amounts available to be withdrawn from any
related Reserve Fund, the amount of cash, if any, initially deposited in the
related Collection Account and any other Mortgage Assets pledged to secure such
Series or deposited into the Trust Fund for such Series, as the case may be,
together with the Reinvestment Income thereon at the Assumed Reinvestment Rate,
if any, will be sufficient irrespective of the rate of prepayments on the
Mortgage Assets to make required payments of interest on the Securities of such
Series and to retire each Class of such Series not later than its Stated
Maturity or Final Scheduled Distribution Date, as applicable. See "YIELD AND
PREPAYMENT CONSIDERATIONS." The Mortgage Assets for a Series will equally and
ratably secure each Class of such Series, or will represent beneficial interest
in the Trust Fund, as the case may be, without priority of one Class over the
other (subject to any subordination of Subordinate Securities of a Series as set
forth in the related Prospectus Supplement), and the Mortgage Assets securing
each Series, or comprising the Trust Fund, will serve as Mortgage Assets only
for that Series.
MORTGAGE LOANS
GENERAL. Mortgage Loans for a Series may consist of Mortgage Loans or
participation interests therein. Mortgage Loans comprising the Mortgage Assets,
Mortgage Loans in which participation interests are conveyed to the Trustee, and
Mortgage Loans underlying Private Mortgage-Backed Securities are referred to
herein as the "Mortgage Loans." Some of the Mortgage Loans may have been
originated by or acquired from an affiliate of the Issuer and an affiliate of
the Issuer may be an obligor with respect to a Mortgage Loan. Mortgage Loans
may, as specified in the related Prospectus Supplement, consist of fixed
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rate, level payment, fully amortizing Mortgage Loans, ARMs or Mortgage Loans
having balloon or other payment characteristics as described in the related
Prospectus Supplement. ARMs may have a feature which permits the borrower to
convert the rate thereon to a fixed rate. Unless otherwise specified in the
applicable Prospectus Supplement, the Mortgage Loans will be secured by first
mortgages or deeds of trust or other similar security instruments creating a
first lien on Mortgaged Property.
The Mortgaged Properties may include Multifamily Property (i.e., multifamily
residential rental properties or cooperatively owned properties consisting of
five or more dwelling units) or Commercial Property. Multifamily Property may
include mixed commercial and residential structures and may consist of property
securing FHA-insured Mortgage Loans made by private lending institutions to help
finance construction or substantial rehabilitation of the related multifamily
rental or cooperative housing for moderate-income or displaced families. See
"DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS--Hazard Insurance on the
Mortgage Loans--FHA Insurance."
Each Mortgaged Property will be located on land owned in fee simple by the
Mortgagor or on land leased by the Mortgagor for a term at least two years
greater than the term of the related Mortgage Loan. Unless otherwise specified
in the related Prospectus Supplement, the fee interest in leased land will be
subject to the lien securing the related Mortgage Loan. Mortgage Loans secured
by Multifamily Property or Commercial Property will generally also be secured by
an assignment of leases and rents and/or operating or other cash flow guarantees
relating to the Mortgage Loan.
If so specified in the related Prospectus Supplement, Mortgage Loans
relating to real estate projects under construction may be included in the
Mortgage Assets for a Series. The related Prospectus Supplement will set forth
the procedures and timing for making disbursements from construction reserve
funds as portions of the related real estate project are completed. If permitted
by applicable law, the Mortgage Pool may also include Mortgaged Properties
acquired by foreclosure or by deed-in-lieu of foreclosure ("REO Property"). To
the extent specified in the related Prospectus Supplement, the Servicer, the
Master Servicer or the Special Servicer, if any, may establish and maintain a
trust account or accounts to be used in connection with REO Properties and other
Mortgaged Properties being operated by it or on its behalf on behalf of the
Trust Estate or the Trust Fund, as the case may be, by the mortgagor as debtor-
in-possession or otherwise. See "SERVICING OF MORTGAGE LOANS--Maintenance of
Insurance Policies and Other Servicing Procedures--Presentation of Claims;
Realization Upon Defaulted Mortgage Loans." In addition, the Mortgage Pool for a
particular Series may include Mortgage Loans which consist of cash flow
mortgages, installment contracts, mortgage loans with equity features or other
mortgage loans described in the related Prospectus Supplement.
The related Prospectus Supplement for each Series will provide information
with respect to the Mortgage Pool as of the Cut-Off Date, including, among other
things, (a) the aggregate unpaid principal balance of the Mortgage Loans
comprising the Mortgage Pool; (b) the weighted average Mortgage Rate on the
Mortgage Loans, and, in the case of adjustable Mortgage Rates, the weighted
average of the current adjustable Mortgage Rates, the minimum and maximum
permitted adjustable Mortgage Rates, if any, and the weighted average thereof;
(c) the average outstanding principal balance of the Mortgage Loans; (d) the
weighted average remaining scheduled term to maturity of the Mortgage Loans and
the range of remaining scheduled terms to maturity; (e) the range of
Loan-to-Value Ratios of the Mortgage Loans; (f) the relative percentage (by
principal balance as of the Cut-Off Date) of Mortgage Loans that are ARMs, fixed
interest rate, FHA Loans or other types of Mortgage Loans; (g) any Enhancement
relating to the Mortgage Pool; (h) the relative percentage (by principal balance
as of the Cut-Off Date) of Mortgage Loans that are secured by Multifamily
Property or Commercial Property; (i) the geographic dispersion of Mortgaged
Properties securing the Mortgage Loans; and (j) the use or type of each
Mortgaged Property securing a Mortgage Loan. The related Prospectus Supplement
will also specify other characteristics of Mortgage Loans which may be included
in the Mortgage Pool for a Series. If Private Mortgage-Backed Securities
representing ownership interests in multiple mortgage pools constitute Mortgage
Assets for a Series, the
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Prospectus Supplement will set forth, to the extent available, the
above-specified information on an aggregate basis for the respective mortgage
pools. If specific information respecting the Mortgage Loans is not known to the
Issuer at the time the related Series is initially offered, more general
information of the nature described above will be provided in the Prospectus
Supplement, and final specific information will be set forth in a Current Report
on Form 8-K to be available to investors on the date of issuance of the Series
and to be filed with the Commission within 15 days after the initial issuance of
such Series.
If so specified in the related Prospectus Supplement, the terms of a
Mortgage Loan may provide that upon the sale of the Mortgaged Property, the
obligor may, in lieu of the payment in full of the amount of principal and
interest then outstanding or accrued on the related Mortgage Loan, irrevocably
deposit cash or other specified obligations into an account with the Trustee in
an amount which, together with interest thereon, will be sufficient to make
timely payments or distributions of principal and interest on the Mortgage Loan
and, therefore, on the Securities according to their terms.
The characteristics of the Mortgage Loans comprising or underlying the
Mortgage Assets may affect the rate of prepayment of Securities and the risk of
delinquencies, foreclosures and losses. See "RISK FACTORS" and "YIELD AND
PREPAYMENT CONSIDERATIONS."
MORTGAGE UNDERWRITING STANDARDS AND PROCEDURES. The underwriting procedures
and standards for Mortgage Loans included in a Mortgage Pool will be specified
in the related Prospectus Supplement to the extent such procedures and standards
are known or available. Such Mortgage Loans may be originated in contemplation
of the transactions contemplated by this Prospectus and the related Prospectus
Supplement. If stated in the related Prospectus Supplement, the originator of
the Mortgage Loans (or another entity specified in the related Prospectus
Supplement) will make representations and warranties concerning compliance with
such underwriting procedures and standards.
Except as otherwise set forth in the related Prospectus Supplement for a
Series, the originator of a Mortgage Loan will have applied underwriting
procedures intended to evaluate, among other things, the income derived from the
Mortgaged Property, the capabilities of the management of the project, including
a review of management's past performance record, its management reporting and
control procedures (to determine its ability to recognize and respond to
problems) and its accounting procedures to determine cash management ability,
the obligor's credit standing and repayment ability and the value and adequacy
of the Mortgaged Property as collateral. FHA Loans will have been originated by
mortgage lenders which are approved by HUD as an FHA mortgagee in the ordinary
course of their real estate lending activities and will comply with the
underwriting policies of FHA. Except as described below or in the related
Prospectus Supplement, the Issuer believes that underwriting procedures used
were consistent with those utilized by mortgage lenders generally during the
period of origination.
Unless otherwise specified in the related Prospectus Supplement, the
adequacy of a Mortgaged Property as security for repayment will generally have
been determined by appraisal by appraisers selected in accordance with
pre-established guidelines established by or acceptable to the loan originator
for appraisers. Unless otherwise specified in the related Prospectus Supplement,
the appraiser must personally inspect the property and verify that it was in
good condition and that construction, if new, has been completed. Unless
otherwise stated in the applicable Prospectus Supplement, the appraisal will
have been based upon a cash flow analysis or a market data analysis of recent
sales of comparable properties and, when deemed applicable, a replacement cost
analysis based on the current cost of constructing or purchasing a similar
property.
No assurance can be given that values of the Mortgaged Properties have
remained or will remain at their levels on the dates of origination of the
related Mortgage Loans. Further, there is no assurance that appreciation of real
estate values generally will limit loss experiences on Commercial Property or on
non-traditional housing such as Multifamily Property. If the residential real
estate market should experience an overall decline in property values such that
the outstanding balances of the Mortgage Loans and any additional financing on
the Mortgaged Properties in a particular Mortgage Pool become equal to or
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greater than the value of the Mortgaged Properties, the actual rates of
delinquencies, foreclosures and losses could be higher than those now generally
experienced in the mortgage lending industry. To the extent that such losses are
not covered by the methods of Enhancement or the insurance policies described
herein, the ability of the Issuer to pay principal of and interest on the
Securities may be adversely affected. Even where credit support covers all
losses resulting from defaults and foreclosure, the effect of defaults and
foreclosures may be to increase prepayment experience on the Mortgage Assets,
thus shortening weighted average life and affecting yield to maturity. See
"YIELD AND PREPAYMENT CONSIDERATIONS."
DETERMINATION OF COMPLIANCE WITH POOL REQUIREMENTS AND UNDERWRITING
PROCEDURES. As more specifically set forth in the related Prospectus
Supplement, the Issuer will represent and warrant, upon pledge of the Mortgage
Loans to the Trustee under the Indenture or deposit of such Mortgage Loans into
the Trust Fund, as applicable, among other things, as to the accuracy of the
information in the related Mortgage Loan Schedule. If specified in the related
Prospectus Supplement, the originator of a Mortgage Loan may make
representations and warranties with respect to such Mortgage Loan. If so
specified in the related Prospectus Supplement, the Issuer will assign its
rights and the seller's obligations under the agreement pursuant to which the
Issuer acquired the Mortgage Assets for the related Series to the Trustee.
If so specified in the related Prospectus Supplement, upon the discovery of
the breach of certain representations or warranties made by the Issuer in
respect of a Mortgage Loan that materially and adversely affects the interests
of the Bondholders or Certificateholders of the related Series, the Issuer will
be obligated to cause the seller of such Mortgage Loans to repurchase such
Mortgage Loan or deliver a substitute conforming Mortgage Loan as described
below under "Repurchase and Substitution of Non-Conforming Mortgage Loans." The
Trustee will be required to enforce this obligation for the benefit of the
Bondholders or Certificateholders, following the practices it would employ in
its good faith business judgment were it the owner of such Mortgage Loan. If so
specified in the related Prospectus Supplement, the Master Servicer, if any, may
be obligated to enforce such obligations rather than the Trustee.
REPURCHASE AND SUBSTITUTION OF NON-CONFORMING MORTGAGE LOANS. The Trustee,
or if so specified in the related Prospectus Supplement, a custodian, will
review Mortgage Loan documents after receipt thereof. Unless otherwise provided
in the related Prospectus Supplement, if any such document is found to be
defective in any material respect, or if it is determined that the Issuer has
breached any representation or warranty, the Trustee or the custodian shall
immediately notify the Issuer and the Master Servicer, if any, and the Trustee,
if the custodian. Unless otherwise specified in the related Prospectus
Supplement, if the Issuer cannot cure such defect thereafter, the Issuer will be
obligated to cause the seller of such Mortgage Loan to repurchase within 90 days
of the execution of the related Series Supplement, or within such other period
specified in the related Prospectus Supplement, the related Mortgage Loan or any
property acquired in respect thereof from the Trustee at a purchase price
generally equal to the unpaid principal balance of the Mortgage Loan (or, in the
case of a foreclosed Mortgage Loan, the unpaid principal balance of such
Mortgage Loan immediately prior to foreclosure) plus accrued interest.
Unless otherwise provided in the related Prospectus Supplement, the Issuer
may, rather than cause the repurchase of the Mortgage Loan as described above,
remove such Mortgage Loan from the Trust Estate (a "Deleted Mortgage Loan") or
Trust Fund, as applicable, and substitute in its place one or more other
Mortgage Loans (each, a "Substitute Mortgage Loan"); provided, however with
respect to a Series for which no REMIC election is made, such substitution must
be effected within the period specified in the related Prospectus Supplement.
Any Substitute Mortgage Loan will, on the date of substitution, have the
characteristics specified in the related Prospectus Supplement. Unless otherwise
specified in the related Prospectus Supplement, this repurchase or substitution
obligation constitutes the sole remedy available to the Bondholders,
Certificateholders or the Trustee for a material defect in a Mortgage Loan
document or for breach of representations and warranties with respect to any
Mortgage Loan. With respect to Mortgage Loans underlying Private Mortgage-Backed
Securities, the PMBS
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Agreement may have terms relating to the repurchase or substitution obligations
which differ from those set forth above.
The Master Servicer, if any, may also make certain warranties with respect
to the Mortgage Loans comprising the Mortgage Pool for a Series. See "SERVICING
OF MORTGAGE LOANS--Certain Matters Regarding the Master Servicer and Special
Servicer." Upon a breach of any such warranty that materially and adversely
affects the interests of Bondholders or Certificateholders of the related
Series, the related Mortgage Loan will be required to be repurchased, subject to
the conditions described in the preceding paragraph and in the related
Prospectus Supplement. If the Master Servicer fails to repurchase such a
Mortgage Loan, payments to Bondholders or Certificateholders could be reduced to
the extent payments are not made on the Mortgage Loan.
Various Servicers will provide certain customary servicing functions with
respect to any Mortgage Loans pursuant to servicing agreements. Such Servicers
may include affiliates of the Issuer. If so specified in the related Prospectus
Supplement, a Master Servicing Agreement may be entered into between the Issuer
and a Master Servicer. The Master Servicer will supervise the performance by the
Servicers of their duties and responsibilities under the servicing agreements
with respect to Mortgage Loans for the related Series. Alternatively, if so
specified in the related Prospectus Supplement, the Master Servicer may be
obligated to service Mortgage Loans directly or through one or more Servicers.
In such a case, the Master Servicer will be primarily responsible for servicing
of the Mortgage Loans. The specific duties to be performed by any Servicers and
Master Servicer, if any, with respect to the Mortgage Loans of a particular
Series will be set forth in the Prospectus Supplement to the extent they differ
from the servicing obligations described herein under "SERVICING OF THE MORTGAGE
LOANS." Servicers and the Master Servicer, if any, may be required to advance
funds to cover delinquent payments on Mortgage Loans, to the extent specified in
the related Prospectus Supplement. The Prospectus Supplement also will specify
criteria to be met by each Servicer and the Master Servicer. Such criteria will
be determined by the Issuer consistent with the requirements of each Rating
Agency rating such Series. See "SERVICING OF MORTGAGE LOANS."
PRIVATE MORTGAGE-BACKED SECURITIES
GENERAL. Private Mortgage-Backed Securities may consist of (a) mortgage
participations and pass-through certificates, evidencing an undivided interest
in a pool of Mortgage Loans, (b) debt obligations (interest payments on which
may be tax-exempt in whole or in part), secured by mortgages or (c)
participations or other interests in any of the foregoing. Private
Mortgage-Backed Securities will have been issued pursuant to a pooling and
servicing agreement, an indenture or similar agreement, or a participation
agreement or similar agreement (a "PMBS Agreement"). The seller or servicer of
the underlying Mortgage Loans will have entered into the PMBS Agreement with the
trustee under such PMBS Agreement (the "PMBS Trustee"). The PMBS Trustee or its
agent, or a custodian, will possess the Mortgage Loans, participations or other
interest, underlying such Private Mortgage-Backed Security. Mortgage Loans
underlying a Private Mortgage-Backed Security will be serviced by the Master
Servicer directly or by one or more Servicers who may be subject to the
supervision of the Master Servicer. Unless otherwise specified in the Prospectus
Supplement relating to a Series, if payments with respect to interest on the
underlying obligations are tax-exempt, such Prospectus Supplement will disclose
the relevant federal tax characteristics relating to the tax-exempt status of
such obligations.
The issuer of the Private Mortgage-Backed Securities (the "PMBS Issuer") may
be a financial institution or other entity engaged generally in the business of
mortgage lending, a public agency or instrumentality of a state, local or
federal government or a limited purpose corporation organized for the purpose
of, among other things, establishing trusts and acquiring and selling housing
loans to such trusts, and selling beneficial interests in such trusts. If so
specified in the Prospectus Supplement, the PMBS Issuer may be an affiliate of
the Issuer. The obligations of the PMBS Issuer will generally be limited to
certain representations and warranties with respect to the assets conveyed by it
to the related trust. Unless
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otherwise specified in the related Prospectus Supplement, the PMBS Issuer will
not have guaranteed any of the assets conveyed to the related trust or any of
the Private Mortgage-Backed Securities issued under the PMBS Agreement.
Additionally, although the Mortgage Loans, participations or other interest,
underlying the Private Mortgage-Backed Securities may be guaranteed by an agency
or instrumentality of the United States, the Private Mortgage-Backed Securities
themselves will not be so guaranteed.
Distributions of principal and interest will be made on the Private
Mortgage-Backed Securities on the dates specified in the related Prospectus
Supplement. The Private Mortgage-Backed Securities may be entitled to receive
nominal or no principal distributions or nominal or no interest distributions.
Principal and interest distributions will be made on the Private Mortgage-Backed
Securities by the PMBS Trustee or the Servicer. The PMBS Issuer or the Servicer
or another person specified in the related Prospectus Supplement may have the
right or obligation to repurchase or substitute assets underlying the Private
Mortgage-Backed Securities after a certain date or under other circumstances
specified in the related Prospectus Supplement.
UNDERLYING MORTGAGE LOANS. The Mortgage Loans underlying the Private
Mortgage-Backed Securities may consist of fixed rate, level payment, fully
amortizing Mortgage Loans, ARMs, or Mortgage Loans having balloon or other
special payment features. Mortgage Loans underlying the Private Mortgage-Backed
Securities will be secured primarily by Multifamily Property or Commercial
Property. Unless otherwise stated in the related Prospectus Supplement, the
underwriting procedures set forth above will also apply to Underlying Mortgage
Loans.
ENHANCEMENT RELATING TO PRIVATE MORTGAGE-BACKED SECURITIES. Enhancement in
the form of reserve funds, subordination of other private mortgage certificates
issued under the PMBS Agreement, letters of credit, insurance policies or other
types of credit support may be provided with respect to the Mortgage Loans,
participations or other interest, underlying the Private Mortgage-Backed
Securities or with respect to the Private Mortgage-Backed Securities themselves.
The type, characteristics and amount of enhancement, if any, will be a function
of certain characteristics of the Mortgage Loans, participations or other
interest, and other factors and will have been established for the Private
Mortgage-Backed Securities on the basis of requirements of the Rating Agency
which assigned a rating to the Private Mortgage-Backed Securities.
ADDITIONAL INFORMATION. The Prospectus Supplement for a Series which
includes Private Mortgage-Backed Securities will specify, to the extent
available, (i) the aggregate approximate principal amount and type of the
Private Mortgage-Backed Securities to be included in the Trust Estate or Trust
Fund, as applicable, (ii) certain characteristics of the Mortgage Loans,
participations or other interests which comprise the underlying assets for the
Private Mortgage-Backed Securities including (A) the payment features of such
Mortgage Loans, participations or other interests (i.e., whether they are fixed
rate or adjustable rate and whether they provide for fixed level payments,
adjustable payments or other payment features), (B) the approximate aggregate
principal balance, if known, of Underlying Mortgage Loans, participations or
other interests insured or guaranteed by a governmental entity, (C) the
servicing fee or range of servicing fees with respect to the Mortgage Loans, and
(D) the minimum and maximum stated maturities of the underlying Mortgage Loans,
participations or other interests at origination, (iii) the maximum original
term-to-stated maturity of the Private Mortgage-Backed Securities, (iv) the
weighted average pass-through or bond rate of the Private Mortgage-Backed
Securities or formula therefor, (v) the pass-through or bond rate or ranges
thereof for the Private Mortgage-Backed Securities or formula therefor, (vi) the
PMBS Issuer, Master Servicer and the PMBS Trustee for such Private
Mortgage-Backed Securities, (vii) certain characteristics of enhancement, if
any, such as subordination, reserve funds, insurance policies, letters of credit
or guarantees relating to the Mortgage Loans, participations or other interests
underlying the Private Mortgage-Backed Securities or to such Private
Mortgage-Backed Securities themselves, (viii) the terms on which the Underlying
Mortgage Loans, participations or other interests for such Private
Mortgage-Backed Securities or the Private Mortgage-Backed Securities may, or are
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required to, be purchased prior to their maturity or the maturity of the Private
Mortgage-Backed Securities and (ix) the terms on which Mortgage Loans,
participations or other interests may be substituted for those originally
underlying the Private Mortgage-Backed Securities.
SUBSTITUTION OF MORTGAGE ASSETS
Unless otherwise provided in the related Prospectus Supplement, subject to
the limitations set forth in the Indenture or Trust Agreement for a Series, the
Issuer or Depositor may deliver to the Trustee other Mortgage Assets in
substitution for any Mortgage Assets originally pledged as security for a
Series, or deposited in the Trust Fund for a Series, as the case may be. Any
such Substitute Mortgage Assets will have an outstanding principal balance or
Asset Value (determined in a manner consistent with the Mortgage Assets for
which it is substituted) that is less than or equal to the outstanding principal
balance or Aggregate Asset Value of the Mortgage Assets for which it is
substituted, unless otherwise specified in the related Prospectus Supplement,
and will otherwise have such characteristics as shall be necessary to cause the
Mortgage Assets, upon such substitution, to conform more fully to the
description thereof set forth in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, (1) no substitution
will be permitted which would delay the Stated Maturity or Final Scheduled
Distribution Date, of any Class of Securities of the related Series, (2) no more
than 40% of the Mortgage Assets (including any cash deposited on the Closing
Date) securing a Series may be substituted for, (3) only like kind Mortgage
Assets may be substituted for Mortgage Assets (or, with respect to a
substitution for cash deposited in any Pledged Fund or Account on the Closing
Date, the Substitute Mortgage Assets must be of like kind as the Mortgage Assets
securing the related Series) and (4) there can be no substitutions for
Substitute Mortgage Assets. No substitution may be made (1) if such substitution
would result in the Issuer becoming required to register as an "Investment
Company" for purposes of the Investment Company Act of 1940, (2) if the Rating
Agencies will, as a result of such substitution, downgrade the rating on the
related Series of Securities or any Class thereof or (3) in the event that the
Issuer has elected to be treated as a REMIC and such substitution would cause
the REMIC to lose its status as a REMIC or result in a tax on "prohibited
contributions" to or "prohibited transactions" of the REMIC.
If the Issuer elects to treat the Mortgage Assets securing a Series of
Bonds, or deposited into the Trust Fund, as a REMIC or an election is made to
treat the arrangement by which a Series of Securities is issued as a REMIC, no
Substitute Mortgage Assets may be pledged by the Issuer (a) in the case of the
substitution for a "defective obligation" (within the meaning of Section
860G(a)(4)(B) of the Code), more than two years after the "Start Up Day" (as
defined in Section 860G(a)(9) of the Code) of the REMIC, or (b) in the case of
any other Mortgage Assets, more than three months after the Start Up Day.
COLLECTION ACCOUNT
Unless otherwise provided in the related Series Supplement, a separate
Collection Account for each Series will be established by the Trustee, or if the
Trustee is not also the Paying Agent, by the Paying Agent, for receipt of all
monthly principal and interest payments on the Primary Assets securing such
Series and the amount of cash, if any, to be initially deposited therein by the
Issuer, Reinvestment Income, if any, thereon and any amounts withdrawn from any
Reserve Funds for such Series. If specified in the related Prospectus
Supplement, Reinvestment Income, if any, or other gain from investments of
moneys in the Collection Account will be credited to the Collection Account for
such Series and any loss resulting from such investments will be charged to such
Collection Account. Funds on deposit in the Collection Account will be available
for application to the payment of principal of and interest on the Securities of
the related Series and for certain other payments provided for in the Indenture
or Trust Agreement and described in the related Prospectus Supplement. To the
extent that amounts remaining on deposit in the Collection Account on each
Payment Date or Distribution Date represent Excess Cash Flow not required to be
applied to such payments or distributions, unless otherwise specified in the
related Prospectus Supplement,
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such amounts may be paid as provided in the Indenture or Trust Agreement to the
Issuer (or, in the case of a REMIC, to the holder of the residual interest
therein).
OTHER FUNDS OR ACCOUNTS
A Series may also be secured by certain other funds and accounts for the
purpose of, among other things, (i) paying certain administrative fees and
operating expenses and (ii) accumulating funds that are credited to the Issuer's
account pending their distribution to the Issuer. See "--Enhancement."
INVESTMENT OF FUNDS
The Collection Account, Servicing Accounts and certain other funds and
accounts for a Series are to be invested by the Trustee or the Paying Agent, as
directed by the Issuer, in certain Eligible Investments acceptable to each
Rating Agency rating such Series, which may include, without limitation, (a)
direct obligations of, and obligations fully guaranteed by, the United States of
America, FHLMC, FNMA or any agency or instrumentality of the United States of
America, the obligations of which are backed by the full faith and credit of the
United States of America, (b) demand and time deposits, certificates of deposit
or bankers' acceptances, (c) repurchase obligations pursuant to a written
agreement with respect to (1) any security described in clause (a) above or (2)
any other security issued or guaranteed by an agency or instrumentality of the
United States of America, (d) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United States of
America or any state, (e) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or on a
specified date not more than one year after the date of issuance thereof), (f) a
Guaranteed Investment Contract, (g) certificates or receipts representing
ownership interests in future interest or principal payments on obligations
described in clause (a) above, and (h) any other demand, money market or time
deposit obligation, security or investment acceptable to the Rating Agencies.
Eligible Investments with respect to a Series will include only obligations
or securities that mature on or before the date on which the Collection Account
or any other Pledged Fund or Account for such Series are required or may be
anticipated to be required to be applied for the benefit of the holders of such
Series. Any gain or loss from such investments for a Series will be credited or
charged to the appropriate fund or account for such Series unless otherwise
specified in the related Prospectus Supplement.
GUARANTEED INVESTMENT CONTRACT
If specified in the related Prospectus Supplement, on or prior to the
Delivery Date the Issuer and the Trustee will enter into a Guaranteed Investment
Contract with a guarantor acceptable to the Rating Agencies rating the
Securities (the "Guarantor"), pursuant to which all distributions on the
Mortgage Assets will be invested by the Trustee with the Guarantor, and the
Guarantor will pay to the Trustee interest at the rate per annum set forth in
such Guaranteed Investment Contract on all amounts invested. Whenever funds are
required under the Indenture to be paid to Bondholders or under the Trust
Agreement to be paid to the Certificateholders, the Guarantor, upon the request
of the Trustee, will remit such funds to the Trustee.
ENHANCEMENT
Enhancement may be provided with respect to a Series, or with respect to any
Mortgage Loans or Private Mortgage-Backed Securities securing a Series. See
"ENHANCEMENT."
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SERVICING OF MORTGAGE LOANS
GENERAL
The servicing obligations with respect to a particular Series may be
performed by various Servicers or by the Trustee. If so specified in the related
Prospectus Supplement, a Master Servicer or a Special Servicer may be appointed.
The related Prospectus Supplement for each Series will describe the extent, if
any, such rights, duties and obligations vary or differ with respect to such
Series from those described herein.
If so specified in the related Prospectus Supplement, pursuant to a Master
Servicing Agreement or Trust Agreement, customary servicing functions with
respect to Mortgage Loans which comprise Mortgage Assets for a Series, or which
constitute Underlying Collateral for a Private Mortgage-Backed Security will be
provided by the Master Servicer directly or by one or more Servicers subject to
supervision by the Master Servicer. To the extent specified in the related
Prospectus Supplement, a special servicer (the "Special Servicer") may be
appointed. The related Prospectus Supplement will describe the duties and
obligations of such Special Servicer. To the extent specified in the related
Prospectus Supplement, the Master Servicer or Special Servicer, if any, may have
the authority to sell or otherwise dispose of Mortgage Loans or the related REO
Property in order to maximize the value of such Mortgage Loans or property. The
entity which has primary liability for servicing Mortgage Loans directly is
sometimes referred to herein as the "Primary Servicer." If the Master Servicer
is not required under the Master Servicing Agreement, Trust Agreement or PMBS
Agreement, as applicable, to act as Primary Servicer, then the Master Servicer,
if any, will (i) administer and supervise the performance by the Servicers (who
will act as Primary Servicers) of their servicing responsibilities under the
Servicing Agreements, (ii) to the extent not maintained by a Primary Servicer,
maintain any insurance policy required for the related Mortgage Pool and (iii)
advance funds as described below under "Advances" and in the related Prospectus
Supplement. If a Master Servicer undertakes to service Mortgage Loans directly
it may do so through Servicers as its agents. In such case, the Master Servicer
will be responsible for all aspects of the servicing of the related Mortgage
Loans notwithstanding such use of Servicers. The Master Servicer or a Servicer
may be an affiliate of the Issuer. Unless otherwise specified in the related
Prospectus Supplement, in the case of FHA Loans, the Master Servicer and each
Servicer will be required to be approved by HUD as an FHA mortgagee. The Master
Servicer will only be responsible for the duties and obligations of the Special
Servicer to the extent set forth in the related Prospectus Supplement.
To the extent applicable, Master Servicing Agreements (direct or
supervisory), Servicing Agreements and Special Servicing Agreements, if any,
with respect to a Series will be filed as exhibits to a Current Report on Form
8-K within 15 days following the issuance of the Securities of a Series.
The Master Servicer will be paid a servicing fee for the performance of its
services and duties under each Master Servicing Agreement, as specified in the
related Prospectus Supplement. Each Servicer, if any, will be entitled to
receive a servicing fee. The Special Servicer, if any, will also be entitled to
a servicing fee. In addition, the Master Servicer, Special Servicer or Servicer
may be entitled to retain late charges, assumption fees and similar charges to
the extent collected from Mortgagors. If a Servicer or the Special Servicer is
terminated by the Master Servicer, the servicing function of the Servicer or the
Special Servicer will be either transferred to a substitute Servicer or Special
Servicer, as the case may be, or performed by the Master Servicer. The Master
Servicer will be entitled to retain the portion of the Servicing Fee paid to a
Servicer, under a terminated Servicing Agreement, or the Special Servicer, under
the Special Servicing Agreement, if the Master Servicer elects to perform such
servicing functions itself. See "--Servicing Compensation and Payment of
Expenses" below.
COLLECTION PROCEDURES
The Primary Servicer or, if so specified in the related Prospectus
Supplement, the Trustee, will make reasonable efforts to collect all payments
called for under the Mortgage Loans and will follow such collection procedures
as it follows with respect to mortgage loans serviced by it that are comparable
to the Mortgage Loans.
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Unless otherwise specified in the related Prospectus Supplement, the Primary
Servicer, to the extent permitted by law and the terms of the related Mortgage
Loans, will establish and maintain an escrow account (the "Escrow Account") in
which payments by Mortgagors to pay taxes, assessments, mortgage and hazard
insurance premiums, and other comparable items will be deposited. Withdrawals
from the Escrow Account are to be made to effect timely payment of taxes,
assessments and hazard insurance premiums, to refund to Mortgagors amounts
determined to be overages, to pay interest to Mortgagors on balances in the
Escrow Account to the extent required by law, to repair or otherwise protect the
Mortgaged Property and to clear and terminate such account. Alternatively, the
terms of the related Mortgage Loan may require, upon the occurrence of a
delinquency or default by the obligor, an impound account ("Impound Account") to
be established and maintained and into which payments by Mortgagors to pay
taxes, assessments, mortgage and hazard insurance premiums and other comparable
items will be deposited pending distribution of such items. The Primary Servicer
will be responsible for the administration of the Escrow Account or the Impound
Account and may be obligated to make escrow or impound advances to the relevant
account when a deficiency exists therein if so specified in the related
Prospectus Supplement.
PAYMENTS ON MORTGAGE LOANS; DEPOSITS TO CUSTODIAL ACCOUNTS
With respect to any Series, the Master Servicer, if any, will establish an
account (the "Custodial Account") in the name of the Trustee, unless otherwise
specified in the related Prospectus Supplement. The Custodial Account will be
established so as to comply with the standards of each Rating Agency rating the
Securities of a Series. Amounts to be remitted to the Trustee shall be remitted
by the Master Servicer to the Trustee from the Custodial Account for deposit in
the Collection Account for the related Series.
In those cases where a Servicer is servicing Mortgage Loans pursuant to a
Servicing Agreement, the Servicer will establish and maintain an account (the
"Servicing Account") that will comply with the standards set forth below for the
Custodial Account and that is otherwise acceptable to the Master Servicer, if
any. The Servicer will be required to deposit into the Servicing Account on a
daily basis (or upon identification) all mortgage related receipts received by
it with respect to Mortgage Loans serviced by such Servicer subsequent to the
Cut-Off Date less its servicing fee and certain other amounts specified in the
Servicing Agreement. On each Servicer Remittance Date, the Servicer shall remit
all funds held in the Servicing Account (other than payments due on or before
the Cut-Off Date and other amounts permitted to be withdrawn from or held in the
Servicing Account pursuant to the Servicing Agreement) with respect to each
Mortgage Loan together with any Advances made by such Servicer for deposit to
the Custodial Account, or if a Custodial Account has not been established,
directly to the Collection Account. See "--Advances" below.
If so specified in the related Prospectus Supplement, the Custodial Account
and each Servicing Account may be maintained as an interest-bearing account, or
the funds held therein may be invested pending remittance to the Trustee in
Eligible Investments. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer or the Servicer will be entitled to receive any
such interest or other income earned on funds in the Custodial Account or
Servicing Account as additional compensation.
The Master Servicer will deposit in the Custodial Account on a daily basis
all mortgage related receipts (including amounts remitted by the Servicer)
received by it subsequent to the Cut-off Date (other than payments of principal
and interest due on or before the Cut-off Date).
With respect to any other type of Mortgage Loan which provides for payments
other than on the basis of level payments, an account may be established as
described in the related Prospectus Supplement.
ADVANCES
GENERAL. To the extent provided in the related Prospectus Supplement, the
Primary Servicer may make periodic advances of cash ("Advances") from its own
funds or, if so specified in the related Prospectus Supplement, from excess
funds in the Custodial Account or Servicing Account, but only to the
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extent such Advances are, in the good faith business judgment of the Servicer or
the Master Servicer, as the case may be, ultimately recoverable from future
payments and collections on the Mortgage Loans or otherwise. Neither the Master
Servicer nor the Servicers will be required to make such Advances, unless
otherwise specified in the related Prospectus Supplement. The Master Servicer's
obligation to make Advances, if any, may, as specified in the related Prospectus
Supplement, be limited in amount or may be limited to Advances received from
Servicers. If so specified in the related Prospectus Supplement, the Master
Servicer will not be obligated to make Advances until all or a specified portion
of a Reserve Fund is depleted. Advances are intended to enable the Issuer to
make timely payment of the scheduled principal and interest payments or
distributions on the Securities of such Series, not to guarantee or insure
against losses. Accordingly, any funds so advanced are recoverable by the
Servicer or the Master Servicer, as the case may be, out of amounts received on
particular Mortgage Loans which represent late recoveries of principal or
interest respecting which any such Advance was made. If an Advance is made and
subsequently determined to be nonrecoverable from late collections, Insurance
Proceeds or Liquidation Proceeds from the related Mortgage Loans, or any other
source described in the related Prospectus Supplement, the Servicer or Master
Servicer will be entitled to reimbursements from other funds in the Custodial
Account or Servicing Account, as applicable.
ADJUSTMENTS TO SERVICING FEE OR ADVANCES IN CONNECTION WITH PREPAID MORTGAGE
LOANS. With respect to each Mortgage Pool, if an obligor makes a principal
prepayment between scheduled payment dates, the obligor may be required to pay
interest on the principal balance only to the date of prepayment in full. If and
to the extent provided in the related Prospectus Supplement, the amount of the
servicing fee may be reduced, or the Primary Servicer may be otherwise obligated
to advance moneys from its own funds or any reserve maintained for such purpose,
to the extent necessary to include an amount equal to a full month's interest
payment at the applicable Mortgage Rate. Partial principal prepayments may be
treated as having been received on the next Due Date, and, if so, no reduction
in interest remitted for deposit to the Collection Account will occur. See
"YIELD AND PREPAYMENT CONSIDERATIONS."
MAINTENANCE OF INSURANCE POLICIES AND OTHER SERVICING PROCEDURES
GENERAL. To the extent specified in the related Prospectus Supplement and
the Servicing Agreement, the Primary Servicer will be required to cause to be
maintained a standard hazard insurance policy with respect to each Mortgaged
Property. In addition, all or a portion of the Mortgage Loans comprising a
Mortgage Pool or constituting Underlying Collateral may be insured by the FHA.
The Primary Servicer will be required to take such steps as are reasonably
necessary to keep such insurance in full force and effect. See "DESCRIPTION OF
INSURANCE ON THE MORTGAGE LOANS."
PRESENTATION OF CLAIMS; REALIZATION UPON DEFAULTED MORTGAGE LOANS. The
market value of any property obtained in foreclosure or by deed in lieu of
foreclosure may be based substantially on the operating income obtained by
renting the applicable property. As a default on a Mortgage Loan secured by
Multifamily Property or Commercial Property is likely to have occurred because
operating income, net of expenses, is insufficient to make debt service payments
on the related Mortgage Loan, it can be anticipated that the market value of
such property generally will be less than anticipated when such Mortgage Loan
was originated. To the extent that equity does not cushion the loss in market
value upon any liquidation and such loss is not covered by other credit support,
a loss may be experienced by the related Bondholders or Certificateholders, as
applicable.
The Primary Servicer, on behalf of itself, the Trustee, the Bondholders or
Certificateholders, as applicable, and the Issuer, will be required to present,
or cause to be presented, claims with respect to any insurance policy. The
Primary Servicer will be required to present claims and take such reasonable
steps as are necessary to permit recovery under any FHA insurance respecting
defaulted Mortgage Loans.
The Primary Servicer may foreclose upon or otherwise comparably convert the
ownership of properties securing such of the related Mortgage Loans as come into
and continue in default and as to which no satisfactory arrangements can be made
for collection of delinquent payments. In connection with such
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foreclosure or other conversion, the Primary Servicer will generally follow such
practices and procedures as it shall deem necessary or advisable and as shall be
normal and usual in its general mortgage servicing activities, subject to the
express provisions of the related Servicing Agreement.
ENFORCEMENT OF DUE-ON SALE CLAUSES
Unless otherwise specified in the related Prospectus Supplement, when any
Mortgaged Property is about to be conveyed by the Mortgagor, the Primary
Servicer will not exercise its rights to accelerate the maturity of such
Mortgage Loan under the applicable "due-on-sale" clause, if any, so long as the
new mortgagor satisfies the applicable underwriting criteria for similar loans
serviced by the Primary Servicer. If such conditions are met or the Primary
Servicer reasonably believes enforcement of a due-on-sale clause will not be
enforceable, the Primary Servicer is authorized to take or enter into an
assumption agreement from or with the person to whom such Mortgaged Property has
been or is about to be conveyed, pursuant to which such person becomes liable
under the Mortgage Note and pursuant to which the original Mortgagor is released
from liability and such person is substituted as Mortgagor and becomes liable
under the Mortgage Note. Unless otherwise specified in the related Prospectus
Supplement, any fee collected in connection with an assumption will be retained
as additional servicing compensation.
MODIFICATION; WAIVERS
As set forth in the related Prospectus Supplement, the Master Servicer or
Special Servicer, if any, may have the discretion, subject to certain conditions
set forth therein, to modify, waive or amend the terms of any Mortgage Loan
without the consent of the Trustee, or any Bondholder or Certificateholders, as
applicable.
Unless otherwise specified in the related Prospectus Supplement, the Master
Servicer or the Special Servicer, if any, will not agree to any modification,
waiver or amendment of the payment terms of a Mortgage Loan unless the Master
Servicer or the Special Servicer, if any, has determined that such modification,
waiver or amendment is reasonably likely to produce a greater recovery on a
present value basis than liquidation of the Mortgage Loan.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Master Servicer, the Special Servicer, if any, and each Servicer will be
entitled to a servicing fee in an amount specified or to be calculated in a
manner described in the related Prospectus Supplement. The servicing fee may be
fixed or variable, as specified in the related Prospectus Supplement. In
addition, unless otherwise specified in the related Prospectus Supplement, the
Master Servicer, the Special Servicer, if any, or a Servicer will be entitled to
additional servicing compensation in the form of assumption fees, late payment
charges and modification fees.
The Primary Servicer will be entitled to reimbursement for certain expenses
incurred by it in connection with the liquidation of defaulted Mortgage Loans.
The ability of the Issuer of the related Series to pay principal of and interest
on the Securities will not be affected to the extent claims are paid under the
related insurance policies. If claims are either not made or paid under such
insurance policies or if coverage thereunder has ceased or is insufficient, the
ability of the Issuer to meet debt service requirements on the related Series
may be adversely affected. In addition, the Primary Servicer will be entitled to
reimbursement of expenditures incurred by it in connection with the restoration
of Mortgaged Property, such right of reimbursement being prior to the rights of
the Bondholders to receive any related Insurance Proceeds or Liquidation
Proceeds.
EVIDENCE AS TO COMPLIANCE
The Master Servicer and the Special Servicer, if any, will deliver to the
Trustee, on or before 120 days after the end of each fiscal year of the Master
Servicer and the Special Servicer, if applicable, an officer's certificate
stating that (i) a review of the activities of the Master Servicer, the Special
Servicer and the
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Servicers during the preceding calendar year and of performance under the Master
Servicing Agreement, Special Servicing Agreement, if applicable, and the
Servicing Agreements has been made under the supervision of such officer and
(ii) the Master Servicer and the Special Servicer, if applicable, has fulfilled
all its obligations under the Master Servicing Agreement and Special Servicing
Agreement, if applicable, throughout such year, and, to the best of such
officer's knowledge, based on such review, each Servicer has fulfilled its
obligations under the related Servicing Agreement 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. Such
officer's certificate shall be accompanied by a statement of a firm of
independent public accountants to the effect that, on the basis of an
examination of certain documents and records relating to servicing of the
Mortgage Loans, conducted in accordance with generally accepted accounting
principles in the mortgage banking industry, the Master Servicer's and the
Special Servicer's, if applicable, duties and duties of the Servicers have been
conducted in compliance with the provisions of the applicable agreement, except
for (i) such exceptions as such firm believes to be immaterial and (ii) such
other exceptions as are set forth in such statement. Copies of the annual
officer's certificate and accountants' statement may be obtained without charge
upon written request to the Trustee.
CERTAIN MATTERS REGARDING THE MASTER SERVICER AND SPECIAL SERVICER
The Master Servicer and any Special Servicer for each Series will be
specified in the related Prospectus Supplement. The Master Servicer and any
Special Servicer may be an affiliate of the Issuer and may have other business
relationships with the Issuer and its affiliates.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer may not resign from its obligations and duties except with the consent
of the Trustee or upon a determination that its duties thereunder are no longer
permissible under applicable law. No such resignation will become effective
until the Trustee or a successor servicer has assumed the Master Servicer's
obligations and duties under such Master Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, each Master
Servicing Agreement will also provide that neither the Master Servicer, nor any
director, officer, employee or agent of the Master Servicer, will be under any
liability to the Bondholders or Certificateholders for any action taken or for
refraining from the taking of any action in good faith pursuant to the Master
Servicing Agreement, or for errors in judgment; provided, however, that neither
the Master Servicer nor any such person will be protected against any liability
which would otherwise be imposed by reason of failure to perform its obligations
in compliance with the standards of care set forth in the Master Servicing
Agreement. The Master Servicer may, in its discretion, undertake any such action
which it may deem necessary or desirable with respect to the rights and duties
of the parties to the Master Servicing Agreement and the interests of the
Bondholders, or Certificateholders thereunder. In such event, the Master
Servicer will be entitled to be reimbursed for legal expenses and costs of such
action out of the related Custodial Account.
ENHANCEMENT
GENERAL
For any Series, Enhancement may be provided with respect to one or more
Classes thereof or the related Mortgage Assets. Enhancement may be in the form
of a letter of credit, the subordination of one or more Classes of the
Securities of such Series, the establishment of one or more reserve funds,
overcollateralization, guarantee insurance, the use of cross-support features or
another method of Enhancement described in the related Prospectus Supplement, or
any combination of the foregoing. If so specified in the related Prospectus
Supplement, any form of Enhancement (including but not limited to insurance,
letters of credit or guarantee insurance) may be structured so as to be drawn
upon by more than one Series to the extent described therein.
Unless otherwise specified in the related Prospectus Supplement for a
Series, the Enhancement will not provide protection against all risks of loss
and will not guarantee repayment of the entire principal
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balance of the Securities and interest thereon. If losses occur which exceed the
amount covered by Enhancement or which are not covered by the Enhancement,
Bondholders or Certificateholders, as applicable will bear their allocable share
of deficiencies. Moreover, if a form of Enhancement covers more than one Series
of Securities (each, a "Covered Trust"), holders of Securities issued by any of
such Covered Trusts will be subject to the risk that such Enhancement will be
exhausted by the claims of other Covered Trusts prior to such Covered Trust
receiving any of its intended share of such coverage.
If Enhancement is provided with respect to a Series, or the related Mortgage
Assets, the related Prospectus Supplement will include a description of (a) the
amount payable under such Enhancement, (b) any conditions to payment thereunder
not otherwise described herein, (c) the conditions (if any) under which the
amount payable under such Enhancement may be reduced and under which such
Enhancement may be terminated or replaced and (d) the material provisions of any
agreement relating to such Enhancement. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the issuer of any
third-party Enhancement, including (i) a brief description of its principal
business activities, (ii) its principal place of business, place of
incorporation and the jurisdiction under which it is chartered or licensed to do
business, (iii) if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its business and (iv) its
total assets, and its stockholders' or policyholders' surplus, if applicable, as
of the date specified in the Prospectus Supplement.
SUBORDINATE SECURITIES
If so specified in the related Prospectus Supplement, one or more Classes of
a Series may be Subordinate Securities. If so specified in the related
Prospectus Supplement, the rights of the Holders of Subordinate Securities to
receive distributions of principal and interest from the Collection Account on
any Payment Date or Distribution Date will be subordinated to such rights of the
Holders of Senior Securities to the extent specified in the related Prospectus
Supplement. Unless otherwise provided in the Prospectus Supplement, the amount
of subordination will decrease whenever amounts otherwise payable to the Holder
of Subordinate Securities are paid to the Holders of Senior Securities
(including amounts withdrawn from any related Reserve Fund and paid to the
Holders of Senior Securities), and will (unless otherwise specified in the
related Prospectus Supplement) increase whenever there is distributed to the
Holders of Subordinate Securities amounts in respect of which subordination
payments have previously been paid to the Holders of Senior Securities. Unless
otherwise specified in the related Prospectus Supplement, the related Series
Supplement may require a trustee that is not the Trustee to be appointed to act
on behalf of Holders of Subordinate Securities.
A Series may include one or more Classes of Subordinate Securities entitled
to receive cash flows remaining after distributions are made to all other
Classes designated as being senior thereto. Such right will effectively be
subordinate to the rights of other Holders of Senior Securities, but will be not
be limited to a specified dollar amount of subordination. If so specified in the
related Prospectus Supplement, the subordination of a Class may apply only in
the event of (or may be limited to) certain types of losses not covered by
Insurance Policies or other credit support, such as losses arising from damage
to property securing a Mortgage Loan not covered by standard hazard insurance
policies.
The related Prospectus Supplement will set forth information concerning the
amount of subordination of a Class or Classes of Subordinate Securities in a
Series, the circumstances in which such subordination will be applicable, the
manner, if any, in which the amount of subordination will decrease over time,
the manner of funding any related Reserve Fund and the conditions under which
amounts in any related Reserve Fund will be used to make distributions to
Holders of Senior Securities and/or to Holders of Subordinate Securities or be
released from the related Trust Estate or Trust Fund. If cash flows otherwise
distributable to holders of Subordinate Securities secured by a Mortgage Group
will be used as credit support for Senior Securities secured by another Mortgage
Group within the Trust Estate or Trust Fund, the related Prospectus Supplement
will specify the manner and conditions for applying such a cross-support
feature.
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CROSS-SUPPORT FEATURES
If the Mortgage Assets for a Series are divided into separate Mortgage
Groups, each securing a separate Class or Classes of a Series, credit support
may be provided by a cross-support feature which requires that distributions be
made on Senior Securities secured by one Mortgage Group prior to distributions
on Subordinate Securities secured by another Mortgage Group within the Trust
Estate or Trust Fund. The related Prospectus Supplement for a Series which
includes a cross-support feature will describe the manner and conditions for
applying such cross-support feature.
INSURANCE ON THE MORTGAGE LOANS
Credit support with respect to a Series may be provided by insurance
policies that include standard hazard insurance and may, if specified in the
related Prospectus Supplement, include FHA Insurance. See "DESCRIPTION OF
INSURANCE ON THE MORTGAGE LOANS."
LETTER OF CREDIT
The letter of credit, if any, with respect to a Series of Securities will be
issued by the bank or financial institution specified in the related Prospectus
Supplement (the "L/C Bank"). Under the letter of credit, the L/C Bank will be
obligated to honor drawings thereunder in an aggregate fixed dollar amount, net
of unreimbursed payments thereunder, equal to the percentage specified in the
related Prospectus Supplement of the aggregate principal balance of the Mortgage
Loans on the related Cut-Off Date or of one or more Classes of Securities (the
"L/C Percentage"). If so specified in the related Prospectus Supplement, the
letter of credit may permit drawings in the event of losses not covered by
insurance policies or other credit support, such as losses arising from damage
not covered by standard hazard insurance policies. The amount available under
the letter of credit will, in all cases, be reduced to the extent of the
unreimbursed payments thereunder. The obligations of the L/C Bank under the
letter of credit for each Series of Securities will expire at the earlier of the
date specified in the related Prospectus Supplement or the termination of the
Trust Estate or Trust Fund, as applicable. A copy of the letter of credit for a
Series, if any, will be filed with the Commission as an exhibit to a Current
Report on Form 8-K to be filed within 15 days of issuance of the Securities of
the related Series.
BOND GUARANTEE INSURANCE
Bond guarantee insurance, if any, with respect to a Series of Bonds will be
provided by one or more insurance companies. Such bond guarantee insurance will
guarantee, with respect to one or more Classes of Bonds of the related Series,
timely distributions of interest and full distributions of principal on the
basis of a schedule of principal distributions set forth in or determined in the
manner specified in the related Prospectus Supplement. If so specified in the
related Prospectus Supplement, the bond guarantee insurance will also guarantee
against any payment made to a Bondholder which is subsequently recovered as a
"voidable preference" payment under the Bankruptcy Code. A copy of the bond
guarantee insurance for a Series, if any, will be filed with the Commission as
an exhibit to a Current Report on Form 8-K to be filed with the Commission
within 15 days of issuance of the Bonds of the related Series.
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RESERVE FUNDS
One or more Reserve Funds may be established with respect to a Series, in
which cash, a letter of credit, Eligible Investments, a demand note or a
combination thereof, in the amounts, if any, so specified in the related
Prospectus Supplement will be deposited. The Reserve Funds for a Series may also
be funded over time by depositing therein a specified amount of the
distributions received on the related Mortgage Assets as specified in the
related Prospectus Supplement.
Amounts on deposit in any Reserve Fund for a Series, together with the
reinvestment income thereon, if any, will be applied by the Trustee for the
purposes, in the manner, and to the extent specified in the related Prospectus
Supplement. A Reserve Fund may be provided to increase the likelihood of timely
payments or distributions of principal of and interest on the Securities, if
required as a condition to the rating of such Series by each Rating Agency, or
to reduce the likelihood of special redemptions with respect to any Series. If
so specified in the related Prospectus Supplement, Reserve Funds may be
established to provide limited protection, in an amount satisfactory to each
Rating Agency, against certain types of losses not covered by Insurance Policies
or other credit support, such as losses arising from damage not covered by
standard hazard insurance policies. Following each Payment Date or Distribution
Date amounts in such Reserve Fund in excess of any amount required to be
maintained therein may be released from the Reserve Fund under the conditions
and to the extent specified in the related Prospectus Supplement and will not be
available for further application by the Trustee.
Moneys deposited in any Reserve Funds will be invested in Eligible
Investments, except as otherwise specified in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, any
reinvestment income or other gain from such investments will be credited to the
related Reserve Fund for such Series, and any loss resulting from such
investments will be charged to such Reserve Fund. However, such income may be
payable to the Master Servicer or a Servicer as additional servicing
compensation. See "SERVICING OF MORTGAGE LOANS". The Reserve Fund, if any, for a
Series will not be a part of the Trust Estate or Trust Fund, as applicable,
unless otherwise specified in the related Prospectus Supplement.
Additional information concerning any Reserve Fund will be set forth in the
related Prospectus Supplement, including the initial balance of such Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which such required balance will decrease over time, the manner of funding such
Reserve Fund, the purposes for which funds in the Reserve Fund may be applied to
make payments or distributions to Bondholders or Certificateholders and use of
investment earnings from the Reserve Fund, if any.
DESCRIPTION OF INSURANCE ON THE MORTGAGE LOANS
The following descriptions of standard hazard insurance policies and FHA
insurance and the respective coverages thereunder are general descriptions only
and do not purport to be complete.
GENERAL
Each Mortgaged Property will be covered by a standard hazard insurance
policy, as described in the related Prospectus Supplement. The coverage under
standard hazard insurance policies will be subject to conditions and limitations
described in the Prospectus Supplement and under "Hazard Insurance on the
Mortgage Loans" below. Certain hazard risks will, therefore, not be insured and
the occurrence of such hazards could adversely affect payments or distributions
to Holders. Additionally, to the extent that losses on a defaulted or foreclosed
Mortgage Loan are not covered by other credit support for such Series, such
losses, if any, would affect payments or distributions to Holders.
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HAZARD INSURANCE ON THE MORTGAGE LOANS
The standard hazard insurance policies will provide for coverage at least
equal to the applicable state standard form of fire insurance policy with
extended coverage. In general, the standard form of fire and extended coverage
policy will cover physical damage to or destruction of, the improvements on the
Mortgaged Property caused by fire, lightning, explosion, smoke, windstorm, hail,
riot, strike and civil commotion, subject to the conditions and exclusions
particularized in each policy. Because the standard hazard insurance policies
relating to the Mortgage Loans will be underwritten by different insurers and
will cover Mortgaged Properties located in various states, such policies will
not contain identical terms and conditions. The basic terms, however, generally
will be determined by state law and generally will be similar. Most such
policies typically will not cover any physical damage resulting from war,
revolution, governmental actions, floods and other water-related causes, earth
movement (including earthquake, landslides, and mudflows), nuclear reaction, wet
or dry rot, vermin, rodents, insects or domestic animals, theft and, in certain
cases, vandalism. The foregoing list is merely indicative of certain kinds of
uninsured risks and is not intended to be all-inclusive. Uninsured risks not
covered by a special hazard insurance policy or other form of credit support may
adversely affect the ability of the Issuer to make payments of principal or
interest on the Bonds. When a Mortgaged Property is located in a flood area
identified in the Federal Register by the Flood Emergency Management Agency, the
Master Servicer or the Servicer will be required to cause flood insurance to be
maintained with respect to such Mortgaged Property.
The standard hazard insurance policies covering Mortgaged Properties
securing Mortgage Loans typically will contain a "coinsurance" clause which will
require the insured at all times to carry hazard insurance of a specified
percentage (generally 80% to 90%) of the actual cash value of the improvements
on the Mortgaged Property in order to recover the full amount of any partial
loss. If the insured's coverage falls below this specified percentage, such
clause will provide that the hazard insurer's liability in the event of partial
loss will not exceed the greater of (i) the actual cash value (the replacement
cost less physical depreciation) of the improvements damaged or destroyed or
(ii) such proportion of the loss as the amount of insurance carried bears to the
specified percentage of the actual cash value of such improvements.
In the event of partial loss, hazard insurance proceeds may be insufficient
to restore fully the damaged property. Under the terms of the Mortgage Loans,
Mortgagors are required to present claims to insurers under hazard insurance
policies maintained on the Mortgaged Properties. The Primary Servicer, on behalf
of the Trustee, Bondholders, and Certificateholders, is obligated to present or
cause to be presented claims under any blanket insurance policy insuring against
hazard losses on Mortgaged Properties; however, the ability of the Primary
Servicer to present or cause to be presented such claims is dependent upon the
extent to which information in this regard is furnished to the Primary Servicer
by Mortgagors.
FHA INSURANCE
The FHA is responsible for administering various federal programs, including
mortgage insurance, authorized under the Housing Act, as amended, and the United
States Housing Act of 1937, as amended. To the extent specified in the related
Prospectus Supplement, all or a portion of the Mortgage Loans may be insured by
the FHA. The Primary Servicer will be required to take such steps as are
reasonably necessary to keep such insurance in full force and effect.
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains summaries of certain legal aspects of
mortgage loans that are general in nature. Because such legal aspects are
governed by applicable state law (which laws may differ substantially), the
summaries do not purport to be complete nor to reflect the laws of any
particular state, nor to encompass the laws of all states in which the Mortgaged
Properties are situated. The summaries are qualified in their entirety by
reference to the applicable federal and state laws governing the Mortgage Loans.
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MORTGAGES
Each Mortgage Loan will be secured by a mortgage, a deed of trust or a deed
to secure debt, depending upon the prevailing practice and law in the state in
which the related Mortgaged Property is located. The filing of a mortgage, deed
of trust or deed to secure debt creates a lien upon, or grants a title interest
in, the real property covered by such instrument and represents the security for
the repayment of an obligation that is customarily evidenced by a promissory
note. The lien of the mortgage is generally subordinate to the lien for real
estate taxes and assessments or other charges imposed under governmental police
powers. The priority of the lien with respect to such mortgage depends on its
terms, the knowledge of the parties to the mortgage and generally on the order
of recording the mortgage with the applicable public recording office.
There are two parties to a mortgage: the mortgagor, who is the owner of the
property and usually the borrower, and the mortgagee, who is the lender. In the
case where the borrower is a land trust, there are three parties because title
to the property is held by a land trustee under a land trust agreement of which
the borrower is the beneficiary at origination of a mortgage loan involving a
land trust, the borrower executes a separate undertaking to make payments on the
mortgage note. A deed of trust has three parties: the owner of the property and
usually the borrower, called the trustor (similar to a mortgagor), a lender,
called the beneficiary (similar to the mortgagee), and a third-party grantee,
called the trustee. Under a deed of trust, the borrower grants the property,
irrevocably until the debt is paid, in trust, generally with a power of sale, to
the trustee to secure payment of the mortgage loan. The trustee's authority
under a deed of trust and the mortgagee's authority under a mortgage are
governed by the express provisions of the deed of trust or mortgage, the law of
the state in which the related Mortgaged Property is located and, in some cases,
in deed of trust transactions, the directions of the beneficiary. Some states
use a security deed or deed to secure debt which is similar to a deed of trust
except it has only two parties: a grantor (similar to a mortgagor) and a grantee
(similar to a mortgagee).
INTEREST IN REAL PROPERTY
The real property covered by a mortgage, deed of trust, security deed or
deed to secure debt is most often the fee estate in land and improvements.
However, such an instrument may encumber other interests in real property such
as a tenant's interest in a lease of land or improvements, or both, and the
leasehold estate created by such lease. An instrument covering an interest in
real property other than the fee estate requires special provisions in the
instrument creating such interest or in the mortgage, deed of trust, security
deed or deed to secure debt, to protect the mortgagee against termination of
such interest before the mortgage, deed of trust, security deed or deed to
secure debt is paid. Unless otherwise specified in the Prospectus Supplement,
the Depositor or the Asset Seller will make certain representations and
warranties in the Agreement with respect to the Mortgage Loans which are secured
by an interest in a leasehold estate. Such representation and warranties will be
set forth in the Prospectus Supplement if applicable.
JUNIOR MORTGAGES; RIGHTS OF SENIOR MORTGAGES OR BENEFICIARIES
If specified in the applicable Prospectus Supplement, some of the Mortgage
Loans included in the Mortgage Pool will be secured by junior mortgages or deeds
of trust which are subordinate to senior mortgages or deeds of trust held by
other lenders or institutional investors. The rights of the Trust Fund (and
therefore the Certificateholders), as beneficiary under a junior deed of trust
or as mortgagee under a junior mortgage, are subordinate to those of the
mortgagee or beneficiary under the senior mortgage or deed of trust, including
the prior rights of the senior mortgagee or beneficiary to receive rents, hazard
insurance and condemnation proceeds and to cause the property securing the
Mortgage Loan to be sold upon default of the mortgagor or trustor, thereby
extinguishing the junior mortgagee's or junior beneficiary's lien unless the
Special Servicer asserts its subordinate interest in a property in foreclosure
litigation or satisfies the defaulted senior loan. Accordingly, the Trust Fund
(and therefore the Certificateholders), as the holder of the junior lien, bear
(i) the risk of delay in distributions while a deficiency judgement against
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the borrower is obtained and (ii) the risk of loss if the deficiency judgement
is not realized upon. Moreover, deficiency judgements may not be available in
certain jurisdictions or the Mortgage Loan may be nonrecourse. As discussed more
fully below, in many states a junior mortgagee or beneficiary may satisfy a
defaulted senior loan in full, or may cure such default and bring the senior
loan current, in either event adding the amounts expended to the balance due on
the junior loan. Absent a provision in the senior mortgage, no notice of default
is required to be given to the junior mortgagee.
The form of the mortgage or deed of trust used by many institutional lenders
confers on the mortgagee or beneficiary the right both to receive all proceeds
collected under any hazard insurance policy and all awards made in connection
with any condemnation proceedings, and to apply such proceeds and awards to any
indebtedness secured by the mortgage or deed of trust, in such order as the
mortgage or beneficiary may determine. Thus, in the event improvements on the
property are damaged or destroyed by fire or other casualty, or in the event the
property is taken by condemnation, the mortgagee or beneficiary under the senior
mortgage or deed of trust will have the prior right to collect any insurance
proceeds payable under a hazard insurance policy and any award of damages in
connection with the condemnation and to apply the same to the indebtedness
secured by the senior mortgage or deed of trust. Proceeds in excess of the
amount of senior mortgage indebtedness will, in most cases, by applied to the
indebtedness of a junior mortgage or trust deed. The laws of certain states may
limit the ability of mortgagees or beneficiaries to apply the proceeds of hazard
insurance and partial condemnation awards to the secured indebtedness. In such
states, the mortgagor or trustor must be allowed to use the proceeds of hazard
insurance to repair the damage unless the security of the mortgagee or
beneficiary has been impaired. Similarly, in certain states, the mortgagee or
beneficiary is entitled to the award for a partial condemnation of the real
property security only to the extent that its security is impaired.
The form of mortgage or deed of trust used by many institutional lenders
typically contains a "future advance" clause, which provides, in essence, that
additional amounts advanced to or on behalf of the mortgagor or trustor by the
mortgagee or beneficiary are to be secured by the mortgage or deed of trust.
While such a clause is valid under the laws of most states, the priority of any
advance made under the clause depends, in some states, on whether the advance
was an "obligatory" or "optional" advance. If the mortgagee or beneficiary is
obligated to advance the additional amounts, the advance may be entitled to
receive the same priority as amounts initially made under the mortgage or deed
of trust, notwithstanding that there may be intervening junior mortgages or
deeds of trust and other liens between the date of recording of the mortgage or
deed of trust and the date of the future advance, and notwithstanding that the
mortgagee or beneficiary had actual knowledge of such intervening junior
mortgages or deeds of trust and other liens at the time of the advance. Where
the mortgagee or beneficiary is not obligated to advance the additional amounts
and has actual knowledge of the intervening junior mortgages or deeds of trust
and other liens, the advance may be subordinate to such intervening junior
mortgages or deeds of trust and other liens. Priority of advances under a
"future advance" clause rests, in many other states, on state law giving
priority to all advances made under the loan agreement up to a "credit limit"
amount stated in the recorded mortgage.
Another provision typically found in the form of the mortgage or deed of
trust used by many institutional lenders obligates the mortgagor or trustor to
pay before delinquency all taxes and assessments on the property and, when due,
all encumbrances, charges and liens on the property which appear prior to the
mortgage or deed of trust, to provide and maintain fire insurance on the
property, to maintain and repair the property and not to commit or permit any
waste thereof, and to appear in and defend any action or proceeding purporting
to affect the property or the rights of the mortgagee or beneficiary under the
mortgage or deed of trust. Upon a failure of the mortgagor or trustor to perform
any of these obligations, the mortgagee or beneficiary is given the right under
the mortgage or deed of trust to perform the obligation itself, at its election,
with the mortgagor or trustor agreeing to reimburse the mortgagee or beneficiary
for any sums expended by the mortgagee or beneficiary on behalf of the trustor.
All sums so expended by the mortgagee or beneficiary become part of the
indebtedness secured by the mortgage or deed of trust.
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The form of mortgage or deed of trust used by many institutional lenders
typically requires the mortgagor or trustor to obtain the consent of the
mortgagee or beneficiary in respect of actions affecting the mortgaged property,
including, without limitation, leasing activities (including new leases and
termination or modification of existing leases), alterations and improvements to
buildings forming a part of the mortgaged property and management and leasing
agreements for the mortgaged property. Tenants will often refuse to execute a
lease unless the mortgagee or beneficiary executes a written agreement with the
tenant not to disturb the tenant's possession of its premises in the event of a
foreclosure. A senior mortgagee or beneficiary may refuse to consent to matters
approved by a junior mortgagee or beneficiary with the result that the value of
the security for the junior mortgage or deed of trust is diminished. For
example, a senior mortgagee or beneficiary may decide not to approve a lease or
to refuse to grant a tenant a non-disturbance agreement. If, as a result, the
lease is not executed, the value of the mortgaged property may be diminished.
FORECLOSURE OF MORTGAGE
In states permitting nonjudicial foreclosure proceedings, foreclosure of a
deed of trust or deed to secure debt is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust which authorizes
the trustee to sell the property upon any default by the borrower under the
terms of the note or deed of trust or deed to secure debt. In some states, prior
to such sale, the trustee must record a notice of default and send a copy to the
borrower-trustor and to any person who has recorded a request for a copy of a
notice of default and notice of sale. In addition, the trustee in some states
must provide notice of any other individual having an interest in the real
property, including any junior lienholders. In some states there is a
reinstatement period. The trustor, borrower, or any person having a junior
encumbrance on the real estate may, during a reinstatement period, cure the
default by paying the entire amount in arrears plus the costs and expenses
incurred in enforcing the obligation. In other states, after acceleration of the
debt, the borrower is not provided with a period to reinstate the loan, but has
only the right to pay off the entire debt to prevent the foreclosure sale.
Generally, state law controls the amount of foreclosure expenses and costs,
including attorneys' fees, which may be recovered by a lender. If the deed of
trust is not reinstated, 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. In addition, some state laws require that a copy of the notice of
sale be posted on the property, recorded and sent to all parties having an
interest in the real property. Generally, state law governs the procedure for
public sale, the parties entitled to notice, the method of giving notice and the
applicable time periods.
An action to foreclose a mortgage is an action to recover the mortgage debt
by enforcing the mortgagee's rights under the mortgage. It is regulated by
statutes and rules and subject throughout to the court's equitable powers.
Generally, a borrower is bound by the terms of the mortgage note and the
mortgage and cannot be relieved from his default if the mortgagee has exercised
his rights in a commercially reasonable manner. However, since a foreclosure
action historically was equitable in nature, the court may exercise equitable
powers to relieve a mortgagor of a default and deny the mortgagee foreclosure on
proof that either the mortgagor's default was neither willful nor in bad faith
or the mortgagee's action established a waiver, fraud, bad faith, or oppressive
or unconscionable conduct such as to warrant a court of equity refusing
affirmative relief to the mortgagee. Under certain circumstances, a court of
equity may relieve the borrower from an entirely technical default where such
default was not willful.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses or counterclaims are interposed, sometimes requiring up to
several years to complete. Moreover, a non-collusive, regularly conducted
foreclosure sale may be challenged as a fraudulent conveyance, regardless of the
parties' intent, if a court determines that the sale was for less than fair
consideration and such sale occurred while the mortgagor was insolvent and
within the state statute of limitations (which is tolled by the filing of a
bankruptcy case). Similarly, in some states, a suit against the debtor on the
mortgage note
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may take several years and, generally, is a remedy alternative to foreclosure,
the mortgagee being precluded from pursuing both at the same time.
In case of foreclosure under either a mortgage or a deed of trust, the sale
by the referee or other designated officer or by the trustee is a public sale.
However, because of the difficulty potential third-party purchasers at the sale
have in determining the exact status of title and because the physical condition
of the property may have deteriorated during the foreclosure proceedings, it is
uncommon for a third party to purchase the property at a foreclosure sale.
Rather, it is common for the lender to purchase the property from the trustee or
referee for an amount which may be equal to the principal amount of the mortgage
or deed of trust plus accrued and unpaid interest and the expenses of
foreclosure, in which event the borrower's debt will be extinguished or the
lender may purchase for a lesser amount in order to preserve its right against a
borrower to seek a deficiency judgment in states where such a judgment is
available. Thereafter, and subject in some states to the right of the borrower
to stay in possession during a redemption period, the lender will assume the
burdens of ownership, including obtaining casualty insurance, paying taxes and
making such repairs at its own expense as are necessary to render the property
suitable for sale. The lender will commonly obtain the services of a real estate
broker and pay the broker's commission in connection with the sale of the
property. Depending upon market conditions, the ultimate proceeds of the sale of
the property may not equal the lender's investment in the property. Moreover, a
lender typically incurs substantial legal fees and court costs in acquiring a
mortgaged property through contested foreclosure. Furthermore, certain states
require that any environmental hazards be eliminated before a property may be
resold. In addition, a lender may be responsible under federal or state law for
the cost of cleaning up a mortgaged property that is environmentally
contaminated. As a result, a lender could realize an overall loss on a mortgage
loan even if the related 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 mortgage loan, plus accrued interest. Any
loss may be reduced by the receipt of any mortgage guaranty insurance proceeds.
The holder of a junior mortgage that forecloses on any Mortgaged Property
does so subject to senior mortgages and any other prior liens, and may be
obliged to keep senior mortgage loans current in order to avoid foreclosure of
its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
If title to any Mortgaged Property is acquired by the Trustee on behalf of
the Certificateholders, the Master Servicer or any related Sub-servicer or the
Special Servicer, on behalf of such holders, will be required to sell the
Mortgaged Property prior to the close of the third calendar year following the
year of acquisition of such Mortgaged Property by the Trust Fund, unless (i) the
Internal Revenue Service grants an extension of time to sell such property (an
"REO Extension") or (ii) it obtains an opinion of counsel generally to the
effect that the holding of the property for more than two years after its
acquisition will not result in the imposition of a tax on the Trust Fund or
cause any REMIC created pursuant to the Pooling and Servicing Agreement to fail
to qualify as a REMIC under the Code. Subject to the foregoing, the Master
Servicer or any related Sub-servicer or the Special Servicer will generally be
required to solicit bids for any Mortgaged Property so acquired in such a manner
as will be reasonably likely to realize a fair price for such property. The
Master Servicer or any related Sub-servicer or the Special Servicer may retain
an independent contractor to operate and manage any REO Property; however, the
retention of an independent contractor will not relieve the Master Servicer or
any related Sub-servicer or the Special Servicer of its obligations with respect
to such REO Property.
In general, the Master Servicer or any related Sub-servicer or the Special
Servicer or an independent contractor employed by the Master Servicer or any
related Sub-servicer or the Special Servicer at the expense of the Trust Fund
will be obligated to operate and manage any Mortgaged Property acquired as REO
Property in a manner that (i) would cause such property to be treated as
"foreclosure property" by any REMIC in which such REO Property is held and (ii)
would, to the extent commercially reasonable and
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consistent with clause (i), maximize the Trust Fund's net after-tax proceeds
from such property. After the Master Servicer or any related Sub-servicer or the
Special Servicer reviews the operation of such property and consults with the
Trustee to determine the Trust Fund's federal income tax reporting position with
respect to the income it is anticipated that the Trust Fund would derive from
such property, the Master Servicer or any related Sub-servicer or the Special
Servicer could determine (particularly in the case of an REO Property that is a
hospitality property or residential health care facility) that it would not be
commercially feasible to manage and operate such property in a manner that would
avoid the imposition of a tax on "net income from foreclosure property," within
the meaning of Section 857(b)(4)(B) of the Code (an "REO Tax") at the highest
marginal corporate tax rate (currently 35%). The determination as to whether
income from an REO Property would be subject to an REO Tax will depend on the
specific facts and circumstances relating to the management and operation of
each REO Property. Any REO Tax imposed on the Trust Fund's income from an REO
Property would reduce the amount available for distribution to
Certificateholders. Certificateholders are advised to consult their tax advisors
regarding the possible imposition of REO Taxes in connection with the operation
of commercial REO Properties by REMICs.
LEASEHOLD RISKS
Mortgage Loans may be secured by a mortgage on a ground lease. Leasehold
mortgages are subject to certain risks not associated with mortgage loans
secured by the fee estate of the mortgagor. The most significant of these risks
is that the ground lease creating the leasehold estate could terminate, leaving
the leasehold mortgagee without its security. The ground lease may terminate if,
among other reasons, the ground lessee breaches or defaults in is obligations
under the ground lease or there is a bankruptcy of the ground lessee or the
ground lessor. This risk may be minimized if the ground lease contains certain
provisions protective of the mortgagee, but the ground leases that secure
Mortgage Loans may not contain some of these protective provisions, and
mortgages may not contain the other protections discussed in the next paragraph.
Protective ground lease provisions include the right of the leasehold mortgagee
to receive notices from the ground lessor of any defaults by the mortgagor; the
right to cure such defaults, with adequate cure periods; if a default is not
susceptible of cure by the leasehold mortgagee, the right to acquire the
leasehold estate through foreclosure or otherwise; the ability of the ground
lease to be assigned to and by the leasehold mortgagee or purchaser at a
foreclosure sale and for the concomitant release of the ground lessee's
liabilities thereunder; and the right of the leasehold mortgagee to enter into a
new ground lease with the ground lessor on the same terms and conditions as the
old ground lease in the event of a termination thereof.
In addition to the foregoing protections, a leasehold mortgagee may require
that the ground lease or leasehold mortgage prohibit the ground lessee from
treating the ground lease as terminated in the event of the ground lessor's
bankruptcy and rejection of the ground lease by the trustee for the
debtor-ground lessor. As further protection, a leasehold mortgage may provide
for the assignment of the debtor-ground lessee's right to reject a lease
pursuant to Section 365 of the Bankruptcy Reform Act of 1978, as amended (Title
11 of the United States Code), although the enforceability of such clause has
not been established. Without the protections described above, a leasehold
mortgagee may lose the collateral securing its leasehold mortgage. In addition,
terms and conditions of a leasehold mortgage are subject to the terms and
conditions of the ground lease. Although certain rights given to a ground lessee
can be limited by the terms of a leasehold mortgage, the rights of a ground
lessee or a leasehold mortgagee with respect to, among other things, insurance,
casualty and condemnation will be governed by the provisions of the ground
lease.
RIGHTS OF REDEMPTION
In some states, after sale pursuant to a deed of trust or foreclosure of a
mortgage, the trustor or borrower and foreclosed junior lienors are given a
statutory period in which to redeem the property from the foreclosure sale. The
right of redemption should be distinguished from the equity of redemption, which
is a nonstatutory right that must be exercised prior to the foreclosure sale. In
some states, redemption may
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occur only upon payment of the foreclosure sales price and expenses of
foreclosure. In other states, redemption may be authorized if the former
borrower pays only a portion of the sums due. The effect of a statutory right of
redemption is to diminish the ability of the lender to sell the foreclosed
property. The right of redemption would defeat the title of any purchaser from
the lender subsequent to foreclosure or sale under a deed of trust.
Consequently, the practical effect of a right of redemption is to force the
lender to retain the property and pay expenses of ownership until the redemption
period has run. In some states, there is no right to redeem property after a
trustee's sale under a deed of trust.
Under the REMIC Provisions currently in effect, property acquired by
foreclosure generally must not be held beyond the end of the third taxable year
following the year of acquisition. Unless otherwise provided in the related
Prospectus Supplement, with respect to a series of Certificates for which an
election is made to qualify the Trust Fund or a part thereof as a REMIC, the
Agreement will permit foreclosed property to be held for more than two years if
the Internal Revenue Service grants an extension of time within which to sell
such property or independent counsel renders an opinion to the effect that
holding such property for such additional period is permissible under the REMIC
Provisions.
ENVIRONMENTAL MATTERS
Real property pledged as security to a lender may be subject to
environmental risks. For example, certain environmental liabilities may (1)
cause a diminution in the value of the Mortgaged Property; (2) limit the
lender's foreclosure rights; and (3) subject the lender to liability for
clean-up costs or other remedial actions. Under the laws of many states,
contamination of a property may give rise to a lien on the property to assure
the costs of clean-up. In several states, such a lien has priority over the lien
of an existing mortgage against such property.
The presence of hazardous or toxic substances, or the failure to remediate
such property properly, may adversely affect the market value of the property,
as well as the owner's ability to sell or use the real estate or to borrow using
the real estate as collateral. In addition, certain environmental laws and
common law principles govern the responsibility for the removal, encapsulation
or disturbance of asbestos containing materials ("ACMs") when these ACMs are in
poor condition or when a property with ACMs is undergoing repair, renovation or
demolition. Such laws could also be used to impose liability upon owners and
operators of real properties for release of ACMs into the air that cause
personal injury or other damage. In addition to cleanup and natural resource
damages actions brought by federal, state, and local agencies and private
parties, the presence of hazardous substances on a property may lead to claims
of personal injury, property damage, or other claims by private plaintiffs.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), and under the laws of certain
states, a secured party which takes a deed-in-lieu of foreclosure, purchases a
mortgaged property at a foreclosure sale, or operates a Mortgaged Property may
become liable in some circumstances either to the government or to private
parties for cleanup costs, even if the lender does not cause or contribute to
the contamination. Liability under some federal or state statutes may not be
limited to the original or unamortized principal balance of a loan or to the
value of the property securing a loan. CERCLA imposes strict, as well as joint
and several, liability on several classes of potentially responsible parties,
including current owners and operators of the property, regardless of whether
they caused or contributed to the contamination. Many states have laws similar
to CERCLA.
Lenders may be held liable under CERCLA as owners or operators. 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 exemption for holders
of a security interest such as a secured lender applies only in circumstances
where the lender acts to protect its security interest in the contaminated
facility or property. Thus, if a lender's activities encroach on the actual
management of such facility or property, the lender faces potential liability as
an "owner or operator" under CERCLA. Similarly, when a lender forecloses and
takes title to a contaminated facility or
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property (whether it holds the facility or property as an investment or leases
it to a third party), the lender may incur potential CERCLA liability.
Whether actions taken by a lender would constitute such an encroachment on
the actual management of a facility or property, so as to render the secured
creditor exemption unavailable to the lender has been a matter of judicial
interpretation of the statutory language, and court decisions have historically
been inconsistent.
This ambiguity appears to have been resolved by the enactment of the Asset
Conservation, Lender Liability and Deposit Insurance Protection Act of 1996 (the
"Asset Conservation Act"), signed into law by President Clinton on September 30,
1996, which lists permissible actions that may be undertaken by a lender holding
security in a contaminated facility without exceeding the bounds of the secured
creditor exemption, subject to certain conditions and limitations. The Asset
Conservation Act provides that in order to be deemed to have participated in the
management of a secured property, a lender must actually participate in the
operational affairs of the property or the borrower. The Asset Conservation Act
also provides that a lender will continue to have the benefit of the secured
creditor exemption even if it forecloses on a mortgaged property, purchases it
at a foreclosure sale or accepts a deed-in-lieu of foreclosure provided that the
lender seeks to sell the mortgaged property at the earliest practicable
commercially reasonable time on commercially reasonable terms. In addition to
its application to CERCLA, the Asset Conservation Act applies to determining a
lender's liability as an owner or operator of a petroleum or hazardous substance
underground storage tank ("UST") under the federal Resource Conservation and
Recovery Act ("RCRA").
The secured creditor exemption does not protect a lender from liability
under CERCLA in cases, among others, where the lender arranges for disposal of
hazardous substances or for transportation of hazardous substances. In addition,
the secured creditor exemption does not govern liability for cleanup costs under
federal laws other than CERCLA or the petroleum and hazardous substance UST
provisions of RCRA. For example, under other provisions of RCRA, a past or
present owner or operator of a facility may be ordered to conduct environmental
property remediation in a proceeding brought by the government or by private
citizens. In addition, many states have statutes similar to CERCLA, and not all
those statutes provide for a secured creditor exemption.
In a few states, transfer of some types of properties is conditioned upon
clean up 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 cleanup the contamination before selling or
otherwise transferring the property.
Beyond statute-based environmental liability, there exist common law causes
of action (for example, actions based on nuisance or on toxic tort resulting in
death, personal injury or damage to property) related to hazardous environmental
conditions on a property. While it may be more difficult to hold a lender liable
in such cases, unanticipated or uninsurable liabilities of the borrower may
jeopardize the borrower's ability to meet its loan obligations.
If a lender is or becomes liable, it may bring an action for contribution
against the owner or operator who created the environmental hazard, but that
person or entity may be bankrupt or otherwise judgment proof. It is possible
that cleanup costs could become a liability of the Trust Fund and occasion a
loss to Certificateholders in certain circumstances described above if such
remedial costs were incurred.
Except as otherwise specified in the applicable Prospectus Supplement, at
the time the Mortgage Loans were originated, it is possible that no
environmental assessment or a very limited environmental assessment of the
Mortgaged Properties was conducted.
Unless otherwise specified in the related Prospectus Supplement, the
Servicing Agreement, Master Servicing Agreement or Special Servicing Agreement,
as applicable, provides that the Servicer, the Master Servicer or the Special
Servicer, as applicable, acting on behalf of the Trust Estate or Trust Fund, as
applicable, may not acquire title to a Mortgaged Property underlying a Mortgage
Loan or take over its
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operation unless the Servicer, the Master Servicer or the Special Servicer, as
applicable, has previously determined, based upon a report prepared by a person
who regularly conducts environmental audits, that (i) the Mortgaged Property is
in compliance with applicable environmental laws and regulations or, if not,
that taking such actions as are necessary to bring the Mortgaged Property in
compliance therewith is reasonably likely to produce a greater recovery on a
present value basis than not taking such actions and (ii) there are no
circumstances or conditions present that have resulted in any contamination or
if such circumstances or conditions are present for which any action could be
required, taking such actions with respect to the affected Mortgaged Property is
reasonably likely to produce a greater recovery on a present value basis than
not taking such actions.
CERTAIN LAWS AND REGULATIONS
The Mortgaged Properties are subject to compliance with various federal,
state and local statutes and regulations. Failure to comply (together with an
inability to remedy any such failure) could result in material diminution in the
value of a Mortgaged Property which could, together with the limited alternative
uses for such Mortgaged Property, result in a failure to realize the full
principal amount of the Mortgage Loans.
For instance, Mortgaged Properties which are hospitals, nursing homes or
convalescent homes may present special risks in large part due to significant
governmental regulation of the operation, maintenance, control and financing of
health care institutions. Mortgaged Properties which are hotels or motels may
present additional risk in that: (i) hotels and motels are typically operated
pursuant to franchise, management and operating agreements which may be
terminable by the operator, and (ii) the transferability of the hotel's
operating, liquor and other licenses to the entity acquiring the hotel either
through purchase or foreclosure is subject to the vagaries of local law
requirements.
LEASES AND RENTS
Multifamily and commercial mortgage loan transactions often provide for an
assignment of the leases and rents pursuant to which the borrower typically
assigns its right, title and interest, as landlord under each lease and the
income derived therefrom, to the lender while either obtaining a license to
collect rents for so long as there is no default or providing for the direct
payment to the lender. The manner of perfecting the mortgagee's interest in
rents may depend on whether the mortgagor's assignment was absolute or one
granted as security for the loan. Failure to properly perfect the mortgagee's
interest in rents may result in the loss of substantial pool of funds, which
could otherwise serve as a source of repayment for such loan. If the mortgagor
defaults, the license terminates and the lender is entitled to collect the
rents. Local law may require that the lender take possession of the property
and/or obtain a court-appointed receiver before becoming entitled to collect the
rents. In most states, hotel and motel room revenues are considered accounts
receivable under the UCC; generally these revenues are either assigned by the
mortgagor, which remains entitled to collect such revenues absent a default, or
pledged by the mortgagor, as security for the loan. In general, the lender must
file financing statements in order to perfect its security interest in the
revenues and must file continuation statements, generally every five years, to
maintain perfection of such security interest. Even if the lender's security
interest in room revenues is perfected under the UCC, the lender will generally
be required to commence a foreclosure or otherwise take possession of the
property in order to collect the room revenues after a default.
PERSONALTY
Certain types of Mortgaged Properties, such as hotels, motels and industrial
plants, are likely to derive a significant part of their value from personal
property which does not constitute "fixtures" under applicable state real
property law and, hence, would not be subject to the lien of a mortgage. Such
property is generally pledged or assigned as security to the lender under the
UCC. In order to perfect its security interest therein, the lender generally
must file UCC financing statements and, to maintain perfection of such security
interest, file continuation statements generally every five years.
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ANTI-DEFICIENCY LEGISLATION AND OTHER LIMITATIONS ON LENDERS
Certain states have imposed statutory restrictions that limit the remedies
of a beneficiary under a deed of trust or a mortgagee under a mortgage. In some
states, statutes limit the right of the beneficiary or mortgagee to 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 in most cases to the difference between the amount due to the
lender and the net amount realized upon the foreclosure sale. Other statutes may
require the beneficiary or mortgagee to exhaust the security afforded under a
deed of trust or mortgage by foreclosure in an attempt to satisfy the full debt
before bringing a personal action against the borrower. In certain other states,
the lender has the option of bringing a personal action against the borrower on
the debt without first exhausting such security; however, in some of these
states, the lender, following judgment on such personal action, may be deemed to
have elected a remedy and may be precluded from exercising remedies with respect
to the security. Consequently, the practical effect of the election requirement,
when applicable, is that lenders will usually proceed first against the security
rather than bringing personal action against the borrower. Finally, other
statutory provisions may limit any deficiency judgment against the former
borrower following a foreclosure sale to the excess of the outstanding debt over
the fair market value of the property at the time of such sale. The purpose of
these statutes is to prevent a beneficiary or a mortgagee from obtaining a large
deficiency judgment against the former borrower as a result of low or no bids at
the judicial sale. In some states, exceptions to the anti-deficiency statutes
are provided for in certain instances where the value of the lender's security
has been impaired by acts or omissions of the borrower, for example, in the
event of waste of the property.
In addition, substantive requirements are imposed upon lenders in connection
with the origination and the servicing of mortgage loans by numerous federal and
some state consumer protection laws. The laws include the federal
Truth-in-Lending Act, Real Estate Settlement Procedures Act, Equal Credit
Opportunity Act, Fair Credit Billing Act, Fair Credit Reporting Act and related
statutes and regulations. These federal laws impose specific statutory
liabilities upon lenders who originate loans and who fail to comply with the
provisions of the law. In some cases, this liability may affect assignees of the
loans.
FEDERAL BANKRUPTCY AND OTHER LAWS AFFECTING CREDITORS' RIGHTS
In addition to laws limiting or prohibiting deficiency judgments, numerous
other statutory provisions, including the federal bankruptcy laws (the
"Bankruptcy Code") and state laws affording relief to debtors, may interfere
with or affect the ability of the secured lender to realize upon collateral
and/or enforce a deficiency judgment. For example, with respect to federal
bankruptcy law, the filing of a bankruptcy petition acts as a stay of the
enforcement of remedies (including the right of foreclosure) for collection of a
debt. Also, the filing of a petition in bankruptcy by or on behalf of a junior
lienor may stay a senior lender from taking action to foreclose the junior lien.
In a Chapter 11 case under the Bankruptcy Code, the lender's lien may be
transferred to other collateral and/or be limited in amount to the value of the
lender's interest in the collateral as of the date of the bankruptcy. The loan
term may be extended, the interest rate may be adjusted to market rates and the
priority of the loan may be subordinated to bankruptcy court-approved financing.
The bankruptcy court can also reinstate accelerated indebtedness and, in effect,
invalidate due-on-sale clauses through confirmed Chapter 11 plans of
reorganization. Under Section 363(b) and (f) of the Bankruptcy Code, a trustee
for a debtor, or a debtor as debtor-in-possession, may, despite the provisions
of the related Mortgage Loan to the contrary, sell its Mortgaged Property free
and clear of all liens, which liens would then attach to the proceeds of such
sale.
The Bankruptcy Code has recently been amended to provide that a lender's
perfected pre-petition security interest in leases, rents and hotel revenues
continues in the post-petition leases, rents and hotel revenues, unless a
bankruptcy court orders to the contrary "based on the equities of the case."
Thus, unless a court orders otherwise, revenues from a Mortgaged Property
generated after the date the bankruptcy petition is filed will constitute "cash
collateral" under the Bankruptcy Code. Debtors may only use cash
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collateral upon obtaining the lender's consent or a prior court order finding
that the lender's interest in the Mortgaged Properties and the cash collateral
is "adequately protected" as such term has been interpreted under the Bankruptcy
Code. It should be noted, however, that, in the case of hospitality properties,
the court may find that the lender has no security interest in either
pre-petition or post-petition revenues if the court finds that the loan
documents do not contain language covering accounts, room rents, or other forms
of personalty necessary for a security interest to attach to hotel revenues.
Lessee bankruptcies at the Mortgaged Properties could have an adverse impact
on the Mortgagors' ability to meet their obligations. For example, Section
365(e) of the Bankruptcy Code provides generally that rights and obligations
under an unexpired lease may not be terminated or modified at any time after the
commencement of a case under the Bankruptcy Code solely because of a provision
in the lease conditioned upon the commencement of a case under the Bankruptcy
Code or certain other similar events. In addition, Section 362 of the Bankruptcy
Code operates as an automatic stay of, among other things, any act to obtain
possession of property of or from a debtor's estate, which may delay the
Trustee's exercise of remedies in the event that a lessee becomes the subject of
a proceeding under the Bankruptcy Code.
Section 365(a) of the Bankruptcy Code generally provides that a trustee or a
debtor-in-possession in a case under the Bankruptcy Code has the power to assume
or to reject an executory contract or an unexpired lease of the debtor, in each
case subject to the approval of the bankruptcy court administering such case. If
the trustee or debtor-in-possession rejects an executory contract or an
unexpired lease, such rejection generally constitutes a breach of the executory
contract or unexpired lease immediately before the date of the filing of the
bankruptcy petition. As a consequence, the other party or parties to such
executory contract or unexpired lease, such as the Mortgagor as lessor under a
lease, would have only an unsecured claim against the debtor for damages
resulting from such breach, which could adversely affect the security for the
related Mortgage Loan. Moreover, under Section 502(b)(6) of the Bankruptcy Code,
the claim of a lessor for such damages from the termination of a lease of real
property will be limited to the sum of (i) the rent reserved by such lease,
without acceleration, for the greater of one year or 15 percent, not to exceed
three years, of the remaining term of such lease, following the earlier of the
date of the filing of the petition and the date on which such lender
repossessed, or the lessee surrendered, the leased property, and (ii) any unpaid
rent due under such lease, without acceleration, on the earlier of such dates.
Under Section 365(f) of the Bankruptcy Code, if a trustee or
debtor-in-possession assumes an executory contract or an unexpired lease of the
debtor, the trustee or debtor-in-possession generally may assign such executory
contract or unexpired lease, notwithstanding any provision therein or in
applicable law that prohibits, restricts or conditions such assignment, provided
that "adequate assurance of future performance" by the assignee is provided to
the lessor or contract party. The Bankruptcy Code specifically provides,
however, that adequate assurance of future performance for purposes of a lease
of real property in a shopping center includes adequate assurance of the source
of rent and other consideration due under such lease, and in the case of an
assignment, that the financial condition and operating performance of the
proposed assignee and its guarantors, if any, shall be similar to the financial
condition and operating performance of the debtor and its guarantors, if any, as
of the time the debtor became the lessee under the lease, that any percentage
rent due under such lease will not decline substantially, that the assumption
and assignment of the lease is subject to all the provisions thereof, including
(but not limited to) provisions such as a radius location, use or exclusivity
provision, and that the assignment will not breach any such provision contained
in any other lease, financing agreement, or master agreement relating to such
shopping center, and that the assumption or assignment of such lease will not
disrupt the tenant mix or balance in such shopping center. Thus, an undetermined
third party may assume the obligations of the lessee under a lease in the event
of commencement of a proceeding under the Bankruptcy Code with respect to the
lessee.
Under Section 365(h) of the Bankruptcy Code, if a trustee for a debtor, or a
debtor as a debtor-in-possession, rejects an unexpired lease of real property as
to which it is the lessor, the lessee may treat such lease as terminated by such
rejection or, in the alternative, may remain in possession of the leasehold for
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the balance of such term and for any renewal or extension of such term that is
enforceable by the lessee under applicable nonbankruptcy law. The Bankruptcy
Code provides that if a lessee elects to remain in possession after such a
rejection of a lease, the lessee may offset against rents reserved under the
lease for the balance of the term after the date of rejection of the lease, and
any such renewal or extension thereof, any damages occurring after such date
caused by the nonperformance of any obligation of the lessor under the lease
after such date.
In a bankruptcy or similar proceeding, action may be taken seeking the
recovery as a preferential transfer of any payments made by a mortgagor under
the related Mortgage Loan to the Trust Fund. Such payments may be protected from
recovery as preferences if they are payments in the ordinary course of business
made according to ordinary business terms on debts incurred in the ordinary
course of business. Whether any particular payment would be protected depends
upon the facts specific to the particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect its costs
and expenses in preserving or selling mortgaged property ahead of payment to the
lender. In certain circumstances, a debtor in bankruptcy may have the power to
grant liens senior to the lien of a mortgage, and analogous state statutes and
general principles of equity may also provide a mortgagor with the ability to
halt a foreclosure proceeding or sale and to force a restructuring of a mortgage
loan on terms a lender would not otherwise accept. Moreover, the laws of certain
states also give priority to certain tax liens over the lien of a mortgage or
deed of trust. Under the Bankruptcy Code, if the court finds that actions of the
mortgagee have been unreasonable, the lien of the related mortgage and the claim
of the mortgagee may be subordinated to the claims of unsecured creditors.
DUE ON-SALE CLAUSES IN MORTGAGE LOANS
A note, mortgage or deed of trust relating to the Mortgage Loans generally
contains a "due-on-sale" clause permitting acceleration of the maturity of a
loan if the borrower transfers its interest in the property. In recent years,
court decisions and legislative actions placed substantial restrictions on the
right of lenders to enforce such clauses in many states. By virtue, however, of
the Garn St. Germain Depository Institutions Act of 1982 (the "Garn Act")
effective October 15, 1982 (which purports to preempt state laws which prohibit
the enforcement of due-on-sale clauses by providing among other matters, that
"due-on-sale" clauses in certain loans made after the effective date of the Garn
Act are enforceable, within certain limitations as set forth in the Garn Act and
the regulations promulgated thereunder) the Servicer or the Master Servicer may
nevertheless be able to accelerate many of the Mortgage Loans that contain a
"due-on-sale" provision upon transfer of an interest in the property subject to
the Mortgage Loans, regardless of the Servicer's or the Master Servicer's
ability to demonstrate that a sale threatens its legitimate security interest.
ENFORCEABILITY OF PREPAYMENT AND LATE PAYMENT FEES
Forms of notes, mortgages and deeds of trust used by lenders may contain
provisions obligating the borrower to pay a late charge if payments are not
timely made, and in some circumstances may provide for prepayment fees or
penalties if the obligation is paid prior to maturity. In certain states, there
are or may be specific limitations upon the late charges which a lender may
collect from a borrower for delinquent payments. Certain states also limit the
amounts that a lender may collect from a borrower as an additional charge if the
loan is prepaid. The enforceability, under the laws of a number of states of
provisions providing for prepayment fees or penalties upon an involuntary
prepayment is unclear, and no assurance can be given that, at the time a
prepayment fee or penalty is required to be made on a Mortgage Loan in
connection with an involuntary prepayment, the obligation to make such payment
will be enforceable under applicable state law. Late charges and prepayment fees
are typically retained by servicers as additional servicing compensation. The
absence of a restraint on prepayment, particularly with respect to Mortgage
Loans having higher mortgage rates, may increase the likelihood of refinancing
or other early retirements of the Mortgage Loans.
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EQUITABLE LIMITATIONS ON REMEDIES
In connection with lenders' attempts to realize upon their security, courts
have invoked general equitable principles. The equitable principles are
generally designed to relieve the borrower from the legal effect of his defaults
under the loan documents. Examples of judicial remedies that have been fashioned
include judicial requirements that the lender undertake affirmative and
expensive actions to determine the causes for the borrower's default and the
likelihood that the borrower will be able to reinstate the loan. In some cases,
courts have substituted their judgment for the lender's judgment and have
required that lenders reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from temporary financial disability. In
other cases, courts have limited the right of a lender to realize upon his
security if the default under the security agreement is not monetary, such as
the borrower's failure to adequately maintain the property or the borrower's
execution of secondary financing affecting the property. Finally, some courts
have been faced with the issue of whether or not federal or state constitutional
provisions reflecting due process concerns for adequate notice require that
borrowers under security agreements receive notices in addition to the
statutorily prescribed minimums. For the most part, these cases have upheld the
notice provisions as being reasonable or have found that, in cases involving the
sale by a trustee under a deed of trust or by a mortgagee under a mortgage
having a power of sale, there is insufficient state action to afford
constitutional protections to the borrower.
The Mortgage Loans may include a debt-acceleration clause, which permits the
lender to accelerate the debt upon a monetary default of the borrower, after the
applicable cure period. The courts of all states will enforce clauses providing
for acceleration in the event of a material payment default. However, courts of
any state, exercising equity jurisdiction, may refuse to allow a lender to
foreclose a mortgage or deed of trust when an acceleration of the indebtedness
would be inequitable or unjust and the circumstances would render the
acceleration unconscionable.
APPLICABILITY OF USURY LAWS
Title V of the Depository Institutions Deregulation and Monetary Control Act
of 1980, enacted in March 1980 ("Title V"), provides that state usury
limitations shall not apply to certain types of residential first mortgage loans
originated by certain lenders after March 31, 1980. Similar federal statutes
were in effect with respect to mortgage loans made during the first three months
of 1980. The OTS, as successor to the Federal Home Loan Bank Board, is
authorized to issue rules and regulations and to publish interpretations
governing implementation of Title V. Title V authorizes any state to reimpose
interest rate limits by adopting, before April 1, 1983, a state law, or by
certifying that the voters of such state have voted in favor of any provision,
constitutional or otherwise, which expressly rejects an application of the
federal law. Fifteen states adopted such a law prior to the April 1, 1983
deadline. In addition, even where Title V is not so rejected, any state is
authorized by the law to adopt a provision limiting discount points or other
charges on mortgage loans covered by Title V.
In any state in which application of Title V has been expressly rejected or
a provision limiting discount points or other charges is adopted, no Mortgage
Loan originated after the date of such state action will be eligible as Mortgage
Assets unless (i) such Mortgage Loan provides for such interest rate, discount
points and charges as are permitted in such state or (ii) such Mortgage Loan
provides that the terms thereof shall be construed in accordance with the laws
of another state under which such interest rate, discount points and charges
would not be usurious and the Mortgagor's counsel has rendered an opinion that
such choice of law provision would be given effect. No Mortgage Loan originated
prior to January 1, 1980 will bear interest or provide for discount points or
charges in excess of permitted levels.
ALTERNATIVE MORTGAGE INSTRUMENTS
Alternative mortgage instruments, including ARMs originated by non-federally
chartered lenders, have historically been subject to a variety of restrictions.
Such restrictions differed from state to state,
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resulting in difficulties in determining whether a particular alternative
mortgage instrument originated by a state-chartered lender complied with
applicable law. These difficulties were alleviated substantially as a result of
the enactment of Title VIII of the Garn St. Germain Act ("Title VIII"). Title
VIII provides that, notwithstanding any state law to the contrary,
state-chartered banks may originate "alternative mortgage instruments"
(including ARMs) in accordance with regulations promulgated by the Comptroller
of the Currency with respect to origination of alternative mortgage instruments
by national banks; state chartered credit unions may originate alternative
mortgage instruments in accordance with regulations promulgated by the National
Credit Union Administration with respect to origination of alternative mortgage
instruments by federal credit unions and all other non-federally chartered
housing creditors, including state-chartered savings and loan associations; and
state-chartered savings banks and mortgage banking companies may originate
alternative mortgage instruments in accordance with the regulations promulgated
by the Federal Home Loan Bank Board, as succeeded by the OTS, with respect to
origination of alternative mortgage instruments by federal savings and loan
associations. Title VIII provides that any state may reject applicability of the
provisions of Title VIII by adopting, prior to October 15, 1985, a law or
constitutional provision expressly rejecting the applicability of such
provisions. Certain states have taken such action.
SECONDARY FINANCING; DUE-ON-ENCUMBRANCE PROVISIONS
Certain of the Mortgage Loans may not restrict secondary financing, thereby
permitting the borrower to use the Mortgaged Property as security for one or
more additional loans. Certain of the Mortgage Loans may preclude secondary
financing (by permitting the first lender to accelerate the maturity of its loan
if the borrower further encumbers the Mortgaged Property or in some other
fashion) or may require the consent of the senior lender to any junior or
substitute financing; however, such provisions may be unenforceable in certain
jurisdictions under certain circumstances.
Where the borrower encumbers the Mortgaged Property with one or more junior
liens, the senior lender is subjected to additional risk. For example, the
borrower may have difficulty servicing and repaying multiple loans or acts of
the senior lender which prejudice the junior lender or impair the junior
lender's security may create a superior equity in favor of the junior lender.
For example, if the borrower and the senior lender agree to an increase in the
principal amount of or the interest rate payable on the senior loan, the senior
lender may lose its priority to the extent any existing junior lender is harmed
or the borrower is additionally burdened. In addition, 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, delay and in certain circumstances
even prevent the taking of action by the senior lender. In addition, the
bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
AMERICANS WITH DISABILITIES ACT
Under Title III of the Americans with Disabilities Act of 1990 and rules
promulgated thereunder (collectively, the "ADA"), in order to protect
individuals with disabilities, public accommodations (such as hotels,
restaurants, shopping centers, hospitals, schools and social service center
establishments) must remove architectural and communication barriers which are
structural in nature from existing places of public accommodation to the extent
"readily achievable." In addition, under the ADA, alterations to a place of
public accommodation or a commercial facility are to be made so that, to the
maximum extent feasible, such altered portions are readily accessible to and
usable by disabled individuals. The "readily achievable" standard takes into
account, among other factors, the financial resources of the affected site,
owner, landlord or other applicable person. In addition to imposing a possible
financial burden on the Mortgagor in its capacity as owner or landlord, the ADA
may also impose such requirements on a foreclosing lender who succeeds to the
interest of the Mortgagor as owner or landlord. Furthermore, since the "readily
achievable" standard may vary depending on the financial condition of the owner
or landlord,
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a foreclosing lender who is financially more capable than the Mortgagor of
complying with the requirements of the ADA may be subject to more stringent
requirements than those to which the Mortgagor is subject.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT OF 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended (the "Relief Act"), a mortgagor who enters military service after the
origination of such mortgagor's Mortgage Loan (including a mortgagor who was in
reserve status and is called to active duty after origination of the Mortgage
Loan), may not be charged interest (including fees and charges) above an annual
rate of 6% during the period of such mortgagor's active duty status, unless a
court orders otherwise upon application of the lender. The Relief Act applies to
mortgagors who are members of the Army, Navy, Air Force, Marines, National
Guard, Reserves, Coast Guard and officers of the U.S. Public Health Service
assigned to duty with the military. Because the Relief Act applies to mortgagors
who enter military service (including reservists who are called to active duty)
after origination of the related Mortgage Loan, no information can be provided
as to the number of loans that may be affected by the Relief Act. Application of
the Relief Act would adversely affect, for an indeterminate period of time, the
ability of any servicer to collect full amounts of interest on certain of the
Mortgage Loans. Any shortfalls in interest collections resulting from the
application of the Relief Act would result in a reduction of the amounts
distributable to the holders of the related series of Certificates, and would
not be covered by advances or, unless otherwise specified in the related
Prospectus Supplement, any form of Credit Support provided in connection with
such Certificates. In addition, the Relief Act imposes limitations that would
impair the ability of the servicer to foreclose on an affected Mortgage Loan
during the mortgagor's period of active duty status, and, under certain
circumstances, during an additional three month period thereafter. Thus, in the
event that such a Mortgage Loan goes into default, there may be delays and
losses occasioned thereby.
FORFEITURES IN DRUG AND RICO PROCEEDINGS
Federal law provides that property owned by persons convicted of
drug-related crimes or of criminal violations of the Racketeer Influenced and
Corrupt Organizations ("RICO") statute can be seized by the government if the
property was used in, or purchased with the proceeds of, such crimes. Under
procedures contained in the Comprehensive Crime Control Act of 1984 (the "Crime
Control Act"), the government may seize the property even before conviction. The
government must publish notice of the forfeiture proceeding and may give notice
to all parties "known to have an alleged interest in the property," including
the holders of mortgage loans.
A lender may avoid forfeiture of its interest in the property if it
establishes that: (i) its mortgage was executed and recorded before commission
of the crime upon which the forfeiture is based, or (ii) the lender was, at the
time of execution of the mortgage, "reasonably without cause to believe" that
the property was used in, or purchased with the proceeds of, illegal drug or
RICO activities.
THE INDENTURE
The following summaries describe certain provisions of the Indenture. The
summaries do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of the Indenture. Where
particular provisions or terms used in the Indenture are referred to, such
provisions or terms are as specified in the Indenture.
CERTAIN COVENANTS
The Issuer may not liquidate or dissolve, without the consent of the holders
of not less than 66 2/3% of the Aggregate Outstanding Principal of each Series.
The Issuer also may not consolidate or merge with or into any other Person or
convey or transfer its properties and assets substantially as an entirety
without the consent of holders of not less than 66 2/3% of the Aggregate
Outstanding Principal of each Series, and
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unless (a) the Person (if other than the Issuer) formed or surviving such merger
or consolidation or acquiring such assets is a Person organized under the laws
of the United States of America or any State and shall have expressly assumed,
by supplemental indenture in form satisfactory to the Trustee, the due and
punctual payment of principal of and interest on all Bonds and the performance
of every applicable covenant of the Indenture to be performed, by the Issuer,
(b) immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred, and be continuing, (c) the Trustee shall have
received a letter from each Rating Agency rating any outstanding Bonds to the
effect that the rating issued with respect to such Bonds is confirmed
notwithstanding the consummation of such transaction and (d) the Trustee shall
have received from the Issuer an Officers' Certificate and an Opinion of
Counsel, each to the effect that, among other things, such transaction complies
with the foregoing requirements.
The Issuer may incur, assume, have outstanding or guarantee any indebtedness
other than pursuant to the Indenture only subject to certain conditions and
limitations.
MODIFICATION OF INDENTURE
Except as set forth below, with the consent of the holders of not less than
a majority of the then Aggregate Outstanding Principal of each Series or Class
of such Series to be affected, the Trustee and the Issuer may amend the
Indenture or execute a supplemental indenture, to add provisions to or change or
eliminate any provisions of the Indenture or Trust Agreement, as applicable,
relating to such Series, or modify the rights of the holders of the Bonds of
that Series.
Without the consent of the holder of each outstanding Bond affected,
however, except as provided below, no such amendment or supplemental indenture
shall (i) change the Stated Maturity of the principal of or any installment of
principal of or interest on any Bond or reduce the principal amount thereof, the
Bond Interest Rate for any Bond or the Redemption Price with respect thereto, or
change the provisions of the Trust Indenture or the related Series Supplement
relating to the application of the Trust Estate to payment principal of or
interest on the affected Bonds, or change any place of payment where, or the
coin or currency in which, any affected Bond or any interest thereon is payable,
or impair the right to institute suit for the enforcement of the provisions of
the Indenture regarding payment, (ii) reduce the percentage of Aggregate
Outstanding Principal of the Bonds of the affected Series or Class of such
Series, the consent of the holders of which is required for the authorization of
any such amendment or supplemental indenture or for any waiver of compliance
with certain provisions of the Indenture or certain defaults thereunder and
their consequences, (iii) modify or alter the provisions of the Indenture
defining the term "Outstanding," (iv) permit the creation of any lien ranking
prior to or on a parity with the lien of the Indenture with respect to any part
of the property subject to the lien of the Indenture or terminate the lien of
the Indenture on any property at any time subject thereto or deprive the holder
of any Bond of the security afforded by the lien of the Indenture, (v) reduce
the percentage of the Aggregate Outstanding Principal of any Series (or Class of
such Series), the consent of the holders of which is required to direct the
Trustee to liquidate the Mortgage Assets for such Series, (vi) modify any of the
provisions of the Indenture if such modification affects the calculation of the
amount of any payment of interest or principal due and payable on any Bond on
any Payment Date or to affect the rights of the holders of Bonds of any Series
(or Class of such Series) to the benefit of any provisions for the mandatory
redemption of Bonds of such Series (or Class of such Series) contained therein
or in the related Series Supplement or (vii) modify the provisions of the
Indenture regarding any modifications of such Indenture requiring consent of the
holders of Bonds, except to increase the percentage or number of holders
required to consent to such modification of such Indenture or Trust Agreement,
as applicable, or to provide that additional provisions of the Indenture cannot
be modified or waived without the consent of the holder of each Bond affected
thereby.
The Issuer and the Trustee may also amend the Indenture or enter into
supplemental indentures, without obtaining the consent of holders of any Series,
to cure any ambiguity or to correct or supplement any provision of the Indenture
or any supplemental indenture which may be defective or inconsistent with
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any other provision, or to make or to amend any other provisions with respect to
matters or questions arising under the Indenture or any supplemental indenture,
provided that such action shall not materially adversely affect the interests of
the holders of the Bonds. Such amendments may also be made and such supplemental
indentures may also be entered into without the consent of Bondholders or
Certificateholders to set forth the terms of and security for additional Series,
to evidence the succession of another person to the Issuer, to add to the
conditions, limitations and restrictions on certain terms of any Series and to
the covenants of the Issuer, to surrender any right or power conferred upon the
Issuer, to convey, transfer, assign, mortgage or pledge any property to the
Trustee, to correct or amplify the description of any property subject to the
lien of the Indenture to modify the Indenture to the extent necessary to effect
the Trustee's qualification under the TIA or comply with the requirements of the
TIA, to provide for the issuance of Bonds of any Series, to make any amendment
necessary or desirable to maintain the status of a REMIC as a REMIC and to amend
the provisions of the Indenture relating to authentication and delivery of a
Series with respect to which a supplemental indenture has not theretofore been
authorized or to evidence and provide for the acceptance of appointment by a
successor trustee.
EVENTS OF DEFAULT
Unless otherwise stated in the related Prospectus Supplement, an "Event of
Default" with respect to any Series is defined in the Indenture as being: (i) a
continuing default for 5 days in the payment of interest on any Bond of such
Series; (ii) a continuing default for five days in the payment of principal,
when due, of any Bond of such Series; (iii) the impairment of the validity or
effectiveness of the Indenture or any grant thereunder, or the subordination,
termination or discharge of the lien of the Indenture with respect to such
Series, or the release of any Person from any covenants or obligations under the
Indenture with respect to such Series, unless otherwise expressly permitted, or
the creation of any lien, charge, security interest, mortgage or other
encumbrance with respect to any part of the property subject to the lien of the
Indenture, or any interest in or proceeds of such property, or the failure of
the lien of the Indenture to constitute a valid first priority security interest
in the property subject to the lien of the Indenture and the continuation of any
of such defaults for a period of 30 days after notice to the Issuer by the
Trustee or to the Issuer and the Trustee by the Holders of at least 25% of the
then Aggregate Outstanding Principal of such Series; (iv) a default in the
observance of, or breach of, any covenant or negative covenant of the Issuer
made in the Indenture, or a material breach of any representation or warranty of
the Issuer made in the Indenture or in any certificate or other document
delivered pursuant thereto or in connection therewith as of the time when the
same shall have been made, and the continuation of any such default or breach
for a period of 60 days after notice to the Issuer by the Trustee or to the
Issuer and the Trustee by the holders of at least 25% of the then Aggregate
Outstanding Principal of such Series (unless the default or breach is with
respect to certain covenants specified in the Indenture not requiring such
continuation or notice); and (v) certain events of bankruptcy, insolvency,
receivership or reorganization of the Issuer. Notwithstanding the foregoing, if
a Series includes a Class of Subordinate Bonds, the Series Supplement for such a
Series may provide that certain defaults which relate only to such Subordinate
Securities shall not constitute an Event of Default with respect to the Bonds,
under certain circumstances, and may limit the rights of holders of Subordinate
Securities to direct the Trustee to pursue remedies with respect to such
defaults, or other Events of Default. Such limitations, if any, will be
specified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, in case an
Event of Default with respect to any Series should occur and be continuing, the
Trustee may and, upon the written request of the holders of at least 25% of the
then Aggregate Outstanding Principal of such Series shall, declare all Bonds of
such Series to be due and payable, together with accrued and unpaid interest
thereon. Such declaration may under certain circumstances be rescinded by the
holders of a majority of the then Aggregate Outstanding Principal of such
Series.
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of an Event of Default with respect to a Series, mail to the holders
of such Series notice of all uncured or unwaived
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defaults known to it; provided that, except in the case of an Event of Default
in the payment of the principal or purchase price of or interest on any Bond,
the Trustee shall be protected in withholding such notice if it determines in
good faith that the withholding of such notice is in the interest of the
Bondholders of such Series, and provided, further, that, in the case of a
default specified in clause (iv) of the first paragraph of this "Events of
Default" subsection the Trustee is not required to give such notice until at
least 30 days after the occurrence of such default or breach and that, in the
case of any default or breach specified in clause (v) of the first paragraph of
this "Events of Default" subsection, the Trustee is not required to give such
notice until at least 60 days after the occurrence of such default or breach.
An Event of Default with respect to one Series will not necessarily be an
Event of Default with respect to any other Series.
Unless otherwise provided in the related Prospectus Supplement, if following
an Event of Default with respect to any Series, the Bonds of such Series have
been declared to be due and payable, the Trustee may, but shall not be obligated
to, in its sole discretion, refrain from liquidating the related Mortgage Assets
if (i) the Trustee determines that the amounts receivable with respect to such
Mortgage Assets and any Enhancement will be sufficient to pay (a) all principal
of and interest on the Bonds in accordance with their terms without regard to
the declaration of acceleration and (b) all sums due the Trustee and any other
administrative amounts required to be paid under the Indenture and (ii) Holders
of the requisite percentage of the Securities of such Series have not directed
the Trustee to sell the related Mortgage Assets as so specified in the
Indenture. In addition, unless otherwise specified in the related Prospectus
Supplement, the Trustee is prohibited from selling the Trust Estate following
certain Events of Default unless (a) the amounts receivable with respect to the
Mortgage Assets and any Enhancement are not sufficient to pay in full the
principal of and accrued interest on the Bonds of such Series and to pay sums
due the Trustee and other administrative expenses specified in the Indenture and
the Trustee obtains the consent of holders of 66 2/3% of the Aggregate
Outstanding Principal of such Series or (b) the Trustee obtains the consent of
100% of the Aggregate Outstanding Principal of such Series, and subject to the
provisions of the related Prospectus Supplement, the obligor under the
Enhancement. Unless otherwise provided in the related Prospectus Supplement, the
proceeds of a sale of Mortgage Assets will be applied to the payment of amounts
due the Trustee and other administrative expenses specified in the Indenture and
then distributed pro rata among the Bondholders of such Series (without regard
to Class, provided that Subordinate Securities will be subordinate to Senior
Securities of the Series to the extent provided in the related Prospectus
Supplement) according to the amounts due and payable on the Bonds for principal
and interest at the time such proceeds are distributed by the Trustee.
The Trustee shall not be deemed to have knowledge of any Event of Default or
Default described in clauses (iv) through (vi) of the first paragraph of this
"Events of Default" subsection unless an officer in the Trustee's corporate
trust department has actual knowledge thereof. Subject to the provisions of the
Indenture relating to the duties of the Trustee, in case an Event of Default
shall occur and be continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the Bondholders of a Series, unless such Bondholders shall
have offered to the Trustee reasonable security or indemnity. Subject to such
provisions for indemnification and certain limitations contained in the
Indenture the holders of a majority of the then Aggregate Outstanding Principal
of a Series (or of such Classes specified in the related Prospectus Supplement)
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee with respect to the Series. In addition, the
Holders of a majority of the then Aggregate Outstanding Principal of a Series
(or of such Classes specified in the related Prospectus Supplement) may, in
certain cases, waive any default with respect to such Series, except a default
in payment of principal or interest or in respect of a covenant or provision
which cannot be modified without the consent of all Bondholders affected.
Unless otherwise specified in the related Prospectus Supplement, no holder
of Bonds of a Series will have the right to institute any Proceeding with
respect to the Indenture, unless (i) such Holder previously
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has given to the Trustee written notice of a continuing Event of Default with
respect to such Series and has offered the Trustee satisfactory indemnity, (ii)
the Holders of not less than 25% of the then Aggregate Outstanding Principal of
such Series have made written request upon the Trustee to institute such
Proceeding as Trustee and have offered satisfactory indemnity, (iii) the Trustee
has, for 60 days after receipt of such notice, request and offer of indemnity,
failed to institute any such Proceeding and (iv) no direction inconsistent with
such written request has been given to the Trustee during such 60-day period by
the Holders of a majority of the then Aggregate Outstanding Principal of such
Series; provided, however, that in the event that the Trustee receives
conflicting requests and indemnities from two or more groups of Bondholders,
each representing less than a majority of the Aggregate Outstanding Principal of
such Series, the Trustee may in its sole discretion determine what action with
respect to the Proceeding, if any, shall be taken.
AUTHENTICATION AND DELIVERY OF BONDS
The Issuer may from time to time deliver Bonds executed by it to the Trustee
and order that the Trustee authenticate such Bonds. Upon the receipt of such
Bonds and such order and subject to the Issuer's compliance with certain
conditions specified in the Indenture the Trustee will authenticate and deliver
such Bonds as the Issuer may direct. Unless otherwise specified in the related
Prospectus Supplement, the Trustee will be authorized to appoint an agent for
purposes of authenticating and delivering any Series of Bonds (the
"Authenticating Agent").
SATISFACTION AND DISCHARGE OF THE INDENTURE
The Indenture will be discharged as to a Series (except with respect to
certain continuing rights specified in the Indenture or Trust Agreement, as
applicable), (a)(1) upon the delivery to the Trustee for cancellation of all of
the Bonds of such Series other than Bonds which have been mutilated, lost or
stolen and have been replaced or paid and Bonds for which money has been
deposited in trust for the full payment thereof (and thereafter repaid to the
Issuer and discharged from such trust) as provided in of the Indenture, or (2)
at such time as all Bonds of such Series not previously cancelled by the Trustee
have become, or, within one year, will become, due and payable or called for
redemption and the Issuer shall have deposited with the Trustee an amount
sufficient to repay all of the Bonds and (b) the Issuer shall have paid all
other amounts payable under the Indenture or Trust Agreement, as applicable,
with respect to such Series.
ISSUER'S ANNUAL COMPLIANCE STATEMENT
The Issuer will be required to file annually with the Trustee a written
statement as to fulfillment of its obligations under the Indenture.
LIST OF BONDHOLDERS
Three or more Holders of a Series which have each owned the Bonds for at
least six months may, by written application to the Trustee, request access to
the list maintained by the Trustee of all holders of the same Series or of all
Bonds, as specified in the request, for the purpose of communicating with other
Bondholders with respect to their rights under the Indenture.
MEETINGS OF BONDHOLDERS
Meetings of Bondholders or Certificateholders may be called at any time and
from time to time to (i) give any notice to the Issuer or to the Trustee, give
directions to the Trustee, consent to the waiver of any Default or Event of
Default under the Indenture, or to take any other action authorized to be taken
by Bondholders in connection therewith, (ii) remove the Trustee and to appoint a
successor Trustee, (iii) consent to the execution of supplemental indentures or
(iv) take any other action authorized to be taken by or on behalf of the
Bondholders of any specified percentage of the Aggregate Outstanding
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Principal of the Bonds. Such meetings may be called by the Trustee, the Issuer
or by the holders of 10% in Aggregate Outstanding Principal of any such Series.
FISCAL YEAR
The fiscal year of each Issuer ends on December 31.
TRUSTEE'S ANNUAL REPORT
The Trustee will be required to mail each year to all Bondholders a brief
report relating to its eligibility and qualification to continue as the Trustee
under the Indenture any amounts advanced by it under the Indenture which remain
unpaid on the date of the report, the amount, interest rate and maturity date of
certain indebtedness owing by the Issuer (or any other obligor on such Series)
to the Trustee in its individual capacity, the property and funds physically
held by the Trustee as such, any release or release and substitution of property
subject to the lien of the Indenture which has not been previously reported, any
additional issuance of Bonds not previously reported and any action taken by it
which materially affects the Bonds and which has not been previously reported.
THE TRUSTEE
LaSalle National Bank (or another bank or trust company qualified under the
TIA and named in the Prospectus Supplement related to a Series of Bonds) will be
the Trustee under the Indenture for the Bonds. The Issuer may maintain other
banking relationships in the ordinary course of business with the Trustee. If
LaSalle National Bank serves as Trustee, the Trustee's "Corporate Trust Office"
is 135 South LaSalle Street, Suite 1625, Chicago, Illinois 60674, or at such
other addressees as the Trustee may designate from time to time by notice to the
Bondholders and the Issuer. If another bank or trust company serves as Trustee,
the address of its Corporate Trust Office will be specified in the related
Prospectus Supplement. With respect to the presentment and surrender of Bonds
for final payment of principal in retirement thereof on any Payment Date,
Redemption Date, Special Payment Date or Special Redemption Date and, with
respect to any other presentment and surrender of such Bonds and for all other
purposes, unless otherwise specified in the related Prospectus Supplement, such
Bonds may be presented at the Corporate Trust Office of the Trustee or at the
office of the Issuer's agent in the State of New York (the "New York Presenting
Agent"), which will be specified in the related Prospectus Supplement.
THE TRUST AGREEMENT
The following summaries describe certain provisions of the Trust Agreement.
The summaries do not purport to be complete and are subject to, and qualified in
their entirety by reference to, the provisions of the Trust Agreement. Where
particular provisions or terms used in the Trust Agreement are referred to, such
provisions or terms are as specified in the Trust Agreement.
ASSIGNMENT OF MORTGAGE ASSETS
GENERAL. The Depositor will transfer, convey and assign to the Trustee all
right, title and interest of the Depositor in the Mortgage Assets and other
property to be included in the Trust Fund for a Series. Such assignment will
include all principal and interest due on or with respect to the Mortgage Assets
after the Cut-off Date specified in the related Prospectus Supplement. The
Trustee will, concurrently with such assignment, execute and deliver the
Certificates.
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ASSIGNMENT OF MORTGAGE LOANS. The Depositor will, as to each Mortgage Loan,
deliver or cause to be delivered to the Trustee, or, as specified in the related
Prospectus Supplement, the Custodian, the Mortgage Note endorsed without
recourse to the order of the Trustee or in blank, the original Mortgage with
evidence of recording indicated thereon (except for any Mortgage not returned
from the public recording office, in which case a copy of such Mortgage will be
delivered, together with a certificate that the original of such Mortgage was
delivered to such recording office) and an assignment of the Mortgage in
recordable form. The Trustee, or, if so specified in the related Prospectus
Supplement, the Custodian, will hold such documents in trust for the benefit of
the Certificateholders.
If so specified in the related Prospectus Supplement, the Depositor will, at
the time of delivery of the Certificates, cause assignments to the Trustee of
the Mortgage Loans to be recorded in the appropriate public office for real
property records, except in states where, in the opinion of counsel acceptable
to the Trustee, such recording is not required to protect the Trustee's interest
in the Mortgage Loan. If specified in the related Prospectus Supplement, the
Depositor will cause such assignments to be so recorded within the time after
delivery of the Certificates as is specified in the related Prospectus
Supplement, in which event, the Trust Agreement may, as specified in the related
Prospectus Supplement, require the Depositor to repurchase from the Trustee any
Mortgage Loan required to be recorded but not recorded within such time, at the
price described below with respect to repurchase by reason of defective
documentation. Unless otherwise provided in the related Prospectus Supplement,
the enforcement of the repurchase obligation would constitute the sole remedy
available to the Certificateholders or the Trustee for the failure of a Mortgage
Loan to be recorded.
Each Mortgage Loan will be identified in a schedule appearing as an exhibit
to the Trust Agreement (the "Mortgage Loan Schedule"). Such Mortgage Loan
Schedule will specify with respect to each mortgage loan: the original principal
amount and unpaid principal balance as of the Cut-off Date; the current interest
rate; the current Scheduled Payment of principal and interest; the maturity date
of the related mortgage note; if the Mortgage Loan is an adjustable rate
mortgage, the lifetime mortgage rate cap, if any, and the current index; and, if
the Mortgage Loan is a loan with other than fixed Scheduled Payments and level
amortization, the terms thereof.
REPURCHASE OF NON-CONFORMING LOANS
Unless otherwise provided in the related Prospectus Supplement, if any
document in the Mortgage Loan file delivered by the Depositor to the Trustee is
found by the Trustee within 45 days of the execution of the related Trust
Agreement (or promptly after the Trustee's receipt of any document permitted to
be delivered after the Closing Date) to be defective in any material respect and
the Depositor does not cure such defect within 90 days, or within such other
period specified in the related Prospectus Supplement, the Depositor will, not
later than 90 days or within such other period specified in the related
Prospectus Supplement, after the Trustee's notice to the Depositor or the Master
Servicer, as the case may be, of the defect, repurchase the related Mortgage
Loan or any property acquired in respect thereof from the Trustee at a price
generally equal to (a) the outstanding principal balance of such Mortgage Loan
(or, in the case of a foreclosed Mortgage Loan, the outstanding principal
balance of such Mortgage Loan immediately prior to foreclosure) and (b), accrued
and unpaid interest to the date of the next scheduled payment on such Mortgage
Loan at the related Certificate Interest Rate (less any unreimbursed Advances
respecting such Mortgage Loan).
Unless otherwise provided in the related Prospectus Supplement, the
above-described repurchase obligation constitutes the sole remedy available to
the Certificateholders or the Trustee for a material defect in a Mortgage Loan
document.
The Depositor or another entity will make representations and warranties
with respect to Mortgage Loans which comprise the Mortgage Assets for a Series.
If the Depositor or such entity cannot cure a breach of any such representations
and warranties in all material respects within 90 days after notification
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by the Trustee of such breach, and if such breach is of a nature that materially
and adversely affects the value of such Mortgage Loan, the Depositor or such
entity is obligated to repurchase the affected Mortgaged Loan or, if provided in
the related Prospectus Supplement, provide a Substitute Mortgage Loan therefor,
subject to the same conditions and limitations on purchases and substitutions as
described above.
The Depositor's only source of funds to effect any cure, repurchase or
substitution will be through the enforcement of the corresponding obligations of
the responsible originator or seller of such Mortgage Loans. See "RISK FACTORS".
REPORTS TO CERTIFICATEHOLDERS
The Trustee will prepare and forward to each Certificateholder on each
Distribution Date, or as soon thereafter as is practicable, a statement setting
forth, to the extent applicable to any Series, among other things:
(i) with respect to a Series, the amount of such distribution allocable to
principal on the Mortgage Assets, separately identifying the aggregate amount of
any principal prepayments included therein and the amount, if any, advanced by
the Servicer or by a Servicer;
(ii) with respect to a Series, the amount of such distribution allocable to
interest on the Mortgage Assets and the amount, if any, advanced by a Servicer;
(iii) the amount of servicing compensation with respect to the Mortgage
Assets and paid during the Due Period commencing on the Due Date to which such
distribution relates and the amount of servicing compensation during such period
attributable to penalties and fees;
(iv) the aggregate outstanding principal balance of the Mortgage Assets as
of the opening of business on the Due Date, after giving effect to distributions
allocated to principal and reported under (i) above;
(v) the aggregate outstanding principal amount of the Certificates of such
series as of the Due Date, after giving effect to distributions allocated to
principal reported under (i) above;
(vi) with respect to Compound Interest Securities, prior to the Accrual
Termination Date in addition to the information specified in (ii) above, the
amount of interest accrued on such Securities during the related Interest
Accrual Period and added to the Compound Value thereof;
(vii) in the case of Variable Rate Securities, the Variable Interest Rate
applicable to the distribution being made;
(viii) if applicable, the amount of any shortfall (i.e., the difference
between the aggregate amounts of principal and interest which Certificateholders
would have received if there were sufficient eligible funds to distribute and
the amounts actually distributed);
(ix) if applicable, the number and aggregate principal balances of Mortgage
Loans delinquent for (A) two consecutive payments and (B) three or more
consecutive payments, as of the close of the business on the Determination Date
to which such distribution relates;
(x) if applicable, the book value of any REO Property acquired on behalf of
Certificateholders through foreclosure, grant of a deed in lieu of foreclosure
or repossession as of the close of the business on the Business Day preceding
the Distribution Date to which such distribution relates;
(xi) if applicable, the amount of coverage under any pool insurance policy
as of the close of business on the applicable Distribution Date;
(xii) if applicable, the amount of coverage under any special hazard
insurance policy as of the close of business on the applicable Distribution
Date;
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(xiii) if applicable, the amount of coverage under any bankruptcy bond as of
the close of business on the applicable Distribution Date;
(xiv) in the case of any other Enhancement described in the related
Prospectus Supplement, the amount of coverage of such credit support as of the
close of business on the applicable Distribution Date;
(xv) in the case of any Series which includes a Subordinate Securities, the
subordinated amount, if any, determined as of the related Determination Date and
if the distribution to the Holders of Senior Securities is less than their
required distribution, the amount of the shortfall;
(xvi) the amount of any withdrawal from any applicable reserve fund included
in amounts actually distributed to Certificateholders and the remaining balance
of each reserve fund, if any, on such Distribution Date, after giving effect to
distributions made on such date; and
(xvii) such other information as specified in the related Trust Agreement.
In addition, within a reasonable period of time after the end of each
calendar year the Trustee, unless otherwise specified in the related Prospectus
Supplement, will furnish to each Certificateholder of record at any time during
such calendar year: (a) the aggregate of amounts reported pursuant to (i)
through (iv), (vi), (viii) and (xvi) above for such calendar year and (b) such
information specified in the Trust Agreement to enable Certificateholders to
prepare their tax returns including, without limitation, the amount of original
issue discount accrued on the Certificates, if applicable. Information in the
Distribution Date and annual reports provided to the Certificateholders will not
have been examined and reported upon by an independent public accountant.
However, the Master Servicer will provide to the Trustee a report by independent
public accountants with respect to the Master Servicer's servicing of the
Mortgage Loans. See "SERVICING OF MORTGAGE LOANS--Evidence as to Compliance"
herein.
EVENT OF DEFAULT
Unless otherwise specified in the related Prospectus Supplement, events of
Default under the Trust Agreement for each Series include (i) any failure by the
Master Servicer to distribute to Certificateholders of such Series any required
payment which continues unremedied for five days after the giving of written
notice of such failure to the Master Servicer by the Trustee for such Series, or
to the Master Servicer and the Trustee by the Holders of Certificates of such
Series evidencing not less than 25% of the aggregate outstanding principal
amount of the Certificates for such Series, (ii) any failure by the Servicer
duly to observe or perform in any material respect any other of its covenants or
agreements in the Trust Agreement which continues unremedied for 30 days after
the giving of written notice of such failure to the Master Servicer by the
Trustee, or to the Master Servicer and the Trustee by the Holders of
Certificates of such Series evidencing not less than 25% of the aggregate
outstanding principal amount of the Certificates and (iii) certain events in
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings and certain actions by the Master Servicer indicating its
insolvency, reorganization or inability to pay its obligations.
RIGHTS UPON EVENT OF DEFAULT
So long as an Event of Default remains unremedied under the Trust Agreement
for a Series, the Trustee for such Series or Holders of Certificates of such
Series evidencing not less than 25% of the aggregate outstanding principal
amount of the Certificates for such Series may terminate all of the rights and
obligations of the Master Servicer as servicer under the Trust Agreement and in
and to the Mortgage Loans (other than its right to recovery of other expenses
and amounts advanced pursuant to the terms of the Trust Agreement which rights
the Master Servicer will retain under all circumstances), whereupon the Trustee
will succeed to all the responsibilities, duties and liabilities of the Master
Servicer under the Trust Agreement and will be entitled to reasonable servicing
compensation not to exceed the applicable servicing fee, together with other
servicing compensation in the form of assumption fees, late payment charges or
otherwise as provided in the Trust Agreement.
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In the event that the Trustee is unwilling or unable so to act, it may
select, or petition a court of competent jurisdiction to appoint, a housing and
home finance institution, bank or mortgage servicing institution with a net
worth of at least $15,000,000 to act as successor Master Servicer under the
provisions of such Trust Agreement relating to the servicing of the Mortgage
Loans. The successor Servicer would be entitled to reasonable servicing
compensation in an amount not to exceed the servicing fee as set forth in the
related Prospectus Supplement, together with the other servicing compensation in
the form of assumption fees, late payment charges or otherwise, as provided in
the Trust Agreement.
During the continuance of any Event of Default under the Trust Agreement for
a Series, the Trustee for such Series will have the right to take action to
enforce its rights and remedies and to protect and enforce the rights and
remedies of the Certificateholders of such Series, and Holders of Certificates
evidencing not less than 25% of the aggregate outstanding principal amount of
the Certificates for such Series may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred upon the Trustee. However, the Trustee will not be
under any obligation to pursue any such remedy or to exercise any of such trusts
or powers unless such Certificateholders have offered the Trustee reasonable
security or indemnity against the cost, expenses and liabilities which may be
incurred by the Trustee therein or thereby. Also, the Trustee may decline to
follow any such direction if the Trustee determines that the action or
proceeding so directed may not lawfully be taken or would involve it in personal
liability or be unjustly prejudicial to the nonassenting Certificateholders.
No Certificateholder of a Series, solely by virtue of such Holder's status
as a Certificateholder, will have any right under the Trust Agreement for such
Series to institute any proceeding with respect to the Trust Agreement, unless
such Holder previously has given to the Trustee for such Series written notice
of default and unless the Holders of Certificates evidencing not less than 25%
of the aggregate outstanding principal amount of the Certificates for such
Series have made written request upon the Trustee to institute such proceeding
in its own name as Trustee thereunder and have offered to the Trustee reasonable
indemnity, and the Trustee for 60 days has neglected or refused to institute any
such proceeding.
THE TRUSTEE
The identity of the commercial bank, savings and loan association or trust
company named as the Trustee for each Series of Certificates will be set forth
in the related Prospectus Supplement, and such Trustee may be LaSalle National
Bank. The entity serving as Trustee may have normal banking relationships with
the Depositor or the Master Servicer. In addition, for the purpose of meeting
the legal requirements of certain local jurisdictions, the Trustee will have the
power to appoint co-trustees or separate trustees of all or any part of the
Trust Fund relating to a Series of Certificates. In the event of such
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Trustee by the Trust Agreement relating to such Series will be
conferred or imposed upon the Trustee and each such separate trustee or
co-trustee jointly, or, in any jurisdiction in which the Trustee shall be
incompetent or unqualified to perform certain acts, singly upon such separate
trustee or co-trustee who shall exercise and perform such rights, powers, duties
and obligations solely at the direction of the Trustee. The Trustee may also
appoint agents to perform any of the responsibilities of the Trustee, which
agents shall have any or all of the rights, powers, duties and obligations of
the Trustee conferred on them by such appointment; provided that the Trustee
shall continue to be responsible for its duties and obligations under the Trust
Agreement.
DUTIES OF THE TRUSTEE
The Trustee makes no representations as to the validity or sufficiency of
the Trust Agreement, the Certificates or of any Mortgage Asset or related
documents. If no Event of Default (as defined in the related Trust Agreement)
has occurred, the Trustee is required to perform only those duties specifically
required of it under the Trust Agreement. Upon receipt of the various
certificates, statements, reports or other instruments required to be furnished
to it, the Trustee is required to examine them to determine
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whether they are in the form required by the related Trust Agreement; provided,
however, the Trustee will not be responsible for the accuracy or content of any
such documents furnished to it.
The Trustee may be held liable for its own grossly negligent action or
failure to act, or for its own willful misconduct; provided, however, that the
Trustee will not be personally liable with respect to any action taken, suffered
or omitted to be taken by it in good faith in accordance with the direction of
the Certificateholders in connection with the occurrence and/or continuation of
an Event of Default (see "--Rights Upon Event of Default" above). The Trustee is
not required to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties under a Trust Agreement, or in
the exercise of any of its rights or powers, if it has reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it.
RESIGNATION OF TRUSTEE
The Trustee may, upon written notice to the Depositor, resign at any time,
in which event the Depositor will be obligated to use its best efforts to
appoint a successor Trustee. If no successor Trustee has been appointed and has
accepted the appointment within 30 days after giving such notice of resignation,
the resigning Trustee may petition any court of competent jurisdiction for
appointment of a successor Trustee. The Trustee may also be removed at any time
(i) by the Depositor, if the Trustee ceases to be eligible to continue as such
under the Trust Agreement, if the Trustee becomes insolvent, or if a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee pursuant to the Trust Agreement is
located, or (ii) by the Holders of Certificates evidencing over 50% of the
aggregate outstanding principal amount of the Certificates in the Trust Fund
upon 30 days' advance written notice to the Trustee and to the Depositor. Any
resignation or removal of the Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by the successor
Trustee.
AMENDMENT OF TRUST AGREEMENT
Unless otherwise specified in the Prospectus Supplement, the Trust Agreement
for each Series of Certificates may be amended by the Depositor, the Master
Servicer, and the Trustee with respect to such Series, without notice to or
consent of the Certificateholders (i) to cure any ambiguity, (ii) to correct or
supplement any provision therein which may be inconsistent with any other
provision therein or in the Prospectus Supplement, (iii) to make any other
provisions with respect to matters or questions arising under such Trust
Agreement or (iv) to comply with any requirements imposed by the Code; provided
that any such amendment pursuant to clause (iii) above will not adversely affect
in any material respect the interests of any Certificateholders of such Series
not consenting thereto. Any such amendment pursuant to clause (iii) of the
preceding sentence shall be deemed not to adversely affect in any material
respect the interests of any Certificateholder if the Trustee receives written
confirmation from each Rating Agency rating such Certificates that such
amendment will not cause such Rating Agency to reduce the then current rating
thereof. The Trust Agreement for each Series may also be amended by the Trustee,
the Master Servicer and the Depositor with respect to such Series with the
consent of the Holders possessing not less than 66 2/3% of the aggregate
outstanding principal amount of the Certificates of each Class of such Series
affected thereby, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Trust Agreement or modifying
in any manner the rights of Certificateholders of such Series; provided,
however, that no such amendment may (a) reduce the amount or delay the timing of
payments on any Certificate without the consent of the Holder of such
Certificate; or (b) reduce the aforesaid percentage of aggregate outstanding
principal amount of Certificates of each Class, the Holders of which are
required to consent to any such amendment without the consent of the Holders of
100% of the aggregate outstanding principal amount of each Class of Certificates
affected thereby.
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VOTING RIGHTS
The related Prospectus Supplement will set forth the method of determining
allocation of voting rights with respect to a Series, if other than set forth
herein.
LIST OF CERTIFICATEHOLDERS
Upon written request of three or more Certificateholders of record of a
Series for purposes of communicating with other Certificateholders with respect
to their rights under the Trust Agreement or under the Certificates for such
Series, which request is accompanied by a copy of the communication which such
Certificateholders propose to transmit, the Trustee will afford such
Certificateholders access during business hours to the most recent list of
Certificateholders of that Series held by the Trustee.
No Trust Agreement will provide for the holding of any annual or other
meeting of Certificateholders.
REMIC ADMINISTRATOR
With respect to any Series, preparation of certain reports and certain other
administrative duties with respect to the Trust Fund may be performed by a REMIC
administrator, who may be an affiliate of the Depositor.
TERMINATION
The obligations created by the Trust Agreement for a Series will terminate
upon the distribution to Certificateholders of all amounts distributable to them
pursuant to such Trust Agreement after (i) the later of the final payment or
other liquidation of the last Mortgage Loan remaining in the Trust Fund for such
Series or the disposition of all REO Property or (ii) the repurchase, as
described below, by the Servicer from the Trustee for such Series of all
Mortgage Loans at that time subject to the Trust Agreement and all REO Property.
The Trust Agreement for each Series permits, but does not require, the Servicer
to repurchase from the Trust Fund for such Series all remaining Mortgage Loans
at a price equal to 100% of the Aggregate Asset Value of such Mortgage Loans
plus, with respect to REO Property, if any, the outstanding principal balance of
the related Mortgage Loan, less, in either case, related unreimbursed Advances
(in the case of the Mortgage Loans, only to the extent not already reflected in
the computation of the Aggregate Asset Value of such Mortgage Loans) and
unreimbursed expenses (that are reimburseable pursuant to the terms of the Trust
Agreement) plus, in either case, accrued interest thereon at the weighted
average Mortgage Rate through the last day of the Due Period in which such
repurchase occurs; provided, however, that if an election is made for treatment
as a REMIC under the Code, the repurchase price may equal the greater of (a)
100% of the Aggregate Asset Value of such Loans, plus accrued interest thereon
at the applicable net Mortgage Rates through the last day of the month of such
repurchase and (b) the aggregate fair market value of such Mortgage Loans; plus
the fair market value of any property acquired in respect of a Mortgage Loan and
remaining in the Trust Fund. The exercise of such right will effect early
retirement of the Certificates of such Series, but the Servicer's right to so
purchase is subject to the Aggregate Value of the Mortgage Loans at the time of
repurchase being less than a fixed percentage, to be set forth in the related
Prospectus Supplement, of the Cut-off Date Aggregate Asset Value. In no event,
however, will the trust created by the Trust Agreement continue beyond the
expiration of 21 years from the death of the last survivor of certain persons
identified therein. For each Series, the Servicer or the Trustee, as applicable,
will give written notice of termination of the Trust Agreement to each
Certificateholder, and the final distribution will be made only upon surrender
and cancellation of the Certificates at an office or agency specified in the
notice of termination. If so provided in the related Prospectus Supplement for a
Series, the Depositor or another entity may effect an optional termination of
the Trust Fund or repurchase all or certain Classes of Certificates of a Series
under the circumstances described in such Prospectus Supplement. See
"DESCRIPTION OF THE SECURITIES--Optional Termination," "--Optional Repurchase of
Certificates," and "--Other Repurchases" herein.
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THE ISSUER
THE COMPANY
The Company was incorporated in the State of Delaware on January 2, 1987.
The principal office of the Company is located at 200 Vesey Street, New York,
New York 10285. Its telephone number is (212) 526-5594.
The Certificate of Incorporation of the Company provides that the Company
may not conduct any activities other than those related to the issue and sale of
one or more Series and to serve as depositor of one or more trusts that may
issue and sell Bonds or Certificates. The Certificate of Incorporation of the
Company provides that any Securities, except for subordinated Securities, issued
by the Company must be rated in one of the three highest categories available by
any Rating Agency rating the Series. Pursuant to the terms of the Indenture or
Trust Agreement, as applicable, the Company may not issue any Securities which
would result in the lowering of the then current ratings of the outstanding
Securities of any Series.
The Series Supplement for a particular Series may permit the Primary Assets
pledged to secure the related Series of Bonds to be transferred by the Issuer to
a trust, subject to the obligations of the Bonds of such Series, thereby
relieving the Issuer of its obligations with respect to such Bonds.
OWNER TRUST
Each owner trust established to act as Issuer of a Series of bonds (each, an
"Owner Trust") will be created pursuant to a deposit trust agreement (the
"Deposit Trust Agreement") between the Company which will act as Depositor and
the bank, trust company or other fiduciary named in the related Prospectus
Supplement which will act solely in its fiduciary capacity as Owner Trustee.
Under the terms of each Deposit Trust Agreement, the Company will convey to the
Owner Trustee Mortgage Assets and other Primary Assets to secure one or more
Series in return for certificates or other instruments evidencing beneficial
ownership of the Owner Trust and the net proceeds of the sale of the Bonds. The
Company may in turn sell or assign the certificates of beneficial interest to
another entity or entities, including affiliates of the Company.
The Owner Trust will pledge the Mortgage Assets and other Primary Assets to
the Trustee under the related Indenture as security for a Series. The Trustee
will hold such Mortgage Assets as security only for that Series, and Holders of
the Bonds of such Series will be entitled to the equal and proportionate
benefits of such security, subject to the express subordination of certain
Classes thereof, as if the same had been granted by a corporate issuer.
Each Deposit Trust Agreement will provide that the related Trust may not
conduct any activities other than those related to the issuance and sale of the
particular Series. No Deposit Trust Agreement will be subject to amendment
without the prior written consent of the Owner Trustee, the holders representing
a majority of the beneficial interest of the Owner Trust and the Trustee, except
that the holders of not less than 66 2/3% of the Aggregate Outstanding Principal
of each Series must consent to any amendment of, among other provisions, the
limitation on activities of the Owner Trust and the provision regarding
amendments to the Deposit Trust Agreement. The holders of the beneficial
interests in an Owner Trust which issues a Series will not be liable for payment
of principal of or interest on the Bonds and each holder of Bonds of such Series
will be deemed to have released such beneficial owners from any such liability.
ADMINISTRATOR
Unless otherwise specified in the related Prospectus Supplement, it is
expected that the Issuer will enter into an administration agreement with an
administrator acceptable to the Rating Agencies rating the applicable Series of
Securities (the "Administrator") pursuant to which advisory, administrative,
accounting and clerical services will be provided to the Issuer with respect to
the Securities. The Trustee or the Master Servicer may serve as the Securities
Administrator. In addition, under the Indenture or Trust Agreement, as
applicable, the Issuer is responsible for certain administrative and accounting
matters
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relating to the Securities. It is intended that the Administrator will perform
these services on behalf of the Issuer, and amounts payable with respect to such
services, unless otherwise provided in the related Prospectus Supplement, will
be subordinate to the Issuer's obligations to pay principal and interest to the
Bondholders or Certificateholders (including any Residual Interest Bondholders
or Residual Interest Certificateholders) but, unless otherwise specified in the
related Prospectus Supplement, will be senior to the Issuer's obligation to pay
any Excess Cash Flow to the Residual Interest Bondholders or Residual Interest
Certificateholders.
USE OF PROCEEDS
The Issuer will apply all or substantially all of the net proceeds from the
sale of each Series offered hereby and by the related Prospectus Supplement to
purchase the Mortgage Assets securing each Series simultaneously with the
issuance and sale of such Securities. The proceeds may also be used to repay
indebtedness which has been incurred to acquire Mortgage Assets, to establish
the Reserve Funds, if any, for the Series and to pay costs of structuring,
guaranteeing and issuing the Securities. If so specified in the related
Prospectus Supplement, the purchase of the Mortgage Assets for a Series may be
effected by an exchange of Securities with the Seller of such Mortgage Assets.
LIMITATIONS ON ISSUANCE OF BEARER SECURITIES
Any bearer securities will be issued in compliance with United States
federal tax laws and regulations applicable at the time of issuance. Under
current law, bearer securities may not be offered or sold during the restricted
period, or delivered in definitive form in connection with a sale during the
restricted period (as defined under "DESCRIPTION OF THE SECURITIES--Bearer
Securities and Registered Securities"), in the United States or to United States
persons other than to (a) the United States office of (i) an international
organization (as defined in Section 7701(a)(18) of the Code), (ii) a foreign
central bank (as defined in Section 895 of the Code), or (iii) any underwriter,
agent, or dealer offering or selling bearer securities during the restricted
period (a "Distributor") pursuant to a written contract with the Issuer or with
another Distributor, that purchases bearer securities for resale or for its own
account and agrees to comply with the requirements of Section 165(j)(3)(A), (B),
or (C) of the Code, or (b) the foreign branch of a United States financial
institution purchasing for its own account or for resale, which institution
agrees to comply with the requirements of Section 165(j)(3)(A), (B), or (C) of
the Code. In addition, a sale of a bearer security may be made during the
restricted period to a United States person who acquired and holds the bearer
security on the certification date through a foreign branch of a United States
financial institution that agrees to comply with the requirements of Section
165(j)(3)(A), (B) or (C) of the Code. Any Distributor (including an affiliate of
a Distributor) offering or selling bearer securities during the restricted
period must agree not to offer or sell bearer securities in the United States or
to United States persons (except as discussed above) and must employ procedures
reasonably designed to ensure that its employees or agents directly engaged in
selling bearer securities are aware of these restrictions.
Bearer securities and their interest coupons will bear a legend
substantially to the following effect: "Any United States person who holds this
obligation will be subject to limitations under the United States income tax
laws, including the limitations provided in Section 165(j) and 1287(a) of the
Internal Revenue Code."
As used herein, "United States person" means a citizen or resident of the
United States, a corporation, partnership or other entity created or organized
in or under the laws of the United States and an estate the income of which is
subject to United States federal income taxation regardless of its source or a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust and one or more United States
persons have the authority to control all substantial decisions of such trust,
and "United States" means the United States of America (including the States and
the District of Columbia) and its possessions including Puerto Rico, the U.S.
Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana
Islands.
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FEDERAL INCOME TAX CONSIDERATIONS
GENERAL
The following is a summary of certain anticipated federal income tax
consequences of the purchase, ownership, and disposition of the Securities. The
summary is based upon the provisions of the Code, the regulations promulgated
thereunder, including, where applicable, proposed regulations, and the judicial
and administrative rulings and decisions now in effect, all of which are subject
to change or possible differing interpretations. The statutory provisions,
regulations, and interpretations on which this summary and the opinion of
counsel to which the summary refers below, are based are subject to change, and
such a change could apply retroactively. No rulings have been or will be sought
from the IRS on these matters.
The summary does not purport to deal with all aspects of federal income
taxation that may affect particular investors in light of their individual
circumstances, nor with certain types of investors subject to special treatment
under the federal income tax laws. This summary focuses primarily upon investors
who will hold Securities as "capital assets" (generally, property held for
investment) within the meaning of Section 1221 of the Code, but much of the
discussion is applicable to other investors as well. Potential purchasers of
Securities are advised to consult their own tax advisers concerning the federal,
state or local tax consequences to them of the purchase, holding and disposition
of the Securities.
CHARACTERIZATION OF SECURITIES
Unless otherwise stated in the applicable Prospectus Supplement, a REMIC
election will be made with respect to each Series of Securities. In such a case,
special counsel to the Issuer will deliver its opinion to the effect that the
arrangement by which the Securities of that Series are issued will be treated as
a REMIC as long as all of the provisions of the applicable Indenture or Trust
Agreement, as applicable, are complied with and the statutory and regulatory
requirements are satisfied. Securities of such Series will be designated as
"regular interests" or "residual interests" in a REMIC, as specified in the
related Prospectus Supplement.
If the applicable Prospectus Supplement so specifies with respect to a
Series of Securities, the Securities of such Series will not be treated as
regular or residual interests in a REMIC for federal income tax purposes but
instead will be treated as (i) indebtedness of the Issuer; (ii) an undivided
beneficial ownership interest in the Mortgage Loans (and the arrangement
pursuant to which the Mortgage Loans will be held and the Securities will be
issued will be treated as a grantor trust under Subpart E, part I of subchapter
J of the Code and not as an association taxable as a corporation for federal
income tax purposes); (iii) equity interests in an association that will satisfy
the requirements for qualification as a real estate investment trust; (iv)
interests in an entity that will be treated as a partnership for federal income
tax purposes, or (v) interests in an entity or a pool of assets that will
satisfy the requirements for qualification as a financial asset securitization
investment trust (a "FASIT") for federal income tax purposes. The federal income
tax consequences to Bondholders or Certificateholders of any such Series will be
described in the applicable Prospectus Supplement.
If an entity electing to be treated as a REMIC fails to comply with one or
more of the ongoing requirements of the Code for such status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In that event, such entity may be taxable as a corporation
under Treasury regulations, and the related REMIC Certificates may not be
accorded the status or given the tax treatment described below. Although the
Code authorizes the Treasury Department to issue regulations providing relief in
the event of an inadvertent termination of REMIC status, no such regulations
have been issued. Any such relief, moreover, may be accompanied by sanctions,
such as the imposition of a corporate tax on all or a portion of the Trust
Fund's income for the period in which the requirements for such status are not
satisfied. The Pooling Agreement or Indenture with respect to each REMIC will
include provisions designed to maintain the Trust Fund's status as a REMIC under
the REMIC Provisions. It is not anticipated that the status of any Trust Fund as
a REMIC will be terminated.
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Except to the extent the related Prospectus Supplement specifies otherwise,
if a REMIC election is made with respect to a Series of Securities, (i)
Securities held by a domestic building and loan association will constitute "a
regular or a residual interest in a REMIC" within the meaning of Code Section
7701(a)(19)(C)(xi) (assuming that at least 95% of the REMIC's assets consist of
cash, government securities, "loans . . . secured by an interest in real
property which is . . . residential real property," and other types of assets
described in Code Section 7701(a)(19)(C)); and (ii) Securities held by a real
estate investment trust will constitute "real estate assets" within the meaning
of Code Section 856(c)(5)(B), and income with respect to the Securities will be
considered "interest on obligations secured by mortgages on real property or on
interest in real property" within the meaning of Code Section 856(c)(3)(B)
(assuming, for both purposes, that at least 95% of the REMIC's assets are
qualifying assets). If less than 95% of the REMIC's assets consist of assets
described in (i) or (ii) above, then Securities will qualify for the tax
treatment described in (i) or (ii) in the proportion that such REMIC assets are
qualifying assets. In general, Mortgage Loans secured by non-residential real
property will not constitute "loans . . . secured by an interest in real
property which is . . . residential real property" within the meaning of Section
7701(a)(19)(C). The Small Business Job Protection Act of 1996 (the "SBJPA of
1996") repealed the reserve method for bad debts of domestic building and loan
associations and mutual savings banks, and thus has eliminated the asset
category of "qualifying real property loans" in former Code Section 593(d) for
taxable years beginning after December 31, 1995. The requirement in the SBJPA of
1996 that such institutions must "recapture" a portion of their existing bad
debt reserves is suspended if a certain portion of their assets are maintained
in "residential loans" under Code Section 7701(a)(19)(C)(v), but only if such
loans were made to acquire, construct or improve the related real property and
not for the purpose of refinancing. However, no effort will be made to identify
the portion of the Mortgage Loans of any Series meeting this requirement, and no
representation is made in this regard.
It is possible that various reserves or funds will reduce the proportion of
REMIC assets which qualify under the standards described above.
TAXATION OF REGULAR INTEREST SECURITIES
INTEREST AND ACQUISITION DISCOUNT. Securities that qualify as regular
interests in a REMIC ("Regular Interest Securities") are generally treated as
indebtedness for federal income tax purposes. Stated interest on a Regular
Interest Security will be taxable as ordinary income using the accrual method of
accounting, regardless of the Bondholder's or Certificateholder's normal
accounting method. Reports will be made annually to the IRS and to holders of
Regular Interest Securities that are not excepted from the reporting
requirements regarding amounts treated as interest (including accrual of
original issue discount) on Regular Interest Securities.
Compound Interest Securities, Interest Weighted Securities, and Zero Coupon
Securities will, and other Securities constituting Regular Interest Securities
may, be issued with "original issue discount" ("OID") within the meaning of Code
Section 1273. Rules governing original issue discount are set forth in sections
1271-1275 of the Code and the Treasury regulations thereunder (the "OID
Regulations"). Treasury regulations (the "Contingent Regulations") governing the
treatment of contingent payment obligations also have been adopted. As described
more fully below, Code Section 1272(a)(6) requires the use of an income tax
accounting methodology that utilizes (i) a single constant yield to maturity and
(ii) the Prepayment Assumptions. Under Section 1272(a)(6) of the Code, special
rules apply to the computation of OID on instruments, such as the Regular
Interest Securities, on which principal is prepaid based on prepayments of the
underlying assets. Neither the OID Regulations nor the Contingent Regulations
contain rules applicable to instruments governed by Section 1272(a)(6). Although
technically not applicable to prepayable securities, the Contingent Regulations
may represent a possible method to be applied in calculating OID on certain
Classes of Certificates. Until the Treasury Department issues guidance to the
contrary, the Servicer or other person responsible for computing the amount of
original issue discount to be reported to a Regular Interest Securityholder each
taxable year (the "Tax Administrator") intends to
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base its computations on Code Section 1272(a)(6), the OID Regulations and the
Contingent Regulations as described below. However, because no regulatory
guidance currently exists under Code Section 1272(a)(6), there can be no
assurance that the methodology described below represents the correct manner of
calculating original issue discount on the Regular Interest Securities.
In general, OID, if any, will equal the difference between the stated
redemption price at maturity of a Regular Interest Security and its issue price.
A holder of a Regular Interest Security must include such OID in gross income as
ordinary interest income as it accrues under a method taking into account an
economic accrual of the discount. In general, OID must be included in income in
advance of the receipt of the cash representing that income. The amount of OID
on a Regular Interest Security will be considered to be zero if it is less than
a DE MINIMIS amount determined under the Code, generally less than 0.25% of the
stated redemption price at maturity of the Regular Interest Security multiplied
by the weighted average maturity of the Regular Interest Security. For this
purpose, the weighted average maturity of the Regular Interest Security is
computed as the sum of the amounts determined by multiplying the number of full
years (I.E., rounding down partial years) from the issue date until each
distribution in reduction of stated redemption price at maturity is scheduled to
be made by a fraction, the numerator of which is the amount of each distribution
included in the stated redemption price at maturity of the Regular Interest
Security and the denominator of which is the stated redemption price at maturity
of the Regular Interest Security. The schedule of such distributions should be
determined in accordance with the assumed rate of prepayment of the Mortgage
Loans used in pricing the Regular Interest Securities (the "Prepayment
Assumption") relating to the Regular Interest Securities. The Prepayment
Assumption with respect to a Series of Regular Interest Securities will be set
forth in the applicable Prospectus Supplement. However, the amount of any DE
MINIMIS OID must be included in income as principal payments are received on a
Regular Interest Security, in the proportion that each such payment bears to the
original principal balance of the Security.
The issue price of a Regular Interest Security of a Class will generally be
the initial offering price at which a substantial amount of the Securities in
the Class are sold, and will be treated by the Issuer as including, in addition,
the amount paid by the Bondholder or Certificateholder for accrued interest that
relates to a period prior to the Closing Date of such Regular Interest Security.
Under the OID Regulations, the stated redemption price at maturity is the sum of
all payments on the Security other than any "qualified stated interest"
payments. Qualified stated interest is defined as any one of a series of
payments equal to the product of the outstanding principal balance of the
Security and a single fixed rate, or certain variable rates of interest, that is
unconditionally payable at least annually. See "--Variable Rate Securities"
below. In the case of the Compound Interest Securities, Interest Weighted
Securities and certain of the other Regular Interest Securities, none of the
payments under the instrument will be considered "qualified stated interest,"
and thus the aggregate amount of all payments will be included in the stated
redemption price. For example, any securities upon which interest can be
deferred and added to principal ("Deferred Interest Securities") will not be
"qualified stated interest." In addition, because Securities Owners are entitled
to receive interest only to the extent that payments are made on the Mortgage
Loans, interest on all Regular Interest Securities may not be "unconditionally
payable." In that case, all of the yield on a Regular Interest Security will be
taxed as OID, but interest would not then be includable in income again when
received. Unless otherwise specified in the related Prospectus Supplement, the
Issuer intends to take the position for income tax information reporting
purposes that interest on the Regular Interest Securities is "unconditionally
payable."
The holder of a Regular Interest Security issued with OID must include in
gross income, for all days during its taxable year on which it holds such
Regular Interest Security, the sum of the "daily portions" of such OID. Such
daily portions are computed by allocating to each day during a taxable year a
pro rata portion of the OID that accrued during the relevant accrual period. In
the case of a debt instrument, subject to Section 1272(a)(6) of the Code, such
as a Regular Interest Security, that is subject to acceleration due to
prepayments on other debt obligations securing such instrument, OID is computed
by
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taking into account the Prepayment Assumption. The amount of OID that will
accrue during an accrual period (generally the period between interest payments
or compounding dates) is the excess (if any) of (i) the sum of (a) the present
value of all payments remaining to be made on the Regular Interest Security as
of the close of the accrual period and (b) the payments during the accrual
period of amounts included in the stated redemption price of the Regular
Interest Security, over (ii) an "adjusted issue price" of the Regular Interest
Security at the beginning of the accrual period. The adjusted issue price of a
Regular Interest Security is the sum of its issue price plus prior accruals of
OID, reduced by the total payments made with respect to such Regular Interest
Security in all prior periods, other than qualified stated interest payments.
The present value of the remaining payments is determined on the basis of three
factors: (i) the original yield to maturity of the Regular Interest Security
(determined on the basis of compounding at the end of each accrual period and
properly adjusted for the length of the accrual period), (ii) events which have
occurred before the end of the accrual period and (iii) the assumption that the
remaining payments will be made in accordance with the original Prepayment
Assumption. Although original issue discount will be reported to Bondholders or
Certificateholders based on the Prepayment Assumption, no representation is made
to Bondholders or Certificateholders that Mortgage Loans will be prepaid at that
rate or at any other rate.
Certain classes of Regular Interest Securities may represent more than one
class of REMIC regular interests. Unless the applicable Prospectus Supplement
specifies otherwise, the Trustee intends, based on the OID Regulations, to
calculate OID on such Regular Interest Securities as if, solely for the purposes
of computing OID, the separate regular interests were a single debt instrument.
Certain Series of Securities may be structured to include two or more
REMICs, one or more of which (each, an "Upper Tier REMIC") hold regular
interests ("Lower Tier Interests") in other REMICs (each, a "Lower Tier REMIC").
Under the OID Regulations, OID on all of the Lower Tier Interests issued by a
single Lower Tier REMIC that are held by a second REMIC will be calculated by
treating all of such Lower Tier Interests as a single debt instrument.
A holder of a Regular Interest Security, which acquires the Regular Interest
Security for an amount that exceeds its stated redemption price, will not
include any original issue discount in gross income. A subsequent holder of a
Regular Interest Security which acquires the Regular Interest Security for an
amount that is less than its stated redemption price, will be required to
include original issue discount in gross income, but such a holder who purchases
such Regular Interest Security for an amount that exceeds its adjusted issue
price will be entitled (as will an initial holder who pays more than a Regular
Interest Security's issue price) to offset such original issue discount by
comparable economic accruals of offsetting portions of such excess.
INTEREST WEIGHTED SECURITIES. It is not clear how income should be accrued
with respect to Regular Interest Securities the payments on which consist solely
or primarily of a specified portion of the interest payments on qualified
mortgages held by a REMIC ("Interest Weighted Securities"). Absent guidance to
the contrary, the Issuer intends to take the position that all of the income
derived from Interest Weighted Securities is treated as OID and that the amount
and rate of accrual of such OID should be calculated in the same manner as for a
Compound Interest Security. Those calculations could result in an income accrual
for a period below zero (a "Negative Adjustment"). The legislative history to
the relevant Code provisions indicates, and the relevant Code provisions appear
to provide that any such Negative Adjustment may not be taken as current loss or
deduction, but may only be carried forward to offset future accruals of positive
OID. Thus, in the absence of such accruals of positive OID, it appears that any
losses resulting from a Negative Adjustment must be carried forward until
disposition or retirement of the debt obligation, and may give rise to a capital
loss at that time. However it is possible that income derived from an Interest
Weighted Security that had a principal balance might be calculated as if the
Interest Weighted Security were a bond purchased at a premium equal to the
excess of the price paid by such holder for the Interest Weighted Security over
its stated principal amount, if any. Under this approach, a holder would be
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entitled to amortize such premium only if it had in effect an election under
Section 171 of the Code with respect to all taxable debt instruments held by
such holder, as described below.
VARIABLE RATE REGULAR SECURITIES. The REMIC regulations (the "REMIC
Regulations") permit REMICs to issue regular interests bearing a variety of
variable rates including rates based on (i) "qualified floating rates" or (ii) a
weighted average of the interest rates on some or all of the qualified mortgages
held by the REMIC (a "Variable Rate Security"). Under the OID Regulations,
interest is treated as payable at a variable rate if, generally, (i) the issue
price does not exceed the original principal balance by more than a specified
amount and (ii) the interest compounds or is payable at least annually at
current values of (a) one or more "qualified floating rates," (b) a single fixed
rate and one or more qualified floating rates, (c) a single "objective rate," or
(d) a singled fixed rate and a single objective rate that is a "qualified
inverse floating rate." A floating rate is a qualified floating rate if
variations in the rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds, where such rate is subject to a
fixed multiple that is greater than 0.65 but not more than 1.35. Such rate may
also be increased or decreased by a fixed spread or subject to a fixed cap or
floor, or a cap or floor that is not reasonably expected as of the issue date to
affect the yield of the instrument significantly. An objective rate is any rate
(other than a qualified floating rate) that is determined using a single fixed
formula and that is based on objective financial or economic information,
provided that such information is not (i) within the control of the issuer or a
related party or (ii) unique to the circumstances of the issuer or a related
party. A qualified inverse floating rate is a rate equal to a fixed rate minus a
qualified floating rate that inversely reflects contemporaneous variations in
the cost of newly borrowed funds; an inverse floating rate that is not a
qualified inverse floating rate may nevertheless be an objective rate.
Under the OID Regulations, the amount and accrual of OID on a Variable Rate
Security that qualifies for treatment under the rules applicable to variable
rate debt instruments (a "VRDI Security") is determined, in general, by
converting the VRDI Security into a hypothetical fixed rate security and
applying the rules applicable to fixed rate securities described above to the
hypothetical fixed rate security. A VRDI Security providing for a qualified
floating rate or rates or a qualified inverse floating rate is converted to a
hypothetical fixed rate security by assuming that each qualified floating rate
or the qualified inverse floating rate will remain at its value as of the issue
date. A VRDI Security providing for an objective rate or rates is converted to a
hypothetical fixed rate security by assuming that each objective rate will equal
a fixed rate that reflects the yield that reasonably is expected for the
instrument. Such hypothetical fixed rate securities are assumed to have terms
identical to those provided under the related VRDI Securities, except for the
substitution of fixed rates for the qualified floating rates, objective rates,
or qualified inverse floating rate as described above. In the case of a VRDI
Security that does not provide for the payment of interest at least annually,
appropriate adjustments to the OID accruals and the qualified stated interest
payments are made in each accrual period to the extent that the interest
actually accrued or paid during the accrual period is greater or less than the
interest assumed to be accrued or paid under the hypothetical fixed rate
security.
Regular Interest Securities of certain Series may provide for interest based
on a weighted average of the interest rates on some or all of the Mortgage Loans
of the related Trust ("Weighted Average Securities"). Under the OID Regulations,
it appears that Weighted Average Securities bear interest at an "objective
rate."
Due to the complexity of these rules and the variety of Variable Rate
Securities that may be offered hereunder, the precise application of these rules
to any Variable Rate Securities offered hereunder will be discussed in the
related Prospectus Supplement, based on the specific characteristics of each
such security.
EFFECT OF DEFAULTS AND DELINQUENCIES. Each holder of a Regular Interest
Security will be required to accrue interest and original issue discount on such
Security without giving effect to any reductions in distributions attributable
to defaults or delinquencies on the Mortgage Loans, until it can be established
that any such reduction ultimately will not be recoverable. As a result, the
amount of taxable income
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reported in any period by the holder of a Regular Interest Security could exceed
the amount of economic income actually realized by the holder in such period.
Although the holder of a Regular Interest Security eventually will recognize a
loss or reduction in income attributable to previously accrued and included
income that, as a result of such loss, ultimately will not be paid, the law is
unclear with respect to the timing and character of such losses or reduction in
income.
Under Section 166 of the Code, both corporate and noncorporate holders of
Regular Interest Securities that hold such Securities in connection with a trade
of business should be allowed to deduct, as ordinary losses, any losses
sustained during a taxable year in which their Regular Interest Securities
become wholly or partially worthless as the result of one or more realized
losses on the Mortgage Loans. However, it appears that a noncorporate holder
that does not acquire a Regular Interest Security in connection with a trade or
business will not be entitled to deduct a loss under Section 166 of the Code
until such holder's Regular Interest Security becomes wholly worthless (that is,
until its outstanding principal balance has been reduced to zero) and that the
loss will be characterized as a short-term capital loss.
MARKET DISCOUNT AND PREMIUM. A purchaser of a Regular Interest Security may
also be subject to the market discount rules of the Code. Such purchaser
generally will be required to recognize accrued market discount as ordinary
income as payments of principal are received on such Regular Interest Security,
or upon sale or exchange of the Regular Interest Security. In general terms,
until regulations are promulgated, market discount may be treated as accruing,
at the election of the holder, either (i) under a constant yield method, taking
into account the Prepayment Assumption, or (ii) in the ratio of (a) in the case
of a Regular Interest Security not originally issued with original issue
discount, stated interest payable in the relevant period to total stated
interest remaining to be paid at the beginning of the period or (b) in the case
of a Regular Interest Security originally issued at a discount, original issue
discount in the relevant period to total original issue discount remaining to be
paid. A holder of a Regular Interest Security having market discount may also be
required to defer a portion of the interest deductions attributable to any
indebtedness incurred or continued to purchase or carry the Regular Interest
Security. As an alternative to the inclusion of market discount in income on the
foregoing basis, the holder may elect to include such market discount in income
currently as it accrues on all market discount instruments acquired by such
holder in that taxable year or thereafter, in which case the interest deferral
rule will not apply.
A holder who purchases a Regular Interest Security (other than an Interest
Weighted Security, to the extent described above) at a cost greater than its
stated redemption price at maturity, generally will be considered to have
purchased the Security at a premium, which it may elect to amortize as an offset
to interest income on such Security (and not as a separate deduction item) on a
constant yield method. Although no regulations addressing the computation of
premium accrual on collateralized mortgage obligations or REMIC regular
interests have been issued, applicable legislative history indicates that
premium is to be accrued in the same manner as market discount. Accordingly, it
appears that the accrual of premium on a Regular Interest Security will be
calculated using the prepayment assumption used in pricing such Regular Interest
Security. If a holder makes an election to amortize premium on a Security, such
election will apply to all taxable debt instruments (including all REMIC regular
interests) held by the holder at the beginning of the taxable year in which the
election is made, and to all taxable debt instruments acquired thereafter by
such holder, and will be irrevocable without the consent of the Internal Revenue
Service. Purchasers who pay a premium for the Regular Interest Security should
consult their tax advisers regarding the election to amortize premium and the
method to be employed.
ELECTION TO TREAT ALL INTEREST UNDER THE CONSTANT YIELD METHOD. A holder of
a debt instrument such as a Regular Interest Security may elect to treat all
interest that accrues on the instrument using the constant yield method, with
none of the interest being treated as qualified stated interest. For purposes of
applying the constant yield method to a debt instrument subject to such an
election, (i) "interest" includes stated interest, original issue discount, DE
MINIMIS original issue discount, market discount and DE MINIMIS market discount,
as adjusted by any amortizable bond premium or acquisition premium and (ii) the
debt instrument is treated as if the instrument were issued on the holder's
acquisition date in the amount of the
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holder's adjusted basis immediately after acquisition. It is unclear whether,
for this purpose, the initial Prepayment Assumption would continue to apply or
if a new prepayment assumption as of the date of the holder's acquisition would
apply. A holder generally may make such an election on an instrument by
instrument basis or for a class or group of debt instruments. However, if the
holder makes such an election with respect to a debt instrument with amortizable
bond premium or with market discount, the holder is deemed to have made
elections to amortize bond premium or to report market discount income currently
as it accrues under the constant yield method, respectively, for all premium
bonds held or market discount bonds acquired by the holder in the same taxable
year or thereafter. The election is made on the holder's federal income tax
return for the year in which the debt instrument is acquired and is irrevocable
except with the approval of the Internal Revenue Service. Investors should
consult their own tax advisors regarding the advisability of making such an
election.
SALE OR EXCHANGE OF REGULAR INTEREST SECURITIES
A Regular Bondholder's or Regular Certificateholder's tax basis in its
Regular Interest Securities is the price such holder pays for a Security, plus
amounts of original issue discount and market discount included in income and
reduced by any payments received (other than qualified periodic interest
payments), any amortized premium, and any prior losses. Gain or loss recognized
on a sale, exchange, or redemption of a Regular Interest Securities, measured by
the difference between the amount realized and the Regular Interest Security's
basis as so adjusted, will generally be capital gain or loss, assuming that the
Regular Interest Security is held as a capital asset. If, however, a Regular
Bondholder or Regular Certificateholder is a bank, thrift, or similar
institution described in Section 582 of the Code, gain or loss realized on the
sale or exchange of a Regular Interest Security will be taxable as ordinary
income or loss. In addition, gain from the disposition of a Regular Interest
Security that might otherwise be capital gain will be treated as ordinary income
to the extent of the excess, if any, of (i) the amount that would have been
includable in the holder's income if the yield on such Regular Interest Security
had equaled 110% of the applicable federal rate as of the beginning of such
holder's holding period, over (ii) the amount of ordinary income actually
recognized by the holder with respect to such Regular Interest Security. The
Taxpayer Relief Act of 1997 (the "1997 Act") has generally reduced capital gains
tax rates for non-corporate taxpayers, who should consult their tax advisors
regarding the consequences to them of the 1997 Act. There is no such discrepancy
in tax rates on capital gains and ordinary income in the case of corporations.
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REMIC EXPENSES
As a general rule, all of the expenses of a REMIC will be taken into account
by holders of the Residual Interest Securities or the REMIC residual interest.
In the case of a "single class REMIC," however, the expenses will be allocated,
under temporary Treasury regulations, among the holders of the Regular Interest
Securities and the holders of the Residual Interest Securities on a daily basis
in proportion to the relative amounts of income accruing to each Bondholder or
Certificateholder on that day. In the case of a holder of a Regular Interest
Security who is an individual or a "pass-through interest holder" (including
certain pass-through entities but not including real estate investment trusts),
such expenses will be deductible only to the extent that such expenses, plus
other "miscellaneous itemized deductions" of the Bondholder or Certificateholder
exceed 2% of such Bondholder's or Certificateholder's adjusted gross income and
will not be deductible in computing alternative minimum taxable income. In
addition, Code Section 68 provides that the amount of itemized deductions
otherwise allowable for the taxable year for an individual whose adjusted gross
income exceeds the applicable amount (for 1991, $100,000, or $50,000 in the case
of a separate return by a married individual within the meaning of Code Section
7703, which amounts will be adjusted annually for inflation) will be reduced by
the lesser of (i) 3% of the excess of adjusted gross income over the applicable
amount, or (ii) 80% of the amount of itemized deductions otherwise allowable for
such taxable year. Moreover, such expenses are disallowed entirely as deductions
for purposes of the Alternative Minimum Tax. The disallowance of this deduction
may have a significant impact on the yield of the Regular Interest Security to
such a holder. In general terms, a single class REMIC is one that either (i)
would qualify, under existing Treasury regulations, as a grantor trust if it
were not a REMIC (treating all interests as ownership interests, even if they
would be classified as debt for federal income tax purposes) or (ii) is similar
to such a trust and which s structured with the principal purpose of avoiding
the single class REMIC rules.
Unless otherwise disclosed in the related Prospectus Supplement, REMICs
issuing securities offered hereunder will not be treated as "single class"
REMICs under these rules.
TAXATION OF THE REMIC
GENERAL. Although a REMIC is a separate entity for federal income tax
purposes, a REMIC is not generally subject to entity-level tax. Rather, the
taxable income or net loss of a REMIC is taken into account by the holders of
residual interests. The regular interests are generally taxable as debt of the
REMIC.
CALCULATION OF REMIC INCOME. The taxable income or net loss of a REMIC is
determined under an accrual method of accounting and in the same manner as in
the case of an individual, with certain adjustments. In general, the taxable
income or net loss will be the difference between (i) the gross income produced
by the REMIC's assets, including stated interest and any original issue discount
or market discount on loans and other assets, income from amortization of
premium on Regular Interest Securities issued at a premium and income from
write-off of Regular Interest Securities, and (ii) deductions, including stated
interest and original issue discount accrued on a Regular Interest Security,
amortization of any premium with respect to loans, losses on Mortgage Loans, and
servicing fees and other expenses of the REMIC. A holder of a Residual Interest
Security that is an individual or a "pass-through interest holder" (including
certain pass-through entities, but not including real estate investment trusts)
will be unable to deduct servicing fees payable on the loans or other
administrative expenses of the REMIC for a given taxable year, to the extent
that such expenses, when aggregated with the Residual Interest Securityholder's
other miscellaneous itemized deductions for that year, do not exceed two percent
of such holder's adjusted gross income. In addition, Code Section 68 provides
that the amount of itemized deductions otherwise allowable for the taxable year
for an individual whose adjusted gross income exceeds a specified applicable
amount will be reduced by the lesser of (i) 3% of the excess of adjusted gross
income over the applicable amount, or (ii) 80% of the amount of itemized
deductions otherwise allowable for such taxable year. See "--REMIC Expenses"
above.
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For purposes of computing its taxable income or net loss, the REMIC should
have an initial aggregate tax basis in its assets equal to the aggregate fair
market value of the regular interests and the residual interests on the Start Up
Day (generally, the day that the interests are issued). That aggregate basis
will be allocated among the assets of the REMIC in proportion to their
respective fair market values.
The original issue discount provisions of the Code apply to loans of
individuals originated on or after March 2, 1984, and the market discount
provisions apply to all loans. Subject to possible application of the DE MINIMIS
rules, the method of accrual by the REMIC of original issue discount on such
loans will be equivalent to the method under which holders of Regular Interest
Securities accrue original issue discount (i.e., under the constant yield method
taking into account the Prepayment Assumption). The REMIC will deduct original
issue discount on the Regular Interest Securities in the same manner that the
holders of the Securities include such discount in income, but without regard to
the DE MINIMIS rules. See "--Taxation of Regular Interest Securities" above.
However, a REMIC that acquires loans at a market discount must include such
market discount in income currently, as it accrues, on a constant interest
basis.
To the extent that the REMIC's basis allocable to loans that it holds
exceeds their principal amounts, the resulting premium, if attributable to
mortgages originated after September 27, 1985, will be amortized over the life
of the loans (taking into account the Prepayment Assumption) on a constant yield
method. Although the law is somewhat unclear regarding recovery of premium
attributable to loans originated on or before such date, it is possible that
such premium may be recovered in proportion to payments of loan principal.
INCOME FROM FORECLOSURE PROPERTY. To the extent that the Lower Tier REMIC
derives income from Foreclosed Properties that is treated as "net income from
foreclosure property," that income will be subject to taxation at the highest
corporate tax rate. Net income from foreclosure property generally includes gain
from the sale of a foreclosure property that is inventory property and net
income from the property that would not be treated as "rents from real property"
or other certain other qualifying income for a real estate investment trust. A
trust agreement or indenture may permit the Servicer to operate a Foreclosed
Property in a manner that produces income subject to the foregoing tax if
certain conditions are satisfied. In addition, if the operation of the
Foreclosed Property is treated as a trade or business carried on by the REMIC,
then unless the property is operated through an independent contractor, the
income from the foreclosed property will be subject to tax on "net income from
foreclosure property" at a rate of 100%. Accordingly, operation of Foreclosed
Properties generally will be required to be conducted through an independent
contractor.
PROHIBITED TRANSACTIONS AND CONTRIBUTIONS TAX. The REMIC will be subject to
a 100% tax on any net income derived from a "prohibited transaction." For this
purpose, net income will be calculated without taking into account any losses
from other prohibited transactions or any deductions attributable to any
prohibited transaction that resulted in a loss. In general, prohibited
transactions include (i) subject to limited exceptions, the sale or other
disposition of any qualified mortgage transferred to the REMIC; (ii) subject to
a limited exception, the sale or other disposition of a cash flow investment;
(iii) the receipt of any income from assets not permitted to be held by the
REMIC pursuant to the Code; or (iv) the receipt of any fees or other
compensation for services rendered by the REMIC. It is anticipated that a REMIC
will not engage in any prohibited transactions in which it would recognize a
material amount of net income. In addition, subject to a number of exceptions, a
tax is imposed at the rate of 100% on amounts contributed to a REMIC after the
close of the three-month period beginning on the Start Up Day. Unless chargeable
to the servicer or trustee under the applicable Trust Agreement or Indenture,
such taxes will be paid out of the assets of the REMIC and, unless otherwise
specified in the related Prospectus Supplement, will be allocated pro rata to
all outstanding Classes of Securities of such REMIC.
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TAXATION OF HOLDERS OF RESIDUAL INTEREST SECURITIES
The Holder of a Security representing a REMIC residual interest (a "Residual
Interest Security") will take into account the "daily portion" of the taxable
income or net loss of the REMIC for each day during the taxable year on which
such holder held the Residual Interest Security. The daily portion is determined
by allocating to each day in any calendar quarter its ratable portion of the
taxable income or net loss of the REMIC for such quarter, and by allocating that
amount among the holders (on such day) of the Residual Interest Securities in
proportion to their respective holdings on such day.
The holder of a Residual Interest Security must report its proportionate
share of the taxable income of the REMIC whether or not it receives cash
distributions from the REMIC attributable to such income or loss. The reporting
of taxable income without corresponding distributions could occur, for example,
in certain REMIC issues in which the loans held by the REMIC were issued or
acquired at a discount, since mortgage prepayments cause recognition of discount
income, while the corresponding portion of the prepayment could be used in whole
or in part to make principal payments on Regular Interest Securities issued
without any discount or at an insubstantial discount. (If this occurs, it is
likely that cash distributions will exceed taxable income in later years.)
Taxable income may also be greater in earlier years of certain REMIC issues as a
result of the fact that interest expense deductions, as a percentage of
outstanding principal on Regular Interest Securities, will typically increase
over time as lower yielding Securities are paid, whereas interest income with
respect to loans will generally remain constant over time as a percentage of
loan principal.
In any event, because the holder of a residual interest is taxed on the net
income of the REMIC, the taxable income derived from a Residual Interest
Security in a given taxable year will not be equal to the taxable income
associated with investment in a corporate bond or stripped instrument having
similar cash flow characteristics and pretax yield. Therefore, the after-tax
yield on the Residual Interest Security may be less than that of such a bond or
instrument, or may be negative. Consequently, a Residual Interest Security may
have a negative "value".
LIMITATION ON LOSSES. The amount of the REMIC's net loss that a holder may
take into account currently is limited to the holder's adjusted basis at the end
of the calendar quarter in which such loss arises. A holder's basis in a
Residual Interest Security will initially equal such holder's purchase price,
and will subsequently be increased by the amount of the REMIC's taxable income
allocated to the holder, and decreased (but not below zero) by the amount of
distributions made and the amount of the REMIC's net loss allocated to the
holder. Any disallowed loss may be carried forward indefinitely, but may be used
only to offset income generated by the same REMIC. The ability of Residual
Bondholders or Residual Certificateholders to deduct net losses may be subject
to additional limitations under the Code, as to which such holders should
consult their tax advisers.
DISTRIBUTIONS. Distributions on a Residual Interest Security (whether at
their scheduled times or as a result of prepayments) will generally not result
in any additional taxable income or loss to a holder of a Residual Interest
Security. If the amount of such payment exceeds a holder's adjusted basis in the
Residual Interest Security, however, the holder will recognize gain (treated as
gain from the sale of the Residual Interest Security) to the extent of such
excess.
MARK-TO-MARKET RULES. A Residual Interest Security is not treated as a
security and thus may not be marked to market under Treasury regulations that
generally require a securities dealer to mark to market securities held for sale
to customers.
SALE OR EXCHANGE. A holder of a Residual Interest Security will recognize
gain or loss on the sale or exchange of a Residual Interest Security equal to
the difference, if any, between the amount realized and such Bondholder's or
Certificateholder's adjusted basis in the Residual Interest Security at the time
of such sale or exchange. Except to the extent provided in regulations, which
have not yet been issued, any loss
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upon disposition of a Residual Interest Security will be disallowed if the
selling Bondholder or Certificateholder acquires any residual interest in a
REMIC or similar mortgage pool within six months before or after such
disposition.
EXCESS INCLUSION INCOME
The portion of a Residual Bondholder's or Residual Certificateholder's REMIC
taxable income consisting of "excess exclusion" income may not be offset by
other deductions or losses, including net operating losses, on such Bondholder's
or Certificateholder's federal income tax return. Further, if the holder of a
Residual Interest Security is an organization subject to the tax on unrelated
business income imposed by Code Section 511, such Residual Bondholder's or
Residual Certificateholder's excess inclusion income will be treated as
unrelated business taxable income of such Bondholder or Certificateholder's. In
addition, under Treasury regulations yet to be issued, if a real estate
investment trust, a regulated investment company, a common trust fund, or
certain cooperatives were to own a Residual Interest Security, a portion of
dividends (or other distributions) paid by the real estate investment trust (or
other entity) would be treated as excess inclusion income. If a Residual
Interest Security is owned by a foreign person, excess inclusion income is
subject to tax at a rate of 30% which may not be reduced by treaty and is not
eligible for treatment as "portfolio interest."
The excess inclusion portion of a REMIC's income is generally equal to the
excess, if any, of REMIC taxable income for the quarterly period allocable to a
Residual Interest Security, over the daily accruals for such quarterly period of
(i) 120% of the long term applicable federal rate on the Start Up Day multiplied
by (ii) the adjusted issue price of such Residual Interest Security at the
beginning of such quarterly period. The adjusted issue price of a Residual
Interest Security at the beginning of each calendar quarter will equal its issue
price (calculated in a manner analogous to the determination of the issue price
of a Regular Interest Security), increased by the aggregate of the daily
accruals for prior calendar quarters, and decreased (but not below zero) by the
amount of loss allocated to a holder and the amount of distributions made on the
Residual Interest Security before the beginning of the quarter. The long-term
federal rate, which is announced monthly by the Treasury Department, is an
interest rate that is based on the average market yield of outstanding
marketable obligations of the United States government having remaining
maturities in excess of nine years.
Under the REMIC Regulations, in certain circumstances, transfers of Residual
Interest Securities may be disregarded. See "--Restrictions on Ownership and
Transfer of Residual Interest Securities" and "-- Tax Treatment of Foreign
Investors" below.
RESTRICTIONS ON OWNERSHIP AND TRANSFER OF RESIDUAL INTEREST SECURITIES
As a condition to qualification as a REMIC, reasonable arrangements must be
made to prevent the ownership of a REMIC residual interest by any "Disqualified
Organization." Disqualified Organizations include the United States, any State
or political subdivision thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing, a rural
electric or telephone cooperative described in Section 1381(a)(2)(C) of the
Code, or any entity exempt from the tax imposed by Sections 1-1399 of the Code,
if such entity is not subject to tax on its unrelated business income.
Accordingly, the Indenture or Trust Agreement, as applicable, will prohibit
Disqualified Organizations from owning a Residual Interest Security. In
addition, no transfer of a Residual Interest Security will be permitted unless
the proposed transferee shall have furnished to the Issuer an affidavit
representing and warranting that it is neither a Disqualified Organization nor
an agent or nominee acting on behalf of a Disqualified Organization.
If a Residual Interest Security is transferred to a Disqualified
Organization (in violation of the restrictions set forth above), a substantial
tax will be imposed on the transferor of such Residual Interest Security at the
time of the transfer. In addition, if a Disqualified Organization holds an
interest in a pass-
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through entity (including, among others, a partnership, trust, real estate
investment trust, regulated investment company, or any person holding as
nominee), that owns a Residual Interest Security, the pass-through entity will
be required to pay an annual tax on its share of the excess inclusion income of
the REMIC allocable to such Disqualified Organization.
Under the REMIC Regulations, if a Residual Interest Security is a
"noneconomic residual interest," as described below, a transfer of a Residual
Interest Security to a United States person will be disregarded for all Federal
tax purposes unless no significant purpose of the transfer was to impede the
assessment or collection of tax. A Residual Interest Security is a "noneconomic
residual interest" unless, at the time of the transfer (i) the present value of
the expected future distributions on the Residual Interest Security at least
equals the product of the present value of the anticipated excess inclusions and
the highest rate of tax for the year in which the transfer occurs, and (ii) the
transferor reasonably expects that the transferee will receive distributions
from the REMIC at or after the time at which the taxes accrue on the anticipated
excess inclusions in an amount sufficient to satisfy the accrued taxes. The
present value is calculated based on the Prepayment Assumption, using a discount
rate equal to the "applicable federal rate" at the time of transfer. If a
transfer of a residual interest is disregarded, the transferor would be liable
for any Federal income tax imposed upon taxable income derived by the transferee
from the REMIC. A significant purpose to impede the assessment or collection of
tax exists if the transferor, at the time of transfer, knew or should have known
that the transferee would be unwilling or unable to pay taxes on its share of
the taxable income of the REMIC. A similar limitation exists with respect to
certain transfers of residual interests by foreign persons to United States
persons. See "--Tax Treatment of Foreign Investors" below.
ADMINISTRATIVE MATTERS
The REMIC's books must be maintained on a calendar year basis and the REMIC
must file an annual federal income tax return. The REMIC will also be subject to
the procedural and administrative rules of the Code applicable to partnerships,
including the determination of any adjustments to, among other things, items of
REMIC income, gain, loss, deduction, or credit, by the Internal Revenue Service
in a unified administrative proceeding. The holder of the Residual Interest
Security holding the largest percentage interest will be designated as "tax
matters person" of the related REMIC for purposes of any such proceeding.
TAX STATUS AS A GRANTOR TRUST
GENERAL. If the applicable Prospectus Supplement so specifies with respect
to a Series of Securities, the Securities of such Series will not be treated as
regular or residual interests in a REMIC for federal income tax purposes but
instead, special tax counsel to the Issuer will deliver its opinion to the
effect that the arrangement by which the Securities of that Series are issued
will be treated as a "grantor" or "fixed investment" trust as long as all of the
provisions of the applicable Trust Agreement are complied with and the statutory
and regulatory requirements are satisfied. In some Series ("Pass-Through
Certificates"), there will be no separation of the principal and interest
payments on the Mortgage Loans. In such circumstances, a Certificateholder will
be considered to have purchased an undivided interest in each of the Mortgage
Loans. In other cases ("Stripped Certificates"), sale of the Certificates will
produce a separation in the ownership of the principal payments and interest
payments on the Mortgage Loans.
Each Certificateholder must report on its federal income tax return its pro
rata share of the gross income derived from the Mortgage Loans (not reduced by
the amount payable as fees to the Trustee and the Master Servicer and similar
fees (collectively, the "Servicing Fee")), at the same time and in the same
manner as such items would have been reported under the Certificateholder's tax
accounting method had it held its interest in the Mortgage Loans directly,
received directly its share of the amounts received with respect to the Mortgage
Loans, and paid directly its share of the Servicing Fees. In the case of Pass-
Through Certificates, such gross income will consist of a pro rata share of all
of the income derived from all of the Mortgage Loans and, in the case of
Stripped Certificates, such income will consist of a pro rata
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share of the income derived from each stripped bond or stripped coupon in which
the Certificateholder owns an interest. The holder of a Certificate will
generally be entitled to deduct such Servicing Fees under Section 162 or Section
212 of the Code to the extent that such Servicing Fees represent "reasonable"
compensation for the services rendered by the Trustee, the Master Servicer, and
any other service providers. In the case of a noncorporate holder, however,
Servicing Fees (to the extent not otherwise disallowed, e.g., because they
exceed reasonable compensation) will be deductible in computing such holder's
regular tax liability only to the extent that such fees, when added to other
miscellaneous itemized deductions, exceed 2% of adjusted gross income and may
not be deductible to any extent in computing such holder's alternative minimum
tax liability. In addition, Code Section 68 provides that the amount of itemized
deductions otherwise allowable for the taxable year for an individual whose
adjusted gross income exceeds a specified applicable amount will be reduced by
the lesser of (i) 3% of the excess of adjusted gross income over the applicable
amount, or (ii) 80% of the amount of itemized deductions otherwise allowable for
such taxable year.
DISCOUNT OR PREMIUM ON PASS-THROUGH CERTIFICATES. The holder's purchase
price of a Pass-Through Certificate is to be allocated among the Mortgage Loans
in proportion to their fair market values, determined as of the time of purchase
of the Certificates. In the typical case, the Trustee believes it is reasonable
for this purpose to treat each Mortgage Loan as having a fair market value
proportional to the share of the aggregate principal balances of all of the
Mortgage Loans that it represents, to the extent that the Mortgage Loans
underlying a series have a relatively uniform interest rate and other common
characteristics. To the extent that the portion of the purchase price of a
Certificate allocated to a Mortgage Loan (other than to a right to receive any
accrued interest thereon and any undistributed principal payments) is less than
or greater than the portion of the principal balance of the Mortgage Loan
allocable to the Certificate, the interest in the Mortgage Loan allocable to the
Certificate will be deemed to have been acquired at a discount or premium,
respectively.
The treatment of any discount will depend on whether the discount represents
original issue discount or market discount. Under Legislation enacted in 1997,
Section 1272(a)(6) of the Code requires in the case of a pool of Mortgage Loans
with original issue discount in excess of a prescribed DE MINIMIS amount, that a
holder of a Certificate report as interest income in each taxable year its share
of the amount of original issue discount that accrues during that year,
determined under a constant yield method by reference to the initial yield to
maturity of the Mortgage Loan, based on a prepayment assumption, in advance of
receipt of the cash attributable to such income and regardless of the method of
federal income tax accounting employed by that holder. It is unclear when such
prepayment assumption is determined or adjusted. Original issue discount with
respect to a Mortgage Loan could arise for example by virtue of the financing of
points by the originator of the Mortgage Loan, or by virtue of the charging of
points by the originator of the Mortgage Loan in an amount greater than a
statutory de minimis exception, in circumstances under which the points are not
currently deductible pursuant to applicable Code provisions. However, the OID
Regulations provide that if a holder acquires an obligation at a price that
exceeds its stated redemption price, the holder will not include any original
issue discount in gross income. In addition, if a subsequent holder acquires an
obligation for an amount that exceeds its adjusted issue price, the subsequent
holder will be entitled to offset the original issue discount with economic
accruals of portions of such excess. Accordingly, if the Mortgage Loans acquired
by a Certificateholder are purchased at a price that exceeds the adjusted issue
price of such Mortgage Loans, any original issue discount will be reduced or
eliminated.
Certificateholders also may be subject to the market discount rules of
Sections 1276-1278 of the Code. A Certificateholder that acquires an interest in
Mortgage Loans with more than a prescribed DE MINIMIS amount of "market
discount" (generally, the excess of the principal amount of the Mortgage Loans
over the purchaser's purchase price) will be required under Section 1276 of the
Code to include accrued market discount in income as ordinary income in each
month, but limited to an amount not exceeding the principal payments on the
Mortgage Loans received in that month and, if the Certificates are sold, the
gain realized. Such market discount would accrue, using a prepayment assumption,
in a manner to be provided
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in Treasury regulations. The relevant legislative history of the 1986 Act
indicates that, until such regulations are issued, such market discount would in
general accrue either (i) on the basis of a constant interest rate or (ii) in
the ratio of (a) in the case of Mortgage Loans not originally issued with
original issue discount, stated interest payable in the relevant period to total
stated interest remaining to be paid at the beginning of the period or (b) in
the case of Mortgage Loans originally issued at a discount, original issue
discount in the relevant period to total original issue discount remaining to be
paid.
Section 1277 of the Code provides that the excess of interest paid or
accrued to purchase or carry a loan with market discount over interest received
on such loan is allowed as a current deduction only to the extent such excess is
greater than the market discount that accrued during the taxable year in which
such interest expense was incurred. In general, the deferred portion of any
interest expense will be deductible when such market discount is included in
income, including upon the sale, disposition, or repayment of the loan. A holder
may elect to include market discount in income currently as it accrues, on all
market discount obligations acquired by such holder during the taxable year such
election is made and thereafter, in which case the interest deferral rule
discussed above will not apply.
A Certificateholder who purchases a Certificate at a premium generally will
be deemed to have purchased its interest in the underlying Mortgage Loans at a
premium. A Certificateholder who holds a Certificate as a capital asset may
generally elect under Section 171 of the Code to amortize such premium as an
offset to interest income on the Mortgage Loans (and not as a separate deduction
item) on a constant yield method. The legislative history of the 1986 Act
suggests that the same rules that will apply to the accrual of market discount
(described above), which rules now appear to require the use of a prepayment
assumption, will generally also apply in amortizing premium with respect to
Mortgage Loans originated after September 27, 1985. If a holder makes an
election to amortize premium, such election will apply to all taxable debt
instruments held by such holder at the beginning of the taxable year in which
the election is made, and to all taxable debt instruments acquired thereafter by
such holder, and will be irrevocable without the consent of the Internal Revenue
Service. Purchasers who pay a premium for the Certificates should consult their
tax advisers regarding the election to amortize premium and the method to be
employed. Although the law is somewhat unclear regarding recovery of premium
allocable to Mortgage Loans originated before September 28, 1985, it is possible
that such premium may be recovered in proportion to payments of Mortgage Loan
principal.
Discount or Premium on Stripped Certificates. A Stripped Certificate may
represent a right to receive only a portion of the interest payments on the
Mortgage Loans, a right to receive only principal payments on the Mortgage
Loans, or a right to receive certain payments of both interest and principal.
Certain Stripped Certificated ("Ratio Strip Certificates") may represent a right
to receive differing percentages of both the interest and principal on each
Mortgage Loan. Pursuant to Section 1286 of the Code, the separation of ownership
of the right to receive some or all of the interest payments on an obligation
from ownership of the right to receive some or all of the principal payments
results in the creation of "stripped bonds" with respect to principal payments
and "stripped coupons" with respect to interest payments. Section 1286 of the
Code applies the original issue discount rules to stripped bonds and stripped
coupons. For purposes of computing original issue discount, a stripped bond or a
stripped coupon is treated as a debt instrument issued on the date that such
stripped interest is purchased with an issue price equal to its purchase price
or, if more than one stripped interest is purchased, the ratable share of the
purchase price allocable to such stripped interest. The Code, the OID
Regulations, and judicial decisions provide no direct guidance as to how the
interest and original issue discount rules are to apply to Stripped
Certificates. Under the method described above for REMIC Regular Interest
Certificates (the "Cash Flow Bond Method"), a prepayment assumption is used and
periodic recalculations are made which take into account with respect to each
accrual period the effect of prepayments during such period. Legislation enacted
in 1997 extends this treatment to instruments such as the Stripped Certificates.
The Cash Flow Bond Method will consequently be used in preparing information
reports as to the income accruing on such Certificates, and it is expected that
original issue discount will be reported on that basis. In applying the
calculation to a
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class of Certificates, the Trustee will treat all payments to be received with
respect to the Certificates, whether attributable to principal or interest on
the loans, as payments on a single installment obligation, in the case of a
Class of Certificates that has no right, or a nominal right, to receive
principal, and as includable in the stated redemption price at maturity. In the
case of a "stripped bond" which is entitled to a significant amount of
principal, the Trustee intends to take the position that interest payments are
"qualified stated interest." The Internal Revenue Service could, however, assert
that original issue discount must be calculated separately for each Mortgage
Loan underlying a Certificate. In addition, in the case of Ratio Strip or
similar Certificates, the Internal Revenue Service could assert that original
issue discount must be calculated separately for each stripped coupon or
stripped bond underlying a Certificate.
Under certain circumstances, if the Mortgage Loans prepay at a rate faster
than the Prepayment Assumption, the use of the Cash Flow Bond Method may
accelerate a Certificateholder's recognition of income. If, however, the
Mortgage Loans prepay at a rate slower than the prepayment assumption, in some
circumstances the use of this method may decelerate a Certificateholder's
recognition of income.
A Stripped Certificate which either embodies only interest payments on the
underlying loans or (if it embodies some principal payments on the Mortgage
Loans) is issued at a price that exceeds the principal payments (an "Interest
Weighted Certificate"), may be taxed as a contingent payment instrument.
POSSIBLE ALTERNATIVE CHARACTERIZATIONS. The characterizations of the
Stripped Certificates described above are not the only possible interpretations
of the applicable Code provisions. Among other possibilities, the Internal
Revenue Service could contend that (i) in certain Series, each non-Interest
Weighted Certificate is composed of an unstripped undivided ownership interest
in Mortgage Loans and an installment obligation consisting of stripped principal
payments; (ii) the non-Interest Weighted Certificates are subject to the OID
Regulations; (iii) each Interest Weighted Certificate is composed of an
unstripped undivided ownership interest in the Mortgage Loans and an installment
obligation consisting of stripped interest payments; or (iv) there are as many
stripped bonds or stripped coupons as there are scheduled payments of principal
and/or interest on each Mortgage Loan.
Given the variety of alternatives for treatment of the Certificates and the
different federal income tax consequences that result from each alternative,
potential purchasers are urged to consult their own tax advisers regarding the
proper treatment of the Certificates for federal income tax purposes.
CHARACTER AS QUALIFYING MORTGAGE LOANS. In the case of Stripped
Certificates there is no specific legal authority existing regarding whether the
character of the Certificates, for federal income tax purposes, will be the same
as the Mortgage Loans. The IRS could take the position that the Mortgage Loans'
character is not carried over to the Certificates in such circumstances.
Pass-Through Certificates will be, and, although the matter is not free from
doubt, Stripped Certificates should be considered to represent "real estate
assets" within the meaning of Section 856(c)(5)(B) of the Code, and "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, and
interest income attributable to the Certificates should be considered to
represent "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 each case to the extent the underlying Mortgage Loans qualify for such
treatments. However, Mortgage Loans secured by non-residential real property
will not constitute "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. In addition, it is possible that various reserve
funds underlying the Certificates may cause a proportionate reduction in the
above-described qualifying status categories of Certificates.
SALE OF CERTIFICATES. As a general rule, if a Certificate is sold, gain or
loss will be recognized by the holder thereof in an amount equal to the
difference between the amount realized on the sale and the Certificateholder's
adjusted tax basis in the Certificate. Such gain or loss will generally be
capital gain or loss if the Certificate is held as a capital asset. In the case
of Pass-Through Certificates, such tax basis will
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generally equal the holder's cost of the Certificate increased by any discount
income with respect to the loans represented by such Certificate previously
included in income, and decreased by the amount of any distributions of
principal previously received with respect to the Certificate. Such gain, to the
extent not otherwise treated as ordinary income, will be treated as ordinary
income to the extent of any accrued market discount not previously reported as
income. In the case of Stripped Certificates, the tax basis will generally equal
the Certificateholder's cost for the Certificate, increased by any discount
income with respect to the Certificate previously included in income, and
decreased by the amount of all payments previously received with respect to such
Certificate.
MISCELLANEOUS TAX ASPECTS
BACKUP WITHHOLDING. A Bondholder or Certificateholder, other than a
Residual Bondholder or Residual Certificateholder, may, under certain
circumstances, be subject to "backup withholding" at the rate of 31% with
respect to distributions or the proceeds of a sale of certificates to or through
brokers that represent interest or original issue discount on the Securities.
This withholding generally applies if the holder of a Security (i) fails to
furnish the Issuer with its taxpayer identification number ("TIN"); (ii)
furnishes the Issuer an incorrect TIN; (iii) fails to report properly interest,
dividends or other "reportable payments" as defined in the Code; or (iv) under
certain circumstances, fails to provide the Issuer or such holder's securities
broker with a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that the holder is not subject to backup
withholding. Backup withholding will not apply, however, with respect to certain
payments made to Bondholders or Certificateholders, including payments to
certain exempt recipients (such as exempt organizations) and to certain
Nonresidents (as defined below). Holders of the Securities should consult their
tax advisers as to their qualification for exemption from backup withholding and
the procedure for obtaining the exemption.
The Issuer will report to the Securityholders and to the Internal Revenue
Service for each calendar year the amount of any "reportable payments" during
such year and the amount of tax withheld, if any, with respect to payments on
the Securities.
TAX TREATMENT OF FOREIGN INVESTORS
Under the Code, unless interest (including OID) paid on a Security (other
than a Residual Interest Security) is considered to be "effectively connected"
with a trade or business conducted in the United States by a nonresident alien
individual, foreign partnership or foreign corporation ("Nonresidents"), such
interest will normally qualify as portfolio interest (except where (i) the
recipient is a holder, directly or by attribution, of 10% or more of the capital
or profits interest in the Issuer or (ii) the recipient is a controlled foreign
corporation to which the Issuer is a related person) and will be exempt from
federal income tax. Upon receipt of appropriate ownership statements, the Issuer
normally will be relieved of the obligation to withhold federal income tax from
such interest payments. These provisions supersede the generally applicable
provisions of the Code that would otherwise require the Issuer to withhold at a
30% rate (unless such rate were reduced or eliminated by an applicable tax
treaty) on, among other things, interest and original issue discount paid to
Nonresidents.
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Interest and original issue discount of Bondholders or Certificateholders
who are foreign persons are not subject to withholding if they are effectively
connected with a United States business conducted by the Bondholder or
Certificateholders. In such case, however, they will generally be subject to the
regular United States income tax.
Payments to holders of Residual Interest Securities who are foreign persons
will generally be treated as interest for purposes of the 30% (or lower treaty
rate) United States withholding tax. Holders should assume that such income does
not qualify for exemption from United States withholding tax as "portfolio
interest." To the extent that a payment represents a portion of REMIC taxable
income that constitutes excess inclusion income, a holder of a Residual Interest
Security will not be entitled to an exemption from or reduction of the 30% (or
lower treaty rate) withholding tax rule. If the payments are subject to United
States withholding tax, they generally will be taken into account for
withholding tax purposes only when paid or distributed (or when the Residual
Interest Security is disposed of). The Treasury has statutory authority,
however, to promulgate regulations which would require such amounts to be taken
into account at an earlier time in order to prevent the avoidance of tax. Under
the REMIC Regulations, if a Residual Interest Security has tax avoidance
potential, a transfer of a Residual Interest Security to a Nonresident will be
disregarded for all Federal tax purposes. A Residual Interest Security has tax
avoidance potential unless, at the time of the transfer the transferor
reasonably expects that the REMIC will distribute to the transferee residual
holder amounts that will equal at least 30% of each excess inclusion, and that
such amounts will be distributed at or after the time at which the excess
inclusion accrues and not later than the close of the calendar year following
the calendar year of accrual. If a Nonresident transfers a Residual Interest
Security to a United States person, and if the transfer has the effect of
allowing the transferor to avoid tax on accrued excess inclusions, then the
transfer is disregarded and the transferor continues to be treated as the owner
of the Residual Interest Security for purposes of the withholding tax provisions
of the Code. See "--Excess Inclusion Income."
STATE AND LOCAL TAX CONSIDERATIONS
In addition to the federal income tax consequences described in "FEDERAL
INCOME TAX CONSIDERATIONS," potential investors should consider the state income
tax consequences of the acquisition, ownership, and disposition of the
Securities. State and local income tax law may differ substantially from the
corresponding federal law, and this discussion does not purport to describe any
aspect of the income tax laws of any state or locality. Therefore, potential
investors should consult their own tax advisors with respect to the various
state and local tax consequences of investment in the Bonds or Certificates. In
particular, potential investors in Residual Interest Securities should consult
their tax advisers regarding the taxation of the Residual Interest Securities in
general and the effect of foreclosure on the Mortgaged Properties on such
taxation.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain restrictions on employee benefit plans ("Plans") subject to
ERISA and persons who have certain specified relationships to such Plans
("Parties in Interest"). ERISA also imposes certain duties on persons who are
fiduciaries of Plans subject to ERISA and prohibits certain transactions between
a Plan and Parties in Interest with respect to such Plans ("Prohibited
Transactions"). Under ERISA, any person who exercises any authority or control
respecting the management or disposition of the assets of a Plan is considered
to be a fiduciary of such Plan (subject to certain exceptions not here
relevant). Similar restrictions also apply to Plans and other retirement
arrangements, such as individual retirement accounts and Keogh plans, that are
subject to Section 4975 of the Code.
The Issuer, the Master Servicer, if any, the Servicer, the Trustee or the
provider of Enhancement, if any, because of their activities or the activities
of their respective affiliates, may be considered to be or may become Parties in
Interest with respect to certain Plans. If the Securities are acquired by a Plan
with
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respect to which the Issuer, the Master Servicer, if any, the Servicer, the
Trustee or the provider of Enhancement, if any, is a Party in Interest, such
transaction might be considered to violate the Prohibited Transaction rules of
ERISA and the Code unless such transaction were subject to one or more statutory
or administrative exemptions such as: Prohibited Transaction Class Exemption
("PTCE") 75-1, which exempts certain transactions involving employee benefit
plans and certain broker-dealers, reporting dealers and banks; PTCE 90-1, which
exempts certain transactions between insurance company pooled separate accounts
and Parties in Interest; PTCE 91-38, which exempts certain transactions between
bank collective investment funds and Parties in Interest; PTCE 95-60, which
exempts certain transactions between insurance company general accounts and
Parties in Interest; PTCE 84-14, which exempts certain transactions effected on
behalf of a Plan by a "qualified plan asset manager"; PTCE 96-23, which exempts
certain transactions effected on behalf of a Plan by an "in-house asset
manager"; or any other available exemption. Accordingly, prior to making an
investment in the Securities, investing Plans should determine whether the
Issuer is a Party in Interest with respect to such Plan and, if so, whether such
transaction is subject to one or more statutory or administrative exemptions.
Special caution should be exercised before the assets of a Plan (including
assets that may be held in an insurance company's separate or general accounts
where assets in such accounts may be deemed Plan assets for purposes of ERISA)
are used to purchase a Security if the Issuer, the Master Servicer, if any, the
Servicer, the Trustee, the provider of Enhancement, if any, or an affiliate
thereof is a fiduciary with respect to such assets.
The Certificates of a Series will, and the Bonds of a Series could, be
treated as "equity" for purposes of ERISA. Under regulations issued by the
Department of Labor ("DOL") (the "Plan Asset Regulations"), if a Plan makes an
"equity" investment in a corporation, partnership, trust or certain other
entities, the underlying assets and properties of such entity will be deemed for
purposes of ERISA to be assets of the investing Plan unless certain exceptions
set forth in the regulation apply. One such exception applies if the class of
"equity" interests in question is (i) held by 100 or more investors who are
independent of the Issuer and each other, (ii) freely transferable, and (iii)
sold as part of an offering pursuant to (a) an effective registration statement
under the Securities Act of 1933, and then subsequently registered under the
Securities Exchange Act of 1934 or (b) an effective registration statement under
Section 12(b) or 12(g) of the Securities Exchange Act of 1934 ("Publicly Offered
Securities"). In addition, another exception provides that if at all times less
than 25% of the value of all classes of equity interests in the Issuer are held
by "benefit plan investors" (which is defined as including plans subject to
ERISA, individual retirement accounts, certain plans not subject to ERISA, and
entities whose underlying assets include plan assets by reason of plan
investment in such entities), the investing Plan's assets will not include any
of the underlying assets of the Issuer.
If a particular Series is treated as "equity" for purposes of the Plan Asset
Regulations and the underlying assets of the Issuer are treated as assets of a
Plan purchasing Securities of such Series and the Mortgage Assets securing such
Series consists of a single Mortgage Loan or obligations of a single obligor or
related obligors as specified in the related Prospectus Supplement (e.g.,
affiliates of the Issuer), and Securities of such Series are acquired by a Plan
with respect to which the obligor or related obligors are Parties in Interest,
such transaction would violate the Prohibited Transaction rules of ERISA and the
Code unless such transaction were subject to one or more statutory or
administrative exemptions such as those described above or any other available
exemption. Accordingly, prior to making an investment in Securities of such
Series, a Plan investor should determine whether such obligor or related
obligors are Parties in Interest with respect to such Plan and, if so, whether
such transaction is subject to one or more of the statutory or administrative
exemptions.
If a particular Series is treated as "equity" for purposes of the Plan Asset
Regulations and the underlying assets of the Issuer are treated as assets of a
Plan purchasing Securities of such Series and the Mortgage Assets securing such
Series consists of multiple Mortgage Loans or obligations of multiple unrelated
obligors as specified in the related Prospectus Supplement, an investing Plan
may not be able to determine whether any of the obligors is a Party in Interest
with respect to such Plan. In that event, prior to
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making an investment in Securities of such Series, such Plan investor should
determine whether one or more statutory or administrative exemptions is
applicable.
Furthermore, in either of the cases above, if the Issuer were deemed to hold
plan assets by reason of a Plan's investment in a Security, the persons
providing services with respect to the assets of the Issuer, including the
Mortgage Loans, may be subject to the fiduciary responsibility provisions of
Title I of ERISA and be subject to the prohibited transactions provisions of
ERISA and Section 4975 of the Code with respect to transactions involving such
assets unless such transactions are subject to a statutory or administrative
exemption.
Even if the underlying assets of the Issuer are treated as assets of a Plan
purchasing Securities of such Series, an additional exemption may also be
available if the Issuer is a trust. The DOL granted to Shearson Lehman Hutton,
Inc. an administrative exemption (the "Exemption") from certain of the
prohibited transaction rules of ERISA with respect to the initial purchase, the
holding and the subsequent resale by Plans of certificates representing
interests in asset-backed pass through trusts that consist of certain
receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The obligations covered by the Exemption include
obligations such as the Mortgage Assets. The Exemption will apply to the
acquisition, holding and resale of the Securities by a Plan, provided that
certain conditions (certain of which are described below) are met. The
Prospectus Supplement will specify whether the Exemption will apply with respect
to any particular series.
Among the conditions which must be satisfied for the Exemption to apply are
the following:
1. The acquisition of the Securities by a Plan is on terms (including the
price for the Securities) that are at least as favorable to the Plan as they
would be in an arm's-length transaction with an unrelated party;
2. The rights and interests evidenced by the Securities acquired by the Plan
are not subordinated to the rights and interests evidenced by other certificates
of the trust;
3. The Securities acquired by the Plan have received a rating at the time of
such acquisition that is in one of the three highest generic rating categories
from either Standard & Poor's Ratings Services, a Division of the McGraw Hill
Companies, Inc. ("Standard & Poor's"), Moody's Investors Service, Inc.
("Moody's"), Duff & Phelps Credit Rating Co. ("DCR") or Fitch Investors Service,
L.P. ("Fitch");
4. The sum of all payments made to the underwriter in connection with the
distribution of the Securities represents not more than reasonable compensation
for underwriting the Securities. The sum of all payments made to and retained by
the seller pursuant to the sale of the obligations to the trust represents not
more than the fair market value of such obligations. The sum of all payments
made to and retained by the servicer represents not more than reasonable
compensation for the servicer's services under the related servicing agreement
and reimbursement of the servicer's reasonable expenses in connection therewith;
5. The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below); and
6. The Plan investing in the Securities is an "accredited investor" as
defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933.
The trust also must meet the following requirements:
(i) the corpus of the trust must consist solely of assets of the type which
have been included in other investment pools;
(ii) certificates in such other investment pools must have been rated in one
of the three highest rating categories of Standard & Poor's, Moody's, DCR or
Fitch for at least one year prior to the Plan's acquisition of certificates; and
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(iii) certificates evidencing interests in such other investment pools must
have been purchased by investors other than Plans for at least one year prior to
any Plan's acquisition of Securities.
Moreover, the Exemption provides relief from certain self-dealing/conflict
of interest prohibited transactions that may occur when the Plan fiduciary
causes a Plan to acquire certificates in a trust in which the fiduciary (or its
affiliate) is an obligor on the receivables held in the trust provided that,
among other requirements: (i) in the case of an acquisition in connection with
the initial issuance of Securities, at least fifty (50) percent of each class of
Securities in which Plans have invested is acquired by persons independent of
the Restricted Group and at least fifty (50) percent of the aggregate interest
in the trust is acquired by persons independent of the Restricted Group; (ii)
such fiduciary (or its affiliate) is an obligor with respect to five (5) percent
or less of the fair market value of the obligations contained in the trust;
(iii) the Plan's investment in Securities does not exceed twenty-five (25)
percent of all of the Securities outstanding after the acquisition; and (iv) no
more than twenty-five (25) percent of the assets of the Plan are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Plans
sponsored by the Issuer, the Underwriter, the Trustee, the Servicer, the Master
Servicer, if any, the Special Servicer, if any, any obligor with respect to
obligations included in a Trust constituting more than five (5) percent of the
aggregate unamortized principal balance of the assets in a Trust, provider of
Enhancement, if any, or any affiliate of such parties (the "Restricted Group").
There can be no assurance that the Securities will not be treated as equity
interests in the Issuer for purposes of the Plan Asset Regulations. Moreover, if
the Securities are treated as equity interests for purposes of ERISA, it should
be assumed, unless the Prospectus Supplement provides otherwise, that none of
the exceptions set forth in the Plan Asset Regulations will apply to the
purchase of Securities offered hereby.
Prospective Plan investors should consult with their legal advisors
concerning the impact of ERISA and the Code and the potential consequences to
their specific circumstances, prior to making an investment in the Securities.
Moreover, each Plan fiduciary should determine whether under the general
fiduciary standards of investment procedure and diversification an investment in
the Securities is appropriate for the Plan, taking into account the overall
investment policy of the Plan and the composition of the Plan's investment
portfolio.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
ERISA or Section 4975 of the Code. However, such a governmental plan may be
subject to a federal, state, or local law which is, to a material extent,
similar to the provisions of ERISA or Section 4975 of the Code ("Similar Law").
A fiduciary of a governmental plan should make its own determination as to the
need for and the availability of any exemptive relief under Similar Law.
The sale of Securities to a Plan is in no respect a representation by the
Issuer or the Underwriter that this investment meets all relevant legal
requirements with respect to investments by Plans generally or by any particular
Plan, or that this investment is appropriate for Plans generally or for any
particular Plan.
LEGAL INVESTMENT
The Prospectus Supplement for each Series of Securities will specify which,
if any, of the Classes of Securities offered thereby will constitute "mortgage
related securities" for purposes of the Secondary Mortgage Market Enhancement
Act of 1984, as amended ("SMMEA"). The appropriate characterization of those
Securities not qualifying as "mortgage related securities" ("Non-SMMEA
Securities") under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase such Securities, may be
subject to significant interpretive uncertainties. Accordingly, investors whose
investment authority is subject to legal restrictions should consult their own
legal advisors to determine whether and to what extent the Non-SMMEA Securities
constitute legal investments for them.
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Those Classes of Securities that (i) are rated in one of the two highest
rating categories by one or more Rating Agencies and (ii) are part of a Series
representing interests in, or secured by, a Trust Fund consisting of Mortgage
Loans or Private Mortgage-Backed Securities, provided that such Mortgage Loans
(or the Mortgage Loans underlying the Private Mortgage-Backed Securities) are
secured by first liens on Mortgaged Property and were originated by certain
types of originators as specified in SMMEA, will be "mortgage related
securities" for purposes of SMMEA. As "mortgage related securities," such
Classes will constitute legal investments for persons, trusts, corporations,
partnerships, associations, business trusts and business entities (including,
but not limited to, state-chartered savings banks, commercial banks, savings and
loan associations and insurance companies, as well as trustees and state
government employee retirement systems) created pursuant to or existing under
the laws of the United States or of any state (including the District of
Columbia and Puerto Rico) whose authorized investments are subject to state
regulation to the same extent that, under applicable law, obligations issued by
or guaranteed as to principal and interest by the United States or any agency or
instrumentality thereof constitute legal investments for such entities. Pursuant
to SMMEA, a number of states enacted legislation, on or before the October 3,
1991 cutoff for such enactments, limiting to varying extents the ability of
certain entities (in particular, insurance companies) to invest in "mortgage
related securities" secured by liens on residential, or mixed residential and
commercial properties, in most cases by requiring the affected investors to rely
solely upon existing state law, and not SMMEA. Pursuant to Section 347 of the
Riegle Community Development and Regulatory Improvement Act of 1994, which
amended the definition of "mortgage related security" (effective December 31,
1996) to include, in relevant part, Securities satisfying the rating, first lien
and qualified originator requirements for "mortgage related securities," but
representing interests in, or secured by, a Trust Fund consisting, in whole or
in part, of first liens on one or more parcels of real estate upon which are
located one or more commercial structures, states were authorized to enact
legislation, on or before September 23, 2001, specifically referring to Section
347 and prohibiting or restricting the purchase, holding or investment by
state-regulated entities in such types of Securities. Accordingly, the investors
affected by such legislation will be authorized to invest in Securities
qualifying as "mortgage related securities" only to the extent provided in such
legislation.
SMMEA also amended the legal investment authority of federally-chartered
depository institutions as follows: federal savings and loan associations and
federal savings banks may invest in, sell or otherwise deal in mortgage related
securities without limitation as to the percentage of their assets represented
thereby, federal credit unions may invest in such securities, and national banks
may purchase such securities for their own account without regard to the
limitations generally applicable to investment securities set forth in 12 U.S.C.
Section 24 (Seventh), subject in each case to such regulations as the applicable
federal regulatory authority may prescribe. In this connection, the Office of
the Comptroller of the Currency (the "OCC") has amended 12 C.F.R. Part 1 to
authorize national banks to purchase and sell for their own account, without
limitation as to a percentage of the bank's capital and surplus (but subject to
compliance with certain general standards concerning "safety and soundness" and
retention of credit information in 12 C.F.R. Section 1.5), certain "Type IV
securities," defined in 12 C.F.R. Section 1.2(1) to include certain "commercial
mortgage-related securities" and "residential mortgage-related securities." As
so defined, "commercial mortgage-related security" and "residential
mortgage-related security" mean, in relevant part, "mortgage-related security"
within the meaning of SMMEA, PROVIDED THAT, in the case of a "commercial
mortgage-related security," it "represents ownership of a promissory note or
certificate of interest or participation that is directly secured by a first
lien on one or more parcels of real estate upon which one or more commercial
structures are located and that is fully secured by interests in a pool of loans
to NUMEROUS OBLIGORS." In the absence of any rule or administrative
interpretation by the OCC defining the term "numerous obligors," no
representation is made as to whether any Class of Securities will qualify as
"commercial mortgage-related securities," and thus as "Type IV securities," for
investment by national banks. Federal credit unions should review National
Credit Union Administration ("NCUA") Letter to Credit Unions No. 96, as modified
by Letter to Credit Unions No. 108, which includes guidelines to assist federal
credit unions in making investment decisions for mortgage related securities.
The NCUA has adopted rules, codified as 12 C.F.R. SectionSection 703.5(f)-(k),
which prohibit federal credit unions from investing in
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certain mortgage related securities (including securities such as certain Series
or Classes of Securities), except under limited circumstances. Effective January
1, 1998, the NCUA has amended its rules governing investments by federal credit
unions at 12 C.F.R. Part 703; the revised rules will permit investments in
"mortgage related securities" under certain limited circumstances, but will
prohibit investments in stripped mortgage related securities, residual interests
in mortgage related securities, and commercial mortgage related securities,
unless the credit union has obtained written approval from the NCUA to
participate in the "investment pilot program" described in 12 C.F.R. Section
703.140.
All depository institutions considering an investment in the Securities
should review the "Supervisory Policy Statement on Securities Activities" dated
January 28, 1992, as revised April 15, 1994 (the "Policy Statement") of the
Federal Financial Institutions Examination Council. The Policy Statement, which
has been adopted by the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, the OCC and the Office of Thrift
Supervision, and by the NCUA (with certain modifications), prohibits depository
institutions from investing in certain "high-risk mortgage securities"
(including securities such as certain Series or Classes of the Securities),
except under limited circumstances, and sets forth certain investment practices
deemed to be unsuitable for regulated institutions.
Institutions whose investment activities are subject to regulation by
federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any Securities,
as certain Series or Classes may be deemed unsuitable investments, or may
otherwise be restricted, under such rules, policies or guidelines (in certain
instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any Securities issued in
book-entry form, provisions which may restrict or prohibit investments in
securities which are issued in book-entry form.
Except as to the status of certain Classes of Securities as "mortgage
related securities," no representation is made as to the proper characterization
of the Securities for legal investment purposes, financial institution
regulatory purposes, or other purposes, or as to the ability of particular
investors to purchase Securities under applicable legal investment restrictions.
The uncertainties described above (and any unfavorable future determinations
concerning legal investment or financial institution regulatory characteristics
of the Securities) may adversely affect the liquidity of the Securities.
Investors should consult their own legal advisors in determining whether and
to what extent the Securities constitute legal investments for such investors.
PLAN OF DISTRIBUTION
The Issuer may sell the Securities offered hereby through Lehman Brothers,
as agent or as underwriter, or through underwriting syndicates represented by
Lehman Brothers (collectively, the "Underwriters") or by one or more other
underwriters, in each case, to be specified in the related Prospectus
Supplement. The Prospectus Supplement relating to a Series will set forth the
terms of the offering of such Series and each Class within such Series,
including the name or names of the Underwriters, the proceeds to and their
intended use by the Issuer, and either the initial public offering price, the
discounts and commissions to the Underwriters and any discounts or concessions
allowed or reallowed to certain dealers, or the method by which the price at
which the Underwriters will sell the Securities will be determined.
The Underwriters will be obligated, subject to certain conditions, to
purchase all of the Securities described in the Prospectus Supplement relating
to a Series if any such Securities are purchased. The Securities may be acquired
by the Underwriters for their own account and may be resold from time to time in
one or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. If specified
in the related Prospectus Supplement, a Series may be
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offered in whole or in part in exchange for the Mortgage Assets that would be
pledged to secure such Series. In such event, the Prospectus Supplement will
specify the amount of compensation to be paid to the Underwriters and expenses,
if any, in connection with such distribution. If so indicated in the Prospectus
Supplement, the Issuer will authorize Underwriters or other persons acting as
the Issuer's agents to solicit offers by certain institutions to purchase the
Securities on such terms and subject to such conditions as so specified.
The Issuer may also sell the Securities offered hereby and by means of the
related Prospectus Supplements from time to time in negotiated transactions or
otherwise, at prices determined at the time of sale. The Issuer may effect such
transactions by selling Securities to or through dealers and such dealers may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Issuer and any purchasers of Securities for whom they may
act as agents.
If any Certificates are offered other than through underwriters pursuant to
such underwriting agreements, the related Prospectus Supplement or Prospectus
Supplements will contain information regarding the terms of such offering and
any agreements to be entered into in connection with such offering.
Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act"), in
connection with reoffers and sales by them of Certificates. Certificateholders
should consult with their legal advisors in this regard prior to any such
reoffer and sale.
If specified in the Prospectus Supplement relating to a Series of
Certificates, the Depositor, any affiliate thereof or any other person or
persons specified therein may purchase some or all of one or more Classes of
Certificates of such Series from the underwriter or underwriters of such other
person or persons specified in such Prospectus Supplement. The consideration for
such purchase may be cash or Mortgage Assets. Such purchaser may thereafter from
time to time offer and sell, pursuant to this Prospectus and the related
Prospectus Supplement, some or all of such Certificates so purchased, directly,
through one or more underwriters to be designated at the time of the offering of
such Certificates, through dealers acting as agent and/or principal as in such
other manner as may be specified in the related Prospectus Supplement. Such
offering may be restricted in the manner specified in such Prospectus
Supplement. Such transactions may be effected at market prices prevailing at the
time of sale, at negotiated prices or at fixed prices. Any underwriters and
dealers participating in such purchaser's offering of such Certificates may
receive compensation in the form of underwriting discounts or commissions from
such purchaser and such dealers may receive commissions from the investors
purchasing such Certificates for whom they may act as agent (which discounts or
commissions will not exceed those customary in those types of transactions
involved). Any dealer that participates in the distribution of such Certificates
may be deemed to be an "underwriter" within the meaning of the Securities Act
and any commissions and discounts received by such dealer and any profit on the
resale of such Certificates by such dealer might be deemed to be underwriting
discounts and commissions under the Securities Act.
The place and time of delivery for the Series in respect of which this
Prospectus is delivered will be set forth in the related Prospectus Supplement.
LEGAL MATTERS
Certain legal matters in connection with the Securities offered hereby will
be passed upon for the Issuer and for the Underwriters by Skadden, Arps, Slate,
Meagher & Flom, New York, New York, Cadwalader, Wickersham & Taft, New York, New
York, Sidley & Austin, New York, New York or Thacher Proffitt & Wood, New York,
New York.
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GLOSSARY
The following are abbreviated definitions of certain capitalized terms used
in this Prospectus. Unless otherwise provided in the Prospectus Supplement for a
Series, such definitions shall apply to capitalized terms used in such
Prospectus Supplement. The definitions may vary from those in the Indenture or
Trust Agreement, as applicable, and the Indenture or Trust Agreement, as
applicable, generally provides a more complete definition of certain of the
terms. Reference should be made to the Indenture or Trust Agreement, as
applicable, for a more complete definition of such terms.
"Accrual Date" means, with respect to any Series, the date upon which
interest begins accruing on the Securities of the Series, as specified in the
related Prospectus Supplement.
"Accrual Payment Amount" means, with respect to any Payment Date or
Distribution Date for a Series that occurs prior to or on the Accrual
Termination Date, the aggregate amount of interest which has accrued on the
Compound Interest Securities of such Series during the Interest Accrual Period
relating to such Payment Date or Distribution Date and which is not then
required to be paid.
"Accrual Termination Date" means, with respect to a Class of Compound
Interest Securities, the Payment Date or Distribution Date on which all
Securities of the related Series with Stated Maturities or Final Scheduled
Termination Dates earlier than that of such Class of Compound Interest
Securities have been fully paid, or such other date or period as may be
specified in the related Prospectus Supplement.
"Administration Agreement" means, with respect to a Series, an agreement
pursuant to which the Administrator agrees to perform certain ministerial,
administrative, accounting and clerical duties on behalf of the Issuer with
respect to such Series.
"Administration Fee" means the fee specified as such in the Administration
Agreement.
"Advances" means, unless otherwise specified in a Prospectus Supplement,
cash advances with respect to delinquent payments of principal and interest on
any Mortgage Loan made by the Primary Servicer from its own funds or, if so
specified in the related Prospectus Supplement, from excess funds in the
Custodial Account or Servicing Account, but only to the extent that such
advances are, in the good faith business judgment of the Servicer or the Master
Servicer, as the case may be, ultimately recoverable from future payments and
collections on the Mortgage Loans or otherwise.
"Aggregate Asset Value" means, with respect to any Series, the aggregate
amount obtained by adding the Asset Value of each Mortgage Loan or Private
Mortgage-Backed Security or other Mortgage Assets in the Trust Estate for such
Series, plus the Asset Value, as determined in the related Series Supplement, of
any cash remaining in the Collection Account or any other Pledged Fund or
Account subsequent to an initial deposit therein by the Issuer.
"Aggregate Outstanding Principal" means, with respect to any Series or Class
thereof, the principal amount of all Securities of such Series or Class
outstanding at the date of determination, including, in respect of any Class of
Compound Interest Securities of such Series (or other Class of Securities on
which interest accrues and is added to the outstanding principal amount
thereof), the Compound Value (or accreted value) of such Securities through the
Payment Date or Distribution Date immediately preceding the date of
determination.
"Appraised Value" means, unless otherwise specified in a Prospectus
Supplement, the lesser of the appraised value determined in an appraisal
obtained at origination or the sales price of a Mortgaged Property.
"ARM," "ARM Loan," or "Adjustable Rate Mortgage Loan" means a Mortgage which
provides for adjustment from time to time to the Mortgage Rate in accordance
with an approved index.
"Asset Value" means, unless specified otherwise in the related Prospectus
Supplement, with respect to each Private Mortgage-Backed Security or Mortgage
Loan or other Mortgage Assets included in the Trust
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Estate or Trust Fund for a Series, its Scheduled Principal Balance. In addition,
the related Series Supplement shall set forth, for purposes of calculating the
Asset Value of Mortgage Assets, the dates on which the scheduled principal and
interest payments with respect to such Mortgage Assets are assumed to be
deposited in the Collection Account. The Asset Value of any cash deposited in
any Pledged Fund or Account shall be as set forth in the related Series
Supplement.
"Assumed Deposit Date" means the date specified therefor in the Series
Supplement for a Series, upon which distributions on the Primary Assets are
assumed to be deposited in the Collection Account for purposes of calculating
Reinvestment Income thereon.
"Assumed Reinvestment Rate" means, with respect to a Series, the per annum
rate or rates specified in the related Prospectus Supplement or the related
Guaranteed Investment Contract for a particular period or periods as the
"Assumed Reinvestment Rate" for funds held in Pledged Funds and Accounts for the
Series.
"BIF" means Bank Insurance Fund.
"Bondholder" means the Person in whose name a Bond is registered in the Bond
Register.
"Bond Interest Rate" means the interest rate on the outstanding principal
amount of a Bond payable on the applicable Payment Date for such Bond, as
specified in the related Prospectus Supplement.
"Bond Register" means the register maintained pursuant to the Trust
Indenture for a Series, providing for the registration of the Bonds of a Series
and the transfers and exchanges thereof.
"Bonds" means Collateralized Mortgage Obligations sold by the Issuer
pursuant to this Prospectus and a related Prospectus Supplement.
"Business Day" means, with respect to any Series that does not include any
Class of Variable Interest Securities, any day that is not a Saturday, Sunday or
other day on which commercial banking institutions in New York, New York, or in
the cities in which the Corporate Trust Office or, if applicable, the offices of
the Servicer or the Special Servicer, are then located, are authorized or
obligated by law or executive order to be closed, and with respect to any Series
that includes any Class of Variable Interest Securities, a day that is not a
Saturday or Sunday, and that is not a legal holiday nor a day on which banking
institutions are authorized or obligated by law, regulation or executive order
to close in either London or New York City or in the city in which the Corporate
Trust Office is then located.
"Cash Liquidation" means as to any defaulted Mortgage Loan other than a
Mortgage Loan with respect to which the related Mortgaged Property became REO
Property, the recovery of all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries that the Master Servicer or Servicer, as applicable,
expects to be finally recoverable.
"CERCLA" means the federal Comprehensive Environmental Response,
Compensation, and Liability Act of 1980.
"Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register.
"Certificate Interest Rate" means the per annum interest rate on the
outstanding principal amount of a Certificate payable on the applicable
Distribution Date for such Certificate, as specified in the related Prospectus
Supplement.
"Certificate Register" means the register maintained pursuant to the Trust
Agreement for a Series, providing for the registration of the Certificates of a
Series and the transfers and exchanges thereof.
"Certificates" means the Mortgage-Backed Certificates sold by the Issuer
pursuant to this Prospectus and a related Prospectus Supplement.
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"Class" means a class of Securities of a Series.
"Closing Date" means, with respect to a Series, the date specified in the
related Series Supplement as the date on which Securities of such Series are
first issued.
"Code" means the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder.
"Collection Account" means, with respect to a Series, the account designated
as such and created pursuant to the Trust Indenture or Trust Agreement, as
applicable.
"Commercial Property" means any property securing a Mortgage Loan that used
for commercial purposes.
"Commission" means the Securities and Exchange Commission.
"Company" means Structured Asset Securities Corporation.
"Compound Interest Security" means any Security of a Series on which
interest accrues and is added to the principal of such Security periodically,
but with respect to which no interest or principal shall be payable except
during the period or periods specified in the related Prospectus Supplement.
"Compound Value" means, with respect to a Class of Compound Interest
Securities, as of any determination date, the original principal amount of such
Class, plus all accrued and unpaid interest, if any, previously added to the
principal thereof and reduced by any payments of principal previously made on
such Class of Compound Interest Securities and by any losses allocated to such
Class.
"Condemnation Proceeds" means any awards resulting from the full or partial
condemnation or any eminent domain proceeding or any conveyance in lieu or in
anticipation thereof with respect to a Mortgaged Property by or to any
governmental or quasi-governmental authority other than amounts to be applied to
the restoration, preservation or repair of such Mortgaged Property or released
to the related Mortgagor in accordance with the terms of the Mortgage Loan.
"Corporate Trust Office" means the corporate trust office of the Trustee.
"Covered Trust" means a Trust Estate or Trust Fund covered by a form of
credit support.
"CPR" means the Constant Prepayment Rate prepayment model.
"Custodial Account" means an account established by a Master Servicer, a
Servicer, or a Special Servicer in the name of the Trustee for the deposit on a
daily basis of all Mortgage Loan related receipts received by it subsequent to
the Cut-Off Date.
"Custodian" means any bank, savings and loan association, trust company or
other entity appointed to hold documentation with respect to any Mortgage Loans.
"Cut-Off Date" means, with respect to a Series, the date specified in the
related Series Supplement on which, as of the close of business on such date,
the Mortgage Loans securing or included in such Series are sold to a Trust or
subject to the lien of the Indenture.
"Deferred Interest" means the excess resulting when the amount of interest
required to be paid by a Mortgagor on a Mortgage Loan on any Due Date for such
Mortgage Loan is less than the amount of interest accrued on the Scheduled
Principal Balance thereof, to the extent such excess is added to the Scheduled
Principal Balance of such Mortgage Loan.
"Deferred Interest Securities" means Bonds or Certificates on which interest
accrued during an Interest Accrual Period may be added to the principal amount
of such Bonds or Certificates rather than being paid in cash on the related
Distribution Date.
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"Definitive Securities" means the Bonds or the Certificates for a Series
when and if issued in definitive form to the Securities Owners of such Series or
their nominees.
"Deleted Mortgage Loan" means a Mortgage Loan removed from the Trust Estate
or Trust Fund in order to substitute a Substitute Mortgage Loan.
"Delivery Date" means with respect to a Series, the date specified in the
related Prospectus Supplement as the date on which the Securities of such Series
are to be delivered to the original purchasers thereof.
"Depositor" means the Company (i) when acting in such capacity under a
Deposit Trust Agreement to deposit Primary Assets into an Owner Trust relating
to a Series of Bonds, or (ii) when acting in such capacity under a Trust
Agreement to deposit Primary Assets into a Trust Fund relating to a Series of
Certificates.
"Deposit Trust Agreement" means a deposit trust agreement between the
Company and an Owner Trustee pursuant to which an Owner Trust is created and
Primary Assets are deposited therein.
"Designated Interest Accrual Date" means, as specified in the related
Prospectus Supplement, (a) the day preceding a Redemption Date or Special
Redemption Date as the date through which accrued interest is paid upon
redemption or special redemption, or (b) the date through which accrued interest
is paid upon the occurrence of an Event of Default.
"Determination Date" means the date specified in the related Prospectus
Supplement.
"Disqualified Organization" means the United States, any State or political
subdivision thereof, any possession of the United States, any foreign
government, any international organization, or any agency or instrumentality of
any of the foregoing, a rural electric or telephone cooperative described in
section 1381(a)(2)(C) of the Code, or any entity exempt from the tax imposed by
sections 1-1399 of the Code, if such entity is not subject to tax on its
unrelated business income.
"Distribution Date" means the date on which distributions of principal of
and interest on Certificates of a Series will be made.
"DOL" means Department of Labor.
"Due Date" means each date on which a payment is due and payable on any
Mortgage Assets.
"Due Period" means, unless other specified in the related Prospectus
Supplement, for each Payment Date or Distribution Date, as applicable, the
period beginning on the second day of the month preceding the month in which
such Payment Date or Distribution Date, as applicable, occurs and ending on the
first day of the month in which such Payment Date or Distribution Date, as
applicable, occurs.
"Eligible Investments" means any one or more of the obligations or
securities described herein under "SECURITY FOR THE BONDS AND
CERTIFICATES--Investment of Funds."
"Enhancement" means the Enhancement for a Series, if any, specified in the
related Prospectus Supplement.
"Enhancement Agreement" means the agreement or instrument pursuant to which
any Enhancement is issued or the terms of any Enhancement are set forth.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Plans" means qualified employee benefit plans established under ERISA
or the Code.
"Escrow Account" means an escrow account established and maintained by the
Primary Servicer in which payments by Mortgagors to pay taxes, assessments,
mortgage and hazard insurance premiums and other comparable items will be
deposited.
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"Event of Default" unless otherwise specified in the Prospectus Supplement
shall have the meaning set forth herein under "THE INDENTURE AND TRUST
AGREEMENT--Events of Default."
"Excess Cash Flow" shall have the meaning set forth in the related
Prospectus Supplement.
"Exchange Act" means the Securities Exchange Act of 1934.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHA" means the Federal Housing Administration, a division of HUD. "FHA
Loan" means a fixed-rate mortgage loan insured by the FHA. "FHLMC" means the
Federal Home Loan Mortgage Corporation.
"FNMA" means the Federal National Mortgage Association.
"Final Scheduled Distribution Date" means the Distribution Date on which
principal of and interest on a Series of Certificates is scheduled to be paid in
full.
"First Mandatory Principal Distribution Date" means the date specified in
the related Prospectus Supplement as the Distribution Date on which the Issuer
must begin paying installments of principal of the Certificates of the related
Series or Class if the Issuer has not already begun making such distributions.
"First Mandatory Principal Payment Date" means the date specified in the
related Prospectus Supplement as the Payment Date on which the Issuer must begin
paying installments of principal of the Bonds of the related Series or Class if
the Issuer has not already begun making such payments.
"First PAC Paydown Date" means the date on which the initial PAC Principal
Payment is applied to the PAC Bonds, as set forth in the related Prospectus
Supplement.
"Garn-St. Germain Act" means the Garn-St. Germain Depository Institutions
Act of 1982.
"Grant" means to mortgage, pledge, bargain, sell, warrant, alienate, remise,
convey, assign, transfer, create and grant a lien upon and a security interest
in and right of setoff against, deposit, set over and confirm.
"Guaranteed Investment Contract" means a guaranteed investment contract
providing for the investment of all distributions on the Mortgage Assets
guaranteeing a minimum or a fixed rate of return on the investment of moneys
deposited therein.
"Guarantor" means a guarantor acceptable to the Rating Agencies rating the
Securities.
"Highest Bond Interest Rate" means, unless specified otherwise in the
related Prospectus Supplement, with respect to any Series of Bonds, the highest
Bond Interest Rate borne by outstanding Bonds of the Series.
"Highest Certificate Interest Rate" means, unless otherwise specified in the
related Prospectus Supplement, with respect to any Series of Certificates, the
highest Certificate Interest Rate borne by outstanding Certificates of a Series.
"Holder" means a Bondholder or Certificateholder, as applicable.
"Housing Act" means the National Housing Act of 1934, as amended.
"HUD" means the United States Department of Housing and Urban Development.
"Indenture" means, with respect to any Series of Bonds, collectively the
Trust Indenture and any related Series Supplement.
"Individual Investor Bonds" means each of the Bonds of a Class identified as
such in the related Prospectus Supplement.
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"Individual Investor Certificates" means each of the Certificates of a Class
identified as such in the related Prospectus Supplement.
"Insurance Policies" means hazard insurance and other insurance policies
required to be maintained with respect to Mortgage Loans.
"Insurance Proceeds" means amounts received by the Trustee from the Master
Servicer or a Servicer in connection with sums paid or payable under any
insurance policies, to the extent not applied to the restoration or repair of
the Mortgaged Property.
"Interest Accrual Period" means the period specified in the related
Prospectus Supplement for a Series, during which interest accrues on Securities
of the related Series or Class with respect to any Payment Date, Distribution
Date, Redemption Date, or Special Redemption Date.
"Interest Only Securities" means a Security entitled to receive payments of
interest only based upon the Notional Amount of the Security.
"Interest Weighted Securities" means, with respect to Certificates issued by
a grantor Trust, Certificates that embody only interest payments on the
underlying Mortgage Loans or which consist in whole or in part of stripped
coupons or, in the case of a regular interest in a REMIC, which qualify as such
pursuant to Section 860G(a)(1)(B)(ii) of the Code.
"IRS" means the Internal Revenue Service.
"Issuer" means the Company Owner Trust, or a separate trust established by
the Company as issuer of a Series of Securities.
"L/C Bank" means the issuer of the letter of credit.
"LCPI" means Lehman Commercial Paper Inc.
"Lehman Brothers" means Lehman Brothers Inc.
"Liquidation Proceeds" means amounts (other than Insurance Proceeds)
received and retained in connection with liquidation of defaulted Mortgage Loans
whether through foreclosure or otherwise, net of related liquidation expenses
and certain other expenses.
"Loan-to-Value Ratio" means, as of any date of determination, the ratio of
the then outstanding principal amount to the lesser of the appraised value and
the purchase price of the Mortgaged Property at the time of origination.
"Master Servicer" means, with respect to a Series secured by Mortgage Loans
or Private Mortgage-Backed Securities, the Person, if any, designated in the
related Prospectus Supplement to manage and supervise the administration and
servicing by the Servicers of the Mortgage Loans comprising Mortgage Assets or
Underlying Collateral for that Series, or the successors or assigns of such
Person.
"Master Servicing Agreement" means the Master Servicing Agreement between
the Issuer and the Master Servicer, if any, specified in the related Prospectus
Supplement.
"Maximum Variable Interest Rate" means the interest rate cap on the Bond
Interest Rate or Certificate Interest Rate for Variable Interest Securities.
"Minimum Variable Interest Rate" means the interest rate floor on the Bond
Interest Rate or Certificate Interest Rate for Variable Interest Securities.
"Mortgage" means a mortgage, deed of trust or other security instrument
evidencing the lien on the Mortgaged Property.
"Mortgage Assets" means the Mortgage Loans, including participation
interests therein, REO Property and Private Mortgage-Backed Securities which are
Granted to the Trustee as security for a
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Series of Bonds or deposited into the Trust Fund in respect of a Series of
Certificates; an item of Mortgage Assets refers to a specific Mortgage Loan, REO
Property or Private Mortgage-Backed Security.
"Mortgaged Properties" means the real properties on which liens are created
pursuant to Mortgages for purposes of securing the Mortgage Loans.
"Mortgage Loan Group" means groups of Mortgage Assets.
"Mortgage Loan" means a mortgage loan or participation interest therein that
is owned by the Issuer and constitutes a part of the Mortgage Assets for a
Series, or that is Underlying Collateral for a Private Mortgage-Backed Security
that constitutes a part of the Mortgage Assets for a Series.
"Mortgage Note" means the note or other evidence of indebtedness of a
Mortgagor with respect to a Mortgage Loan.
"Mortgage Pool" means, with respect to a Series, the pool of Mortgage Loans.
"Mortgage Rate" means, with respect to each Mortgage Loan, the annual
interest rate required to be paid by the Mortgagor under the terms of the
related Mortgage Note.
"Mortgagor" means the Person indebted under the Mortgage Note relating to a
Mortgage Loan.
"Multifamily Property" means any property securing a Mortgage Loan
consisting of multifamily residential rental property or cooperatively owned
multifamily property consisting of five or more dwelling units.
"New York Presenting Agent" means the Issuer's agent in the State of New
York.
"Nonresidents" means a nonresident alien individual, foreign partnership or
foreign corporation.
"OID" means "original issue discount" within the meaning of section 1273 of
the Code.
"OTS" means the Office of the Thrift Supervision.
"Owner Trust" means the trust fund established by the Company pursuant to a
Deposit Trust Agreement to hold Primary Assets and issue a Series of Bonds.
"Owner Trustee" means the bank or trust company named in the Prospectus
Supplement related to a Series of Bonds, not in its individual capacity but
solely as trustee pursuant to a Deposit Trust Agreement, and its successors and
assigns.
"PAC" means Planned Amortization Class Securities.
"PAC Amount" means the scheduled amounts of principal payments to be applied
on each Payment Date or Distribution Date to the PAC Securities, as set forth in
the related Prospectus Supplement.
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"PAC Security" or "Planned Amortization Class Security" means a Security on
which the Principal Amortization Amount in an amount equal to the PAC Principal
Payment or PAC Principal Distribution will be applied to such Securities
commencing on the First PAC Paydown Date, and each Payment Date or Distribution
Dates thereafter.
"PAC Paydown Date" means the date on which each PAC Amount is applied to the
PAC Securities as set forth in the related Prospectus Supplement.
"PAC Principal Payment" means, with respect to a particular Payment Date,
the scheduled PAC Amount, if any, for such Payment Date less any principal
payments made on the PAC Securities due to a special redemption subsequent to
the preceding Payment Date.
"Participating Securities" means a Security entitled to receive payments of
principal and interest and an additional return on investment as described in
the related Prospectus Supplement.
"Participation Agreement" means the agreement through which participation
interests in a Series will be acquired.
"Pass-Through Certificates" means, in respect of Certificates issued by a
grantor trust, Certificates in which there is no separation of the principal and
interest payments on the underlying Mortgage Loans.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Paying Agent specified in the Indenture or Trust
Agreement, as applicable and is authorized and appointed pursuant to the
Indenture or Trust Agreement, as applicable by the Issuer to pay the principal
of or interest on any Securities on behalf of the Issuer.
"Payment Date" means the date on which payments of principal of and interest
on the Bonds will be made.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization, or government or any agency or political
subdivision thereof.
"Pledged Fund or Account" means any fund or account, including, without
limitation, the Collection Account or any Reserve Fund established with respect
to, and Granted as security for, a Series.
"PMBS Agreement" means the pooling and servicing agreement, indenture or
similar agreement pursuant to which Private Mortgage-Backed Securities have been
issued.
"PMBS Issuer" means the issuer of the Private Mortgage-Backed Securities.
"PMBS Trustee" means the trustee of the Private Mortgage-Backed Securities.
"Policy Statement" means the supervisory policy statement adopted by the
Federal Financial Institution Examination Council.
"Prepayment Assumption" means the anticipated rate of prepayments assumed in
pricing the Securities.
"Prepayment Period" means, if specified in any Prospectus Supplement with
respect to any Series, the calendar month preceding the month in which the
related Payment Date occurs.
"Primary Assets" means that portion of the Trust Estate pledged to secure a
Series of Bonds, or comprising the Trust Fund relating to a Series of
Certificates.
"Primary Servicer" means the entity which has primary liability for
servicing Mortgage Loans directly.
"Principal Balance" means, unless otherwise specified in a Prospectus
Supplement, with respect to any Mortgage Loan or related REO Property, for any
Due Date and the Due Period with respect thereto, the principal balance of such
Mortgage Loan (or, in the case of REO Property, of the related Mortgage Loan
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on the last date on which a payment was made thereon) outstanding as of the
Cut-Off Date, after application of principal payments due on or before the
Cut-Off Date, whether or not received, plus all amounts of Deferred Interest
accrued on such Mortgage Loan to the Due Date in the Due Period immediately
preceding the date of determination minus the sum of (a) the principal portion
of the Scheduled Payment due on or prior to such Due Date, but only if received
from or on behalf of the Mortgagor, (b) all Principal Prepayments, and all
Insurance Proceeds, Condemnation Proceeds, Liquidation Proceeds and other
amounts applied as recoveries of principal to the extent identified and applied
by the Master Servicer, Special Servicer or Servicer, as applicable, as
recoveries of principal through the close of the related Prepayment Period for
the Master Servicer or Servicer, as applicable, and (c) any Realized Loss on
such Mortgage Loan to the extent treated as a principal loss and which is
realized during such Prepayment Period.
"Principal Determination Date" means the day specified in the related
Prospectus Supplement.
"Principal Payment Amount" means, with respect to any Payment Date or
Distribution Date related to a particular Series, the amount that is specified
in the related Prospectus Supplement.
"Principal Payment Dates" means, with respect to a Class, the dates
specified in the related Prospectus Supplement on which principal of the
Securities of such Class is to be paid.
"Principal Only Securities" means a Security entitled to receive payments of
principal only.
"Principal Prepayment" means, with respect to any Private Mortgage-Backed
Security or Mortgage Loan, any payment of principal on such Private
Mortgage-Backed Security or Mortgage Loan in excess of the Scheduled Payment,
resulting from prepayment, partial prepayment, (other than Liquidation Proceeds,
Condemnation Proceeds or Insurance Proceeds) with respect to the Mortgage Loan
or Mortgage Loans underlying such Private Mortgage-Backed Security but not
including any Scheduled Payment received prior to the Due Period in which it was
scheduled to be paid.
"Private Mortgage-Backed Security" means a mortgage participation or other
interest, pass-through certificate or collateralized mortgage obligation.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"PTE" means Prohibited Transactions Exemption.
"Rating Agency" means a nationally recognized statistical rating agency.
"Realized Losses" means, unless otherwise specified in a Prospectus
Supplement, with respect to each Mortgage Loan or REO Property, as the case may
be, as to which a Cash Liquidation or REO Disposition has occurred, an amount
equal to (i) the Principal Balance of the Mortgage Loan as of the date of Cash
Liquidation or REO Disposition, plus (ii) interest at the applicable Mortgage
Rate, from the date as to which interest was last paid up to the Due Date in the
period in which such Cash Liquidation or REO Disposition has occurred on the
Principal Balance of such Mortgage Loan outstanding during each Due Period that
accrued interest was not paid, minus (iii) Liquidation Proceeds received during
the month in which such Cash Liquidation or REO Disposition occurred, net of
related expenses, including but not limited to, amounts that are payable to a
Master Servicer, Servicer, or Special Servicer, as applicable, with respect to
such Mortgage Loan and (iv) any other amounts applied as a recovery of principal
or interest on the Mortgage Loan.
"Redemption Date" means, with respect to any Series, the Payment Date
specified by the Issuer for the redemption of Bonds of such Series pursuant to
the Indenture.
"Redemption Price" means, with respect to any Bond of a Series or Class to
be redeemed, an amount equal to the percentage specified in the related
Prospectus Supplement of the principal amount (or of the Compound Value of any
Compound Interest Security) of such Security so redeemed, together with accrued
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and unpaid interest thereon at the applicable Bond Interest Rate to the
Designated Interest Accrual Date for such Series.
"Regular Bondholder" means a Holder of a Regular Interest Bond.
"Regular Certificateholder" means a Holder of a Regular Interest
Certificate.
"Regular Interest Bonds" means Classes of Bonds constituting regular
interests in a REMIC.
"Regular Interest Certificates" means Classes of Certificates constituting
regular interests in a REMIC.
"Regular Interest Securities" means Regular Interest Bonds, Regular Interest
Certificates or Uncertificated Regular Interests, as applicable.
"Reinvestment Income" means any interest or other earnings on Pledged Funds
or Accounts that are part of the Primary Assets for a Series.
"REMIC Provisions" means the provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A through 860G of the Code, and related provisions, and regulations and
rulings promulgated thereunder.
"REMIC Regulations" means final Treasury regulations under Sections 860A
through 860G of the Code or related provisions.
"REO Disposition" means the receipt by the Master Servicer, Servicer, or
Special Servicer, as applicable, of Liquidation Proceeds, Insurance Proceeds and
other payments and recoveries (including proceeds of a final sale) from the sale
or other disposition of the REO Property.
"REO Property" means Mortgaged Properties the beneficial interest in which
has been acquired by a Trust Fund or by a Trustee on behalf of Bondholders by
foreclosure, by deed-in-lieu of foreclosure or otherwise.
"Reserve Fund" means, with respect to a Series, any reserve fund described
in the applicable Prospectus Supplement, including a Subordination Reserve Fund.
"Reserve Funds" means, collectively, more than one reserve fund.
"Residual Bondholder" means the Holder of a Residual Interest Bond.
"Residual Certificateholder" means the Holder of a Residual Interest
Certificate.
"Residual Interest Bonds" means Classes of Bonds constituting the residual
interest in a REMIC.
"Residual Interest Certificates" means Classes of Certificates constituting
residual interests in a REMIC.
"Residual Interest Securities" means Residual Interest Bonds or Residual
Interest Certificates, as applicable.
"SAIF" means Savings Association Insurance Fund.
"Scheduled Payments" means the scheduled payments of principal and interest
to be made by the Mortgagor on a Mortgage Loan in accordance with the terms of
the related Mortgage Note, as modified by any permitted modification of a
Mortgage Note.
"Scheduled Principal Balance" means the principal balance of a Mortgage Loan
outstanding as of the Cut-Off Date, after application of principal payments due
on or before the Cut-Off Date, whether or not received, plus all amounts of
Deferred Interest accrued on such Mortgage Loan to the Due Date in the Due
Period immediately preceding the date of determination, minus the sum of (a) the
principal portion of all Scheduled Payments due on or prior to such Due Date,
irrespective of any delinquency in payment by
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the Mortgagor, (b) all Principal Prepayments and all Insurance Proceeds,
Condemnation Proceeds, Liquidation Proceeds and other amounts applied as
recoveries of principal to the extent identified and applied by the Master
Servicer, Special Servicer, or Servicer, as applicable, as recoveries of
principal through the close of the related Prepayment Period, and (c) any
Realized Loss on such Mortgage Loan to the extent treated as a principal loss
and that is realized during such Prepayment Period.
"Securities" means Bonds of Certificates.
"Securities Owners" means the owners of the beneficial interests in a Series
of Bonds or Certificates.
"Senior Securities" means a Class of Securities which are senior in right
and priority to the extent described in the related Prospectus Supplement to
payment of principal and interest to certain other Classes of Securities of such
Series.
"Series" means a separate series of Bonds sold pursuant to this Prospectus
and the related Prospectus Supplement.
"Series Supplement" means the supplemental indenture to or terms indenture
incorporating by reference the Trust Indenture or Trust Agreement, as
applicable, between the Issuer of a Series of Securities and the Trustee
relating to such Series of Securities.
"Servicer" means, for any Mortgage Loan, the Person approved by the Issuer
and by the Master Servicer, if any, as servicer of such Mortgage Loan, which
Person shall also be a FNMA or FHLMC-approved seller and servicer.
"Servicer Remittance Date" means with respect to each Mortgage Loan, the
date on which the Servicer shall remit all funds held in the Servicing Account
together with any Advances made by such Servicer for deposit to the Collection
Account.
"Servicing Account" means an account established by a Servicer which
complies with the standards set forth herein for a Custodial Account.
"Servicing Agreements" means the Master Servicing Agreement, Servicing
Agreement and Special Servicing Agreement, if any.
"Servicing Fee" means for any Series, the aggregate fees paid to the
Trustee, Master Servicer or other similar fees.
"SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984, as
amended.
"SPA" means the Standard Prepayment Assumption prepayment model.
"Special Redemption Date" means, with respect to a Series, the date each
month (other than any month in which a Payment Date occurs) on which Bonds of
that Series may be redeemed pursuant to the Trust Indenture or the related
Series Supplement; such date shall be the same day of the month as the day on
which the Payment Date for the Bonds of that Series occurs.
"Special Servicer" means a special servicer identified in the related
Prospectus Supplement appointed to perform the activities set forth in the
related Prospectus Supplement.
"Start Up Day" means the "startup day" of the REMIC as defined in section
860G(a)(9) of the Code.
"Stated Maturity" means the date specified in the related Prospectus
Supplement no later than which all the Bonds of such Class will be fully paid,
calculated on the basis of the assumptions set forth in the related Prospectus
Supplement.
"Stripped Certificates" means, in respect of Certificates issued by a
grantor trust, Certificates in which there is considered to be a separate
ownership of the payments of principal and interest on the underlying Mortgage
Loans. "Subordinate Securities" means a Class of Securities which are
subordinate in right and
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priority to the extent described in the related Prospectus Supplement to payment
of principal and interest to Senior Classes of Securities of such Series.
"Substitute Mortgage Asset" means any Mortgage Asset that is Granted to the
Trustee as security for a Series of Bonds or deposited into the Trust Fund in
respect of a Series of Certificates in lieu of any Mortgage Assets then pledged
as security.
"Substitute Mortgage Loan" means a Mortgage Loan substituted for one or more
Deleted Mortgage Loans in the Trust Estate or Trust Fund.
"TIN" means Taxpayer Identification Number.
"Trust Agreement" means the trust agreement between the Company and a
Trustee pursuant to which a Series of Certificates is issued.
"Trust Estate" means, with respect to any Series of Bonds, all money,
instruments, securities and other property, including all proceeds thereof,
which are subject or intended to be subject to the lien of the Indenture for the
benefit of the Series as of any particular time (including, without limitation,
all property and interests Granted to the Trustee pursuant to the Series
Supplement for such Series).
"Trust Fund" means the trust fund established pursuant to a Trust Agreement
into which Primary Assets are deposited for the purpose of issuing a Series of
Certificates.
"Trust Indenture" means the trust indenture between the Company and the
Trustee or a Trust and the Trustee pursuant to which a Series of Bonds are
issued.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 and
rules and regulations promulgated by the Commission with respect thereto.
"Trustee" means LaSalle National Bank or another bank or trust company named
as trustee in the Prospectus Supplement for a series of Securities and, in the
case of a series of Bonds, qualified under the TIA.
"Unavailable Amount" means, with respect to a Series, the amount, if any,
remaining in the related Collection Account on a related Payment Date that
represents (1) payments of scheduled payments of principal of and interest on
the Mortgage Assets due subsequent to the Principal Determination Date
immediately preceding the related Payment Date or Distribution Date, (2) the
amount of all related prepayments received or deemed received subsequent to the
Principal Determination Date immediately preceding such Payment Date or
Distribution Date, or (3) any investment income that has accrued subsequent to
the Principal Determination Date immediately preceding such Payment Date or
Distribution Date.
"Uncertificated Regular Interest" means a regular interest in a REMIC that
is not represented by a physical Certificate.
"Undelivered Mortgage Assets" means Mortgage Assets that are not pledged and
delivered to the Trustee on the related Closing Date.
"Underlying Collateral" means, with respect to a Private Mortgage-Backed
Security, the underlying Mortgage Loans.
"Underwriters" means, collectively, Lehman Brothers, as agent or as
underwriter, or underwriting syndicates represented by Lehman Brothers.
"VRDI Security" means a Regular Interest Security that qualifies as a
"variable rate debt instrument" under Section 1.7275-5 of the Treasury
Regulations.
"Variable Interest Distribution Date" means, with respect to a Class of
Variable Interest Securities issued as part of a Series of Certificates, the
date specified in the related Prospectus Supplement, it being
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expressly provided herein that Variable Interest Distribution Dates may be
monthly, quarterly, semi-annual or annual.
"Variable Interest Payment Date" means, with respect to any Class of
Variable Interest Securities issued as part of a Series of Bonds, the date
specified in the related Prospectus Supplement, it being expressly provided
herein that Variable Interest Payment Dates may be monthly, quarterly,
semi-annual or annual.
"Variable Interest Period" means, with respect to any Class of Variable
Interest Securities, the period commencing immediately subsequent to the
preceding Variable Interest Period (or, in the case of the Variable Interest
Period applicable to the first Variable Interest Payment Date with respect to
such Class of Variable Interest Securities, commencing on the Accrual Date for
such Class) and ending on the date specified in the related Prospectus
Supplement, during which such Class of Variable Interest Securities shall accrue
interest, payable on the immediately succeeding Variable Interest Payment Date
or Variable Interest Distribution Date, at the Bond Interest Rate or Certificate
Interest Rate determined on the immediately preceding Determination Date.
"Variable Interest Rate" means the interest rate in respect of a Variable
Interest Security.
"Variable Interest Security" means a Security on which interest accrues at a
Bond Interest Rate or Certificate Interest Rate that is adjusted, based upon a
predetermined index, at fixed periodic intervals, all as set forth in the
related Prospectus Supplement.
"Weighted Average Securities" means Regular Interest Securities that bear
interest at a rate based on a weighted average of the interest rates on some or
all of the Mortgage Loans of the related trust.
"Zero Coupon Bonds" means a Security entitled to receive payments or
distributions of Principal only. "1986 Act" means the Tax Reform Act of 1986, as
amended.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (ITEM 14 OF FORM S-3).
The expenses expected to be incurred in connection with the issuance and
distribution of the Securities being registered, other than underwriting
compensation, are as set forth below.
Filing Fee for Registration Statement $ 1,475,000
Legal Fees and Expenses ___________*
Accounting Fees and Expenses ___________*
Trustee's Fees and Expenses
(including counsel fees) ___________*
Blue Sky Fees and Expenses ___________*
Printing and Engraving Fees ___________*
Rating Agency Fees ___________*
MISCELLANEOUS ___________*
Total $ 1,475,000
______________________
* Based on ___________ offerings. To be provided by amendment.
INDEMNIFICATION OF DIRECTORS AND OFFICERS (ITEM 15 OF FORM S-3).
The agreements pursuant to which Certificates are to be issued, 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. Such 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
agreements and related Certificates.
Any purchase agreement pursuant to which the Registrant acquires Mortgage Assets
for inclusion in or as part of the Trust Fund or Trust Estate, as the case may
be, with respect to any Series of Securities may provide under certain
circumstances that each director of the Registrant, each officer of the
Registrant that signed this Registration Statement or any amendment hereof, and
certain controlling persons of the Registrant, are entitled to be indemnified by
the seller of such Mortgage Assets or an affiliate against certain liabilities,
including liabilities under the Securities Act of 1933, relating to such
Mortgage Assets.
Any underwriters who execute an Underwriting Agreement in the form filed as
Exhibit 1.1 to this Registration Statement will agree to indemnify the
Registrant's directors and its officers who signed this Registration Statement
and certain controlling persons of the Registrant against certain liabilities
which might arise under the Securities Act of 1933 from certain information
furnished to the Registrant by or on behalf of such indemnifying party.
Subsection (a) of Section 145 of the General Corporation Law of Delaware
empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, employee or agent of the corporation or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no
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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 Certificate of Incorporation of the Registrant provides that no director of
the Registrant shall be personally liable to the Registrant or its stockholders
for monetary damages for breach of fiduciary duty as a director; provided,
however, that this limitation of liability of a director shall not apply with
respect to (i) any breach of the director's duty of loyalty to the Registrant or
its stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) any liability
arising under Section 174 of the General Corporation Law of the State of
Delaware and (iv) for any transaction from which the director derives an
improper personal benefit. The By-laws of the Registrant are silent as to the
indemnification of officers and directors.
EXHIBITS (ITEM 16 OF FORM S-3).
Exhibits--
1.1 -- Form of Underwriting Agreement*
4.1 -- Form of Pooling and Servicing Agreement
4.2 -- Form of Trust Indenture*
5.1 -- Opinion of Cadwalader, Wickersham & Taft with respect to
legality
5.2 -- Opinion of Sidley & Austin with respect to legality
5.3 -- Opinion of Skadden, Arps, Slate, Meagher & Flom with respect
to legality
5.4 -- Opinion of Thacher, Proffitt & Wood with respect to legality
8.1 -- Opinion of Cadwalader, Wickersham & Taft with respect to
certain tax matters (included as part of Exhibit 5.1)
8.2 -- Opinion of Sidley & Austin with respect to certain tax
matters
8.3 -- Opinion of Skadden, Arps, Slate, Meagher & Flom with respect
to certain tax matters
8.4 -- Opinion of Thacher, Proffitt & Wood with respect to certain
tax matters (included as part of Exhibit 5.4)
23.1 -- Consent of Cadwalader, Wickersham & Taft (included as part
of Exhibit 5.1)
23.2 -- Consent of Sidley & Austin (included as part of Exhibit 5.2
and Exhibit 8.2)
23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included as
part of Exhibit 5.3 and Exhibit 8.3)
23.4 -- Consent of Thacher, Proffitt & Wood (included as part of
Exhibit 5.4)
24.1 -- Power of Attorney (included in signature page to this
Registration Statement)
25.1 -- Statement of Eligibility of Trustee
99.1 -- Form of Servicing and Administration Agreement
99.2 -- Form of Deposit Trust Agreement*
__________________
* Incorporated herein by reference to Amendment No. 2 to Registration
Statement on Form S-3 (Reg. No. 33-50210) filed with the Commission on
August 25, 1992.
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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.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Securities Exchange Act
of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial BONA FIDE offering
thereof.
(f) To provide to the underwriter at the closing specified in the
underwriting agreements, certificates in such denominations and
registered in such names as required by the underwriter to permit
prompt delivery to each purchaser.
(j) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310
of the Trust Indenture Act of 1939 in accordance with the rules and
regulations prescribed by the Securities and Exchange Commission under
Section 305(b)(2) of the Trust Indenture Act of 1939.
B. UNDERTAKING IN RESPECT OF INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, reasonably believes that the security
rating requirement contained in Transaction Requirement I.B.5. of Form S-3 will
be met by the time of the sale of the securities registered hereunder and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York on the 20th day of March, 1998.
STRUCTURED ASSET SECURITIES CORPORATION
By: /s/ Theodore P. Janulis
-------------------------------
Name: Theodore P. Janulis
Title: President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Theodore P. Janulis, 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:
SIGNATURE TITLE DATE
/s/ Theodore P. Janulis President and Director March 20, 1998
- - ----------------------------- (principal executive
Theodore P. Janulis officer)
/s/ Mark L. Zusy Senior Vice President and March 20, 1998
- - ----------------------------- Director
Mark L. Zusy
/s/ James J. Sullivan Director March 20, 1998
- - -----------------------------
James J. Sullivan
/s/ Charles B. Hintz Chief Financial Officer March 20, 1998
- - ----------------------------- (principal financial and
Charles B. Hintz accounting officer)
<PAGE>
EXHIBIT INDEX
Exhibit Number
--------------
1.1 -- Form of Underwriting Agreement*
4.1 -- Form of Pooling and Servicing Agreement
4.2 -- Form of Trust Indenture*
5.1 -- Opinion of Cadwalader, Wickersham & Taft with respect to
legality
5.2 -- Opinion of Sidley & Austin with respect to legality
5.3 -- Opinion of Skadden, Arps, Slate, Meagher & Flom with respect
to legality
5.4 -- Opinion of Thacher, Proffitt & Wood with respect to legality
8.1 -- Opinion of Cadwalader, Wickersham & Taft with respect to
certain tax matters (included as part of Exhibit 5.1)
8.2 -- Opinion of Sidley & Austin with respect to certain tax
matters
8.3 -- Opinion of Skadden, Arps, Slate, Meagher & Flom with respect
to certain tax matters
8.4 -- Opinion of Thacher, Proffitt & Wood with respect to certain
tax matters (included as part of Exhibit 5.4)
23.1 -- Consent of Cadwalader, Wickersham & Taft (included as part
of Exhibit 5.1)
23.2 -- Consent of Sidley & Austin (included as part of Exhibit 5.2
and Exhibit 8.2)
23.3 -- Consent of Skadden, Arps, Slate, Meagher & Flom (included as
part of Exhibit 5.3 and Exhibit 8.3)
23.4 -- Consent of Thacher, Proffitt & Wood (included as part of
Exhibit 5.4)
24.1 -- Power of Attorney (included in signature page to this
Registration Statement)
25.1 -- Statement of Eligibility of Trustee
99.1 -- Form of Servicing and Administration Agreement
99.2 -- Form of Deposit Trust Agreement*
__________________
* Incorporated herein by reference to Amendment No. 2 to Registration
Statement on Form S-3 (Reg. No. 33-50210) filed with the Commission on
August 25, 1992.
<PAGE>
Exhibit 4.1
STRUCTURED ASSET SECURITIES CORPORATION
Depositor
and
---------------------------------------
Master Servicer
and
---------------------------------------
Special Servicer
and
-----------------------------
Trustee
and
-----------------------------
Fiscal Agent
POOLING AND SERVICING AGREEMENT
Dated as of ___________
------------------------------
$____________
[LB Commercial Mortgage Trust ____]
Commercial Mortgage Pass-Through Certificates
Series ________
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
SECTION 1.01. Defined Terms................................................4
SECTION 1.02. General Interpretive Principles.............................49
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Creation of Trust; Conveyance of Mortgage Loans.............50
SECTION 2.02. Acceptance of Trust Fund by Trustee.........................51
SECTION 2.03. Mortgage Loan Seller's Repurchase of Mortgage Loans for
Document Defects and Breaches of Representations and
Warranties................................................53
SECTION 2.04. Representations and Warranties of Depositor.................54
SECTION 2.05. Execution, Authentication and Delivery of Class R-I
Certificates; Creation of REMIC I Regular Interests.......56
SECTION 2.06. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by Trustee.......................................56
SECTION 2.07. Execution, Authentication and Delivery of Class R-II
Certificates..............................................56
SECTION 2.08. Conveyance of REMIC II Regular Interests; Acceptance of
REMIC III by Trustee......................................57
SECTION 2.09. Execution, Authentication and Delivery of REMIC III
Certificates..............................................57
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
SECTION 3.01. Administration of the Mortgage Loans........................58
SECTION 3.02. Collection of Mortgage Loan Payments........................59
SECTION 3.03. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts; Reserve Accounts......................60
SECTION 3.04. Custodial Account and Collection Account....................63
SECTION 3.05. Permitted Withdrawals From the Custodial Account and
the Collection Account....................................66
-i-
<PAGE>
Page
----
SECTION 3.06. Investment of Funds in the Servicing Accounts,
the Reserve Accounts, the Custodial Account,
the Collection Account and the REO Account................70
SECTION 3.07. Maintenance of Insurance Policies; Errors and Omissions
and Fidelity Coverage.....................................72
SECTION 3.08. Enforcement of Alienation Clauses...........................74
SECTION 3.09. Realization Upon Defaulted Mortgage Loans; Required
Appraisals................................................75
SECTION 3.10. Trustee and Custodian to Cooperate; Release of Mortgage
Files.....................................................78
SECTION 3.11. Servicing Compensation......................................79
SECTION 3.12. Property Inspections; Collection of Financial Statements;
Delivery of Certain Reports...............................82
SECTION 3.13. Annual Statement as to Compliance...........................85
SECTION 3.14. Reports by Independent Public Accountants...................85
SECTION 3.15. Access to Certain Information...............................86
SECTION 3.16. Title to REO Property; REO Account..........................86
SECTION 3.17. Management of REO Property..................................87
SECTION 3.18. Sale of Mortgage Loans and REO Properties...................90
SECTION 3.19. Additional Obligations of Servicer..........................93
SECTION 3.20. Modifications, Waivers, Amendments and Consents.............94
SECTION 3.21. Transfer of Servicing Between Master Servicer and
Special Servicer; Record Keeping..........................97
SECTION 3.22. Sub-Servicing Agreements....................................98
SECTION 3.23. Representations and Warranties of the Master Servicer......101
SECTION 3.24. Representations and Warranties of the Special Servicer.....103
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions..............................................105
SECTION 4.02. Statements to Certificateholders; CSSA Loan File Report....115
SECTION 4.03. P&I Advances...............................................122
SECTION 4.04. Allocation of Realized Losses and Additional Trust Fund
Expenses.................................................124
SECTION 4.05. Calculations...............................................125
SECTION 4.06. Use of Agents..............................................125
-ii-
<PAGE>
Page
----
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates...........................................126
SECTION 5.02. Registration of Transfer and Exchange of Certificates......126
SECTION 5.03. Book-Entry Certificates....................................133
SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates..........134
SECTION 5.05. Persons Deemed Owners......................................135
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER, THE SPECIAL SERVICER
AND THE CONTROLLING CLASS REPRESENTATIVE
SECTION 6.01. Liability of Depositor, Master Servicer and Special
Servicer.................................................136
SECTION 6.02. Merger, Consolidation or Conversion of Depositor,
Master Servicer or Special Servicer......................136
SECTION 6.03. Limitation on Liability of Depositor, Master Servicer
and Special Servicer.....................................137
SECTION 6.04. Resignation of Master Servicer and the Special Servicer....137
SECTION 6.05. Rights of Depositor and Trustee in Respect of Master
Servicer and the Special Servicer........................138
SECTION 6.06. Depositor, Master Servicer and Special Servicer to
Cooperate with Trustee...................................139
SECTION 6.07. Depositor, Special Servicer and Trustee to Cooperate
with Master Servicer.....................................139
SECTION 6.08. Depositor, Master Servicer and Trustee to Cooperate
with Special Servicer....................................139
SECTION 6.09. Designation of Special Servicer by the Controlling
Class....................................................139
SECTION 6.10. Master Servicer or Special Servicer as Owner of
a Certificate............................................140
SECTION 6.11. Certain Powers of the Controlling Class Representative.....141
-iii-
<PAGE>
Page
----
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default..........................................143
SECTION 7.02. Trustee to Act; Appointment of Successor...................146
SECTION 7.03. Notification to Certificateholders.........................147
SECTION 7.04. Waiver of Events of Default................................147
SECTION 7.05. Additional Remedies of Trustee Upon Event of Default.......147
ARTICLE VIII
CONCERNING THE TRUSTEE
AND FISCAL AGENT
SECTION 8.01. Duties of Trustee..........................................148
SECTION 8.02. Certain Matters Affecting Trustee..........................149
SECTION 8.03. Trustee and Fiscal Agent Not Liable for Validity or
Sufficiency of Certificates or Mortgage Loans............150
SECTION 8.04. Trustee and Fiscal Agent May Own Certificates..............151
SECTION 8.05. Fees and Expenses of Trustee; Indemnification of Trustee...151
SECTION 8.06. Eligibility Requirements for Trustee.......................152
SECTION 8.07. Resignation and Removal of Trustee.........................152
SECTION 8.08. Successor Trustee..........................................154
SECTION 8.09. Merger or Consolidation of Trustee and Fiscal Agent........154
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee..............154
SECTION 8.11. Appointment of Custodians..................................155
SECTION 8.12. Appointment of Authenticating Agents.......................156
SECTION 8.13. Appointment of REMIC Administrators........................157
SECTION 8.14. Access to Certain Information..............................158
SECTION 8.15. Reports to the Securities and Exchange Commission;
Available Information....................................159
SECTION 8.16. Representations and Warranties of Trustee..................160
SECTION 8.17. The Fiscal Agent...........................................161
SECTION 8.18. Representations and Warranties of Fiscal Agent.............163
-iv-
<PAGE>
Page
----
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of
All Mortgage Loans.......................................165
SECTION 9.02. Additional Termination Requirements........................171
ARTICLE X
ADDITIONAL TAX PROVISIONS
SECTION 10.01. REMIC Administration.......................................173
SECTION 10.02 Grantor Trust Administration...............................177
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment..................................................179
SECTION 11.02. Recordation of Agreement; Counterparts.....................181
SECTION 11.03. Limitation on Rights of Certificateholders.................181
SECTION 11.04. Governing Law..............................................182
SECTION 11.05. Notices....................................................182
SECTION 11.06. Severability of Provisions.................................182
SECTION 11.07. Grant of a Security Interest...............................183
SECTION 11.08. Streit Act.................................................183
SECTION 11.09. Successors and Assigns; Beneficiaries......................184
SECTION 11.10. Article and Section Headings...............................184
SECTION 11.11. Notices to Rating Agencies.................................184
SECTION 11.12. Complete Agreement.........................................186
-v-
<PAGE>
EXHIBITS
Exhibit No. Exhibit Description
----------- -------------------
A-1 Form of Class [A-1][A-2][A-3] Certificate
A-2 Form of Class IO Certificate
A-3 Form of Class [B][C][D][E] Certificate
A-4 Form of Class [F][G][H][J][K][L][M] Certificate
A-5 Form of Class [R-I][R-II][R-III] Certificate
B Mortgage Loan Schedule
C Form of Schedule of Exceptions to Mortgage File Delivery
D-1 Form of Master Servicer Request for Release
D-2 Form of Special Servicer Request for Release
E Calculation of NOI/Debt Service Coverage Ratios
F-1 Form of Transferor Certificate for Transfers of Definitive
Non-Registered Certificates
F-2A Form I of Transferee Certificate for Transfers of Definitive
Non-Registered Certificates
F-2B Form II of Transferee Certificate for Transfers of Definitive
Non-Registered Certificates
F-2C Form I of Transferee Certificate for Transfers of Interests in
Book-Entry Non-Registered Certificates
F-2D Form II of Transferee Certificate for Transfers of Interests in
Book-Entry Non-Registered Certificates
G-1 Form I of Transferee Certificate in Connection with ERISA
(Definitive Subordinated Certificates)
G-2 Form II of Transferee Certificate in Connection with ERISA
(Book-Entry Subordinated Certificates)
H-1 Form of Transfer Affidavit and Agreement regarding Residual
Interest Certificates
H-2 Form of Transferor Certificate regarding Residual Interest
Certificates
I-1 Form of Notice and Acknowledgment
I-2 Form of Acknowledgment of Proposed Special Servicer
J Form of UCC-1 financing statement
K Form of Schedule of initial Certificate Owners of each
Class of Book-Entry Certificates
L Form of CSSA Loan File Report
M Form of CSSA Property File Report
N Form of Comparative Financial Status Report
O Form of REO Status Report
P Form of Watch List Report
Q Form of Delinquent Loan Status Report
R Form of Historical Loan Modification Report
-vi-
<PAGE>
Exhibit No. Exhibit Description
----------- -------------------
S Form of Historical Loss Estimate Report
T Form of NOI Adjustment Worksheet
U Form of Operating Statement Analysis
V Form of Loan Payoff Notification Report
-vii-
<PAGE>
This Pooling and Servicing Agreement (this "Agreement") is
dated and effective as of __________, among STRUCTURED ASSET SECURITIES
CORPORATION, as Depositor, _______________________________________, as Master
Servicer and Special Servicer, _____________________________, as Trustee, and
_____________________________, as Fiscal Agent.
PRELIMINARY STATEMENT:
The Depositor intends to sell the Certificates to be issued
hereunder in multiple Classes, which in the aggregate will evidence the entire
beneficial ownership interest in the Trust Fund to be created hereunder.
As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the Mortgage Loans and certain other related assets
subject to this Agreement as a REMIC for federal income tax purposes, and such
segregated pool of assets will be designated as "REMIC I". The Class R-I
Certificates will represent the sole class of "residual interests" in REMIC I
for purposes of the REMIC Provisions under federal income tax law. Except as
provided below, each of the REMIC I Regular Interests will relate to a specific
Mortgage Loan. Each such REMIC I Regular Interest will have: (i) subject to
adjustment as provided herein, a REMIC I Remittance Rate equal to the Net
Mortgage Rate as of the Closing Date of the related Mortgage Loan; and (ii) an
initial Uncertificated Principal Balance equal to the Cut-off Date Balance of
the related Mortgage Loan. The Legal Final Distribution Date of each of the
REMIC I Regular Interests is the Distribution Date in __________. None of the
REMIC I Regular Interests will be certificated.
As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC I Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Certificates will represent the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions
under federal income tax law. The following table sets forth the designation,
the REMIC II Remittance Rate and the initial Uncertificated Principal Balance
for each of the REMIC II Regular Interests. The Legal Final Distribution Date
for each REMIC II Regular Interest is the Distribution Date in __________. None
of the REMIC II Regular Interests will be certificated.
<PAGE>
Initial
REMIC II Uncertificated
Designation Remittance Rate Principal Balance
----------- --------------- -----------------
A-1 Variable (1)
A-2 Variable (1)
A-3 Variable (1)
B Variable (1)
C Variable (1)
D Variable (1)
E Variable (1)
F Variable (1)
G Variable (1)
H Variable (1)
J Variable (1)
K Variable (1)
L Variable (1)
M Variable (1)
- - ----------
(1) Calculated in accordance with the definition of "REMIC II Remittance
Rate".
As provided herein, the Trustee will elect to treat the segregated
pool of assets consisting of the REMIC II Regular Interests as a REMIC for
federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC III". The Class R-III Certificates will evidence the sole
class of "residual interests" in REMIC III for purposes of the REMIC Provisions
under federal income tax law. The following table irrevocably sets forth the
Class designation, Pass-Through Rate, initial Class Principal Balance and
Assumed Final Distribution Date for each Class of the Regular Interest
Certificates. For federal income tax purposes, each Class of the Regular
Interest Certificates (other than the Class IO Certificates) and each of the
fourteen Components of the Class IO Certificates will be designated as a
separate "regular interest" in REMIC III. The Legal Final Distribution for each
Class of Regular Interest Certificates (or, in the case of the Class IO
Certificates, for each of the fourteen Components thereof) is the Distribution
Date in __________.
-2-
<PAGE>
Class Pass-Through Initial Class Assumed Final
Designation Rate Principal Balance Distribution Date
- - ----------- ---- ----------------- -----------------
[Class A-1 _____%
Class A-2 _____%
Class A-3 _____%
Class B _____%
Class C _____%
Class D _____%
Class E _____%
Class IO Variable (1) (2)
Class F _____%
Class G _____%
Class H _____%
Class J _____%
Class K _____%
Class L _____%
Class M] _____%
- - ----------
(1) Calculated in accordance with the definition of "Pass-Through Rate".
(2) The Class IO Certificates will not have a Class Principal Balance, and
will not be entitled to receive distributions of principal. As more
specifically provided herein, interest in respect of such Certificates
will consist of the aggregate amount of interest accrued on the respective
Component Notional Amounts of its Components from time to time.
The aggregate Cut-off Date Balance of the Mortgage Loans, the
initial aggregate Uncertificated Principal Balance of the REMIC I Regular
Interests, the initial aggregate Uncertificated Principal Balance of the REMIC
II Regular Interests and the initial aggregate Class Principal Balance of the
respective Classes of Regular Interest Certificates (other than the Class IO
Certificates) will in each case be $__________.
Capitalized terms used in this Preliminary Statement have the
respective meanings assigned thereto in Section 1.01.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent agree as follows:
-3-
<PAGE>
ARTICLE I
DEFINITIONS; GENERAL INTERPRETIVE PRINCIPLES
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including in the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Article.
"Accrued Certificate Interest": With respect to any Class of
Sequential Pay Certificates for any Distribution Date, one month's interest at
the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date, accrued during the related Interest Accrual Period on the
related Class Principal Balance outstanding immediately prior to such
Distribution Date. With respect to the Class IO Certificates for any
Distribution Date, the aggregate Accrued Component Interest for all of its
Components for such Distribution Date. Accrued Certificate Interest shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
"Accrued Component Interest": With respect to each Component of the
Class IO Certificates for any Distribution Date, one month's interest at the
Pass-Through Rate applicable to such Component for such Distribution Date,
accrued during the related Interest Accrual Period on the Component Notional
Amount of such Component outstanding immediately prior to such Distribution
Date. Accrued Component Interest shall be calculated on the basis of a 360-day
year consisting of twelve 30-day months.
"Acquisition Date": With respect to any REO Property, the first day
on which such REO Property is considered to be acquired by the Trust Fund within
the meaning of Treasury Regulations Section 1.856-6(b)(1), which is the first
day on which the Trust Fund is treated as the owner of such REO Property for
federal income tax purposes.
"Additional Information": As defined in Section 4.02(a).
"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 all interest
accrued on such principal balance at the Mortgage Rate (net of the Additional
Interest Rate) and outstanding principal has been paid, together with all
interest, if any, accrued at the related Mortgage Rate on such deferred
interest. For purposes of this Agreement, Additional Interest on an ARD Loan or
any successor REO 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 Loan, notwithstanding that
the terms of the related loan documents
-4-
<PAGE>
so permit. To the extent that any Additional Interest is not paid on a current
basis, it shall be deemed to be 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 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 interest to which they
are entitled on any Distribution Date.
"Additional Yield Amount": With respect to any Distribution Date and
any Class of Sequential Pay Certificates (other than any Excluded Class thereof)
entitled to distributions of principal pursuant to Section 4.01(a) on such
Distribution Date, provided that a Prepayment Premium or Yield Maintenance
Charge was actually collected on a Mortgage Loan or an REO Loan during the
related Collection Period, the product of (a) such Prepayment Premium or Yield
Maintenance Charge, as the case may be, multiplied by (b) a fraction, which in
no event will be greater than one, the numerator of which is equal to the
positive excess, if any, of (i) the Pass-Through Rate for such Class of
Sequential Pay Certificates over (ii) the related Discount Rate, and the
denominator of which is equal to the positive excess, if any, of (i) the
Mortgage Rate for such Mortgage Loan or REO Loan, as the case may be, over (ii)
the related Discount Rate, multiplied by (c) a fraction, the numerator of which
is equal to the amount of principal distributable on such Class of Sequential
Pay Certificates on such Distribution Date pursuant to Section 4.01(a), and the
denominator of which is equal to the Principal Distribution Amount for such
Distribution Date.
"Advance": Any P&I Advance or Servicing Advance.
"Adverse Grantor Trust Event:" As defined in Section 10.02(e).
"Adverse REMIC Event": As defined in Section 10.01(i).
"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.
"Annual Accountants' Report": As defined in Section 3.14
-5-
<PAGE>
"Annual Performance Certification": As defined in Section 3.13.
"Appraisal Reduction Amount": With respect to any Required Appraisal
Mortgage Loan, an amount (calculated as of the Determination Date immediately
following the later of the date on which the subject Mortgage Loan became a
Required Appraisal Mortgage Loan and the date on which the applicable Required
Appraisal was obtained) equal to the excess, if any, of (a) the sum of, without
duplication, (i) the Stated Principal Balance of the subject Required Appraisal
Mortgage Loan, (ii) to the extent not previously advanced by or on behalf of the
Master Servicer, the Trustee or the Fiscal Agent, all unpaid interest on the
Required Appraisal Mortgage Loan through the most recent Due Date prior to such
Determination Date at a per annum rate equal to the related Mortgage Rate (net
of related Master Servicing Fees and, in the case of an ARD Loan after its
Anticipated Repayment Date, Additional Interest), (iii) all accrued but unpaid
Servicing Fees and Additional Trust Fund Expenses in respect of such Required
Appraisal Mortgage Loan, (iv) all related unreimbursed Advances (plus accrued
interest thereon) made by or on behalf of the Master Servicer, the Special
Servicer, the Trustee or the Fiscal Agent with respect to such Required
Appraisal Mortgage Loan and (v) all currently due and unpaid real estate taxes
and unfunded improvement reserves (in each case net of any amounts escrowed
therefor) and assessments, insurance premiums, and, if applicable, ground rents
in respect of the related Mortgaged Property over (b) the Required Appraisal
Value.
"Appraised Value": With respect to each Mortgaged Property, the
appraised value thereof based upon the most recent appraisal or update thereof
that is contained in the related Servicing File.
"Anticipated Repayment Date": For each ARD Loan, the date specified
in the related Mortgage Note after which the Mortgage Rate for such ARD Loan
will increase as specified in the related Mortgage Note.
"ARD Loan": Any Mortgage Loan that provides that if the unamortized
principal balance thereof is not repaid on its Anticipated Repayment Date, such
Mortgage Loan will accrue additional interest at the rate specified in the
related Mortgage Note and the Mortgagor is required to apply excess monthly cash
flow generated by the related Mortgaged Property to the repayment of the
outstanding principal balance on such Mortgage Loan.
"Assignment of Leases": With respect to any Mortgaged Property, any
assignment of leases, rents and profits or similar document or instrument
executed by the Mortgagor in connection with the origination of the related
Mortgage Loan.
"Assumed Final Distribution Date": For each Class of Regular
Interest Certificates, the date so designated for such Class in the table in the
Preliminary Statement (determined as described in the Prospectus Supplement).
"Assumed Scheduled Payment": With respect to any Balloon Mortgage
Loan for its Stated Maturity Date (provided that such Mortgage Loan has not been
paid in full on or before such
-6-
<PAGE>
date and no other Liquidation Event has occurred in respect thereof) and for any
subsequent Due Date therefor as of which such Mortgage Loan remains outstanding
and part of the Trust Fund, the scheduled monthly payment of principal and/or
interest deemed to be due in respect thereof on such Due Date equal to the
Scheduled Payment that would have been due in respect of such Mortgage Loan on
such Due Date if it had been required to continue to pay in accordance with the
amortization schedule in effect on the Closing Date and without regard to the
occurrence of its Stated Maturity Date. With respect to any REO Loan, for any
Due Date therefor as of which the related REO Property remains part of the Trust
Fund, the scheduled monthly payment of principal and/or interest deemed to be
due in respect thereof on such Due Date equal to the Scheduled Payment that
would have been due in respect of the predecessor Mortgage Loan on such Due Date
had it remained outstanding (or, if the predecessor Mortgage Loan was a Balloon
Mortgage Loan and such Due Date coincides with or follows what had been its
Stated Maturity Date, the Assumed Scheduled Payment that would have been deemed
due in respect of the predecessor Mortgage Loan on such Due Date had it remained
outstanding).
"Authenticating Agent": Any authenticating agent appointed pursuant
to Section 8.12 (or, in the absence of any such appointment, the Trustee).
"Available Distribution Amount": With respect to any Distribution
Date, an amount equal to (a) the sum of, without duplication, (i) the aggregate
of the amounts on deposit in the Custodial Account and the Collection Account as
of the close of business on the related Determination Date and the amounts
collected by or on behalf of the Master Servicer as of the close of business on
such Determination Date and required to be (but, as of such time, not yet)
deposited in the Custodial Account, (ii) the aggregate amount of any P&I
Advances made by the Master Servicer, the Trustee and the Fiscal Agent for
distribution on the Certificates on such Distribution Date pursuant to Section
4.03, (iii) the aggregate amount transferred from the REO Account (if
established) to the Custodial Account during the month of such Distribution
Date, on or prior to the P&I Advance Date in such month, pursuant to Section
3.16(c), and (iv) the aggregate amount deposited by the Master Servicer in the
Collection Account for such Distribution Date pursuant to Section 3.19(a) in
connection with Prepayment Interest Shortfalls, net of (b) the portion of the
amount described in subclauses (a)(i) and (a)(iii) 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
amounts payable or reimbursable to any Person from (A) the Custodial Account
pursuant to clauses (ii) through (xv) of Section 3.05(a) or (B) the Collection
Account pursuant to clauses (ii) through (vii) of Section 3.05(b), (iii)
Prepayment Premiums and Yield Maintenance Charges, (iv) Additional Interest
collected in respect of ARD Loans, and (v) any amounts deposited in the
Custodial Account or the Collection Account in error.
"Balloon Mortgage Loan": Any Mortgage Loan that by its original
terms or by virtue of any modification entered into as of the Closing Date
provides for an amortization schedule extending beyond its Stated Maturity Date
and as to which, in accordance with such terms, the Scheduled Payment due on its
Stated Maturity Date is at least two times larger than the Scheduled Payment due
on the Due Date next preceding its Stated Maturity Date.
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"Balloon Payment": With respect to any Balloon Mortgage Loan as of
any date of determination, the Scheduled Payment payable on the Stated Maturity
Date of such Mortgage Loan.
"Bankruptcy Code": The federal Bankruptcy Code, as amended from time
to time (Title 11 of the United States Code).
"Book-Entry Certificate": Any Certificate registered in the name of
the Depository or its nominee.
"Breach": As defined in Section 2.03(a).
"Book-Entry Non-Registered Certificate": Any Non-Registered
Certificate that constitutes a Book-Entry Certificate.
"Book-Entry Subordinated Certificate": Any Subordinated Certificate
that constitutes a Book-Entry Certificate.
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York or in each of the cities in
which the Corporate Trust Office of the Trustee and the Primary Servicing
Offices of the Master Servicer and the Special Servicer are 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 [LB Commercial Mortgage Trust ____],
Commercial Mortgage Pass-Through Certificates, Series ____, as executed by the
Certificate Registrar and authenticated and delivered hereunder by the
Authenticating Agent.
"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 six places, the numerator of which is the then current Class
Principal Balance or Class Notional Amount, as the case may be, of such Class of
Regular Interest Certificates, and the denominator of which is the Original
Class Principal Balance or Original Class Notional Amount, as the case may be,
of such Class of Regular Interest Certificates.
"Certificate Notional Amount": With respect to any Class IO
Certificate, as of any date of determination, the then notional amount of such
Certificate equal to the product of (a) the then Certificate Factor for the
Class IO Certificates, multiplied by (b) the amount specified on the face of
such Certificate as the initial Certificate Notional Amount thereof.
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"Certificate Owner": With respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Certificate as reflected on the books
of the Depository or on the books of a Depository Participant or on the books of
an indirect participating brokerage firm for which a Depository Participant acts
as agent.
"Certificate Principal Balance": With respect to any Sequential Pay
Certificate, as of any date of determination, the then outstanding principal
amount of such Certificate equal to the product of (a) the then Certificate
Factor for the Class of Sequential Pay 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.
"Certificateholder": The Person in whose name a Certificate is
registered in the Certificate Register, except that (i) neither a Disqualified
Organization nor a Non-United States Person shall be Holder of a Residual
Interest Certificate for any purpose hereof and, (ii) solely for the purposes of
giving any consent, approval or waiver pursuant to this Agreement that relates
to any of the Depositor, the Mortgage Loan Seller, the Master Servicer, the
Special Servicer, the Fiscal Agent or the Trustee in its respective capacity as
such (except with respect to amendments referred to in Section 11.01 hereof, any
consent, approval or waiver by, of or relating to the Majority Subordinate
Certificateholder and any election, removal or replacement of the Controlling
Class Representative), any Certificate registered in the name of the Depositor,
the Mortgage Loan Seller, the Master Servicer, the Special Servicer, the Fiscal
Agent or the Trustee, as the case may be, or any Certificate registered in the
name of any of its Affiliates, shall be deemed not to be outstanding, and the
Voting Rights to which it is entitled shall not be taken into account in
determining whether the requisite percentage of Voting Rights necessary to
effect any such consent, approval or waiver that relates to it has been
obtained. The Certificate Registrar shall be entitled to request and rely upon a
certificate of the Depositor, the Master Servicer or the Special Servicer in
determining whether a Certificate is registered in the name of an Affiliate of
such Person. All references herein to "Certificateholders" or "Holders" shall
reflect the rights of Certificate Owners as they may indirectly exercise such
rights through the Depository and the Depository Participants, except as
otherwise specified herein; provided, however, 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).
"Class": Collectively, all of the Certificates bearing the same
alphabetical and, if applicable, numerical class designation.
"Class A Certificates": The Class A-1, Class A-2 and Class A-3
Certificates.
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"Class A-1 Certificate": Any one of the Certificates with a "Class
A-1" designation on the face thereof, substantially in the form of Exhibit A-1
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class A-2 Certificate": Any one of the Certificates with a "Class
A-2" designation on the face thereof, substantially in the form of Exhibit A-1
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class A-3 Certificate": Any one of the Certificates with a "Class
A-3" designation on the face thereof, substantially in the form of Exhibit A-1
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class B Certificate": Any one of the Certificates with a "Class B"
designation on the face thereof, substantially in the form of Exhibit A-3
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class C Certificate": Any one of the Certificates with a "Class C"
designation on the face thereof, substantially in the form of Exhibit A-3
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class D Certificate": Any one of the Certificates with a "Class D"
designation on the face thereof, substantially in the form of Exhibit A-3
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class E Certificate": Any one of the Certificates with a "Class E"
designation on the face thereof, substantially in the form of Exhibit A-3
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class F Certificate": Any one of the Certificates with a "Class F"
designation on the face thereof, substantially in the form of Exhibit A-4
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class G Certificate": Any one of the Certificates with a "Class G"
designation on the face thereof, substantially in the form of Exhibit A-4
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class H Certificate": Any of the Certificates with a "Class H"
designation on the face thereof, substantially in the form of Exhibit A-4
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class IO Certificate": Any one of the Certificates with a "Class
IO" designation on the face thereof, substantially in the form of Exhibit A-2
attached hereto, and evidencing a portion
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of each of the Components, each of which Components shall constitute a separate
"regular interest" in REMIC III for purposes of the REMIC Provisions.
"Class J Certificate": Any one of the Certificates with a "Class J"
designation on the face thereof, substantially in the form of Exhibit A-4
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class K Certificate": Any of the Certificates with a "Class K"
designation on the face thereof, substantially in the form of Exhibit A-4
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class L Certificate": Any of the Certificates with a "Class L"
designation on the face thereof, substantially in the form of Exhibit A-4
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class M Certificate": Any of the Certificates with a "Class M"
designation on the face thereof, substantially in the form of Exhibit A-4
attached hereto, and evidencing a portion of a class of "regular interests" in
REMIC III for purposes of the REMIC Provisions.
"Class Notional Amount": As of any date of determination, the then
aggregate of the Component Notional Amounts of all the Components of the Class
IO Certificates.
"Class Principal Balance": The aggregate principal amount of any
Class of Regular Interest Certificates (other than the Class IO Certificates)
outstanding as of any date of determination. As of the Closing Date, the Class
Principal Balance of each such Class of Certificates shall equal the Original
Class Principal Balance thereof. On each Distribution Date, the Class Principal
Balance of each such Class of Certificates shall be permanently reduced by the
amount of any distributions of principal made thereon on such Distribution Date
pursuant to Section 4.01 or 9.01, as applicable, and shall be further
permanently reduced by the amount of any Realized Losses and Additional Trust
Fund Expenses allocated thereto on such Distribution Date pursuant to Section
4.04(a).
"Class R-I Certificate": Any one of the Certificates with a "Class
R-I" designation on the face thereof, substantially in the form of Exhibit A-5
attached hereto, and evidencing a portion of the sole class of "residual
interests" in REMIC I for purposes of the REMIC Provisions.
"Class R-II Certificate": Any one of the Certificates with a "Class
R-II" designation on the face thereof, substantially in the form of Exhibit A-5
attached hereto, and evidencing a portion of the sole class of "residual
interests" in REMIC II for purposes of the REMIC Provisions.
"Class R-III Certificate": Any one of the Certificates with a "Class
R-III" designation on the face thereof, substantially in the form of Exhibit A-5
attached hereto, and evidencing a portion of the sole class of "residual
interests" in REMIC III for purposes of the REMIC Provisions.
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"Closing Date": __________.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The segregated account or accounts created and
maintained by the Trustee pursuant to Section 3.04(b), which shall be entitled
"_____________________________, as Trustee, in trust for the registered holders
of [LB Commercial Mortgage Trust ____], Commercial Mortgage Pass-Through
Certificates, Series____".
"Collection Period": With respect to any Distribution Date, the
period commencing on the day 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.
"Comparative Financial Status Report": A report substantially
containing the information described in Exhibit N attached hereto, including,
among other things, the occupancy, revenue, net operating income and Debt
Service Coverage Ratio for each Mortgage Loan or the related Mortgaged Property,
as applicable, as of and through the last day of the calendar month immediately
preceding the month of the preparation of such report for each of 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 Master Servicer's production of any such report that is
required to state information for any period prior to the Cut-off Date, the
Master Servicer may conclusively rely (without independent verification), absent
manifest error, on information provided to it by the Mortgage Loan Seller or the
related Mortgagor.
"Component": Each of Component IO-A-1, Component IO-A-2, Component
IO-A-3, Component IO-B, Component IO-C, Component IO-D, Component IO-E,
Component IO-F, Component IO-G, Component IO-H, Component IO-J, Component IO-K,
Component IO-L, Component IO-M, each evidencing a separate "regular interest" in
REMIC III for purposes of the REMIC Provisions. Such Components are collectively
evidenced by the Class IO Certificates.
"Component IO-A-1": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest A-1 outstanding from time to
time.
"Component IO-A-2": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest A-2 outstanding from time to
time.
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"Component IO-A-3": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest A-3 outstanding from time to
time.
"Component IO-B": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest B outstanding from time to time.
"Component IO-C": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest C outstanding from time to time.
"Component IO-D": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest D outstanding from time to time.
"Component IO-E": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest E outstanding from time to time.
"Component IO-F": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest F outstanding from time to time.
"Component IO-G": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest G outstanding from time to time.
"Component IO-H": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest H outstanding from time to time.
"Component IO-J": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest J outstanding from time to time.
"Component IO-K": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest K outstanding from time to time.
"Component IO-L": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest L outstanding from time to time.
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"Component IO-M": One of fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the Uncertificated
Principal Balance of REMIC II Regular Interest M outstanding from time to time.
"Component Notional Amount": The notional amount on which any of the
Components accrue interest, which, in the case of any Component, as of any date
of determination, is equal to the then current Uncertificated Principal Balance
of the Corresponding REMIC II Regular Interest.
"Controlling Class": As of any date of determination, the
outstanding Class of Sequential Pay Certificates that (a) bears the latest
alphabetical Class designation and (b) has a Class Principal Balance which is
greater than ___% of the Original Class Principal Balance of such Class;
provided, however, that if no Class of Sequential Pay Certificates has a Class
Principal Balance greater than ___% of its Original Class Principal Balance, the
Controlling Class shall be the outstanding Class of Sequential Pay Certificates
bearing the latest alphabetical Class designation. With respect to determining
the Controlling Class, the Class A-1, Class A-2 and Class A-3 Certificates shall
be deemed a single Class of Certificates.
"Controlling Class Representative": As defined in Section 6.09.
"Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at _____________________, Attention:
___________________________________.
"Corrected Mortgage Loan": Any Mortgage Loan that had been a
Specially Serviced Mortgage Loan but has ceased to be such in accordance with
the definition of "Specially Serviced Mortgage Loan" (other than by reason of a
Liquidation Event occurring in respect of such Mortgage Loan or the related
Mortgaged Property becoming an REO Property).
"Corresponding REMIC II Regular Interest": With respect to any Class
of Sequential Pay 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
Sequential Pay Certificates; and, with respect to any Component of the Class IO
Certificates, the REMIC II Regular Interest that has an alphabetical and, if
applicable, numerical designation that, when preceded by "IO-", is the same as
the alphabetical and, if applicable, numerical designation for such Component of
the Class IO 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
cross-defaulted and cross-collateralized with any other Mortgage Loan.
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"CSSA Loan File Report": The monthly report in the "CSSA loan file"
format substantially containing the information called for therein for the
Mortgage Loans, a form of which is attached hereto as Exhibit L.
"CSSA Property File Report": The monthly report in the "CSSA
property file" format containing the information called for therein for each
Mortgaged Property, a form of which is attached hereto as Exhibit M.
"Custodial Account": The segregated account or accounts created and
maintained by the Master Servicer pursuant to Section 3.04(a) on behalf of the
Trustee in trust for Certificateholders, which shall be entitled
"_______________________________________, as Master Servicer, in trust for the
registered holders of [LB Commercial Mortgage Trust ____], Commercial Mortgage
Pass-Through Certificates, Series ____".
"Custodian": A Person who is at any time appointed by the Trustee
pursuant to Section 8.11 as a document custodian for the Mortgage Files, which
Person shall not be the Depositor, the Mortgage Loan Seller or an Affiliate of
the Depositor or the Mortgage Loan Seller. If no such custodian has been
appointed or if such custodian has been so appointed, but the Trustee shall have
terminated such appointment, then the Trustee shall be the Custodian.
"Cut-off Date": __________.
"Cut-off Date Balance": With respect to any Mortgage Loan, the
outstanding principal balance of such Mortgage Loan as of the Cut-off Date, net
of all unpaid payments of principal due in respect thereof on or before such
date.
"[Rating Agency #2]": ___________________. or its successor in
interest. If neither such rating agency nor any successor remains in existence,
"[Rating Agency #2]" 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 Trustee, the
Fiscal Agent, the Master Servicer and the Special Servicer, and specific ratings
of [Rating Agency #2] herein referenced shall be deemed to refer to the
equivalent ratings of the party so designated.
"Debt Service Coverage Ratio": As defined in and determined in
accordance with the provisions of Exhibit E attached hereto.
"Default Interest": With respect to any Mortgage Loan (or successor
REO Loan), any amounts collected thereon, other than late payment charges,
Prepayment Premiums or Yield Maintenance Charges, that represent penalty
interest (arising out of a default) in excess of interest accrued on the
principal balance of such Mortgage Loan (or successor REO Loan) at the related
Mortgage Rate.
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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) or is delinquent thirty days or more in respect
of its Balloon Payment, in either case such delinquency to be determined without
giving effect to any grace period permitted by the related Mortgage or Mortgage
Note and without regard to any acceleration of payments under the related
Mortgage and Mortgage Note, or (ii) as to which the Master Servicer or the
Special Servicer has, by written notice to the related Mortgagor, accelerated
the maturity of the indebtedness evidenced by the related Mortgage Note.
"Defaulting Party": As defined in Section 7.01(b).
"Defeasance Collateral": With respect to any Defeasance Loan, the
United States Treasury obligations required or permitted to be pledged in lieu
of prepayment pursuant to the terms thereof.
"Defeasance Loan": Any Mortgage Loan which requires the related
Mortgagor (or permits the holder of such Mortgage Loan to require the related
Mortgagor) to pledge Defeasance Collateral to such holder in lieu of prepayment.
"Definitive Certificate": As defined in Section 5.03(a).
"Definitive Non-Registered Certificate": Any Non-Registered
Certificate that has been issued as a Definitive Certificate.
"Definitive Subordinated Certificate": Any Subordinated Certificate
that has been issued as a Definitive Certificate.
"Delinquent Loan Status Report": A report substantially containing
the information described in Exhibit Q 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) were in foreclosure but were
not REO Property.
"Depositor": Structured Asset Securities Corporation 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.
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"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Determination Date": With respect to any Distribution Date, the ___
day of the month in which such Distribution Date occurs, or if such ___ day is
not a Business Day, the Business Day immediately preceding.
"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 or lease,
the performance of any construction work thereon or any use of such REO Property
in a trade or business conducted by REMIC I other than through an Independent
Contractor; provided, however, that the Trustee (or the Special Servicer or any
Sub-Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Special Servicer or
any Sub-Servicer on behalf of the Trustee) 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": With respect to any prepaid Mortgage Loan or REO
Loan for purposes of allocating any Prepayment Premium or Yield Maintenance
Charge received thereon or with respect thereto among the respective Classes of
the Sequential Pay Certificates (other than any Excluded Class thereof), an
amount equal to the yield (when compounded monthly) on the U.S. Treasury issue
(primary issue) with a maturity date closest to the maturity date for such
prepaid Mortgage Loan or REO Loan. In the event there are two such U.S. Treasury
issues (a) with the same coupon, the issue with the lower yield shall apply, and
(b) with maturity dates equally close to the maturity date for the prepaid
Mortgage Loan or REO Loan, the issue with the earliest maturity date shall
apply.
"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 Trustee or 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 Fund or any Person having an
Ownership Interest in any Class of Certificates, other than such Person, to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a
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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, the Accrued Certificate
Interest in respect of such Class of Certificates for such Distribution Date,
reduced (to not less than zero) by the product of (i) any Net Aggregate
Prepayment Interest Shortfall for such Distribution Date, multiplied by (ii) a
fraction, expressed as a decimal, the numerator of which is the Accrued
Certificate Interest in respect of such Class of Certificates for such
Distribution Date, and the denominator of which is the aggregate Accrued
Certificate Interest in respect of all the Classes of Regular Interest
Certificates for such Distribution Date.
"Distribution Date": The _____ day of any month, or if such _____
day is not a Business Day, the Business Day immediately following, commencing in
__________.
"Distribution Date Statement": As defined in Section 4.02(a).
"Document Defect": As defined in Section 2.03(a).
"Due Date": With respect to: (i) any Mortgage Loan on or prior to
its Stated Maturity Date, 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; (ii) any Mortgage Loan after its Stated Maturity Date, the day of the
month set forth in the related Mortgage Note on which each Monthly Payment on
such Mortgage Loan had been scheduled to be first due; and (iii) any REO Loan,
the day of the month set forth in the related Mortgage Note on which each
Monthly Payment on the related Mortgage Loan had been scheduled to be first due.
"Eligible Account": Any of (i) an account maintained with a federal
or state chartered depository institution or trust company, the long-term
deposit or unsecured debt obligations of which (or of such institution's parent
holding company) are rated "___" by [Rating Agency #1] and "___" by [Rating
Agency #2] (if then rated by [Rating Agency #2]) (or, in the case of either
Rating Agency, such lower rating as will not result in qualification, downgrade
or withdrawal of any of the ratings then assigned to the Certificates by such
Rating Agency, as evidenced in writing by such Rating Agency) at any time such
funds are on deposit therein (if such funds are to be held for more than 30
days), or the short-term deposits of which (or of such institution's parent
holding company) are rated "____" by [Rating Agency #1] and "____" by [Rating
Agency #2] (if then rated by [Rating Agency #2]) (or, in the case of either
Rating Agency, such lower rating as will not result in qualification, downgrade
or withdrawal of the ratings then assigned to the Certificates by such Rating
Agency, as evidenced in writing by such Rating Agency), at any time such funds
are on deposit therein (if such funds are to be held for 30 days or less), or
(ii) a segregated trust account or accounts 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),
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having in either case a combined capital and surplus of at least $_____________
and subject to supervision or examination by federal or state authority, or
(iii) any other account, the use of which would not, in and of itself, cause a
qualification, downgrade or withdrawal of the then-current rating assigned by
either Rating Agency to any Class of Certificates, as confirmed in writing by
each Rating Agency.
"Environmental Assessment": A "Phase I assessment" as described in
and meeting the criteria of Chapter 5 of the FNMA Multifamily Guide and an ASTM
Standard for Environmental Site Assessments, each as amended from time to time.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Payment": Any payment received by the Master Servicer or the
Special Servicer for the account of any Mortgagor for application toward the
payment of real estate taxes, assessments, insurance premiums, ground rents (if
applicable) and other items for which an escrow has been created in respect of
the related Mortgaged Property.
"Event of Default": One or more of the events described in Section
7.01(a).
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Excluded Class": Any Class of Sequential Pay Certificates other
than the Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates,
Class B Certificates, Class C Certificates, Class D Certificates, Class E
Certificates, Class F Certificates and Class G Certificates.
"FDIC": The Federal Deposit Insurance Corporation or any successor.
"FHLMC": The Federal Home Loan Mortgage Corporation or any
successor.
"Final Recovery Determination": A determination by the Special
Servicer with respect to any Mortgage Loan or REO Property (other than a
Mortgage Loan that was paid in full and other than a Mortgage Loan or REO
Property, as the case may be, that was purchased by the Mortgage Loan Seller
pursuant to the Mortgage Loan Purchase Agreement, by the Majority Subordinate
Certificateholder pursuant to Section 3.18(b), by the Master Servicer or the
Special Servicer pursuant to Section 3.18(c) or by the Depositor, the Master
Servicer, the Special Servicer, the Underwriter or the Majority Subordinate
Certificateholder pursuant to Section 9.01) that there has been a recovery of
all Insurance Proceeds, Liquidation Proceeds and other payments or recoveries
that the Special Servicer has determined, in accordance with the Servicing
Standard, will be ultimately recoverable.
"Fiscal Agent": _____________________________, a
____________________, or its successor in interest, in its capacity as fiscal
agent hereunder, or any successor fiscal agent appointed as herein provided.
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"FNMA": The Federal National Mortgage Association or any successor.
"Grantor Trust": The "grantor trust" within the meaning of the
Grantor Trust Provisions created hereunder, the assets of which are the Grantor
Trust Assets.
"Grantor Trust Assets": Any Additional Interest collected with
respect to an ARD Loan after its Anticipated Repayment Date.
"Grantor Trust Provisions": Subpart E of Subchapter J of the Code.
"Ground Lease": With respect to any Mortgage Loan for which the
Mortgagor has a leasehold interest in the related Mortgaged Property, the lease
agreement creating such leasehold interest.
"Hazardous Materials": Any dangerous, toxic or hazardous pollutants,
chemicals, wastes, or substances, including, without limitation, those so
identified pursuant to CERCLA or any other federal, state or local environmental
related laws and regulations now existing or hereafter enacted, and specifically
including, without limitation, asbestos and asbestos-containing materials,
polychlorinated biphenyls ("PCBs"), radon gas, petroleum and petroleum products
and urea formaldehyde.
"Historical Loan Modification Report": A report substantially
containing the information described in Exhibit R 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 containing
the information described in Exhibit S 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.
"Holder": A Certificateholder.
"HUD-Approved Servicer": A servicer that is a mortgagee approved by
the Secretary of Housing and Urban Development pursuant to Sections 203, 207 and
211 of the National Housing Act.
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"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 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 or any Affiliate thereof, and (iii) is
not connected with the Depositor, the Mortgage Loan Seller, the Master Servicer,
the Special Servicer 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
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 or any Affiliate thereof, as
the case may be.
"Independent Appraiser": An Independent professional real estate
appraiser who (i) is a member in good standing of the Appraisal Institute, (ii)
if the state in which the subject Mortgaged Property is located certifies or
licenses appraisers, is certified or licensed in such state, and (iii) has a
minimum of five years experience in the subject property type and market.
"Independent Contractor": Any Person that would be an "independent
contractor" with respect to REMIC I within the meaning of Section 856(d)(3) of
the Code if REMIC I were a real estate investment trust (except that the
ownership test set forth in that section shall be considered to be met by any
Person that owns, directly or indirectly, 35 percent 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 Master
Servicer, the Special Servicer, the Trustee or the Trust Fund, delivered to the
Trustee), so long as REMIC I does not receive or derive any income from such
Person and provided that the relationship between such Person and REMIC I is at
arm's length, all within the meaning of Treasury Regulations Section
1.856-4(b)(5), or any other Person upon receipt by the Trustee of an Opinion of
Counsel, which shall be at no expense to the Master Servicer, the Special
Servicer, the Trustee or the Trust Fund, to the effect that the taking of any
action in respect of any REO Property by such Person, subject to any conditions
therein specified, that is otherwise herein contemplated to be taken by an
Independent Contractor will not cause such REO Property to cease to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code, or
cause any income realized in respect of such REO Property to fail to qualify as
Rents from Real Property.
"Insurance Policy": With respect to any Mortgage Loan, any hazard
insurance policy, flood insurance policy, title policy or other insurance policy
that is maintained from time to time in respect of such Mortgage Loan or the
related Mortgaged Property.
"Insurance Proceeds": Proceeds paid under any Insurance Policy, to
the extent such proceeds are not applied to the restoration of the related
Mortgaged Property, released to the Mortgagor, or any tenants or ground lessors,
as the case may be, pursuant to the terms of the related Mortgage or lease, in
accordance with the Servicing Standard.
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"Interest Accrual Basis": The basis on which interest accrues in
respect of any Mortgage Loan, any REMIC I Regular Interest, any REMIC II Regular
Interest, any Class of Regular Interest Certificates or any particular Component
of the Class IO Certificates, in each case consisting of one of the following:
(i) a 360-day year consisting of twelve 30-day months; (ii) actual number of
days elapsed in a 360-day year; (iii) actual number of days elapsed in a 365-day
year; or (iv) actual number of days elapsed in an actual calendar year (taking
account of leap year).
"Interest Accrual Period": With respect to any REMIC I Regular
Interest, any REMIC II Regular Interest, any Class of Regular Interest
Certificates or any particular Component of the Class IO Certificates, for any
Distribution Date, the calendar month immediately preceding the month in which
such Distribution Date occurs.
"Interested Person": The Depositor, the Mortgage Loan Seller, the
Master Servicer, the Special Servicer, any Holder of a Certificate, or any
Affiliate of any such Person.
"Investment Account": As defined in Section 3.06(a).
"Issue Price": With respect to each Class of Certificates, the
"issue price" as defined in the Code and Treasury regulations promulgated
thereunder.
"Late Collections": With respect to any Mortgage Loan, all amounts
received thereon during any Collection Period, other than Default Interest,
whether as payments, Insurance Proceeds, Liquidation Proceeds or otherwise,
which represent late collections of the principal and/or interest portions of a
Scheduled Payment (other than a Balloon Payment) or an Assumed Scheduled Payment
in respect of such Mortgage Loan due or deemed due on a Due Date in a previous
Collection Period, or on a Due Date coinciding with or preceding the Cut-off
Date, and not previously recovered. With respect to any REO Loan, all amounts
received in connection with the related REO Property during any Collection
Period, whether as Insurance Proceeds, Liquidation Proceeds, REO Revenues or
otherwise, which represent late collections of the principal and/or interest
portions of a Scheduled Payment (other than a Balloon Payment) or an Assumed
Scheduled Payment in respect of the predecessor Mortgage Loan or of an Assumed
Scheduled Payment in respect of such REO Loan due or deemed due on a Due Date in
a previous Collection Period and not previously recovered.
"Legal Final Distribution Date": With respect to any REMIC I Regular
Interest, any REMIC II Regular Interest, any Class of Regular Interest
Certificates or any particular Component of the Class IO Certificates, the
"latest possible maturity date" thereof, calculated solely for purposes of
satisfying Treasury regulation section 1.860G-1(a)(4)(iii).
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made with respect to such Mortgage Loan; (iii) such Mortgage
Loan is repurchased by the Mortgage Loan Seller pursuant to the Mortgage Loan
Purchase Agreement; or (iv) such Mortgage Loan is purchased by the Majority
Subordinate Certificateholder pursuant to Section 3.18(b), by the Master
Servicer or the Special
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Servicer pursuant to Section 3.18(c), or by the Depositor, the Master Servicer,
the Special Servicer, the Underwriter or the Majority Subordinate
Certificateholder pursuant to Section 9.01. With respect to any REO Property
(and the related REO Loan), any of the following events: (i) a Final Recovery
Determination is made with respect to such REO Property; or (ii) such REO
Property is purchased by the Depositor, the Master Servicer, the Special
Servicer, the Underwriter or the Majority Subordinate Certificateholder pursuant
to Section 9.01.
"Liquidation Fee": With respect to each Specially Serviced Mortgage
Loan or REO Property (other than any Specially Serviced Mortgage Loan or REO
Property (i) repurchased by the Mortgage Loan Seller pursuant to Section 2.03
within 180 days of the Mortgage Loan Seller's notice or discovery of the Breach
or Document Defect giving rise to such repurchase obligation, (ii) purchased by
the Majority Subordinate Certificateholder pursuant to Section 3.18(b), (iii)
purchased by the Master Servicer or the Special Servicer pursuant to Section
3.18(c), or (iv) purchased by the Depositor, the Master Servicer, the Special
Servicer, the Underwriter or the Majority Subordinate Certificateholder pursuant
to Section 9.01), the fee designated as such and payable to the Special Servicer
pursuant to Section 3.11(c).
"Liquidation Fee Rate: With respect to each Specially Serviced
Mortgage Loan or REO Property as to which a Liquidation Fee is payable, ____%.
"Liquidation Proceeds": All cash amounts (other than Insurance
Proceeds and REO Revenues) received by the Master Servicer or the Special
Servicer in connection with: (i) the taking of all or a part of a Mortgaged
Property or REO Property by exercise of the power of eminent domain or
condemnation, subject, however, to the rights of any tenants and ground lessors,
as the case may be, and the terms of the related 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 Mortgagor in accordance with applicable law and the
terms and conditions of the related Mortgage Note and Mortgage; (iii) the
realization upon any deficiency judgment obtained against a Mortgagor; (iv) the
purchase of a Defaulted Mortgage Loan by the Majority Subordinate
Certificateholder 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 Agreement; or (vi) the purchase of
a Mortgage Loan or REO Property by the Depositor, the Master Servicer, the
Special Servicer, the Underwriter or the Majority Subordinate Certificateholder
pursuant to Section 9.01.
"Loan Payoff Notification Report": A report substantially containing
the information described in Exhibit V attached hereto, and setting forth for
each Mortgage Loan as to which notice of anticipated payoff has been received as
of the Determination Date immediately preceding the preparation of such report,
among other things, the control number, the property name, the amount of
principal expected to be paid, the expected date of payment and the estimated
amount of Yield Maintenance Charge or Prepayment Premium due.
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"Lockout Period": With respect to any Mortgage Note that prohibits
the Mortgagor from prepaying such Mortgage Loan until a date specified in such
Mortgage Note, the period from the Closing Date until the such specified date.
"Majority Subordinate Certificateholder": As of any date of
determination, any single Holder of Certificates of the Controlling Class
entitled to greater than 50% of the Voting Rights allocated to such Class;
provided, however, that, if there is no single Holder of Certificates of the
Controlling Class entitled to greater than 50% of the Voting Rights allocated to
such Class, then the Majority Subordinate Certificateholder shall be the single
Holder of Certificates of the Controlling Class with the largest percentage of
Voting Rights allocated to such Class.
"Master Servicer": _______________________________________ or its
successor in interest, in its capacity as master servicer hereunder, or any
successor master servicer appointed as herein provided.
"Master Servicing Fee": With respect to each Mortgage Loan and REO
Loan, the fee payable to the Master Servicer pursuant to Section 3.11(a).
"Master Servicing Fee Rate": With respect to each Mortgage Loan, the
percentage set forth under the column "Master Servicing Fee Rate" on the
Mortgage Loan Schedule that corresponds to such Mortgage Loan.
"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.
"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 Mortgagor from time to time under the terms of
the related Mortgage Note (as such terms may be changed or modified in
connection with a bankruptcy or similar proceeding involving the related
Mortgagor or by reason of a modification, waiver or amendment granted or agreed
to by the Special Servicer pursuant to Section 3.20); provided that the Monthly
Payment due in respect of any ARD Loan after its Anticipated Repayment Date
shall not include Additional Interest.
"[Rating Agency #1]": __________________ or its successor in
interest. If neither such rating agency nor any successor remains in existence,
"[Rating Agency #1]" 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 Trustee, the
Fiscal Agent, the Master Servicer and the Special Servicer, and specific ratings
of [Rating Agency #1] herein referenced shall be deemed to refer to the
equivalent ratings of the party so designated.
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"Mortgage": With respect to any Mortgage Loan, the mortgage, deed of
trust, deed to secure debt or similar instrument that secures the Mortgage Note
and creates a lien on the related Mortgaged Property.
"Mortgage File": With respect to any Mortgage Loan, collectively the
following documents:
(i) the original executed Mortgage Note, endorsed (without recourse,
representation or warranty, express or implied) to the order of
_____________________________, as trustee for the registered holders of
[LB Commercial Mortgage Trust ____], Commercial Mortgage Pass-Through
Certificates, Series ____ or in blank, and further showing a complete,
unbroken chain of endorsement from the originator (if such originator is
other than the Mortgage Loan Seller); or, alternatively, if the original
executed Mortgage Note has been lost, a lost note affidavit and indemnity
with a copy of such Mortgage Note;
(ii) an original or copy of the Mortgage, together with any and all
intervening assignments thereof, in each case with evidence of recording
indicated thereon;
(iii) an original or copy of any related Assignment of Leases (if
such item is a document separate from the Mortgage), together with any and
all intervening assignments thereof, in each case with evidence of
recording indicated thereon;
(iv) an original executed assignment, in recordable form, of (a) the
Mortgage, (b) any related Assignment of Leases (if such item is a document
separate from the Mortgage) and (c) any other recorded document relating
to the Mortgage Loan otherwise included in the Mortgage File, in favor of
_____________________________, as trustee for the registered holders of
[LB Commercial Mortgage Trust ____], Commercial Mortgage Pass-Through
Certificates, Series ____;
(v) an original assignment of all unrecorded documents relating to
the Mortgage Loan, in favor of _____________________________, as trustee
for the registered holders of [LB Commercial Mortgage Trust ____],
Commercial Mortgage Pass-Through Certificates, Series ____;
(vi) originals or copies of any written modification agreements in
those instances where the terms or provisions of the Mortgage or Mortgage
Note have been modified;
(vii) the original or a copy of the policy or certificate of
lender's title insurance issued on the date of the origination of such
Mortgage Loan, or, if such policy has not been issued, an irrevocable,
binding commitment to issue such title insurance policy;
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(viii) any filed copies (with evidence of filing) 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
assignment, as appropriate, in form suitable for filing, in favor of
_____________________________, as trustee for the registered holders of
[LB Commercial Mortgage Trust ____], Commercial Mortgage Pass-Through
Certificates, Series ____; and
(ix) an original or copy of any Ground Lease relating to such
Mortgage Loan;
provided that whenever the term "Mortgage File" is used to refer to documents
actually received by the Trustee or by a Custodian on its behalf, such term
shall not be deemed to include such documents required to be included therein
unless they are actually so received, and with respect to any receipt or
certification by the Trustee or the Custodian for documents described in clause
(vi) of this definition, shall be deemed to include only such documents to the
extent the Trustee or Custodian has actual knowledge of their existence.
"Mortgage Loan": Each of the mortgage loans listed on the Mortgage
Loan Schedule and from time to time held in the Trust Fund. As used herein, the
term "Mortgage Loan" includes the related Mortgage Note, Mortgage and other
security documents contained in the related Mortgage File.
"Mortgage Loan Purchase Agreement": That certain Mortgage Loan
Purchase Agreement, dated as of __________, between the Depositor and the
Mortgage Loan Seller and relating to the transfer of the Mortgage Loans to the
Depositor.
"Mortgage Loan Schedule": The list of Mortgage Loans transferred on
the Closing Date to the Trustee as part of REMIC I, attached hereto as Exhibit B
(and also delivered to the Trustee in a computer readable format). 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) and
name of the related Mortgaged Property;
(iii) the Cut-off Date Balance;
(iv) the amount of the Monthly Payment due on the first Due Date
following the Closing Date;
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(v) the original Mortgage Rate;
(vi) the (A) remaining term to stated maturity and (B) the Stated
Maturity Date;
(vii) in the case of a Balloon Mortgage Loan, the remaining
amortization term;
(viii) the Interest Accrual Basis;
(ix) the Master Servicing Fee Rate;
(x) whether the Mortgage Loan is secured by a Ground Lease; and
(xi) whether such Mortgage Loan is an ARD Loan and, if so, the
Anticipated Repayment Date for such ARD Loan.
"Mortgage Loan Seller": Lehman Brothers Holdings Inc., doing
business as Lehman Capital, a Division of Lehman Brothers Holdings Inc., or its
successor in interest.
"Mortgage Note": The original executed note evidencing the
indebtedness of a Mortgagor under a Mortgage Loan, together with any rider,
addendum or amendment thereto, or any renewal, substitution or replacement of
such note.
"Mortgage Pool": Collectively, all of the Mortgage Loans and any
successor REO Loans.
"Mortgage Rate": With respect to any Mortgage Loan (and any
successor REO Loan), the annualized rate at which interest is scheduled (in the
absence of a default) to accrue on such Mortgage Loan from time to time in
accordance with the related Mortgage Note and applicable law, as such rate may
be modified in accordance with Section 3.20 or in connection with a bankruptcy,
insolvency or similar proceeding involving the related Mortgagor. In the case of
each ARD Loan, the related Mortgage Rate shall increase by a specified number of
percentage points if the particular Mortgage Loan is not paid in full by its
Anticipated Repayment Date. Subject to modification in accordance with Section
3.20 or in connection with a bankruptcy, insolvency or similar proceeding
involving the related Mortgagor, the Mortgage Rate for each Mortgage Loan shall
otherwise be fixed.
"Mortgaged Property": The real property subject to the lien of a
Mortgage.
"Mortgagor": The obligor or obligors on a Mortgage Note, including
without limitation, any Person that has acquired the related Mortgaged Property
and assumed the obligations of the original obligor under the Mortgage Note.
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"Net Aggregate Prepayment Interest Shortfall": With respect to any
Distribution Date, the amount, if any, by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred in connection with the receipt of
Principal Prepayments on the Mortgage Loans during the related Collection
Period, exceeds (b) the aggregate amount deposited by the Master Servicer in the
Collection Account for such Distribution Date pursuant to Section 3.19(a) in
connection with such Prepayment Interest Shortfalls.
"Net Investment Earnings": With respect to the Custodial Account,
the Collection Account or the REO Account (if any) 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 account, exceeds
the aggregate of all losses, if any, incurred during such Collection Period in
connection with the investment of such funds in accordance with Section 3.06.
"Net Investment Loss": With respect to the Custodial Account, the
Collection Account or the REO Account (if any) 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
account in accordance with Section 3.06, exceeds the aggregate of all interest
and other income realized during such Collection Period on such funds.
"Net Mortgage Rate": With respect to any Mortgage Loan or any REO
Loan, as of any date of determination, a rate per annum equal to the then
related Mortgage Rate minus the sum of the Trustee Fee Rate, the related Master
Servicing Fee Rate and, in the case of an ARD Loan after its Anticipated
Repayment Date, the related Additional Interest Rate.
"Net Operating Income" or "NOI": As defined in and determined in
accordance with the provisions of Exhibit E attached hereto.
"New Lease": Any lease of REO Property entered into on behalf of
REMIC I, including any lease renewed, modified or extended on behalf of REMIC I
if REMIC I has the right to renegotiate the terms of such lease.
"NOI Adjustment Worksheet": A report prepared by the Special
Servicer with respect to Specially Serviced Mortgaged Loans and REO Loans, and
by the Master Servicer with respect to all other Mortgage Loans, substantially
containing the information described in Exhibit T attached hereto, presenting
the computations made in accordance with the methodology described in Exhibit T
to "normalize" the full year net operating income and debt service coverage
numbers used in the other reports required by this Agreement, delivered or
maintained with each annual operating statement for a Mortgaged Property
pursuant to Section 3.12(a).
"Nonrecoverable Advance": Any Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance.
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"Nonrecoverable P&I Advance": Any P&I Advance previously made or
proposed to be made in respect of any Mortgage Loan or REO Loan by the Master
Servicer, the Trustee or the Fiscal Agent with respect to any P&I Advance, that
such party has determined in its reasonable, good faith judgment, will not be
ultimately recoverable from late payments, Insurance Proceeds or Liquidation
Proceeds, or any other recovery on or in respect of such Mortgage Loan or REO
Loan.
"Nonrecoverable Servicing Advance": Any Servicing Advance previously
made or proposed to be made in respect of a Mortgage Loan or REO Property by the
Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent, that
such party has determined, 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 F, Class
G, Class H, Class J, Class K, Class L, Class M, Class R-I, Class R-II or Class
R-III Certificates are Non-Registered Certificates.
"Non-United States Person": Any person other than a United States
Person.
"Officers' Certificate": A certificate signed by a Servicing Officer
of the Master Servicer or the Special Servicer, as the case may be, or by a
Responsible Officer of the Trustee or the Fiscal Agent, as the case may be.
"Operating Statement Analysis": With respect to each Specially
Serviced Mortgage Loan and REO Property, a report prepared by the Special
Servicer, and with respect to all other Mortgage Loans, a report prepared by the
Master Servicer, substantially containing the information described in Exhibit U
attached hereto.
"Opinion of Counsel": A written opinion of counsel (which counsel
shall be Independent of the Depositor, the Master Servicer and the Special
Servicer) acceptable to and delivered to the Trustee or any other specified
Person, as the case may be.
"Original Class Notional Amount": With respect to the Class IO
Certificates, the initial Class Notional Amount thereof as of the Closing Date,
which is equal to $__________.
"Original Class Principal Balance": With respect to any Class of
Sequential Pay Certificates, the initial Class Principal Balance thereof as of
the Closing Date, in each case as specified in the Preliminary Statement.
"OTS": The Office of Thrift Supervision or any successor thereto.
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"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.
"Pass-Through Rate": With respect to:
(i) the Class A-1 Certificates for any Distribution Date, ___% per
annum;
(ii) the Class A-2 Certificates for any Distribution Date, ___% per
annum;
(iii) the Class A-3 Certificates for any Distribution Date, ___% per
annum;
(iv) the Class B Certificates for any Distribution Date, ___% per
annum;
(v) the Class C Certificates for any Distribution Date, ___% per
annum;
(vi) the Class D Certificates for any Distribution Date, ___% per
annum;
(vii) the Class E Certificates for any Distribution Date, ___% per
annum;
(viii) the Class F Certificates for any Distribution Date, ___% per
annum;
(ix) the Class G Certificates for any Distribution Date, ___% per
annum;
(x) the Class H Certificates for any Distribution Date, ___% per
annum;
(xi) the Class J Certificates for any Distribution Date, ___% per
annum;
(xii) the Class K Certificates for any Distribution Date, ___% per
annum;
(xiii) the Class L Certificates for any Distribution Date, ___% per
annum;
(xiv) the Class M Certificates for any Distribution Date, ___% per
annum;
(xv) each Component of the Class IO Certificates for any
Distribution Date, the excess, if any, of (A) the Weighted Average REMIC I
Remittance Rate for such Distribution Date, over (B) the Pass-Through Rate
for such Distribution Date applicable to the Class of Sequential Pay
Certificates whose alphabetical (and, if applicable, numerical) Class
designation is included in the designation of such Component; and
(xvi) the Class IO Certificates for any Distribution Date, the
weighted average (expressed as a percentage and rounded to six decimal
places) of the respective Pass-Through Rates applicable to all of the
Components of such Class for such Distribution Date, weighted
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on the basis of the respective Component Notional Amounts of such
Components outstanding immediately prior to such Distribution Date.
The Weighted Average REMIC I Remittance Rate referenced above in this definition
is also the REMIC II Remittance Rate for each REMIC II Regular Interest.
"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 Original Class Principal Balance or Original Class Notional Amount,
as the case may be, of the relevant Class. With respect to a 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.
"Permitted Investments": Any one or more of the following
obligations or securities (including, without limitation, obligations or
securities of the Trustee if otherwise qualifying hereunder):
(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 (having original maturities of not more
than 365 days), provided such obligations are backed by the full faith and
credit of the United States. Such obligations must be limited to those
instruments that have a predetermined fixed dollar amount of principal due
at maturity that cannot vary or change. Interest may either be fixed or
variable. If such interest is variable, interest must be tied to a single
interest rate index plus a single fixed spread (if any), and move
proportionately with that index;
(ii) repurchase obligations with respect to any security described
in clause (i) above (having original maturities of not more than 365
days), provided that the short-term deposit or debt obligations, of the
party agreeing to repurchase such obligations are rated in the highest
rating category of each of [Rating Agency #1] and [Rating Agency #2] (if
rated by [Rating Agency #2]) (or, in the case of either Rating Agency,
such lower rating as will not result in qualification, downgrade or
withdrawal of any of the ratings then assigned to the Certificates by such
Rating Agency, as evidenced in writing by such Rating Agency). In
addition, any such item by its terms must have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or change.
Interest may either be fixed or variable. If such interest is variable,
interest must be tied to a single interest rate index plus a single fixed
spread (if any), and move proportionately with that index.
(iii) certificates of deposit, time deposits, demand deposits and
bankers' acceptances of any bank or trust company organized under the laws
of the United States or any state thereof (having original maturities of
not more than 365 days), the short term obligations of which are rated in
the highest rating category of each of [Rating Agency #1]
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and [Rating Agency #2] (if rated by [Rating Agency #2]) (or, in the case
of either Rating Agency, such lower rating as will not result in
qualification, downgrade or withdrawal of any of the ratings then assigned
to the Certificates by such Rating Agency, as evidenced in writing by such
Rating Agency). In addition, any such item by its terms must have a
predetermined fixed dollar amount of principal due at maturity that cannot
vary or change. Interest may either be fixed or variable. If such interest
is variable, interest must be tied to a single interest rate index plus a
single fixed spread (if any), and move proportionately with that index.
(iv) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of the United
States or any state thereof (or if not so incorporated, the commercial
paper is United States Dollar denominated and amounts payable thereunder
are not subject to any withholding imposed by any non-United States
jurisdiction) which is rated in the highest rating category of each of
[Rating Agency #1] and [Rating Agency #2] (if rated by [Rating Agency #2])
(or, in the case of either Rating Agency, such lower rating as will not
result in qualification, downgrade or withdrawal of any of the ratings
then assigned to the Certificates by such Rating Agency, as evidenced in
writing by such Rating Agency). In addition, such commercial paper by its
terms must have a predetermined fixed dollar amount of principal due at
maturity that cannot vary or change. Interest may either by fixed or
variable. If such interest is variable, interest must be tied to a single
interest rate index plus a single fixed spread (if any), and move
proportionately with that index.
(v) units of money market funds rated in the highest applicable
rating category of each Rating Agency (or, in the case of either Rating
Agency, such lower rating as will not result in qualification, downgrade
or withdrawal of any of the ratings then assigned to the Certificates by
such Rating Agency, as evidenced in writing by such Rating Agency) and
which seeks to maintain a constant net asset value; and
(vi) any other obligation or security acceptable to each Rating
Agency, evidence of which acceptability shall be provided in writing by
each Rating Agency to the Master Servicer, the Special Servicer and the
Trustee;
provided that (1) no investment described hereunder shall evidence either the
right to receive (x) only interest with respect to such investment or (y) a
yield to maturity greater than 120% of the yield to maturity at par of the
underlying obligations; and (2) 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.
"Permitted Transferee": Any Transferee of a Residual Interest
Certificate other than a Disqualified Organization or Non-United States Person.
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"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.
"P&I Advance": As to any Mortgage Loan or REO Loan, any advance made
by the Master Servicer, the Trustee or the Fiscal Agent pursuant to Section
4.03(a) and (b).
"P&I Advance Date": The Business Day immediately preceding each
Distribution Date.
"Plan": As defined in Section 5.02(c).
"Plurality Residual Interest Certificateholder": As to any taxable
year of REMIC I, REMIC II or REMIC III, the Holder of Certificates entitled to
the largest percentage of the Voting Rights allocated to the related Class of
Residual Interest Certificates.
"Prepayment Assumption": For purposes of determining the accrual of
original issue discount, market discount and premium, if any, on the
Certificates for federal income tax purposes, 0% CPR (within the meaning of the
Prospectus), except that it is assumed that each ARD Loan is repaid on its
Anticipated Repayment 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 Servicing
Fees) actually collected from the related Mortgagor 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 and, in the case of an ARD Loan
after its Anticipated Repayment Date, of any Additional Interest).
"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 Mortgagor (without regard to any Prepayment Premium
or Yield Maintenance Charge that may have been collected), that would have
accrued at a rate per annum equal to the related Net Mortgage Rate plus the
Trustee Fee Rate on the amount of such Principal Prepayment during the period
from the date of prepayment to, but not including, such Due Date.
"Prepayment Premium": Any premium, penalty or fee (other than a
Yield Maintenance Charge) paid or payable, as the context requires, by a
Mortgagor in connection with a Principal Prepayment.
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"Primary Servicing Office": The offices of the Master Servicer or
the Special Servicer, as the context may require, that are primarily responsible
for such party's servicing obligations hereunder. As of the Closing Date, the
Primary Servicing Office of each of the Master Servicer and the Special Servicer
is located at __________________________ and _______________________,
respectively.
"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 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 Fiscal Agent, the Master Servicer and the Special Servicer in
writing of its selection.
"Principal Distribution Amount": With respect to any Distribution
Date, the aggregate, without duplication, of the following:
(a) the aggregate of the principal portions of all Scheduled
Payments (other than Balloon Payments) and any Assumed Scheduled Payments
in respect of the Mortgage Loans for their respective Due Dates occurring
during the related Collection Period;
(b) the aggregate of all Principal Prepayments received on any of
the Mortgage Loans during the related Collection Period;
(c) with respect to any Mortgage Loan as to which the related Stated
Maturity Date occurred during or prior to the related Collection Period,
any payment of principal (exclusive of any amounts described in clause (b)
above or clause (d) below) made by or on behalf of the related Mortgagor
during the related Collection Period (including any Balloon Payment), net
of any portion of such payment that represents a recovery of the principal
portion of any Scheduled Payment (other than a Balloon Payment) due, or
the principal portion of any Assumed Scheduled Payment deemed due, in
respect of such Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered;
(d) the aggregate of all Liquidation Proceeds and Insurance Proceeds
that were received on any of the Mortgage Loans during the related
Collection Period and that were identified and applied by the Master
Servicer as recoveries of principal of such Mortgage Loans, in each case
net of any portion of such amounts that represents a recovery of the
principal portion of any Scheduled Payment (other than a Balloon Payment)
due, or of the principal portion of any Assumed Scheduled Payment deemed
due, in respect of the related Mortgage Loan on a Due Date during or prior
to the related Collection Period and not previously recovered;
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(e) with respect to any REO Properties, the aggregate of the
principal portions of all Assumed Scheduled Payments in respect of the
related REO Loans for their respective Due Dates occurring during the
related Collection Period;
(f) with respect to any REO Properties, the aggregate of all
Liquidation Proceeds, Insurance Proceeds and REO Revenues that were
received during the related Collection Period on such REO Properties and
that were identified and applied by the Master Servicer and/or Special
Servicer as recoveries of principal of the related REO Loans, in each case
net of any portion of such amounts that represents a recovery of the
principal portion of any Scheduled Payment (other than a Balloon Payment)
due, or of the principal portion of any Assumed Scheduled Payment deemed
due, in respect of the related REO Loan or the predecessor Mortgage Loan
on a Due Date during or prior to the related Collection Period and not
previously recovered; and
(g) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Principal Distribution
Amount for the immediately preceding Distribution Date, over the aggregate
distributions of principal made on the Certificates on such immediately
preceding Distribution Date pursuant to Section 4.01.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan that is received in advance of its scheduled Due
Date and that is not accompanied by an amount of interest (without regard to any
Prepayment Premium or Yield Maintenance Charge 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)(iii).
"Prospectus": The prospectus dated __________, as supplemented by
the Prospectus Supplement, relating to the Registered Certificates.
"Prospectus Supplement": The prospectus supplement dated __________,
relating to the Registered Certificates.
"Purchase Price": With respect to any Mortgage Loan (or REO
Property), a cash price equal to the aggregate of: (a) the outstanding principal
balance of such Mortgage Loan (or the related REO Loan) as of the date of
purchase, (b) all accrued and unpaid interest on such Mortgage Loan (or the
related REO Loan) at the related Mortgage Rate to, but not including, the Due
Date in the Collection Period of purchase (exclusive, however, in the case of an
ARD Loan after its Anticipated Repayment Date, of any portion of such accrued
and unpaid interest that constitutes Additional Interest), (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 Agreement, all
accrued and unpaid interest in respect of related Advances.
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"Qualified Insurer": An insurance company or security or bonding
company qualified to write the related Insurance Policy in the relevant
jurisdiction.
"Rating Agency": Each of [Rating Agency #1] and [Rating Agency #2].
"Realized Loss": With respect to: (1) each Mortgage Loan as to which
a Final Recovery Determination has been made, or with respect to any successor
REO Loan as to which a Final Recovery Determination has been made as to the
related REO Property, an amount (not less than zero) equal to (a) the unpaid
principal balance of such Mortgage Loan or REO Loan, as the case may be, as of
the commencement of the Collection Period in which the Final Recovery
Determination was made, plus (b) without taking into account the amount
described in subclause (1)(d) of this definition, all accrued but unpaid
interest on such Mortgage Loan or such REO Loan, as the case may be, at the
related Mortgage Rate to but not including the Due Date in the Collection Period
in which the Final Recovery Determination was made (exclusive, in the case of an
ARD Loan after its Anticipated Repayment Date, of Additional Interest), plus (c)
any related unreimbursed Servicing Advances as of the commencement of the
Collection Period in which the Final Recovery Determination was made, together
with any new related Servicing Advances made during such Collection Period,
minus (d) all payments and proceeds, if any, received in respect of such
Mortgage Loan or the REO Property that relates to such REO Loan, as the case may
be, during the Collection Period in which such Final Recovery Determination was
made; (2) each Mortgage Loan as to which any portion of the principal or
previously accrued interest payable thereunder was canceled in connection with a
bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Special Servicer pursuant to Section 3.20, the amount of such principal
and/or interest (other than Default Interest and, in the case of an ARD Loan
after its Anticipated Repayment Date, Additional Interest) so cancelled; and (3)
each Mortgage Loan as to which the Mortgage Rate thereon has been permanently
reduced and not recaptured for any period in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Special Servicer
pursuant to Section 3.20, the amount of the consequent reduction in the interest
portion of each successive Monthly Payment due thereon (each such Realized Loss
shall be deemed to have been incurred on the Due Date for each affected Monthly
Payment).
"Record Date": With respect to any Distribution Date other than the
initial Distribution Date, the last Business Day of the month immediately
preceding the month in which such Distribution Date occurs, and with respect to
the initial Distribution Date, the Closing Date.
"Registered Certificate": Any Certificate that has been registered
under the Securities Act. As of the Closing Date, the Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D, Class E and Class IO Certificates are
Registered Certificates.
"Regular Interest Certificate": Any REMIC III Certificate other than
a Class R-III Certificate.
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"Reimbursement Rate": The rate per annum applicable to the accrual
of interest on Servicing Advances in accordance with Section 3.03(d) and on P&I
Advances in accordance with Section 4.03(d), which rate per annum is equal to
the Prime Rate.
"REMIC": A "real estate mortgage investment conduit" as defined in
Section 860D of the Code.
"REMIC Administrator": Any REMIC administrator appointed pursuant to
Section 8.13 (or, in the absence of any such appointment, the Trustee).
"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 I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder
with respect to which a separate REMIC election is to be made, and consisting
of: (i) the Mortgage Loans as from time to time are subject to this Agreement
and all payments under and proceeds of such Mortgage Loans received after the
Closing Date (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 Escrow Payments and Reserve Funds; (ii) any REO
Property acquired in respect of a Mortgage Loan; (iii) such funds or assets as
from time to time are deposited in the Custodial Account, the Collection Account
and, if established, the REO Account, exclusive or any amounts that represent
Additional Interest collected in respect of an ARD Loan; and (iv) the rights of
the Depositor under Sections ___, ___, ___, ___ and ___ of the Mortgage Loan
Purchase Agreement.
"REMIC I Regular Interest": Any of the separate non-certificated
beneficial ownership interests in REMIC I issued hereunder and designated as a
"regular interest" in REMIC I, as described in the Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to any REMIC I Regular
Interest for any Distribution Date, either: (a) if the related Mortgage Loan
accrues or accrued, as the case may be, interest on the basis of a 360-day year
consisting of twelve 30-day months, the Net Mortgage Rate in effect for the
related Mortgage Loan as of the Closing Date; and (b) if the related Mortgage
Loan does not or did not, as the case may be, accrue interest on the basis of a
360-day year consisting of twelve 30-day months, a rate per annum equal to (i) a
fraction (expressed as a percentage), the numerator of which is the product of
twelve times the aggregate amount of interest that would accrue during the
related Interest Accrual Period on the Uncertificated Principal Balance of such
REMIC I Regular Interest outstanding immediately prior to such Distribution Date
if such interest were calculated (A) at the Mortgage Rate in effect for the
related Mortgage Loan as of the Closing Date and (B) on the same Interest
Accrual Basis as is applicable to the related Mortgage Loan, and the
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denominator of which is the Uncertificated Principal Balance of such REMIC I
Regular Interest outstanding immediately prior to such Distribution Date, minus
(ii) the sum of the applicable Master Servicing Fee Rate and the Trustee Fee
Rate.
"REMIC II": The segregated pool of assets consisting of all of the
REMIC I Regular Interests conveyed in trust to the Trustee for the benefit of
REMIC III, as holder of the REMIC II Regular Interests, and the Holders of the
Class R-II Certificates pursuant to Section 2.06, with respect to which a
separate REMIC election is to be made.
"REMIC II Regular Interest": Any of the fourteen separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
shall accrue interest at the REMIC II Remittance Rate in effect from time to
time, and shall be entitled to distributions of principal, subject to the terms
and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto. The designations for the respective REMIC II Regular Interests are set
forth in the Preliminary Statement hereto.
"REMIC II Remittance Rate": With respect to each REMIC II Regular
Interest for any Distribution Date, the Weighted Average REMIC I Remittance Rate
for such Distribution Date.
"REMIC III": The segregated pool of assets consisting of all of the
REMIC II Regular Interests conveyed in trust to the Trustee for the benefit of
the Holders of the REMIC III Certificates pursuant to Section 2.08, with respect
to which a separate REMIC election is to be made.
"REMIC III Certificate": Any Class A-1, Class A-2, Class A-3, Class
B, Class C, Class D, Class E, Class F, Class G, Class H, Class IO, Class J,
Class K, Class L, Class M or Class R-III Certificate.
"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 account or accounts created and
maintained by the Special Servicer pursuant to Section 3.16 on behalf of the
Trustee in trust for the Certificateholders, which shall be entitled
"_______________________________________, as Special Servicer, in trust for
registered holders of [LB Commercial Mortgage Trust ____], 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).
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"REO Loan": The mortgage loan deemed for purposes hereof to be
outstanding with respect to each REO Property. Each REO Loan shall be deemed to
provide for monthly payments of principal and/or interest equal to its Assumed
Scheduled Payment and otherwise to have the same terms and conditions as its
predecessor Mortgage Loan (such terms and conditions to be applied without
regard to the default on such predecessor Mortgage Loan and the acquisition of
the related REO Property as part of the Trust Fund). Each REO Loan shall be
deemed to have an initial unpaid principal balance and Stated Principal Balance
equal to the unpaid principal balance and Stated Principal Balance,
respectively, of its predecessor Mortgage Loan as of the date of the related REO
Acquisition. All Scheduled Payments (other than a Balloon Payment), Assumed
Scheduled Payments (in the case of a Balloon Mortgage Loan delinquent in respect
of its Balloon Payment) and other amounts due and owing, or deemed to be due and
owing, in respect of the predecessor Mortgage Loan as of the date of the related
REO Acquisition, shall be deemed to continue to be due and owing in respect of
an REO Loan. Collections in respect of each REO Loan (after provision for
amounts to be applied to the payment of, or to be reimbursed to the Master
Servicer or the Special Servicer for the payment of, the costs of operating,
managing and maintaining the related REO Property or for the reimbursement of
the Master Servicer or the Special Servicer for other related Servicing
Advances) shall be treated: first, as a recovery of accrued and unpaid interest
on such REO Loan at the related Mortgage Rate to but not including the Due Date
in the Collection Period of receipt (exclusive, however, in the case of an REO
Loan that relates to an ARD Loan after its Anticipated Repayment Date, of any
such accrued and unpaid interest that constitutes Additional Interest); second,
as a recovery of principal of such REO Loan to the extent of its entire unpaid
principal balance; and third, in accordance with the normal servicing practices
of the Master Servicer, as a recovery of any other amounts due and owing in
respect of such REO Loan. Notwithstanding the foregoing, all amounts payable or
reimbursable to the Master Servicer, the Special Servicer, the Trustee or the
Fiscal Agent in respect of the predecessor Mortgage Loan as of the date of the
related REO Acquisition, including, without limitation, any unpaid Servicing
Fees and any unreimbursed Servicing Advances and P&I Advances, together with any
interest accrued and payable to the Master Servicer, the Special Servicer, the
Trustee or the Fiscal Agent in respect of such Servicing Advances and P&I
Advances in accordance with Sections 3.03(d) and 4.03(d), shall continue to be
payable or reimbursable to the Master Servicer, the Special Servicer, the
Trustee or the Fiscal Agent, as the case may be, in respect of an REO Loan
pursuant to Section 3.05(a).
"REO Property": A Mortgaged Property acquired on behalf and in the
name of the Trustee for the benefit of the Certificateholders through
foreclosure, acceptance of a deed-in-lieu of foreclosure or otherwise in
accordance with applicable law in connection with the default or imminent
default of a Mortgage Loan.
"REO Revenues": All income, rents, profits and proceeds derived from
the ownership, operation or leasing of any REO Property.
"REO Status Report": A report substantially containing the
information described in Exhibit O 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
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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)(i).
"Request for Release": A request signed by a Servicing Officer, as
applicable, of the Master Servicer in the form of Exhibit D-1 attached hereto or
of the Special Servicer in the form of Exhibit D-2 attached hereto.
"Required Appraisal": With respect to each Required Appraisal
Mortgage Loan, an appraisal of the related Mortgaged Property from an
Independent Appraiser selected by the Special Servicer, which appraisal shall be
prepared in accordance with 12 CFR ss.225.62 and conducted in accordance with
the standards of the Appraisal Institute.
"Required Appraisal Mortgage Loan": Any Mortgage Loan (i) that is
sixty (60) days or more delinquent in respect of any Monthly Payment, (ii) that
becomes an REO Loan, (iii) that has been modified by the Special Servicer to
reduce the amount of any Monthly Payment (other than a Balloon Payment), (iv)
with respect to which a receiver in bankruptcy is appointed and continues in
such capacity in respect of the related Mortgaged Property, (v) with respect to
which the related Mortgagor is subject to a bankruptcy proceeding or (vi) with
respect to which any Balloon Payment on such Mortgage Loan has not been paid
within 20 days following its most recent scheduled maturity date. Any Required
Appraisal Loan shall cease to be such at such time as it has become a Corrected
Mortgage Loan, it has remained current for twelve consecutive Monthly Payments,
and no other Servicing Transfer Event has occurred with respect thereto during
such twelve-month period.
"Required Appraisal Value": An amount equal to [90%] of the
Appraised Value (net of any prior liens and estimated liquidation expenses) of
the Mortgaged Property related to the subject Required Appraisal Mortgage Loan
as determined by a Required Appraisal or any letter update of such Required
Appraisal; and provided further that for purposes of determining any Appraisal
Reduction Amount in respect of such Required Appraisal Mortgage Loan, such
Appraisal Reduction Amount shall be amended annually to reflect the Required
Appraisal Value determined pursuant to any Required Appraisal or letter update
of a Required Appraisal conducted subsequent to the original Required Appraisal
performed pursuant to Section 3.09(a).
"Reserve Account": The account or accounts created and maintained
pursuant to Section 3.03(f).
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"Reserve Funds": With respect to any Mortgage Loan, any amounts
delivered by the related Mortgagor to be held by or on behalf of the mortgagee
representing reserves for repairs, capital improvements and/or environmental
remediation in respect of the related Mortgaged Property.
"Residual Interest Certificate": A Class R-I, Class R-II or Class
R-III Certificate.
"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 the Fiscal Agent,
any officer or assistant officer thereof.
"Scheduled Payment": With respect to any Mortgage Loan, for any Due
Date following the Cut-off Date as of which it is outstanding, the Monthly
Payment on such Mortgage Loan that is or would be, as the case may be, payable
by the related Mortgagor on such Due Date under the terms of the related
Mortgage Note as in effect on the Closing Date, without regard to any subsequent
change in or modification of such terms in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Special Servicer
pursuant to Section 3.20, and assuming that the full amount of each prior
Scheduled Payment has been made in a timely manner.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Certificate": Any Class A-1, Class A-2, Class A-3 or Class
IO Certificate.
"Sequential Pay Certificates": Any of the Regular Interest
Certificates other than the Class IO Certificates.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.03(a).
"Servicing Advances": All customary, reasonable and necessary "out
of pocket" costs and expenses incurred by the Master Servicer, the Special
Servicer, the Fiscal Agent or the Trustee in connection with the servicing of a
Mortgage Loan, or in connection with the administration of any REO Property,
including, but not limited to, the cost of (a) compliance with the obligations
of the Master Servicer, the Special Servicer, the Fiscal Agent or the Trustee,
if any, set forth in Section 3.03(c), (b) the preservation, insurance,
restoration, protection and management of a Mortgaged Property (including,
without limitation, the cost of any "forced placed" insurance policy purchased
by the Master 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 Insurance
Proceeds or Liquidation Proceeds, (d) any enforcement or judicial proceedings
with respect to a Mortgaged Property, including, without limitation,
foreclosures,
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(e) any Required Appraisal or any other appraisal expressly permitted or
required to be obtained hereunder and (f) the operation, management, maintenance
and liquidation of any REO Property; provided that, notwithstanding anything to
the contrary, "Servicing Advances" shall not include allocable overhead of the
Master Servicer or the Special Servicer, such as costs for office space, office
equipment, supplies and related expenses, employee salaries and related expenses
and similar internal costs and expenses, or costs and expenses incurred by any
such party in connection with its purchase of any Mortgage Loan or REO Property
pursuant to any provision of this Agreement.
"Servicing Fees": With respect to each Mortgage Loan and REO 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) in the possession of the Master Servicer or
the Special Servicer and relating to the origination and servicing of any
Mortgage Loan, including, without limitation, appraisals, surveys, engineering
reports and environmental reports.
"Servicing Officer": Any officer or employee of the Master Servicer
or the Special Servicer involved in, or responsible for, the administration and
servicing of the Mortgage Loans, whose name and specimen signature appear on a
list of servicing officers furnished by such party to the Trustee and the
Depositor on the Closing Date, as such list may be amended from time to time.
"Servicing Standard": With respect to the Master Servicer or the
Special Servicer, to service and administer the Mortgage Loans for which it is
responsible: (i) with the same care, skill and diligence as is normal and usual
in its general mortgage servicing and asset management activities on behalf of
third parties or on behalf of itself, whichever is higher, with respect to
mortgage loans comparable to the Mortgage Loans; (ii) with a view to the timely
collection of all scheduled payments of principal and interest under the
Mortgage Loans, or, if a Mortgage Loan comes into and continues in default and
if, in the and reasonable, good faith judgment of the Special Servicer, no
satisfactory arrangements can be made for the collection of the delinquent
payments, the maximization of the recovery on such Mortgage Loan to the
Certificateholders (as a collective whole) on a present value basis (the
relevant discounting of anticipated collections that will be distributable to
the Certificateholders to be performed at the related Net Mortgage Rate); and
(iii) without regard to (A) any relationship that the Master Servicer or the
Special Servicer, as the case may be, or any Affiliate thereof may have with the
related borrower; (B) the ownership of any Certificate by the Master Servicer or
the Special Servicer, as the case may be, or any Affiliate thereof; (C) the
Master Servicer's or the Special Servicer's obligation to make Advances; and (D)
the right of the Master Servicer or the Special Servicer, as the case may be, or
any Affiliate of either of them, to receive reimbursement of costs, or the
sufficiency of any compensation payable to it hereunder or with respect to any
particular transaction.
"Servicing Transfer Event": With respect to any Mortgage Loan, the
occurrence of any of the events described in clauses (a) through (g) of the
definition of "Specially Serviced Mortgage Loan".
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"Single Certificate": For purposes of Section 4.02, a hypothetical
Certificate of any Class of Regular Interest Certificates evidencing a $1,000
denomination.
"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 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 Loan, ____% per annum.
"Specially Serviced Mortgage Loan": Any Mortgage Loan as to which
any of the following events has occurred:
(a) the related Mortgagor shall have failed to make any Monthly
Payment and such failure has continued unremedied for 60 days (or,
in the event that (i) the Mortgagor has failed to make a Balloon
Payment, (ii) the Master Servicer has received written evidence from
an institutional lender of such lender's binding commitment to
refinance such Mortgage Loan and (iii) the related Mortgagor has
continued to make monthly payments of principal and interest in an
amount at least equal to the Monthly Payment due on the Due Date
immediately preceding the scheduled maturity date, such failure has
continued unremedied for the lesser of 120 days and the period
within which such refinancing was expected to occur); or
(b) the Master Servicer shall have determined, in its good faith,
reasonable judgment, based on communications with the related
Mortgagor, that a default in the making of a Monthly Payment is
likely to occur within 30 days and is likely to remain unremedied
for at least 60 days (or, in the event that (i) the Mortgagor is
expected to default in the making of a Balloon Payment, (ii) the
Master Servicer has received written evidence from an institutional
lender of such lender's binding commitment to refinance such
Mortgage Loan and (iii) the Master Servicer reasonably expects the
related Mortgagor will continue to make monthly payments of
principal and interest in an amount at least equal to the Monthly
Payment due on the Due Date immediately preceding the scheduled
maturity date, such default is likely to remain unremedied for the
lesser of 120 days and the period within which such refinancing is
expected to occur); or
(c) there shall have occurred a default (other than as described in
clause (a) above) that materially impairs the value of the Mortgaged
Property as security for the Mortgage Loan or otherwise materially
adversely affects the interests of
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Certificateholders and that continues unremedied for the applicable
grace period under the terms of the Mortgage Loan (or, if no grace
period is specified, for 30 days); or
(d) a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises in an involuntary case under any
present or future federal or state bankruptcy, insolvency or similar
law or the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
related Mortgagor and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(e) the related Mortgagor shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to such Mortgagor or of or
relating to all or substantially all of its property; or
(f) the related Mortgagor shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or voluntarily
suspend payment of its obligations; or
(g) the Master Servicer shall have received notice of the
commencement of foreclosure or similar proceedings with respect to
the related Mortgaged Property;
provided, however, that a Mortgage Loan will cease to be a Specially Serviced
Mortgage Loan when a Liquidation Event has occurred with respect to 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
(g) above exists that would cause the Mortgage Loan to continue to be
characterized as a Specially Serviced Mortgage Loan, when:
(w) with respect to the circumstances described in clause (a)
above, the related Mortgagor has made three consecutive full
and timely Monthly Payments under the terms of such Mortgage
Loan (as such terms may be changed or modified in connection
with a bankruptcy or similar proceeding involving the related
Mortgagor or by reason of a modification, waiver or amendment
granted or agreed to by the Special Servicer pursuant to
Section 3.20);
(x) with respect to the circumstances described in clauses (b),
(d), (e) and (f) above, such circumstances cease to exist in
the good faith reasonable judgment of the Special Servicer,
but, with respect to any bankruptcy or insolvency proceedings
described in clauses (d), (e) and (f), no later than the entry
of an order or decree dismissing such proceeding;
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(y) with respect to the circumstances described in clause (c)
above, such default is cured; and
(z) with respect to the circumstances described in clause (g)
above, such proceedings are terminated;
so long as at that time no circumstance identified in clauses (a) through (g)
above exists that would cause the Mortgage Loan to continue to be characterized
as a Specially Serviced Mortgage Loan.
"Startup Day": With respect to each of REMIC I, REMIC II and REMIC
III, the day designated as such in Section 10.01(c).
"Stated Maturity Date": With respect to any Mortgage Loan, the Due
Date specified in the Mortgage Note (as in effect on the Closing Date) on which
the last payment of principal is due and payable under the terms of the Mortgage
Note (as in effect on the Closing Date), without regard to any change in or
modification of such terms in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or a modification, waiver or amendment of such
Mortgage Loan granted or agreed to by the Special Servicer pursuant to Section
3.20 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 Loan), the Cut-off Date Balance of such Mortgage Loan, as
permanently reduced on each Distribution Date (to not less than zero) by (i) all
payments (or advances in lieu thereof) and other collections of principal of
such Mortgage Loan (or successor REO Loan) that are distributed (or, to the
extent that they had not been applied to cover Additional Trust Fund Expenses,
would have been distributed) to Certificateholders on such Distribution Date,
and (ii) the principal portion of any Realized Loss incurred in respect of such
Mortgage Loan (or successor or REO Loan) during the related Collection Period.
Notwithstanding the foregoing, if a Liquidation Event occurs in respect of any
Mortgage Loan or REO Property, then the "Stated Principal Balance" of such
Mortgage Loan or of the related REO Loan, as the case may be, shall be zero
commencing as of the Distribution Date in the Collection Period next following
the Collection Period in which such Liquidation Event occurred.
"Subordinated Certificate": Any Class B, Class C, Class D, Class E,
Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class R-I, Class
R-II or Class R-III Certificate.
"Sub-Servicer": Any Person with which the Master Servicer or the
Special Servicer has entered into a Sub-Servicing Agreement.
"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.
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"Tax Matters Person": With respect to each of the REMICs created
hereunder, the Person designated as the "tax matters person" of such REMIC in
the manner provided under Treasury regulation section 1.860F-4(d) and temporary
Treasury regulation section 301.6231(a)(7)-1T, which Person shall be the
Plurality Residual Interest Certificateholder in respect of the related Class of
Residual Interest Certificates.
"Tax Returns": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of each of REMIC I, REMIC II and REMIC III due to its
classification as a REMIC under the REMIC Provisions, and the federal income tax
return to be filed on behalf of the Grantor Trust due to its classification as a
grantor trust under the Grantor Trust Provisions, together with any and all
other information, reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service under any
applicable provisions of federal tax law or any other governmental taxing
authority under applicable state and local tax law.
"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)(i)(B).
"Transferee": Any Person who is acquiring by Transfer any Ownership
Interest in a Certificate.
"Transferor": Any Person who is disposing of, by Transfer, any
Ownership Interest in a Certificate.
"Trust Fund": Collectively, all of the assets of REMIC I, REMIC II,
REMIC III and the Grantor Trust.
"Trustee": _____________________________ or its successor in
interest, in its capacity as trustee hereunder, or any successor trustee
appointed as herein provided.
"Trustee Fee": With respect to each Distribution Date, an amount
equal to one-twelfth of the product of (i) the Trustee Fee Rate, multiplied by
(ii) the aggregate Stated Principal Balance of the Mortgage Pool outstanding
immediately prior to such Distribution Date.
"Trustee Fee Rate": ___%.
"Trustee Liability": As defined in Section 8.05(b).
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
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"UCC Financing Statement": A financing statement executed and filed
pursuant to the Uniform Commercial Code, as in effect in any relevant
jurisdiction.
"Uncertificated Accrued Interest": With respect to any REMIC I
Regular Interest, for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued during the related Interest Accrual Period on the
Uncertificated Principal Balance of such REMIC I Regular Interest outstanding
immediately prior to such Distribution Date. With respect to any REMIC II
Regular Interest, for any Distribution Date, one month's interest at the REMIC
II Remittance Rate applicable to such REMIC II Regular Interest for such
Distribution Date, accrued during the related Interest Accrual Period on the
Uncertificated Principal Balance of such REMIC II Regular Interest outstanding
immediately prior to such Distribution Date. Uncertificated Accrued Interest
shall accrue on the basis of a 360- day year consisting of twelve 30-day months.
"Uncertificated Distributable Interest": With respect to any REMIC I
Regular Interest for any Distribution Date, the Uncertificated Accrued Interest
in respect of such REMIC I Regular Interest for such Distribution Date, reduced
(to not less than zero) by the product of (i) any Net Aggregate Prepayment
Interest Shortfall for such Distribution Date, multiplied by (ii) a fraction,
the numerator of which is the Uncertificated Accrued Interest in respect of such
REMIC I Regular Interest for such Distribution Date, and the denominator of
which is the aggregate Uncertificated Accrued Interest in respect of all the
REMIC I Regular Interests for such Distribution Date. With respect to any REMIC
II Regular Interest for any Distribution Date, the Uncertificated Accrued
Interest in respect of such REMIC II Regular Interest for such Distribution
Date, reduced (to not less than zero) by the product of (i) any Net Aggregate
Prepayment Interest Shortfall for such Distribution Date, multiplied by (ii) a
fraction, expressed as a percentage, the numerator of which is the
Uncertificated Accrued Interest in respect of such REMIC II Regular Interest for
such Distribution Date, and the denominator of which is the aggregate
Uncertificated Accrued Interest in respect of all the REMIC II Regular Interests
for such Distribution Date.
"Uncertificated Principal Balance": The principal amount of any
REMIC I Regular Interest or REMIC II Regular Interest outstanding as of any date
of determination. As of the Closing Date, the Uncertificated Principal Balance
of each REMIC I Regular Interest shall equal the Cut-off Date Balance of the
related Mortgage Loan, and the Uncertificated Principal Balance of each REMIC II
Regular Interest shall equal the amount set forth in the Preliminary Statement
hereto as its initial Uncertificated Principal Balance. On each Distribution
Date, the Uncertificated Principal Balance of each REMIC II Regular Interest
shall be permanently reduced by all distributions of principal deemed to have
been made thereon on such Distribution Date pursuant to Section 4.01(h), and
shall be further permanently reduced on such Distribution Date by all Realized
Losses and Additional Trust Fund Expenses deemed to have been allocated thereto
on such Distribution Date pursuant to Section 4.04(b). On each Distribution
Date, the Uncertificated Principal Balance of each REMIC I Regular Interest
shall be permanently reduced by all distributions of principal deemed to have
been made in respect of such REMIC I Regular Interest on such Distribution Date
pursuant to Section 4.01(i), and shall be further permanently reduced on such
Distribution Date by all Realized Losses and Additional
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Trust Fund Expenses deemed to have been allocated thereto on such Distribution
Date pursuant to Section 4.04(c).
"Underwriter": Lehman Brothers Inc. or its successor in interest.
"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,
all within the meaning of Section 7701(a) (30) of the Code.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. At all times during the term
of this Agreement, ____% of the Voting Rights shall be allocated among the
Holders of the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class K, Class L and Class M Certificates
in proportion to the respective Class Principal Balances of their Certificates,
and ____% of the Voting Rights shall be allocated to the Class IO Certificates.
Voting Rights allocated to a Class of Certificateholders shall be allocated
among such Certificateholders in standard proportion to the Percentage Interests
evidenced by their respective Certificates.
"Watch List Report": A report substantially containing the
information described in Exhibit P attached hereto, including, among other
things, any Mortgage Loan with a Debt Service Coverage Ratio of less than 1.0x
and that is in jeopardy of becoming a Specially Serviced Mortgage Loan.
"Weighted Average REMIC I Remittance Rate": With respect to any
Distribution Date, the rate per annum equal to the weighted average, expressed
as a percentage and rounded to six decimal places, of the respective REMIC I
Remittance Rates applicable to the REMIC I Regular Interests for such
Distribution Date, weighted on the basis of the respective Uncertificated
Principal Balances of such REMIC I Regular Interests outstanding immediately
prior to such Distribution Date.
"Workout Fee": With respect to each Corrected Mortgage Loan, the fee
designated as such and payable to the Special Servicer pursuant to Section
3.11(c).
"Workout Fee Rate": With respect to each Corrected Mortgage Loan as
to which a Workout Fee is payable, ____%.
"Yield Maintenance Charge": Payments paid or payable, as the context
requires, on a Mortgage Loan as the result of a Principal Prepayment thereon,
not otherwise due thereon in respect of principal or interest, which have been
calculated (based on Scheduled Payments on such
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Mortgage Loan) to compensate the holder for reinvestment losses based on the
value of an interest rate index at or near the time of prepayment. Any other
prepayment premiums, penalties and fees not so calculated will not be considered
"Yield Maintenance Charges."
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 generally accepted accounting
principles;
(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
(vii) the terms "include" or "including" shall mean without
limitation by reason of enumeration.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Creation of Trust; 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 that such trust be
designated "[LB Commercial 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. The Depositor, concurrently with
the execution and delivery hereof, does hereby assign, sell, transfer, set over
and otherwise convey to the Trustee in trust, without recourse, for the benefit
of the Certificateholders all the right, title and interest of the Depositor,
in, to and under (i) the Mortgage Loans, (ii) Sections ___, ___, ___, ___ and
___ of the Mortgage Loan Purchase Agreement and (iii) all other assets included
or to be included in the Trust Fund. Such assignment includes all interest and
principal received or receivable on or with respect to the Mortgage Loans and
due after the Cut-off Date. The transfer of the Mortgage Loans and the related
rights and property accomplished hereby is absolute and, notwithstanding Section
11.07, is intended by the parties to constitute a sale.
(b) In connection with the Depositor's assignment pursuant to
Section 2.01(a) above, the Depositor shall direct, and hereby represents and
warrants that it has directed, 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
(with a copy to the Master Servicer), on or before the Closing Date, the
Mortgage File for each Mortgage Loan so assigned. None of the Trustee, any
Custodian, the Master Servicer or the Special Servicer shall be liable for any
failure by the Mortgage Loan Seller or the Depositor to comply with the document
delivery requirements of the Mortgage Loan Purchase Agreement and this Section
2.01 (b).
(c) The Trustee shall, as to each Mortgage Loan, promptly (and in
any event within 30 days following the later of Closing Date and the date on
which the complete Mortgage File for such Mortgage Loan (including, without
limitation, all necessary recording and filing information) has been delivered
to the Trustee or its agent), at the Mortgage Loan Seller's expense pursuant to
the Mortgage Loan Purchase Agreement, submit for recording or filing, as the
case may be, in the appropriate public office for real property records or UCC
Financing Statements, as appropriate) each assignment of Mortgage, assignment of
Assignment of Leases and any other recordable documents relating to the Mortgage
Loan, in favor of the Trustee referred to in clause (iv) of the definition of
"Mortgage File", and each UCC-2 and UCC-3 assignment in favor of the Trustee
referred to in clause (viii) of the definition of "Mortgage File." Each such
assignment shall reflect that it should be returned by the public recording
office to the Master Servicer or its agent following recording, and each such
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UCC-2 and UCC-3 assignment shall reflect that the file copy thereof should be
returned to the Master Servicer or its agent following filing; provided that in
those instances where the public recording office retains the original
assignment of Mortgage or assignment of Assignment of Leases the Master Servicer
shall obtain therefrom a certified copy of the recorded original. The Master
Servicer will forward each of the aforementioned assignments to the Trustee
promptly following the Master Servicer's receipt thereof. If any such document
or instrument is lost or returned unrecorded or unfiled, as the case may be,
because of a defect therein, the Master Servicer shall direct the Mortgage Loan
Seller pursuant to the Mortgage Loan Purchase Agreement promptly to prepare or
cause to be prepared a substitute therefor or cure such defect, as the case may
be, and thereafter the Master Servicer shall upon receipt thereof cause the same
to be duly recorded or filed, as appropriate.
(d) All documents and records in the possession of the Depositor or
the Mortgage Loan Seller that relate to the Mortgage Loans and that are not
required to be a part of a Mortgage File in accordance with the definition
thereof, together with all unapplied Escrow Payments and Reserve Funds in the
possession of the Depositor or the Mortgage Loan Seller that relate to the
Mortgage Loans, shall be delivered to the Master Servicer or such other Person
as may be directed by the Master Servicer (at the expense of the Depositor or
the Mortgage Loan Seller) on or before the Closing Date and shall be held by the
Master Servicer on behalf of the Trustee in trust for the benefit of the
Certificateholders.
(e) In connection with the Depositor's assignment pursuant to
Section 2.01(a) above, the Depositor shall deliver to the Trustee and the Master
Servicer on or before the Closing Date a copy of a fully executed counterpart of
the Mortgage Loan Purchase Agreement, as in full force and effect on the Closing
Date.
(f) It is not intended that this Agreement create a partnership or a
joint-stock association.
SECTION 2.02. Acceptance of Trust Fund by Trustee.
(a) The Trustee, by its execution and delivery of this Agreement,
hereby accepts receipt, directly or through a Custodian on its behalf, of (i)
the 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 subsequently received by it that
constitute portions of the Mortgage Files, and that it holds and will hold the
Mortgage Loans and such other assets, together with any other 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.
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 Mortgage Loan, except as specifically identified in the Schedule of
Exceptions to Mortgage File Delivery attached hereto as Exhibit C, (i) all
documents specified in clauses (i) through (v), (vii) and (viii) of the
definition of "Mortgage File" are in its possession or the possession of a
Custodian
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on its behalf, and (ii) all documents and instruments 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 Mortgagor), (B) appear to have been executed (where
appropriate) and (C) purport to relate to such Mortgage Loan.
(b) On or about the 90th day following the Closing Date (and, if any
exceptions are noted, again on or about the first anniversary of the Closing
Date), the Trustee or a Custodian on its behalf shall review the documents
delivered to it or such Custodian with respect to each Mortgage Loan, and the
Trustee shall, subject to Sections 2.01, 2.02(c) and 2.02(d), certify in writing
to each of the other parties hereto, the Mortgage Loan Seller and the
Underwriter that, as to each Mortgage Loan then subject to this Agreement
(except as specifically identified in any exception report annexed to such
certification): (i) all documents specified in clauses (i) through (v), (vii)
and (viii) of the definition of "Mortgage File" are in its possession or the
possession of a Custodian on its behalf; (ii) the recordation/filing
contemplated by Section 2.01(c) 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 Mortgagor), (B) appear to have been executed
(where appropriate) 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), (v)
and (vi)(B) of the definition of "Mortgage Loan Schedule" accurately reflects
the information set forth in the Mortgage File.
(c) None of the Trustee, the Master Servicer, the Special Servicer
or any Custodian is under any duty or obligation to inspect, review or examine
any of the documents, instruments, certificates or other papers relating to the
Mortgage Loans delivered to it to determine that the same are valid, legal,
effective, genuine, 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.
(d) In performing the reviews contemplated by Subsections (a) and
(b) above, the Trustee may conclusively rely on the 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.
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SECTION 2.03. Mortgage Loan Seller's Repurchase of Mortgage Loans
for Document Defects and Breaches of Representations
and Warranties.
(a) If any party hereto discovers that any document or documents
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, or does
not appear to be regular on its face (each, a "Document Defect"), or discovers
or receives notice of a breach of any representation or warranty set forth in in
Schedule I to, and made pursuant to Section 3 of, the Mortgage Loan Purchase
Agreement (a "Breach"), and such Document Defect or Breach, as the case may be,
materially and adversely affects the interests of the Certificateholders in, or
the value of, any Mortgage Loan, such party shall give prompt written notice
thereof to each of the Rating Agencies, the Mortgage Loan Seller and the other
parties hereto. Promptly upon becoming aware of any such Document Defect or
Breach (including through such written notice provided by any party hereto, as
provided above), the Trustee shall request that the Mortgage Loan Seller, not
later than 90 days from the Mortgage Loan Seller's receipt of such notice (or,
in the case of a Document Defect or Breach relating to a Mortgage Loan not being
a "qualified mortgage" within the meaning of the REMIC Provisions, not later
than 90 days of any party discovering such Document Defect or Breach), cure such
Document Defect or Breach, as the case may be, in all material respects (which
cure shall include payment of losses and any Additional Trust Fund Expenses
associated therewith) or, if such Document Defect or Breach, as the case may be,
cannot be cured within such 90-day period, repurchase the affected Mortgage Loan
at the applicable Purchase Price in accordance with the Mortgage Loan Purchase
Agreement; provided, however, that if such Document Defect or Breach is capable
of being cured but not within such 90-day period, such Document Defect or Breach
is not related to any Mortgage Loan not being a "qualified mortgage" within the
meaning of the REMIC Provisions and the Mortgage Loan Seller has commenced and
is diligently proceeding with the cure of such Document Defect or Breach within
such 90-day period, then (subject to the Mortgage Loan Seller's delivery of the
Officer's Certificate comtemplated by the Mortgage Loan Purchase Agreement) the
Mortgage Loan Seller shall have an additional 90 days to complete such cure (or,
in the event of a failure to so cure, to complete such repurchase); and
provided, further, that if, any such Document Defect is still not cured after
the initial 90 days and any such additional 90-day period solely due to the
failure of a recording office to have returned the recorded document, then the
Mortgage Loan Seller shall be entitled to continue to defer its cure and
repurchase obligations in respect of such Document Defect so long as the
Mortgage Loan Seller certifies to the Trustee every 30 days thereafter that the
Document Defect is still in effect solely because of the failure of a recording
office to have returned the recorded document and that the Mortgage Loan Seller
is diligently pursuing the cure of such defect (specifying the actions being
taken) provided that no such deferral of cure or repurchase may continue beyond
the second anniversary of the Closing Date. If the affected Mortgage Loan is to
be repurchased, the Master Servicer shall designate the Custodial Account as the
account to which funds in the amount of the Purchase Price are to be wired.
Notwithstanding the foregoing, the delivery of a commitment to issue a policy of
lender's title insurance in lieu of the delivery of the actual policy of
lender's title insurance shall not be considered a Document Defect with respect
to any Mortgage File if such actual
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policy of insurance is delivered to the Trustee or a Custodian on its behalf not
later than the 90th day following the Closing Date.
(b) In connection with any repurchase of a Mortgage Loan
contemplated by this Section 2.03, the Trustee, the Custodian, the Master
Servicer and the Special Servicer shall each tender to the Mortgage Loan Seller,
upon delivery to each of them of a receipt executed by the Mortgage Loan Seller,
all portions of the Mortgage File and other documents pertaining to such
Mortgage Loan possessed by it, and each document that constitutes a part of the
Mortgage File shall be endorsed or assigned to the extent necessary or
appropriate to the Mortgage Loan Seller or its designee in the same manner, and
pursuant to appropriate forms of assignment, substantially similar to the manner
and forms pursuant to which such documents were previously assigned to the
Trustee; provided that such tender by the Trustee shall be conditioned upon its
receipt from the Master Servicer of a Request for Release. The Master Servicer
shall, and is hereby authorized and empowered by the Trustee to, prepare,
execute and deliver in its own name, on behalf of the Certificateholders and the
Trustee or any of them, the endorsements and assignments contemplated by this
Section 2.03, and the Trustee shall execute and deliver any powers of attorney
necessary to permit the Master Servicer to do so; provided, however, that the
Trustee shall not be held liable for any misuse of any such power of attorney by
the Master Servicer.
(c) The Mortgage Loan Purchase Agreement provides the sole remedies
available to the Certificateholders, or the Trustee on behalf of the
Certificateholders, respecting any Document Defect or Breach with respect to the
Mortgage Loans.
SECTION 2.04. Representations and Warranties of Depositor.
(a) The Depositor hereby represents and warrants to the Trustee, for
its own benefit and the benefit of the Certificateholders, and to the Fiscal
Agent, the Master Servicer and the Special Servicer, as of the Closing Date,
that:
(i) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
(ii) The execution and delivery of this Agreement by the Depositor,
and the performance and compliance with the terms of this Agreement by the
Depositor, will not violate the Depositor's certificate of incorporation
or by-laws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in
the breach of, any material agreement or other instrument to which it is a
party or which is applicable to it or any of its assets.
(iii) The Depositor 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 Depositor, enforceable against the Depositor
in accordance with the terms hereof, subject to (A) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, and (B) general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(v) The Depositor is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court or arbiter, or any order, regulation or
demand of any federal, state or local governmental or regulatory
authority, which violation, in the Depositor's 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) 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.
(vii) No litigation is pending or, to the best of the Depositor's
knowledge, threatened against the Depositor that, if determined adversely
to the Depositor, would prohibit the Depositor from entering into this
Agreement or that, in the Depositor's 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.
(viii) Immediately prior to the transfer of the Mortgage Loans to
the Trust Fund pursuant to this Agreement, (A) the Depositor had good and
marketable title to, and was the sole owner and holder of, each Mortgage
Loan; and (B) the Depositor has full right and authority to sell, assign
and transfer the Mortgage Loans and all servicing rights pertaining
thereto.
(ix) The Depositor is transferring the Mortgage Loans to the Trust
Fund free and clear of any liens, pledges, charges and security interests.
(b) The representations and warranties of the Depositor set forth in
Section 2.04(a) shall survive the execution and delivery of this Agreement and
shall inure to the benefit of the Persons for whose benefit they were made for
so long as the Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice thereof to the
other parties.
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SECTION 2.05. Execution, Authentication and Delivery of Class R-I
Certificates; Creation of REMIC I Regular Interests.
The Trustee hereby acknowledges the assignment to it of the assets
included in the Trust Fund. Concurrently with such assignment and in exchange
therefor, (a) the REMIC I Regular Interests have been issued, and (b) pursuant
to the written request of the Depositor executed by an officer thereof, the
Trustee, as Certificate Registrar, has executed, and the Trustee, as
Authenticating Agent, has authenticated and delivered to or upon the order of
the Depositor, the Class R-I Certificates in authorized denominations. The
interests evidenced by the Class R-I Certificates, together with the REMIC I
Regular Interests, constitute the entire beneficial ownership of REMIC I. The
rights of the Class R-I Certificateholders and REMIC II (as holder of the REMIC
I Regular Interests) to receive distributions from the proceeds of REMIC I in
respect of the Class R-I Certificates and the REMIC I Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-I Certificates and the REMIC I Regular Interests, shall be as set forth in
this Agreement.
SECTION 2.06. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by Trustee.
The Depositor, as of the Closing Date, and concurrently with the
execution and delivery of this Agreement, does hereby assign without recourse
all the right, title and interest of the Depositor in and to the REMIC I Regular
Interests to the Trustee for the benefit of the Holders of the Class R-II
Certificates and REMIC III as the holder of the REMIC II Regular Interests. 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 Certificates and
REMIC III as the holder of the REMIC II Regular Interests.
SECTION 2.07. Execution, Authentication and Delivery of Class R-II
Certificates.
Concurrently with the assignment to the Trustee of the REMIC I
Regular Interests and in exchange therefor, (a) the REMIC II Regular Interests
have been issued and (b) pursuant to the written request of the Depositor
executed by an officer thereof, the Trustee, as Certificate Registrar, has
executed, and the Trustee, as Authenticating Agent, has authenticated and
delivered to or upon the order of the Depositor, the Class R-II Certificates in
authorized denominations. The rights of the Class R-II Certificateholders and
REMIC III (as holder of the REMIC II Regular Interests) to receive distributions
from the proceeds of REMIC II in respect of the Class R-II Certificates and the
REMIC II Regular Interests, respectively, and all ownership interests evidenced
or constituted by the Class R-II Certificates and the REMIC II Regular
Interests, shall be as set forth in this Agreement.
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SECTION 2.08. Conveyance of REMIC II Regular Interests; Acceptance
of REMIC III by Trustee.
The Depositor, as of the Closing Date, and concurrently with the
execution and delivery of this Agreement, does hereby assign without recourse
all the right, title and interest of the Depositor in and to the REMIC II
Regular Interests to the Trustee for the benefit of the Holders of the REMIC III
Certificates. The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and declares that it holds and will hold the same in trust for
the exclusive use and benefit of all present and future Holders of the REMIC III
Certificates.
SECTION 2.09. Execution, Authentication and Delivery of REMIC III
Certificates.
Concurrently with the assignment to the Trustee of the REMIC II
Regular Interests and in exchange therefor, pursuant to the written request of
the Depositor executed by an officer thereof, the Trustee, as Certificate
Registrar, has executed, and the Trustee, as Authenticating Agent, has
authenticated and delivered to or upon the order of the Depositor, the REMIC III
Certificates in authorized denominations evidencing the entire beneficial
ownership of REMIC III. The rights of the Holders of the respective Classes of
REMIC III Certificates to receive distributions from the proceeds of REMIC III
in respect of their REMIC III Certificates, and all ownership interests
evidenced or constituted by the respective Classes of REMIC III Certificates in
such distributions, shall be as set forth in this Agreement.
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ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
SECTION 3.01. Administration of the Mortgage Loans.
(a) Each of the Master Servicer and the Special Servicer shall
service and administer the Mortgage Loans that each is obligated to service and
administer pursuant to this Agreement on behalf of the Trustee, for the benefit
of the Certificateholders as determined in the good faith and reasonable
judgement of the Master Servicer or the Special Servicer, as the case may be, in
accordance with any and all applicable laws, the terms of this Agreement and the
terms of the respective Mortgage Loans and, to the extent consistent with the
foregoing, in accordance with the Servicing Standard. The Master Servicer or the
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 Mortgage Loans that are not Specially Serviced
Mortgage Loans, and (ii) the Special Servicer shall service and administer each
Specially Serviced Mortgage Loan and REO Property and shall render such services
with respect to all Mortgage Loans and REO Properties as are specifically
provided for herein. All references herein to the respective duties of the
Master Servicer and the Special Servicer, and to the areas in which they may
exercise discretion, shall be subject to Section 3.21.
(b) Subject to Section 3.01(a) and Section 6.11, the Master Servicer
and the Special Servicer shall each have full power and authority, acting alone,
to do or cause to be done any and all things in connection with such servicing
and administration which it may deem necessary or desirable. Without limiting
the generality of the foregoing, each of the Master Servicer and the Special
Servicer, in its own name, with respect to each of the Mortgage Loans it is
obligated to service hereunder, is hereby authorized and empowered by the
Trustee to execute and deliver, on behalf of the Certificateholders and the
Trustee or any of them, (i) any and all financing statements, continuation
statements and other documents or instruments necessary to maintain the lien
created by any Mortgage or other security document in the related Mortgage File
on the related Mortgaged Property and related collateral; (ii) in accordance
with the Servicing Standard and subject to Section 3.20 and Section 6.11, any
and all modifications, waivers, amendments or consents to or with respect to any
documents contained in the related Mortgage File; and (iii) any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments. Subject to Section 3.10, the
Trustee shall, at the written request of the Master Servicer or the Special
Servicer, promptly execute any limited powers of attorney and other documents
furnished by the Master Servicer or the Special Servicer that are necessary or
appropriate to enable them to carry out their 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) Each of the Master Servicer or the Special Servicer shall
undertake reasonable efforts to collect all payments required 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. Consistent with the foregoing, the Special Servicer, with regard to a
Specially Serviced Mortgage Loan, or the Master Servicer, with regard to a
Mortgage Loan that is not a Specially Serviced Mortgage Loan, may waive any
Default Interest or late payment charge in connection with any payment on a
Mortgage Loan.
(b) All amounts collected in respect of any Cross-Collateralized
Group in the form of payments from Mortgagors, 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 Mortgagors, Liquidation Proceeds or Insurance Proceeds
shall be applied to amounts due and owing under the related Mortgage Note and
Mortgage (including, without limitation, for principal and accrued and unpaid
interest) in accordance with the express provisions of the related Mortgage Note
and Mortgage and, in the absence of such express provisions, shall be applied
for purposes of this Agreement: first, as a recovery of any related and
unreimbursed Servicing Advances; second, as a recovery of accrued and unpaid
interest on such Mortgage Loan at the related Mortgage Rate to, but not
including, the date of receipt (or, in the case of a full Monthly Payment from
any Mortgagor, through the related Due Date), exclusive, however, in the case of
an ARD Loan after its Anticipated Repayment Date, of any such accrued and unpaid
interest 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, as a recovery
of amounts to be currently applied to the payment of, or escrowed for the future
payment of, real estate taxes, assessments, insurance premiums, ground rents (if
applicable) and similar items; fifth, as a recovery of Reserve Funds to the
extent then required to be held in escrow; sixth, as a recovery of any
Prepayment Premium or Yield Maintenance Charge then due and owing under such
Mortgage Loan; seventh, as a recovery of any Default Interest and late payment
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
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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.
SECTION 3.03. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts; Reserve Accounts.
(a) The Master Servicer shall, as to all Mortgage Loans, establish
and maintain one or more accounts (the "Servicing Accounts"), in which all
Escrow Payments shall be deposited and retained. Each Servicing Account shall be
an Eligible Account. Withdrawals of amounts so collected from a Servicing
Account may be made (to the extent of amounts on deposit therein in respect of
the related Mortgage Loan or, in the case of clauses (iv) and (v), to the extent
of interest or other income earned on such amounts) only to: (i) effect payment
of real estate taxes, assessments, insurance premiums, ground rents (if
applicable) and comparable items in respect of the respective Mortgaged
Properties; (ii) reimburse the Master Servicer or the Special Servicer for any
Servicing Advances made to cover any of the items described in the immediately
preceding clause (i); (iii) refund to Mortgagors any sums as may be determined
to be overages; (iv) pay interest, if required and as described below, to
Mortgagors on balances in the Servicing Account; (v) pay the Master Servicer
interest and investment income on balances in the Servicing Account as described
in Section 3.06(b), if and to the extent not required by law or the terms of
Mortgage Loan to be paid to the Mortgagor; or (vi) clear and terminate the
Servicing Account at the termination of this Agreement in accordance with
Section 9.01. To the extent permitted by law or the applicable Mortgage Loan,
funds in the Servicing Accounts may be invested only in Permitted Investments in
accordance with the provisions of Section 3.06. The Master Servicer shall pay or
cause to be paid to the Mortgagors interest, if any, earned on the investment of
funds in Servicing Accounts maintained thereby, if 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.
(b) The Master Servicer shall, as to each and every 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 to
obtain, from time to time, all bills for (or otherwise confirm) the payment of
such items (including renewal premiums) and, as and when necessary, shall effect
payment thereof prior to the applicable penalty or termination date. For
purposes of effecting any such payment for which it is responsible, the Master
Servicer shall apply Escrow Payments as allowed under the terms of the related
Mortgage Loan or, if such Mortgage Loan does not require the related Mortgagor
to escrow for the payment of real estate taxes, assessments, insurance premiums,
ground rents (if applicable) and similar items, the Master Servicer shall, as to
each and every Mortgage Loan, use reasonable efforts consistent with the
Servicing Standard to cause the related Mortgagor to comply with the requirement
of the related
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Mortgage that the Mortgagor make payments in respect of such items at the time
they first become due.
(c) The Master Servicer shall, as to each and every Mortgage Loan,
make a Servicing Advance with respect to the related Mortgaged Property in an
amount equal to all such funds as are necessary for the purpose of effecting the
payment of (i) real estate taxes, assessments and other similar items, (ii)
ground rents (if applicable), and (iii) premiums on Insurance Policies, in each
instance if and to the extent Escrow Payments (if any) collected from the
related Mortgagor are insufficient to pay such item when due and the related
Mortgagor has failed to pay such item on a timely basis, and provided that the
particular Servicing Advance would not, if made, constitute a Nonrecoverable
Servicing Advance. All such Servicing Advances shall be reimbursable in the
first instance from related collections from the Mortgagors, 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 the Mortgaged Properties shall, for purposes of
this Agreement, including, without limitation, the Trustee's calculation of
monthly distributions to Certificateholders, be added to the unpaid Stated
Principal Balances of the related Mortgage Loans, notwithstanding that the terms
of such Mortgage Loans so permit. The foregoing shall in no way limit the Master
Servicer's ability to charge and collect from the Mortgagor such costs together
with interest thereon.
If the Master Servicer or Special Servicer is required under any
provision of this Agreement (including, but not limited to, this Section
3.03(c)) to make a Servicing Advance, but neither does so within 15 days after
such Advance is required to be made, the Trustee shall, if it has actual
knowledge of such failure on the part of the Master Servicer or Special
Servicer, as the case may be, give written notice of such failure, as
applicable, to the Master Servicer or the Special Servicer. If such Servicing
Advance is not made by the Master Servicer or the Special Servicer within three
Business Days after such notice is given to the Master Servicer or the Special
Servicer, as applicable, then (subject to a determination that such Servicing
Advance would, if made, be a Nonrecoverable Servicing Advance) the Trustee shall
make such Servicing Advance. If the Trustee fails to make any Servicing Advance
required to be made under this Section 3.03(c), then (subject to a determination
that such Servicing Advance would, if made, be a Nonrecoverable Servicing
Advance) the Fiscal Agent shall make such Servicing Advance within three
Business Days of such failure by the Trustee and, thereby, the Trustee shall be
deemed not to be in default under this Agreement. Any failure by the Master
Servicer or the Special Servicer to make a Servicing Advance (excluding
Servicing Advances determined to be Nonrecoverable Servicing Advances prior to
the Master Servicer's or the Special Servicer's, as the case may be, refusal or
failure to make such Servicing Advance) hereunder shall constitute an Event of
Default by the Master Servicer or the Special Servicer, as the case may be,
subject to and as provided in Section 7.01.
(d) In connection with its recovery of any Servicing Advance from
the Custodial Account pursuant to Section 3.05(a), each of the Master Servicer,
the Special Servicer, the Trustee and the Fiscal Agent shall be entitled to
receive, out of any amounts then on deposit in the Custodial Account, any unpaid
interest at the Reimbursement Rate in effect from time to time, compounded
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annually, accrued on the amount of such Servicing Advance from the date made to
but not including the date of reimbursement. The Master Servicer shall reimburse
itself, the Special Servicer, the Trustee or the Fiscal Agent, as appropriate
and in accordance with Section 3.05(a), for any Servicing Advance as soon as
practicable after funds available for such purpose are deposited in the
Custodial Account.
(e) None of the Master Servicer, the Special Servicer, the Trustee
or the Fiscal Agent shall be required to make out of its own funds any Servicing
Advance that would, if made, constitute a Nonrecoverable Servicing Advance. The
determination by either the Master Servicer or the Special Servicer 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 in
accordance with the Servicing Standard and shall be evidenced by an Officers'
Certificate delivered promptly to the Trustee and the Depositor, setting forth
the basis for such determination, together with a copy of any appraisal of the
related Mortgaged Property or REO Property, as the case may be; which appraisal
shall take into account the factors specified in Section 3.18(e), including,
without limitation, any environmental, engineering or other third party reports
available, and other factors that a prudent real estate appraiser would consider
and shall have been conducted by an Independent Appraiser in accordance with the
standards of the Appraisal Institute, within the twelve months preceding such
determination of nonrecoverability, and further accompanied by related Mortgagor
operating statements and financial statements, budgets and rent rolls of the
related Mortgaged Property (to the extent available and/or in the Master
Servicer's or the Special Servicer's possession) and any engineers' reports,
environmental surveys or similar reports that the Master Servicer or the Special
Servicer may have obtained and that support such determination. The Trustee and
the Fiscal Agent shall be entitled to rely, conclusively, on any determination
by the Master Servicer or the Special Servicer that a Servicing Advance, if
made, would be a Nonrecoverable Advance; provided, however, that if the Master
Servicer or the Special Servicer has failed to make a Servicing Advance for
reasons other than a determination by the Master Servicer or the Special
Servicer, as applicable, that such Servicing Advance would be a Nonrecoverable
Advance, the Trustee or the Fiscal Agent, as applicable, shall make such
Servicing Advance within the time periods required by Section 3.03(c) unless the
Trustee or the Fiscal Agent, in good faith, makes a determination that such
Servicing Advance would be a Nonrecoverable Advance.
Notwithstanding anything set forth herein to the contrary, however,
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 Custodial Account any servicing expense that, if advanced 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 Certificate delivered promptly to the Trustee, the
Depositor and 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
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promptly delivered 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.
(f) The Master Servicer shall, as to all Mortgage Loans, establish
and maintain, as applicable, one or more accounts (the "Reserve Accounts"), into
which all Reserve Funds, if any, shall be deposited and retained. Withdrawals of
amounts so deposited may be made (i) to pay for, or to reimburse the related
Mortgagor in connection with, the related repairs, capital improvements and/or
environmental remediation at the related Mortgaged Property if the repairs,
capital improvements and/or environmental remediation have been completed, and
such withdrawals are made in accordance with the Servicing Standard and the
terms of the related Mortgage Note, Mortgage and any other agreement with the
related Mortgagor governing such Reserve Funds and (ii) to pay the Master
Servicer interest and investment income earned on amounts in the Reserve
Accounts as described below. To the extent permitted in the applicable Mortgage,
funds in the Reserve Accounts may be invested in Permitted Investments in
accordance with the provisions of Section 3.06. Subject to the related Mortgage
Loan documents, all Reserve Accounts shall be Eligible Accounts. Consistent with
the Servicing Standard, the Master Servicer may waive or extend the date set
forth in any agreement governing such Reserve Funds by which the required
repairs, capital improvements and/or environmental remediation at the related
Mortgaged Property must be completed.
SECTION 3.04. Custodial Account and Collection Account.
(a) The Master Servicer shall establish and maintain one or more
accounts (collectively, the "Custodial Account"), in which the amounts described
in clauses (i) through (viii) below shall be deposited and held on behalf of the
Trustee in trust for the benefit of the Certificateholders. The Custodial
Account shall be an Eligible Account. The Master Servicer shall deposit or cause
to be deposited in the Custodial Account, within two Business Days of receipt
thereof (in the case of payments by Mortgagors or other collections on the
Mortgage Loans) or as otherwise required hereunder, the following payments and
collections received or made by the Master Servicer or on its behalf subsequent
to the Cut-off Date (other than in respect of principal and interest on the
Mortgage Loans due and payable on or before the Cut-off Date, which payments
shall be delivered promptly to the Mortgage Loan Seller or its designee, with
negotiable instruments endorsed as necessary and appropriate without recourse),
or payments (other than Principal Prepayments) received by it on or prior to the
Cut-off Date but allocable to a period subsequent thereto:
(i) all payments on account of principal of the Mortgage Loans,
including, without limitation, Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans,
including, without limitation, Default Interest and Additional Interest;
(iii) all Prepayment Premiums and Yield Maintenance Charges;
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(iv) all Insurance Proceeds and Liquidation Proceeds (other than
that portion of the Liquidation Proceeds described in clause (vi) of the
definition thereof that are required to be deposited in the Collection
Account pursuant to Section 9.01) received in respect of any Mortgage
Loan;
(v) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.06 in connection with losses incurred with respect
to Permitted Investments of funds held in the Custodial Account;
(vi) any amounts required to be deposited by the Master Servicer or
the Special Servicer pursuant to Section 3.07(b) in connection with losses
resulting from a deductible clause in a blanket hazard policy;
(vii) any amounts required to be transferred from an REO Account
pursuant to Section 3.16(c); and
(viii) insofar as they do not constitute Escrow Payments, any
amounts paid by a Mortgagor specifically to cover items for which a
Servicing Advance has been made.
The foregoing requirements for deposit in the Custodial Account
shall be exclusive. Notwithstanding the foregoing, actual payments from
Mortgagors in the nature of Escrow Payments, Reserve Funds, assumption fees,
modification fees, extension fees, late payment charges, charges for beneficiary
statements or demands, amounts collected for checks returned for insufficient
funds and any similar fees need not be deposited by the Master Servicer in the
Custodial Account. If the Master Servicer shall deposit in the Custodial Account
any amount not required to be deposited therein, it may at any time withdraw
such amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Master Servicer shall promptly deliver to the Special
Servicer, as additional servicing compensation in accordance with Section
3.11(d), assumption fees, modification fees, extension fees, late payment
charges and other transaction fees received by the Master Servicer to which the
Special Servicer is entitled pursuant to such section upon receipt of a
certificate of a Servicing Officer of the Special Servicer describing the item
and amount. The Custodial Account shall be maintained as a segregated account,
separate and apart from trust funds created for mortgage-backed securities of
other series and the other accounts of the Master Servicer.
Upon receipt of any of the amounts described in clauses (i) through
(iv) and (viii) above with respect to any Mortgage Loan, the Special Servicer
shall promptly, but in no event later than one Business Day after receipt, remit
such amounts to the Master Servicer for deposit into the Custodial Account in
accordance with the second preceding paragraph, unless the Special Servicer
determines, consistent with the Servicing Standard, that a particular item
should not be deposited because of a restrictive endorsement or other
appropriate reason. 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, unless the Special Servicer determines, consistent
with the Servicing Standard, that a particular item cannot be so endorsed and
delivered because of a restrictive
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endorsement or other appropriate reason. Any such amounts received by the
Special Servicer with respect to an REO Property shall be deposited by the
Special Servicer into the REO Account and remitted to the Master Servicer for
deposit into the Custodial Account pursuant to Section 3.16(c).
(b) The Trustee shall establish and maintain one or more trust
accounts (collectively, the "Collection Account") to be held in trust for the
benefit of the Certificateholders. The Collection Account shall be an Eligible
Account. The Master Servicer shall deliver to the Trustee each month on or
before the P&I Advance Date therein, for deposit in the Collection Account, an
aggregate amount of immediately available funds equal to that portion of the
Available Distribution Amount (calculated without regard to clause (b)(ii)(B) of
the definition thereof) for the related Distribution Date then on deposit in the
Custodial Account, together with (i) any Prepayment Premiums or Yield
Maintenance Charges received on the Mortgage Loans during the related Collection
Period, (ii) any Additional Interest collected on any ARD Loan and (iii) in the
case of the final Distribution Date, any additional amounts contemplated by the
second paragraph of Section 9.01.
In addition, the Master Servicer shall, as and when required
hereunder, deliver to the Trustee (without duplication) for deposit in the
Collection Account:
(i) any P&I Advances required to be made by the Master Servicer in
accordance with Section 4.03(a);
(ii) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.06 in connection with losses realized on Permitted
Investments with respect to funds held in the Collection Account;
(iii) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.19(a) in connection with Prepayment Interest
Shortfalls; and
(iv) the Purchase Price paid in connection with the purchase by the
Master Servicer of all of the Mortgage Loans and any REO Properties
pursuant to Section 9.01, exclusive of the portion of such amounts
required to be deposited in the Custodial Account pursuant to Section
9.01.
The Trustee shall, upon receipt, deposit in the Collection Account
any and all amounts received by the Trustee that are required by the terms of
this Agreement to be deposited therein.
(c) Funds in the Custodial Account and the Collection Account may be
invested only in Permitted Investments in accordance with the provisions of
Section 3.06. The Master Servicer shall give notice to the Trustee, the Special
Servicer and the Rating Agencies of the location of the Custodial Account as of
the Closing Date and of the new location of the Custodial Account prior to any
change thereof. The Trustee shall give notice to the Master Servicer, the
Special
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Servicer and the Rating Agencies of the location of the Collection Account as of
the Closing Date and of the new location of the Collection Account prior to any
change thereof.
SECTION 3.05. Permitted Withdrawals From the Custodial Account and
the Collection Account.
(a) The Master Servicer may, from time to time, make withdrawals
from the Custodial 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 Collection Account
the amounts required to be so deposited pursuant to the first paragraph of
Section 3.04(b) and any amounts that may be applied to make P&I Advances
pursuant to Section 4.03(a);
(ii) to reimburse the Fiscal Agent, the Trustee and itself, in that
order, for unreimbursed P&I Advances, the Fiscal Agent's, the Trustee's
and Master Servicer'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 Advances, which are reimbursable pursuant to
clause (vii) below) being limited to amounts that represent Late
Collections of interest and principal (net of related Master Servicing
Fees and any related Workout Fees and Liquidation Fees) received in
respect of the particular Mortgage Loan or REO Loan as to which such P&I
Advance was made;
(iii) to pay to itself earned and unpaid Master Servicing Fees and
to pay to the Special Servicer earned and unpaid Additional Servicing
Fees, in each case in respect of each Mortgage Loan and REO Loan, the
Master Servicer's and the Special Servicer's, as the case may be,
respective rights to payment pursuant to this clause (iii) with respect to
any Mortgage Loan or REO Loan being limited to amounts received on or in
respect of such Mortgage Loan (whether in the form of payments,
Liquidation Proceeds or Insurance Proceeds) or such REO Loan (whether in
the form of REO Revenues, Liquidation Proceeds or Insurance Proceeds) that
are allocable as a recovery of 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
Loan;
(v) to pay the Special Servicer (or, if applicable, a predecessor
Special Servicer) earned and unpaid Workout Fees and Liquidation Fees in
respect of each Specially Serviced Mortgage Loan, Corrected Mortgage Loan
and REO Loan, the Special Servicer's (or, if applicable, any predecessor
Special Servicer's) right to payment pursuant to this clause (v) with
respect to any such Mortgage Loan or REO Loan being limited to amounts
received on or in respect of such Mortgage Loan (whether in the form of
payments, Liquidation Proceeds or Insurance Proceeds) or such REO Loan
(whether in the form of REO Revenues,
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Liquidation Proceeds or Insurance Proceeds) that are allocable as a
recovery of principal thereon (provided that no Workout Fees and
Liquidation Fees shall be payable out of any Liquidation Proceeds
received in connection with the purchase of any Mortgage Loan or REO
Property by the Mortgage Loan Seller pursuant to the Mortgage Loan
Purchase Agreement, by the Majority Subordinate Certificateholder
pursuant to Section 3.18(b), by the Master Servicer or Special Servicer
pursuant to Section 3.18(c) or by the Depositor, the Master Servicer,
the Special Servicer, the Underwriter or the Majority Subordinate
Certificateholder pursuant to Section 9.01);
(vi) to reimburse the Fiscal Agent, the Trustee, itself or the
Special Servicer, in that order, for any unreimbursed Servicing Advances,
the Fiscal Agent's, the Trustee's, the Special Servicer's and the Master
Servicer's respective rights to reimbursement pursuant to this clause (vi)
with respect to any Servicing Advance being limited to payments made by
the related Mortgagor that are allocable to such Servicing Advance, or to
Liquidation Proceeds (net of Liquidation Fees payable therefrom),
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 the Fiscal Agent, the Trustee, itself or the
Special Servicer, in that order, out of general collections on the
Mortgage Loans and any REO Properties, for any unreimbursed Advances that
have been or are determined to be Nonrecoverable Advances;
(viii) at such time as it reimburses the Fiscal Agent, the Trustee,
the Special Servicer or itself, as the case may be, for any unreimbursed
Advance pursuant to clause (ii), (vi) or (vii) above, to pay the Trustee,
the Fiscal Agent, itself or the Special Servicer, as the case may be, in
that order, out of general collections on the Mortgage Loans and any REO
Properties, any interest accrued and payable thereon in accordance with
Section 3.03(d) or 4.03(d), as applicable;
(ix) 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);
(x) to pay itself, as additional servicing compensation in
accordance with Section 3.11(b), (A) interest and investment income earned
in respect of amounts held in the Custodial Account as provided in Section
3.06(b), but only to the extent of the Net Investment Earnings with
respect to the Custodial Account for any Collection Period, (B) Prepayment
Interest Excesses and (C) Default Interest in respect of Mortgage Loans
that are not Specially Serviced Mortgage Loans, and to pay the Special
Servicer, as additional servicing compensation in accordance with Section
3.11(d), Default Interest in respect of Mortgage Loans that are Specially
Serviced Mortgage Loans and in respect of REO Loans;
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(xi) to pay, out of general collections on the Mortgage Loans and
any REO Properties, for the cost of an independent appraiser or other
expert in real estate matters retained pursuant to Section 3.03(e),
3.09(a), 3.18(e) or 4.03(c);
(xii) to pay itself, the Special Servicer, the Depositor, or any of
their respective directors, officers, employees and agents, as the case
may be, out of general collections on the Mortgage Loans and any REO
Properties, any amounts payable to any such Person pursuant to Section
6.03;
(xiii) to pay, out of general collections on the Mortgage Loans and
any REO Properties, for (A) the advice of counsel and tax accountants
contemplated by Section 3.17(a), (B) the cost of the Opinions of Counsel
contemplated by Sections 3.09(b)(ii), 3.16(a) and 11.02(a), (C) the cost
of an Opinion of Counsel contemplated by Section 11.01(a) or 11.01(c) in
connection with any amendment to this Agreement requested by the Master
Servicer or the Special Servicer that protects or is in furtherance of the
rights and interests of Certificateholders, (D) the cost of obtaining any
REO Extension sought by the Special Servicer as contemplated by Section
3.16(a), and (E) the cost of recording this Agreement in accordance with
Section 11.02(a);
(xiv) to pay itself, the Special Servicer, the Mortgage Loan Seller,
the Majority Subordinate Certificateholder or any other Person, as the
case may be, with respect to each Mortgage Loan, if any, previously
purchased by such Person pursuant to this Agreement, all amounts received
thereon subsequent to the date of purchase;
(xv) to pay, in accordance with Section 3.03(e), out of general
collections on the Mortgage Loans and any REO Properties, any servicing
expenses, that would, if advanced, constitute Nonrecoverable Servicing
Advances; and
(xvi) to clear and terminate the Custodial Account at the
termination of this Agreement pursuant to Section 9.01.
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 Custodial Account pursuant to clauses
(ii) - (xv) above.
The Master Servicer shall pay to the Special Servicer (or to third
party contractors at the direction of the Special Servicer), the Trustee or the
Fiscal Agent from the Custodial Account amounts permitted to be paid to the
Special Servicer (or to any such third party contractor), the Trustee or the
Fiscal Agent therefrom promptly upon receipt of a certificate of a Servicing
Officer of the Special Servicer or of a Responsible Officer of the Trustee or
Fiscal Agent, as the case may be, describing the item and amount to which the
Special Servicer (or such third party contractor), the Trustee or the Fiscal
Agent, as applicable, 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
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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
Custodial Account. With respect to each Mortgage Loan for which it makes an
Advance, each of the Trustee and Fiscal Agent shall similarly keep and maintain
separate accounting for each 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 Custodial Account for reimbursements of Advances or interest
thereon.
(b) The Trustee may, from time to time, make withdrawals from the
Collection Account for any of the following purposes (in no particular order of
priority):
(i) to make distributions to Certificateholders on each Distribution
Date pursuant to Section 4.01 or 9.01, as applicable;
(ii) to pay the Trustee, the Fiscal Agent or any of their respective
directors, officers, employees and agents, as the case may be, out of
general collections on the Mortgage Loans and any REO Properties, any
amounts payable or reimbursable to any such Person pursuant to Section
8.05 and/or Section 8.17(b), as applicable;
(iii) to pay the Master Servicer, as additional servicing
compensation in accordance with Section 3.11(b), interest and investment
income earned in respect of amounts held in the Collection Account as
provided in Section 3.06(b) (but only to the extent of the Net Investment
Earnings with respect to the Collection Account for any Collection
Period);
(iv) to pay, out of general collections on the Mortgage Loans and
any REO Properties, for the cost of the Opinions of Counsel sought by the
Trustee (A) as provided in clause (v) of the definition of "Disqualified
Organization", (B) as contemplated by Sections 9.02(a)(i), 10.01(i) and
10.02(e), or (C) 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, out of general collections on the Mortgage Loans and any
REO Properties, any and all federal, state and local taxes imposed on any
of the REMICs created hereunder or on the assets or transactions of any
such REMIC, together with all incidental costs and expenses, to the extent
none of the Depositor, the Trustee, the REMIC Administrator, the Master
Servicer or the Special Servicer is liable therefor pursuant to Section
10.01(j);
(vi) to pay the REMIC Administrator, out of general collections on
the Mortgage Loans and any REO Properties, any amounts reimbursable to it
pursuant to Section 10.01(f);
(vii) to pay the Master Servicer any amounts deposited by the Master
Servicer in the Collection Account in error; and
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(viii) to clear and terminate the Collection Account at the
termination of this Agreement pursuant to Section 9.01.
SECTION 3.06. Investment of Funds in the Servicing Accounts, the
Reserve Accounts, the Custodial Account, the
Collection Account and the REO Account.
(a) The Master Servicer may direct in writing any depository
institution maintaining a Servicing Account, a Reserve Account or the Custodial
Account and may direct in writing the Trustee with respect to the Collection
Account (each, for purposes of this Section 3.06, an "Investment Account"), and
the Special Servicer may direct in writing any depository institution
maintaining the REO Account (also, for purposes of this Section 3.06, an
"Investment Account"), to invest, or if it is such depository institution, may
itself invest, the funds held therein 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; provided that, in the case of any Servicing Account or Reserve
Account, such investment direction shall be subject to the related Mortgage Loan
documents. In the event that the Master Servicer shall have failed to give
investment directions for any Servicing Account, any Reserve Account, the
Custodial Account or the Collection Account (exclusive of any accounts as are
held by the Master Servicer) or the Special Servicer shall have failed to give
investment directions for the REO Account by 11:00 a.m. (New York City time) on
any Business Day on which there may be uninvested cash, such funds held in the
REO account shall be invested in securities described in clause (i) of the
definition of the term "Permitted Investments"; and such funds held in such
other accounts shall be invested in securities described in clause (v) of such
definition. The Trustee agrees that funds in the Collection Account will be
invested in accordance herewith on the day of receipt if received by 5:00 p.m.
(New York City time). 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 Servicing
Accounts, the Reserve Accounts and the Custodial Account) and the Special
Servicer (with respect to Permitted Investments of amounts in the REO Account),
on behalf of the Trustee, shall (and the Trustee hereby designates the Master
Servicer and the Special Servicer, as applicable, as the person that shall)
maintain continuous possession of any Permitted Investment that is either (i) a
"certificated security", as such term is defined in the UCC, or (ii) other
property in which a secured party may perfect its security interest by
possession under the UCC or any other applicable law. Possession of any such
Permitted Investment by the Master Servicer or the Special Servicer shall
constitute possession by a Person designated by the Trustee for purposes of
Section 8-313 of the UCC and possession by the Trustee, as secured party, for
purposes of Section 9-305 of the UCC and any other applicable law. If amounts on
deposit in an Investment Account are at any time invested in a Permitted
Investment payable on demand, the Master Servicer (in the case of the Custodial
Account, Servicing Accounts and Reserve Accounts), the Trustee (in the case of
the Collection 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 equal to at least 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 any of the Servicing Accounts, the Reserve Accounts, the Custodial
Account or the Collection Account, interest and investment income realized on
funds deposited therein, to the extent of the Net Investment Earnings, if any,
for each 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 3.03(a), 3.03(f) or 3.05(a) or withdrawal
by the Trustee at its direction in accordance with Section 3.05(b), as
applicable. 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, the Master
Servicer (in the case of the Servicing Accounts, the Reserve Accounts, the
Custodial Account and the Collection Account) and the Special Servicer (in the
case of the REO Account) shall promptly deposit therein from its own funds,
without right of reimbursement, no later than the end of the Collection Period
during which such loss was incurred, the amount of the Net Investment Loss, if
any, for such Investment Account for such Collection Period.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment and the Special Servicer or the Master Servicer fails to deposit any
losses with respect to such Permitted Investment pursuant to 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, shall take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings.
(d) Notwithstanding the investment of funds held in any Investment
Account, for purposes of the calculations hereunder, including, without
limitation, the calculation of the Available Distribution Amount, the amounts so
invested shall be deemed to remain on deposit in such Investment Account.
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SECTION 3.07. Maintenance of Insurance Policies; Errors and
Omissions and Fidelity Coverage.
(a) The Master Servicer (with respect to Mortgage Loans other than
Specially Serviced Mortgaged Loans) and the Special Servicer (with respect to
Specially Serviced Mortgage Loans) shall, consistent with the Servicing
Standard, cause to be maintained for each Mortgaged Property all insurance
coverage as is required under the related Mortgage; provided that if and to the
extent that any such Mortgage permits the holder thereof any discretion (by way
of consent, approval or otherwise) as to the insurance coverage that the related
Mortgagor is required to maintain, the Master Servicer or Special Servicer, as
the case may be, shall exercise such discretion in a manner consistent with the
Servicing Standard; and provided further that, if and to the extent that a
Mortgage so permits, the related Mortgagor shall be required to exercise its
reasonable best efforts to obtain the required insurance coverage from Qualified
Insurers that have a "claims paying ability" rating of at least "___" from
__________________ and a comparable rating from at least one other nationally
recognized statistical rating agency. The Majority Subordinate Certificateholder
may request that earthquake insurance be secured for one or more Mortgaged
Properties at the expense of the Majority Subordinate Certificateholder. Subject
to Section 3.17(a), the Special Servicer, in accordance with the Servicing
Standard shall also cause to be maintained for each REO Property no less
insurance coverage than was previously required of the Mortgagor under the
related Mortgage; provided that all such insurance shall be obtained from
Qualified Insurers that, if they are providing casualty insurance, shall have
(or, any entities that guarantee their obligations shall have) a claims paying
ability rating (or, in the case of [Rating Agency #1], an insurance financial
strength rating) of at least "____" or "____", as applicable, from each of
[Rating Agency #1] and [Rating Agency #2] (if then rated by [Rating Agency #2])
(or, in the case of either Rating Agency, such lower rating as will not result
in qualification, downgrade or withdrawal of any of the ratings then assigned to
the Certificates by such Rating Agency, as evidenced in writing by such Rating
Agency). All such insurance policies shall contain (if they insure against loss
to property and do not relate to an REO Property) a "standard" mortgagee clause,
with loss payable to the Master Servicer (in the case of insurance maintained in
respect of Mortgage Loans, including, without limitation, Specially Serviced
Mortgage Loans), and shall be in the name of the Special Servicer (in the case
of insurance maintained in respect of REO Properties), on behalf of the Trustee;
and, in each case, such insurance shall be issued by a Qualified Insurer. Any
amounts collected by the Master Servicer or the Special Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
related Mortgaged Property or REO Property or amounts to be released to the
related Mortgagor, in each case subject to the rights of any tenants and ground
lessors, as the case may be, and in each case in accordance with the terms of
the related Mortgage and the Servicing Standard) shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.05(a), in the
case of amounts received in respect of a Mortgage Loan, or in the REO Account,
subject to withdrawal pursuant to Section 3.16(c), in the case of amounts
received in respect of an REO Property. Any cost incurred by the Master Servicer
or the Special Servicer in maintaining any such insurance shall not, for
purposes hereof, including, without limitation, calculating monthly
distributions to Certificateholders, be added to the unpaid principal balance or
Stated Principal Balance of the related
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Mortgage Loan or REO Loan, notwithstanding that the terms of such Mortgage Loan
so permit, but shall be recoverable by the Master Servicer and the Special
Servicer as a Servicing Advance.
(b) If either the Master Servicer or the Special Servicer shall
obtain and maintain, or cause to be obtained and maintained, a blanket policy
insuring against hazard losses on all of the Mortgage Loans and/or REO
Properties that it is required to service and administer, then, to the extent
such policy (i) is obtained from a Qualified Insurer having (or whose
obligations are guaranteed by an entity having a claims-paying rating (or, in
the case of [Rating Agency #1], an insurance financial strength rating) of at
least "____" or "____", as applicable, from each of [Rating Agency #1] and
[Rating Agency #2] (if then rated by [Rating Agency #2]) (or, in the case of
either Rating Agency, such lower rating as will not result in qualification,
downgrade or withdrawal of any of the ratings then assigned to the Certificates
by such Rating Agency, as evidenced in writing by such Rating Agency), and (ii)
provides protection equivalent to the individual policies otherwise required,
the Master Servicer or the Special Servicer, as the case may be, shall
conclusively be deemed to have satisfied its obligation to cause hazard
insurance to be maintained on the related Mortgaged Properties and/or REO
Properties. Such blanket policy may contain a deductible clause (not in excess
of a customary amount), in which case the Master Servicer or the Special
Servicer, as appropriate, shall, if there shall not have been maintained on the
related Mortgaged Property or REO Property a hazard insurance policy complying
with the requirements of Section 3.07(a), and there shall have been one or more
losses that would have been covered by such policy, promptly deposit into the
Custodial Account from its own funds the amount not otherwise payable under the
blanket policy because of such deductible clause. The Master Servicer or the
Special Servicer, as appropriate, shall prepare and present, on behalf of
itself, the Trustee and Certificateholders, claims under any such blanket policy
in a timely fashion in accordance with the terms of such policy.
(c) Each of the Master Servicer and the Special Servicer shall at
all times during the term of this Agreement (or, in the case of the Special
Servicer, at all times during the term of this Agreement in which Specially
Serviced Mortgage Loans or REO Properties are part of the Trust Fund) keep in
force with Qualified Insurers having (or whose obligations are guaranteed by
entities having) a claims-paying rating (or, in the case of [Rating Agency #1],
an insurance financial strength rating) of at least "____" from [Rating Agency
#1], and "____" from [Rating Agency #2] (if then rated by [Rating Agency #2])
(or, in the case of either Rating Agency, such lower rating as will not result
in qualification, downgrade or withdrawal of any of the ratings then assigned to
the Certificates by such Rating Agency, as evidenced in writing by such Rating
Agency), a fidelity bond, which fidelity bond shall be in such form and amount
as would permit it to be a qualified FNMA seller-servicer of multifamily
mortgage loans, or in such other form and amount as would not cause the
qualification, downgrade or withdrawal of any rating assigned by either Rating
Agency to the Certificates (as evidenced in writing from 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 for ten days' written notice to the
Trustee prior to any cancellation.
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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 in which Specially
Serviced Mortgage Loans and/or REO Properties are part of the Trust Fund) also
keep in force with Qualified Insurers having a claims-paying rating (or, in the
case of [Rating Agency #1], an insurance financial strength rating) of at least
"____" from [Rating Agency #1] and "___" from [Rating Agency #2] (if then rated
by [Rating Agency #2]) (or, in the case of either Rating Agency, such lower
rating as will not result in qualification, downgrade or withdrawal of any of
the ratings then assigned to the Certificates by such Rating Agency, as
evidenced in writing by such Rating Agency), a policy or policies of insurance
covering loss occasioned by the errors and omissions of its officers, employees
and agents in connection with its servicing obligations hereunder, which policy
or policies shall be in such form and amount as would permit it to be a
qualified FNMA seller-servicer of multifamily mortgage loans, or in such other
form and amount as would not cause the qualification, downgrade or withdrawal of
any rating assigned by either Rating Agency to the Certificates (as evidenced in
writing from 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 for ten days' written notice to the Trustee prior to cancellation.
For so long as the long-term debt obligations of the Master Servicer
or Special Servicer, as the case may be (or, in the case of the initial Master
Servicer and Special Servicer, their respective direct or indirect parent), are
rated at least "____" or the equivalent by each of the Rating Agencies (or, in
the case of either Rating Agency, such lower rating as will not result in
qualification, downgrade or withdrawal of any of the ratings then assigned to
the Certificates by such Rating Agency, as evidenced in writing by such Rating
Agency), such Person may self-insure with respect to the risks described in this
Section 3.07(c).
SECTION 3.08. Enforcement of Alienation Clauses.
With respect to all Mortgage Loans, the Special Servicer, on behalf
of the Trustee as the mortgagee of record, shall, to the extent permitted by
applicable law, enforce the restrictions contained in the related Mortgage on
transfers or further encumbrances of the related Mortgaged Property and on
transfers of interests in the related Mortgagor, unless (i) the Special Servicer
has determined, in its reasonable, good faith judgment, that waiver of such
restrictions would be in accordance with the Servicing Standard and (ii) such
waiver is consistent with Section 6.11. Promptly after the Special Servicer has
made any such determination, the Special Servicer shall deliver to the Trustee,
the Rating Agencies and the Master Servicer an Officers' Certificate setting
forth the basis for such determination. Notwithstanding the foregoing, the
Special Servicer shall not exercise any such waiver in respect of a
due-on-encumbrance provision without receiving prior written confirmation from
each Rating Agency that such action would not result in a qualification,
downgrade or withdrawal of any of the ratings then assigned to the Certificates;
provided that, in the event that the principal balance of the related Mortgage
Loan is less than 2% of the aggregate principal balance of all of the Mortgage
Loans as of the date of such waiver, no prior written consent
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will be required from [Rating Agency #2], but the Special Servicer will deliver
notice of such waiver to [Rating Agency #2].
SECTION 3.09. Realization Upon Defaulted Mortgage Loans; Required
Appraisals.
(a) The Special Servicer shall, subject to Sections 3.09(b),
3.09(c), 3.09(d) and 6.11, exercise reasonable efforts, consistent with the
Servicing Standard, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans as come into and
continue in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments, including, without limitation, pursuant to
Section 3.20. The Special Servicer shall advance all costs and expenses (other
than costs or expenses that would, if incurred, constitute a Nonrecoverable
Servicing Advance) incurred by it in any such proceedings, and shall be entitled
to reimbursement therefor as provided in Section 3.05(a). Nothing contained in
this Section 3.09 shall be construed so as to require the Special Servicer, on
behalf of the Trust Fund, to make a bid on any Mortgaged Property at a
foreclosure sale or similar proceeding that is in excess of the fair market
value of such property, as determined by the Special Servicer in its reasonable
and good faith judgment taking into account the factors described in Section
3.18(e) and the results of any appraisal obtained as provided below in this
Section 3.09, all such bids to be made in a manner consistent with the Servicing
Standard. If and when the Master Servicer or the Special Servicer deems it
necessary and prudent for purposes of establishing the fair market value of any
Mortgaged Property securing a defaulted Mortgage Loan, whether for purposes of
bidding at foreclosure or otherwise, it may, at the expense of the Trust Fund,
have an appraisal performed with respect to such property by an Independent
Appraiser or other expert in real estate matters; which appraisal shall take
into account the factors specified in Section 3.18(e), including without
limitation, any environmental, engineering or other third party reports
available, and other factors that a prudent real estate appraiser would
consider. With respect to each Required Appraisal Mortgage Loan, the Special
Servicer will be required to obtain a Required Appraisal within 60 days of a
Mortgage Loan becoming a Required Appraisal Mortgage Loan (unless an appraisal
meeting the requirements of a Required Appraisal was obtained for such Required
Appraisal Mortgage Loan within the prior 12 months, in which case such appraisal
shall be the Required Appraisal) and thereafter shall obtain a letter update of
such Required Appraisal once every 12 months for so long as such Mortgage Loan
remains a Required Appraisal Mortgage Loan. The Special Servicer shall advance
the cost of such Required Appraisal; provided, however, that such expense will
be subject to reimbursement to the Special Servicer as a Servicing Advance out
of the Custodial Account pursuant to Section 3.05(a).
(b) Notwithstanding any other provision of this Agreement, no
Mortgaged Property shall be acquired by the Special Servicer as part of the
Trust Fund 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
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Section 3.17(a), subject the Trust Fund to the imposition of any federal income
taxes under the Code. In addition, the Special Servicer shall not acquire any
personal property pursuant to this Section 3.09 unless either:
(i) such personal property is incident to real property (within the
meaning of Section 856(e)(1) of the Code) so acquired by the Special
Servicer; or
(ii) the Special Servicer shall have obtained an Opinion of Counsel
(the cost of which may be withdrawn from the Custodial Account pursuant to
Section 3.05(a)) to the effect that the holding of such personal property
as part of the Trust Fund will not cause the imposition of a tax on any of
REMIC I, REMIC II or REMIC III under the REMIC Provisions or cause any of
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time
that any Certificate is outstanding.
(c) Notwithstanding the foregoing provisions of this Section 3.09,
neither the Master Servicer nor the Special Servicer shall, on behalf of the
Trustee, obtain title to a Mortgaged Property by 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 Master
Servicer or the Special Servicer, as the case may be, made 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 (a
"potentially responsible party"), unless such action is consistent with Section
6.11 and the Special Servicer has previously determined (as evidenced by an
Officers' Certificate to such effect delivered to the Trustee that shall specify
all of the bases for such determination) in accordance with the Servicing
Standard, and based on a Environmental Assessment of such Mortgaged Property
performed by an Independent Person who regularly conducts Environmental
Assessments and performed within six months prior to any such acquisition of
title or other action (a copy of which Environmental Assessment shall be
delivered to the Trustee and the Master Servicer), that:
(i) the Mortgaged Property is in compliance with applicable
environmental laws and regulations or, if not, that it would maximize the
recovery to the Certificateholders on a present value basis (the relevant
discounting of anticipated collections that will be distributable to
Certificateholders to be performed at the related Net Mortgage Rate) to
acquire title to or possession of the Mortgaged Property and to take such
actions as are necessary to bring the Mortgaged Property into compliance
therewith in all material respects; and
(ii) 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, if such circumstances or
conditions are present for which any such action could reasonably be
expected to be required, that it would
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maximize the recovery to the Certificateholders on a present value basis
(the relevant discounting of anticipated collections that will be
distributable to Certificateholders to be performed at the related Net
Mortgage Rate) to acquire title to or possession of the Mortgaged Property
and to take such actions with respect to the affected Mortgaged Property.
The Special Servicer shall undertake, in good faith, reasonable
efforts to make the determination referred to in the preceding paragraph and may
conclusively rely on the Environmental Assessment referred to above in making
such determination. The cost of any such Environmental Assessment, as well as
the cost of any remedial, corrective or other further action contemplated by
clause (i) and/or clause (ii) of the preceding paragraph, shall be payable out
of the Custodial Account pursuant to Section 3.05; and if any such Environmental
Assessment so warrants, the Special Servicer shall, at the expense of the Trust
Fund, perform such additional environmental testing as it deems necessary and
prudent to determine whether the conditions described in clauses (i) and (ii) of
the preceding paragraph have been satisfied.
(d) If the environmental testing contemplated by Section 3.09(c)
above establishes that any of the conditions set forth in clauses (i) and (ii)
of the first sentence thereof has not been satisfied with respect to any
Mortgaged Property securing a defaulted Mortgage Loan, the Special Servicer
shall take such action as is in accordance with the Servicing Standard (other
than proceeding against the Mortgaged Property) and, at such time as it deems
appropriate, may, on behalf of the Trustee, release all or a portion of such
Mortgaged Property from the lien of the related Mortgage; provided that, if such
Mortgage Loan has a then outstanding principal balance of greater than $1
million, then prior to the release of all or a portion of the related Mortgaged
Property from the lien of the related Mortgage, (i) the Special Servicer shall
have notified the Rating Agencies, the Trustee and the Master Servicer in
writing of its intention to so release all or a portion of such Mortgaged
Property and the bases for such intention, (ii) the Trustee shall have notified
the Certificateholders in writing of the Special Servicer's intention to so
release all or a portion of such Mortgaged Property and (iii) the Holders of
Certificates entitled to a majority of the Voting Rights shall not have objected
to such release within 30 days of the Trustee's distributing such notice.
(e) The Special Servicer shall report to the Master Servicer, the
Underwriter and the Trustee monthly in writing as to any actions taken by the
Special Servicer with respect to any Mortgaged Property that represents security
for a defaulted Mortgage Loan as to which the environmental testing contemplated
in Section 3.09(c) above has revealed that any of the conditions set forth in
clauses (i) and (ii) of the first sentence thereof has not been satisfied, in
each case until the earlier to occur of satisfaction of all such conditions and
release of the lien of the related Mortgage on such Mortgaged Property.
(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.
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(g) The Special Servicer shall prepare and file information returns
with respect to the receipt of mortgage interest received in a trade or
business, 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 Sections 6050H, 6050J and 6050P of
the Code and each year deliver to the Trustee and the REMIC Administrator an
Officers' Certificate stating that such reports have been filed. Such reports
shall be in form and substance sufficient to meet the reporting requirements
imposed by Sections 6050H, 6050J and 6050P of the Code.
(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 and the Master Servicer. 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 and Custodian 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 notify
the Trustee by a certification (which certification shall be in the form of a
Request for Release in the form of Exhibit D-1 attached hereto and shall be
accompanied by the form of a release or discharge and shall include a statement
to the effect that all amounts received or to be received in connection with
such payment which are required to be deposited in the Custodial Account
pursuant to Section 3.04(a) have been or will be so deposited) of a Servicing
Officer (a copy of which certification shall be delivered to the Special
Servicer) and shall request delivery to it of the related Mortgage File. Upon
receipt of such certification and request, the Trustee shall release, or cause
any related Custodian to release, the related Mortgage File to the Master
Servicer and shall deliver to the Master Servicer such release or discharge,
duly executed. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account or the Collection Account.
(b) If from time to time, and as appropriate for servicing or
foreclosure of any Mortgage Loan, the Master Servicer or the Special Servicer
shall otherwise require any Mortgage File (or any portion thereof), the Trustee,
upon request of the Master Servicer and receipt from the Master Servicer of a
Request for Release in the form of Exhibit D-1 attached hereto signed by a
Servicing Officer thereof, or upon request of the Special Servicer and receipt
from the Special Servicer of a Request for Release in the form of Exhibit D-2
attached hereto, shall release, or cause any related Custodian to release, such
Mortgage File (or portion thereof) to the Master Servicer or the Special
Servicer, as the case may be. Upon return of such Mortgage File (or portion
thereof) to the Trustee or related Custodian, or the delivery to the Trustee of
a certificate of a Servicing Officer of the Special Servicer stating that such
Mortgage Loan was liquidated and that all amounts received
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or to be received in connection with such liquidation that are required to be
deposited into the Custodial Account pursuant to Section 3.04(a) have been or
will be so deposited, or that such Mortgage Loan has become an REO Property, a
copy of the Request for Release shall be released by the Trustee or related
Custodian to the Master Servicer or the Special Servicer, as applicable.
(c) Within seven Business Days (or within such shorter period (but
no less than three Business Days) as execution and delivery can reasonably be
accomplished if the Special Servicer notifies the Trustee of an exigency) of the
Special Servicer's request therefor, the Trustee shall execute and deliver to
the Special Servicer (or the Special Servicer may execute and deliver in the
name of the Trustee based on a limited power of attorney issued in favor of the
Special Servicer pursuant to Section 3.01(b)), in the form supplied to the
Trustee, any court pleadings, requests for trustee's sale or other documents
stated by the Special Servicer to be reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or REO Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity or to defend any legal action or counterclaim
filed against the Trust Fund, the Master Servicer or the Special Servicer.
Together with such documents or pleadings, the Special Servicer shall deliver to
the Trustee a certificate of a Servicing Officer requesting that such pleadings
or documents be executed by the Trustee and certifying as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Trustee will not invalidate or otherwise affect the lien of the Mortgage,
except for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
SECTION 3.11. Servicing Compensation.
(a) As compensation for its activities hereunder, the Master
Servicer shall be entitled to receive the Master Servicing Fee with respect to
each Mortgage Loan (including, without limitation, each Specially Serviced
Mortgage Loan) and REO Loan. As to each such Mortgage Loan and REO Loan, the
Master Servicing Fee shall accrue from time to time (on the basis of a 360-day
year consisting of twelve 30-day months) at the related Master Servicing Fee
Rate on the same principal amount as interest accrues from time to time on such
Mortgage Loan or is deemed to accrue from time to time on such REO Loan. The
Master Servicing Fee with respect to any Mortgage Loan or REO Loan shall cease
to accrue if a Liquidation Event occurs in respect thereof. Earned but unpaid
Master Servicing Fees shall be payable monthly, on a loan-by-loan basis, from
payments of interest on each Mortgage Loan and REO Revenues allocable as
interest on each REO Loan. The Master Servicer shall be entitled to recover
unpaid Master Servicing Fees in respect of any Mortgage Loan or REO Loan out of
that portion of related Insurance Proceeds or Liquidation Proceeds allocable as
recoveries of interest, to the extent permitted by Section 3.05(a)(iii). 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.
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(b) Additional servicing compensation in the form of (i) late
payment charges, Default Interest, charges for beneficiary statements or
demands, amounts collected for checks returned for insufficient funds and any
similar fees (excluding Prepayment Premiums or Yield Maintenance Charges), in
each case to the extent actually paid by a Mortgagor with respect to a Mortgage
Loan that is not a Specially Serviced Mortgage Loan, and (ii) fifty percent
(50%) of any assumption fee to the extent actually paid by a Mortgagor with
respect to any Mortgage Loan, may be retained by the Master Servicer and are not
required to be deposited in the Custodial Account. The Master Servicer shall
also be entitled to additional servicing compensation in the form of (i)
Prepayment Interest Excesses; (ii) interest or other income earned on deposits
in the Custodial Account and the Collection Account, in accordance with Section
3.06(b) (but only to the extent of the Net Investment Earnings, if any, with
respect to each such account for each Collection Period), and (iii) to the
extent not required to be paid to any Mortgagor under applicable law, any
interest or other income earned on deposits in the Servicing Accounts and
Reserve Accounts maintained thereby. The Master Servicer shall be required to
pay out of its own funds all expenses incurred by it in connection with its
servicing activities hereunder (including, without limitation, payment of any
amounts due and owing to any of its Sub-Servicers and the premiums for any
blanket policy insuring against hazard losses pursuant to Section 3.07(b)), if
and to the extent such expenses are not payable directly out of the Custodial
Account, and the Master Servicer shall not be entitled to reimbursement therefor
except as expressly provided in this Agreement.
(c) As compensation for its activities hereunder, the Special
Servicer shall be entitled to receive the Special Servicing Fee with respect to
each Specially Serviced Mortgage Loan and each REO Loan. As to each Specially
Serviced Mortgage Loan and REO Loan, the Special Servicing Fee shall accrue from
time to time (on the basis of a 360-day year consisting of twelve 30- day
months) at the Special Servicing Fee Rate on the same principal amount as
interest accrues from time to time on such Specially Serviced Mortgage Loan or
is deemed to accrue from time to time on such REO Loan. The Special Servicing
Fee with respect to any Specially Serviced Mortgage Loan or REO Loan shall cease
to accrue as of the date a Liquidation Event occurs in respect thereof or it
becomes a Corrected Mortgage Loan. Earned but unpaid Special Servicing Fees
shall be payable monthly out of general collections on the Mortgage Loans and
any REO Properties on deposit in the Custodial Account pursuant to Section
3.05(a).
In addition, with respect to each corrected Mortgage Loan, the
Special Servicer shall be entitled to receive the Workout Fee, unless the basis
on which such Mortgage Loan became a Corrected Mortgage Loan was the remediation
of a circumstance or condition relating to the Mortgage Loan Seller's obligation
to repurchase such Mortgage Loan pursuant to Section 2.03, in which case, if
such Mortgage Loan is repurchased within the 180 days described in Section
2.03(a), no Workout Fee will be payable from or based upon the receipt of, any
Purchase Price paid by the Mortgage Loan Seller in satisfaction of such
repurchase obligation. Furthermore, no Workout Fees will be payable from or
based upon the receipt of any Liquidation Proceeds paid by the Depositor, the
Master Servicer, the Special Servicer, the Underwriter or the Majority
Subordinate Certificateholder in connection with the purchase of all the
Mortgage Loans and any REO Properties in the Trust Fund pursuant to Section 9.01
hereof. As to each Corrected Mortgage Loan, subject to
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the exceptions provided for in the two preceding sentences, the Workout Fee
shall be payable from, and shall be calculated by application of the Workout Fee
Rate to, each collection of interest (other than Default Interest and, in the
case of an ARD Loan after its Anticipated Repayment Date, Additional 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 will become payable if and when such Mortgage Loan again
becomes a Corrected Mortgage Loan. If the Special Servicer is terminated other
than for cause or resigns in accordance with the first sentence of the first
paragraph of Section 6.04, it shall retain the right to receive any and all
Workout Fees payable in respect of Mortgage Loans that became Corrected Mortgage
Loans during the period that it acted as Special Servicer and were still such at
the time of such termination or resignation (and the successor Special Servicer
shall not be entitled to any portion of such Workout Fees), in each case until
the Workout Fee for any such Mortgage Loan ceases to be payable in accordance
with the preceding sentence.
As further compensation for its activities hereunder, the Special
Servicer shall also be entitled to receive a Liquidation Fee with respect to
each Specially Serviced Mortgage Loan or REO Property as to which it receives
any full or discounted payoff from the related Mortgagor or any Liquidation
Proceeds (other than in connection with the purchase of any such Specially
Serviced Mortgage Loan or REO Property by the Majority Subordinate
Certificateholder pursuant to Section 3.18(b), by the Master Servicer or the
Special Servicer pursuant to Section 3.18(c), by the Depositor, the Master
Servicer, the Special Servicer, the Underwriter or the Majority Subordinate
Certificateholder pursuant to Section 9.01, or by the Mortgage Loan Seller
pursuant to Section 2.03 within 180 days of its discovery or notice of the
Breach or Document Defect that gave rise to the repurchase obligation, and other
than in connection with the condemnation or other governmental taking of a
Mortgaged Property or REO Property). As to each such Specially Serviced Mortgage
Loan or REO Property, the Liquidation Fee shall be payable from, and shall be
calculated by application of the Liquidation Fee Rate to, such full or
discounted payoff and/or Liquidation Proceeds; provided that no Liquidation Fee
shall be payable with respect to any such Specially Serviced Mortgage Loan that
becomes a Corrected Mortgage Loan; and provided, further, that (without limiting
the Special Servicer's right to any Workout Fee that is properly payable
therefrom), no Liquidation Fee shall be payable from, or based upon the receipt
of, Liquidation Proceeds collected as a result of any purchase of a Specially
Serviced Mortgage Loan or REO Property described in the parenthetical to the
first sentence of this paragraph or in connection with a condemnation or other
governmental taking of a Mortgaged Property or REO Property.
Notwithstanding anything to the contrary herein, a Liquidation Fee
and a Workout Fee relating to the same Mortgage Loan shall not be paid from the
same proceeds on or with respect to such Mortgage Loan.
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The Special Servicer's right to receive the Special Servicing Fee,
the Workout Fee and the Liquidation Fee may not be transferred in whole or in
part except in connection with the transfer of all of the Special Servicer's
responsibilities and obligations under this Agreement.
(d) Additional servicing compensation in the form of (i) late
payment charges or Default Interest received on or with respect to Specially
Serviced Mortgage Loans, (ii) fifty percent (50%) of assumption fees collected
on all Mortgage Loans and (iii) one hundred percent (100%) of modification fees
and extension fees collected on all Mortgage Loans, in each case to the extent
actually paid by the related Mortgagor, shall be retained by the Special
Servicer or promptly paid to the Special Servicer by the Master Servicer and
shall not be required to be deposited in the Custodial Account pursuant to
Section 3.04(a). The Special Servicer shall also be entitled to additional
servicing compensation in the form of: (i) 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). The Special Servicer shall be
required to pay out of its own funds all expenses incurred by it in connection
with its servicing activities hereunder (including, without limitation, payment
of any amounts due and owing to any of its Sub-Servicers and the premiums for
any blanket policy obtained by it insuring against hazard losses pursuant to
Section 3.07(b)), if and to the extent such expenses are not payable directly
out of the Custodial Account or the REO Account, and the Special Servicer shall
not be entitled to reimbursement therefor except or expressly provided in this
Agreement.
SECTION 3.12. Property Inspections; Collection of Financial
Statements; Delivery of Certain Reports.
(a) The Special Servicer shall at its expense perform or cause to be
performed a physical inspection of a Mortgaged Property as soon as practicable
after a related Mortgage Loan becomes a Specially Serviced Mortgage Loan. The
Master Servicer shall at its expense perform or cause to be performed an
inspection of each of the Mortgaged Properties at least once per calendar year,
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
promptly prepare (and, in the case of reports prepared by or on behalf of the
Special Servicer, deliver to the Master Servicer) a written report of each such
inspection performed by it that sets forth in detail the condition of the
Mortgaged Property and that specifies the existence of: (i) any sale, transfer
or abandonment of the Mortgaged Property of which the Master Servicer or the
Special Servicer, as applicable, is aware, (ii) any change in the condition or
value of the Mortgaged Property that the Master Servicer or the Special
Servicer, as applicable, in its reasonable, good faith judgment, considers
material, or (iii) any waste committed on the Mortgaged Property, which reports
shall be delivered by the Master Servicer to the Trustee as provided in Section
3.12(c). The Trustee shall make copies of all such inspection reports available
for review by, among others, Certificateholders and Certificate Owners during
normal business hours at its Corporate Trust Office in accordance with Section
8.14(b). The Master Servicer and Special Servicer shall each forward copies of
any such inspection reports prepared by it to the Underwriter upon request.
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The Special Servicer, in the case of any Specially Serviced Mortgage
Loan and REO Loan, and the Master Servicer, in the case of all other Mortgage
Loans, shall each, consistent with the Servicing Standard, use reasonable
efforts to obtain quarterly and annual operating statements and rent rolls with
respect to each of the related Mortgaged Properties and REO Properties, which
efforts shall include in the case of Mortgage Loans, a letter sent to the
related Mortgagor each quarter (followed up with telephone calls) requesting
such quarterly and annual operating statements and rent rolls until they are
received to the extent such action is consistent with applicable law. The
Special Servicer shall deliver copies of the operating statements and rent rolls
received by it to the Master Servicer. With respect to each Mortgaged Property
and REO Property, as applicable, the Master Servicer and Special Servicer shall
prepare and deliver to the Trustee, upon request an Operating Statement Analysis
for the related Mortgaged Property or REO Property for or as of the end the
prior calendar month, together with copies of the operating statements and rent
rolls obtained by the Master Servicer and the Special Servicer for the related
Mortgaged Property or REO Property, as applicable.
The Special Servicer shall, promptly after taking over servicing of
any Specially Serviced Mortgage Loan, give written notice to the Master Servicer
and the Trustee which shall include an explanation as to the reasons such
Mortgage Loan became a Specially Serviced Mortgage Loan and the Special
Servicer's plan for servicing such Mortgage Loan, a copy of which notice will be
provided by the Trustee to each Certificateholder, each Rating Agency, the
Depositor and the Underwriter.
Within ten days after receipt by the Master Servicer or 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 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).
The Special Servicer with respect to each Specially Serviced
Mortgage Loan and REO Loan, and the Master Servicer with respect to each other
Mortgage Loan, shall each maintain (and, in the case of the Special Servicer,
deliver to the Master Servicer) one Operating Statement Analysis report for each
Mortgaged Property and REO Property, as applicable. The Operating Statement
Analysis report for each Mortgaged Property and REO Property is to be updated by
each of the Master Servicer and the Special Servicer and such updated report to
be prepared by the Master Servicer and the Special Servicer within thirty days
after its respective receipt of updated operating statements for such Mortgaged
Property or REO Property, as the case may be. The Master Servicer and the
Special Servicer shall each use the "Normalized" column from the NOI Adjustment
Worksheet to update the Operating Statement Analysis report and will use any
operating statements received with respect to any Mortgaged Property to update
the Operating Statement Analysis report for such Mortgaged Property, such
updates to be completed and copies to be made available upon request to the
Trustee.
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(b) Not later than 2:00 p.m. (New York City time) on the second
Business Day prior to each Determination Date, the Special Servicer shall
deliver or cause to be delivered to the Master Servicer the following reports
with respect to the Mortgage Loans (and, if applicable, the related REO
Properties) providing the required information as of the end of the preceding
calendar month: (i) a CSSA Property File Report; (ii) a CSSA Loan File Report;
(iii) any property inspection report; (iv) Operating Statement Analyses; (v) NOI
Adjustment Worksheets; and (vi) a Loan Payoff Notification Report. Not later
than 2:00 p.m. (New York City time) on the second Business Day following each
Determination Date, the Special Servicer shall deliver or cause to be delivered
to the Master Servicer the following reports with respect to the Mortgage Loans
(and, if applicable, the related REO Properties) providing the required
information as of such Determination Date: (i) a Delinquent Loan Status Report;
(ii) an Historical Loss Estimate Report; (iii) an Historical Loan Modification
Report; and (iv) an REO Status Report.
(c) Not later than 2:00 p.m. (New York City time) on the third
Business Day after each Determination Date, the Master Servicer shall deliver or
cause to be delivered to the Trustee: (i) 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(b); (ii) the most recent CSSA Property File Report, CSSA Loan File Report,
Comparative Financial Status Reports and Loan Payoff Notification 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.
(d) The Special Servicer will deliver to the Master Servicer the
reports set forth in Section 3.12(b) and the Master Servicer shall deliver to
the Trustee the reports set forth in Section 3.12(c) in an electronic format
reasonably acceptable to the Special Servicer and the Master Servicer with
respect to the reports set forth in Section 3.12(b), and the Master Servicer and
the Trustee with respect to the reports set forth in Section 3.12(c). 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). The Trustee may,
absent manifest error, conclusively rely on the reports to be provided by the
Master Servicer pursuant to Section 3.12(c) to the extent that the underlying
information is solely within the control of the Master Servicer or the Special
Servicer. In the case of information or reports to be furnished by the Master
Servicer to the Trustee pursuant to Section 3.12(c), to the extent that such
information is based on reports to be provided by the Special Servicer pursuant
to Section 3.12(b) and to the extent that such reports are to be prepared and
delivered by the Special Servicer pursuant to Section 3.12(b), the Master
Servicer shall have no obligation to provide such information or reports until
it has received such 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(c) caused by the Special Servicer's failure
to timely provide any report required under Section 3.12(b) of this Agreement.
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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 and each other, on or before
__________ of each year, beginning __________, 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 of REMIC
I, REMIC II or REMIC III as a REMIC or the Grantor Trust as a grantor trust from
the Internal Revenue Service or any other governmental agency or body (or, if it
has received any such notice, specifying the details thereof).
SECTION 3.14. Reports by Independent Public Accountants.
On or before __________ of each year, beginning __________, each of
the Master Servicer and the Special Servicer at its expense shall cause a firm
of independent public accountants (which may also render other services to the
Master Servicer or the Special Servicer) with at least 250 professionals and
that is a member of the American Institute of Certified Public Accountants to
furnish a statement (the "Annual Accountants' Report") to the Trustee, the
Depositor, the Underwriter and each other, to the effect that (i) has obtained a
letter of representation regarding certain matters from the management of the
Master Servicer or the Special Servicer, as applicable, which includes an
assertion that the Master Servicer or the Special Servicer, as applicable, has
complied with certain minimum mortgage loan servicing standards (to the extent
applicable to commercial and mutlifamily mortgage loans), identified in the
Unifrom Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
commercial and multifamily mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all materal
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report such firm may rely, as to matters relating
to the direct servicing of commercial and multifamily mortgage loans by
sub-servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those sub-servicers.
The Master Servicer and the Special Servicer, to the extent
applicable, will reasonably cooperate with the Depositor in conforming any
reports delivered pursuant to this Section 3.14 to requirements imposed by the
Commission on the Depositor in connection with the Commission's
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issuance of a no-action letter relating to the Depositor's reporting
requirements in respect of the Trust Fund pursuant to the Exchange Act.
SECTION 3.15. Access to Certain Information.
Each of the Master Servicer and the Special Servicer shall afford to
the Trustee, the Underwriter, the Rating Agencies and the Depositor, and to the
OTS, the FDIC and any other banking or insurance regulatory authority that may
exercise authority over any Certificateholder, access to any records regarding
the Mortgage Loans and the servicing thereof within its control, except to the
extent it is prohibited from doing so by applicable law or contract or to the
extent such information is subject to a privilege under applicable law to be
asserted on behalf of the Certificateholders. Such access shall be afforded only
upon reasonable prior written request and during normal business hours at the
offices of the Master Servicer or the Special Servicer, as the case may be,
designated by it.
SECTION 3.16. Title to REO Property; REO Account.
(a) If title to any REO Property is acquired, the deed or
certificate of sale shall be issued to the Trustee on behalf of the
Certificateholders. The Special Servicer, on behalf of the Trust Fund, shall
sell any REO Property by the end of the third calendar year following the
calendar year in which REMIC I acquires ownership of such REO Property for
purposes of Section 860G(a)(8) of the Code, unless the Special Servicer either
(i) applies, more than sixty days prior to the end of such third succeeding
year, for and is granted an extension of time (an "REO Extension") by the
Internal Revenue Service to sell such REO Property or (ii) obtains for the
Trustee an Opinion of Counsel, addressed to the Trustee, the Special Servicer
and the Master Servicer, to the effect that the holding by REMIC I of such REO
Property subsequent to the end of such third succeeding year will not result in
the imposition of taxes on "prohibited transactions" (as defined in Section 860F
of the Code) of any of REMIC I, REMIC II or REMIC III or cause any of REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC at any time that any
Certificates are outstanding. If the Special Servicer is granted the REO
Extension contemplated by clause (i) of the immediately preceding sentence or
obtains the Opinion of Counsel contemplated by clause (ii) of the immediately
preceding sentence, the Special Servicer shall sell such REO Property within
such extended period as is permitted by such REO Extension or such Opinion of
Counsel, as the case may be. Any expense incurred by the Special Servicer in
connection with its obtaining the REO Extension contemplated by clause (i) of
the second preceding sentence or its obtaining the Opinion of Counsel
contemplated by clause (ii) of the second preceding sentence, shall be an
expense of the Trust Fund payable out of the Custodial Account pursuant to
Section 3.05(a).
(b) The Special Servicer shall segregate and hold all funds
collected and received in connection with any REO Property separate and apart
from its own funds and general assets. If an REO Acquisition shall occur, the
Special Servicer shall establish and maintain one or more accounts
(collectively, the "REO Account"), held on behalf of the Trustee in trust for
the benefit of the Certificateholders, for the retention of revenues and other
proceeds derived from each REO
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Property. The REO Account shall be an Eligible Account. The Special Servicer
shall deposit, or cause to be deposited, in the REO Account, upon receipt, all
REO Revenues, Insurance Proceeds and Liquidation Proceeds received in respect of
any REO Property. Funds in the REO Account may be invested in Permitted
Investments in accordance with Section 3.06. The Special Servicer shall be
entitled to make withdrawals from the REO Account to pay itself, as additional
servicing compensation in accordance with Section 3.11(d), interest and
investment income earned in respect of amounts held in the REO Account as
provided in Section 3.06(b) (but only to the extent of the Net Investment
Earnings with respect to the REO Account for any Collection Period). The Special
Servicer shall give notice to the Trustee and the Master Servicer 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, 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. On each Determination Date, the Special
Servicer shall withdraw from the REO Account and deposit into the Custodial
Account (or deliver to the Master Servicer for deposit into the Custodial
Account) the aggregate of all amounts received in respect of each REO Property
during the most recently ended 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 proceeds and
collections in respect of any REO Property as may be necessary to maintain a
reserve of sufficient funds for the proper operation, management and maintenance
of such REO Property (including, without limitation, the creation of a
reasonable reserve for repairs, replacements and other related expenses), such
reserve not to exceed an amount sufficent to cover such items to be incurred
during the following twelve-month period.
(d) The Special Servicer shall keep and maintain separate records,
on a property-by-property basis, for the purpose of accounting for all deposits
to, and withdrawals from, the REO Account pursuant to Section 3.16(b) or (c).
The Special Servicer shall provide the Master Servicer any information with
respect to the REO Account as is reasonably requested by the Master Servicer.
SECTION 3.17. Management of REO Property.
(a) Prior to the acquisition of title to a Mortgaged Property, the
Special Servicer shall review the operation of such Mortgaged Property and
determine the nature of the income that would be derived from such property if
it were acquired by the Trust Fund. If the Special Servicer determines from such
review that:
(i) None of the income from Directly Operating such Mortgaged
Property would be subject to tax as "net income from foreclosure property"
within the meaning of the REMIC Provisions or would be subject to the tax
imposed on "prohibited transactions" under Section 860F of the Code
(either such tax referred to herein as an "REO Tax"), such Mortgaged
Property may be Directly Operated by the Special Servicer as REO Property;
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(ii) Directly Operating such Mortgaged Property as 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 good faith and reasonable
judgment of the Special Servicer, it is commercially reasonable) acquire
such Mortgaged Property as REO Property and so lease or 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 Fund incurring or possibly incurring an REO
Tax on income from such property, the Special Servicer shall deliver to
the REMIC Administrator, in writing, a proposed plan (the "Proposed Plan")
to manage such property as REO Property. Such plan shall include potential
sources of income, and, to the extent reasonably possible, estimates of
the amount of income from each such source. Within a reasonable period of
time after receipt of such plan, the REMIC Administrator shall consult
with the Special Servicer and shall advise the Special Servicer of the
REMIC Administrator's federal income tax reporting position with respect
to the various sources of income that the Trust Fund would derive under
the Proposed Plan. In addition, the REMIC Administrator shall (to the
maximum extent reasonably possible) advise the Special Servicer of the
estimated amount of taxes that the Trust Fund would be required to pay
with respect to each such source of income. After receiving the
information described in the two preceding sentences from the REMIC
Administrator, the Special Servicer shall either (A) implement the
Proposed Plan (after acquiring the respective Mortgaged Property as REO
Property) or (B) manage and operate such property in a manner that would
not result in the imposition of an REO Tax on the income derived from such
property.
The Special Servicer's decision as to how each REO Property shall be
managed and operated shall be based on the Servicing Standard and in any case on
the good faith and reasonable judgment of the Special Servicer as to which means
would be in the best interest of the Certificateholders by maximizing (to the
extent commercially reasonable and consistent with Section 3.17(b)) the net
after-tax REO Revenues received by the Trust Fund with respect to such property
and, to the extent consistent with the foregoing, in the same manner as would
prudent mortgage loan servicers and asset managers operating acquired mortgaged
property comparable to the respective Mortgaged Property. In connection with
performing their respective duties under this Section 3.17(a), both the Special
Servicer and the REMIC Administrator may, at the expense of the Trust Fund
payable pursuant to Section 3.05(a)(xiii), consult with counsel and tax
accountants.
(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 prompt disposition and sale
in a manner that does not and will not cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the
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Code or, except as contemplated by Section 3.17(a), either result in the receipt
by REMIC I, REMIC II or REMIC III of any "income from non-permitted assets"
within the meaning of Section 860F(a)(2)(B) of the Code or result in an Adverse
REMIC Event. Subject to the foregoing, however, the Special Servicer shall have
full power and authority to do any and all things in connection therewith as are
consistent with the Servicing Standard and, consistent therewith, shall withdraw
from the REO Account, to the extent of amounts on deposit therein with respect
to any REO Property, funds necessary for the proper operation, management,
maintenance and disposition of such REO Property, including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon;
(iii) any ground rents in respect of such REO Property; and
(iv) all costs and expenses necessary to maintain, lease, sell,
protect, manage, operate and restore such REO Property.
To the extent that amounts on deposit in the REO Account in respect of any REO
Property are insufficient for the purposes set forth in the preceding sentence
with respect to such REO Property, the Special Servicer shall make Servicing
Advances in such amounts as are necessary for such purposes unless the Special
Servicer determines, in accordance with the Servicing Standard, that such
payment would be a Nonrecoverable Advance; provided, however, that the Special
Servicer may make any such Servicing Advance without regard to recoverability if
it is a necessary fee or expense incurred in connection with the defense or
prosecution of legal proceedings. The Special Servicer shall notify the Master
Servicer if it shall have made any such Servicing Advance.
(c) The Special Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract may not be
inconsistent herewith and shall reflect an agreement reached at arm's
length;
(ii) the fees of such Independent Contractor (which shall be
expenses of the Trust Fund) shall be reasonable and customary in
consideration of the nature and locality of the REO Property;
(iii) except as permitted under Section 3.17(a), any such contract
shall require, or shall be administered to require, that the Independent
Contractor, in a timely manner, (A) pay all costs and expenses incurred in
connection with the operation and management of such REO Property,
including, without limitation, those listed in Section 3.17(b) above, and
(B) except to the extent that such revenues are derived from any services
rendered by the
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Independent Contractor to tenants of the REO Property that are not
customarily furnished or rendered in connection with the rental of real
property (within the meaning of Section 1.856-4(b)(5) of the Treasury
Regulations or any successor provision), 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
(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. No agreement entered into pursuant to this
Section 3.17(c) shall be deemed a Sub-Servicing Agreement for purposes of
Section 3.22.
SECTION 3.18. Sale of Mortgage Loans and REO Properties.
(a) The Master Servicer, the Special Servicer or the Trustee 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
2.03(a) and 9.01.
(b) If the Special Servicer has determined in good faith that any
Defaulted Mortgage Loan will become subject to foreclosure proceedings, the
Special Servicer shall promptly so notify in writing the Trustee and the Master
Servicer, and the Trustee, following its receipt of such notice, shall, within
10 days after receipt of such notice, notify the Majority Subordinate
Certificateholder. The Majority Subordinate Certificateholder may at its option,
within 30 days after receipt of such notice, purchase from the Trust Fund, at a
price equal to the Purchase Price, any such Mortgage Loan. The Purchase Price
for any Mortgage Loan purchased under this paragraph (b) shall be deposited into
the Custodial Account, and the Trustee, upon receipt of an Officers' Certificate
from the Master Servicer to the effect that such deposit has been made, shall
release or cause to be released to the Majority Subordinate Certificateholder
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 Majority Subordinate
Certificateholder ownership of such Mortgage Loan. In connection with any such
purchase, the Special Servicer shall deliver the related Servicing File to the
Majority Subordinate Certificateholder.
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(c) If the Majority Subordinate Certificateholder has not purchased
any Defaulted Mortgage Loan within 30 days of its having received notice in
respect thereof pursuant to Section 3.18(b) above, either the Master Servicer or
the Special Servicer (with preference given to the Special Servicer) may at its
option, within 10 days of the expiration of such 30-day period, purchase such
Mortgage Loan from the Trust Fund, at a price equal to the Purchase Price. The
Purchase Price for any such Mortgage Loan purchased under this paragraph (c)
shall be deposited into the Custodial Account, and the Trustee, upon receipt of
an Officers' Certificate from the Master Servicer to the effect that such
deposit has been made, shall release or cause to be released to the Master
Servicer or the Special Servicer, as applicable, the related Mortgage File, and
shall execute and deliver such instruments of transfer or assignment, in each
case without recourse, as shall be provided to it and are reasonably necessary
to vest in the Master Servicer or the Special Servicer, as applicable, the
ownership of such Mortgage Loan. In connection with any such purchase by the
Master Servicer, the Special Servicer shall deliver the related Servicing File
to the Master Servicer.
(d) The Special Servicer may offer to sell any Defaulted Mortgage
Loan not otherwise purchased pursuant to Section 3.18(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 Trust Fund. Such offer shall be made in a commercially reasonable manner
(which, for purposes hereof, includes an offer to sell without representation or
warranty other than customary warranties of title and condition, if liability
for breach thereof is limited to recourse against the Trust Fund) for a period
of not less than 10 days. Subject to Sections 3.18(h) and 6.11, 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
Sections 3.18(h) and 6.11, the Special Servicer shall accept the first (and, if
multiple bids are received contemporaneously or subsequently, the highest,
provided that the Special Servicer is not obligated to the first bidder) cash
bid received from any Person that constitutes a fair price for such REO
Property. If the Special Servicer reasonably believes that it will be unable to
realize a fair price for any REO Property within the time constraints imposed by
Section 3.16(a), then (subject to Section 6.11) the Special Servicer shall
dispose of such REO Property upon such terms and conditions as the Special
Servicer shall deem necessary and desirable to maximize the recovery thereon
under the circumstances and, in connection therewith, shall accept the highest
outstanding cash bid, regardless of from whom received.
The Special Servicer shall give the Trustee, the Depositor, the
Master Servicer, the Special Servicer and the Controlling Class Representative
not less than three Business Days' prior written notice of its intention to sell
any 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
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individual capacity, nor any of its Affiliates may bid for or purchase any
Defaulted Mortgage Loan or any REO Property pursuant hereto.
(e) Whether any cash bid constitutes a fair price for any Defaulted
Mortgage Loan or REO Property, as the case may be, for purposes of Section
3.18(d), shall be determined by the Special Servicer or, if such cash bid is
from an Interested Person, by the Trustee. In determining whether any bid
received from an Interested Person represents a fair price for any such Mortgage
Loan or REO Property, the Trustee shall be supplied with and shall be entitled
to rely on the most recent appraisal in the related Servicing File conducted in
accordance with this Agreement within the preceding 12-month period (or, in the
absence of any such appraisal 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 an Independent Appraiser 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 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 (and, if the Special Servicer is bidding, shall be submitted by
it to the Trustee) in writing and be accompanied by a refundable deposit of cash
in an amount equal to 5% of the bid amount. In determining whether any bid from
a Person other than an Interested Person constitutes a fair price for any such
Mortgage Loan or REO Property, the Special Servicer shall take into account the
results of any appraisal or updated appraisal that it or the Master Servicer may
have obtained in accordance with this Agreement within the prior twelve months,
and any Independent 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.
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(f) Subject to Sections 3.18(a) through 3.18(e) above and Section
6.11, 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 Custodial Account. Any
sale of a Defaulted Mortgage Loan or any REO Property shall be final and without
recourse 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.
(g) Any sale of a Defaulted Mortgage Loan or any REO Property
pursuant to this Section 3.18 shall be for cash only and shall be on a servicing
released basis.
(h) Notwithstanding any of the foregoing paragraphs of this Section
3.18, the Special Servicer shall not be obligated to accept the highest cash bid
if the Special Servicer determines, in accordance with the Servicing Standard,
that rejection of such bid would be in the best interests of the
Certificateholders (as a collective whole), and the Special Servicer may,
subject to Section 6.11, 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 Servicer.
(a) The Master Servicer shall deliver to the Trustee for deposit in
the Collection Account on each P&I Advance Date, without any right of
reimbursement therefor, an amount equal to the lesser of (i) the aggregate
amount of Prepayment Interest Shortfalls incurred in connection with Principal
Prepayments received in respect of the Mortgage Pool during the most recently
ended Collection Period and (ii) the sum of (1) the Master Servicing Fee
received by the Master Servicer for such Collection Period (but only to the
extent of that portion calculated at a rate of 0.04% per annum with respect to
each and every Mortgage Loan) and (2) the total amount of the other servicing
compensation received by the Master Servicer during such Collection Period.
(b) The Master Servicer shall, as to each Mortgage Loan which is
secured by the interest of the related Mortgagor 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 Fund 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.
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SECTION 3.20. Modifications, Waivers, Amendments and Consents.
(a) Subject to Sections 3.20(b) through 3.20(g) below and further
subject to Section 6.11, the Special Servicer may, on behalf of the Trustee,
agree to any modification, waiver or amendment of any term of any Mortgage Loan
(including the lease reviews and lease consents related thereto) without the
consent of the Trustee or any Certificateholder.
(b) All modifications, waivers or amendments of any Mortgage Loan
(including the lease reviews and lease consents related thereto) shall be in
writing and shall be considered and effected in a manner consistent with the
Servicing Standard.
(c) Except as provided in Section 3.02(a), Section 3.08 or Section
3.20(d), the Special Servicer, on behalf of the Trustee, shall not agree or
consent to any modification, waiver or amendment of any term of any Mortgage
Loan that would:
(i) affect the amount or timing of any related payment of principal,
interest or other amount (including Prepayment Premiums or Yield
Maintenance Charges, but excluding Default Interest and other amounts
payable as additional servicing compensation) payable thereunder;
(ii) affect the obligation of the related Mortgagor to pay a
Prepayment Premium or Yield Maintenance Charge or permit a Principal
Prepayment during any period in which the related Mortgage Note prohibits
Principal Prepayments;
(iii) except as expressly contemplated by the related Mortgage or
pursuant to Section 3.09(d), result 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 determined by an appraisal by an Independent Appraiser
delivered to the Special Servicer at the expense of the related Mortgagor
and upon which the Special Servicer may conclusively rely) of the property
to be released; or
(iv) in the reasonable, good faith judgment of the Special Servicer,
otherwise materially impair the security for such Mortgage Loan or reduce
the likelihood of timely payment of amounts due thereon.
(d) Notwithstanding Section 3.20(c), but subject to the third
paragraph of this Section 3.20(d), the Special Servicer may (i) reduce the
amounts owing under any Specially Serviced Mortgage Loan by forgiving principal,
accrued interest or any Prepayment Premium or Yield Maintenance Charge, (ii)
reduce the amount of the monthly payment on any Specially Serviced Mortgage
Loan, including by way of a reduction in the related Mortgage Rate, (iii)
forbear in the enforcement of any right granted under any Mortgage Note or
Mortgage relating to a Specially Serviced Mortgage Loan or (iv) accept a
Principal Prepayment on any Specially Serviced Mortgage Loan during any Lockout
Period; provided that (A) the related Mortgagor is in default with respect
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to the Specially Serviced Mortgage Loan or, in the reasonable, good faith
judgment of the Special Servicer, such default is reasonably foreseeable, (B) in
the reasonable, good faith judgment of the Special Servicer, such modification
would increase the recovery on the Mortgage Loan to Certificateholders on a net
present value basis (the relevant discounting of amounts that will be
distributable to Certificateholders to be performed at the related Net Mortgage
Rate) and (C) such modification, waiver or amendment would not cause REMIC I,
REMIC II or REMIC III to fail to qualify as a REMIC under the Code or result in
the imposition of any tax on "prohibited transactions" or "contributions" after
the Startup Day under the REMIC Provisions.
In addition, notwithstanding Section 3.20(c), but subject to the
third paragraph of this Section 3.20(d), the Special Servicer may extend the
date on which any Balloon Payment is scheduled to be due in respect of a
Specially Serviced Mortgage Loan if the conditions set forth in the proviso to
the prior paragraph are satisfied and the Special Servicer has obtained an
appraisal, in accordance with the standards of the Appraisal Institute, of the
related Mortgaged Property, performed by an Independent Appraiser, in connection
with such extension, which appraisal supports the determination of the Special
Servicer contemplated by clause (B) of the proviso to the immediately preceding
paragraph.
In no event shall the Special Servicer (i) extend the maturity date
of a Mortgage Loan beyond a date that is two years prior to __________, (ii)
extend the maturity date of any Mortgage Loan which has a Mortgage Rate below
the prevailing interest rate for comparable loans at the time of such
modification as determined by the Special Servicer, unless (A) such Mortgage
Loan is a Balloon Loan, (B) the related Mortgagor has failed to make the Balloon
Payment at its Stated Maturity Date and (C) such Balloon Loan is not a Specially
Serviced Mortgage Loan (other than by reason of the failure to make its Balloon
Payment) and has not been delinquent with respect to a Monthly Payment (other
than the Balloon Payment) in the preceding twelve months, in which case the
Special Servicer may permit up to three one-year extensions at the existing
Mortgage Rate for such Mortgage Loan (provided that such limitation of
extensions made at below market rate shall not limit the ability of the Special
Servicer to extend the maturity date of any Mortgage Loan at an interest rate at
or in excess to the prevailing rate for comparable loans at the time of such
modification), (iii) if the Mortgage Loan is secured by a Ground Lease, extend
the maturity date of such Mortgage Loan beyond a date which is less than 10
years prior to the expiration of the term of such Ground Lease; (iv) reduce the
Mortgage Rate to a rate below the prevailing interest rate for comparable loans
at the time of such modification, as determined by the Special Servicer; or (v)
defer interest due on any Mortgage Loan in excess of 10% of the Stated Principal
Balance of such Mortgage Loan or defer the collection of interest on any
Mortgage Loan without accruing interest on such deferred interest at a rate at
least equal to the Mortgage Rate of such Mortgage Loan.
The determination of the Special Servicer contemplated by clause (B)
of the proviso to the first paragraph of this Section 3.20(d) shall be evidenced
by an Officer's Certificate to such effect delivered to the Trustee and the
Master Servicer and describing in reasonable detail the basis for the Special
Servicer's determination. The Special Servicer shall append to such Officer's
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Certificate any information including but not limited to income and expense
statements, rent rolls, property inspection reports and appraisals that support
such determination.
(e) Any payment of interest that is deferred pursuant to any
modification, waiver or amendment permitted hereunder, shall not, for purposes
hereof, including, without limitation, calculating monthly distributions to
Certificateholders, be added to the unpaid principal balance or Stated Principal
Balance of the related Mortgage Loan, notwithstanding that the terms of such
modification, waiver or amendment so permit. The foregoing shall in no way limit
the Special Servicer's ability to charge and collect from the Mortgagor costs
otherwise collectible under the terms of the related Mortgage Note and this
Agreement together with interest thereon.
(f) The Special Servicer may, as a condition to granting any request
by a Mortgagor for consent, modification, waiver or indulgence or any other
matter or thing, the granting of which is within its discretion pursuant to the
terms of the instruments evidencing or securing the related Mortgage Loan and is
permitted by the terms of this Agreement and applicable law, require that such
Mortgagor pay to it (i) as additional servicing compensation, a reasonable or
customary fee for the additional services performed in connection with such
request, and (ii) any related costs and expenses incurred by it. In no event
shall the Special Servicer be entitled to payment for such fees or expenses
unless such payment is collected from the related Mortgagor.
(g) The Special Servicer shall notify the Master Servicer, any
related Sub-Servicers and the Trustee, in writing, of any modification, waiver
or amendment of any term of any Mortgage Loan (including fees charged the
Mortgagor) and the date thereof, and shall deliver to the Trustee or any related
Custodian for deposit in the related Mortgage File, an original recorded
counterpart of the agreement relating to such modification, waiver or amendment,
promptly (and in any event within ten Business Days) following the execution and
recordation thereof.
(h) If, with respect to any Defeasance Loan, the Master Servicer
shall receive a notice from the related Mortgagor that it intends to prepay the
related Defeasance Loan in accordance with the terms thereof, except as set
forth below, the Master Servicer shall (a) promptly respond to such notice in a
manner which would require that the Mortgagor pledge Defeasance Collateral in
lieu of such prepayment pursuant to the terms of the related Mortgage Note, (b)
notify each Rating Agency, the Trustee and the Underwriter of the request to
defease a Mortgage Loan and (c) upon the written confirmation from each Rating
Agency described in the next paragraph, take such further action as provided in
such Mortgage Note to effectuate such defeasance, including the purchase and
perfection of the Defeasance Collateral in the name of the Trustee, as trustee
for the registered holders of [LB Commercial Mortgage Trust ____], Commercial
Mortgage Pass-Through Certificates, Series ____.
Notwithstanding the above, the Master Servicer shall not permit a
pledge of Defeasance Collateral in lieu of prepayment under a Defeasance Loan if
(i) such defeasance would occur within two years of the Startup Day, (ii) such
Defeasance Loan (or any applicable agreement executed in connection with the
related defeasance) provides that the Mortgagor will be liable for any
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shortfalls from the Defeasance Collateral or otherwise become subjected to
recourse liability with respect to the Defeasance Loan, (iii) such defeasance
would result in a new Mortgagor on the Defeasance Loan (unless such new
Mortgagor is acquiring the Mortgaged Property that was the initial security for
the Defeasance Loan), or (iv) each Rating Agency does not confirm in writing to
the Master Servicer that the acceptance of a pledge of the Defeasance Collateral
in lieu of a full prepayment will not result in a qualification, downgrade or
withdrawal of the ratings then assigned by it to any Class of Certificates.
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 a copy of the related Servicing File, to the Special Servicer and
shall use reasonable 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 either in the Master Servicer's or any of its directors',
officers', employees', affiliates' or agents' possession or control or otherwise
available to the Master Servicer without undue burden or expense, and reasonably
requested by the Special Servicer to enable it to assume its functions hereunder
with respect thereto without acting through a Sub-Servicer. The Master Servicer
shall use reasonable efforts to comply with the preceding sentence within five
Business Days of the occurrence of each related Servicing Transfer Event;
provided, however, if the information, documents and records requested by the
Special Servicer are not contained in the Servicing File, the Master Servicer
shall have such period of time as reasonably necessary to make such delivery.
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 and all other information, documents and
records that were not part of the Servicing File when it was delivered to the
Special Servicer within five Business Days of the occurrence, to the Master
Servicer (or such other Person as may be directed by the Master Servicer) and
upon giving such notice, and returning such Servicing File, to the Master
Servicer (or such other Person as may be directed by the Master Servicer), the
Special Servicer's obligation to service such Mortgage Loan, and the Special
Servicer's right to receive the Special Servicing Fee with respect to such
Mortgage Loan, shall terminate, and the obligations of the Master Servicer to
service and administer such Mortgage Loan shall resume.
(b) In servicing any Specially Serviced Mortgage Loans, the Special
Servicer shall provide to the Custodian originals of documents included within
the definition of "Mortgage File" for inclusion in the related Mortgage File
(with a copy of each such original to the Master Servicer), and shall provide to
the Master Servicer copies of any additional related Mortgage Loan information,
including correspondence with the related Mortgagor.
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(c) On or before each Determination Date, the Special Servicer shall
deliver to the Master Servicer, the Trustee and each Rating Agency (or such
other Person as may be directed by the Master Servicer) a statement in writing
and in computer readable format (the form of such statement to be agreed upon by
the Master Servicer) describing, on a loan-by-loan and property-by-property
basis, (1) insofar as it relates to Specially Serviced Mortgage Loans and REO
Properties, the information described in clauses (vi) through (xv) of Section
4.02(a) and, insofar as it relates to the Special Servicer, the information
described in clauses (xxiv) and (xxv) of Section 4.02(a), (2) the amount of all
payments, Insurance Proceeds and Liquidation Proceeds received, and the amount
of any Realized Loss incurred, with respect to each Specially Serviced Mortgage
Loan during the related Collection Period, and the amount of all REO Revenues,
Insurance Proceeds and Liquidation Proceeds received, and the amount of any
Realized Loss incurred, with respect to each REO Property during the related
Collection Period, (3) the amount, purpose and date of all Servicing Advances
made by the Special Servicer with respect to each Specially Serviced Mortgage
Loan and REO Property during the related Collection Period and (4) such
additional information relating to the Specially Serviced Mortgage Loans and REO
Properties as the Master Servicer reasonably requests to enable it to perform
its responsibilities under this Agreement. Notwithstanding the foregoing
provisions of this subsection (c), the Master Servicer shall maintain ongoing
payment records with respect to each of the Specially Serviced Mortgage Loans
and REO Properties and shall provide the Special Servicer with any information
reasonably available to the Master Servicer required by the Special Servicer to
perform its duties under this Agreement.
SECTION 3.22. Sub-Servicing Agreements.
(a) The Master Servicer and the Special Servicer may enter into
Sub-Servicing Agreements to provide for the performance by third parties of any
or all of their respective obligations hereunder, provided that, in each case,
the Sub-Servicing Agreement: (i) is consistent with this Agreement in all
material respects and requires the Sub-Servicer to comply with all of the
applicable conditions of this Agreement; (ii) provides that if the Master
Servicer or the Special Servicer, as the case may be, shall for any reason no
longer act in such capacity hereunder (including, without limitation, by reason
of an Event of Default), the Trustee or its designee may thereupon assume all of
the rights and, except to the extent they arose prior to the date of assumption,
obligations of the Master Servicer or the Special Servicer, as the case may be,
under such agreement or may terminate such subservicing agreement (except with
respect only to those Sub-Servicing Agreements in effect as of the Closing Date
subject to the provisions of Section 3.22(d)) without cause and without payment
of any penalty or termination fee (except with respect only to those
Sub-Servicing Agreements in effect as of the Closing Date as set forth in
Section 3.22(d)); (iii) provides that the Trustee, for the benefit of the
Certificateholders, shall be a third party beneficiary under such agreement, but
that (except to the extent the Trustee or its designee assumes the obligations
of the Master Servicer or the Special Servicer, as the case may be, thereunder
as contemplated by the immediately preceding clause (ii)) none of the Trustee,
the Trust Fund, any successor Master Servicer or Special Servicer, as the case
may be, or any Certificateholder shall have any duties under such agreement or
any liabilities arising therefrom; (iv) permits any purchaser of a Mortgage Loan
pursuant to this Agreement to terminate such agreement with respect to such
purchased Mortgage Loan at its
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option and without penalty, (v) does not permit the Sub-Servicer to enter into
or consent to any modification, waiver or amendment or otherwise take any action
on behalf of the Special Servicer contemplated by Section 3.20 hereof without
the consent of such Special Servicer, and (vi) does not permit the Sub-Servicer
any rights of indemnification that may be satisfied out of assets of the Trust
Fund. In addition, each Sub-Servicing Agreement entered into by the Master
Servicer shall provide that such agreement shall, 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 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 each shall deliver to the Trustee and
to each other 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 P&I Advances or Servicing 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 P&I Advances or
Servicing Advances shall be recoverable by such Sub-Servicer in the same manner
and out of the same funds as if such Sub-Servicer were the Master Servicer or
the Special Servicer, as the case may be. For so long as they are outstanding,
Advances shall accrue interest in accordance with Sections 3.03(d) and 4.03(d),
such interest to be allocable between the Master Servicer or the Special
Servicer, as the case may be, and such Sub-Servicer as they may agree. For
purposes of this Agreement, the Master Servicer and the Special Servicer each
shall be deemed to have received any payment when a Sub-Servicer retained by it
receives such payment. The Master Servicer and the Special Servicer each shall
notify the other, the Trustee and the Depositor in writing promptly of the
appointment by it of any Sub-Servicer.
(b) Each Sub-Servicer (i) 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, and (ii)
shall be an approved conventional seller/servicer of mortgage loans for FHLMC or
FNMA or a HUD-Approved Servicer.
(c) The Master Servicer and the Special Servicer, for the benefit of
the Trustee and the Certificateholders, shall (at no expense to the Trustee, the
Certificateholders or the Trust Fund) monitor the performance and enforce the
obligations of their respective Sub-Servicers under the related Sub-Servicing
Agreements. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements in accordance
with their respective terms and the pursuit of other appropriate remedies, shall
be in such form and carried out to such an extent and at such time as the Master
Servicer or the Special Servicer, as applicable, in its good faith business
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 may each have
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the right to remove a Sub-Servicer at any time it considers such removal to be
in the best interests of Certificateholders.
(d) In the event of the resignation, removal or other termination of
_______________________________________ or any successor Master Servicer
hereunder for any reason, the Trustee or other Person succeeding such resigning,
removed or terminated party as Master Servicer, shall elect, with respect to any
Sub-Servicing Agreement existing at the time of such termination: (i) to assume
the rights and obligations of the Master Servicer under such Sub-Servicing
Agreement and continue the sub-servicing arrangements thereunder on the same
terms (including without limitation the obligation to pay the same sub-servicing
fee); (ii) to enter into a new Sub-Servicing Agreement with such Sub-Servicer on
such terms as the Trustee or other successor Master Servicer and such
Sub-Servicer shall mutually agree (it being understood that such Sub-Servicer is
under no obligation to accept any such new Sub-Servicing Agreement or to enter
into or continue negotiations with the Trustee or other successor Master
Servicer), provided that neither the Trustee nor any successor Master Servicer
shall enter into a new Sub-Servicing Agreement with a Sub-Servicer that was a
party to a Sub-Servicing Agreement as of the Closing Date, if such new
Sub-Servicing Agreement amends, alters or fails to restate the rights of the
Underwriter, if any, under the existing Sub-Servicing Agreement with respect to
the termination of the Sub-Servicer and the appointment of a successor thereto
or the rights of the Underwriter, if any, as a third party beneficiary under
such Sub-Servicing Agreement, unless the successor Master Servicer has obtained
the prior written consent to the terms of such new Sub-Servicing Agreement from
the Underwriter; (iii) subject to the terms of the next paragraph, to terminate
such Sub-Servicing Agreement without cause, provided that no Sub-Servicer under
a Sub-Servicing Agreement that was in effect as of the Closing Date may be
terminated without cause unless it receives Sub-Servicer Termination
Compensation, if any, as defined in the Sub-Servicing Agreement for such
Sub-Servicer; or (iv) to terminate the Sub-Servicing Agreement if an Event of
Default (as defined in such Sub-Servicing Agreement) has occurred and is
continuing or either of the events set forth in clauses (i) or (ii) of the
following paragraph has occurred and is continuing, in each case without paying
any sub-servicer termination fee. It shall be the corporate obligation (not
reimbursable by the Trust Fund or any of the other parties to this Agreement) of
the Person, who as successor Master Servicer, terminates any Sub-Servicer
without cause, and of its successors and assigns in such capacity (to the extent
contemplated by clause (iii) of the preceding sentence), to pay Sub-Servicer
Termination Compensation to such terminated Sub-Servicer.
Each Sub-Servicing Agreement in effect on the Closing Date shall
provide, among other things, that the Master Servicer may at its sole option,
terminate any rights the Sub-Servicer may have thereunder with respect to any or
all Mortgage Loans if any of the Rating Agencies (i) reduces the rating assigned
to one or more Classes of the respective Certificates as a result of the
sub-servicing of the Mortgage Loans by the Sub-Servicer, or (ii) advise the
Master Servicer or the Trustee that it will qualify, downgrade or withdraw such
rating due to the continued servicing by the Sub-Servicer.
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(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.
SECTION 3.23. Representations and Warranties of the Master Servicer.
(a) The Master Servicer, in such capacity, hereby represents and
warrants to the Trustee, for its own benefit and the benefit of the
Certificateholders, and to the Depositor and the Special Servicer, as of the
Closing Date, that:
(i) The Master Servicer is a _________________, duly organized and
in good standing under the laws of ______________, and the Master Servicer
is in compliance with the laws of each state in which any Mortgaged
Property is located to the extent necessary to perform its obligations
under this Agreement.
(ii) The execution and delivery of this Agreement by the Master
Servicer, and the performance and compliance with the terms of this
Agreement by the Master Servicer, will not violate the Master Servicer's
organizational documents or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material agreement or other instrument to
which it is a party or which is applicable to it or any of its assets.
(iii) The Master Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has
duly authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Master Servicer, enforceable against the
Master Servicer in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally, and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(v) The Master Servicer is not in violation of, and its execution
and delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court or arbiter, or any order, regulation or
demand of any federal, state or local governmental or regulatory
authority, which violation, in the Master Servicer's 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.
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(vi) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened, against the Master Servicer that would
prohibit the Master Servicer from entering into this Agreement or, 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.
(vii) Each officer, director, employee, consultant or advisor of the
Master Servicer with responsibilities concerning the servicing and
administration of Mortgage Loans is covered by errors and omissions
insurance in the amounts and with the coverage as, and to the extent,
required by Section 3.07(c).
(viii) The net worth of the Master Servicer, determined in
accordance with generally accepted accounting principles, is not less than
$__________.
(ix) Any consent, approval, authorization or order of any court or
governmental agency or body required for the execution, delivery and
performance by the Master Servicer of or compliance by the Master Servicer
with this Agreement or the consummation of the transactions contemplated
by this Agreement has been obtained and is effective except where the lack
of consent would not have a material adverse effect on the performance by
the Master Servicer under this Agreement.
(x) The Master Servicer possesses all insurance required pursuant to
Section 3.07(c) of this Agreement.
(xi) 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.
(b) The representations and warranties of the Master Servicer set
forth in Section 3.23(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made for so long as the Trust Fund remains in existence. Upon discovery by
any party hereto of any breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
thereof to the other parties hereto.
(c) Any successor Master Servicer shall be deemed to have made, as
of the date of its succession, each of the representations and warranties set
forth in Section 3.23(a), subject to such appropriate modifications to the
representation and warranty set forth in Section 3.23(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 3.24. Representations and Warranties of the Special
Servicer.
(a) The Special Servicer, in such capacity, hereby represents and
warrants to the Trustee, for its own benefit and the benefit of the
Certificateholders, and to the Depositor and the Master Servicer, as of the
Closing Date, that:
(i) The Special Servicer is a ________________, validly existing and
in good standing under the laws 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 perform its
obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the Special
Servicer, and the performance and compliance with the terms of this
Agreement by the Special Servicer, will not violate the Special Servicer's
organizational documents or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material agreement or other instrument to
which it is a party or which is applicable to it or any of its assets.
(iii) The Special Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has
duly authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Special Servicer, enforceable against the
Special Servicer in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally, and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(v) The Special Servicer is not in violation of, and its execution
and delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court or arbiter, or any order, regulation or
demand of any federal, state or local governmental or regulatory
authority, which violation, in the Special Servicer's 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.
(vi) No litigation is pending or, to the best of the Special
Servicer's knowledge, threatened, against the Special Servicer that would
prohibit the Special Servicer from entering into this Agreement or, in the
Special Servicer's good faith and reasonable judgment, is likely to
materially and adversely affect either the ability of the Special Servicer
to perform its obligations under this Agreement or the financial condition
of the Special Servicer.
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(vii) Each officer, director and employee of the Special Servicer
and each consultant or advisor of the Special Servicer with
responsibilities concerning the servicing and administration of Mortgage
Loans is covered by errors and omissions insurance in the amounts and with
the coverage required by Section 3.07(c).
(viii) Any consent, approval, authorization or order of any court or
governmental agency or body required for the execution, delivery and
performance by the Special Servicer of or compliance by the Special
Servicer with this Agreement or the consummation of the transactions
contemplated by this Agreement has been obtained and is effective except
where the lack of consent would not have a material adverse effect on the
performance by the Special Servicer under this Agreement.
(ix) The Special Servicer possesses all insurance required pursuant
to Section 3.07(c) of this Agreement.
(x) 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 Special Servicer.
(b) The representations and warranties of the Special Servicer set
forth in Section 3.24(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made for so long as the Trust Fund remains in existence. Upon discovery by
any party hereto of any breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
thereof to the other parties hereto.
(c) Any successor Special Servicer shall be deemed to have made, as
of the date of its succession, each of the representations and warranties set
forth in Section 3.24(a), subject to such appropriate modifications to the
representation and warranty set forth in Section 3.24(a)(i) to accurately
reflect such successor's jurisdiction of organization and whether it is a
corporation, partnership, bank, association or other type of organization.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) On each Distribution Date, the Trustee shall (except as
otherwise provided in Section 9.01), based on information provided by the Master
Servicer and the Special Servicer, apply amounts on deposit in the Collection
Account, after payment of any amounts payable from the Collection Account
pursuant to Section 3.05(b) (ii) through (viii) 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 distributions of interest to the Holders of the Senior
Certificates in an amount equal to, and pro rata in accordance with, all
Distributable Certificate Interest in respect of each Class of Senior
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(ii) to distributions of principal to the Holders of the Class A-1
Certificates, in an amount (not to exceed the Class Principal Balance of
the Class A-1 Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date;
(iii) after the Class Principal Balance of the Class A-1
Certificates has been reduced to zero, to distributions of principal to
the Holders of the Class A-2 Certificates, in an amount (not to exceed the
Class Principal Balance of the Class A-2 Certificates outstanding
immediately prior to such Distribution Date) equal to the entire Principal
Distribution Amount for such Distribution Date (net of any portion thereof
distributed on such Distribution Date to the Holders of the Class A-1
Certificates pursuant to clause (ii) above);
(iv) after the Class Principal Balances of the Class A-1
Certificates and Class A-2 Certificates have been reduced to zero, to
distributions of principal to the Holders of the Class A-3 Certificates,
in an amount (not to exceed the Class Principal Balance of the Class A-3
Certificates outstanding immediately prior to such Distribution Date)
equal to the entire Principal Distribution Amount for such Distribution
Date (net of any portion thereof distributed on such Distribution Date to
the Holders of the Class A-1 Certificates pursuant to clause (ii) above or
the Holders of the Class A-2 Certificates pursuant to clause (iii) above);
(v) to distributions to the Holders of the Class A-1 Certificates,
the Class A-2 Certificates and the Class A-3 Certificates, pro rata in
accordance with, in an amount equal
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to, and in reimbursement of, all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and not previously reimbursed;
(vi) to distributions of interest to the Holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for all prior Distribution Dates;
(vii) after the Class Principal Balances of the Class A-1
Certificates, the Class A-2 Certificates and the Class A-3 Certificates
have been reduced to zero, to distributions of principal to the Holders of
the Class B Certificates, in an amount (not to exceed the Class Principal
Balance of the Class B Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a)).
(viii) to distributions to the Holders of the Class B Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
B Certificates and not previously reimbursed;
(ix) to distributions of interest to the Holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for all prior Distribution Dates;
(x) after the Class Principal Balance of the Class B Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class C Certificates, in an amount (not to exceed the Class Principal
Balance of the Class C Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xi) to distributions to the Holders of the Class C Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
C Certificates and not previously reimbursed;
(xii) to distributions of interest to the Holders of the Class D
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class D Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xiii) after the Class Principal Balance of the Class C Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class D Certificates, in an amount
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(not to exceed the Class Principal Balance of the Class D Certificates
outstanding immediately prior to such Distribution Date) equal to the
entire Principal Distribution Amount for such Distribution Date (net of
any portion thereof distributed on such Distribution Date to the Holders
of any other Class of Certificates pursuant to any prior clause of this
Section 4.01(a));
(xiv) to distributions to the Holders of the Class D Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
D Certificates and not previously reimbursed;
(xv) to distributions of interest to the Holders of the Class E
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class E Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xvi) after the Class Principal Balance of the Class D Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class E Certificates, in an amount (not to exceed the Class Principal
Balance of the Class E Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xvii) to distributions to the Holders of the Class E Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
E Certificates and not previously reimbursed;
(xviii) to distributions of interest to the Holders of the Class F
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class F Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xix) after the Class Principal Balance of the Class E Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class F Certificates, in an amount (not to exceed the Class Principal
Balance of the Class F Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xx) to distributions to the Holders of the Class F Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
F Certificates and not previously reimbursed;
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(xxi) to distributions of interest to the Holders of the Class G
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class G Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxii) after the Class Principal Balance of the Class F Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class G Certificates, in an amount (not to exceed the Class Principal
Balance of the Class G Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxiii) to distributions to the Holders of the Class G Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
G Certificates and not previously reimbursed;
(xxiv) to distributions of interest to the Holders of Class H
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class H Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxv) after the Class Principal Balance of the Class G Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class H Certificates, in an amount (not to exceed the Class Principal
Balance of the Class H Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxvi) to distributions to the Holders of the Class H Certificates
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to such Class
of Certificates and not previously reimbursed;
(xxvii) to distributions of interest to the Holders of the Class J
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class J Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxviii) after the Class Principal Balance of the Class H
Certificates has been reduced to zero, to distributions of principal to
the Holders of the Class J Certificates, in an amount (not to exceed the
Class Principal Balance of the Class J Certificates outstanding
immediately prior to such Distribution Date) equal to the entire Principal
Distribution Amount for such Distribution Date (net of any portion thereof
distributed on such Distribution Date to the Holders of any other Class of
Certificates pursuant to any prior clause of this Section 4.01(a));
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(xxix) to distributions to the Holders of the Class J Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
J Certificates and not previously reimbursed;
(xxx) to distributions of interest to the Holders of the Class K
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class K Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxi) after the Class Principal Balance of the Class J Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class K Certificates, in an amount (not to exceed the Class Principal
Balance of the Class K Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxxii) to distributions to the Holders of the Class K Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
K Certificates and not previously reimbursed;
(xxxiii) to distributions of interest to the Holders of the Class L
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class L Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxiv) after the Class Principal Balance of the Class K
Certificates has been reduced to zero, to distributions of principal to
the Holders of the Class L Certificates, in an amount (not to exceed the
Class Principal Balance of the Class L Certificates outstanding
immediately prior to such Distribution Date) equal to the entire Principal
Distribution Amount for such Distribution Date (net of any portion thereof
distributed on such Distribution Date to the Holders of any other Class of
Certificates pursuant to any prior clause of this Section 4.01(a));
(xxxv) to distributions to the Holders of the Class L Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
L Certificates and not previously reimbursed; and
(xxxvi) to distributions of interest to the Holders of the Class M
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class M Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxvii) after the Class Principal Balance of the Class L
Certificates has been reduced to zero, to distributions of principal to
the Holders of the Class M Certificates, in an amount (not to exceed the
Class Principal Balance of the Class M Certificates outstanding
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immediately prior to such Distribution Date) equal to the entire Principal
Distribution Amount for such Distribution Date (net of any portion thereof
distributed on such Distribution Date to the Holders of any other Class of
Certificates pursuant to any prior clause of this Section 4.01(a));
(xxxviii) to distributions to the Holders of the Class M
Certificates, in an amount equal to, and in reimbursement of, all Realized
Losses and Additional Trust Fund Expenses, if any, previously allocated to
the Class M Certificates and not previously reimbursed;
(xxxix) to make distributions to the Holders of the Class R-III
Certificates, in 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(h), over (B)
the aggregate distributions made in respect of the Regular Interest
Certificates on such Distribution Date pursuant to clauses (i) through
(xxxviii) above;
(xl) 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(i), over (B)
the aggregate distributions deemed made in respect of the REMIC II Regular
Interests on such Distribution Date pursuant to Section 4.01(h); and
(xli) 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
(xl) above;
provided that on each Distribution Date after the aggregate Certificate
Principal Balance of the Subordinated Certificates has been reduced to zero, the
payments of principal to be made as contemplated by clauses (ii), (iii) and (iv)
above with respect to the Class A Certificates will be made to the Holders of
the respective Classes of such Class A Certificates up to an amount equal to,
and pro rata as among such Classes in accordance with, the respective then
outstanding Class Principal Balances of such Classes of Certificates and without
regard to the Principal Distribution Amount for such Distribution Date.
Distributions in reimbursement of Realized Losses and Additional Trust Fund
Expenses previously allocated to a Class of Certificates shall not constitute
distributions of principal and shall not result in reduction of the related
Class Principal Balance.
All distributions of interest made in respect of the Class IO
Certificates on any Distribution Date pursuant to clause (i) above, shall be
deemed to have been made in respect of the respective Components of such Class,
pro rata in accordance with the respective amounts of Distributable Certificate
Interest that would be payable on such Components on such Distribution Date if
each such Component were treated as a separate Class of Regular Interest
Certificates.
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(b) On each Distribution Date, the Trustee shall withdraw from the
Collection Account any amounts that represent Prepayment Premiums and/or Yield
Maintenance Charges actually collected on the Mortgage Loans and any REO Loans
during the related Collection Period and shall distribute each such Prepayment
Premium and/or Yield Maintenance Charge, as additional interest, as follows:
(i) first, to the Holders of the respective Classes of Sequential
Pay Certificates (other than any Excluded Class thereof) entitled to
distributions of principal pursuant to Section 4.01(a) on such
Distribution Date, up to an amount equal to, and pro rata based on, the
respective Additional Yield Amounts for such Classes of Certificates for
such Distribution Date; and
(ii) second, to the Holders of the Class IO Certificates, to the
extent of any remaining portion of such Prepayment Premium and/or Yield
Maintenance Charge (distributions pursuant to this clause (ii) to be
deemed allocable among the respective Components of the Class IO
Certificates on a pro rata basis in accordance with the respective amounts
of Accrued Component Interest in respect of such Components for the
subject Distribution Date).
On each Distribution Date, the Trustee shall withdraw from the
Collection Account any amounts that represent Additional Interest actually
collected on the ARD Loans and any related REO Loans during the related
Collection Period and shall distribute such Additional Interest among all the
Classes of Sequential Pay Certificates on a pro rata basis in accordance with
the respective initial Certificate Principal Balances of such Classes of
Certificates, without regard to whether any such Class is entitled to
distributions of principal on such Distribution Date (whether by reason of its
Certificate Principal Balance having been reduced to zero or by reason of it not
yet being entitled to distributions of principal).
(c) All distributions made with respect to each Class on each
Distribution Date shall be allocated pro rata among the outstanding Certificates
in such Class based on their respective Percentage Interests. Except as
otherwise provided below, all such distributions with respect to each Class on
each Distribution Date shall be made to the Certificateholders of the respective
Class of record at the close of business on the related Record Date and shall be
made by wire transfer of immediately available funds to the account of any such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided the Trustee with wiring
instructions no less than five Business Days prior to the related Record Date
(which wiring instructions may be in the form of a standing order applicable to
all subsequent Distribution Dates), or otherwise by check mailed to the address
of such Certificateholder as it appears in the Certificate Register. The final
distribution on each Certificate (determined without regard to any possible
future reimbursement of any Realized Loss or Additional Trust Fund Expense
previously allocated to such Certificate) will be made in a 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. Prior to any termination of the
Trust Fund pursuant to
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Section 9.01, any distribution that is to be made with respect to a Certificate
in reimbursement of a Realized Loss or Additional Trust Fund Expense previously
allocated thereto, which reimbursement is to occur after the date on which such
Certificate is surrendered as contemplated by the preceding sentence, will be
made by check mailed to the address of the Certificateholder that surrendered
such Certificate as such address last appeared in the Certificate Register or to
any other address of which the Trustee was subsequently notified in writing. If
such check is returned to the Trustee, then the Trustee, directly or through an
agent, shall take such reasonable steps to contact the related Holder and
deliver such check as it shall deem appropriate. Any funds in respect of a check
returned to the Trustee shall be set aside by the Trustee and held uninvested in
trust and credited to the account of the appropriate Holder. The costs and
expenses of locating the appropriate Holder and holding such funds 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 the Trustee has not, after having
taken such reasonable steps, located the related Holder by the second
anniversary of the initial sending of a check, the Trustee shall, subject to
applicable law, distribute the unclaimed funds to the Class R-III
Certificateholders.
(d) Each distribution with respect to a Book-Entry Certificate shall
be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the related Certificate Owners that it represents and to each indirect
participating brokerage firm (a "brokerage firm" or "indirect participating
firm") for which it acts as agent. Each brokerage firm shall be responsible for
disbursing funds to the related Certificate Owners that it represents. None of
the Trustee, the Certificate Registrar, the Depositor or the Master Servicer
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 a Letter of Representations among the Depositor,
the Trustee and the initial Depository dated as of the Closing Date.
(e) The rights of the Certificateholders to receive distributions
from the proceeds of the Trust Fund in respect of the Certificates, and all
rights and interests of the Certificateholders in and to such distributions,
shall be as set forth in this Agreement. Neither the Holders of any Class of
Certificates nor any party hereto shall in any way be responsible or liable to
the Holders of any other Class of Certificates in respect of amounts properly
previously distributed on the Certificates.
(f) Except as otherwise provided in Section 9.01, whenever the
Trustee receives written notification of or expects that the final distribution
with respect to any Class of Certificates (determined without regard to any
possible future reimbursement of any Realized Loss or Additional Trust Fund
Expense previously allocated to such Class of Certificates) will be made on the
next Distribution Date, the Trustee shall, no later than five days after the
related Determination Date, mail to each Holder of record on such date of such
Class of Certificates a notice to the effect that:
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(i) the Trustee expects that the final distribution with respect to
such Class of Certificates will be made on such Distribution Date but only
upon presentation and surrender of such Certificates at the office of the
Certificate Registrar or at such other location therein specified, and
(ii) no interest shall accrue on such Certificates from and after
such Distribution Date.
Any funds not distributed to any Holder or Holders of Certificates
of such Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and held
uninvested in trust and credited to the account or accounts of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(f) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, 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 delivery
of the second notice, the Trustee shall, subject to applicable law, distribute
to the Class R-III Certificateholders all unclaimed funds and other assets which
remain subject thereto.
(g) Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. If the Trustee
does withhold any amount from interest or original issue discount payments or
advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.
(h) All distributions made in respect of each Class of Sequential
Pay Certificates on each Distribution Date pursuant to Section 4.01(a), the
first paragraph of Section 4.01(b) or Section 9.01 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 Certificates; and all distributions
made in respect of the Class IO Certificates on each Distribution Date pursuant
to Section 4.01(a), the first paragraph of Section 4.01(b) or Section 9.01, and
allocable to any particular Component of such Class of Certificates, 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 Component. In each case,
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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 previously
allocated Realized Losses and Additional Trust Fund Expenses in respect of such
Class of Certificates, then the corresponding distribution deemed to be made on
a REMIC II Regular Interest pursuant to the preceding sentence shall be deemed
to also be a distribution of interest, of principal, of additional interest (in
the form of Prepayment Premiums or Yield Maintenance Charges) or in
reimbursement of any previously allocated Realized Losses and Additional Trust
Fund Expenses, as the case may be, in respect of such REMIC II Regular Interest.
The actual distributions made by the Trustee on each Distribution Date in
respect of the REMIC III Certificates pursuant to Section 4.01(a), the first
paragraph of Section 4.01(b) or Section 9.01, 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(h).
Notwithstanding the deemed distributions on the REMIC II Regular Interests
described in this Section 4.01(h), actual distributions of funds from the
Collection Account shall be made only in accordance with Section 4.01(a), the
first paragraph of Section 4.01(b) or Section 9.01, as applicable.
(i) On each Distribution Date, including, without limitation, the
final Distribution Date in connection with a termination of the Trust Fund, the
Available Distribution Amount for such date shall be deemed to have first been
distributed from REMIC I to REMIC II in respect of the REMIC I Regular
Interests, in each case to the extent of the remaining portions of such funds,
for the following purposes and in the following order of priority:
(i) as deemed distributions of interest in respect of the REMIC I
Regular Interests, in an amount equal to, and pro rata in accordance with,
all Uncertificated Distributable Interest in respect of each such REMIC I
Regular Interest for such Distribution Date and, to the extent not
previously deemed distributed, for all prior Distribution Dates;
(ii) as deemed distributions of principal in respect of the REMIC I
Regular Interests, in an amount equal to, and pro rata in accordance with,
as to each such REMIC I Regular Interest, the excess, if any, of the
Uncertificated Principal Balance of such REMIC I Regular Interest
outstanding immediately prior to such Distribution Date, over the Stated
Principal Balance of the related Mortgage Loan (or successor REO Loan)
that will be outstanding immediately following such Distribution Date; and
(iii) as deemed distributions in respect of the REMIC I Regular
Interests, in an amount equal to, pro rata in accordance with, and in
reimbursement of, any Realized Losses and Additional Trust Fund Expenses
(with compounded interest), previously allocated to each such REMIC I
Regular Interest.
Any Prepayment Premiums or Yield Maintenance Charges distributed to
any Class of Regular Interest Certificates on any Distribution Date shall, in
each case, be deemed to have been distributed from REMIC I to REMIC II in
respect of the REMIC I Regular Interest corresponding
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to the prepaid Mortgage Loan or REO Loan, as the case may be, in respect of
which such premium or charge was received.
SECTION 4.02. Statements to Certificateholders; CSSA Loan File
Report.
(a) On each Distribution Date, the Trustee shall forward by first
class mail (or, in the case of each Rating Agency and any of the other Persons
entitled thereto who so request, by electronic medium) to the Depositor, the
Underwriter, the Master Servicer, the Special Servicer, the Controlling Class
Representative, each Rating Agency, all of the Holders of each Class of Regular
Interest Certificates, all of the initial Certificate Owners of each Class of
Book-Entry Certificates (a list of which shall be provided to the Trustee on the
Closing Date substantially in the form set forth on Exhibit L hereto) and, upon
their written request to the Trustee, any subsequent Certificate Owners of the
Book-Entry Certificates as may be identified to the reasonable satisfaction of
the Trustee, a statement (a "Distribution Date Statement"), based on information
provided to it by the Master Servicer and the Special Servicer, setting forth:
(i) the amount of the distribution on such Distribution Date to the
Holders of each Class of Sequential Pay Certificates in reduction of the
Class Principal Balance thereof;
(ii) the amount of the distribution on such Distribution Date to the
Holders of each Class of Regular Interest Certificates allocable to
Distributable Certificate Interest;
(iii) the amount of the distribution on such Distribution Date to
the Holders of each Class of Regular Interest Certificates allocable to
Prepayment Premiums and Yield Maintenance Charges;
(iv) the amount of the distribution on such Distribution Date to the
Holders of each Class of Sequential Pay Certificates in reimbursement of
previously allocated Realized Losses and Additional Trust Fund Expenses;
(v) the Available Distribution Amount for such Distribution Date;
(vi) the aggregate amount of P&I Advances made in respect of the
prior Distribution Date pursuant to Section 4.03(a), including, without
limitation, any amounts applied pursuant to Section 4.03(a)(ii);
(vii) (A) the aggregate amount of unreimbursed P&I Advances that had
been outstanding at the close of business on the related Determination
Date and the aggregate amount of interest accrued and payable to the
Master Servicer, the Trustee or the Fiscal Agent in respect of such
unreimbursed P&I Advances in accordance with Section 4.03(d) as of the
close of business on the related Determination Date and (B) the aggregate
amount of unreimbursed Servicing Advances that had been outstanding as of
the close of business on the related Determination Date and the aggregate
amount of interest accrued and payable to the
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Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent in
respect of such unreimbursed Servicing Advances in accordance with Section
3.03(d) as of the close of business on the related Determination Date;
(viii) the aggregate unpaid principal balance of the Mortgage Pool
outstanding as of the close of business on the related Determination Date
and the aggregate Stated Principal Balance of the Mortgage Pool
outstanding immediately before and immediately after such Distribution
Date;
(ix) the number, aggregate unpaid principal balance, weighted
average remaining term to maturity and weighted average Mortgage Rate of
the Mortgage Loans as of the close of business on the related
Determination Date;
(x) the number, aggregate unpaid principal balance (as of the close
of business on the related Determination Date) and aggregate Stated
Principal Balance (immediately after such Distribution Date) of Mortgage
Loans (A) delinquent one month, (B) delinquent two months, (C) delinquent
three or more months, and (D) as to which foreclosure proceedings have
been commenced;
(xi) as to each Mortgage Loan referred to in the preceding clause
(x) above, (A) the loan number thereof, (B) the Stated Principal Balance
thereof immediately following such Distribution Date, (C) whether the
delinquency is in respect of its Balloon Payment, (D) whether a notice of
acceleration has been sent to the Mortgagor and, if so, the date of such
notice, (E) whether an Environmental Assessment of the related Mortgaged
Property has been performed as contemplated by Section 3.09(c) and, if the
assessment is such that the Special Servicer cannot make the determination
set forth in clauses (i) and (ii) of the first sentence of Section
3.09(c), a brief description of the results of such Environmental
Assessment, and (F) a brief description of the status of any foreclosure
proceedings or any workout or loan modification negotiations with the
related Mortgagor;
(xii) with respect to any Mortgage Loan as to which a Liquidation
Event occurred during the related Collection Period (other than a payment
in full), (A) the loan number thereof, (B) the nature of the Liquidation
Event and, in the case of a Final Recovery Determination, a brief
description of the basis for such Final Recovery Determination, (C) the
aggregate of all Liquidation Proceeds and other amounts received in
connection with such Liquidation Event (separately identifying the portion
thereof allocable to distributions on the Certificates), and (D) the
amount of any Realized Loss in connection with such Liquidation Event;
(xiii) with respect to any REO Property that was included in the
Trust Fund as of the close of business on the related Determination Date,
the loan number of the related Mortgage Loan, the book value of such REO
Property and the amount of REO Revenues and other amounts, if any,
received with respect to such REO Property during the related
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Collection Period (separately identifying the portion thereof allocable to
distributions on the Certificates);
(xiv) with respect to any Mortgage Loan as to which the related
Mortgaged Property became an REO Property during the related Collection
Period, the loan number of such Mortgage Loan and the Stated Principal
Balance of such Mortgage Loan as of the related Acquisition Date;
(xv) with respect to any REO Property included in the Trust Fund as
to which a Final Recovery Determination was made during the related
Collection Period, (A) the loan number of the related Mortgage Loan, (B) a
brief description of the basis for the Final Recovery Determination, (C)
the aggregate of all Liquidation Proceeds and other amounts received with
respect to such REO Property during the related Collection Period
(separately identifying the portion thereof allocable to distributions on
the Certificates), and (D) the amount of any Realized Loss in respect of
the related REO Loan in connection with such Final Recovery Determination;
(xvi) the Accrued Certificate Interest and Distributable Certificate
Interest in respect of each Class of Regular Interest Certificates for
such Distribution Date;
(xvii) any unpaid Distributable Certificate Interest in respect of
each Class of Regular Interest Certificates after giving effect to the
distributions made on such Distribution Date, and if the full amount of
the Principal Distribution Amount was not distributed on such Distribution
Date, the portion of the shortfall affecting each Class of Sequential Pay
Certificates;
(xviii) the Pass-Through Rate for each Class of Regular Interest
Certificates for such Distribution Date;
(xix) the Principal Distribution Amount for such Distribution Date,
separately identifying the respective components thereof (and, in the case
of any Principal Prepayment or other unscheduled collection of principal
received during the related Collection Period, the loan number for the
related Mortgage Loan and the amount of such prepayment or other
collection of principal);
(xx) the aggregate of all Realized Losses incurred during the
related Collection Period and, aggregated by type, all Additional Trust
Fund Expenses incurred during the related Collection Period;
(xxi) the aggregate of all Realized Losses and Additional Trust Fund
Expenses that remain unallocated immediately following such Distribution
Date;
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(xxii) the Class Principal Balance of each Class of Sequential Pay
Certificates and the Component Notional Amount of each Component of the
Class IO Certificates, outstanding immediately before and immediately
after such Distribution Date, separately identifying any reduction therein
due to the allocation of Realized Losses and Additional Trust Fund
Expenses on such Distribution Date;
(xxiii) the Certificate Factor for each Class of Regular Interest
Certificates immediately following such Distribution Date;
(xxiv) the aggregate amount of interest on Advances paid to the
Master Servicer, the Special Servicer, the Trustee and the Fiscal Agent
during the related Collection Period in accordance with Section 3.03(d)
and/or Section 4.03(d); and
(xxv) (A) the aggregate amount of servicing compensation (separately
identifying the amount of each category of compensation) paid to the
Master Servicer, the Special Servicer and, if payable directly out of the
Trust Fund without a reduction in the servicing compensation otherwise
payable to the Master Servicer or the Special Servicer, to each
Sub-Servicer, during the related Collection Period, and (B) such other
information as the Trustee is required by the Code or other applicable law
to furnish to enable Certificateholders to prepare their tax returns.
In the case of information to be furnished pursuant to clauses (i) through (iv)
above, the amounts shall be expressed as a dollar amount in the aggregate for
all Certificates of each applicable Class and per Single Certificate. In the
case of information provided to the Trustee as a basis for information to be
furnished pursuant to clauses (vi) through (xv), (xxiv) and (xxv) above, insofar
as the underlying information is solely within the control of the Special
Servicer or the Master Servicer, the Trustee may, absent manifest error,
conclusively rely on the reports to be provided by the Special Servicer or the
Master Servicer.
On each Distribution Date, the Trustee shall forward by first class
mail (or, in the case of each Rating Agency and any of the other Persons
entitled thereto who so request, by electronic medium) to each
Certificateholder, the Underwriter, the Depositor, each Rating Agency and each
other Person that was forwarded a Distribution Date Statement on such
Distribution Date, a copy of the following reports delivered to it by the Master
Servicer pursuant to Section 3.12(c) 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; (vi) a Loan Payoff Notification Report; and (vii) the
Comparative Financial Status Report. The Trustee shall prepare and deliver or
shall cause to be delivered on each Distribution Date by first class mail (or,
in the case of each Rating Agency and any of the other Persons entitled thereto
who so request, by electronic medium) to each Certificateholder, the
Underwriter, the Depositor, each Rating Agency and each other Person that was
forwarded a Distribution Date Statement on such Distribution Date a copy of the
CSSA Loan File Report containing information regarding each Mortgage Loan and
the CSSA
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Property File Report containing information regarding each Mortgaged Property
and REO Property as of the end of the preceding calendar month. The Distribution
Date Statement, the CSSA Loan File Report, the CSSA Property File Report and the
reports referred to in the second preceding sentence collectively constitute the
"Certificateholder Reports". Absent manifest error, 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 Mortgagor or third party
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 Mortgagor, a third party or each other.
A Certificateholder or Certificate Owner may obtain certain
information contained in each Distribution Date Statement by calling the
Trustee's _____________ System at _____________ and requesting statement number
_____, or such other mechanism as the Trustee may have in place from time to
time. Account numbers on the Trustee's ASAP System may be obtained by calling
_____________ and following the voice prompts for obtaining account numbers.
Certificate Factor information may be obtained by potential purchasers of the
Certificates or interests therein, by calling _____________ . In addition, if
the Depositor or the Underwriter so directs the Trustee, the Trustee will make
available the Distribution Date Statement via automated medium to any Person who
places a telephone call to _____________ and requests access to _____________ ,
the Trustee's automated fax back system. Additionally, the Trustee shall make
available to the Master Servicer, the Special Servicer, the Certificateholders,
Certificate Owners identified to the Trustee in writing, the Depositor, the
Underwriter, each Rating Agency, and Bloomberg, L.P. (and may in its discretion
and upon receipt of written consent of the Underwriter or the Depositor publish
on the internet) by means of electronic access to a datafile in the "CSSA Loan
periodic update file" and the "CSSA Property File" with the Delinquent Loan
Status Report, Historical Loan Modification Report, Historical Loss Estimate
Report, REO Status Report, Loan Payoff Notification Report and the Watch List
Report attached (provided such reports have been delivered to the Trustee
pursuant to Section 3.12(c) in an electronic format acceptable to the Trustee)
via the Trustee's bulletin board (accessible by dialing _____________ ). The
Trustee may disclaim responsibility for any information therein for which it is
not the original source. The Master Servicer, upon receipt of written consent of
the Underwriter or the Depositor, may publish on the internet any information
that Trustee is obligated to provide to Bloomberg, L.P. provided that any
expenses or liability arising therefrom shall not be an Additional Trust Fund
Expense and shall be the sole responsibility of the Master Servicer.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall send to each Person who at any time during the calendar
year was a Certificateholder of record, a report summarizing on an annual basis
(if appropriate) the items provided to Certificateholders pursuant to clauses
(i), (ii), (iii) and (iv) of the description of "Distribution Date Statement"
above and such other information as may be required to enable such
Certificateholders to prepare their federal income tax returns. Such information
shall include the amount of original issue discount accrued on each Class of
Certificates and information regarding the expenses of the Trust Fund. Such
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requirement shall be deemed to be satisfied to the extent such information is
provided pursuant to applicable requirements of the Code from time to time in
force.
On each Distribution Date, the Trustee shall forward to the
Depositor, to each Rating Agency, to each Holder of a Residual Interest
Certificate, to the Underwriter (at Three World Financial Center, New York, New
York 10285, Attention: Trish Hall, or such other address as the Underwriter may
designate) and, in the case of reports regarding the respective Classes of
Book-Entry Certificates, if any, to The Trepp Group (at 477 Madison Avenue, 18th
Floor, New York, New York 10022, or such other address as The Trepp Group may
hereafter designate), a copy of the reports forwarded to the Holders of the
Regular Interest Certificates on such Distribution Date and a statement setting
forth the amounts, if any, actually distributed with respect to the Class R-I,
Class R-II and Class R-III Certificates on such Distribution Date.
Upon written request of the Depositor or the Underwriter, without
payment of any fee, and upon written request of any Certificateholders or any
other Person, together with payment of a reasonable fee specified by the
Trustee, the Trustee shall provide any statements, reports and/or information
contemplated by this Section 4.02(a) on computer diskette to such party (such
computer diskette and such statements, reports, and/or information thereon to
bear such appropriate disclaimers and qualifications as the Depositor and the
Trustee shall determine in their reasonable discretion).
If any Certificate Owner does not receive through the Depository or
any of its Depository Participants any of the statements, reports and/or other
written information described above in this Section 4.02(a) that it would
otherwise be entitled to receive if it were the Holder of a Definitive
Certificate evidencing its ownership interest in the related Class of Book Entry
Certificates, then the Trustee shall forward such statements, reports and/or
other written information to such Certificate Owner as provided above, upon the
request of such Certificate Owner made in writing to the Corporate Trust Office
(accompanied by current verification of such Certificate Owner's ownership
interest). Such portion of such information as may be agreed upon by the
Depositor and the Trustee shall be furnished to any such Person via overnight
courier delivery or telecopy from the Trustee; provided that the cost of such
overnight courier delivery or telecopy shall be an expense of the party
requesting such information.
The Trustee shall only be obligated to deliver the statements,
reports and information contemplated by this Section 4.02(a) to the extent it
receives the necessary underlying information from the Master Servicer and shall
not be liable for any failure to deliver any thereof on the prescribed due
dates, to the extent caused by failure to receive timely such underlying
information. Nothing herein shall obligate the Trustee, the Master Servicer or
the Special Servicer to violate any applicable law prohibiting disclosure of
information with respect to any Mortgagor and the failure of the Trustee, Master
Servicer or the Special Servicer to disseminate information for such reason
shall not be a breach hereof.
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The information to be furnished by the Trustee to the
Certificateholders pursuant to Sections 4.02(a) and (b) shall not limit the
Trustee in furnishing any such information to other Persons to whom it
determines such disclosure to be appropriate and shall not limit the Trustee in
furnishing to Certificateholders or to any person any other information with
respect to the Mortgage Loans, the Mortgaged Properties or the Trust Fund as may
be provided to it by the Depositor, the Master Servicer or the Special Servicer
or gathered by it in any investigation or other manner from time to time (such
information, other than as described in Sections 4.02(a) and (b), is referred to
herein as "Additional Information") as it may reasonably deem necessary or
appropriate from time to time, provided that (A) the Trustee shall give the
Depositor three business days' advance notice before doing so, (B) any such
Additional Information shall only be furnished with the consent or at the
request of the Depositor (except pursuant to clause (E) below), (C) the Trustee
shall be entitled to indicate the source of all information furnished by it, and
the Trustee may affix thereto any disclaimer it deems appropriate in its
discretion, (D) the Trustee shall notify Certificateholders of the availability
of any such information in any manner as it, in its sole discretion, may
determine and (E) this provision shall not prevent the Trustee, whether with or
without the consent of the Depositor, from furnishing information with respect
to the Trust Fund and its administration thereof to any Person, if it reasonably
determines that the furnishing of such information is required by applicable
law. The Trustee shall forward to the Depositor any requests for Additional
Information which, for their fulfillment, require the consent of the Depositor.
Nothing herein shall be construed to impose upon the Trustee any obligation or
duty to furnish or distribute any Additional Information to any Person in any
instance.
(b) Not later than 2:00 p.m. (New York City time) on the third
Business Day preceding each Distribution Date, the Master Servicer shall furnish
to the Trustee, the Depositor and the Underwriter, by electronic transmission
(or in such other form to which the Trustee or the Depositor, as the case may
be, and the Master Servicer may agree), with a hard copy of such transmitted
information to follow not later than the second Business Day following such
Determination Date, an accurate and complete CSSA Loan File Report providing the
required information for the Mortgage Loans as of such Determination Date.
In the performance of its obligations set forth in Section 4.05 and
its other duties hereunder, the Trustee may conclusively rely on the CSSA Loan
File Report provided to it by the Master Servicer, and the Trustee shall not be
responsible to recompute, recalculate or verify the information provided to it
by the Master Servicer. In the case of information to be furnished by the Master
Servicer to the Trustee pursuant to this Section 4.02(b), insofar as such
information is solely within the control of the Special Servicer, the Master
Servicer shall have no obligation to provide such information until it has
received such information from the Special Servicer, shall not be in default
hereunder due to a delay in providing the CSSA Loan File Report caused by the
Special Servicer's failure to timely provide any report required under this
Agreement and may, absent manifest error, conclusively rely on the reports to be
provided by the Special Servicer. The Master Servicer may conclusively rely on
any information provided by the Depositor or any Mortgagor with respect to the
CSSA Loan File Report.
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SECTION 4.03. P&I Advances.
(a) On or before 4:00 p.m., New York City time, on each P&I Advance
Date, the Master Servicer shall, subject to Section 4.03(c) below, either (i)
remit from its own funds to the Trustee for deposit into the Collection 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
Custodial 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 Custodial
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 Custodial Account on or before the next
succeeding Determination Date (to the extent not previously replaced through the
deposit of Late Collections of the delinquent principal and interest in respect
of which such P&I Advances were made). If, as of 3:00 p.m., New York City time,
on any P&I Advance Date, the Master Servicer shall not have made any P&I Advance
required to be made on such date pursuant to this Section 4.03(a) (and shall not
have delivered to the Trustee the requisite Officer's Certificate and
documentation related to a determination of nonrecoverability of a P&I Advance),
then the Trustee shall provide notice of such failure to a Servicing Officer of
the Master Servicer by facsimile transmission sent to telecopy no. _____________
(or such alternative number provided by the Master Servicer to the Trustee in
writing) and by telephone at telephone no. _____________ (or such alternative
number provided by the Master Servicer to the Trustee in writing) as soon as
possible, but in any event before 5:00 p.m., New York City time, on such P&I
Advance Date. If after such notice by facsimile, the Trustee does not receive
the full amount of such P&I Advances by 11:00 a.m., New York City time, on the
Business Day immediately following such P&I Advance Date, then (i) the Trustee
(or the Fiscal Agent on its behalf) shall make the portion of such P&I Advances
that was required to be, but was not, made by the Master Servicer on such P&I
Advance Date and (ii) the provisions of Sections 7.01 and 7.02 shall apply. If
the Trustee fails to make any such P&I Advance on the related Distribution Date,
but the Fiscal Agent shall make such P&I Advance on such date, then the Trustee
shall be deemed not to be in default hereunder.
(b) The aggregate amount of P&I Advances to be made by the Master
Servicer, the Trustee or the Fiscal Agent, as the case may be, in respect of any
Distribution Date shall, subject to Section 4.03(c) below, equal the aggregate
of all Scheduled Payments (other than Balloon Payments) and any Assumed
Scheduled Payments, in each case net of related Master Servicing Fees, and any
related Workout Fees, due or deemed due, as the case may be, in respect of the
Mortgage Loans (including, without limitation, Balloon Mortgage Loans delinquent
as to their respective Balloon Payments) and any REO Loans on their respective
Due Dates during the related Collection Period, in each case to the extent such
amount was not paid by or on behalf of the related Mortgagor or otherwise
collected (including received as net income from REO Properties) as of the close
of business on the related Determination Date; provided that, (i) if the Monthly
Payment on any Mortgage Loan has been reduced in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or a modification, waiver or
amendment granted or agreed to by the Special
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Servicer pursuant to Section 3.20, or if the final maturity on any Mortgage Loan
shall be extended in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or a modification, waiver or amendment granted
or agreed to by the Special Servicer pursuant to Section 3.20, and the Monthly
Payment due and owing during the extension period is less than the related
Assumed Scheduled Payment, then the Master Servicer, the Trustee or the Fiscal
Agent, as the case may be, shall, as to such Mortgage Loan only, advance only
the amount of the Monthly Payment due and owing after taking into account such
reduction (net of related Master Servicing Fees and any related Workout Fees) in
the event of subsequent delinquencies thereon; and (ii) if it is determined that
an Appraisal Reduction Amount exists with respect to any Required Appraisal
Loan, then, with respect to the Distribution Date immediately following the date
of such determination and with respect to each subsequent Distribution Date for
so long as such Appraisal Reduction Amount exists with respect to such Required
Appraisal Loan, the Master Servicer, the Trustee or the Fiscal Agent, as the
case may be, will be required in the event of subsequent delinquencies to
advance in respect of such Mortgage Loan only an amount equal to the product of
(x) the amount of the P&I Advance that would otherwise be required without
regard to this clause (ii), multiplied by (y) a fraction, the numerator of which
is equal to the Stated Principal Balance of such Mortgage Loan, net of such
Appraisal Reduction Amount, and the denominator of which is equal to the Stated
Principal Balance of such Mortgage Loan.
(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 that it has made a Nonrecoverable P&I Advance or that any proposed P&I
Advance, if made, would constitute a Nonrecoverable P&I Advance, shall be
evidenced by an Officers' Certificate delivered to the Trustee and the Depositor
on or before the related P&I Advance Date, setting forth the basis for such
determination, together with any other information that supports such
determination, including appraisals (which appraisal shall be conducted in
accordance with the standards of the Appraisal Institute taking into account the
factors specified in Section 3.18(e), including without limitation, any
environmental, engineering or other third party reports available, and other
factors that a prudent real estate appraiser would consider (or, if no such
appraisal has been performed pursuant to this Section 4.03(c), a copy of an
appraisal of the related Mortgaged Property performed within the twelve months
preceding such determination by an Independent Appraiser or other expert in real
estate matters)), related Mortgagor operating statements and financial
statements, budgets and rent rolls of the related Mortgaged Properties (to the
extent available and /or in the Master Servicer's or the Special Servicer' s
possession), engineers' reports, environmental surveys and any similar reports
that the Master Servicer may have obtained consistent with the Servicing
Standard and at the expense of the Trust Fund, that support such determination
by the Master Servicer. The Trustee and the Fiscal Agent shall be entitled to
rely, conclusively, on any determination by the Master Servicer that a P&I
Advance, if made, would be a Nonrecoverable Advance; provided, however, that if
the Master Servicer has failed to make a P&I Advance for reasons other than a
determination by the Master Servicer that such P&I Advance would be
Nonrecoverable Advance, the Trustee or Fiscal Agent, as applicable, shall make
such Advance within the time periods required by Section 4.03(a) unless the
Trustee or the Fiscal Agent, in good faith, makes a determination prior to the
times specified in Section 4.03(a) that such P&I Advance
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would be a Nonrecoverable Advance. The Trustee and the Fiscal Agent, in
determining whether or not a P&I Advance previously made is, or a proposed P&I
Advance, if made, would be, a Nonrecoverable Advance shall be subject to the
standards applicable to the Master Servicer hereunder.
(d) In connection with the recovery by the Master Servicer, the
Trustee or the Fiscal Agent of any P&I Advance made thereby out of the Custodial
Account pursuant to Section 3.05(a), subject to the next sentence, the Master
Servicer shall be entitled to pay itself, the Trustee or the Fiscal Agent, as
the case may be, out of any amounts then on deposit in the Custodial Account,
interest at the Reimbursement Rate in effect from time to time, compounded
annually, accrued on the amount of such P&I Advance from the date made to but
not including the date of reimbursement. The Master Servicer shall, in
accordance with Section 3.05(a), reimburse itself, the Trustee or the 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
Custodial 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.
SECTION 4.04. Allocation of Realized Losses and Additional Trust
Fund Expenses.
(a) On each Distribution Date, following all distributions to be
made on such date pursuant to Section 4.01, the Trustee shall allocate to the
respective Classes of Sequential Pay Certificates as follows the aggregate of
all Realized Losses and Additional Trust Fund Expenses that were incurred at any
time following the Cut-off Date through the end of the related Collection
Period, and in any event that were not previously allocated pursuant to this
Section 4.04(a) on any prior Distribution Date, but only to the extent that (i)
the aggregate Certificate Principal Balance of the Sequential Pay Certificates
as of such Distribution Date (after taking into account all of the distributions
made on such Distribution Date pursuant to Section 4.01 other than those made
pursuant to the second paragraph of Section 4.01(b)), exceeds (ii) the aggregate
Stated Principal Balance of the Mortgage Pool that will be outstanding
immediately following such Distribution Date: first, to the Class M
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; second, to the Class L Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; third, to the Class K
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; fourth, to the Class J Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; fifth, to the Class H
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; sixth, to the Class G Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; seventh, to the Class F
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; eighth, to the Class E Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; ninth, to the Class D
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; tenth, to the Class C Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; eleventh, to the Class B
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; and twelfth, pro rata (based on remaining Class Principal
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Balances) to the Class A-1 Certificates, Class A-2 Certificates and Class A-3
Certificates, until the Class Principal Balances thereof are reduced to zero.
Any allocation of Realized Losses and Additional Trust Fund Expenses to a Class
of Regular Interest Certificates shall be made by reducing the Class Principal
Balance thereof by the amount so allocated. All Realized Losses and Additional
Trust Fund Expenses, if any, allocated to a Class of Regular Interest
Certificates shall be allocated among the respective Certificates of such Class
in proportion to the Percentage Interests evidenced thereby. All Realized Losses
and Additional Trust Fund Expenses, if any, that have not been allocated to the
Regular Interest Certificates as of the Distribution Date on which the aggregate
Certificate Principal Balance of such Certificates has been reduced to zero,
shall be deemed allocated to the Residual Interest Certificates.
(b) Each Realized Loss and Additional Trust Fund Expense, if any,
allocated to any Class of Sequential Pay Certificates on any Distribution Date
shall be deemed to have first been allocated to the Corresponding REMIC II
Regular Interest for such Class of Certificates, with a corresponding reduction
in the Uncertificated Principal Balance of such REMIC II Regular Interest.
(c) On each Distribution Date, following the deemed distributions to
be made in respect of the REMIC I Regular Interests pursuant to Section 4.01(i),
the Uncertified Principal Balance of each REMIC I Regular Interest (after taking
account of such deemed distributions) shall be reduced to equal the Stated
Principal Balance of the related Mortgage Loan or REO Loan, as the case may be,
that will be outstanding immediately following such Distribution Date. Such
reductions shall be deemed to be an allocation of Realized Losses and Additional
Trust Fund Expenses.
SECTION 4.05. Calculations.
The Trustee shall, provided it receives the necessary information
from the Master Servicer and the Special Servicer, be responsible for performing
all calculations necessary in connection with the actual and deemed
distributions and allocations to be made pursuant to Section 4.01 and Article IX
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, and the
Trustee shall have no obligation to recompute, recalculate or verify any
information provided to it by the Special Servicer or Master Servicer. The
calculations by the Trustee of such amounts shall, in the absence of manifest
error, be presumptively deemed to be correct for all purposes hereunder.
SECTION 4.06. Use of Agents.
The Master Servicer or the Trustee may at its own expense utilize
agents or attorneys-in-fact in performing any of its obligations under this
Article IV (except the obligation to make P&I Advances), but no such utilization
shall relieve the Master Servicer or the Trustee from any of such obligations,
and the Master Servicer or the Trustee, as applicable, shall remain responsible
for all acts and omissions of any such agent or attorney-in-fact.
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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, A-2, A-3, A-4 and A-5; provided that any of the
Certificates may be issued with appropriate insertions, omissions, substitutions
and variations, and may have imprinted or otherwise reproduced thereon such
legend or legends, not inconsistent with the provisions of this Agreement, as
may be required to comply with any law or with rules or regulations pursuant
thereto, or with the rules of any securities market in which the Certificates
are admitted to trading, or to conform to general usage. The Certificates will
be issuable in registered form only; provided, however, that in accordance with
Section 5.03, beneficial ownership interests in the Registered Certificates and
the Class F and Class G Certificates shall initially be held and transferred
through the book-entry facilities of the Depository. The Regular Interest
Certificates will be issuable only in denominations corresponding to initial
Certificate Principal Balances or initial Certificate Notional Amounts, as the
case may be, as of the Closing Date of not less than $ _________in the case of
the Registered Certificates (other than the Class IO Certificates), $
_________in the case of the Class IO Certificates, and $ _________in the case of
the Non-Registered Certificates (other than the Residual Interest Certificates),
and in each such case in integral multiples of $1 in excess thereof. The Class
R-I Certificates, the Class R-II Certificates and the Class R-III Certificates
will be issuable in denominations representing Percentage Interests in the
related Class of not less than 10%.
(b) The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee by the Certificate Registrar hereunder by an
authorized signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the authorized officers of the Certificate
Registrar 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
Authenticating Agent by manual signature, and such certificate of authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
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
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regulations as the Certificate Registrar may prescribe, the Certificate
Registrar shall provide for the registration of Certificates and of transfers
and exchanges of Certificates as herein provided. The Trustee is hereby
initially appointed (and hereby agrees to act in accordance with the terms
hereof) as Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided. The Certificate
Registrar may appoint, by a written instrument delivered to the Depositor, the
Master Servicer, the Special Servicer and (if the Trustee is not the Certificate
Registrar) the Trustee, any other bank or trust company to act as Certificate
Registrar under such conditions as the predecessor Certificate Registrar may
prescribe, provided that the predecessor Certificate Registrar shall not be
relieved of any of its duties or responsibilities hereunder by reason of such
appointment. If the Trustee resigns or is removed in accordance with the terms
hereof, the successor trustee shall immediately succeed to its duties as
Certificate Registrar. The Depositor, the Trustee (if it is no longer the
Certificate Registrar), the Master Servicer and the Special Servicer 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, 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 the most recent list of
Certificateholders held by the Certificate Registrar.
(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 Definitive Non-Registered
Certificate is to be made without registration under the Securities Act (other
than in connection with the initial issuance thereof or a transfer thereof by
the Depositor, the Underwriter or any of their respective Affiliates or, in the
case of a Book-Entry Non-Registered Certificate, a transfer thereof to a
successor Depository or the applicable Certificate Owner in accordance with
Section 5.03), 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-1 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 (ii)
an Opinion of Counsel satisfactory to the Trustee to the effect that such
transfer may be made without registration under the Securities Act (which
Opinion of Counsel shall not be an expense of the Trust Fund or of the
Depositor, the Master Servicer, the Special Servicer, the REMIC Administrator,
the Trustee, the 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. If any Transferee of a Definitive Non-Registered
Certificate does not,
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in connection with the subject transfer, deliver to the Certificate Registrar
one of the certifications described in clause (i) of the preceding sentence or
the Opinion of Counsel described in clause (ii) of the preceding sentence, then
such Transferee shall be deemed to have represented and warranted that all the
certifications set forth in either Exhibit F-2A or Exhibit F-2B hereto are, with
respect to the subject transfer, true and correct. If a transfer of any interest
in a Book-Entry Non-Registered Certificate is to be made without registration
under the Securities Act (other than in connection with the initial issuance of
the Book-Entry Non-Registered Certificates or a transfer of any interest therein
by the Depositor, the Underwriter or any of their respective Affiliates), then
the Certificate Owner desiring to effect such transfer shall be required to
obtain either (i) a certificate from such Certificate Owner's prospective
Transferee substantially in the form attached hereto as Exhibit F-2C or as
Exhibit F-2D, or (ii) an Opinion of Counsel to the effect that such transfer may
be made without registration under the Securities Act. If any Transferee of an
interest in a Book-Entry Non-Registered Certificate does not, in connection with
the subject transfer, deliver to the Transferor the Opinion of Counsel or one of
the certifications described in the preceding sentence, then such Transferee
shall be deemed to have represented and warranted that all the certifications
set forth in either Exhibit F-2C or Exhibit F-2D hereto are, with respect to the
subject transfer, true and correct. None of the Depositor, the Trustee or the
Certificate Registrar is obligated to register or qualify any Class of
Non-Registered of 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 or Certificate Owner
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 Underwriter, the Trustee, the Fiscal Agent, the
Master Servicer, the Special Servicer, the REMIC 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 employee benefit plan or other retirement
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and separate accounts in which such plans,
accounts or arrangements are invested, including insurance company general
accounts, that is subject to ERISA or the Code (each, a "Plan"), or (B) to any
Person who is directly or indirectly purchasing such Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan, 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 Non-Registered Certificates or any transfer of a NonRegistered
Certificate or any interest therein by the Depositor, the Underwriter or any of
their respective Affiliates or, in the case of a Book-Entry Non-Registered
Certificate, any transfer of such Certificate to a successor Depository or to
the applicable Certificate Owner in accordance with Section 5.03, the
Certificate Registrar shall refuse to register the transfer of a Definitive
NonRegistered Certificate unless it has received from the prospective
Transferee, and any Certificate Owner transferring an interest in a Book-Entry
Non-Registered Certificate shall be required to obtain
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from its prospective Transferee, either (i) a certification to the effect that
such prospective Transferee is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan; or (ii) a
certification to the effect that the purchase and holding of such Certificate or
interest therein 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 or such Certificate
Owner, as the case may be, 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
forms of certification attached hereto as Exhibit G-1 (in the case of Definitive
Non-Registered Certificates) and Exhibit G-2 (in the case of ownership interests
in Book-Entry Non-Registered Certificates) are acceptable for purposes of the
preceding sentence. If any Transferee of a Subordinated Certificate (including,
without limitation, a Class B, Class C, Class D or Class E Certificate) or any
interest therein does not, in connection with the subject transfer, deliver to
the Certificate Registrar (in the case of a Definitive Subordinated Certificate)
or the Transferor (in the case of ownership interests in a Book-Entry
Subordinated Certificate) a certification and/or Opinion of Counsel as required
by the second preceding sentence, then such Transferee shall be deemed to have
represented and warranted that either: (i) such Transferee is neither a Plan nor
any Person who is directly or indirectly purchasing such Certificate or interest
therein on behalf of, as named fiduciary of, as trustee of, or with assets of a
Plan; or (ii) the purchase and 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 REMIC
Administrator and the Trustee of any change or impending
change in its status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any
Ownership Interest in a Residual Interest Certificate, the
Certificate Registrar shall require delivery to it, and shall
not register the Transfer of any Residual
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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 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 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 REMIC
Administrator and the Trustee written notice that it is a
"pass-through interest holder" within the meaning of temporary
Treasury regulation Section 1.67-3T(a)(2)(i)(A) immediately
upon acquiring an Ownership Interest in a Residual 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
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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 as a result of its exercise of such
discretion. Such purported Transferee shall promptly endorse
and deliver such Residual 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 REMIC Administrator shall make available to the
Internal Revenue Service and to those Persons specified by the REMIC
Provisions all information furnished to it by the other parties
hereto necessary to compute any tax imposed (A) as a result of the
Transfer of an Ownership Interest in a Residual 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 REMIC Administrator all information in its possession necessary
for the REMIC Administrator to discharge such obligation. The Person
holding such Ownership Interest shall be responsible for the
reasonable compensation of the REMIC Administrator for providing
such information.
(iv) The provisions of this Section 5.02(d) set forth prior to
this clause (iv) may be modified, added to or eliminated, provided
that there shall have been delivered to the Trustee and the REMIC
Administrator the following:
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(A) written confirmation from each Rating Agency to the
effect that the modification of, addition to or elimination of
such provisions will not cause such Rating Agency to qualify,
downgrade or withdraw its then-current rating with respect to
any Class of Certificates; and
(B) an Opinion of Counsel, in form and substance
satisfactory to the Trustee and the REMIC Administrator,
obtained at the expense of the party seeking such modification
of, addition to or elimination of such provisions (but in no
event at the expense of the Trustee, the REMIC Administrator
or the Trust), to the effect that doing so will not (1) cause
any of REMIC I, REMIC II or REMIC III 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) If a Person is acquiring any Non-Registered Certificate,
Subordinated Certificate or Residual Interest Certificate or an interest in any
such Certificate as a fiduciary or agent for one or more accounts, such Person
shall be required to deliver to the Certificate Registrar (or, in the case of an
interest in a Book-Entry Certificate, to the Certificate Owner that is
transferring such interest) a certification to the effect that, and such other
evidence as may be reasonably required by the Trustee (or such Certificate
Owner) to confirm that, it has (i) sole investment discretion with respect to
each such account and (ii) full power to make the applicable foregoing
acknowledgments, representations, warranties, certifications and agreements with
respect to each such account as set forth in Subsections (b), (c) and/or (d), as
appropriate, of this Section 5.02.
(f) Subject to the preceding provisions of this Section 5.02, upon
surrender for registration of transfer of any Certificate at the offices of the
Certificate Registrar maintained for such purpose, the Certificate Registrar
shall execute and the Authenticating Agent shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of the same Class of a like aggregate Percentage Interest.
(g) At the option of any Holder, its Certificates may be exchanged
for other Certificates of authorized denominations of the same Class of a like
aggregate Percentage Interest upon surrender of the Certificates to be exchanged
at the offices of the Certificate Registrar maintained for such purpose.
Whenever any Certificates are so surrendered for exchange, the Certificate
Registrar shall execute and the Authenticating Agent shall authenticate and
deliver the Certificates which the Certificateholder making the exchange is
entitled to receive.
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(h) Every Certificate presented or surrendered for transfer or
exchange shall (if so required by the Certificate Registrar) be duly endorsed
by, or be accompanied by a written instrument of transfer in the form
satisfactory to the Certificate Registrar duly executed by, the Holder thereof
or his attorney duly authorized in writing.
(i) No service charge shall be imposed for any transfer or exchange
of Certificates, but the Trustee or Certificate Registrar may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
(j) All Certificates surrendered for transfer and exchange shall be
physically canceled by the Certificate Registrar, and the Certificate Registrar
shall dispose of such canceled Certificates in accordance with its standard
procedures.
SECTION 5.03. Book-Entry Certificates.
(a) Each Class of Registered Certificates and the Class F and Class
G Certificates shall 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) below, a 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 transfer
their respective Ownership Interests in and to such Certificates through the
book-entry facilities of the Depository and, except as provided in Section
5.03(c) below, shall not be entitled to definitive, fully registered
Certificates ("Definitive Certificates") in respect of such Ownership Interests.
All transfers by Certificate Owners of their respective Ownership Interests in
the Book-Entry Certificates shall be made in accordance with the procedures
established by the 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 Trustee, the Master Servicer, the Special Servicer, the
Depositor 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.
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(c) If (i)(A) the Depositor advises the Trustee and the Certificate
Registrar in writing that the Depository is no longer willing or able to
properly discharge its responsibilities with respect to a Class of the
Book-Entry Certificates, and (B) the Depositor is unable to locate a qualified
successor, (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 a Class of Book-Entry
Certificates, or (iii) after the occurrence of an Event of Default, Certificate
Owners entitled to a majority of the Voting Rights allocated to the Book-Entry
Certificates advise the Depository through the Depository Participants in
writing that the continuation of a book-entry system through the Depository is
no longer in the best interests of the Certificate Owners, 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 the Book-Entry Certificates of any Class thereof by
the Depository, accompanied by registration instructions from the Depository for
registration of transfer, the Certificate Registrar shall execute, and the
Authenticating Agent shall authenticate and deliver, the Definitive Certificates
in respect of such Class to the Certificate Owners identified in such
instructions. The Depositor shall provide the Certificate Registrar with an
adequate inventory of Definitive Certificates. None of the Depositor, the Master
Servicer, the Special Servicer, 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
Class of Registered 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.
(d) Notwithstanding any other provisions contained herein, neither
the Trustee nor the Certificate Registrar shall have any responsibility
whatsoever to monitor or restrict the transfer of ownership interests in any
Certificate (including but not limited to any Non-Registered Certificate or any
Subordinated Certificate) which interests are transferable through the
book-entry facilities of the Depository.
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 Certificate
Registrar shall execute and the Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of the same Class and like Percentage
Interest. Upon the issuance of any new Certificate under this Section, the
Trustee and the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
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relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any replacement
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the applicable REMIC created hereunder, as
if originally issued, whether or not the lost, stolen or destroyed Certificate
shall be found at any time.
SECTION 5.05. Persons Deemed Owners.
Prior to due presentment for registration of transfer, the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Certificate Registrar and any agent of any of them may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.01 and for all other
purposes whatsoever and none of the Depositor, the Master Servicer, the Special
Servicer, the Trustee, the Certificate Registrar or any agent of any of them
shall be affected by notice to the contrary.
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ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER, THE SPECIAL SERVICER
AND THE CONTROLLING CLASS REPRESENTATIVE
SECTION 6.01. Liability of Depositor, Master Servicer and 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 herein.
SECTION 6.02. Merger, Consolidation or Conversion of Depositor,
Master Servicer or Special Servicer.
Subject to the following paragraph, the Depositor, the Master
Servicer and the Special Servicer shall each keep in full effect its existence,
rights and franchises as a corporation under the laws of the jurisdiction of its
incorporation or organization, and each will obtain and preserve its
qualification to do business as a foreign entity in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this 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 or the Special Servicer
may be merged or consolidated with or into any Person, or transfer all or
substantially all of its assets to any Person, in which case any Person
resulting from any merger or consolidation to which the 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 (i) as confirmed in writing by each of the Rating
Agencies, such succession will not result in the qualification, downgrade or
withdrawal of any rating or ratings then assigned to any Class of Certificates;
(ii) such successor or surviving Person makes the applicable representations and
warranties set forth in Section 3.23 (in the case of a successor or surviving
Person to the Master Servicer) or Section 3.24 (in the case of a successor or
surviving Person to the Special Servicer), as applicable; (iii) in the case of a
successor or surviving Person to the Master Servicer, such successor or
surviving Person shall have a net worth of not less than $ _________; and (iv)
in the case of a successor or surviving Person to the Master Servicer, it is
determined by the Trustee in its reasonable, good faith judgment to have, after
the merger, consolidation or transfer, as the case may be, financial and
servicing capabilities comparable to that of the Master Servicer.
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SECTION 6.03. Limitation on Liability of Depositor, Master Servicer
and Special Servicer.
None of the Depositor, the Master Servicer or the Special Servicer
shall be under any liability to the Trust Fund, the Trustee or the
Certificateholders for any action taken, or not taken, in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Depositor, the Master Servicer or the Special
Servicer against any liability to the Trust Fund, the Trustee or the
Certificateholders for the breach of a representation, warranty or covenant made
herein by such party, 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 obligations or duties
hereunder. The Depositor, the Master Servicer, the Special Servicer and any
director, officer, employee or agent of the Depositor, the Master Servicer or
the Special Servicer may rely in good faith on any document of any kind which,
prima facie, is properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor, the Master Servicer, the Special
Servicer and any director, officer, employee or agent of the Depositor, the
Master Servicer or the Special Servicer shall be indemnified and held harmless
by the Trust Fund against any loss, liability or reasonable expense incurred in
connection with any legal action that relates to this Agreement or the
Certificates, other than any loss, liability or expense: (i) incidental to its
duties and obligations hereunder; (ii) specifically required to be borne by such
party without right of reimbursement pursuant to the terms hereof; (iii)
incurred in connection with any breach of a representation, warranty or covenant
made herein; (iv) incurred by reason of wilful misfeasance, bad faith or
negligence in the performance of obligations or duties hereunder; or (v)
incurred in connection with any violation of any state or federal securities
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, unless
it is specifically required hereunder to bear the costs of such legal action, 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 deem necessary or
desirable with respect to the enforcement and/or protection of the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such action, and any
liability resulting therefrom, shall be expenses, costs and liabilities of the
Trust Fund, and the Depositor, the Master Servicer and the Special Servicer
shall be entitled to be reimbursed therefor from the Custodial Account as
provided in Section 3.05. In no event shall the Master Servicer or the Special
Servicer be liable or responsible for any action taken or omitted to be taken by
the other of them (unless they are the same Person or Affiliates) or by the
Depositor, the Trustee or any Certificateholder, subject to the provisions of
Section 8.05(c).
SECTION 6.04. Resignation of Master Servicer and the Special
Servicer.
The Master Servicer and, subject to Section 6.09, the Special
Servicer may resign from the obligations and duties hereby imposed on it, upon a
determination that its duties hereunder
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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 Special Servicer's
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 7.02 hereof. The Master Servicer and the Special Servicer shall have the
right to resign at any other time provided that (i) a willing successor thereto
has been found, (ii) each of the Rating Agencies confirms in writing that the
successor's appointment will not result in a qualification, downgrade or
withdrawal of any rating or ratings then assigned to any Class of 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, neither the Master Servicer nor the
Special Servicer shall, except as expressly provided herein, assign or transfer
any of its rights, benefits or privileges hereunder to any other Person, or,
except as provided in Sections 3.22 and 4.06, delegate to or 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 Master Servicing Fee and/or the Special
Servicing Fee, as applicable, that accrues pursuant hereto from and after the
date of such transfer shall be payable to such successor.
SECTION 6.05. Rights of Depositor and Trustee in Respect of Master
Servicer and the Special Servicer.
The Master Servicer and the Special Servicer shall each afford the
Depositor, the Underwriter and the Trustee, upon reasonable notice, during
normal business hours access to all records maintained thereby in respect of its
rights and obligations hereunder and access to officers thereof responsible for
such obligations. Upon reasonable request, the Master Servicer and the Special
Servicer shall each furnish the Depositor, the Underwriter and the Trustee with
its most recent financial statements and such other information as it possesses,
and which it is not prohibited by applicable law or contract from disclosing,
regarding its business, affairs, property and condition, financial or otherwise,
except to the extent such information constitutes proprietary information or is
subject to a privilege under applicable law. 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 Special
Servicer hereunder or exercise the rights of the Master Servicer and the Special
Servicer hereunder; provided, however, that neither the Master Servicer nor the
Special Servicer shall be
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relieved of any of its obligations hereunder by virtue of such performance by
the Depositor or its designee and, provided further, that the Depositor may not
exercise any right pursuant to Section 7.01 to terminate the Master Servicer or
the Special Servicer as a party to this Agreement. 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. Depositor, Master Servicer and Special Servicer to
Cooperate with Trustee.
The Depositor, the Master Servicer and the Special Servicer shall
each furnish such reports, certifications and information as are reasonably
requested by the Trustee in order to enable it to perform its duties hereunder.
SECTION 6.07. Depositor, Special Servicer and Trustee to Cooperate
with Master Servicer.
The Depositor, the Special Servicer and the Trustee shall each
furnish such reports, certifications and information as are reasonably requested
by the Master Servicer in order to enable it to perform its duties hereunder.
SECTION 6.08. Depositor, Master Servicer and Trustee to Cooperate
with Special Servicer.
The Depositor, the Master Servicer and the Trustee shall each
furnish such reports, certifications and information as are reasonably requested
by the Special Servicer in order to enable it to perform its duties hereunder.
SECTION 6.09. Designation of Special Servicer by the Controlling
Class.
The Holder or Holders of the Certificates evidencing a majority of
the Voting Rights allocated to the Controlling Class may at any time and from
time to time designate a Person meeting the requirements set forth in Section
6.02 to serve as Special Servicer hereunder and 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 may also select a representative
(the "Controlling Class Representative") from whom the Special Servicer will
seek advice and approval and take direction under certain circumstances, as
described herein. Such Holder or Holders shall so designate a Person to serve as
replacement 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. If such Holders have not replaced the Special Servicer
within 30 days of such Special Servicer's resignation or the date such Special
Servicer has ceased to serve in such capacity, the Trustee shall designate a
successor Special Servicer
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meeting the requirements set forth in Section 6.02. Any designated Person shall
become the Special Servicer on the date as of which the Trustee shall have
received all of the following: (1) written confirmation from all of the Rating
Agencies that the appointment of such Person will not result in the
qualification, downgrade or withdrawal of any rating or ratings then assigned to
any Class of the Certificates; (2) an Acknowledgment of Proposed Special
Servicer in the form attached hereto as Exhibit I-2, executed by the designated
Person, and (3) an Opinion of Counsel (at the expense of the Person designated
to become the Special Servicer) to the effect that the designation of such
Person to serve as Special Servicer is in compliance with this Section 6.09 and
all other applicable provisions of this Agreement, that 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 that this Agreement
shall be enforceable against the designated Person in accordance with its terms.
Any existing Special Servicer shall be deemed to have resigned simultaneously
with such designated Person's becoming the Special Servicer hereunder; provided,
however, that (i) the resigning Special Servicer shall continue to be entitled
to receive all amounts accrued or owing to it under this Agreement on or prior
to the effective date of such resignation, whether in respect of Servicing
Advances or otherwise, (ii) if such Special Servicer was terminated without
cause, it shall be entitled to a portion of certain Workout Fees thereafter
received on the Corrected Mortgage Loans (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. Such resigning Special Servicer shall cooperate with the Trustee
and the replacement Special Servicer in effecting the termination of the
resigning Special Servicer's responsibilities and rights hereunder, including,
without limitation, the transfer within two Business Days to the replacement
Special Servicer for administration by it of all cash amounts that shall at the
time be or should have been credited by the Special Servicer to the Custodial
Account or the REO Account or should have been delivered to the Master Servicer
or that are thereafter received with respect to Specially Serviced Mortgage
Loans and REO Properties.
SECTION 6.10. 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 action (including for
this purpose, omitting to take 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
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 6.10, (b) identifies the Percentage Interest in each Class of
Certificates beneficially owned by the
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Master Servicer or an Affiliate thereof or the Special Servicer or an Affiliate
thereof, as appropriate, and (c) describes in reasonable detail the action that
the Master Servicer or the Special Servicer 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 such instructions for response as the
Trustee shall reasonably determine. 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 appropriate) shall
have failed to object in writing to the proposal described in the written
notice, and if the Master Servicer or the Special Servicer shall act as proposed
in the written notice within thirty (30) days, such action shall be deemed to
comply with, but not modify, 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
only in the case of unusual circumstances.
SECTION 6.11. Certain 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 6.11(b), 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 being notified thereof (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 of a monetary term of a Mortgage Loan other
than a modification consisting of the extension of the maturity date of a
Mortgage Loan for one year or less;
(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 determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address Hazardous Materials
located at an REO Property;
(v) any acceptance of substitute or additional collateral for a
Mortgage Loan;
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(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause;
and
(vii) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan.
In addition, the Controlling Class Representative may direct the Special
Servicer to take, or to refrain from taking, such other actions as the
Controlling Class Representative may deem advisable or as to which provision is
otherwise made herein.
(b) Notwithstanding anything herein to the contrary, no advice,
direction or objection from or by the Controlling Class Representative, as
contemplated by Section 6.11(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, will) require
or cause the Special Servicer to violate any provision of this Agreement or the
REMIC Provisions, including, without limitation, the Special Servicer's
obligation to act in accordance with the Servicing Standard, or expose the
Master Servicer, the Special Servicer, the Trust Fund or the Trustee to material
liability, or materially expand the scope of the Special Servicer's
responsibilities hereunder or cause the Special Servicer to act (including,
without limitation, by omission) in a manner which in the reasonable judgment of
the Special Servicer is not in the best interests of the Certificateholders.
(c) The Controlling Class Representative will have no liability to
the Certificateholders for any action taken, or for refraining from the taking
of any action, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that the Controlling Class Representative will not
be protected against any liability which would otherwise be imposed by reason of
wilful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations or duties. By its acceptance of a
Certificate, each Certificateholder confirms its understanding that the
Controlling Class Representative may take actions that favor the interests of
one or more Classes of the Certificates over other Classes of the Certificates,
and that the Controlling Class Representative may have special relationships and
interests that conflict with those of Holders of some Classes of the
Certificates, and each Certificateholder agrees to take no action against the
Controlling Class Representative or any of its officers, directors, employees,
principals or agents as a result of such a special relationship or conflict.
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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 Custodial
Account, any amount required to be so deposited or remitted by it under
this Agreement; or
(ii) any failure by the Special Servicer to deposit into the REO
Account or to deposit into, or to remit to the Master Servicer for deposit
into, the Custodial Account, any amount required to be so deposited or
remitted under this Agreement; or
(iii) any failure by the Master Servicer to deposit into, or remit
to the Trustee for deposit into, the Collection Account, any amount
required to be so deposited or remitted by it under this Agreement, which
continues unremedied until 11:00 a.m. (New York City time) on the
immediately following Distribution Date; or
(iv) any failure on the part of the Master Servicer or the Special
Servicer duly to observe or perform in any material respect any other of
the covenants or agreements on the part of the Master Servicer or the
Special Servicer, as the case may be, contained in this Agreement, which
continues unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Master Servicer or the Special Servicer, as the
case may be, by any other party hereto or to the Master Servicer or the
Special Servicer, as the case may be (with a copy to each other party
hereto), by the Holders of Certificates entitled to at least 25% of the
Voting Rights; or
(v) any breach on the part of the Master Servicer or the Special
Servicer of any representations or warranties 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
(vi) 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,
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liquidator, trustee or similar official in any bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer or the Special Servicer and
such decree or order shall have remained in force undischarged or unstayed
for a period of 60 days; or
(vii) 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, marshaling
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
(viii) 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
(ix) the Trustee shall have received a written notice from either
Rating Agency to the effect that (A) the Master Servicer's or the Special
Servicer's acting in such capacity shall, in and of itself, have resulted
in one or more of the ratings then assigned to the respective Classes of
Certificates by such Rating Agency being qualified, downgraded or
withdrawn, or (B) if the Master Servicer or Special Servicer continues to
act in such capacity, the rating or ratings then assigned by such Rating
Agency to one or more Classes of Certificates will be qualified,
downgraded or withdrawn.
When a single entity acts as the Master Servicer and the Special Servicer, an
Event of Default in one capacity shall constitute an Event of Default in the
other capacity.
(b) If any Event of Default described in clauses (i) - (viii) of
subsection (a) above shall occur with respect to the Master Servicer or the
Special Servicer (in either case, for purposes of this Section 7.01(b), the
"Defaulting Party") and shall be continuing, then, and in each and every such
case, so long as such Event of Default shall not have been remedied, the Trustee
may, and at the written direction of the Holders of Certificates entitled to at
least 25% of the Voting Rights, the Trustee shall, by notice in writing to the
Defaulting Party (with a copy of such notice to each other party hereto and the
Rating Agencies) terminate all of the rights and obligations (but not the
liabilities for actions and omissions occurring prior thereto) of the Defaulting
Party under this Agreement and in and to the Trust Fund, other than its rights
as a Certificateholder hereunder. If an Event of Default described in clause
(ix) of subsection (a) above shall occur with respect to the Master Servicer or,
if applicable, the Special Servicer (in either case, under such circumstances,
for purposes of this Section 7.01(b), the "Defaulting Party"), the Trustee
shall, by notice in writing (to be sent immediately by facsimile transmission)
to the Defaulting Party (with a copy of such notice to each other party hereto
and the Rating Agencies), terminate all of the rights and obligations (but not
the liabilities for actions and omissions occurring prior thereto) of the
Defaulting Party under this
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Agreement and in and to the Trust Fund, other than its rights, if any, as a
Certificateholder hereunder. From and after the receipt by the Defaulting Party
of such written notice of termination, 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. The Master Servicer and the Special Servicer each agree 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, including those
in electronic form, requested thereby to enable the Trustee to assume the Master
Servicer's or Special Servicer's, as the case may be, functions hereunder, and
shall cooperate with the Trustee in effecting the termination of the Master
Servicer's or Special Servicer's, as the case may be, responsibilities and
rights hereunder, including, without limitation, (i) if the Master Servicer is
the Defaulting Party, the immediate transfer to the Trustee or a successor
Master Servicer for administration by it of all cash amounts that shall at the
time be or should have been credited by the Master Servicer to the Custodial
Account, the Collection Account, a Servicing Account or a Reserve Account or
that are thereafter received by or on behalf of it with respect to any Mortgage
Loan or (ii) if the Special Servicer is the Defaulting Party, the transfer
within two Business Days to the Trustee or a successor Special Servicer for
administration by it of all cash amounts that shall at the time be or should
have been credited by the Special Servicer to the REO Account, the Custodial
Account, a Servicing Account or a Reserve 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; provided, however, that the
Master Servicer and the Special Servicer each shall, if terminated pursuant to
this Section 7.01(b), continue to be entitled to receive all amounts accrued or
owing to it under this Agreement on or prior to the date of such termination,
whether in respect of Advances or otherwise, and it shall continue to be
entitled to the benefits of Section 6.03 notwithstanding any such termination.
Any cost or expenses in connection with any actions to be taken by any party
hereto pursuant to this paragraph shall be borne by the Defaulting Party. If and
to the extent that the Defaulting Party has not reimbursed such costs and
expenses, the Trustee shall have an affirmative obligation to take all
reasonable actions to collect such expenses on behalf of and at the expense of
the Trust Fund. For purposes of this Section 7.01 and of Section 7.03(b), the
Trustee shall not be deemed to have knowledge of an event which constitutes, or
which with the passage of time or notice, or both, would constitute an Event of
Default described in clauses (i)-(viii) of subsection (a) above unless a
Responsible Officer of the Trustee assigned to and working in the Trustee's
Corporate Trust Division has actual knowledge thereof or unless notice of any
event which is in fact such an Event of Default is received by the Trustee and
such notice references the Certificates, the Trust Fund or this Agreement.
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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 Section 6.04 or receives a notice of termination pursuant to
Section 7.01, the Trustee shall, unless a successor is appointed pursuant to
Section 6.04, 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 have
(and the former Master Servicer or the Special Servicer, as the case may be,
shall cease to have) all the responsibilities, duties and liabilities of the
Master Servicer or the Special Servicer, as the case may be, arising thereafter,
including, without limitation, if the Master Servicer is the resigning or
terminated party, the Master Servicer's obligation to make P&I Advances,
including, without limitation, in connection with any termination of the Master
Servicer for an Event of Default described in clause 7.01(a)(iii), the unmade
P&I Advances that gave rise to such Event of Default; provided that any failure
to perform such duties or responsibilities caused by the Master Servicer's or
the Special Servicer's, as the case may be, failure to provide information or
monies required by Section 7.01 shall not be considered a default by the Trustee
hereunder. The Trustee shall not 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 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 if the resigning
or terminated party had continued to act hereunder. Notwithstanding the above,
the Trustee may, if it shall be unwilling to so act as either Master Servicer or
Special Servicer, as the case may be, or shall, if it is unable to so act as
either Master Servicer or Special Servicer, as the case may be, or if the
Trustee is not approved as a master servicer or a special servicer, as the case
may be, by any of the Rating Agencies, or if the Holders of Certificates
entitled to at least 51% of the Voting Rights so request in writing to the
Trustee, promptly appoint, or petition a court of competent jurisdiction to
appoint, any established mortgage loan servicing institution that meets the
requirements of Section 6.02, 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 in
the case of a resigning or terminated Special Servicer, such appointment shall
be subject to the rights of the Holders of Certificates evidencing a majority of
the Voting Rights allocated to the Controlling Class to designate a successor
pursuant to Section 6.09. No appointment of a successor to the Master Servicer
or the Special Servicer hereunder shall be effective until the assumption of the
successor to such party of all its responsibilities, duties and liabilities
under this Agreement. Pending appointment of a successor to the Master Servicer
or the Special Servicer hereunder, the Trustee shall act in such capacity as
hereinabove provided. In connection with any such appointment and assumption
described herein, the Trustee may make such arrangements for the compensation of
such successor out of payments on the Mortgage Loans 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. Such successor and
the other parties hereto shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession.
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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 7.02 or the
effectiveness of any designation of a new Special Servicer pursuant to Section
6.09, the Trustee shall give prompt written notice thereof to Certificateholders
at their respective addresses appearing in the Certificate Register.
(b) Not later than the later of (i) 60 days after the occurrence of
any event which constitutes or, with notice or lapse of time or both, would
constitute an Event of Default and (ii) five days after a Responsible Officer of
the Trustee has notice of the occurrence of such an event, the Trustee shall
transmit by mail to the Depositor and all Certificateholders and the Rating
Agencies notice of such occurrence, unless such default shall have been cured.
SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 66-2/3% of the Voting Rights
allocated to each Class of Certificates affected by any Event of Default
hereunder may waive such Event of Default; provided, however, that an Event of
Default under clauses (i), (ii), (iii) or (ix) of Section 7.01(a) may be waived
only by all of the Certificateholders of the affected Classes. Upon any such
waiver of an Event of Default, such Event of Default shall cease to exist and
shall be deemed to have been remedied for every purpose hereunder. No such
waiver shall extend to any subsequent or other Event of Default or impair any
right consequent thereon except to the extent expressly so waived.
Notwithstanding any other provisions of this Agreement, for purposes of waiving
any Event of Default pursuant to this Section 7.04, Certificates registered in
the name of the Depositor or any Affiliate of the Depositor shall be entitled to
Voting Rights with respect to the matters described above.
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, 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
CONCERNING THE TRUSTEE
AND FISCAL AGENT
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) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement (other than the Mortgage Files, the review of which
is specifically governed by the terms of Article II), shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee shall take such action as it deems appropriate to
have the instrument corrected. The Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Depositor, the Master
Servicer or the Special Servicer, 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 misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith
on the part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
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(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates entitled to at
least 25% of the Voting Rights relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement; and
(iv) The protections, immunities and indemnities afforded to the
Trustee hereunder shall also be available to it in its capacity as
Authenticating Agent, Certificate Registrar, REMIC Administrator and
Custodian.
SECTION 8.02. Certain Matters Affecting Trustee.
Except as otherwise provided in Section 8.01 and Article X:
(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 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, except as provided in
Section 10.01 or 10.02, to institute, conduct or defend any litigation
hereunder or in relation hereto at the request, order or direction of any
of the Certificateholders, pursuant to the provisions of this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; except as provided
in Section 10.01 or 10.02, the Trustee shall not be required to expend or
risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of
its rights or powers, if it shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it; nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the occurrence of an
Event of Default which has not been cured, to exercise such of the rights
and powers vested in it by this Agreement, and to use the same
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degree of care and skill in their exercise as a prudent man would exercise
or use under the circumstances in the conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any action
reasonably taken, suffered or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement;
(v) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, and
except as may be provided in Section 10.01 or 10.02, 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) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys; provided, however, that the Trustee shall remain responsible
for all acts and omissions of such agents or attorneys within the scope of
their employment to the same extent as it is responsible for its own
actions and omissions hereunder; and
(vii) the Trustee shall not be responsible for any act or omission
of the Master Servicer or the Special Servicer (unless the Trustee is
acting as Master Servicer or the Special Servicer) or the Depositor.
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 the Trustee and the Fiscal Agent in Article II,
Section 8.16 and Section 8.18 and the signature of the Certificate Registrar and
the Authenticating Agent set forth on each outstanding Certificate, shall not be
taken as the statements of the Trustee or the Fiscal Agent, and neither the
Trustee nor the Fiscal Agent shall assume any responsibility for their
correctness. Except as expressly set forth in Sections 8.16 and 8.18, the
Trustee and the Fiscal Agent make no representations as to the validity or
sufficiency of this Agreement or of any Certificate (other than as to the
signature of the Trustee set forth thereon) or of any Mortgage Loan or related
document. The Trustee and the Fiscal Agent shall not be accountable for the use
or application by the Depositor of any of the Certificates issued to it or of
the proceeds of such Certificates, or for the use or application of any funds
paid to the Depositor in respect of the assignment of the Mortgage Loans to the
Trust Fund,
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or any funds deposited in or withdrawn from the Custodial Account or any other
account by or on behalf of the Depositor, the Master Servicer or the Special
Servicer. The Trustee and the Fiscal Agent shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Depositor, the Master
Servicer or the Special Servicer, and accepted by the Trustee in good faith,
pursuant to this Agreement.
SECTION 8.04. Trustee and Fiscal Agent May Own Certificates.
The Trustee, the Fiscal Agent or any agent of the Trustee and the
Fiscal Agent, in its individual or any other capacity, 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,
the Fiscal Agent or such agent.
SECTION 8.05. Fees and Expenses of Trustee; Indemnification of
Trustee.
(a) On each Distribution Date, the Trustee shall withdraw from the
general funds on deposit in the Collection Account, prior to any distributions
to be made therefrom on such date, and pay to itself all earned but unpaid
Trustee's Fees, 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. The Trustee's Fees (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) shall constitute the Trustee's sole compensation
for such services to be rendered by it.
(b) The Trustee and any director, officer, employee or agent of the
Trustee shall be entitled to be indemnified for and held harmless by the Trust
Fund against any loss, liability or reasonable "out-of-pocket" expense
(including, without limitation, costs and expenses incurred in connection with
removal of the Special Servicer and Master Servicer pursuant to Sections 7.01
and 7.02, 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 or the Certificates ("Trustee Liability");
provided that neither the Trustee nor any of the other above specified Persons
shall be entitled to indemnification pursuant to this Section 8.05(b) for (1)
any liability specifically required to be borne thereby pursuant to the terms
hereof, or (2) any loss, liability or expense incurred by reason of wilful
misfeasance, bad faith or gross negligence in the performance of the Trustee's
obligations and duties hereunder, or as may arise from a breach of any
representation, warranty or covenant of the Trustee made herein. The provisions
of this Section 8.05(b) and of Section 8.05(c) shall survive any resignation or
removal of the Trustee and appointment of a successor trustee.
(c) If the Trustee Liability arises from the issuance or sale of the
Certificates and the indemnification provided for in Section 8.05(b) is invalid
or unenforceable, then the Trust Fund shall contribute to the amount paid or
payable by the Trustee as a result of such Trustee Liability in such proportion
as is appropriate to reflect the relative fault of any of the other parties on
the one
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hand and the Trustee on the other in connection with the actions or omissions
which resulted in such Trustee Liability, as well as any other relevant
equitable considerations.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a bank, a trust company,
an association or a corporation 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 $ _________and subject to supervision or examination by
federal or state banking authority. If such bank, trust company, association or
corporation 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 bank,
trust company, association or corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. The Trustee shall at all times maintain a long-term unsecured debt
rating of at least "____" or "____", as applicable (or, if a Fiscal Agent
meeting the requirements of Section 8.17(a) is then currently acting in such
capacity, of at least investment grade) from each Rating Agency (or, in the case
of either Rating Agency, such other rating as shall not result in the
qualification, downgrade or withdrawal of any of the ratings then assigned to
the respective Classes of the Certificates by such Rating Agency, as confirmed
in writing by such Rating Agency). If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.07;
provided that if the Trustee shall cease to be so eligible because its combined
capital and surplus is no longer at least $ _________or its long-term unsecured
debt rating no longer conforms to the requirements of the immediately preceding
sentence, and if the Trustee proposes to the other parties hereto to enter into
an agreement with (and reasonably acceptable to) each of them, and if in light
of such agreement the Trustee's continuing to act in such capacity would not (as
evidenced in writing by each Rating Agency) cause either Rating Agency to
qualify, downgrade or withdraw any rating assigned thereby to any Class of
Certificates, then upon the execution and delivery of such agreement the Trustee
shall not be required to resign, and may continue in such capacity, for so long
as none of the ratings assigned by the Rating Agencies to the Certificates is
adversely affected thereby. The bank, trust company, corporation or association
serving as Trustee may have normal banking and trust relationships with the
Depositor, the Master Servicer, the Special Servicer and their respective
Affiliates.
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 to all Certificateholders. Upon
receiving such notice of resignation, the Depositor shall promptly appoint a
successor trustee acceptable to the Depositor by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. A copy of such instrument shall be delivered to the
Master Servicer, the Special Servicer and the Certificateholders by the
Depositor. If no successor trustee shall have been so appointed and have
accepted
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appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor, or 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 shall fail (other than by reason of the failure of either the Master
Servicer or the Special Servicer to timely perform its obligations hereunder or
as a result of other circumstances beyond the Trustee's reasonable control), to
timely deliver any current or revised Distribution Date Statement, CSSA Loan
File Report, CSSA Property File Report or other report or statement required by
Section 4.02 and such failure shall continue unremedied for a period of five
days, or if a tax is imposed or threatened with respect to the Trust Fund by any
state in which the Trustee is located or in which it holds any portion of the
Trust Fund, then the Depositor may remove the Trustee and appoint a successor
trustee acceptable to the Depositor and the Master Servicer by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Master Servicer, the Special Servicer and the
Certificateholders by the Depositor.
(c) The Holders of Certificates entitled to greater than 50% of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Master Servicer, one complete set to the Trustee so removed
and one complete set to the successor trustee so appointed. A copy of such
instrument shall be delivered to the Depositor, the Special Servicer and the
remaining Certificateholders by the successor so appointed. In the event that
the Trustee is terminated or removed pursuant to this Section 8.07, all of its
and any corresponding Fiscal Agent's rights and obligations under this Agreement
and in and to the Mortgage Loans shall be terminated, other than any rights or
obligations that accrued prior to the date of such termination or removal
(including the right to receive all fees, expenses and other amounts (including,
without limitation, P&I Advances and accrued interest thereon) accrued or owing
to it under this Agreement, with respect to periods prior to the date of such
termination or removal, and no termination without cause shall be effective
until the payment of such amounts to the Trustee and such Fiscal Agent).
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 8.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
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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 to the 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 third-party 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 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, the Master Servicer, the
Special Servicer and the Certificateholders.
SECTION 8.09. Merger or Consolidation of Trustee and Fiscal Agent.
Any entity into which the Trustee or the Fiscal Agent may be merged
or converted, or with which the Trustee or the Fiscal Agent may be consolidated,
or any entity resulting from any merger, conversion or consolidation to which
the Trustee or the Fiscal Agent shall be a party, or any entity succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee or the Fiscal Agent, as the case may be, hereunder, provided such entity
shall be eligible under the provisions of Section 8.06 or Section 8.17(a), as
applicable, 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 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
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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. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 8.06 hereunder and no notice to
Holders of Certificates of the appointment of co-trustee(s) or separate
trustee(s) shall be required under Section 8.08 hereof.
(b) In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed (whether as Trustee hereunder or
as successor to the Master Servicer or the Special Servicer hereunder), the
Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations (including the holding
of title to the Trust Fund or any portion thereof in any such jurisdiction)
shall be exercised and performed by such separate trustee or co-trustee at the
direction of the Trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute
the Trustee, its agent or attorney-in-fact, with full power and authority, to
the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts vested therein pursuant to
the applicable instrument of appointment and this Section 8.10, 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 appoint at the Trustee's expense one or more
Custodians to hold all or a portion of the Mortgage Files as agent for the
Trustee. Each Custodian shall be a depository institution supervised and
regulated by a federal or state banking authority, shall have combined
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capital and surplus of at least $ _________, shall be qualified to do business
in the jurisdiction in which it holds any Mortgage File and shall not be the
Depositor, the Mortgage Loan Seller or any Affiliate of either of them. Neither
the Master Servicer nor the Special Servicer shall have any duty to verify that
any such Custodian is qualified to act as such in accordance with the preceding
sentence. The Trustee may enter into agreements to appoint a Custodian which is
not the Trustee, provided that, such agreement: (i) is consistent with this
Agreement in all material respects and requires the Custodian to comply with all
of the applicable conditions of this Agreement; (ii) provides that if the
Trustee shall for any reason no longer act in the capacity of Trustee hereunder,
the successor Trustee or its designee may thereupon assume all of the rights
and, except to the extent they arose prior to the date of assumption,
obligations of the Custodian under such agreement or, alternatively, may
terminate such agreement without cause and without payment of any penalty or
termination fee; and (iii) does not permit the Custodian any rights of
indemnification that may be satisfied out of assets of the Trust Fund. 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. In the absence of any other Person appointed in
accordance herewith acting as Custodian, the Trustee agrees to act in such
capacity in accordance with the terms hereof. Notwithstanding anything herein to
the contrary, if the Trustee is no longer the Custodian, any provision or
requirement herein requiring notice or any information or documentation to be
provided to the Custodian shall be construed to require that such notice,
information or documents also be provided to the Trustee. Any Custodian
hereunder shall at all times maintain a fidelity bond and errors and omissions
policy in amounts customary for custodians performing duties similar to those
set forth in this Agreement.
SECTION 8.12. Appointment of Authenticating Agents.
(a) The Trustee may appoint at the Trustee's expense an
Authenticating Agent, which shall be authorized to act on behalf of the Trustee
in authenticating Certificates. The Trustee shall cause any such Authenticating
Agent to execute and deliver to the Trustee an instrument in which such
Authenticating Agent shall agree to act in such capacity, with the obligations
and responsibilities herein. Each Authenticating Agent must be organized and
doing business under the laws of the United States of America or of any State,
authorized under such laws to carry on a trust business, have a combined capital
and surplus of at least $ _________, and be subject to supervision or
examination by federal or state authorities. Each Authenticating Agent shall be
subject to the same obligations, standard of care, protection and indemnities as
would be imposed on, or would protect, the Trustee hereunder. The appointment of
an Authenticating Agent shall not relieve the Trustee from any of its
obligations hereunder, and the Trustee shall remain responsible for all acts and
omissions of the Authenticating Agent. In the absence of any other Person
appointed in accordance herewith acting as Authenticating Agent, the Trustee
hereby agrees to act in such capacity in accordance with the terms hereof.
Notwithstanding anything herein to the contrary, if the Trustee is no longer the
Authenticating Agent, any provision or requirement herein requiring notice or
any information or documentation to be provided to the Authenticating Agent
shall be construed to require that such notice, information or documentation
also be provided to the Trustee.
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(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion, or consolidation to which any Authenticating Agent shall be
a party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent appointed in accordance with this
Section 8.12 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
Authenticating Agent appointed in accordance with this Section 8.12 by giving
written notice of termination to such Authenticating Agent, the Master Servicer
and the Depositor. Upon receiving a notice of such a resignation or upon such a
termination, or in case at any time any Authenticating Agent shall cease to be
eligible in accordance with the provisions of this Section 8.12, the Trustee may
appoint a successor Authenticating Agent, in which case the Trustee shall give
written notice of such appointment to the Master Servicer, the Certificate
Registrar and the Depositor and shall mail notice of such appointment to all
Holders of Certificates; provided, however, that no successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section
8.12. Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers, duties and
responsibilities of its predecessor hereunder, with like effect as if originally
named as Authenticating Agent.
SECTION 8.13. Appointment of REMIC Administrators.
(a) The Trustee may appoint at the Trustee's expense any Person with
appropriate tax-related experience to act as REMIC Administrator hereunder;
provided that, in the absence of any other Person appointed in accordance
herewith acting as REMIC Administrator, the Trustee agrees to act in such
capacity in accordance with the terms hereof. The appointment of a REMIC
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 REMIC Administrator. The Trustee shall cause such REMIC Administrator
appointed by it to execute and deliver to the Trustee an instrument in which
such REMIC Administrator shall agree to act in such capacity, with the
obligations and responsibilities herein.
(b) Any Person into which any REMIC Administrator may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion, or consolidation to which any REMIC Administrator shall be a
party, or any Person succeeding to the corporate agency business of any REMIC
Administrator, shall continue to be the REMIC Administrator without the
execution or filing of any paper or any further act on the part of the Trustee
or the REMIC Administrator.
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(c) Any REMIC Administrator appointed in accordance with this
Section 8.13 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 REMIC
Administrator appointed in accordance with this Section 8.13 by giving written
notice of termination to such REMIC Administrator, the Master Servicer, and the
Depositor. Upon receiving a notice of such a resignation or upon such a
termination, or in case at any time any REMIC Administrator shall cease to be
eligible in accordance with the provisions of this Section 8.13, the Trustee may
appoint a successor REMIC Administrator, in which case the Trustee shall give
written notice of such appointment to the Master Servicer, the Special Servicer
and the Depositor and shall mail notice of such appointment to all Holders of
Certificates; provided, however, that no successor REMIC Administrator shall be
appointed unless eligible under the provisions of this Section 8.13. Any
successor REMIC Administrator upon acceptance of its appointment hereunder shall
become vested with all the rights, powers, duties and responsibilities of its
predecessor hereunder, with like effect as if originally named as REMIC
Administrator.
SECTION 8.14. Access to Certain Information.
(a) The Trustee shall afford to the Master Servicer, the Special
Servicer and the Depositor, and to the OTS, the FDIC and any other banking or
insurance regulatory authority that may exercise authority over any
Certificateholder, access to any documentation regarding the Mortgage Loans
within its control that may be required to be provided by this Agreement or by
applicable law. Such access shall be afforded without charge but only upon
reasonable prior written request and during normal business hours at the offices
of the Trustee designated by it.
(b) The Trustee shall maintain in its possession and, upon
reasonable prior written request and during normal business hours, shall make
available for review by the Depositor, the Rating Agencies, the Controlling
Class Representative and, subject to the succeeding paragraph, any
Certificateholder, Certificate Owner or Person identified to the Trustee as a
prospective Transferee of a Certificate or an interest therein, originals and/or
copies of the following items: (i) the Prospectus, 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 hereto or thereto; (iii) all
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 Special Servicer, as applicable, and delivered to the
Trustee in respect of each Mortgaged Property pursuant to Section 3.12(a); (vii)
the most recent quarterly and annual operating statement and rent roll of each
related Mortgaged Property and financial statements of the related Mortgagor
collected by the Master Servicer or Special Servicer, as applicable, and
delivered to the Trustee pursuant to Section 3.12(a); (viii) any and all notices
and reports delivered to the Trustee with respect to any Mortgaged Property as
to
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which the environmental testing contemplated by Section 3.09(c) revealed that
either of the conditions set forth in clauses (i) and (ii) of the first sentence
thereof was not satisfied; (ix) 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 Special Servicer and delivered to the
Trustee pursuant to Section 3.20; (x) the most recent appraisal for each
Mortgaged Property and REO Property that has been delivered to the Trustee (each
appraisal obtained hereunder with respect to any Mortgaged Property or REO
Property to be delivered to the Trustee by the Master Servicer or Special
Servicer, as applicable, promptly following its having been obtained); and (xi)
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 the
Fiscal Agent's, as the case may be, determination that any Advance was (or, if
made, would be) a Nonrecoverable Advance. The Trustee shall provide copies of
any and all of the foregoing items upon written request of any of the parties
set forth in the previous sentence; however, except in the case of the Rating
Agencies, the Trustee shall be permitted to require payment of a sum sufficient
to cover the reasonable costs and expenses of providing such copies.
In connection with providing access to or copies of the items
described in the preceding paragraph, the Trustee shall require: (a) in the case
of Certificate Owners, a confirmation executed by the requesting Person (in a
form reasonably acceptable to the Trustee) generally to the effect that such
Person is a beneficial holder of Book-Entry Certificates and will keep such
information confidential (except that such Certificate Owner may provide such
information 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 (in a form 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 will otherwise keep such information
confidential. The Holders of the Certificates, by their acceptance thereof, will
be deemed to have agreed to keep such information confidential (except that any
Holder may provide any such information obtained by it 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).
(c) The Trustee shall not be liable for providing or disseminating
information in accordance with Section 8.14(a) or Section 8.14(b).
SECTION 8.15. Reports to the Securities and Exchange Commission;
Available Information.
The Depositor shall prepare for filing, and the Trustee shall
execute, on behalf of the Trust Fund, and file with the Securities and Exchange
Commission, any and all reports, statements and information respecting the Trust
Fund and/or the Certificates required to be filed on behalf of the
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Trust Fund under the Exchange Act. The Depositor shall promptly file, and
exercise its reasonable best efforts to obtain a favorable response to,
no-action requests to, or requests for other appropriate exemptive relief from,
the Securities and Exchange Commission regarding the usual and customary
exemption from certain reporting requirements granted to issuers of securities
similar to the Certificates. The Depositor agrees to indemnify and hold harmless
the Trustee with respect to any liability, cost or expenses, including
reasonable attorneys' fees, arising from the Trustee's execution of such
reports, statements and information that contain errors or omissions or is
otherwise misleading, provided, however, that if the indemnification provided
for herein is invalid or unenforceable, then the Depositor shall contribute to
the amount paid by the Trustee as a result of such liability in such amount as
is necessary to limit the Trustee's responsibility for any such payment to any
amount resulting from its own fault.
SECTION 8.16. Representations and Warranties of Trustee.
(a) The Trustee hereby represents and warrants to the Master
Servicer, the Special Servicer and the Depositor and for the benefit of the
Certificateholders, as of the Closing Date, that:
(i) The Trustee is a ____________________ duly organized, validly
existing and in good standing under the laws of the __________________.
(ii) The execution and delivery of this Agreement by the Trustee,
and the performance and compliance with the terms of this Agreement by the
Trustee, will not violate the Trustee's organizational documents or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or which is
applicable to it or any of its assets.
(iii) Except to the extent that the laws of certain jurisdictions in
which any part of the Trust Fund may be located require that a co-trustee
or separate trustee be appointed to act with respect to such property as
contemplated by Section 8.10, 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 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 (B) general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
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(v) The Trustee is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement, including, but not limited to, its responsibility
to make P&I Advances if the Master Servicer fails to make a P&I Advance,
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 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, 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.
(vii) Any consent, approval, authorization or order of any court or
governmental agency or body required for the execution, delivery and
performance by the Trustee of or compliance by the Trustee with this
Agreement, or the consummation of the transactions contemplated by this
Agreement, has been obtained and is effective except where the lack of
consent would not have a material adverse effect on the performance by the
Trustee under this Agreement.
(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 8.16(a) shall survive the execution and delivery of this Agreement and
shall inure to the benefit of the Persons for whose benefit they were made for
so long as the Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations, warranties and
covenants, the party discovering such breach shall 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 8.16(a), subject to such appropriate modifications to the representation
and warranty set forth in Section 8.16(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 8.17. The Fiscal Agent.
(a) The Fiscal Agent shall at all times maintain a long-term
unsecured debt rating of no less than "____" or "____", as applicable, from each
Rating Agency (or, in the case of either Rating Agency, such lower rating as
will not (as confirmed in writing by such Rating Agency) result
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in any of the ratings then assigned by such Rating Agency to the respective
Classes of Certificates being qualified, downgraded or withdrawn).
(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 shall make such Advance when and as required by the
terms of this Agreement on behalf the Trustee as if the Fiscal Agent were the
Trustee hereunder. To the extent that the Fiscal Agent makes an Advance pursuant
to this Section 8.17(b) or otherwise pursuant to the Agreement, the obligations
of the Trustee under this Agreement in respect of such Advance shall be
satisfied. Notwithstanding anything contained in this Agreement to the contrary,
the Fiscal Agent shall be entitled to all limitations on liability, rights of
reimbursement and indemnities that the Trustee is entitled to hereunder as if it
were the Trustee.
(c) All fees and expenses of the Fiscal Agent (other than interest
owed to the Fiscal Agent in respect of unreimbursed Advances) incurred by the
Fiscal Agent in connection with the transactions contemplated by this Agreement
shall be borne by the Trustee, and neither the Trustee nor the Fiscal Agent
shall be entitled to reimbursement therefor from any of the Trust Fund, the
Depositor, the Master Servicer or the Special Servicer.
(d) The obligations of the Fiscal Agent set forth in this Section
8.17 or otherwise pursuant to this Agreement shall exist only for so long as the
Trustee that appointed it (or, in the case of the initial Fiscal Agent, so long
as the initial Trustee) shall act as Trustee hereunder. The 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 the Fiscal Agent shall be deemed to
have resigned at such time as the Trustee that appointed it (or, in the case of
the initial Fiscal Agent, at such time as the initial Trustee) resigns or is
removed as Trustee hereunder (in which case the responsibility for appointing a
successor Fiscal Agent shall belong to the successor Trustee, and which
appointment the successor Trustee shall use its best efforts to make, insofar as
such appointment is necessary for such successor Trustee to satisfy the
eligibility requirements of Section 8.06). Any successor fiscal agent so
appointed shall be required to execute and deliver to the other parties hereto a
written agreement to assume and perform the duties of the Fiscal Agent set forth
in this Agreement; provided that no such successor shall become Fiscal Agent
hereunder unless either (i) it satisfies the rating requirements of Section
8.17(a) or (ii) the Trustee shall have received written confirmation from each
Rating Agency that the succession of such proposed successor fiscal agent would
not, in and of itself, result in a qualification, downgrade or withdrawal of any
of the then current ratings on the Certificates.
(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.
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SECTION 8.18. Representations and Warranties of Fiscal Agent.
(a) The Fiscal Agent hereby represents and warrants to each of the
other parties hereto and for the benefit of the Certificateholders, as the
Closing Date, that:
(i) The Fiscal Agent is a ______________________ duly organized,
validly existing and in good standing under the laws governing its
creation.
(ii) The execution and delivery of this Agreement by the Fiscal
Agent, and the performance and compliance with the terms of this Agreement
by the Fiscal Agent, will not violate the Fiscal Agent's organizational
documents or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or result in a
material breach of, any material agreement or other instrument to which it
is a party or by which it is bound.
(iii) The Fiscal Agent 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 the other parties hereto, constitutes a valid, legal and
binding obligation of the Fiscal Agent, enforceable against the Fiscal
Agent 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 Fiscal Agent is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court or arbiter, or any order, regulation or
demand of any federal, state or local governmental or regulatory
authority, which violation, in the Fiscal Agent's good faith and
reasonable judgment, is likely to affect materially and adversely either
the ability of the Fiscal Agent to perform its obligations under this
Agreement or the financial condition of the Fiscal Agent.
(vi) No litigation is pending or, to the best of the Fiscal Agent's
knowledge, threatened against the Fiscal Agent that, if determined
adversely to the Fiscal Agent, would prohibit the Fiscal Agent from
entering into this Agreement or, in the Fiscal Agent's good faith and
reasonable judgment, is likely to materially and adversely affect either
the ability of the Fiscal Agent to perform its obligations under this
Agreement or the financial condition of the Fiscal Agent.
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(vii) Any consent, approval, authorization or order of any court or
governmental agency or body required for the execution, delivery and
performance by the Fiscal Agent of or compliance by the Fiscal Agent with
this Agreement, or the consummation of the transactions comtemplated by
this Agreement, has been obtained and effective except where the lack of
consent would not have a material adverse effect on the performance by the
Fiscal Agent under this Agreement.
(b) The representations and warranties of the Fiscal Agent set forth
in Section 8.18(a) shall survive the execution and delivery of this Agreement
and shall inure to the benefit of the Persons for whose benefit they were made
for so long as the Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations and warranties, the
party discovering such breach shall given prompt written notice thereof to the
other parties hereto.
(c) Any successor Fiscal Agent shall be deemed to have made, as of
the date of its succession, each of the representations and warranties set forth
in Section 8.18(a) subject to such appropriate modifications to the
representations and warranties set forth in Section 8.18(a)(i) to accurately
reflect such successor's jurisdiction of organization and whether it is a
corporation, partnership, bank, association or other type of organization.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.
Subject to Section 9.02, the Trust Fund and the respective
obligations and responsibilities under this Agreement of the Depositor, the
Master Servicer, the Special Servicer, the Fiscal Agent and the Trustee (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): (i) 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 (A) the purchase by the
Depositor, the Master Servicer, the Underwriter, the Special Servicer or the
Majority Subordinate Certificateholder of all Mortgage Loans and each REO
Property remaining in REMIC I at a price equal to (1) the greater of (x) the
aggregate Purchase Price of all the Mortgage Loans and any REO Properties then
included in REMIC I and (y) the aggregate fair market value of such Mortgage
Loans and REO Properties (determined as mutually agreed upon by the Master
Servicer, the Special Servicer and the Trustee), minus (2) if the purchaser is
the Master Servicer or the Special Servicer, the aggregate amount of
unreimbursed Advances made by such Person, together with any interest accrued
and payable to such Person in respect of unreimbursed Advances in accordance
with Section 3.03(d) and, in the case of the Master Servicer, Section 4.03(d),
and any unpaid servicing compensation remaining outstanding (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), and (B) the
final payment or other liquidation (or any advance with respect thereto) of the
last Mortgage Loan or REO Property remaining in REMIC I; and (ii) to the
Trustee, the Fiscal Agent, the Master Servicer, the Special Servicer and the
officers, directors, employees and agents of each of them of all amounts which
may have become due and owing to any of them hereunder; provided, however, that
in no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof.
The Depositor, the Underwriter, the Special Servicer, the Majority
Subordinate Certificateholder or the Master Servicer, in that order of priority
(with the Depositor having the highest priority), may at its option elect to
purchase all of the Mortgage Loans and each REO Property remaining in REMIC I as
contemplated by clause (i) of the preceding paragraph by giving written notice
to the other parties hereto no later than 60 days prior to the anticipated date
of purchase; provided, however, that (i) the aggregate Stated Principal Balance
of the Mortgage Pool at the time of such election is less than ____% of the
aggregate Cut-off Date Balance of the Mortgage Pool set forth in the Preliminary
Statement, and (ii) no such Person shall have the right to effect such a
purchase if, within 30 days following its delivery of a notice of election
pursuant to this paragraph, any other such Person with a higher priority shall
give notice of its election to purchase
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all of the Mortgage Loans and each REO Property remaining in REMIC I and shall
thereafter effect such purchase in accordance with the terms hereof. If the
Trust Fund is to be terminated in connection with the Master Servicer's, the
Special Servicer's, the Majority Subordinate Certificateholder's, the
Underwriter's or the Depositor's purchase of all of the Mortgage Loans and each
REO Property remaining in REMIC I, the Master Servicer, the Special Servicer,
the Majority Subordinate Certificateholder, the Underwriter or the Depositor, as
applicable, shall deliver to the Trustee for deposit in the Collection Account
not later than the Determination Date relating to the Distribution Date on which
the final distribution on the Certificates is to occur an amount in immediately
available funds equal to the above-described purchase price (exclusive of any
portion of such purchase price which would, if it were then on deposit in the
Custodial Account, be payable to any Person pursuant to any of clauses (ii)
through (xv) of Section 3.05(a), which portion shall be deposited in the
Custodial Account). In addition, the Master Servicer shall transfer to the
Collection Account all amounts required to be transferred thereto on such P&I
Advance Date from the Custodial Account pursuant to the first paragraph of
Section 3.04(b), together with any other amounts on deposit in the Custodial
Account that would otherwise be held for future distribution. Upon confirmation
that such final deposits have been made, the Trustee shall release or cause to
be released to the Master Servicer, the Special Servicer, the Majority
Subordinate Certificateholder, the Underwriter or the Depositor, as applicable,
the Mortgage Files for the remaining Mortgage Loans and shall execute all
assignments, endorsements and other instruments furnished to it by the Master
Servicer, the Special Servicer, the Majority Subordinate Certificateholder, the
Underwriter or the Depositor, as applicable, as shall be necessary to effectuate
transfer of the Mortgage Loans and REO Properties to the Depositor, the Master
Servicer, the Special Servicer, the Underwriter or the Majority Subordinate
Certificateholder (or their respective designees), as applicable. Any transfer
of Mortgage Loans pursuant to this paragraph shall be on a servicing-released
basis.
Notice of any termination shall be given promptly by the Trustee by
letter to Certificateholders mailed (a) if such notice is given in connection
with the Depositor's, the Master Servicer's, the Special Servicer's, the
Underwriter's or the Majority Subordinate Certificateholder's purchase of the
Mortgage Loans and each REO Property remaining in REMIC I, 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 or (b) otherwise during the month
of such final distribution on or before the Determination Date in such month, in
each case specifying (i) the Distribution Date upon which the Trust Fund will
terminate and final payment of the Certificates will be made, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the offices of the Certificate
Registrar or such other location therein designated. The Trustee shall give such
notice to the Master Servicer, the Special Servicer and the Depositor 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 then on
deposit in the Collection Account that are allocable to payments on the Class of
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Certificates so presented and surrendered. Amounts on deposit in the Collection
Account as of the final Distribution Date, exclusive of any portion thereof that
would be payable to any Person in accordance with clauses (ii) through (vi) of
Section 3.05(b), and further exclusive of any portion thereof that represents
Prepayment Premiums and Yield Maintenance Charges, shall be allocated in the
following order of priority, in each case to the extent of remaining available
funds:
(i) to distributions of interest to the Holders of the Senior
Certificates, in an amount equal to, and pro rata in accordance with, all
Distributable Certificate Interest in respect of each Class of Senior
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(ii) to distributions of principal to the Holders of the Class A-1,
Class A-2 and Class A-3 Certificates, in an amount equal to, and pro rata
in accordance with, the respective Class Principal Balances thereof
outstanding immediately prior to such Distribution Date;
(iii) to distributions to the Holders of the Class A-1, Class A-2
and Class A-3 Certificates, in an amount equal to, pro rata in accordance
with, and in reimbursement of, all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to each such Class of
Certificates and not previously reimbursed;
(iv) to distributions of interest to the Holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest
in respect of the Class B Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(v) to distributions of principal to the Holders of the Class B
Certificates, in an amount equal to the Class Principal Balance of the
Class B Certificates outstanding immediately prior to such Distribution
Date;
(vi) to distributions to the Holders of the Class B Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
B Certificates and not previously reimbursed;
(vii) to distributions of interest to the Holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest
in respect of the Class C Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(viii) to distributions of principal to the Holders of the Class C
Certificates, in an amount equal to the Class Principal Balance of the
Class C Certificates outstanding immediately prior to such Distribution
Date;
(ix) to distributions to the Holders of the Class C Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
C Certificates and not previously reimbursed;
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(x) to distributions of interest to the Holders of the Class D
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class D Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xi) to distributions of principal to the Holders of the Class D
Certificates, in an amount equal to the Class Principal Balance of the
Class D Certificates outstanding immediately prior to such Distribution
Date;
(xii) to distributions to the Holders of the Class D Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
D Certificates and not previously reimbursed;
(xiii) to distributions of interest to the Holders of the Class E
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class E Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xiv) to distributions of principal to the Holders of the Class E
Certificates, in an amount equal to the Class Principal Balance of the
Class E Certificates outstanding immediately prior to such Distribution
Date;
(xv) to distributions to the Holders of the Class E Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
E Certificates and not previously reimbursed;
(xvi) to distributions of interest to the Holders of the Class F
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class F Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xvii) to distributions of principal to the Holders of the Class F
Certificates, in an amount equal to the Class Principal Balance of the
Class F Certificates outstanding immediately prior to such Distribution
Date;
(xviii) to distributions to the Holders of the Class F Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses if any, previously allocated to the Class F
Certificates and not previously reimbursed;
(xix) to distributions of interest to the Holders of the Class G
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class G Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xx) to distributions of principal to the Holders of the Class G
Certificates, in an amount equal to the Class Principal Balance of the
Class G Certificates outstanding immediately prior to such Distribution
Date;
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(xxi) to distributions to the Holders of the Class G Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
G Certificates and not previously reimbursed;
(xxii) to distributions of interest to the Holders of the Class H
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class H Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxiii) to distributions of principal to the Holders of the Class H
Certificates, in an amount equal to the Class Principal Balance of the
Class H Certificates outstanding immediately prior to such Distribution
Date;
(xxiv) to distributions to the Holders of the Class H Certificates
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
H Certificates and not previously reimbursed;
(xxv) to distributions of interest to the Holders of the Class J
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class J Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxvi) to distributions of principal to the Holders of the Class J
Certificates, in an amount equal to the Class Principal Balance of the
Class J Certificates outstanding immediately prior to such Distribution
Date;
(xxvii) to distributions to the Holders of the Class J Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
J Certificates and not previously reimbursed;
(xxviii) to distributions of interest to the Holders of the Class K
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class K Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxix) to distributions of principal to the Holders of the Class K
Certificates, in an amount equal to the Class Principal Balance of the
Class K Certificates outstanding immediately prior to such Distribution
Date;
(xxx) to distributions to the Holders of the Class K Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
K Certificates and not previously reimbursed;
(xxxi) to distributions of interest to the Holders of the Class L
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class L Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
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(xxxii) to distributions of principal to the Holders of the Class L
Certificates, in an amount equal to the Class Principal Balance of the
Class L Certificates outstanding immediately prior to such Distribution
Date;
(xxxiii) to distributions to the Holders of the Class L
Certificates, in an amount equal to, and in reimbursement of, all Realized
Losses and Additional Trust Fund Expenses, if any, previously allocated to
the Class L Certificates and not previously reimbursed;
(xxxiv) to distributions of interest to the Holders of the Class M
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class M Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxv) to distributions of principal to the Holders of the Class M
Certificates, in an amount equal to the Class Principal Balance of the
Class M Certificates outstanding immediately prior to such Distribution
Date;
(xxxvi) to distributions to the Holders of the Class M Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class
M Certificates and not previously reimbursed;
(xxxvii) to make distributions to the Holders of the Class R-III
Certificates, in 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(h), over (B)
the aggregate distributions made in respect of the Regular Interest
Certificates on such Distribution Date pursuant to clauses (i) through
(xxxvi) above;
(xxxviii) 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(i), over (B)
the aggregate distributions deemed made in respect of the REMIC II Regular
Interests on such Distribution Date pursuant to Section 4.01(h); and
(xxxix) to distributions to the Holders of the Class R-I
Certificates, in an amount equal to the balance, if any, of the Available
Distribution Amount for such Distribution Date remaining after the
distributions to be made on such Distribution Date pursuant to clauses (i)
through (xxxviii) above.
All distributions of interest made in respect of the Class IO
Certificates on the final Distribution Date pursuant to clause (i) above, shall
be deemed to have been made in respect of the respective Components of such
Class, pro rata in accordance with the respective amounts of Distributable
Certificate Interest that would be payable on such Components on such
Distribution Date if each such Component were treated as a separate Class of
Regular Interest Certificates.
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Any Prepayment Premiums and Yield Maintenance Charges on deposit in
the Collection Account as of the final Distribution Date shall be distributed
among the Holders of the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E, Class F and Class G Certificates in accordance with the first
paragraph of Section 4.01(b).
Any amounts representing Additional Interest on deposit in the
Collection Account as of the Final Distribution Date shall be distributed among
the Holders of the Sequential Pay Certificates in accordance with the second
paragraph of Section 4.01(b).
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 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 law, the Trustee shall distribute to
the Class R-III Certificateholders all unclaimed funds and other assets which
remain subject hereto.
All actual distributions on the respective Classes of REMIC III
Certificates on the final Distribution Date in accordance with foregoing
provisions of this Section 9.01 shall be deemed to first have been distributed
from REMIC I to REMIC II on the various REMIC I Regular Interests in accordance
with Section 4.01(i) and then from REMIC II to REMIC III on the various REMIC II
Regular Interests in accordance with Section 4.01(h).
SECTION 9.02. Additional Termination Requirements.
(a) If the Depositor, the Underwriter, any Majority Subordinate
Certificateholder, the Special Servicer or the Master Servicer purchases all of
the Mortgage Loans and each REO Property remaining in REMIC I as provided in
Section 9.01, the Trust Fund (and, accordingly, REMIC I, REMIC II and REMIC III)
shall be terminated in accordance with the following additional requirements,
unless the Person effecting such purchase obtains at its own expense and
delivers to the Trustee and the REMIC Administrator, an Opinion of Counsel,
addressed to the Trustee and the REMIC Administrator, to the effect that the
failure of the Trust Fund to comply with the requirements of this Section 9.02
will not result in the imposition of taxes on "prohibited transactions"
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of REMIC I, REMIC II and REMIC III as defined in Section 860F of the Code or
cause REMIC I, REMIC II and REMIC III to fail to qualify as a REMIC at any time
that any Certificates are outstanding:
(i) the REMIC Administrator shall specify the first day in the
90-day liquidation period in a statement attached to the final Tax Return
for each of REMIC I, REMIC II and REMIC III pursuant to Treasury
regulation Section 1.860F-1 and shall satisfy all requirements of a
qualified liquidation under Section 860F of the Code and any regulations
thereunder as set forth in an Opinion of Counsel obtained at the expense
of the Trust Fund;
(ii) during such 90-day liquidation period and at or prior to the
time of making of the final payment on the Certificates, the Trustee shall
sell all of the assets of REMIC I to the Master Servicer, the Underwriter,
any Majority Subordinate Certificateholder, the Special Servicer or the
Depositor, as applicable, for cash; and
(iii) at the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Certificateholders in accordance with
Section 9.01 all cash on hand (other than cash retained to meet claims),
and each of REMIC I, REMIC II and REMIC III shall terminate at that time.
(b) By their acceptance of Certificates, the Holders thereof hereby
agree to authorize the REMIC Administrator to specify the 90-day liquidation
period for each of REMIC I, REMIC II and REMIC III, which authorization shall be
binding upon all successor Certificateholders.
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ARTICLE X
ADDITIONAL TAX PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The REMIC Administrator shall elect to treat each of REMIC I,
REMIC II and REMIC III as a REMIC under the Code and, if necessary, under
applicable state law. Such election will be made on Form 1066 or other
appropriate federal or state Tax Returns for the taxable year ending on the last
day of the calendar year in which the Certificates are issued.
(b) The REMIC I Regular Interests, the REMIC II Regular Interests
and the Regular Interest Certificates (or, in the case of the IO Certificates,
each of the Components of such Class) are hereby designated as "regular
interests" (within the meaning of Section 860G(a)(1) of the Code) in REMIC I,
REMIC II and REMIC III, respectively. The Class R-I Certificates, the Class R-II
Certificates and the Class R-III Certificates are hereby designated as the
single class of "residual interests" (within the meaning of Section 860G(a)(2)
of the Code) in REMIC I, REMIC II and REMIC III, respectively. None of the
Master Servicer, the Special Servicer or the Trustee shall (to the extent within
its control) permit the creation of any other "interests" in REMIC I, REMIC II
or REMIC III (within the meaning of Treasury regulation Section 1.860D-1(b)(1)).
(c) The Closing Date is hereby designated as the "startup day" of
REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of the
Code.
(d) The related Plurality Residual Interest Certificateholder as to
the applicable taxable year is hereby designated as the Tax Matters Person of
each of REMIC I, REMIC II and REMIC III, and shall act on behalf of the related
REMIC in relation to any tax matter or controversy and shall represent the
related REMIC in any administrative or judicial proceeding relating to an
examination or audit by any governmental taxing authority; provided that the
REMIC Administrator is hereby irrevocably appointed to act and shall act (in
consultation with the Tax Matters Person for each of REMIC I, REMIC II and REMIC
III) as agent and attorney-in-fact for the Tax Matters Person for each of REMIC
I, REMIC II and REMIC III in the performance of its duties as such.
(e) For purposes of Treasury regulation Section 1.860G-1(a)(4)(iii),
the related Legal Final Distribution Date has been designated the "latest
possible maturity date" of each REMIC I Regular Interest, each REMIC II Regular
Interest and each Class of Regular Interest Certificates (or, in the case of the
Class IO Certificates, each Component of such Class).
(f) Except as otherwise provided in Section 3.17(a) and subsections
(i) and (j) below, the REMIC Administrator shall pay out of its own funds any
and all routine tax administration expenses of the Trust Fund incurred with
respect to each of REMIC I, REMIC II and REMIC III (but not including any
professional fees or expenses related to audits or any administrative or
judicial
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proceedings with respect to the Trust Fund that involve the Internal Revenue
Service or state tax authorities which extraordinary expenses shall be payable
or reimbursable to the REMIC Administrator from the Trust Fund unless otherwise
provided in Section 10.01(i) or 10.01(j)).
(g) Within 30 days after the Closing Date, the REMIC Administrator
shall prepare and file with the Internal Revenue Service Form 8811, "Information
Return for Real Estate Mortgage Investment Conduits (REMIC) and Issuers of
Collateralized Debt Obligations" for the Trust Fund. In addition, the REMIC
Administrator shall prepare, sign and file all of the other Tax Returns in
respect of REMIC I, REMIC II and REMIC III. The expenses of preparing and filing
such returns shall be borne by the REMIC Administrator without any right of
reimbursement therefor. The other parties hereto shall provide on a timely basis
to the REMIC Administrator or its designee such information with respect to each
of REMIC I, REMIC II and REMIC III as is in its possession and reasonably
requested by the REMIC Administrator to enable it to perform its obligations
under this Section 10.01. Without limiting the generality of the foregoing, the
Depositor, within ten days following the REMIC Administrator's request therefor,
shall provide in writing to the REMIC Administrator such information as is
reasonably requested by the REMIC Administrator for tax purposes, as to the
valuations and issue prices of the Certificates, and the REMIC Administrator's
duty to perform its reporting and other tax compliance obligations under this
Section 10.01 shall be subject to the condition that it receives from the
Depositor such information possessed by the Depositor that is necessary to
permit the REMIC Administrator to perform such obligations.
(h) The REMIC Administrator shall perform on behalf of each of REMIC
I, REMIC II and REMIC III all reporting and other tax compliance duties that are
the responsibility of each such REMIC under the Code, the REMIC Provisions or
other compliance guidance issued by the Internal Revenue Service or any state or
local taxing authority. Included among such duties, the REMIC Administrator
shall provide to: (i) any Transferor of a Residual 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) the Certificateholders, such information or reports as are
required by the Code or the REMIC Provisions, including, without limitation,
reports relating to interest, original issue discount and market discount or
premium (using the Prepayment Assumption as required hereunder); and (iii) the
Internal Revenue Service, the name, title, address and telephone number of the
Person who will serve as the representative of each of REMIC I, REMIC II and
REMIC III.
(i) The REMIC Administrator shall perform its duties hereunder so as
to maintain the status of each of REMIC I, REMIC II and REMIC III as a REMIC
under the REMIC Provisions (and the Trustee, the Master Servicer and the Special
Servicer shall assist the REMIC Administrator to the extent reasonably requested
by the REMIC Administrator and to the extent of information within the
Trustee's, the Master Servicer's or the Special Servicer's possession or
control). None of the REMIC Administrator, Master Servicer, the Special
Servicer, or the Trustee shall knowingly take (or cause any of REMIC I, REMIC II
or REMIC III to take) any action or fail to take (or fail to cause to be taken)
any action that, under the REMIC Provisions, if taken or not taken, as the case
may be, could (i) endanger the status of any of REMIC I, REMIC II or REMIC III
as a REMIC, or
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(ii) except as provided in Section 3.17(a), result in the imposition of a tax
upon any of REMIC I, REMIC II or REMIC III (including, but not limited to, the
tax on prohibited transactions as defined in Section 860F(a)(2) of the Code and
the tax on contributions to a REMIC set forth in Section 860G(d) of the Code) or
the result in the imposition of a tax on "net income from foreclosure property"
as defined in Section 860G(c) of the Code (any such endangerment of REMIC status
or, except as provided in Section 3.17(a), imposition of a tax, an "Adverse
REMIC Event"), unless the REMIC Administrator has obtained or received an
Opinion of Counsel (at the expense of the party requesting such action or at the
expense of the Trust Fund if the REMIC Administrator seeks to take such action
or to refrain from acting for the benefit of the Certificateholders) to the
effect that the contemplated action will not result in an Adverse REMIC Event.
None of the other parties hereto shall take any action or fail to take any
action (whether or not authorized hereunder) as to which the REMIC Administrator
has advised it in writing that the REMIC Administrator has received or obtained
an Opinion of Counsel to the effect that an Adverse REMIC Event could result
from such action or failure to act. In addition, prior to taking any action with
respect to REMIC I, REMIC II or REMIC III, or causing any of REMIC I, REMIC II
or REMIC III to take any action, that is not expressly permitted under the terms
of this Agreement, the Master Servicer and the Special Servicer shall consult
with the REMIC Administrator or its designee, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur. The REMIC
Administrator may consult with counsel to make such written advice, and the cost
of same shall be borne by the party seeking to take the action not permitted by
this Agreement, but in no event at the cost or expense of the Trust Fund or the
Trustee. At all times as may be required by the Code, the REMIC Administrator
shall make reasonable efforts to ensure that substantially all of the assets of
REMIC I, REMIC II and REMIC III will consist of "qualified mortgages" as defined
in Section 860G(a)(3) of the Code and "permitted investments" as defined in
Section 860G(a)(5) of the Code.
(j) If any tax is imposed on any of REMIC I, REMIC II or REMIC III,
including, without limitation, "prohibited transactions" taxes as defined in
Section 860F(a)(2) of the Code, any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code, any taxes on contributions
to REMIC I, REMIC II or REMIC III after the Startup Day pursuant to Section
860G(d) of the Code, and any other tax imposed by the Code or any applicable
provisions of State or Local Tax laws (other than any tax permitted to be
incurred by the Special Servicer pursuant to Section 3.17(a)), such tax,
together with all incidental costs and expenses (including, without limitation,
penalties and reasonable attorneys' fees), shall be charged to and paid by: (i)
the REMIC Administrator, if such tax arises out of or results from a breach by
the REMIC 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 Section
10.01; (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 Section 10.01; (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 Section 10.01; (v) the Depositor, if such tax was imposed due to the
fact that any of the Mortgage Loans did not, at the time of their transfer to
the REMIC I, constitute a "qualified mortgage" as defined in Section 860G(a)(3)
of the Code; or (vi) the Trust Fund 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
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paid by the Trust Fund. Any such amounts payable by the Trust Fund shall be paid
by the Trustee upon the written direction of the REMIC Administrator out of
amounts on deposit in the Collection Account in reduction of the Available
Distribution Amount pursuant to Section 3.05(b).
(k) The REMIC Administrator shall, for federal income tax purposes,
maintain books and records with respect to each of REMIC I, REMIC II and REMIC
III on a calendar year and on an accrual basis.
(l) Following the Startup Day, none of the Trustee, the Master
Servicer and the Special Servicer shall accept any contributions of assets to
REMIC I, REMIC II or REMIC III unless it shall have received an Opinion of
Counsel (at the expense of the party seeking to cause such contribution and in
no event at the expense of the Trust Fund or the Trustee) to the effect that the
inclusion of such assets in such REMIC will not cause: (i) such REMIC to fail to
qualify as a REMIC at any time that any Certificates are outstanding; or (ii)
the imposition of any tax on such REMIC under the REMIC Provisions or other
applicable provisions of federal, state and local law or ordinances.
(m) None of the Trustee, the Master Servicer and the Special
Servicer shall consent to or, to the extent it is within the control of such
Person, permit: (i) the sale or disposition of any of the Mortgage Loans (except
in connection with (A) the default or reasonably foreseeable material default of
a Mortgage Loan, including, but not limited to, the sale or other disposition of
a Mortgaged Property acquired by deed in lieu of foreclosure, (B) the bankruptcy
of REMIC I, REMIC II or REMIC III, (C) the termination of REMIC I, REMIC II and
REMIC III pursuant to Article IX of this Agreement, or (D) a purchase of
Mortgage Loans pursuant to or as contemplated by Article II or III of this
Agreement); (ii) the sale or disposition of any investments in the Custodial
Account, the Collection Account or the REO Account for gain; or (iii) the
acquisition of any assets for REMIC I, REMIC II or REMIC III (other than a
Mortgaged Property acquired through foreclosure, deed in lieu of foreclosure or
otherwise in respect of a defaulted Mortgage Loan and other than Permitted
Investments acquired in connection with the investment of funds in the Custodial
Account, 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 but in no event at the expense of the
Trust Fund or the Trustee) to the effect that such sale, disposition, or
acquisition will not cause: (x) REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding; or (y) the
imposition of any tax on REMIC I, REMIC II or REMIC III under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.
(n) Except as permitted by Section 3.17(a), none of the Trustee, the
Master Servicer and the Special Servicer shall enter into any arrangement by
which REMIC I, REMIC II or REMIC III will receive a fee or other compensation
for services nor permit REMIC I, REMIC II or REMIC III to receive any income
from assets other than "qualified mortgages" as defined in Section 860G(a)(3) of
the Code or "permitted investments" as defined in Section 860G(a)(5) of the
Code.
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SECTION 10.02 Grantor Trust Administration.
(a) The REMIC Administrator shall treat the Grantor Trust as a
grantor trust under the Code and, if necessary, under applicable state law and
will file appropriate federal or state Tax Returns for the taxable year ending
on the last day of the calendar year in which the Certificates are issued.
(b) The REMIC Administrator shall pay out of its own funds any and
all routine tax administration expenses of the Trust Fund incurred with respect
to the Grantor Trust (but not including any professional fees or expenses
related to audits or any administrative or judicial proceedings with respect to
the Trust Fund that involve the Internal Revenue Service or state tax
authorities which extraordinary expenses shall be payable or reimbursable to the
REMIC Administrator from the Trust Fund unless otherwise provided in Section
10.02(e) or 10.02(f)).
(c) The REMIC Administrator shall prepare, sign and file all of the
Tax Returns in respect of the Grantor Trust. The expenses of preparing and
filing such returns shall be borne by the REMIC Administrator without any right
of reimbursement therefor. The other parties hereto shall provide on a timely
basis to the REMIC Administrator or its designee such information with respect
to the Grantor Trust as is in its possession and reasonably requested by the
REMIC Administrator to enable it to perform its obligations under this Section
10.02. Without limiting the generality of the foregoing, the Depositor, within
ten days following the REMIC Administrator's request therefor, shall provide in
writing to the REMIC Administrator such information as is reasonably requested
by the REMIC Administrator for tax purposes, and the REMIC Administrator's duty
to perform its reporting and other tax compliance obligations under this Section
10.02 shall be subject to the condition that it receives from the Depositor such
information possessed by the Depositor that is necessary to permit the REMIC
Administrator to perform such obligations.
(d) The REMIC Administrator shall perform on behalf of each of the
Grantor Trust all reporting and other tax compliance duties that are the
responsibility of the Grantor Trust under the Code, the Grantor Trust Provisions
or other compliance guidance issued by the Internal Revenue Service or any state
or local taxing authority.
(e) The REMIC Administrator shall perform its duties hereunder so as
to maintain the status of the Grantor Trust as a grantor trust under the Grantor
Trust Provisions (and the Trustee, the Master Servicer and the Special Servicer
shall assist the REMIC Administrator to the extent reasonably requested by the
REMIC Administrator and to the extent of information within the Trustee's, the
Master Servicer's or the Special Servicer's possession or control). None of the
REMIC Administrator, Master Servicer, the Special Servicer, or the Trustee shall
knowingly take (or cause the Grantor Trust to take) any action or fail to take
(or fail to cause to be taken) any action that, under the Grantor Trust
Provisions, if taken or not taken, as the case may be, could endanger the status
of the Grantor Trust as a grantor trust under the Grantor Trust Provisions (any
such endangerment of grantor trust status, an "Adverse Grantor Trust Event"),
unless the REMIC Administrator has obtained or received an Opinion of Counsel
(at the expense of the party requesting
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such action or at the expense of the Trust Fund if the REMIC Administrator seeks
to take such action or to refrain from acting for the benefit of the
Certificateholders) to the effect that the contemplated action will not result
in an Adverse Grantor Trust Event. None of the other parties hereto shall take
any action or fail to take any action (whether or not authorized hereunder) as
to which the REMIC Administrator has advised it in writing that the REMIC
Administrator has received or obtained an Opinion of Counsel to the effect that
an Adverse Grantor Trust Event could result from such action or failure to act.
In addition, prior to taking any action with respect to the Grantor Trust, or
causing the Grantor Trust to take any action, that is not expressly permitted
under the terms of this Agreement, the Master Servicer and the Special Servicer
shall consult with the REMIC Administrator or its designee, in writing, with
respect to whether such action could cause an Adverse Grantor Trust Event to
occur. The REMIC Administrator may consult with counsel to make such written
advice, and the cost of same shall be borne by the party seeking to take the
action not permitted by this Agreement, but in no event at the cost or expense
of the Trust Fund or the Trustee.
(f) If any tax is imposed on the Grantor Trust, such tax, together
with all incidental costs and expenses (including, without limitation, penalties
and reasonable attorneys' fees), shall be charged to and paid by: (i) the REMIC
Administrator, if such tax arises out of or results from a breach by the REMIC
Administrator of any of its obligations under this Section 10.02; (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 Section
10.02; (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 Section 10.02; (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 Seciton 10.02; or (v) the Trust Fund in all other instances.
(g) The REMIC Administrator shall, for federal income tax purposes,
maintain books and records with respect to the Grantor Trust on a calendar year
and on an accrual basis.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
(a) This Agreement may be amended from time to time by the mutual
agreement of the parties hereto, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct, modify or
supplement any provision herein which may be inconsistent with any other
provision herein, (iii) to add any other provisions with respect to matters or
questions arising hereunder which shall not be inconsistent with the provisions
hereof, (iv) to relax or eliminate any requirement hereunder imposed by the
REMIC Provisions if the REMIC Provisions are amended or clarified such that any
such requirement may be relaxed or eliminated, (v) as evidenced by an Opinion of
Counsel delivered to the Master Servicer, the Special Servicer and the Trustee,
either (A) 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 of the REMICs created hereunder at
least from the effective date of such amendment, or (B) 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 such REMIC; or
(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); 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, as evidenced by either an
Opinion of Counsel to such effect or, in the case of a Class of Certificates to
which a rating has been assigned by one or more Rating Agencies, written
confirmation from each applicable Rating Agency to the effect that such
amendment shall not result in a qualification, downgrade or withdrawal of any
rating then assigned by it to such Class of Certificates.
(b) This Agreement may also be amended from time to time by the
agreement of the parties hereto with the consent of the Holders of Certificates
entitled to at least 662/3% of the Voting Rights allocated to each 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 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 (i)
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, (iv) modify the provisions of Section 3.20
without the consent of the Holders of all Regular Interest Certificates then
outstanding or (v) modify the specified percentage of Voting Rights which are
required to be held by Certificateholders to consent
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<PAGE>
or not to object to any particular action pursuant to any provision of this
Agreement without the consent of the Holders of all Certificates then
outstanding. Notwithstanding any other provision of this Agreement, for purposes
of the giving or withholding of consents pursuant to this Section 11.01,
Certificates registered in the name of the Depositor or any Affiliate of the
Depositor shall be entitled to the same Voting Rights with respect to matters
described above as they would if any other Person held such Certificates, so
long as neither the Depositor nor any of its Affiliates is performing servicing
duties with respect to any of the Mortgage Loans.
(c) Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
first have obtained or been furnished with an Opinion of Counsel (at the expense
of the party seeking such amendment) to the effect that (i) such amendment or
the exercise of any power granted to the Trustee, the Master Servicer or the
Special Servicer in accordance with such amendment will not result in the
imposition of a tax on any of REMIC I, REMIC II or REMIC III pursuant to the
REMIC Provisions, cause any of REMIC I, REMIC II or REMIC III to fail to qualify
as a REMIC or cause the Grantor Trust to fail to qualify as a grantor trust
within the meaning of the Grantor Trust Provisions at any time that any
Certificates are outstanding and (ii) such amendment complies with the
provisions of this Section 11.01.
(d) Promptly after the execution of any such amendment, the Trustee
shall send a copy thereof to each Certificateholder.
(e) It shall not be necessary for the consent of Certificateholders
under this Section 11.01 to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
(f) Each of the Master Servicer, the Special Servicer and the
Trustee may but shall not be obligated to enter into any amendment pursuant to
this section that affects its rights, duties and immunities under this Agreement
or otherwise.
(g) The cost of any Opinion of Counsel to be delivered pursuant to
Section 11.01(a) or (c) shall be borne by the Person seeking the related
amendment, except that if the Master Servicer, the Special Servicer or the
Trustee requests any amendment of this Agreement that 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 Custodial Account or the Collection Account
pursuant to Section 3.05.
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SECTION 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Trust Fund, but only upon
direction accompanied by an Opinion of Counsel (the cost of which may be paid
out of the Custodial Account pursuant to Section 3.05(a)) to the effect that
such recordation materially and beneficially affects the interests of the
Certificateholders; provided, however, that the Trustee shall have no obligation
or responsibility to determine whether any such recordation of this Agreement is
required.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
(b) No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement or any Mortgage
Loan, unless, with respect to any suit, action or proceeding upon or under or
with respect to this Agreement, such Holder previously shall have given to the
Trustee a written notice of default hereunder, and of the continuance thereof,
as hereinbefore provided, and unless also (except in the case of a default by
the Trustee) the Holders of Certificates entitled to at least 25% of the Voting
Rights shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding. It is
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<PAGE>
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal, ratable
and common benefit of all Certificateholders. For the protection and enforcement
of the provisions of this section, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 11.04. Governing Law.
This Agreement and the Certificates shall be construed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed in said state, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
SECTION 11.05. Notices.
Any communications provided for or permitted hereunder shall be in
writing and, unless otherwise expressly provided herein, shall be deemed to have
been duly given when delivered to: (i) in the case of the Depositor, Structured
Asset Securities Corporation, 200 Vesey Street, New York, New York 10285,
Attention: _____________, facsimile number: 212-________; (ii) in the case of
the Master Servicer and the Special Servicer, _______________________________,
Attention: _________________, facsimile number: ___-________; (iii) in the case
of the Trustee, ________________________________________________, Attention:
_________________, facsimile number: ____________; (iv) in the case of the
Underwriter, Lehman Brothers Inc., Three World Financial Center, New York, New
York 10285, Attention: [LB Commercial Mortgage Trust ____], Series ____,
facsimile number: _______________; (v) in the case of the Rating Agencies, (A)
_________________________________, Attention:__________________, facsimile
number: ___________; and (B) ___________________________________, Attention:
________________, facsimile number ________________; and (vi) in the case of the
Fiscal Agent, __________________________________,
Attention:_______________________________, facsimile number:__________________;
or as to each such Person such other address as may hereafter be furnished by
such Person to the parties hereto in writing. Any communication required or
permitted to be delivered to a Certificateholder shall be deemed to have been
duly given when mailed first class, postage prepaid, to the address of such
Holder as shown in the Certificate Register.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions
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<PAGE>
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. Grant of a Security Interest.
The Depositor intends that the conveyance of the Depositor's right,
title and interest in and to the Mortgage Loans pursuant to this Agreement shall
constitute a sale and not 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) the Depositor shall be deemed to have granted to the
Trustee (in such capacity) a first priority security interest in the Depositor's
entire right, title and interest in and to the assets constituting the Trust
Fund, including, without limitation, the Mortgage Loans, all principal and
interest received or receivable with respect to the Mortgage Loans (other than
principal and interest payments due and payable prior to the Cut-off Date and
any Principal Prepayments received on or prior to the Cut-off Date), all amounts
held from time to time in the Custodial Account, the Collection Account and, if
established, the REO Account and all reinvestment earnings on such amounts, and
all of the Depositor's right, title and interest in and to the proceeds of any
title, hazard or other Insurance Policies related to such Mortgage Loans, and
(ii) this Agreement shall constitute a security agreement 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 K 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 11.07 shall constitute notice to the
Trustee pursuant to any of the requirements of the New York UCC.
SECTION 11.08. Streit Act.
Any provisions required to be contained in this Agreement by Section
126 of Article 4-A of the New York Real Property Law are hereby incorporated
herein, and such provisions shall be in addition to those conferred or imposed
by this Agreement; provided, however, that to the extent that such Section 126
shall not have any effect, and if said Section 126 should at any time be
repealed or cease to apply to this Agreement or be construed by judicial
decision to be inapplicable, said Section 126 shall cease to have any further
effect upon the provisions of this Agreement. In case of a conflict between the
provisions of this Agreement and any mandatory provisions of Article 4-A of the
New York Real Property Law, such mandatory provisions of said Article 4-A shall
prevail, provided that if said Article 4-A shall not apply to this Agreement,
should at any time be repealed, or cease to apply to this Agreement or be
construed by judicial decision to be inapplicable, such mandatory provisions of
such Article 4-A shall cease to have any further effect upon the provisions of
this Agreement.
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<PAGE>
SECTION 11.09. Successors and Assigns; Beneficiaries.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Certificateholders. The
Underwriter shall be a third party beneficiary to this Agreement with respect to
its rights to receive the reports, statements and other information to which it
is entitled hereunder, to preserve its rights under Sub-Servicing Agreements as
contemplated by Section 3.22(d) and to terminate the Trust Fund pursuant to
Section 9.01. Each of the Sub-Servicers that is a party to a Sub-Servicing
Agreement on the Closing Date shall be a third party beneficiary to obligations
of a successor Master Servicer under Section 3.22(d), provided that the sole
remedy for any claim by a Sub-Servicer as a third party beneficiary pursuant to
this Section 11.09 shall be against a successor Master Servicer solely in its
corporate capacity and no Sub-Servicer shall have any rights or claims against
the Trust Fund or any party hereto (other than a successor Master Servicer in
its corporate capacity as set forth in this Section 11.09) as a result of any
rights conferred on such Sub-Servicer as a third party beneficiary pursuant to
this Section 11.09. This Agreement may not be amended in any manner that would
adversely affect the rights of any such third party beneficiary without its
consent. No other person, including, without limitation, any Mortgagor, shall be
entitled to any benefit or equitable right, remedy or claim under this
Agreement.
SECTION 11.10. 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 11.11. Notices to Rating Agencies.
(a) The Trustee shall promptly provide notice to each Rating Agency
with respect to each of the following of which it has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default that has not been cured;
(iii) the resignation or termination of the Fiscal Agent, the Master
Servicer or the Special Servicer;
(iv) the repurchase of Mortgage Loans by the Mortgage Loan Seller
pursuant to the Mortgage Loan Purchase Agreement;
(v) any change in the location of the Collection Account;
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<PAGE>
(vi) the final payment to any Class of Certificateholders; and
(vii) any sale or disposition of any Mortgage Loan or REO Property.
(b) The Master Servicer shall promptly provide notice to each Rating
Agency with respect to each of the following of which it has actual knowledge:
(i) the resignation or removal of the Trustee; and
(ii) any change in the location of the Custodial Account.
(c) The Special Servicer shall furnish each Rating Agency with
respect to a non-performing or defaulted Mortgage Loan such information as the
Rating Agency shall reasonably request and which the Special Servicer can
reasonably provide in accordance with applicable law.
(d) To the extent applicable, each of the Master Servicer and the
Special Servicer shall promptly furnish to each Rating Agency copies of the
following items:
(i) each of its annual statements as to compliance described in
Section 3.13;
(ii) each of its annual independent public accountants' servicing
reports described in Section 3.14;
(iii) any Officers' Certificate delivered by it to the Trustee
pursuant to Section 3.03(e) or 4.03(c); and
(iv) each of the statements and reports described in Sections
3.12(b) and 4.02(b) that is prepared by it.
(e) The Trustee shall (i) make available to each Rating Agency, upon
reasonable notice, the items described in Section 8.14(b) and (ii) promptly
deliver to each Rating Agency a copy of any notices given pursuant to Section
7.03(a) or Section 7.03(b).
(f) The Trustee shall promptly deliver to each Rating Agency a copy
of each of the statements and reports described in Section 4.02(a) that is
prepared by it.
(g) Each of the Trustee, the Master Servicer and the Special
Servicer shall provide to each Rating Agency such other information with respect
to the Mortgage Loans and the Certificates, to the extent such party possesses
such information, as such Rating Agency shall reasonably request.
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<PAGE>
SECTION 11.12. 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.
STRUCTURED ASSET SECURITIES
CORPORATION
Depositor
By: ___________________________________
Name:
Title:
---------------------------------------
Master Servicer
By: ___________________________________
Name:
Title:
---------------------------------------
Special Servicer
By: ___________________________________
Name:
Title:
---------------------------------------
Trustee
By: ___________________________________
Name:
Title:
<PAGE>
---------------------------------------
Fiscal Agent
By: ___________________________________
Name:
Title:
By: ___________________________________
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ______ day of ______, 199_, before me, a notary public in and
for said State, personally appeared ________________, known to me to be a
___________ of STRUCTURED ASSET SECURITIES CORPORATION, one of the entities that
executed the within instrument, and also known to me to be the person who
executed it on behalf of such entity, and acknowledged to me that such entity
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF ___________________)
) ss.:
COUNTY OF __________________)
On the ______ day of ______, 199_, before me, a notary public in and
for said State, personally appeared ________________ known to me to be a
___________ of _______________________________________, one of the entities that
executed the within instrument, and also known to me to be the person who
executed it on behalf of such entity, and acknowledged to me that such entity
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF ___________________)
) ss.:
COUNTY OF __________________)
On the ______ day of ______, 199_, before me, a notary public in and
for said State, personally appeared ________________ known to me to be a
___________ of _______________________________________, one of the entities that
executed the within instrument, and also known to me to be the person who
executed it on behalf of such entity, and acknowledged to me that such entity
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF ___________________)
) ss.:
COUNTY OF __________________)
On the ______ day of ______, 199_, before me, a notary public in and
for said State, personally appeared ___________________________, known to me to
be a ___________ of __________, one of the entities that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such entity, and acknowledged to me that such entity executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
<PAGE>
STATE OF ___________________)
) ss.:
COUNTY OF __________________)
On the ______ day of ______, 199_, before me, a notary public in and
for said State, personally appeared _____________________ and
_____________________, known to me to be a _________________ and
_____________________, respectively, of _______________, one of the entities
that executed the within instrument, and also known to me to be the persons 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 A-1, CLASS A-2 AND CLASS A-3 CERTIFICATES
CLASS [A-1] [A-2] [A-3] 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 (the "Trust") whose assets consist primarily of a pool (the
"Mortgage Pool") of multifamily and commercial mortgage loans (the "Mortgage
Loans"), such pool being formed and sold by
STRUCTURED ASSET SECURITIES CORPORATION
Pass-Through Rate: ___% Initial Certificate Principal Balance of this
Certificate as of the Closing Date:
Date of Pooling and Servicing $____________
Agreement: _________________
Class Principal Balance of all the Class [A-
Cut-off Date: _______________ 1] [A-2] [A-3] Certificates as of the
Closing Date: $____________
Closing Date: _______________
First Distribution Date: Aggregate unpaid principal balance of the
_____________________________ Mortgage Pool as of the Cut-off Date, after
deducting payments of principal due on or
Master Servicer: before such date (the "Initial Pool
_____________________________ Balance"): $___________________
Special Servicer:
_____________________________ CUSIP No. _____________
Trustee:
_____________________________
Fiscal Agent:
_____________________________
Certificate No. [A-1] [A-2] [A-3]-___
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 DEPOSITOR,
THE TRUSTEE, THE CERTIFICATE REGISTRAR 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 STRUCTURED
ASSET SECURITIES CORPORATION, _____________________________,
_____________________________, ________________________ OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE
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 (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 PREPAY AT AN ASSUMED RATE OF PREPAYMENT USED
SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES EQUAL TO A
"CPR" OF 0% (EXCEPT THAT THE ARD LOANS ARE ASSUMED TO BE PAID IN FULL ON THEIR
RESPECTIVE ANTICIPATED REPAYMENT DATES) (THE "PREPAYMENT ASSUMPTION"), THIS
CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $________ OF OID PER $_________ 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 $________ OF INITIAL CERTIFICATE PRINCIPAL BALANCE,
COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE AS TO WHETHER OR HOW
THE MORTGAGE LOANS WILL PREPAY.]
THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN ABOVE.
A-1-2
<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 Certificates of
the same Class as this Certificate (their "Class Principal Balance") as of the
Closing Date) in that certain beneficial ownership interest in the Trust
evidenced by all the Certificates of the same Class as this Certificate. The
Trust was created and the Certificates were issued pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among
Structured Asset Securities Corporation, (the "Depositor", which term includes
any successor entity under the Agreement), ___________________________________
(the "Master Servicer", which term includes any successor entity under the
Agreement), ___________________________________ (the "Special Servicer", which
term includes any successor entity under the Agreement),
___________________________________ (the "Trustee", which term includes any
successor entity under the Agreement) and _________________________ (the "Fiscal
Agent", 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, the capitalized terms used herein have the respective
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the ____ day of each month or, if such ____ day is not a Business Day, the
Business Day immediately following (each, a "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed pursuant to the
Agreement on the applicable Distribution Date in respect of the Class of
Certificates to which this Certificate belongs. All distributions made under the
Agreement in respect of this Certificate will be made by the Trustee by wire
transfer in 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 written wiring
instructions no less than five (5) Business Days prior to the Record Date for
such distribution (which wiring instructions may be in the form of a standing
order applicable to all subsequent distributions as well), or otherwise by check
mailed to the address of such Certificateholder appearing in the Certificate
Register. Notwithstanding the above, the final distribution in respect of this
Certificate (determined without regard to any possible future reimbursement of
any Realized Loss or Additional Trust Fund Expense previously allocated to this
Certificate) will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the offices of the Certificate Registrar appointed as provided in the
Agreement or such other location as may be specified in such notice. Also
notwithstanding the foregoing, any distribution that may be made with respect to
this Certificate in reimbursement of any Realized Loss or Additional Trust Fund
Expense previously allocated to this Certificate, which reimbursement is to
occur after the date on which this
A-1-3
<PAGE>
Certificate is surrendered as contemplated by the preceding sentence, will be
made by check mailed to the address of the Holder that surrenders this
Certificate as such address last appeared in the Certificate Register or to any
such other address of which the Trustee is subsequently notified in writing.
Any distribution to the Holder of this Certificate in reduction of
the Certificate Principal Balance hereof is binding on such Holder and all
future Holders of this Certificate and any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The 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 Custodial Account, the Collection Account and,
if established, the REO Account may be made from time to time for purposes other
than, and, in certain cases, prior to, distributions to Certificateholders, such
purposes including the reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans and the payment of interest on such
advances and expenses.
The Certificates are issuable in fully registered form only without
coupons in minimum denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, the Certificates
are 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 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.
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.
A-1-4
<PAGE>
Prior to due presentment of this Certificate for registration of
transfer, the Depositor, the Master Servicer, the Special Servicer, the Trustee,
the Fiscal Agent, the Certificate Registrar and any agents of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent, the Certificate Registrar or
any such agent shall be affected by notice to the contrary.
The Trust 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, and (ii) the purchase by the Depositor, the Underwriter, the Master
Servicer, the Special Servicer or the Majority Subordinate Certificateholder at
a price determined as provided in the Agreement of all Mortgage Loans and any
REO Properties remaining in the Trust. The Agreement permits, but does not
require, the Depositor, the Underwriter, the Master Servicer, the Special
Servicer or the Majority Subordinate Certificateholder to purchase from the
Trust all Mortgage Loans and any REO Properties 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 ___% of the Initial Pool
Balance specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof, and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent thereunder and the rights of the Certificateholders thereunder, at any
time by the Depositor, the Master Servicer, the Special Servicer, the Trustee
and the Fiscal Agent with the consent of the Holders of Certificates entitled to
at least 662/3% of the Voting Rights allocated to each 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
circumstances, including any amendment necessary to maintain the status of REMIC
I, REMIC II or REMIC III as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust (to the extent of its rights therein) for
distributions hereunder.
A-1-5
<PAGE>
This Certificate shall be construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed
in said State, without applying any conflicts of laws principles of such state
(other than the provisions of Section 5-1401 of the New York General Obligations
Law), and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
A-1-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
-----------------------------------,
as Trustee
By:
--------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A-1] [A-2] [A-3] Certificates referred to
in the within-mentioned Agreement.
Dated:
-----------------------------------,
as Certificate Registrar
By:
--------------------------------
Authorized Officer
A-1-7
<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 evidenced by the within
Commercial Mortgage Pass-Through Certificate and hereby authorize(s) the
registration of transfer of such interest to the above named assignee on the
Certificate Register of the Trust.
I (we) further direct the issuance of a new Commercial Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and delivery of such Commercial 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-1-8
<PAGE>
EXHIBIT A-2
FORM OF CLASS IO CERTIFICATE
CLASS IO 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 (the "Trust") whose assets consist primarily of a pool (the
"Mortgage Pool") of multifamily and commercial mortgage loans (the "Mortgage
Loans"), such pool being formed and sold by
STRUCTURED ASSET SECURITIES CORPORATION
Pass-Through Rate: Variable Initial Certificate Notional Amount of this
Certificate as of the Closing Date:
Date of Pooling and Servicing $____________
Agreement: _________________
Class Notional Amount of all the Class IO
Cut-off Date: _______________ Certificates as of the Closing Date:
$____________
Closing Date: _______________
First Distribution Date: Aggregate unpaid principal balance of the
_____________________________ Mortgage Pool as of the Cut-off Date, after
deducting payments of principal due on or
Master Servicer: before such date (the "Initial Pool
_____________________________ Balance"):$______________
Special Servicer:
_____________________________ CUSIP No. _____________
Trustee:
_____________________________
Fiscal Agent:
_____________________________
Certificate No. IO-___
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 DEPOSITOR,
THE TRUSTEE, THE CERTIFICATE REGISTRAR 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 STRUCTURED
ASSET SECURITIES CORPORATION, ______________________________,
_____________________________, _________________________ OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE
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 (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 PREPAY AT AN ASSUMED RATE OF PREPAYMENT USED
SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES EQUAL TO A
"CPR" OF 0% (EXCEPT THAT THE ARD LOANS ARE ASSUMED TO BE PAID IN FULL ON THEIR
RESPECTIVE ANTICIPATED REPAYMENT DATES) (THE "PREPAYMENT ASSUMPTION"), THIS
CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $________ OF OID PER $_________ 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 $________ OF INITIAL CERTIFICATE NOTIONAL AMOUNT, COMPUTED UNDER
THE EXACT METHOD. NO REPRESENTATION IS MADE AS TO WHETHER OR HOW THE MORTGAGE
LOANS WILL PREPAY.]
THIS CERTIFICATE DOES NOT HAVE A CERTIFICATE PRINCIPAL BALANCE AND DOES NOT
ENTITLE THE HOLDER HEREOF TO ANY DISTRIBUTIONS OF PRINCIPAL. THE HOLDER HEREOF
WILL BE ENTITLED TO DISTRIBUTIONS OF
A-2-2
<PAGE>
INTEREST ACCRUED AS PROVIDED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN ON THE CERTIFICATE NOTIONAL AMOUNT OF THIS CERTIFICATE, WHICH 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
notional principal amount of this Certificate (its "Certificate Notional
Amount") as of the Closing Date by the aggregate notional principal amount of
all the Certificates of the same Class as this Certificate (their "Class
Notional Amount") as of the Closing Date) in that certain beneficial ownership
interest in the Trust evidenced by all the Certificates of the same Class as
this Certificate. The Trust was created and the Certificates were issued
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Structured Asset Securities Corporation, (the "Depositor",
which term includes any successor entity under the Agreement),
___________________________________ (the "Master Servicer", which term includes
any successor entity under the Agreement), ___________________________________
(the "Special Servicer", which term includes any successor entity under the
Agreement), ___________________________________ (the "Trustee", which term
includes any successor entity under the Agreement) and _________________________
(the "Fiscal Agent", 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, the capitalized terms used
herein have the respective meanings assigned in the Agreement. This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the ____ day of each month or, if such ____ day is not a Business Day, the
Business Day immediately following (each, a "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed pursuant to the
Agreement on the applicable Distribution Date in respect of the Class of
Certificates to which this Certificate belongs. All distributions made under the
Agreement in respect of this Certificate will be made by the Trustee by wire
transfer in 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 written wiring
instructions no less than five (5) Business Days prior to the Record Date for
such distribution (which wiring instructions may be in the form of a standing
order applicable to all subsequent distributions as well), or otherwise by check
mailed to the address of such Certificateholder appearing in the Certificate
Register. Notwithstanding the above, the final distribution in respect of this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
A-2-3
<PAGE>
offices of the Certificate Registrar appointed as provided in the Agreement or
such other location as may be specified in such notice.
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 Custodial Account, the Collection Account and,
if established, the REO Account may be made from time to time for purposes other
than, and, in certain cases, prior to, distributions to Certificateholders, such
purposes including the reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans and the payment of interest on such
advances and expenses.
The Certificates are issuable in fully registered form only without
coupons in minimum denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, the Certificates
are 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 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.
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.
Prior to due presentment of this Certificate for registration of
transfer, the Depositor, the Master Servicer, the Special Servicer, the Trustee,
the Fiscal Agent, the Certificate Registrar and any agents of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent, the Certificate Registrar or
any such agent shall be affected by notice to the contrary.
A-2-4
<PAGE>
The Trust 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, and (ii) the purchase by the Depositor, the Underwriter, the Master
Servicer, the Special Servicer or the Majority Subordinate Certificateholder at
a price determined as provided in the Agreement of all Mortgage Loans and any
REO Properties remaining in the Trust. The Agreement permits, but does not
require, the Depositor, the Underwriter, the Master Servicer, the Special
Servicer or the Majority Subordinate Certificateholder to purchase from the
Trust all Mortgage Loans and any REO Properties 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 ____% of the Initial Pool
Balance specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof, and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent thereunder and the rights of the Certificateholders thereunder, at any
time by the Depositor, the Master Servicer, the Special Servicer, the Trustee
and the Fiscal Agent with the consent of the Holders of Certificates entitled to
at least 662/3% of the Voting Rights allocated to each 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
circumstances, including any amendment necessary to maintain the status of REMIC
I, REMIC II or REMIC III as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed
in said State, without applying any conflicts of laws principles of such state
(other than the provisions of Section 5-1401 of the New York General Obligations
Law), and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
A-2-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
-----------------------------------,
as Trustee
By:
--------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class IO Certificates referred to in the
within-mentioned Agreement.
Dated:
-----------------------------------,
as Certificate Registrar
By:
--------------------------------
Authorized Officer
A-2-6
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust evidenced by the within
Commercial Mortgage Pass-Through Certificate and hereby authorize(s) the
registration of transfer of such interest to the above named assignee on the
Certificate Register of the Trust.
I (we) further direct the issuance of a new Commercial Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and delivery of such Commercial 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 B, CLASS C, CLASS D AND CLASS E CERTIFICATES
CLASS [B][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 (the "Trust") whose assets consist primarily of a pool (the
"Mortgage Pool") of multifamily and commercial mortgage loans (the "Mortgage
Loans"), such pool being formed and sold by
STRUCTURED ASSET SECURITIES CORPORATION
Pass-Through Rate: ____% Initial Certificate Principal Balance of this
Certificate as of the Closing Date:
Date of Pooling and Servicing $_______________
Agreement: __________________
Class Principal Balance of all the Class
Cut-off Date: ________________ [B][C][D][E] Certificates as of the Closing
Date: $____________
Closing Date: ________________
First Distribution Date: Aggregate unpaid principal balance of the
______________________________ Mortgage Pool as of the Cut-off Date, after
deducting payments of principal due on or
Master Servicer: before such date (the "Initial Pool
______________________________ Balance"):$______________
Special Servicer:
______________________________ CUSIP No. _____________
Trustee:
______________________________
Fiscal Agent:
______________________________
Certificate No. [B][C][D][E]-___
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 DEPOSITOR,
THE TRUSTEE, THE CERTIFICATE REGISTRAR 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 TO (A) ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) 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 EMPLOYEE BENEFIT
PLAN OR OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN STRUCTURED
ASSET SECURITIES CORPORATION, ______________________________,
______________________________, _________________________ OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER
PERSON.
THE CLASS OF CERTIFICATES TO WHICH THIS CERTIFICATE BELONGS IS SUBORDINATE TO
ONE OR MORE OTHER CLASSES OF CERTIFICATES OF THE SAME SERIES, AS AND TO THE
EXTENT PROVIDED 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
A-3-2
<PAGE>
____________________. ASSUMING THAT THE MORTGAGE LOANS PREPAY AT AN ASSUMED RATE
OF PREPAYMENT USED SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE
CERTIFICATES EQUAL TO A "CPR" OF 0% (EXCEPT THAT THE ARD LOANS ARE ASSUMED TO BE
PAID IN FULL ON THEIR RESPECTIVE ANTICIPATED REPAYMENT DATES) (THE "PREPAYMENT
ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $________ OF
OID PER $_________ 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 $________ OF INITIAL CERTIFICATE
PRINCIPAL BALANCE, COMPUTED UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE AS
TO WHETHER OR HOW THE MORTGAGE LOANS WILL PREPAY.]
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 Certificates of
the same Class as this Certificate (their "Class Principal Balance") as of the
Closing Date) in that certain beneficial ownership interest in the Trust
evidenced by all the Certificates of the same Class as this Certificate. The
Trust was created and the Certificates were issued pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among
Structured Asset Securities Corporation, (the "Depositor", which term includes
any successor entity under the Agreement), ___________________________________
(the "Master Servicer", which term includes any successor entity under the
Agreement), ___________________________________ (the "Special Servicer", which
term includes any successor entity under the Agreement),
___________________________________ (the "Trustee", which term includes any
successor entity under the Agreement) and _________________________ (the "Fiscal
Agent", 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, the capitalized terms used herein have the respective
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the ____ day of each month or, if such ____ day is not a Business Day, the
Business Day immediately following (each, a "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed pursuant to the
Agreement on the applicable Distribution
A-3-3
<PAGE>
Date in respect of the Class of Certificates to which this Certificate belongs.
All distributions made under the Agreement in respect of this Certificate will
be made by the Trustee by wire transfer in 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 written wiring instructions no less than five (5) Business Days
prior to the Record Date for such distribution (which wiring instructions may be
in the form of a standing order applicable to all subsequent distributions as
well), or otherwise by check mailed to the address of such Certificateholder
appearing in the Certificate Register. Notwithstanding the above, the final
distribution in respect of this Certificate (determined without regard to any
possible future reimbursement of any Realized Loss or Additional Trust Fund
Expense previously allocated to this Certificate) will be made after due notice
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the offices of the Certificate Registrar
appointed as provided in the Agreement or such other location as may be
specified in such notice. Also notwithstanding the foregoing, any distribution
that may be made with respect to this Certificate in reimbursement of any
Realized Loss or Additional Trust Fund Expense previously allocated to this
Certificate, which reimbursement is to occur after the date on which this
Certificate is surrendered as contemplated by the preceding sentence, will be
made by check mailed to the address of the Holder that surrenders this
Certificate as such address last appeared in the Certificate Register or to any
such other address of which the Trustee is subsequently notified in writing.
Any distribution to the Holder of this Certificate in reduction of
the Certificate Principal Balance hereof is binding on such Holder and all
future Holders of this Certificate and any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The 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 Custodial Account, the Collection Account and,
if established, the REO Account may be made from time to time for purposes other
than, and, in certain cases, prior to, distributions to Certificateholders, such
purposes including the reimbursement of advances made, or certain expenses
incurred, with respect to the Mortgage Loans and the payment of interest on such
advances and expenses.
The Certificates are issuable in fully registered form only without
coupons in minimum denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, the Certificates
are 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,
A-3-4
<PAGE>
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 transfer of this Certificate or any interest herein shall be made
to (A) any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, including insurance company general accounts, that is
subject to ERISA or the Code (each, a "Plan"), or (B) 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 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 connection with the initial issuance of the
Certificates or any transfer of this Certificate by the Depositor, Lehman
Brothers Inc. (the "Underwriter") or any of their respective Affiliates or any
transfer of this Certificate to a successor Depository or to the applicable
Certificate Owner in accordance with Section 5.03 of the Agreement, the
Certificate Registrar shall refuse to register any 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 any Transferee of this
Certificate or any interest herein does not, in connection with the subject
transfer, deliver to the Certificate Registrar a certification and/or Opinion of
Counsel as required by the preceding sentence, then 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 form 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.
No service charge will be imposed for any registration of 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.
A-3-5
<PAGE>
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.
Prior to due presentment of this Certificate for registration of
transfer, the Depositor, the Master Servicer, the Special Servicer, the Trustee,
the Fiscal Agent, the Certificate Registrar and any agents of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent, the Certificate Registrar or
any such agent shall be affected by notice to the contrary.
The Trust 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, and (ii) the purchase by the Depositor, the Underwriter, the Master
Servicer, the Special Servicer or the Majority Subordinate Certificateholder at
a price determined as provided in the Agreement of all Mortgage Loans and any
REO Properties remaining in the Trust. The Agreement permits, but does not
require, the Depositor, the Underwriter, the Master Servicer, the Special
Servicer or the Majority Subordinate Certificateholder to purchase from the
Trust all Mortgage Loans and any REO Properties 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 ____% of the Initial Pool
Balance specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof, and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent thereunder and the rights of the Certificateholders thereunder, at any
time by the Depositor, the Master Servicer, the Special Servicer, the Trustee
and the Fiscal Agent with the consent of the Holders of Certificates entitled to
at least 662/3% of the Voting Rights allocated to each 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
circumstances, including any amendment necessary to maintain the status of REMIC
I, REMIC II or REMIC III as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-3-6
<PAGE>
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed
in said State, without applying any conflicts of laws principles of such state
(other than the provisions of Section 5-1401 of the New York General Obligations
Law), and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
A-3-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
-----------------------------------,
as Trustee
By:
--------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class [B][C][D][E] Certificates referred to in
the within-mentioned Agreement.
Dated:
-----------------------------------,
as Certificate Registrar
By:
--------------------------------
Authorized Officer
A-3-8
<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 evidenced by the within
Commercial Mortgage Pass-Through Certificate and hereby authorize(s) the
registration of transfer of such interest to the above named assignee on the
Certificate Register of the Trust.
I (we) further direct the issuance of a new Commercial Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and delivery of such Commercial 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-3-9
<PAGE>
EXHIBIT A-4
FORM OF CLASS F, CLASS G, CLASS H, CLASS J,
CLASS K, CLASS L AND CLASS M CERTIFICATES
CLASS [F] [G] [H] [J] [K] [L] [M] 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 (the "Trust"), whose assets consist primarily of a pool (the
"Mortgage Pool") of multifamily and commercial mortgage loans (the "Mortgage
Loans"), such pool being formed and sold by
STRUCTURED ASSET SECURITIES CORPORATION
Pass-Through Rate: ____% Initial Certificate Principal Balance of this
Certificate as of the Closing Date:
$_______________
Date of Pooling and Servicing Class Principal Balance of all the Class [F]
Agreement: __________________ [G] [H] [J] [K] [L] [M] Certificates as of the
Closing Date: $____________
Cut-off Date: _______________ Aggregate unpaid principal balance of the
Mortgage Pool as of the Cut-off Date, after
Closing Date: ________________ deducting payments of principal due on or
before such date (the "Initial Pool Balance"):
First Distribution Date: _____ $_______________
Master Servicer:
______________________________
Special Servicer:
______________________________
Trustee:
______________________________
Fiscal Agent:
______________________________
Certificate No. [F][G][H][J][K][L][M]-___ CUSIP No. ____________
<PAGE>
[oFOR CLASS F AND CLASS G CERTIFICATES ONLY: UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST CORPORATION, A
NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR, THE TRUSTEE, THE CERTIFICATE
REGISTRAR 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.o]
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 TO (A) ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) 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 EMPLOYEE BENEFIT
PLAN OR OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN STRUCTURED
ASSET SECURITIES CORPORATION, ______________________________,
______________________________, _________________________ OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER
PERSON.
A-4-2
<PAGE>
THE CLASS OF CERTIFICATES TO WHICH THIS CERTIFICATE BELONGS, IS SUBORDINATE TO
ONE OR MORE OTHER CLASSES OF CERTIFICATES OF THE SAME SERIES, AS AND TO THE
EXTENT PROVIDED 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 PREPAY AT AN ASSUMED RATE OF PREPAYMENT USED
SOLELY FOR THE PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES EQUAL TO A
"CPR" OF 0% (EXCEPT THAT THE ARD LOANS ARE ASSUMED TO BE PAID IN FULL ON THEIR
RESPECTIVE ANTICIPATED REPAYMENT DATES) (THE "PREPAYMENT ASSUMPTION"), THIS
CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $__________ OF OID PER $__________
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 $_______ OF INITIAL CERTIFICATE PRINCIPAL BALANCE, COMPUTED
UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE AS TO WHETHER OR HOW THE
MORTGAGE LOANS WILL PREPAY.]
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 balance of this Certificate (its "Certificate Principal Balance") as
of the Closing Date by the aggregate principal balance of all the Certificates
of the same Class as this Certificate (their "Class Principal Balance") as of
the Closing Date) in that certain beneficial ownership interest in the Trust
evidenced by all the Certificates of the same Class as this Certificate. The
Trust was created and the Certificates were issued pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among
Structured Asset Securities Corporation, (the "Depositor", which term includes
any successor entity under the Agreement), ___________________________________
(the "Master Servicer", which term includes any successor entity under the
Agreement), ___________________________________ (the "Special Servicer", which
term includes any successor entity under the Agreement),
___________________________________ (the "Trustee", which term includes any
successor entity under the Agreement) and _________________________ (the "Fiscal
Agent", which term includes any successor entity under the Agreement), a summary
A-4-3
<PAGE>
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the respective
meanings assigned in the Agreement. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the ____ day of each month or, if such ____ day is not a Business Day, the
Business Day immediately following (each, a "Distribution Date"), commencing on
the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed pursuant to the
Agreement on the applicable Distribution Date in respect of the Class of
Certificates to which this Certificate belongs. All distributions made under the
Agreement in respect of this Certificate will be made by the Trustee by wire
transfer in 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 written wiring
instructions no less than five (5) Business Days prior to the Record Date for
such distribution (which wiring instructions may be in the form of a standing
order applicable to all subsequent distributions as well), or otherwise by check
mailed to the address of such Certificateholder appearing in the Certificate
Register. Notwithstanding the above, the final distribution in respect of this
Certificate (determined without regard to any possible future reimbursement of
any Realized Loss or Additional Trust Fund Expense previously allocated to this
Certificate) will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the offices of the Certificate Registrar appointed as provided in the
Agreement or such other location as may be specified in such notice. Also
notwithstanding the foregoing, any distribution that may be made with respect to
this Certificate in reimbursement of any Realized Loss or Additional Trust Fund
Expense previously allocated to this Certificate, which reimbursement is to
occur after the date on which this Certificate is surrendered as contemplated by
the preceding sentence, will be made by check mailed to the address of the
Holder that surrenders this Certificate as such address last appeared in the
Certificate Register or to any such other address of which the Trustee is
subsequently notified in writing.
Any distribution to the Holder of this Certificate in reduction of
the Certificate Principal Balance hereof is binding on such Holder and all
future Holders of this Certificate and any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
distribution is made upon this Certificate.
The 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 Custodial Account, the Collection Account and,
if established, the REO Account may be made from time to time for
A-4-4
<PAGE>
purposes other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
The Certificates are issuable in fully registered form only without
coupons in minimum denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, the Certificates
are 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 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, Lehman Brothers
Inc. (the "Underwriter") or any of their respective Affiliates or, if this
Certificate constitutes a Book-Entry Certificate, a transfer of this Certificate
to a successor Depository or to the applicable Certificate Owner in accordance
with Section 5.03 of the Agreement), 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-1 to the Agreement and a certificate from such Certificateholder's prospective
Transferee substantially in the form attached either as Exhibit F-2A to the
Agreement or as Exhibit F-2B to the Agreement; or (ii) an Opinion of Counsel
satisfactory to the Trustee to the effect that such transfer may be made without
registration under the Securities Act (which Opinion of Counsel shall not be an
expense of the Trust Fund or of the Depositor, the Master Servicer, the Special
Servicer, the Trustee, the 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. If any Transferee of this Certificate
does not, in connection with the subject transfer, deliver to the Certificate
Registrar one of the certifications described in clause (i) of the preceding
sentence or the Opinion of Counsel described in clause (ii) of the preceding
sentence, then such Transferee shall be deemed to have represented and warranted
that all the certifications set forth in either Exhibit F-2A or Exhibit F-2B
attached
A-4-5
<PAGE>
to the Agreement are, with respect to the subject transfer, true and correct. If
this Certificate constitutes a Book-Entry Certificate and a transfer of any
interest herein 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 interest herein by the Depositor, the Underwriter or any of
their respective Affiliates), then the Certificate Owner desiring to effect such
transfer shall be required to obtain either (i) a certificate from such
Certificate Owner's prospective Transferee substantially in the form attached as
Exhibit F-2C to the Agreement or as Exhibit F-2D to the Agreement, or (ii) an
Opinion of Counsel to the effect that such transfer may be made without
registration under the Securities Act. If this Certificate constitutes a
Book-Entry Certificate and any Transferee of an interest herein does not, in
connection with the subject transfer, deliver to the Transferor the Opinion of
Counsel or one of the certifications described in the preceding sentence, then
such Transferee shall be deemed to have represented and warranted that all the
certifications set forth in either Exhibit F-2C or Exhibit F-2D attached to the
Agreement are, with respect to the subject transfer, true and correct. None of
the Depositor, the Trustee or the Certificate Registrar is obligated to register
or qualify the Class of Certificates to which this Certificate belongs, under
the Securities Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of this
Certificate or any interest herein without registration or qualification. Any
Certificateholder or Certificate Owner 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,
the Fiscal Agent, the Master Servicer, the Special Servicer, the Certificate
Registrar and their respective Affiliates 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
to (A) any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, including insurance company general accounts, that is
subject to ERISA or the Code (each, a "Plan"), or (B) 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 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 connection with the initial issuance of the
Certificates or any transfer of this Certificate or any interest herein by the
Depositor, the Underwriter or any of their respective Affiliates or, if this
Certificate constitutes a Book-Entry Certificate, any transfer of this
Certificate to a successor Depository or to the applicable Certificate Owner in
accordance with Section 5.03 of the Agreement, the Certificate Registrar shall
refuse to register the transfer of this Certificate unless it has received from
the prospective Transferee, and, if this Certificate constitutes a Book-Entry
Certificate, any Certificate Owner transferring an interest herein shall be
required to obtain from its 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 or such interest
A-4-6
<PAGE>
herein 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 or such interest herein 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
or such Certificate Owner, as the case may be, 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 any
Transferee of this Certificate or any interest herein does not, in connection
with the subject transfer, deliver to the Certificate Registrar (if this
Certificate constitutes a Definitive Certificate) or the Transferor (if this
Certificate constitutes a Book-Entry Certificate) a certification and/or Opinion
of Counsel as required by the preceding sentence, then 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 Transaction Class Exemption 95-60.
No service charge will be imposed for any registration of 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.
[oFor Class F and Class G Certificates only: 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.o]
Prior to due presentment of this Certificate for registration of
transfer, the Depositor, the Master Servicer, the Special Servicer, the Trustee,
the Fiscal Agent, the Certificate Registrar and any agents of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent, the Certificate Registrar or
any such agent shall be affected by notice to the contrary.
The Trust 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, and (ii) the purchase by the Depositor, the Underwriter, the Master
Servicer, the Special Servicer or the Majority Subordinate Certificateholder at
a price determined as provided in the Agreement of all Mortgage Loans and
A-4-7
<PAGE>
any REO Properties remaining in the Trust. The Agreement permits, but does not
require, the Depositor, the Underwriter, the Master Servicer, the Special
Servicer or the Majority Subordinate Certificateholder to purchase from the
Trust all Mortgage Loans and any REO Properties 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 ____% of the Initial Pool
Balance specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof, and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent thereunder and the rights of the Certificateholders thereunder, at any
time by the Depositor, the Master Servicer, the Special Servicer, the Trustee
and the Fiscal Agent with the consent of the Holders of Certificates entitled to
at least 662/3% of the Voting Rights allocated to each 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
circumstances, including any amendment necessary to maintain the status of REMIC
I, REMIC II or REMIC III as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed
in said State, without applying any conflicts of laws principles of such state
(other than the provisions of Section 5-1401 of the New York General Obligations
Law), and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
A-4-8
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
-----------------------------------,
as Trustee
By:
----------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class [F] [G] [H] [J] [K] [L] [M] Certificates
referred to in the within-mentioned Agreement.
Dated:
-----------------------------------,
as Certificate Registrar
By:
----------------------------------
Authorized Officer
A-4-9
<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 evidenced by the within
Commercial Mortgage Pass-Through Certificate and hereby authorize(s) the
registration of transfer of such interest to the above named assignee on the
Certificate Register of the Trust.
I (we) further direct the issuance of a new Commercial Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and delivery of such Commercial 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 R-I, CLASS R-II AND 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 (the "Trust"), whose assets consist primarily of a pool (the
"Mortgage Pool") of multifamily and commercial mortgage loans (the "Mortgage
Loans"), such pool being formed and sold by
STRUCTURED ASSET SECURITIES CORPORATION
Date of Pooling and Servicing Percentage Interest evidenced by this
Agreement: ___________________ Certificate in the related Class: ___%
Cut-off Date: ________________ Aggregate unpaid principal balance of the
Mortgage Pool as of the Cut-off Date,
Closing Date: _________________ after deducting payments of principal due
on or before such date (the "Initial Pool
First Distribution Date: Balance"): $______________
_______________________________
Master Servicer: Trustee:
_______________________________ __________________________________
Special Servicer:
_______________________________
Fiscal Agent:
_______________________________
Certificate No. [R-I][R-II][R-III]- __ CUSIP No. ___________
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 TO (A) ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE"), OR (B) 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 EMPLOYEE BENEFIT
PLAN OR OTHER RETIREMENT ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS
OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN STRUCTURED
ASSET SECURITIES CORPORATION, ______________________________,
______________________________, _________________________ OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR ANY OTHER
PERSON.
THE CLASS OF CERTIFICATES TO WHICH THIS CERTIFICATE BELONGS, IS SUBORDINATE TO
ONE OR MORE OTHER CLASSES OF CERTIFICATES OF THE SAME SERIES, AS AND TO THE
EXTENT PROVIDED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, THE 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,
A-5-2
<PAGE>
INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS 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 evidenced by all the
Certificates of the same Class as this Certificate. The Trust was created and
the Certificates were issued pursuant to a Pooling and Servicing Agreement,
dated as specified above (the "Agreement"), among Structured Asset Securities
Corporation, (the "Depositor", which term includes any successor entity under
the Agreement), ___________________________________ (the "Master Servicer",
which term includes any successor entity under the Agreement),
___________________________________ (the "Special Servicer", which term includes
any successor entity under the Agreement), ___________________________________
(the "Trustee", which term includes any successor entity under the Agreement)
and _________________________ (the "Fiscal Agent", 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,
the capitalized terms used herein have the respective meanings assigned in the
Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the ____ day of each month or, if such ____ day is not a Business Day, the
Business Day immediately following (each, a "Distribution Date"), commencing
upon the first Distribution Date specified above, to the Person in whose name
this Certificate is registered at the close of business on the last Business Day
of the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed pursuant to the
Agreement on the applicable Distribution Date in respect of the Class of
Certificates to which this Certificate belongs. All distributions made under the
Agreement in respect of this Certificate will be made by the Trustee by wire
transfer in 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 written wiring
instructions no less than five (5) Business Days prior to the Record Date for
such distribution (which wiring instructions may be in the form of a standing
order applicable to all subsequent distributions as well), or otherwise by check
mailed to the address of such Certificateholder appearing in the Certificate
Register. Notwithstanding the above, the final distribution in respect of this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
offices of the Certificate Registrar appointed as provided in the Agreement or
such other location as may be specified in such notice.
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
A-5-3
<PAGE>
Agreement. As provided in the Agreement, withdrawals from the Custodial Account,
the Collection Account and, if established, the REO Account may be made from
time to time for purposes other than, and, in certain cases, prior to,
distributions to Certificateholders, such purposes including the reimbursement
of advances made, or certain expenses incurred, with respect to the Mortgage
Loans and the payment of interest on such advances and expenses.
The Certificates are issuable in fully registered form only without
coupons in minimum denominations specified in the Agreement. As provided in the
Agreement and subject to certain limitations therein set forth, the Certificates
are 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 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, Lehman Brothers
Inc. (the "Underwriter") or any of their respective Affiliates), then the
Certificate Registrar shall refuse to register such transfer unless it receives
(and, upon receipt, may conclusively rely upon) either: (i) a certificate from
the Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit F-1 to the Agreement and a certificate from such
Certificateholder's prospective Transferee substantially in the form attached
either as Exhibit F-2A to the Agreement or as Exhibit F-2B to the Agreement; or
(ii) an Opinion of Counsel satisfactory to the Trustee to the effect that such
transfer may be made without registration under the Securities Act (which
Opinion of Counsel shall not be an expense of the Trust Fund or of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the 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. If any Transferee of this Certificate does not, in connection with the
subject transfer, deliver to the Certificate Registrar one of the certifications
described in clause (i) of the preceding sentence or the Opinion of Counsel
described in clause (ii) of the preceding sentence, then such Transferee shall
be deemed to have represented and warranted that all the certifications set
forth in either Exhibit F-2A or Exhibit F-2B attached
A-5-4
<PAGE>
to the Agreement are, with respect to the subject transfer, true and correct.
None of the Depositor, the Trustee or the Certificate Registrar is obligated to
register or qualify the Class of Certificates to which this Certificate belongs,
under the Securities Act or any other securities law or to take any action not
otherwise required under the Agreement to permit the transfer of this
Certificate or any interest herein without registration or qualification. 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, the Fiscal
Agent, the Master Servicer, the Special Servicer, the Certificate Registrar and
their respective Affiliates 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
to (A) any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, including insurance company general accounts, that is
subject to ERISA or the Code (each, a "Plan"), or (B) 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 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 connection with the initial issuance of the
Certificates or any transfer of this Certificate or any interest herein by the
Depositor, the Underwriter or any of their respective Affiliates, 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 or such interest
herein 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 or such interest herein 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 any Transferee of this Certificate or any interest
herein does not, in connection with the subject transfer, deliver to the
Certificate Registrar a certification and/or Opinion of Counsel as required by
the preceding sentence, then 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 form 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.
A-5-5
<PAGE>
Each Person who has or who acquires any Ownership Interest in this
Certificate shall be deemed by the acceptance or acquisition of such Ownership
Interest to have agreed to be bound by the provisions of Section 5.02(d) of the
Agreement and, if any purported Transferee shall become a Holder of this
Certificate in violation of the provisions of such Section 5.02(d), to have
irrevocably authorized the Trustee under clause (ii)(A) of such Section 5.02(d)
to deliver payments to a Person other than such Person and to have irrevocably
authorized the Trustee under clause (ii)(B) of such Section 5.02(d) to negotiate
the terms of any mandatory 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 REMIC Administrator of any change or impending change in its status as a
Permitted Transferee. In connection with any proposed transfer of any Ownership
Interest in this Certificate, the Certificate Registrar shall require delivery
to it, and shall not register the transfer of this Certificate until its receipt
of, an affidavit and agreement substantially in the form attached as Exhibit H-1
to the Agreement (a "Transfer Affidavit and Agreement") from the proposed
Transferee, 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 the Certificate Registrar has actual
knowledge that the proposed Transferee is not a Permitted Transferee, the
Certificate Registrar shall not register the Transfer of an Ownership Interest
in this Certificate to such proposed Transferee.
Each Person holding or acquiring any Ownership Interest in this
Certificate shall agree (x) to require a Transfer Affidavit and Agreement from
any other Person to whom such Person attempts to transfer its Ownership Interest
herein and (y) not to transfer its Ownership Interest herein unless it provides
to the Certificate Registrar a certificate substantially in the form attached as
Exhibit H-2 to the Agreement stating that, among other things, it has no actual
knowledge that such other Person is not a Permitted Transferee. Each Person
holding or acquiring an Ownership Interest in this Certificate, by purchasing
such Ownership Interest herein, agrees to give the Trustee and the REMIC
Administrator written notice that it is a "pass-through interest holder" within
the meaning of temporary Treasury regulation Section 1.67-3T(a)(2)(i)(A)
immediately upon acquiring such Ownership Interest, if it is, or is holding such
Ownership Interest on behalf of, a "pass-through interest holder".
The provisions of Section 5.02(d) of the Agreement may be modified,
added to or eliminated, provided that there shall have been delivered to the
Trustee and the REMIC Administrator the following: (a) written notification from
each Rating Agency to the effect that the modification of, addition to or
elimination of such provisions will not cause such Rating Agency to withdraw,
qualify or downgrade its then-current rating of any Class of Certificates; and
(b) an opinion of counsel, in form and substance satisfactory to the Trustee and
the REMIC
A-5-6
<PAGE>
Administrator, to the effect that such modification of, addition to or
elimination of such provisions will not (i) cause REMIC I, REMIC II or REMIC III
to (A) cease to qualify as a REMIC or (B) be subject to an entity-level tax
caused by the Transfer of a Residual Interest Certificate to a Person which is
not a Permitted Transferee, or (ii) 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 "Permitted Transferee" is any Transferee that is not a
Disqualified Organization or a Non-United States Person.
A "Disqualified Organization" is (i) the United States, any State or
political subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an instrumentality
which is a corporation if all of its activities are subject to tax and, except
for the Federal Home Loan Mortgage Corporation, a majority of whose board of
directors is not selected by such governmental unit), (ii) a foreign government,
an inter national organization, or any agency or instrumentality of either of
the foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381 of the Code and (v) any other Person so
designated by the REMIC Administrator based upon an opinion of counsel 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 includable 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 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, all within the
meaning of Section 7701(a)(30) of the Code.
No service charge will be imposed for any registration of 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.
A-5-7
<PAGE>
Prior to due presentment of this Certificate for registration of
transfer, the Depositor, the Master Servicer, the Special Servicer, the Trustee,
the Fiscal Agent, the Certificate Registrar and any agents of any of them may
treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes, and none of the Depositor, the Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent, the Certificate Registrar or
any such agent shall be affected by notice to the contrary.
The Trust 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, and (ii) the purchase by the Depositor, the Underwriter, the Master
Servicer, the Special Servicer or the Majority Subordinate Certificateholder at
a price determined as provided in the Agreement of all Mortgage Loans and any
REO Properties remaining in the Trust. The Agreement permits, but does not
require, the Depositor, the Underwriter, the Master Servicer, the Special
Servicer or the Majority Subordinate Certificateholder to purchase from the
Trust all Mortgage Loans and any REO Properties 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 ____% of the Initial Pool
Balance specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof, and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent thereunder and the rights of the Certificateholders thereunder, at any
time by the Depositor, the Master Servicer, the Special Servicer, the Trustee
and the Fiscal Agent with the consent of the Holders of Certificates entitled to
at least 662/3% of the Voting Rights allocated to each 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
circumstances, including any amendment necessary to maintain the status of REMIC
I, REMIC II or REMIC III as a REMIC, without the consent of the Holders of any
of the Certificates.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that
it will look solely to the Trust (to the extent of its rights therein) for
distributions hereunder.
A-5-8
<PAGE>
This Certificate shall be construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed
in said State, without applying any conflicts of laws principles of such state
(other than the provisions of Section 5-1401 of the New York General Obligations
Law), and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
A-5-9
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
-----------------------------------,
as Trustee
By:
--------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class [R-I] [R-II] [R-III] Certificates referred
to in the within-mentioned Agreement.
Dated:
-----------------------------------,
as Certificate Registrar
By:
--------------------------------
Authorized Officer
A-5-10
<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 evidenced by the within
Commercial Mortgage Pass-Through Certificate and hereby authorize(s) the
registration of transfer of such interest to the above named assignee on the
Certificate Register of the Trust.
I (we) further direct the issuance of a new Commercial Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and delivery of such Commercial 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-5-11
<PAGE>
SCHEDULE B
MORTGAGE LOAN SCHEDULE
<PAGE>
SCHEDULE C
FORM OF SCHEDULE OF EXCEPTIONS
TO MORTGAGE FILE DELIVERY
<PAGE>
EXHIBIT D-1
FORM OF MASTER SERVICER REQUEST FOR RELEASE
________, 19___
[TRUSTEE]
Re: [LB Commercial Mortgage Trust ____], 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 that certain Pooling and Servicing
Agreement dated as of ____________________ (the "Pooling and Servicing
Agreement"), by and among Structured Asset Securities Corporation, as depositor,
the undersigned, as master servicer (in such capacity, the "Master Servicer"),
_____________________, as special servicer, __________________, as fiscal agent,
and you as trustee (the "Trustee"), the undersigned hereby requests a release of
the Mortgage File (or the portion thereof specified below) held by or on behalf
of you as Trustee with respect to the following described Mortgage Loan for the
reason indicated below.
Mortgagor's Name:
Address:_____________________________________________________
Loan No.:____________________________________________________
If only particular documents in the Mortgage File are requested, please specify
which: ________________________________________________________________________
Reason for requesting file (or portion thereof):
______ 1. Mortgage Loan paid in full. The undersigned hereby
certifies that all amounts received in connection with
the Mortgage Loan that are required to be credited to
the Custodial 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
<PAGE>
Servicing Agreement and will be returned to you or your designee within ten (10)
days of our receipt thereof, unless the Mortgage Loan has been paid in full, in
which case the Mortgage File (or such portion thereof) will be retained by us
permanently.
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
_______________________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
D-1-2
<PAGE>
EXHIBIT D-2
FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
___________, 19___
[TRUSTEE]
Re: [LB Commercial Mortgage Trust ____], 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 that certain Pooling and Servicing
Agreement dated as of ____________________ (the "Pooling and Servicing
Agreement"), by and among Structured Asset Securities Corporation, as depositor,
___________________, as master servicer, the undersigned as special servicer (in
such capacity, the "Special Servicer"), ___________________, as fiscal agent,
and you as trustee (the "Trustee"), the undersigned hereby requests a release of
the Mortgage File (or the portion thereof specified below) held by or on behalf
of you as Trustee with respect to the following described Mortgage Loan for the
reason indicated below.
Mortgagor's Name: ___________________________________________
Address:_____________________________________________________
Loan No.:____________________________________________________
If only particular documents in the Mortgage File are requested, please specify
which:__________________________________________________________________________
Reason for requesting file (or portion thereof):
______ 1. The Mortgage Loan is being foreclosed.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage File (or
requested portion thereof) will be held by the undersigned in accordance with
the provisions of the Pooling and Servicing Agreement and will be returned to
you or your designee within ten (10) days of our receipt thereof, unless the
Mortgage Loan is being foreclosed, in which case the Mortgage File (or such
portion thereof) will be returned when no longer required by us for such
purpose.
D-2-1
<PAGE>
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
_________________________________________
By:______________________________________
Name:____________________________________
Title:___________________________________
D-2-2
<PAGE>
EXHIBIT E
CALCULATION OF NOI/DEBT SERVICE COVERAGE RATIOS
<PAGE>
EXHIBIT F-1
FORM OF TRANSFEROR CERTIFICATE
FOR TRANSFERS OF DEFINITIVE NON-REGISTERED CERTIFICATES
_____________, 19__
[CERTIFICATE REGISTRAR]
Re: [LB Commercial Mortgage Trust ____], Commercial Mortgage
Pass-Through Certificates, Series ____________, Class__,
[having an initial aggregate Certificate Principal Balance as
of ____________________ (the "Closing Date") of $__________]
[representing a ___% Percentage Interest in the related Class]
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
Structured Asset Securities Corporation, as Depositor,
_________________________, as Master Servicer, ____________________, as Special
Servicer, _________________________, as Trustee, and ______________________, as
Fiscal Agent. 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
Non-Registered Certificate, any interest in a Non-Registered 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
Non-Registered Certificate, any interest in a Non-Registered Certificate
or any other similar security from any person in any manner, (c) otherwise
approached or negotiated
F-1-1
<PAGE>
with respect to any Non-Registered Certificate, any interest in a
Non-Registered Certificate or any other similar security with any person
in any manner, (d) made any general solicitation with respect to any
Non-Registered Certificate, any interest in a NonRegistered 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 Non-Registered
Certificate, any interest in a Non-Registered 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-1-2
<PAGE>
EXHIBIT F-2A
FORM I OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF DEFINITIVE NON-REGISTERED CERTIFICATES
_____________, 19__
[CERTIFICATE REGISTRAR]
Re: [LB Commercial Mortgage Trust ____], Commercial Mortgage
Pass-Through Certificates, Series _______________, Class__,
[having an initial aggregate Certificate Principal Balance as
of ____________________ (the "Closing Date") of $__________]
[evidencing a ___% Percentage Interest in the related Class]
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
Structured Asset Securities Corporation, as Depositor,
_______________________________, as Master Servicer, ____________________, as
Special Servicer, ______________________, as Trustee, and
______________________, as Fiscal Agent. 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. 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 Transferred
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 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
<PAGE>
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, (e) any credit enhancement mechanism associated with the
Transferred Certificates, and (f) 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,
___________________________________
(Transferor)
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-3
<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 (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").
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended,
because (i) the Transferee owned and/or invested on a discretionary basis
$______________________(1) in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent fiscal year
(such amount being calculated in accordance with Rule 144A) and (ii) the
Transferee satisfies the criteria in the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986.
___ Bank. The Transferee (a) is a national bank or a banking institution
organized under the laws of any state, U.S. territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the state or territorial
banking commission or similar official or is a foreign bank or
equivalent
- - --------
(1) Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
F-2A-4
<PAGE>
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.
___ 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.
___ 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.)
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
F-2A-5
<PAGE>
3. The term "securities as used herein does not include (i) securities of
issuers that are affiliated with the Transferee, (ii) securities that are part
of an unsold allotment to or subscription by the Transferee, if the Transferee
is a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
For purposes of determining the aggregate amount of securities owned and/or
invested on a discretionary basis by the Transferee, the Transferee did not
include any of the securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Transferee, the Transferee used
the cost of such securities to the Transferee, unless the Transferee reports its
securities holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of those securities
has been published, in which case the securities were valued at market. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Transferee 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 Transferred
Yes No 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.
F-2A-6
<PAGE>
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Transferred
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties any updated annual financial statements that become available on or
before the date of such purchase, promptly after they become available.
__________________________________
Print Name of Transferee
By: ______________________________
Name: ______________________
Title: _____________________
Date: ______________________
F-2A-7
<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 ("Rule 144A") under the Securities Act of 1933, as amended, 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).
F-2A-8
<PAGE>
____ The Transferee is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other than the
excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Transferee or are part of the Transferee's
Family of Investment Companies, (ii) bank deposit notes and certificates of
deposit, (iii) loan participations, (iv) repurchase agreements, (v) securities
owned but subject to a repurchase agreement and (vi) currency, interest rate and
commodity swaps. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, or owned by
the Transferee's Family of Investment Companies, the securities referred to in
this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands that the
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.
____ ____
Yes No Will the Transferee be purchasing the
Transferred Certificates only for the Transferee's
own account?
6. If the answer to the foregoing question is "no," then in each case
where the Transferee is purchasing for an account other than its own, such
account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
F-2A-9
<PAGE>
7. The undersigned will notify the parties to which this certification is
made of any changes in the information and conclusions herein. Until such
notice, the Transferee's purchase of the Transferred Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
____________________________________
Print Name of Transferee or Adviser
By: ________________________________
Name: ________________________
Title: _______________________
IF AN ADVISER:
____________________________________
Print Name of Transferee
Date: ______________________________
F-2A-10
<PAGE>
EXHIBIT F-2B
FORM II OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF DEFINITIVE NON-REGISTERED CERTIFICATES
_____________, 19__
[CERTIFICATE REGISTRAR]
Attention: Asset-Backed Securities Trust Services Group-
[LB Commercial Mortgage Trust ____] ________________
Re: [LB Commercial Mortgage Trust ____], Commercial Mortgage
Pass-Through Certificates, Series _________, Class__, [having
an initial aggregate Certificate Principal Balance as of
____________________ (the "Closing Date") of $__________]
[evidencing a ___% Percentage Interest in the related Class]
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 Structured
Asset Securities Corporation, as Depositor, ______________________________, as
Master Servicer, __________________________, as Special Servicer,
____________________, as Trustee, and ____________________, as Fiscal Agent. 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
<PAGE>
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-1 to the Pooling and
Servicing Agreement and a certificate from the prospective transferee
substantially in the form attached either as Exhibit F-2A or Exhibit F-2B to the
Pooling and Servicing Agreement, or (B) 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 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 EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT
TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"), OR (B) 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 EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
4. Neither the Transferee nor anyone acting on its behalf has (a) offered,
transferred, pledged, sold or otherwise disposed of any Transferred Certificate,
any interest in a Transferred
F-2B-2
<PAGE>
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, (e) any credit
enhancement mechanism associated with the Transferred Certificates, and (f) 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
<PAGE>
EXHIBIT F-2C
FORM I OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF INTERESTS IN
BOOK-ENTRY NON-REGISTERED CERTIFICATES
____________, 19__
[TRANSFEROR]
Re: [LB Commercial Mortgage Trust ____], Commercial Mortgage
Pass-Through Certificates, Series __________, Class__, [having
an initial aggregate Certificate Principal Balance as of
____________________ (the "Closing Date") of $__________]
[evidencing a ___% Percentage Interest in the related Class]
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
____________________ (the "Transferor") to
__________________________________________ (the "Transferee") through our
respective Depository Participants of the Transferor's beneficial ownership
interest (currently maintained on the books and records of The Depository Trust
Corporation ("DTC") and the Depository Participants) in the captioned
Certificates (the "Transferred Certificates"), which were issued pursuant to the
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), dated
as of ____________________, among Structured Asset Securities Corporation, as
Depositor, ______________________________, as Master Servicer,
_____________________ as Special Servicer, ____________________________, as
Trustee, and _________________________, as Fiscal Agent. 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 and agrees with you, and for the benefit of the
Depositor, that:
1. The Transferee is a "qualified institutional buyer" (a "Qualified
Institutional Buyer") as that term is defined in Rule 144A ("Rule 144A") under
the Securities Act of 1933, as amended (the "Securities Act") and has completed
one of the forms of certification to that effect attached hereto as Annex 1 and
Annex 2. The Transferee is aware that the sale to it of the Transferor's
interest in the Transferred Certificates is being made in reliance on Rule 144A.
The Transferee is acquiring such interest in the Transferred Certificates for
its own account or for the account of another Qualified Institutional Buyer.
<PAGE>
2. The 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) none of the Depositor,
the Trustee or the Certificate Registrar is obligated so to register or qualify
the Transferred Certificates and (c) no interest in the Transferred Certificates
may be resold or transferred unless (i) such Certificates are registered
pursuant to the Securities Act and registered or qualified pursuant any
applicable state securities laws, or (ii) such interest is sold or transferred
in a transaction which is exempt from such registration and qualification and
the Certificate Owner desiring to effect such transfer has received (A) a
certificate from such Certificate Owner's prospective transferee substantially
in the form attached either as Exhibit F-2C or as Exhibit F-2D to the Pooling
and Servicing Agreement or (B) an opinion of counsel to the effect that such
transfer may be made without registration under the Securities Act.
3. The Transferee understands that it may not sell or otherwise transfer
the Transferred Certificates or any interest therein 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 the following legends:
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, 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 TO (A)
ANY EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT
TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"), OR (B) 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 EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
F-2C-2
<PAGE>
4. 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, (e) any credit
enhancement mechanism associated with the Transferred Certificates, and (f) all
related matters, that it has requested.
Very truly yours,
____________________________________
(Transferee)
By: ________________________________
Name: ________________________
Title: _______________________
F-2C-3
<PAGE>
ANNEX 1 TO EXHIBIT F-2C
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 for the benefit of Structured Asset Securities Corporation
with respect to the mortgage pass-through certificates being transferred in
book-entry form (the "Transferred Certificates") as described in the Transferee
certificate to which this certification relates and to which this certification
is an Annex:
1. As indicated below, the undersigned is the chief financial officer, a
person fulfilling an equivalent function, or other executive officer of the
entity purchasing the Transferred Certificates (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act of 1933, as amended ("Rule 144A")
because (i) the Transferee owned and/or invested on a discretionary basis
$______________________(1) in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent fiscal year
(such amount being calculated in accordance with Rule 144A) and (ii) the
Transferee satisfies the criteria in the category marked below.
___ Corporation, etc. The Transferee is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal Revenue
Code of 1986.
___ Bank. The Transferee (a) is a national bank or a banking institution
organized under the laws of any state, U.S. territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the state or territorial
banking commission or similar official or is a foreign bank or
equivalent institution, and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements, a copy of which is attached hereto, as of a date not
more than 16 months preceding the date of sale of the
- - --------
(1) Transferee must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Transferee is a dealer, and, in that case,
Transferee must own and/or invest on a discretionary basis at least $10,000,000
in securities.
F-2C-4
<PAGE>
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.
___ 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.
___ Other. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under subsection
(a)(1) of Rule 144A pursuant to which it qualifies. Note that
registered investment companies should complete Annex 2 rather than
this Annex 1.) ____________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
3. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Transferee, (ii) securities that are part
of an unsold allotment to or
F-2C-5
<PAGE>
subscription by the Transferee, if the Transferee is a dealer, (iii) bank
deposit notes and certificates of deposit, (iv) loan participations, (v)
repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps. For purposes of
determining the aggregate amount of securities owned and/or invested on a
discretionary basis by the Transferee, the Transferee did not include any of the
securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Transferee, the Transferee used
the cost of such securities to the Transferee, unless the Transferee reports its
securities holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of those securities
has been published, in which case the securities were valued at market. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Transferee acknowledges that it is familiar with Rule 144A and
understands that the Transferor and other parties related to the Transferred
Certificates are relying and will continue to rely on the statements made herein
because one or more sales to the Transferee may be in reliance on Rule 144A.
___ ___ Will the Transferee be purchasing the Transferred
Yes No 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.
F-2C-6
<PAGE>
7. The Transferee will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Transferee's purchase of the Transferred
Certificates will constitute a reaffirmation of this certification as of the
date of such purchase. In addition, if the Transferee is a bank or savings and
loan as provided above, the Transferee agrees that it will furnish to such
parties any updated annual financial statements that become available on or
before the date of such purchase, promptly after they become available.
____________________________________
Print Name of Transferee
By: ________________________________
Name: _________________________
Title: ________________________
Date: _________________________
F-2C-7
<PAGE>
ANNEX 2 TO EXHIBIT F-2C
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 for the benefit of Structured Asset Securities
Corporation with respect to the mortgage pass-through certificates being
transferred in book-entry form (the "Transferred Certificates") as described in
the Transferee certificate to which this certification relates and to which this
certification is an Annex:
1. As indicated below, the undersigned is the chief financial officer, a
person fulfilling an equivalent function, or other executive officer of the
entity purchasing the Transferred Certificates (the "Transferee") or, if the
Transferee is a "qualified institutional buyer" as that term is defined in Rule
144A under the Securities Act of 1933, as amended ("Rule 144A"), because the
Transferee is part of a Family of Investment Companies (as defined below), is an
executive officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in Rule
144A because (i) the Transferee is an investment company registered under the
Investment Company Act of 1940, as amended, and (ii) as marked below, the
Transferee alone owned and/or invested on a discretionary basis, or the
Transferee's Family of Investment Companies owned, at least $100,000,000 in
securities (other than the excluded securities referred to below) as of the end
of the Transferee's most recent fiscal year. For purposes of determining the
amount of securities owned by the Transferee or the Transferee's Family of
Investment Companies, the cost of such securities was used, unless the
Transferee or any member of the Transferee's Family of Investment Companies, as
the case may be, reports its securities holdings in its financial statements on
the basis of their market value, and no current information with respect to the
cost of those securities has been published, in which case the securities of
such entity were valued at market.
____ The Transferee owned and/or invested on a discretionary basis
$___________________ in securities (other than the excluded
securities referred to below) as of the end of the Transferee's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
____ The Transferee is part of a Family of Investment Companies which
owned in the aggregate $______________ in securities (other than the
excluded securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
F-2C-8
<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 the Transferred
Yes No 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-2C-9
<PAGE>
____________________________________
Print Name of Transferee or Adviser
By: ________________________________
Name: ________________________
Title: _______________________
IF AN ADVISER:
____________________________________
Print Name of Transferee
Date: ______________________________
F-2C-10
<PAGE>
EXHIBIT F-2D
FORM II OF TRANSFEREE CERTIFICATE
FOR TRANSFERS OF INTERESTS IN BOOK-ENTRY PRIVATE CERTIFICATES
____________, 19__
[TRANSFEROR]
Re: [LB Commercial Mortgage Trust ____], Commercial Mortgage
Pass-Through Certificates, Series __________, Class__, [having
an initial aggregate Certificate Principal Balance as of
____________________ (the "Closing Date") of $__________]
[evidencing a ___% Percentage Interest in the related Class]
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
____________________ (the "Transferor") to _________________________ (the
"Transferee") through our respective Depository Participants of the Transferor's
beneficial ownership interest (currently maintained on the books and records of
The Depository Trust Corporation ("DTC") and the Depository Participants) in the
captioned Certificates (the "Transferred Certificates"), which were issued
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of ____________________, among Structured Asset Securities
Corporation, as Depositor, ________________________, as Master Servicer,
__________________, as Special Servicer, _________________________, as Trustee,
and _________________________, as Fiscal Agent. 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 and agrees with you, and for the benefit of the Depositor, that:
1. The Transferee is acquiring the Transferor's beneficial ownership
interest in the Transferred Certificates for its own account for investment and
not with a view to or for sale or transfer in connection with any distribution
thereof, in whole or in part, in any manner which would violate the Securities
Act of 1933, as amended (the "Securities Act"), or any applicable state
securities laws.
2. The Transferee understands that (a) the 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) none of the Depositor,
the Trustee or the Certificate Registrar is obligated so to register or qualify
the Transferred Certificates, and (c) no interest in the Transferred
<PAGE>
Certificates may be resold or transferred unless (i) such Certificates are
registered pursuant to the Securities Act and registered or qualified pursuant
any applicable state securities laws, or (ii) such interest is sold or
transferred in a transaction which is exempt from such registration and
qualification and the Certificate Owner desiring to effect such transfer has
received (A) a certificate from such Certificate Owner's prospective transferee
substantially in the form attached either as Exhibit F-2C or as Exhibit F-2D to
the Pooling and Servicing Agreement or (B) an opinion of counsel to the effect
that such transfer may be made without registration under the Securities Act.
3. The Transferee understands that it may not sell or otherwise transfer
the Transferred Certificates or any interest therein 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 the following legends:
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF
ANY STATE. ANY RESALE, 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 TO (A)
ANY EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT
TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"), OR (B) 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 EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
4. Neither the Transferee nor anyone acting on its behalf has (a) offered,
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
F-2D-2
<PAGE>
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) 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)
the nature, performance and servicing of the Mortgage Loans, (d) the Pooling and
Servicing Agreement and the Trust Fund created pursuant thereto, (e) any credit
enhancement mechanism associated with the Transferred Certificates, and (f) all
related matters, that it has requested.
6. The Transferee is an "accredited investor" as defined in any of
paragraphs (1), (2), (3) and (7) of Rule 501(a) under the Securities Act or an
entity in which all of the equity owners come within such paragraphs. The
Transferee has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment in the
Transferred Certificates; the Transferee has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision; and the Transferee is able to bear the economic risks of such
investment and can afford a complete loss of such investment.
Very truly yours,
____________________________________
(Transferee)
By: ________________________________
Name: _________________________
Title: ________________________
F-2D-3
<PAGE>
EXHIBIT G-1
FORM I OF TRANSFEREE CERTIFICATE
IN CONNECTION WITH ERISA (DEFINITIVE SUBORDINATED CERTIFICATES)
[Date]
[CERTIFICATE REGISTRAR]
Re: [LB Commercial Mortgage Trust ____], Commercial Mortgage Pass-
Through Certificates, Series ________ (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
Class ______ Certificates [having an initial aggregate Certificate Principal
Balance as of ______________ (the "Closing Date") of $__________] [evidencing a
____% Percentage Interest in the related Class] (the "Transferred
Certificates"). The Certificates, including the Transferred Certificates, were
issued pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of ____________________, among Structured Asset
Securities Corporation, as depositor, ______________________________, as master
servicer, _____________________, as special servicer, _________________________,
as trustee, and _________________________, as fiscal agent. 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 (A) is not an employee benefit plan or other retirement
arrangement, including an individual retirement account or annuity, a
Keogh plan or a collective investment fund or separate account in which
such plans, accounts or arrangements are invested, including, without
limitation, an insurance company general account, that is subject to ERISA
or the Code (each, a "Plan"), and (B) is not directly or indirectly
purchasing the Transferred Certificates on behalf of, as named fiduciary
of, as trustee of, or with assets of a Plan; or
___ 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.
G-1-1
<PAGE>
Very truly yours,
____________________________________
(Transferee)
By: ________________________________
Name:
Title:
G-1-1
<PAGE>
EXHIBIT G-2
FORM II OF TRANSFEREE CERTIFICATE
IN CONNECTION WITH ERISA
(BOOK-ENTRY NON-REGISTERED CERTIFICATES)
[Date]
[TRANSFEROR]
Re: [LB Commercial Mortgage Trust ____], Commercial Mortgage Pass-
Through Certificates, Series ________ (the "Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
______________________ (the "Transferor") to _________________ (the
"Transferee") through our respective Depository Participants of the Transferor's
beneficial ownership interest (currently maintained on the books and records of
The Depository Trust Corporation ("DTC") and the Depository Participants) in
Class ___ Certificates [having an initial aggregate Certificate Principal
Balance as of ____________________ (the "Closing Date") of $__________]
[evidencing a ____% Percentage Interest in the related Class] (the "Transferred
Certificates"). The Certificates, including the Transferred Certificates, were
issued pursuant to the Pooling and Servicing Agreement, dated as of
____________________ (the "Pooling and Servicing Agreement"), among Structured
Asset Securities Corporation, as depositor, ___________________________, as
master servicer, ____________________, as special servicer,
______________________, as trustee, and ____________________, as fiscal agent.
All capitalized terms used but not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement. The
Transferee hereby certifies, represents and warrants to you as follows (check
the applicable paragraph):
___ The Transferee (A) is not an employee benefit plan or other retirement
arrangement, including an individual retirement account or annuity, a
Keogh plan or a collective investment fund or separate account in which
such plans, accounts or arrangements are invested, including, without
limitation, an insurance company general account, that is subject to ERISA
or the Code (each, a "Plan"), and (B) is not directly or indirectly
purchasing an interest in the Transferred Certificates on behalf of, as
named fiduciary of, as trustee of, or with assets of a Plan;
<PAGE>
___ The Transferee is using funds from an insurance company general account to
acquire an interest in the Transferred Certificates, however, the purchase
and holding of such interest by such Person is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the
Code under Sections I and III of Prohibited Transaction Class Exemption
95-60; or
Very truly yours,
____________________________________
(Transferee)
By: ________________________________
Name:
Title:
G-2-2
<PAGE>
EXHIBIT H-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
REGARDING 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 [LB Commercial Mortgage Trust
____], 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".
(For this purpose, a "disqualified organization" means (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 the Federal Home Loan Mortgage Corporation, 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), or
(iv) rural electric and telephone cooperatives described in Section 1381 of the
Code. The terms "United States", "State" and "international organization" shall
have the meanings set forth in Section 7701 of the Code or successor
provisions.)
<PAGE>
3. The Transferee is aware (i) of the tax that would be imposed on
transfers of the Residual Interest Certificates to "disqualified organizations"
under the Code that applies to all transfers of the Residual Interest
Certificates; (ii) that such tax would be on the transferor or, if such transfer
is through an agent (which Person includes a broker, nominee or middleman) for a
non-Permitted Transferee, on the agent; (iii) that the Person otherwise liable
for the tax shall be relieved of liability for the tax if the transferee
furnishes to such Person an affidavit that the transferee is a Permitted
Transferee and, at the time of transfer, such Person does not have actual
knowledge that the affidavit is false; and (iv) that the Residual 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.
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 Certificate will
only be owned, directly or indirectly, by a Permitted Transferee.
7. The Transferee's taxpayer identification number is _____________.
8. The Transferee has reviewed the provisions of Section 5.02(d) of
the Pooling and Servicing Agreement, a description of which provisions is set
forth in the Residual Interest Certificates (in particular, clause (ii)(A) of
Section 5.02(d) which authorizes the Trustee to deliver payments on the Residual
Interest Certificate to a Person other than the Transferee and clause (ii)(B) of
Section 5.02(d) which authorizes the Trustee to negotiate a mandatory
disposition of the Residual Interest Certificates, in either case, in the event
that the Transferee holds such Residual Interest Certificates in violation of
Section 5.02(d)); and the Transferee expressly agrees to be bound by and to
comply with such provisions.
H-1-2
<PAGE>
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 as contemplated by Treasury
regulation Section 1.860E-1(c)(4)(i) and has satisfied the requirements of such
provision.
12. The Transferee is a "United States person". A "United States
person" is a citizen or resident of the United States, a corporation, a
partnership or other entity created or organized in, or under the laws of, the
United States or any political subdivision thereof, or an estate 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, all within the
meaning of Section 7701(a)(30) of the Code.
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
___________, 19__.
H-1-4
<PAGE>
EXHIBIT H-2
FORM OF TRANSFEROR CERTIFICATE
REGARDING RESIDUAL INTEREST CERTIFICATES
[Date]
[CERTIFICATE REGISTRAR]
Re: Lehman Brothers Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series ________________ (the
"Certificates")
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
_________________ (the "Transferor") to _________________ (the "Transferee") of
[Class R-I] [Class R-II] [Class R-III] Certificates evidencing a ____%
Percentage Interest in such Class (the "Residual Interest Certificates"). The
Certificates, including the Residual Interest Certificates, were issued pursuant
to the Pooling and Servicing Agreement, dated as of ____________________ (the
"Pooling and Servicing Agreement"), among Structured Asset Securities
Corporation, as depositor, ________________________, as master servicer,
____________________, as special servicer, _________________________, as
trustee, and ____________________, as fiscal agent. 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.
3. The Transferor has at the time of this transfer conducted a
reasonable investigation of the financial condition of the Transferee as
contemplated by Treasury regulation Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Transferor has determined that the Transferee has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Transferee will not continue to pay its debts as
they become due in
<PAGE>
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 AGENCY #1] [RATING AGENCY #2]
Ladies and Gentlemen:
This notice is being delivered pursuant to Section 6.09 of the Pooling and
Servicing Agreement, dated as of ____________________ and relating to [LB
Commercial Mortgage Trust ____], 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 you deliver 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 by you to one or more Classes of the Certificates.
Accordingly, such confirmation is hereby requested as soon as possible.
<PAGE>
Please acknowledge receipt of this notice by signing the enclosed copy of
this notice where indicated below and returning it to the Trustee, in the
enclosed stamped self-addressed envelope.
Very truly yours,
_________________________________,
as Trustee
By: _____________________________
Name:
Title:
Receipt acknowledged:
[RATING AGENCY #1] [RATING AGENCY #2]
By: ________________________________ By: ________________________________
Name: Name:
Title: Title:
Date: Date:
I-1-2
<PAGE>
EXHIBIT I-2
FORM OF ACKNOWLEDGMENT OF PROPOSED SPECIAL SERVICER
[Date]
[TRUSTEE]
[MASTER SERVICER]
[DEPOSITOR]
[REMIC ADMINISTRATOR]
Re: [LB Commercial Mortgage Trust ____], Commercial Mortgage
Pass-Through Certificates, Series ________________
Ladies and Gentlemen:
Pursuant to Section 6.09 of the Pooling and Servicing Agreement, dated as
of ____________________, relating to [LB Commercial Mortgage Trust ____],
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 3.24 of the Agreement, with the following
corrections with respect to type of entity and jurisdiction of organization:
____________________.
___________________________________
By: _______________________________
Name: _____________________________
Title: ____________________________
<PAGE>
EXHIBIT J
FORM OF UCC-1 FINANCING STATEMENT
<PAGE>
SCHEDULE 1 to EXHIBIT J
This Exhibit 1 is attached to and incorporated in a financing
statement pertaining to Structured Asset Securities Corporation 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 (the "Master Servicer"),
_______________________ as special servicer (the "Special Servicer"), and
___________________________ as fiscal agent (the "Fiscal Agent"), 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 loans (the "Mortgage Loans") listed on the Mortgage
Loan Schedule attached hereto as Exhibit A;
(2) the note or other evidence of indebtedness (the "Mortgage Note")
of the related borrower (the "Mortgagor") under each Mortgage Loan, the related
mortgage, deed of trust or other similar instrument securing such Mortgage Note
(the "Mortgage") and each other legal, credit and servicing document related to
such Mortgage Loan (collectively with the related Mortgage Note and Mortgage,
the "Mortgage Loan Documents");
(3) (a) the Custodial Account required to be maintained by the
Master Servicer pursuant to the Pooling and Servicing Agreement, (b) all funds
from time to time on deposit in the Custodial 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;
(4) All REO Property;
(5) (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,
J-2
<PAGE>
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;
(6) (a) the Servicing Account(s) and Reserve Account(s) required to
be maintained by the Master Servicer and/or the 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);
(7) (a) the Collection 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 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;
(8) 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 pursuant to the Pooling and Servicing Agreement;
(9) any and all general intangibles (as defined in the Uniform
Commercial Code) consisting of, arising from or relating to any of the
foregoing; and
(10) any and all income, payments, proceeds and products of any of
the foregoing.
THE DEBTOR AND THE SECURED PARTY INTEND THE TRANSACTIONS CONTEMPLATED BY THE
POOLING AND SERVICING AGREEMENT TO CONSTITUTE A SALE OF ALL THE DEBTOR'S RIGHT,
TITLE AND INTEREST IN, TO AND UNDER THE MORTGAGE LOANS, THE MORTGAGE NOTES, THE
RELATED MORTGAGES AND THE OTHER RELATED MORTGAGE LOAN DOCUMENTS EVIDENCED BY THE
SERIES ________________ CERTIFICATES, AND THIS FILING SHOULD NOT BE CONSTRUED AS
A CONCLUSION THAT A SALE HAS NOT OCCURRED. THE REFERENCES HEREIN TO MORTGAGE
NOTES SHOULD NOT BE CONSTRUED AS A CONCLUSION THAT ANY MORTGAGE NOTE IS NOT AN
INSTRUMENT WITHIN THE MEANING OF THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN
ANY APPLICABLE JURISDICTION, OR THAT A FILING IS NECESSARY TO PERFECT THE
OWNERSHIP OR SECURITY INTEREST OF THE SECURED PARTY WITH RESPECT TO THE MORTGAGE
LOANS OR IN ANY MORTGAGE NOTE, MORTGAGE OR OTHER MORTGAGE LOAN DOCUMENT IN A
MORTGAGE FILE. 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 MEANING OF THE UNIFORM
COMMERCIAL CODE, AS IN
J-3
<PAGE>
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. WITH RESPECT TO THE
FOREGOING, THIS FILING IS MADE ONLY IN THE EVENT OF CONTRARY ASSERTIONS BY THIRD
PARTIES.
J-4
<PAGE>
Exhibit A to SCHEDULE 1 OF EXHIBIT J
MORTGAGE LOAN SCHEDULE
J-5
<PAGE>
EXHIBIT K
FORM OF SCHEDULE OF INITIAL CERTIFICATE OWNERS OF EACH CLASS OF
BOOK-ENTRY CERTIFICATES
<PAGE>
EXHIBIT L
FORM OF CSSA LOAN FILE REPORT
<PAGE>
EXHIBIT M
FORM OF CSSA PROPERTY FILE REPORT
<PAGE>
EXHIBIT N
FORM OF COMPARATIVE FINANCIAL STATUS REPORT
<PAGE>
EXHIBIT O
FORM OF REO STATUS REPORT
<PAGE>
EXHIBIT P
FORM OF WATCH LIST REPORT
<PAGE>
EXHIBIT Q
FORM OF DELINQUENT LOAN STATUS REPORT
<PAGE>
EXHIBIT R
FORM OF HISTORICAL LOAN MODIFICATION REPORT
<PAGE>
EXHIBIT S
FORM OF HISTORICAL LOSS ESTIMATE REPORT
<PAGE>
EXHIBIT T
FORM OF NOI ADJUSTMENT WORKSHEET
<PAGE>
EXHIBIT U
FORM OF OPERATING STATEMENT ANALYSIS
<PAGE>
EXHIBIT V
FORM OF LOAN PAYOFF NOTIFICATION REPORT
<PAGE>
Exhibit 5.1
CADWALADER, WICKERSHAM & TAFT
100 Maiden Lane
New York, NY 10038
Telephone: (212) 504-6000
Facsimile: (212) 504-6666
March 20, 1998
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Mortgage Backed Certificates and Collateralized Mortgage
Obligations
--------------------------------------------------------
Gentlemen:
We have acted as your counsel in connection with the Registration
Statement on Form S-3 (the "REGISTRATION STATEMENT"), which Registration
Statement is being filed with the Securities and Exchange Commission (the
"COMMISSION") pursuant to the Securities Act of 1933, as amended (the "ACT").
The Prospectus describes Mortgage Backed Certificates ("CERTIFICATES") and
Collateralized Mortgage Obligations ("Bonds") to be sold by Structured Asset
Securities Corporation (the "DEPOSITOR") in one of more series (each, a
"SERIES") of Certificates or Bonds, as applicable. Each Series of Certificates
will be issued under a separate pooling and servicing agreement (each a "POOLING
AND SERVICING AGREEMENT") among the Depositor, a master servicer (a "SERVICER"),
a trustee (a "TRUSTEE") and, if applicable, such other parties to be identified
in the related Prospectus Supplement for such Series. Each Series of Bonds will
be issued under a separate indenture (each, an "INDENTURE") between the
Depositor or a trust formed by the Depositor (in either case, the "ISSUER"), an
indenture trustee (an "INDENTURE TRUSTEE") and, if applicable, such other
parties to be identified in the related Prospectus Supplement for such Series.
Capitalized terms used and not otherwise defined herein have the respective
meanings given to such terms in the Registration Statement.
In rendering the opinions set forth below, we have examined and relied
upon the following: (1) the Registration Statement, the Prospectus and each
form of Prospectus Supplement constituting a part thereof, each substantially in
the form filed with the Commission; and (2) such other documents, materials and
authorities as we have deemed
<PAGE>
necessary in order to enable us to render our opinion set forth below. We
express no opinion with respect to any Series of Certificates for which we do
not act as counsel to the Depositor.
Based on the foregoing, we are of the opinion that:
1. When a Pooling and Servicing Agreement for a Series of
Certificates has been duly and validly authorized, executed and
delivered by the Depositor, a Servicer, a Trustee and any other party
thereto, such Pooling and Servicing Agreement will constitute a valid
and legally binding agreement of Depositor, enforceable against the
Depositor in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
affecting the enforcement of rights of creditors generally and to
general principles of equity and the discretion of the court
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
2. When an Indenture for a Series of Bonds has been duly and
validly authorized, executed and delivered by the Depositor, an
Indenture Trustee and any other party thereto, such Indenture will
constitute a valid and legally binding agreement of the Issuer,
enforceable against the Issuer in accordance with its terms, subject
to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the enforcement of rights of creditors generally
and to general principles of equity and the discretion of the court
(regardless of whether enforceability is considered in a proceeding in
equity or at law).
3. When a Pooling and Servicing Agreement for a Series of
Certificates has been duly and validly authorized, executed and
delivered by the Depositor, a Servicer, a Trustee and any other party
thereto, and the Certificates of such Series have been duly executed,
authenticated, delivered and sold as contemplated in the Registration
Statement, such Certificates will be legally and validly issued, fully
paid and nonassessable, and the holders of such Certificates will be
entitled to the benefits of such Pooling and Servicing Agreement.
4. When an Indenture for a Series of Bonds has been duly and
validly authorized, executed and delivered by the Issuer, an Indenture
Trustee and any other party thereto, and the Bonds of such Series have
been duly executed, authenticated, delivered and sold as contemplated
in the Registration Statement, such Bonds will be legally and validly
issued, fully paid and nonassessable obligations of the Issuer,
enforceable against the Issuer in accordance with its terms, subject
to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the enforcement of rights of creditors generally
and to general principles of equity and the discretion of the court
(regardless of whether enforceability is considered in a proceeding in
-2-
<PAGE>
equity or at law), and the holders of such Bonds will be entitled to
the benefits of such Indenture.
5. The description of federal income tax consequences appearing
under the heading "Federal Income Tax Considerations" in the
Prospectus accurately describes the material federal income tax
consequences to holders of Offered Certificates or Offered Bonds, as
applicable, under existing law and subject to the qualifications and
assumptions stated therein.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to this firm under the headings
"Legal Matters" and "Federal Income Tax Considerations" in the Prospectus, which
is a part of the Registration Statement. This consent is not to be construed as
an admission that we are a person whose consent is required to be filed with the
Registration Statement under the provisions of the Act.
Very truly yours,
/s/ Cadwalader, Wickersham & Taft
-3-
<PAGE>
Exhibit 5.2
SIDLEY & AUSTIN
875 Third Avenue
New York, New York 10022
Telephone: (212) 906-2000
Facsimile: (212) 906-2021
March 20, 1998
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Structured Asset Securities Corporation
Mortgage-Backed Securities
Registration Statement on Form S-3
---------------------------------------
Ladies and Gentlemen:
We have acted as counsel for Structured Asset Securities Corporation,
a Delaware corporation (the "Registrant"), in connection with the registration
statement on Form S-3 (the "Registration Statement") filed by the Registrant on
March 20, 1998 with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933 (the "Act") with respect to the Registrant's
Mortgage-Backed Securities (the "Securities") to be issued from time to time.
The Registration Statement relates to the registration under the Act of
Securities consisting of either (i) collateralized mortgage obligations
("Bonds") that will evidence the indebtedness of the Registrant or,
alternatively, owner trusts established by the Registrant (each, an "Owner
Trust") or (ii) mortgage pass-through certificates ("Certificates") that will
represent interests in trust funds established by the Registrant, in each case
as described in the Registration Statement. The Securities are issuable in one
or more series (each, a "Series") under (i) with respect to each Series of
Bonds, a separate trust indenture (a "Trust Indenture", and together with any
supplements thereto, an "Indenture") between the Registrant or, alternatively,
the Owner Trust identified therein (acting through the owner trustee (the "Owner
Trustee") named therein) and the trustee named therein, and (ii) with respect to
each series of Certificates, a separate pooling and servicing agreement (a
"Pooling and Servicing Agreement") among the Registrant, the servicer or master
servicer named therein, the special servicer (if any) named therein, the fiscal
agent (if any) named therein, the REMIC administrator (if any) named therein and
the trustee named therein. The Securities of each Series are to be sold as
described in the Registration
<PAGE>
Structured Asset Securities Corporation
March 20, 1998
Page 2
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 which were
not known to us, we have relied upon certificates, statements and
representations of officers and other representatives of the Registrant and
others.
In rendering this opinion, we have assumed that: the Pooling and
Servicing Agreement with respect to each Series of Certificates is executed and
delivered substantially in the form included as Exhibit 4.1 to the Registration
Statement; the Trust Indenture with respect to each Series of Bonds is executed
and delivered substantially in the form included as Exhibit 4.2 to the
Registration Statement; and the transactions contemplated to occur under the
Registration Statement and the Pooling and Servicing Agreement or Indenture, as
the case may be, with respect to any Series of Securities in fact occur in
accordance with the terms thereof.
Furthermore, in rendering this opinion, we have also assumed that:
each party to the Pooling and Servicing Agreement or Indenture, as the case may
be, with respect to each Series of Securities will have been duly organized and
will be validly existing and in good standing under the jurisdiction of its
organization; and each party to such Pooling and Servicing Agreement or
Indenture, as the case may be, will possess the power and authority to enter
into and perform all of such party's obligations thereunder.
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 each Series of Securities
have been duly authorized by appropriate corporate action by the Registrant
and, in the case of Bonds issued by an Owner Trust, the applicable Owner
Trustee on behalf of such Owner Trust,
<PAGE>
Structured Asset Securities Corporation
March 20, 1998
Page 3
(iii) the Pooling and Servicing Agreement or Indenture, as the case
may be, with respect to such Series of Securities has been duly authorized
by all necessary action and executed and delivered by or on behalf of each
party thereto, and
(iv) the Securities of such Series have been duly executed,
authenticated and delivered in accordance with the terms and conditions of
the Pooling and Servicing Agreement or Indenture, as the case may be,
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 Securities of such Series will be legally and validly issued and
outstanding, fully paid and non-assessable and, in the case of Bonds, will be
binding obligations of the Registrant, or alternatively, in the case of Bonds
issued by an Owner Trust, the applicable Owner Trust, 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 and in the Prospectus Supplement relating to
each Series of Securities 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 promulgated 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 do not express any opinion, either implicitly or otherwise, on
any issue not expressly addressed above.
Very truly yours,
/s/ Sidley & Austin
<PAGE>
Exhibit 5.3
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue
New York 10022-3879
Tel: (212) 735-3000
Fax: (212) 735-2000
March 20, 1998
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Registration Statement on Form S-3 relating to
Mortgage-Backed Securities
----------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Structured Asset Securities
Corporation, a Delaware corporation (the "Depositor"), in connection with the
preparation of the Depositor's registration statement on Form S-3 (the
"Registration Statement"), to be filed on even date herewith with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), for the registration under the Act of Collateralized Mortgage
Obligations (the "Bonds"), to be issued in series (each a "Series"), pursuant to
a trust indenture with respect to such Series (a "Trust Indenture") and the
supplemental indenture with respect to each such Series (the "Series
Supplement," together with the Trust Indenture, the "Indenture") between the
Depositor and the entity named as trustee therein (the "Trustee"), and
Mortgage-Backed Certificates (the "Certificates"), to be issued in series (each,
a "Series"), pursuant to a trust agreement or pooling and servicing agreement
with respect to each such Series (each, a "Trust Agreement"), among the
Depositor, the entity, if any, named as the master servicer therein (the "Master
Servicer"), the Trustee and the entity, if any, named as the REMIC
Administrator.
We have examined and are familiar with originals or copies, certified
or otherwise identified to our satisfaction, of (i) the certificate of
incorporation, by-laws and other corporate documents of the Depositor; (ii)
certain resolutions of the Board of Directors of the Depositor; (iii) the form
of Trust Agreement filed as an exhibit to the Registration Statement (including
the forms of the Certificates annexed as exhibits thereto); (iv) the form of
Indenture filed as an exhibit to the Registration Statement (including the forms
of Bonds annexed as exhibits thereto); (v) the
<PAGE>
Registration Statement; and (vi) such other documents as we have deemed
necessary or appropriate as a basis for the opinions set forth below.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. As to any facts material to such
opinions which we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of the
Depositor and of public officials and agencies.
Members of our firm are admitted to the bar in the States of New York
and Delaware, and we express no opinion as to the laws of any jurisdiction other
than the laws of such states and the United States of America, as applicable.
Based upon and subject to the foregoing, we are of the opinion that:
(i) each Series of Certificates, when duly executed by the
Depositor, authenticated by the Trustee and delivered against payment
therefor in accordance with the terms of the Trust Agreement pursuant to
which such Series is issued, will be validly issued and outstanding, and
fully paid and nonassessable, and the holders of such Securities will be
entitled to the benefits of such Trust Agreement; and
(ii) each Series of Bonds, when duly executed by the Trustee
and delivered against payment therefor in accordance with the terms of the
Indenture pursuant to which such Series is issued, will be validly issued
and outstanding, and fully paid, and the holders of such Bonds will be
entitled to the benefits of such Indenture except that the enforceability
thereof may be subject to (a) bankruptcy, insolvency, receivership,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to Skadden, Arps, Slate, Meagher &
Flom included in the Registration Statement.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE>
Exhibit 5.4
Thacher Proffitt & Wood
Two World Trade Center
New York, New York 10048
Tel: (212) 912-7400
Fax: (212) 912-7751/52
March 20, 1998
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Structured Asset Securities Corporation
Collateralized Mortgage Obligations
and Mortgage-Backed Certificates;
Registration Statement on Form S-3
---------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Structured Asset Securities
Corporation, a Delaware corporation (the "Registrant"), in connection with the
registration under the Securities Act of 1933, as amended (the "Act"), of
Mortgage-Backed Certificates ("Certificates") and Collateralized Mortgage
Obligations ("Bonds"; and together with Certificates, "Securities"), and the
related preparation and filing of a Registration Statement on Form S-3 (the
"Registration Statement"). The Certificates are issuable in series pursuant to
separate pooling and servicing agreements (each such agreement, a "Pooling and
Servicing Agreement"), among the Registrant, the master servicer named therein,
the special servicer (if any) named therein, the fiscal agent (if any) named
therein, the REMIC administrator (if any) named therein and the trustee to be
identified in the prospectus supplement for such series of Certificates. Each
Trust Agreement will be substantially in the form filed as an Exhibit to the
Registration Statement. The Bonds are issuable in series pursuant to an
indenture and a related series supplement (together, an "Indenture"), between an
issuer, either the Registrant or an owner trust established by it (the "Owner
Trust"), and an indenture trustee, each to be identified in the prospectus
supplement for such series of Bonds. Each Indenture will be substantially in
the form filed as an Exhibit to the Registration Statement.
<PAGE>
Structured Asset Securities Corporation
March 20, 1998 Page 2.
In connection with rendering this opinion letter, we have examined the
forms of the Trust Agreement and Indenture contained as Exhibits in the
Registration Statement, the Registration Statement and such records and other
documents as we have deemed necessary. As to matters of fact, we have examined
and relied upon representations or certifications of officers of the Registrant
or public officials. We have assumed the authenticity of all documents
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all
documents. We have assumed that all parties, other than the Registrant, had the
corporate power and authority to enter into and perform all obligations
thereunder, and, as to such parties, we also have assumed the enforceability of
such documents.
In rendering this opinion letter, we express no opinion as to the laws
of any jurisdiction other than the laws of the State of New York, nor do we
express any opinion, either implicitly or otherwise, on any issue not expressly
addressed below. In rendering this opinion letter, we have not passed upon and
do not pass upon the application of "doing business" or the securities laws of
any jurisdiction. This opinion letter is further subject to the qualification
that enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other laws affecting the enforcement
of the rights of creditors generally and (ii) general principles of equity,
whether enforcement is sought in a proceeding in equity or at law.
Based on the foregoing, we are of the opinion that:
1. When a Trust Agreement for a series of Certificates has been duly
authorized by all necessary action and duly executed and delivered by the
parties thereto, such Trust Agreement will be a legal and valid obligation of
the Registrant.
2. When an Indenture for a series of Bonds has been duly authorized
by all necessary action and duly executed and delivered by the parties thereto,
such Indenture will be a legal and valid obligation of the applicable issuer.
3. When a Trust Agreement for a series of Certificates has been duly
authorized by all necessary action and duly executed and delivered by the
parties thereto, and when the Certificates of such series have been duly
executed and authenticated in accordance with the provisions of that Trust
Agreement, and issued and sold as contemplated in the Registration Statement and
the prospectus and prospectus supplements delivered in connection therewith,
such Certificates will be legally and validly issued and outstanding, fully paid
and non-assessable, and the holders of such Certificates will be entitled to the
benefits of that Trust Agreement.
4. When an Indenture for a series of Bonds has been duly authorized
by all necessary action and duly executed and delivered by the parties thereto,
and when the Bonds of such series have been duly executed and authenticated in
accordance with the provisions of that Indenture, and issued and sold as
contemplated in the Registration Statement and the prospectus and prospectus
supplements delivered in connection therewith, such Bonds will be legally and
validly issued and
<PAGE>
Structured Asset Securities Corporation
March 20, 1998 Page 3.
outstanding, fully paid and non-assessable, and will be binding obligations of
the applicable issuer, and the holders of such Bonds will be entitled to the
benefits of that Indenture.
5. The description of federal income tax consequences appearing
under the heading "Federal Income Tax Considerations" in the prospectus
contained in the Registration Statement, while not purporting to discuss all
possible federal income tax consequences of an investment in Securities, is
accurate with respect to those tax consequences which are discussed.
We hereby consent to the filing of this opinion letter as an Exhibit
to the Registration Statement, and to the use of our name in the prospectus
included in the Registration Statement under the heading "Legal Matters", and in
the prospectus supplements relating to each series of Securities with respect to
which we act as counsel to the Registrant under the headings "Legal Matters" and
"Federal Income Tax Considerations", without admitting that we are "experts"
within the meaning of the Act, and the rules and regulations thereunder, with
respect to any part of the Registration Statement, including this Exhibit.
Very truly yours,
THACHER PROFFITT & WOOD
-----------------------------------
/s/ Thacher Proffitt & Wood
<PAGE>
Exhibit 8.2
SIDLEY & AUSTIN
875 Third Avenue
New York, New York 10022
Telephone: (212) 906-2000
Facsimile: (212) 906-2021
March 20, 1998
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Structured Asset Securities Corporation
Mortgage-Backed Securities
Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel for Structured Asset Securities Corporation,
a Delaware corporation (the "Registrant"), in connection with the registration
statement on Form S-3 (the "Registration Statement") filed by the Registrant on
March 20, 1998 with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933 (the "Act") with respect to the Registrant's
Mortgage-Backed Securities (the "Securities") to be issued from time to time.
The Registration Statement relates to the registration under the Act of
Securities consisting of either (i) collateralized mortgage obligations
("Bonds") that will evidence the indebtedness of the Registrant or,
alternatively, owner trusts established by the Registrant (each, an "Owner
Trust") or (ii) mortgage pass-through certificates ("Certificates") that will
represent interests in trust funds established by the Registrant, in each case
as described in the Registration Statement. The Securities are issuable in one
or more series (each, a "Series") under (i) with respect to each Series of
Bonds, a separate trust indenture (a "Trust Indenture", and together with any
supplements thereto, an "Indenture") between the Registrant or, alternatively,
the Owner Trust identified therein (acting through the owner trustee named
therein) and the trustee named therein, and (ii) with respect to each series of
Certificates, a separate pooling and servicing agreement among the Registrant,
the servicer or master servicer named therein, the special servicer (if any)
named therein, the fiscal agent (if any) named therein, the REMIC administrator
(if any) named therein and the trustee named therein. The Securities of each
Series are to be sold
<PAGE>
Structured Asset Securities Corporation
March 20, 1998
Page 2
as described in the Registration Statement, in any amendment thereto and in the
prospectus and prospectus supplement relating to such Series ("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 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, although it does
not discuss all federal income tax consequences that may be applicable to the
individual circumstances of particular investors (some of which may be subject
to special treatment under the Internal Revenue Code of 1986), the description
set forth under the caption "Federal Income Tax Considerations" in the
Prospectus included as a part of the Registration Statement otherwise correctly
describes the material aspects of the federal income tax treatment of an
investment in a Series of Securities as to which a REMIC election has been made,
commonly applicable 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 will be referred to under the heading "Certain Federal
Income Tax Consequences" in the Prospectus Supplement relating to each Series of
Securities with respect to which we act as counsel to the Registrant, and we
hereby consent to such use of our name therein and to the use of this opinion
for filing with the Registration Statement as Exhibit 8.2 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
promulgated thereunder, with respect to any part of the Registration Statement,
including this opinion as an exhibit or otherwise.
<PAGE>
Structured Asset Securities Corporation
March 20, 1998
Page 3
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
<PAGE>
Exhibit 8.3
SKADDEN, ARPS, SLATE, MEAGHER & FLOM
919 Third Avenue
New York 10022-3879
Tel: (212) 735-3000
Fax: (212) 735-2000
March 20, 1998
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Registration Statement on Form S-3 relating to
Mortgage-Backed Securities
-----------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Structured Asset Securities
Corporation, a Delaware corporation (the "Depositor"), in connection with the
preparation of the Depositor's registration statement on Form S-3 (the
"Registration Statement"), to be filed on even date herewith with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act"), for the registration under the Act of Collateralized Mortgage
Obligations (the "Bonds"), to be issued in series (each a "Series"), pursuant to
a trust indenture with respect to such Series (a "Trust Indenture") and the
supplemental indenture with respect to each such Series (the "Series
Supplement," together with the Trust Indenture, the "Indenture") between the
Depositor and the entity named as trustee therein (the "Trustee"), and
Mortgage-Backed Certificates (the "Certificates"), to be issued in series (each
a "Series"), pursuant to a trust agreement with respect to each such Series
(each a "Trust Agreement"), among the Depositor, the entity, if any, named as
the master servicer therein (the "Master Servicer"), the Trustee and the entity,
if any, named as the REMIC Administrator.
We have examined and are familiar with originals or copies, certified
or otherwise identified to our satisfaction, of (i) the certificate of
incorporation, by-laws and other corporate documents of the Depositor; (ii)
certain resolutions of the Board of Directors of the Depositor; (iii) the form
of Trust Agreement filed as an exhibit to the Registration Statement (including
the forms of the Certificates annexed as exhibits thereto); (iv) the form of
Indenture filed as an exhibit to the Registration Statement (including the forms
of Bonds annexed as
<PAGE>
exhibits thereto); (v) the Registration Statement; and (vi) such other documents
as we have deemed necessary or appropriate as a basis for the opinions set forth
below.
In our examination, we have assumed the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such copies. As to any facts material to such
opinions which we did not independently establish or verify, we have relied upon
statements and representations of officers and other representatives of the
Depositor and of public officials and agencies.
Members of our firm are admitted to the bar in the States of New York
and Delaware, and we express no opinion as to the laws of any jurisdiction other
than the laws of such states and the United States of America, as applicable.
Based upon and subject to the foregoing, we are of the opinion that:
(i) In rendering our opinion, we have also considered and
relied upon the Internal Revenue Code of 1986, as amended (the "Code"),
administrative rulings, judicial decisions, regulations, and such other
authorities as we have deemed appropriate. The statutory provisions,
regulations, interpretations and other authorities upon which our opinion
is based are subject to change, and such changes could apply retroactively.
In addition, there can be no assurance that positions contrary to those
stated in our opinion will not be taken by the Internal Revenue Service.
Based on and subject to the foregoing, we hereby confirm that the
statements in the prospectus contained in the Registration Statement (the
"Prospectus") under the caption "Certain Federal Income Tax Considerations"
accurately describe the material federal income tax consequences to holders of
Offered Certificates, under existing law and the assumptions stated therein.
You should be aware, however, that our opinion represents our
conclusions as to the application of existing law. There can be no assurance
that contrary positions may not be taken by the Internal Revenue Service. We
also note that the Prospectus does not relate to a specific transaction.
Accordingly, the abovereferenced description of federal income tax consequences
may, under certain circumstances, require modification in the context of an
actual transaction.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the references to Skadden, Arps,
Slate, Meagher & Flom under the caption "Certain Federal Income Tax
Considerations" in the Prospectus.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
<PAGE>
This form T-1 applies to Registration
Statement No. 333-________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) |X|
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------
LaSalle National Bank
(Exact name of trustee as specified in its charter)
36-1521370
(I.R.S. Employer Identification No.)
135 South LaSalle Street, Suite 1625; Chicago, Illinois 60674
(Address, including zip code, of principal executive offices)
--------------------
Mr. Robert K. Quinn
Senior Vice President and General Counsel
Telephone: (312) 443-2010
135 South LaSalle Street
Chicago, Illinois 60674
(Name, address and telephone number of agent for service)
--------------------
One or more separate trusts to be
organized by
Structured Asset Securities Corporation
(Exact name of obligor as specified in its charter)
Delaware 74-2440850
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization of Identification No.)
registrant)
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
(Address, including zip code, of registrant's pincipal executive offices)
--------------------
All Collateralized Mortgage Obligations registered under Registration
Statement No. 333-________
(Title of the indenture securities)
<PAGE>
Item 1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it is
subject.
1. Comptroller of the Currency, Washington D.C.
2. Federal Deposit Insurance Corporation, Washington, D.C.
3. The Board of Governors of the Federal Reserve Systems, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor and Underwriters.
If the obligor or any underwriter for the obligor is an affiliate of the
trustee, describe each such affiliation.
Neither the obligor nor any underwriter for the obligor is an affiliate of the
trustee.
Item 3. Voting Securities of the Trustee.
Furnish the following information as to each class of voting securities of the
trustee:
Not applicable
<PAGE>
Item 4. Trusteeships under Other Indentures.
If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, furnish the following information:
(a) Title of the securities outstanding under each other indenture.
Not applicable
(b) A brief statement of the facts relied upon as a basis for the claim that no
conflicting interest within the meaning of Section 310(b)(1) of the Act arises
as a result of the trusteeship under such other indenture, including a statement
as to how the indenture securities will rank as compared with the securities
issued under such other indenture.
Not applicable
<PAGE>
Item 5. Interlocking Directorates and Similar Relationships with the Obligor or
Underwriters.
If the trustee or any of the directors or executive officers of the trustee is a
director, officer, partner, employee, appointee, or representative of the
obligor or of any underwriter for the obligor, identify each such person having
any such connection and state the nature of each such connection.
Not applicable
Item 6. Voting Securities of the Trustee Owned by the Obligor or its Officials.
Furnish the following information as to the voting securities of the trustee
owned beneficially by the obligor and each director, partner and executive
officer of the obligor.
Not applicable
Item 7. Voting Securities of the Trustee Owned by Underwriters or their
Officials.
Furnish the following information as to the voting securities of the trustee
owned beneficially by each underwriter for the obligor and each director,
partner, and executive officer of each such underwriter.
Not applicable
Item 8. Securities of the Obligor Owned or Held by the Trustee.
Furnish the following information as to securities of the obligor owned
beneficially or held as collateral security for obligations in default by the
trustee:
Not applicable
Item 9. Securities of the Underwriter Owned or Held by the Trustee.
If the trustee owns beneficially or holds as collateral security for obligations
in default any securities of an underwriter for the obligor, furnish the
following information as to each class of securities of such underwriter any of
which are so owned or held by the trustee.
Not applicable
Item 10. Ownership or Holdings by the Trustee of Voting Securities of Certain
Affiliates or Security Holders of the Obligor.
If the trustee owns beneficially or holds as collateral security for obligations
in default voting securities of a person who, to the knowledge of the trustee
(1) owns 10 percent or more of the voting securities of the obligor or (2) is an
affiliate, other than a subsidiary, of the obligor,
<PAGE>
furnish the following information as to the voting securities of such person.
Not applicable
Item 11. Ownership or Holdings by the Trustee of any Securities of a Person
owning 50 Percent or more of the Voting Securities of the Obligor.
If the trustee owns beneficially or holds as collateral security for obligations
in default any securities of a person who, to the knowledge of the trustee, owns
50 percent or more of the voting securities of the obligor, furnish the
following information as to each class of securities of such person any of which
are so owned or held by the trustee.
Not applicable
Item 12. Indebtedness of the Obligor to the Trustee.
If the obligor is indebted to the trustee, furnish the following information.
Not applicable
Item 13. Defaults by the Obligor.
a) State whether there is or has been a default with respect to the securities
under this indenture. Explain the nature of any such default.
Not applicable
b) If the trustee is a trustee under another indenture under which any other
securities, or certificates of interest or participation in any other
securities, of the obligor are outstanding, or is trustee for more than one
outstanding series of securities under the indenture, state whether there has
been a default under any such indenture or series, identify the indenture or
series affected, and explain the nature of any such default.
Not applicable
Item 14. Affiliations with the Underwriters.
If any underwriter is an affiliate of the trustee, describe each such
affiliation.
Not applicable
Item 15. Foreign Trustee.
Identify the order or rule pursuant to which the foreign trustee is authorized
to act as sole trustee
<PAGE>
under indentures qualified or to be qualified.
Not applicable
<PAGE>
Item 16. List of Exhibits.
List below all exhibits filed as part of this statement of eligibility and
qualification.
1. A copy of the Articles of Association of LaSalle National Bank now in effect.
2. A copy of the certificate of authority to commence business.
3. A copy of the authorization to exercise corporate trust powers.
4. A copy of the existing By-Laws of LaSalle National Bank.
5. Not applicable.
6. The consent of the trustee required by Section 321(b) of the Trust Indenture
Act of 1939.
7. A copy of the latest report of condition of the trustee published pursuant to
law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
LaSalle National Bank, a corporation organized and existing under the laws of
the United States of America, has duly caused this statement of eligibility and
qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Chicago, State of Illinois, on the 20th day of
March 1998.
LaSalle National Bank
By: /s/ Cynthia Reis
---------------------------
Cynthia Reis
Vice President
<PAGE>
EXHIBIT 1
ARTICLES OF ASSOCIATION
<PAGE>
ARTICLES
OF
ASSOCIATION
LA SALLE NATIONAL BANK (LOGO)
LA SALLE NATIONAL BANK
CHICAGO, ILLINOIS
<PAGE>
(LOGO)
LaSalle National Bank
ARTICLES OF ASSOCIATION
FIRST. The title of this association, which shall carry on the business of
banking under the laws of the United States shall be "LaSalle National Bank."
SECOND. The place where the main banking house or office of this association
shall be located, its operations of discount and deposit carried on, and its
general business conducted, shall be Chicago, County of Cook, State of Illinois.
THIRD. The Board of Directors of this association shall consist of such number
of its shareholders, not less than five nor more than twenty-five, as from time
to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled. A majority of the Board of Directors
shall be necessary to constitute a quorum for the transaction of business. The
Board of Directors, by vote of a majority of the full board, may, between annual
meetings of shareholders increase the membership of the Board where the number
of directors last elected by shareholders was 15 or less, by not more than two
members, and where the number of directors last elected by shareholders was 16
or more, by not more than four members and by a like vote appoint qualified
persons to fill the vacancies created thereby; provided that the number of
Directors shall at no time exceed twenty-five.
FOURTH. The regular annual meeting of the shareholders of this association shall
be held at its main banking house, or other convenient place duly authorized by
the board of directors on such day of each year as is specified therefor in the
bylaws.
FIFTH. The amount of capital stock which this association is authorized to issue
shall be Twenty Million Dollars ($20,000,000.00) divided into 2,000,000 shares
of common capital stock of the par value of $10.00 each; but said capital stock
may be increased or decreased from time to time, in accordance with the
provisions of the laws of the United States.
If the capital stock is increased by the sale of additional shares thereof,
other than to key officers and employees of the association upon the exercise of
options granted pursuant to the terms of a stock option plan then in effect, as
to which sales all pre-emptive rights are waived, each shareholder shall be
entitled to subscribe for such additional shares in proportion to the number of
shares of said capital stock owned by him at the time the increase is authorized
by the shareholders, unless another time subsequent to the date of the
shareholders' meeting is specified in a resolution adopted by the shareholders
at the time the increase is authorized. The board of directors shall have the
power to prescribe a reasonable period of time within which the pre-emptive
rights to subscribe to the new shares of capital stock may be exercised.
The association, at any time and from time to time, may authorize and issue debt
obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The board of directors shall appoint one of its members president of this
association, who shall be chairman of the board, but the board of directors may
appoint a director in lieu of the president to be chairman of the board, who
shall perform such duties as may be designated by the board of directors. The
board of directors shall have the power to appoint one or more vice presidents,
a cashier and such other officers as may be required to transact the business of
this association; to fix the salaries to be paid to all officers of this
association; and to dismiss such officers, or any of them.
The board of directors shall have the power to define the duties of officers and
employees of this association, to require bonds from them, and to fix the
penalty thereof; to regulate the manner in which directors shall be elected or
appointed, and to appoint judges of the election; to make all bylaws that it may
be lawful for them to make for the general regulation of the business of this
association and the management of its affairs; and generally to do and perform
all acts that it may be lawful for a board of directors to do and perform.
SEVENTH. This association shall have succession from the date of its
organization certificate until such time as it be dissolved by act of its
shareholders in accordance with the provisions of the banking laws of
<PAGE>
the United States, or until its franchise becomes forfeited by reason of
violation of law, or until terminated by either a general or a special act of
Congress, or until its affairs be placed in the hands of a receiver and finally
wound up by him.
EIGHTH. The board of directors of this association, or any three or more
shareholders owning, in the aggregate, not less than ten per centum of the stock
of this association, may call a special meeting of shareholders at any time:
Provided, however, that, unless otherwise provided by law, not less than ten
days prior to the date fixed for any such meeting, a notice of the time, place,
and purpose of the meeting shall be given by first-class mail, postage prepaid,
to all shareholders of record of this association at their respective addresses
as shown upon the books of the association. These articles of association may be
amended at any regular or special meeting of the shareholders by the affirmative
vote of the shareholders owning at least a majority of the stock of this
association, subject to the provisions of the banking laws of the United States.
The notice of any shareholders' meeting, at which an amendment to the articles
of association of this association is to be considered, shall be given as
herein-above set forth.
NINTH. Any person, his heirs, executors, or administrators, may be indemnified
or reimbursed by the association for reasonable expenses actually incurred in
connection with any action, suit, or proceeding, civil or criminal, to which he
or they shall be made a party by reason of his being or having been a director,
officer, or employee of the association or of any firm, corporation, or
organization which he served in any such capacity at the request of the
association: Provided, however, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit, or proceeding as to
which he shall finally be adjudged to have been guilty of or liable for
negligence or wilful misconduct in the performance of his duties to the
association: And, provided further, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit, or proceeding which
has been made the subject of a compromise settlement except with the approval of
a court of competent jurisdiction, or the holders of record of a majority of the
outstanding shares of the association, or the board of directors, acting by vote
of directors not parties to the same or substantially the same action, suit, or
proceeding, constituting a majority of the whole number of the directors. The
foregoing right of indemnification or reimbursement shall not be exclusive of
other rights to which such person, his heirs, executors, or administrators, may
be entitled as a matter of law.
********
May 17, 1982
Form No. 181, Rev 5/17/82 GW
<PAGE>
EXHIBIT 2
CERTIFICATE OF AUTHORITY
TO COMMENCE BUSINESS
<PAGE>
STATE OF ILLINOIS
AUDITOR'S OFFICE
NO. 333 (LOGO)
NATIONAL BANK TRUST CERTIFICATE
Springfield, FEBRUARY 15th 1928
I, OSCAR NELSON, Auditor of Public Accounts of the State of Illinois, do hereby
certify that the NATIONAL BUILDERS BANK OF CHICAGO located at CHICAGO, County of
COOK and State of Illinois, a corporation organized under and by authority of
the statutes of the United States governing National Banks and authority granted
by the Federal Reserve Act for the purpose of accepting and executing trusts,
has this day deposited in this office, securities in the sum of TWO HUNDRED
THOUSAND Dollars, $200,000.00 of the character designated by Section 6 of the
Act of the Legislature of the State of Illinois entitled "An Act to provide for
and regulate the administration of trusts by trust companies," The said deposit
is made for the benefit of the creditors of said NATIONAL BUILDERS BANK OF
CHICAGO under and by virtue of the provisions of the Act above referred to and
the said securities are now held by me in this office in my official capacity as
such Auditor of Public Accounts, for the uses and purposes aforesaid.
I further certify that by virtue of the Acts aforesaid, the NATIONAL BUILDERS
BANK OF CHICAGO is hereby authorized to accept and execute trusts and receive
deposits of trust funds under the provisions and limitations of "An Act to
provide for and regulate the administration of trusts in Illinois.
IN TESTIMONY WHEREOF, I hereunto subscribe my name and affix the seal of my
office, the day and year first above written.
(SEAL)
/s/ Oscar Nelson
----------------
AUDITOR OF PUBLIC ACCOUNTS.
STATE OF ILLINOIS.
<PAGE>
NO. 13146.
TREASURY DEPARTMENT (LOGO)
OFFICE OF COMPTROLLER OF THE CURRENCY
Washington, D.C., NOVEMBER 29, 1927.
WHEREAS, by satisfactory evidence presented to the undersigned, it has been made
to appear that "NATIONAL BUILDERS BANK OF CHICAGO" in the CITY of CHICAGO in the
County of COOK and State of ILLINOIS has complied with all the provisions of the
Statutes of the United States, required to be complied with before an
association shall be authorized to commence the business of Banking;
NOW THEREFORE I, J.W. MCINTOSH, Comptroller of the Currency, do hereby certify
that "NATIONAL BUILDERS BANK OF CHICAGO" in the CITY of CHICAGO in the County of
COOK and State of ILLINOIS is authorized to commence the business of Banking as
provided in Section Fifty one hundred and sixty nine of the Revised Statutes of
the United States.
IN TESTIMONY WHEREOF witness my hand and Seal of (SEAL) office this TWENTY-NINTH
day of NOVEMBER, 1927.
(SEAL)
/s/ J.W. McIntosh
-----------------
Comptroller of the Currency
<PAGE>
CERTIFICATE OF CHANGE OF CORPORATE TITLE
(LOGO)
NO. 13146.
TREASURY DEPARTMENT
OFFICE OF THE COMPTROLLER OF THE CURRENCY
WASHINGTON, D.C., MAY 1, 1940.
WHEREAS, by satisfactory evidence presented to me, it appears that under
authority of sections 2, 3, and 4, of the Act of Congress approved May 1, 1886,
entitled "An Act to enable national banking associations to increase their
capital stock and to change their names or location," shareholders owning
two-thirds of the stock of the national banking association heretofore known
as-- "NATIONAL BUILDERS BANK OF CHICAGO," located in CHICAGO, County of COOK,
State of ILLINOIS, have voted to change the name of said association to--
"LASALLE NATIONAL BANK," and have complied with all the provisions of the said
Act relative to national banking associations changing their name.
NOW, THEREFORE, IT IS HEREBY CERTIFIED, that the name of the said association
has been changed to-- "LASALLE NATIONAL BANK," and that such change of name is
hereby approved under authority conferred by said Act.
IN TESTIMONY WHEREOF, witness my hand and seal of office this FIRST day of MAY,
1940.
(SEAL)
/s/
---
ACTING Comptroller of the Currency.
<PAGE>
EXHIBIT 3
AUTHORIZATION TO EXERCISE
CORPORATE TRUST POWERS
<PAGE>
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM [LETTERHEAD]
WASHINGTON
May 9, 1940
LaSalle National Bank,
Chicago, Illinois.
Gentlemen:
The Board of Governors of the Federal Reserve System has been
officially advised by the Comptroller of the Currency that on May 1, 1940,
National Builders Bank of Chicago, Chicago, Illinois, changed its title to
LaSalle National Bank, and accordingly there is enclosed herewith a certificate
showing that LaSalle National Bank has authority to exercise the fiduciary
powers enumerated therein.
Kindly acknowledge receipt of this certificate.
Very truly yours,
S. R. Carpenter
---------------
S. R. Carpenter,
Assistant Secretary.
Enclosure
<PAGE>
BOARD OF GOVERNORS
OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON
I, S. R. Carpenter, Assistant Secretary of the Board of Governors of the Federal
Reserve System (formerly known as the Federal Reserve Board), do hereby certify
that it appears from the records of the Board of Governors of the Federal
Reserve System that:
(1) Pursuant to the authority vested in the Federal Reserve Board by an Act of
Congress approved December 23, 1913, known as the Federal Reserve Act, as
amended, the Federal Reserve Board on December 8, 1927, granted to National
Builders Bank of Chicago, Chicago, Illinois, the right to act, when not in
contravention of State or local law, as trustee, executor, administrator,
registrar of stocks and bonds, guardian of estates, assignee, receiver,
committee of estates of lunatics, or in any other fiduciary capacity in which
State banks, trust companies or other corporations which come into competition
with national banks are permitted to act under the laws of the State of
Illinois;
(2) Under the provisions of an Act of Congress approved May 1, 1886, National
Builders Bank of Chicago, Chicago, Illinois, on May 1, 1940, changed its title
to LaSalle National Bank; and
(3) By virtue of the foregoing, LaSalle National Bank, Chicago, Illinois, has
authority to act, when not in contravention of State or local law, as trustee,
executor, administrator, registrar of stocks and bonds, guardian of estates,
assignee, receiver, committee of estates of lunatics, or in any other fiduciary
capacity in which State banks, trust companies or other corporations which come
into competition with national banks are permitted to act under the laws of the
State of Illinois, subject to regulations prescribed by the Board of Governors
of the Federal Reserve System.
IN WITNESS WHEREOF, I have hereunto subscribed my name and caused the seal of
the Board of Governors of the Federal Reserve System to be affixed at the City
of Washington in the District of Columbia.
/s/ S. R. Carpenter
-------------------
Assistant Secretary.
Dated May 9, 1940
<PAGE>
EXHIBIT 4
BY-LAWS OF LA SALLE NATIONAL BANK
<PAGE>
BYLAWS
OF
LA SALLE NATIONAL BANK
CHICAGO, ILLINOIS
LA SALLE NATIONAL BANK (LOGO)
Organized Under the National Banking Laws
of the United States
<PAGE>
BYLAWS
of the
LA SALLE NATIONAL BANK
(a National Banking Association which association
is herein referred to as the "bank")
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1.1. ANNUAL MEETING. The regular annual meeting of the shareholders for
the election of directors and the transaction of whatever other business may
properly come before the meeting, shall be held at the main office of the Bank,
135 South LaSalle Street, Chicago, Illinois, or such other place as the Board of
Directors may designate, at 9:00 A.M., on the third Wednesday of March of each
year. Notice of such meeting shall be mailed, postage prepaid, at least ten days
prior to the date thereof, addressed to each shareholder at his address
appearing on the books of the Bank. If for any cause, an election of directors
is not made on the said day, the Board of Directors shall order the election to
be held on some subsequent day as soon thereafter as practicable, according to
the provisions of law; and notice thereof shall be given in the manner herein
provided for the annual meeting.
SECTION 1.2. SPECIAL MEETINGS. Except as otherwise specifically provided by
statute, special meetings of the shareholders may be called for any purpose at
anytime by the board of directors or by any three or more shareholders owning,
in the aggregate, not less than ten percent of the stock of the bank. Every such
special meeting, unless otherwise provided by law, shall be called by mailing,
postage pre-paid, not less than ten days prior to the date fixed for such
meeting, to each shareholder at his address appearing on the books of the bank,
a notice stating the purpose of the meeting.
SECTION 1.3. NOMINATIONS FOR DIRECTOR. Nominations for election to the board of
directors may be made by the board of directors or by any shareholder of any
outstanding class of capital stock of the bank entitled to vote for the election
of directors. Nominations, other than those made by or on behalf of the existing
management of the bank, shall be made in writing and shall be delivered or
mailed to the president of the bank and to the Comptroller of the Currency,
Washington, D.C., not less than 14 days nor more than 50 days prior to any
meeting of shareholders called for the election of directors, provided, however,
that if less than 21 days' notice of the meeting is given to the shareholders,
such nomination shall be mailed or delivered to the president of the bank and to
the Comptroller of the Currency not later than the close of business on the
seventh day following the day on which the notice of meeting was mailed. Such
notification shall contain the following information to the extent known to the
notifying shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total number of
shares of capital stock of each proposed nominee; (d) the name and address of
the notifying shareholder; and (e) the number of shares of capital stock of the
bank owned by the notifying shareholder. Nominations not made in accordance
herewith, may, in his discretion, be disregarded by the chairman of the meeting,
and upon his instructions, the vote tellers may disregard all votes cast for
each such nominee.
SECTION 1.4. JUDGES OF ELECTION. Every election of directors shall be managed by
three judges, who shall be appointed by the board of directors prior to the time
of said election. The judges of election shall hold and conduct the election at
which they are appointed to serve; and after the election, they shall file with
the cashier a certificate under their hands, certifying the result thereof and
the names of the directors elected. The judges of election, at the request of
the chairman of the meeting, shall act as tellers of any other vote by ballot
taken at such meeting, and shall certify the result thereof.
SECTION 1.5. PROXIES. Shareholders may vote at any meeting of the shareholders
by proxies duly authorized in writing, but no officer or employee of this bank
shall act as proxy. Proxies shall be valid only for one meeting, to be specified
therein, and any adjournments of such meeting. Proxies shall be dated
1
<PAGE>
and shall be filed with the records of the meeting.
SECTION 1.6. QUORUM. A majority of the outstanding capital stock, represented in
person or by proxy, shall constitute a quorum at any meeting of shareholders,
unless otherwise provided by law; but less than a quorum may adjourn any
meeting, from time to time, and the meeting may be held, as adjourned, without
further notice. A majority of the votes cast shall decide every question or
matter submitted to the shareholders at any meeting, unless otherwise provided
by law or by the articles of association.
ARTICLE II
DIRECTORS
SECTION 2.1. BOARD OF DIRECTORS. The board of directors (hereinafter referred to
as the "board"), shall have power to manage and administer the business affairs
of the bank. Except as expressly limited by law, all corporate powers of the
bank shall be vested in and may be exercised by said board.
SECTION 2.2. NUMBER. The board shall consist of not less than five or more than
twenty-five shareholders, the exact number within such minimum and maximum
limits to be fixed and determined from time to time by resolution of a majority
of the full board or by resolution of the shareholders at any meeting thereof;
provided, however, that a majority of the full board may not increase the number
of directors by more than two if the number of directors last elected by
shareholders was fifteen or less and by not more than four where the number of
directors last elected by shareholders was sixteen or more, provided that in no
event shall the number of directors exceed twenty-five.
SECTION 2.3. ORGANIZATION MEETING. The cashier, upon receiving the certificate
of the judges, of the result of any election, shall notify the directors-elect
of their election and of the time at which they are required to meet at the main
office of the bank for the purpose of organizing the new board and electing and
appointing officers of the bank for the succeeding year. Such meeting shall be
appointed to be held on the day of election or as soon thereafter as
practicable, and, in any event, within thirty days thereof. If, at the time
fixed for such meeting, there shall not be a quorum present the directors
present may adjourn the meeting, from time to time, until a quorum is obtained.
SECTlON 2.4 REGULAR MEETINGS. The regular meetings of the board shall be held,
without notice, on the third Wednesday of each month at the main office. When
any regular meeting of the board falls upon a holiday, the meeting shall be held
on the next banking business day unless the board shall designate some other
day.
SECTION 2.5 SPECIAL MEETINGS. Special meetings of the board may be called by the
chairman of the board, the president, or at the request of three or more
directors. Each member of the board shall be given notice stating the time and
place, by telegram, letter or in person, of each such special meeting.
SECTION 2.6. QUORUM. A majority of the directors shall constitute a quorum at
any meeting, except when otherwise provided by law; but a less number may
adjourn any meeting from time to time, and the meeting may be held, as
adjourned, without further notice.
SECTION 2.7. VACANCIES. When any vacancy occurs among the directors, the
remaining members of the board, in accordance with the laws of the United
States, may appoint a director to fill such vacancy at any regular meeting of
the board, or at a special meeting called for that purpose.
SECTION 2.8. RETIREMENT POLICY. A retirement policy adopted by the board of
directors shall be applicable to directors who are not active officers of the
bank.
2
<PAGE>
ARTICLE III
COMMITTEES OF THE BOARD
SECTION 3.1. EXECUTIVE COMMITTEE. There shall be an executive committee of the
board. The members of the executive committee shall be chosen by the board from
time to time, shall hold office during its pleasure, and shall consist of the
chairman of the board, the chairman of the executive committee selected by the
board, who may but need not be the same person designated to be president, and
the president, ex officio, and not less than seven additional members of the
board who shall not be active officers of the bank. It shall be the duty of this
committee to exercise such powers and perform such duties in respect to the
making of loans and discounts as shall from time to time be specified by
resolution of the board. During such periods as the board shall not be in
session, the executive committee shall have and may exercise all the powers of
the board except such as are by law or by these bylaws required to be exercised
only by the board. The executive committee may make rules for holding and
conducting its meetings and keep in the minute book of the bank a report of all
action taken which shall be submitted for approval at each regular meeting of
the board and the action of the board shall be recorded in the minutes of that
meeting. A quorum of the executive committee shall consist of not less than five
of its members, at least three of whom shall not be active officers of the bank.
The chairman of the board, or in his absence in the order named if present, the
chairman of the executive committee or the president, may designate any director
who is not an active officer of the bank, or a designated member, to serve as a
member of the executive committee at any specified meeting. Vacancies in the
executive committee at any time existing may be filled by appointment by the
board. The board may at anytime revise or change the membership and chairmanship
of the executive committee and make new or additional appointments thereto. The
chairman of the executive committee shall be ex officio a member of all
committees except the examining committee and the trust audit committee, and
shall have such other duties as may from time to time be assigned him by the
board.
SECTION 3.2. OFFICERS' COMPENSATION COMMITTEE. There shall be an officers'
compensation committee of the board. The members of the officers' compensation
committee shall consist of the members ex officio provided for in other sections
of these bylaws and not less than three additional non-officer members of the
board who shall be appointed by the board each year at its first meeting after
the directors have been elected and qualified. It shall be the duty of this
committee to study the compensation of all officers of the bank and from time to
time report their recommendations to the board; and such other duties, if any,
as may from time to time be assigned to it by the board. A majority of the
committee, including at least two non-officer members, shall be necessary for
the committee to keep records of its action.
SECTION 3.3. EXAMINING COMMITTEE. There shall be an examining committee of the
board. The members of the examining committee shall consist of the members ex
officio provided for in other sections of these bylaws, but exclusive of any
active officer of the bank and not less than three additional non-officer
members of the board who shall be appointed by the board each year at its first
meeting after the directors have been elected and qualified. It shall be the
duty of this committee to make an examination at least twice each year into the
affairs of the bank or to cause the examinations to be made by accountants (who
may be the bank's own accountants) responsible only to the board in such
examinations, and to report the result of such examinations in writing to the
board at the next regular meeting thereafter, or it may, at its sole discretion,
submit the reports of the national bank examiner or of the Chicago Clearing
House Association examination, with or without additional comments by the
committee itself, for, and in lieu of its personal examinations. Such reports
shall state whether the bank is in sound condition, whether adequate internal
audit controls and procedures are being maintained and shall recommend to the
board such changes in the manner of doing business or conducting the affairs of
the bank as shall be deemed advisable.
SECTION 3.4. OTHER COMMITTEES. The board may appoint, from time to time, from
its own members, other committees of one or more persons, for such purposes and
with such powers as the board may determine.
3
<PAGE>
ARTICLE IV
OFFICERS AND EMPLOYEES
SECTION 4.1. CHAIRMAN OF THE BOARD. The board shall appoint one of its members
to be chairman of the board. The chairman of the board shall supervise the
carrying out of the policies adopted or approved by the board. He shall have
general executive powers, as well as the specific powers conferred by these
bylaws. He shall be ex officio a member of all committees, except the examining
committee and the trust audit committee. He shall have general supervision and
direction of the business, affairs and personnel of the bank. He shall also have
and may exercise such further powers and duties as from time to time may be
conferred upon, or assigned to him by the board.
SECTION 4. 2. VICE CHAIRMAN OF THE BOARD. The board may appoint one of its
members to be vice chairman of the board. He shall perform such duties as may
from time to time be assigned to him by the board.
SECTION 4.3. PRESIDENT. The board shall appoint one of its members to be
president of the bank. He shall be the chief executive officer and the chief
administrative officer of the bank and in the absence of the chairman of the
board, he shall preside at any meeting of the board at which he is present. The
president shall have general executive powers, and shall have and may exercise
any and all other powers and duties pertaining by law, regulation, or practice
to the office of president, or imposed by these bylaws. He shall be ex officio a
member of all committees, except the examining committee and trust audit
committee. He shall have general supervision of the business, affairs and
personnel of the bank and in the absence of the chairman of the board, shall
exercise the powers and perform the duties of the chairman of the board. He
shall also have and may exercise such further powers and duties as from time to
time may be conferred upon or assigned to him by the board.
SECTION 4.4. SENIOR OFFICERS. The board may appoint one or more executive vice
presidents and one or more senior vice presidents. Each such senior officer
shall have such powers and duties as may be assigned to him by the board, the
chairman of the board, or the president.
SECTION 4.5. VICE PRESIDENT. The board may appoint one or more vice presidents.
Each vice president shall have such powers and duties as may be assigned to him
by the board, the chairman of the board, or the president.
SECTION 4.6. CASHIER. The board shall appoint a cashier who shall have such
powers and duties as may be assigned to him by the board, the chairman of the
board, or the president. The cashier shall be custodian of the corporate seal,
records, documents and papers of the bank. He shall provide for keeping of
proper records of all transactions of the bank.
SECTION 4.7. SECRETARY. The board shall appoint a secretary who shall be
secretary of the bank. He shall also perform such duties as may be assigned to
him from time to time by the board. The board may appoint a secretary of the
board who shall keep accurate minutes of all meetings. He shall attend to the
giving of all notices; he shall also perform such other duties as may be
assigned to him from time to time by the board.
SECTION 4.8. OTHER OFFICERS. The board may appoint one or more assistant vice
presidents, one or more trust officers, one or more assistant secretaries, one
or more assistant cashiers, and such other officers and attorneys-in-fact as
from time to time may appear to the board to be required or desirable to
transact the business of the bank. Such officers, respectively, shall exercise
such powers and perform such duties as pertain to their several offices or as
may be conferred upon or assigned to them by the board the chairman of the board
or the president.
SECTION 4.9. CLERKS AND AGENTS. The chairman of the board, the president, or any
other active officer of the bank authorized by the chairman of the board, or the
president, may appoint and dismiss all or any paying tellers, receiving
tellers, note tellers, vault custodians, bookkeepers and other clerks, agents
and employees as they may deem advisable for the prompt and orderly transaction
of the business of the
4
<PAGE>
bank, define their duties, fix the salaries to be paid them and the conditions
of their employment.
SECTION 4.10. RESPONSIBILITY FOR MONEYS, ETC. Each of the active officers and
clerks of this bank shall be responsible for all moneys, funds valuables and
property of every kind and description that may from time to time be entrusted
to his care or placed in his hands by the board or others, or that otherwise may
come into his possession as an active officer or clerk of this bank.
SECTION 4.11. SURETY BONDS. All the active officers and clerks of this bank may
be covered by one of the blanket form bonds customarily written by the surety
companies, drawn for such an amount, and executed by such surety company, as the
board may from time to time require, and duly approve; or at the discretion of
the board, all such active officers and clerks shall, each for himself, give
such bond, with such security, and in such denominations as the board may from
time to time require and direct. All bonds approved by the board shall assure
the faithful and honest discharge of the respective duties of such active
officer or clerk and shall provide that such active officer or clerk shall
faithfully apply and account for all moneys, funds, valuables and property of
every kind and description that may from time to time come into his hands or be
entrusted to his care, and pay over and deliver the same to the order of the
board or to such other person or persons as may be authorized to demand and
receive the same.
SECTION 4.12. TERM OF OFFICE - OFFICER DIRECTOR. The chairman of the board, the
vice chairman of the board and the president, together with any other active
officers who may be duly elected members of the board, shall hold their
respective offices for the current year for which the board (of which they shall
be members) was elected and until their successors are appointed, unless they
shall resign, be disqualified, or be removed; and any vacancy occurring in the
office of the chairman of the board, the vice chairman of the board, the
president, or in the board, shall, if required by these bylaws, be filled by the
remaining members.
SECTION 4.13. TERM OF OFFICE - OFFICER. The executive vice presidents, the
senior vice presidents, the vice presidents, the assistant vice presidents, the
cashier, the secretary, the trust officers and all other officers and
attorneys-in-fact who are not duly elected members of the board, shall be
appointed to hold their offices, respectively, during the pleasure of the board.
ARTICLE V
TRUST DEPARTMENT
SECTION 5.1. TRUST DEPARTMENT. There shall be a department of the bank known as
the trust department which shall perform the fiduciary responsibilities of the
bank.
SECTION 5.2. TRUST OFFICER. There shall be a senior vice president and trust
officer, or vice president and trust officer of this bank, who shall be
designated as the managing officer of the trust department and whose duties
shall be to manage, supervise and direct all the activities of the trust
department. He shall do, or cause to be done, all things necessary or proper in
carrying on the business of the trust department in accordance with provisions
of law and regulations. He shall act pursuant to opinion of counsel where such
opinion is deemed necessary. Opinions of counsel shall be retained on file in
connection with all important matters pertaining to fiduciary activities. The
trust officer shall be responsible for all assets and documents held by the bank
in connection with fiduciary matters.
The board may appoint such other officers of the trust department as it may deem
necessary, with such duties as may be assigned to them by the board, the
chairman of the board, or the president.
SECTION 5.3. TRUST INVESTMENT COMMITTEE. There shall be appointed by the board a
trust investment committee of this bank composed of not less than four members,
including members ex officio provided for in other sections of these bylaws, who
shall be capable and experienced officers or directors of the bank. All
investments of funds held in a fiduciary capacity shall be made, retained or
disposed of only with the approval of the trust investment committee; and the
committee shall keep minutes of all its meetings, showing the disposition of all
matters considered and passed upon by it. The committee shall, promptly after
the acceptance of an account for which the bank has investment responsibilities,
review the
5
<PAGE>
assets thereof, to determine the advisability of retaining or disposing of such
assets. The committee shall conduct a similar review at least once during each
calendar year thereafter and within fifteen months of the last such review. A
report of all such reviews, together with the action taken as a result thereof,
shall be noted in the minutes of the committee. Three members of the trust
investment committee shall constitute a quorum, and any action approved by a
majority of those present shall constitute the action of the committee.
SECTION 5.4. TRUST AUDIT COMMITTEE. The board shall appoint a committee of not
less than three directors, including members ex officio provided for in other
sections of these bylaws, exclusive of any active officers of the bank, which
shall at least once during each calendar year and within fifteen months of the
last such audit make suitable audits of the trust department, or cause suitable
audits to be made, by auditors responsible only to the board, and at such time
shall ascertain whether the department has been administered in accordance with
law, Regulation 9, and sound fiduciary principles. Notwithstanding the
provisions of this Section, the board at any time may assign to the Examining
Committee, in addition to the duties of the Examining Committee set forth in
Section 3.3 of these bylaws, all of the duties of the Trust Audit Committee and
during such time as the Examining Committee is performing the duties of both
committees, the Trust Audit Committee shall cease to function as a committee of
this board. The board at any time may reassign the duties provided for in this
Section to the Trust Audit Committee.
SECTION 5.5. TRUST DEPARTMENT FILES. There shall be maintained in the trust
department, files containing all fiduciary records necessary to assure that its
fiduciary responsibilities have been properly undertaken and discharged.
SECTION 5.6. TRUST INVESTMENTS. Funds held in a fiduciary capacity shall be
invested in accordance with the instrument establishing the fiduciary
relationship and local law. Where such instrument does not specify the character
and class of investments to be made and does not vest in the bank a discretion
in the matter, fund shield pursuant to such instrument shall be invested in
investments in which corporate fiduciaries may invest under local law.
ARTICLE VI
STOCK AND STOCK CERTIFICATES
SECTION 6.1. TRANSFERS. Shares of capital stock shall be transferable on the
books of the bank and a transfer book shall be kept in which all transfers of
stock shall be recorded. Every person becoming a shareholder by such transfer
shall in proportion to his shares, succeed to all rights and liabilities of the
prior holder of such shares.
SECTION 6.2. STOCK CERTIFICATES. Certificates of capital stock shall bear the
signature of any one of, the chairman of the board, or the president (which may
be engraved, printed or impressed) and shall be signed manually or by facsimile
process by the secretary, assistant secretary, cashier, assistant cashier, or
any other officer appointed by the board for that purpose, to be known as an
authorized officer and the seal of the bank shall be engraven thereon. Each
certificate shall recite on its face that the stock represented thereby is
transferable, properly endorsed, only on the books of the bank.
ARTICLE VII
CORPORATE SEAL
SECTION 7.1. CORPORATE SEAL. The chairman of the board, the president, the
cashier, the secretary or any assistant cashier or assistant secretary, or other
officer thereunto designated by the board, shall have authority to affix the
corporate seal to any document requiring such seal, and to attest the same. Such
seal shall be substantially in the form set forth herein.
ARTICLE VIII
6
<PAGE>
INDEMNIFYING OFFICERS AND DIRECTORS
SECTION 8.1. INDEMNIFYING OFFICERS AND DIRECTORS. Any person, his heirs,
executors or administrators, may be indemnified or reimbursed by the bank for
reasonable expenses actually incurred in connection with any action, suit or
proceeding, civil or criminal, to which he or they shall be made a party by
reason of his being or having been a director, officer or employee of the bank
or of any firm, corporation or organization which he served in any such capacity
at the request of the bank; provided, however, that no person shall be so
indemnified or reimbursed in relation to any matter in such action, suit or
proceeding as to which he shall finally be adjudged to have been guilty of or
liable for negligence or willful misconduct in the performance of his duties to
the bank; and, provided further, that no person shall be so indemnified or
reimbursed in relation to any matter in such action, suit or proceeding which
has been made the subject of a compromise settlement except with the approval of
a court of competent jurisdiction, or the holders of record of a majority of the
outstanding shares of the bank, or the board, acting by vote of directors not
parties to the same or substantially the same action suit or proceeding,
constituting a majority of the whole number of the directors. The foregoing
right of indemnification or reimbursement shall not be exclusive of other rights
to which such person, his heirs, executors or administrators, may be entitled as
a matter of law.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1. FISCAL YEAR. The fiscal year of the bank shall be the calendar
year.
SECTION 9.2. EXECUTION OF INSTRUMENTS. All agreements, indentures mortgages,
deeds, conveyances transfers certificates declarations, receipts, discharges,
releases, satisfactions, settlements, petitions, schedules, accounts,
affidavits, bonds, undertakings, proxies and other instruments or documents may
be signed, executed, acknowledged, verified, delivered or accepted for the bank
by the chairman of the board, or the vice chairman of the board, or the
president, or any executive vice president, or any senior vice president, or any
vice president, or the secretary or the cashier, or, if in connection with the
exercise of fiduciary powers of the bank by any of said officers or by any
officer in the trust department. Any such instruments may also be signed,
executed, acknowledged, verified, delivered or accepted for the bank in such
other manner and by such other officers as the board may from time to time
direct. The provisions of this Section 9.2 are supplementary to any other
provisions of these bylaws.
SECTION 9.3. RECORDS. The articles of association, the bylaws, and the
proceedings of all meetings of the shareholders and of the board shall be
recorded in appropriate minute books provided for the purpose; where these
bylaws so provide, the proceedings of standing committees of the board shall be
recorded in appropriate minute books provided for the purpose.
ARTICLE X
EMERGENCIES
SECTION 10.1. CONTINUATION OF BUSINESS. In the event of a state of emergency of
sufficient severity to interfere with the conduct and management of the affairs
of this bank, the officers and employees will continue to conduct the affairs of
the bank under such guidance from the directors as may be available except as to
matters which by statute require specific approval of the board of directors and
subject to conformance with any governmental directives during the emergency.
SECTION 10.2. DESIGNATION OF PLACE OF BUSINESS. The offices of the bank at which
its business shall be conducted shall be the main office thereof located at 135
South LaSalle Street, Chicago, Illinois, and any other legally authorized
location which may be leased or acquired by this bank to carry on its business.
During an emergency resulting in any authorized place of business of this bank
being unable to function, the business ordinarily conducted at such location
shall be relocated elsewhere in suitable quarters, in addition to or in lieu of
the locations heretofore mentioned, as may be designated by the board
7
<PAGE>
of directors or by the executive committee or by such persons as are then, in
accordance with resolutions adopted from time to time by the board of directors
dealing with the exercise of authority in the time of such emergency, conducting
the affairs of this bank. Any temporarily relocated place of business of this
bank shall be returned to its legally authorized location as soon as practicable
and such temporary place of business shall then be discontinued.
ARTICLE XI
BYLAWS
SECTION 11.1 INSPECTION. A copy of the bylaws with all amendments thereto, shall
at all times be kept in a convenient place at the main office of the bank and
shall be open for inspection to all shareholders, during banking hours.
SECTION 11.2 AMENDMENTS. The bylaws may be amended, altered or repealed, at any
regular meeting of the board, by a vote of a majority of the whole number of the
directors.
***
I........................................... hereby certify that I am
the................................ Cashier/Secretary of LaSalle National Bank,
Chicago, Illinois and that the foregoing is a true and correct copy of the
bylaws of this bank as amended and that the same are in full force and effect
............. day of...................19........
...............................
Cashier/Secretary.
December 15, 1982
(SEAL)
8
<PAGE>
EXHIBIT 5
NOT APPLICABLE
<PAGE>
EXHIBIT 6
LaSalle National Bank hereby consents in accordance with the provisions of
Section 321(b) of the Trust Indenture Act of 1939, that reports of examinations
by Federal, State, Territorial and District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon its request therefor.
LA SALLE NATIONAL BANK
By: /s/ Cynthia Reis
-----------------------
Cynthia Reis
Vice President
<PAGE>
EXHIBIT 7
Latest Report of Condition of
Trustee published pursuant to
law or the requirement of its
surviving or examining authority.
<PAGE>
EXHIBIT 8
NOT APPLICABLE
<PAGE>
EXHIBIT 9
Not Applicable
<PAGE>
<TABLE>
<CAPTION>
LaSalle National Bank Call Date: 12/31/96 ST-BK: 17-1520 FFIEC 031
135 South LaSalle Street Page RC-1
Chicago, IL 60603 Vendor ID: D CERT: 15407 11
Transit Number: 71000505
Consolidated Report of Condition for Insured Commercial and
State-Chartered Savings Banks for December 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
Dollar Amounts in Thousands
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
a. Noninterest-bearing balances and currency and coin (1) 0081 730,888 1.a
b. Interest-bearing balances (2) 0071 80 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 1,061,617 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 2,769,745 2.b
3. Federal funds sold and securities purchased under agreements to resell in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds sold 0276 124,512 3.a
b. Securities purchased under agreements to resell 0277 0 3.b
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income RCFD
(from Schedule RC-C) 2122 8,440,058 4.a
b. LESS: Allowance for loan and lease losses 3123 163,897 4.b
c. LESS: Allocated transfer risk reserve 3128 0 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 8,276,161 4.d
5. Trading assets (from Schedule RC-D) 3545 123,877 5.
6. Premises and fixed assets (including capitalized leases) 2145 32,748 6.
7. Other real estate owned (from Schedule RC-M) 2150 7,703 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M) 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding 2155 19,642 9.
10. Intangible assets (from Schedule RC-M) 2143 21,782 10.
11. Other assets (from Schedule RC-F) 2160 218,191 11.
12. Total assets (sum of items 1 through 11) 2170 13,386,946 12.
- - -----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LaSalle National Bank Call Date: 3/31/97 ST-BK: 17-1520 FFIEC 031
135 South LaSalle Street Page RC-1
Chicago, IL 60603 Vendor ID: D CERT: 15407 11
Transit Number: 71000505
Consolidated Report of Condition for Insured Commercial and
State-Chartered Savings Banks for March 31, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC - Balance Sheet
Dollar Amounts in Thousands
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
a. Noninterest-bearing balances and currency and coin (1) 0081 594,350 1.a
b. Interest-bearing balances (2) 0071 392 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 1,044,435 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 3,505,040 2.b
3. Federal funds sold and securities purchased under agreements to resell 1350 144,843 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income RCFD
(from Schedule RC-C) 2122 8,955,181 4.a
b. LESS: Allowance for loan and lease losses 3123 175,944 4.b
c. LESS: Allocated transfer risk reserve 3128 0 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 8,779,237 4.d
5. Trading assets (from Schedule RC-D) 3545 190,980 5.
6. Premises and fixed assets (including capitalized leases) 2145 37,545 6.
7. Other real estate owned (from Schedule RC-M) 2150 7,123 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M) 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding 2155 9,338 9.
10. Intangible assets (from Schedule RC-M) 2143 21,357 10.
11. Other assets (from Schedule RC-F) 2160 248,671 11.
12. Total assets (sum of items 1 through 11) 2170 14,583,311 12.
- - -----------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LaSalle National Bank Call Date: 6/30/97 ST-BK: 17-1520 FFIEC 031
135 South LaSalle Street Page RC- 2
Chicago, IL 60603 Vendor ID: D CERT: 15407 12
Transit Number: 71000505
Schedule RC - Continued
Dollar Amounts in Thousands
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of RCON
columns A and C from Schedule RC-E, part I) 2200 8,057,102 13.a
RCON
(1) Noninterest-bearing (1) 6631 2,057,727 13.a.1
(2) Interest-bearing 6636 5,999,375 13.a.2
RCFN
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part II) 2200 2,006,523 13.b
RCFN
(1) Noninterest-bearing 6631 0 13.b.1
(2) Interest-bearing 6636 2,006,523 13.b.2
RCFD
14. Federal funds purchased and securities sold under agreements to repurchase 2800 1,556,756 14.
RCON
15. a. Demand notes issued to the U.S. Treasury 2840 692,219 15.a
RCFD
b. Trading liabilities (from Schedule RC-D) 3548 58,221 15.b
16. Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases):
a. With a remaining maturity of one year or less 2332 1,379,144 16.a
b. With a remaining maturity of more than one year through three years A547 15,762 16.b
c. With a remaining maturity of more than three years A548 16,512 16.c
17. Not applicable.
18. Bank's liability on acceptances executed and outstanding 2920 11,097 18.
19. Subordinated notes and debentures (2) 3200 396,250 19.
20. Other liabilities (from Schedule RC-G) 2930 212,679 20.
21. Total liabilities (sum of items 13 through 20) 2948 14,402,265 21.
22. Not applicable.
EQUITY CAPITAL
RCFD
23. Perpetual preferred stock and related surplus 3838 0 23.
24. Common stock 3230 18,417 24.
25. Surplus (exclude all surplus related to preferred stock) 3839 275,636 25.
26. a. Undivided profits and capital reserves 3632 670,189 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities 8434 17,413 26.b
27. Cumulative foreign currency translation adjustments 3284 0 27.
28. Total equity capital (sum of items 23 through 27) 3210 981,655 28.
29. Total liabilities and equity capital (sum of items 21 and 28) 3300 15,383,920 29.
Memorandum
To be reported only with the March Report of Condition.
1.Indicate in the box at the right the number of the statement below that best describes
the most comprehensive level of auditing work performed for the bank by independent RCFD Number
external auditors as of any date during 1996 6724 N/A M.1
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by
submits a report on the consolidated holding company (but external auditors
not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in accordance 8 = No external audit work
with generally accepted auditing standards by a certified
public accounting firm (may be required by state charter-
ing authority)
- - ---------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
(2) Includes limited-life preferred stock and related surplus.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LaSalle National Bank Call Date: 9/30/97 ST-BK: 17-1520 FFIEC 031
135 South LaSalle Street Page RC-1
Chicago, IL 60603 Vendor ID: D CERT: 15407 11
Transit Number: 71000505
Consolidated Report of Condition for Insured Commercial and
State-Chartered Savings Banks for September 30, 1997
All schedules are to be reported in thousands of dollars. Unless otherwise indicated,
report the amount outstanding as of the last business day of the quarter.
Schedule RC - Balance Sheet
Dollar Amounts in Thousands
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
a. Noninterest-bearing balances and currency and coin (1) 0081 804,023 1.a
b. Interest-bearing balances (2) 0071 634 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 1754 962,382 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) 1773 3,463,261 2.b
3. Federal funds sold and securities purchased under agreements to resell 1350 86,026 3.
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income RCFD
(from Schedule RC-C) 2122 10,093,581 4.a
b. LESS: Allowance for loan and lease losses 3123 191,670 4.b
c. LESS: Allocated transfer risk reserve 3128 0 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) 2125 9,901,911 4.d
5. Trading assets (from Schedule RC-D) 3545 153,080 5.
6. Premises and fixed assets (including capitalized leases) 2145 50,587 6.
7. Other real estate owned (from Schedule RC-M) 2150 3,148 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M) 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding 2155 10,561 9.
10. Intangible assets (from Schedule RC-M) 2143 20,508 10.
11. Other assets (from Schedule RC-F) 2160 265,509 11.
12. Total assets (sum of items 1 through 11) 2170 15,721,630 12.
- - ---------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
</TABLE>
<PAGE>
Exhibit 99.1
================================================================================
STRUCTURED ASSET SECURITIES CORPORATION TRUST [I]
Issuer,
and
--------------------------,
as Master Servicer,
and
--------------------------,
as Special Servicer,
and
---------------------------,
as Trustee
---------------------------------
SERVICING AND ADMINISTRATION AGREEMENT
Dated as of ___________, 199__
---------------------------------
$_________________
Collateralized Mortgage Obligations
Series _____-_____
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- - ------- ----
ARTICLE I
DEFINITIONS; CERTAIN CALCULATIONS IN RESPECT
OF THE MORTGAGE POOL
1.01. Defined Terms...........................................................2
1.02. Certain Calculations in Respect of the Mortgage Pool...................25
ARTICLE II
CERTAIN MATTERS REGARDING THE
MORTGAGE LOANS; REPRESENTATIONS
AND WARRANTIES OF THE PARTIES
2.01. Delivery of Mortgage Loan Files and Related Documents..................27
2.02. Document Defects and Breaches..........................................28
2.03. Representations and Warranties of the Issuer...........................29
2.04. Representations and Warranties of the Master Servicer..................30
2.05. Representations and Warranties of the Special Servicer.................32
2.06. Representations, Warranties and Covenants of the Trustee...............33
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
3.01. Administration of the Mortgage Loans; Collection of Mortgage
Loan Payments..........................................................36
3.02 Collection of Mortgage Loan Payments...................................37
3.03. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts; Reserve Accounts.............................................38
3.04. Custodial Account......................................................40
3.05. Permitted Withdrawals from the Custodial Account.......................42
3.06. Investment of Funds in the Custodial Account and the REO Account.......45
3.07. Maintenance of Insurance Policies; Errors and Omissions and
Fidelity Coverage......................................................47
3.08. Enforcement of Alienation Clauses......................................49
3.09. Realization upon Defaulted Mortgage Loans..............................49
3.10. Trustee to Cooperate; Release of Mortgage Files........................52
3.11. Servicing Compensation; Interest on Servicing Advances;
Payment of Certain Expenses; Obligations of the Trustee
regarding Back-up Servicing Advances...................................54
-i-
<PAGE>
Section Page
- - ------- ----
3.12. Property Inspections; Collection of Financial Statements;
Delivery of Certain Reports............................................58
3.13. Annual Statement as to Compliance......................................58
3.14. Reports by Independent Public Accountants..............................59
3.15. Access to Certain Information..........................................59
3.16. Title to REO Property; REO Account.....................................60
3.17. Management of REO Property.............................................61
3.18. Sale of Mortgage Loans and REO Properties..............................64
3.19. Additional Obligations of Master Servicer..............................68
3.20. Modifications, Waivers, Amendments and Consents........................69
3.21. Transfer of Servicing Between Master Servicer and Special
Servicer; Record Keeping...............................................72
3.22. Sub-Servicing Agreements...............................................73
3.23 Certain Tax Related Matters............................................75
ARTICLE IV
MASTER SERVICER REMITTANCES; REPORTS; P&I ADVANCES
4.01. Master Servicer Remittances............................................77
4.02. Reports................................................................77
4.03. P&I Advances; Advances relating to the Master Servicer
Remittance Amount......................................................78
ARTICLE V
THE MASTER SERVICER AND
THE SPECIAL SERVICER
5.01. Liability of the Master Servicer and the Special Servicer..............81
5.02. Merger, Consolidation or Conversion of the Master Servicer
or the Special Servicer................................................81
5.03. Limitation on Liability of the Master Servicer and the
Special Servicer.......................................................81
5.04. Master Servicer and Special Servicer Not to Resign.....................82
5.05. Rights of the Issuer and the Trustee in Respect of the Master
Servicer and the Special Servicer......................................83
ARTICLE VI
DEFAULT
6.01. Events of Default......................................................84
6.02. Trustee to Act; Appointment of Successor...............................87
6.03. Waiver of Events of Default............................................88
6.04. Additional Remedies of Trustee upon Event of Default...................88
-ii-
<PAGE>
Section Page
- - ------- ----
ARTICLE VII
TERMINATION
7.01. Termination Upon Liquidation of All Mortgage Loans.....................89
ARTICLE VIII
MISCELLANEOUS PROVISIONS
8.01. Amendments; Successors to the Issuer and the Trustee...................90
8.02. Successors to the Issuer and the Trustee...............................90
8.03. Recordation of Agreement; Counterparts.................................90
8.04. Governing Law..........................................................91
8.05. Notices................................................................91
8.06. Severability of Provisions.............................................91
8.07. Successors and Assigns; Beneficiaries..................................91
8.08. Article and Section Headings...........................................92
8.09. Notices to Rating Agencies.............................................92
8.10. Complete Agreement.....................................................93
-iii-
<PAGE>
EXHIBITS
EXHIBIT A Mortgage Loan Schedule
EXHIBIT B-1 Form of Master Servicer Request for Release
EXHIBIT B-2 Form of Special Servicer Request for Release
EXHIBIT C-1 Form of Determination Date Report
EXHIBIT C-2 Form of Special Servicer Report
EXHIBIT C-3 Form of Operating Statement Analysis
-iv-
<PAGE>
This Servicing and Administration Agreement (this "Agreement"), is
dated and effective as of _________, 199__ (the "Cut-off Date"), among
Structured Asset Securities Corporation Trust [I], as Issuer, _______________,
as Master Servicer, _______________, as Special Servicer, and _______________,
as Trustee.
PRELIMINARY STATEMENT:
The Issuer is a trust established under the laws of the State of
___________ by Structured Asset Securities Corporation (the "Company"), pursuant
to a Deposit Trust Agreement, dated as of _________, ______ (the "Deposit Trust
Agreement"), between the Company and ______________ as owner trustee (in such
capacity, the "Owner Trustee"). Pursuant to the Deposit Trust Agreement, the
Company delivered to, and deposited with, the Owner Trustee, as owner trustee,
on behalf of the Issuer, certain [provide general description of Mortgage Loans]
mortgage loans (the "Mortgage Loans"), which are more specifically identified on
Exhibit A hereto and which had been acquired by the Company from _______________
as seller (in such capacity, the "Mortgage Loan Seller") pursuant to the
Mortgage Loan Purchase Agreement, dated as of ________________, ______ (the
"Mortgage Loan Purchase Agreement"), between the Company and the Mortgage Loan
Seller.
Pursuant to a Trust Indenture, dated as of __________, _____ (the
"Indenture"), between the [Company][Owner Trustee], on behalf of the Issuer, and
the Trustee, as indenture trustee, on behalf of the Bondholders, the Issuer
issued collateralized mortgage obligations (collectively, the "Bonds"), in
multiple classes (each, a "Class"), secured by a pledge of, among other things,
the Mortgage Loans.
The parties hereto desire to provide for, among other things, the
servicing and administration of the Mortgage Loans for so long as the Bonds are
Outstanding.
In consideration of the mutual agreements herein contained, the
Issuer, the Master Servicer, the Special Servicer and the Trustee agree as
follows:
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ARTICLE I
DEFINITIONS; CERTAIN CALCULATIONS IN RESPECT OF THE MORTGAGE POOL
SECTION 1.01. Defined Terms.
(a) Whenever used in this Agreement, including in the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in this Section 1.01.
["Acquisition Date": With respect to any REO Property, the first day
on which such REO Property is considered to be acquired by the Trustee, on
behalf of the Issuer and the Bondholders, within the meaning of Treasury
regulation Section 1.856-6(b)(1), which is the first day on which the Trustee,
on behalf of the Issuer and the Bondholders, is treated as the owner of such REO
Property for federal income tax purposes.]
"Advance": Any P&I Advance or Servicing Advance.
"Advance Interest": Interest accrued on any Advance at the
Reimbursement Rate and payable to the Master Servicer, the Special Servicer or
the Trustee, as the case may be, all in accordance with Section 3.11(f) or
Section 4.03(d), as applicable.
["Adverse REMIC Event": Either (i) the endangerment of the status of
any REMIC Pool as a REMIC or (ii) the imposition of a tax upon any REMIC Pool or
on its assets or transactions (including, without limitation, the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax
on prohibited contributions set forth in Section 860G(d) of the Code).]
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Servicing and Administration Agreement, together
with all amendments hereof and supplements hereto.
"Appraisal": With respect to any Mortgaged Property or REO Property
as to which an appraisal is required to be performed pursuant to the terms of
this Agreement, either: (i) a narrative appraisal complying with USPAP conducted
by a Qualified Appraiser in the case of Mortgage Loans and REO Loans with a
Stated Principal Balance as of the date of such appraisal of greater than
$1,000,000; or (ii) a limited appraisal and a summary report of the "market
value" of the Mortgaged Property, as defined in 12 CFR ss. 225.62(g), conducted
by a Qualified Appraiser
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in the case of Mortgage Loans and REO Loans with a Stated Principal Balance as
of the date of such appraisal of $1,000,000 or less.
"Appraisal Reduction Amount": With respect to any Required Appraisal
Loan, an amount equal to the excess, if any, of (a) as calculated on the
Determination Date immediately following the date on which the most recent
relevant Appraisal was obtained by the Special Servicer pursuant to this
Agreement, the sum of (i) the Stated Principal Balance of such Required
Appraisal Loan, (ii) to the extent not previously advanced by or on behalf of
the Master Servicer or the Trustee, all accrued and unpaid interest on such
Required Appraisal Loan through the most recent Due Date prior to such
Determination Date at a per annum rate equal to the sum of the related Net
Mortgage Rate and the Trustee's Fee Rate, (iii) all accrued but unpaid Master
Servicing Fees, Property Servicing Fees and Special Servicing Fees in respect of
such Required Appraisal Loan, (iv) all related unreimbursed Advances made by or
on behalf of the Master Servicer, the Special Servicer or the Trustee in respect
of such Required Appraisal Loan, together with all unpaid Advance Interest
accrued on such Advances, and (v) all currently due but unpaid real estate taxes
and assessments, insurance premiums, and if applicable, ground rents in respect
of the related Mortgaged Property or REO Property, net of any Escrow Payments or
other reserves held by the Master Servicer or the Special Servicer with respect
to any such item, over (b) 90% of an amount equal to (i) the Appraised Value of
the related Mortgaged Property or REO Property, as applicable, as determined by
such Appraisal, net of (ii) the amount of any liens on such property (not
accounted for in clause (a)(v) of this definition) that are prior to the lien of
the Required Appraisal Loan.
"Appraised Value": With respect to each Mortgaged Property or REO
Property, the appraised value thereof (as is) based upon the most recent
Appraisal obtained pursuant to this Agreement but in no event based upon an
Appraisal more than 12 months old.
"Assignment of Leases": With respect to any Mortgaged Property, any
assignment of leases, rents and profits or similar document or instrument
executed by the Mortgagor in connection with the origination of the related
Mortgage Loan.
"Assumed Scheduled Payment": With respect to any Balloon Mortgage
Loan for its Stated Maturity Date (provided that such Mortgage Loan has not been
paid in full, and no other Liquidation Event has occurred in respect thereof, on
or before such date) and for any subsequent Due Date therefor as of which such
Mortgage Loan remains outstanding and part of the Trust Estate, the scheduled
monthly payment of principal and/or interest deemed to be due in respect thereof
on such Due Date equal to the Scheduled Payment that would have been due in
respect of such Mortgage Loan on such Due Date if it had been required to
continue to pay in accordance with the amortization schedule, if any, in effect
on the Closing Date, and without regard to the occurrence of its Stated Maturity
Date. With respect to any REO Loan, for any Due Date therefor as of which the
related REO Property remains part of the Trust Estate, the scheduled monthly
payment of principal and/or interest deemed to be due in respect thereof on such
Due Date equal to the Scheduled Payment that would have been due in respect of
the predecessor Mortgage Loan on such Due Date had it remained outstanding (or,
if the predecessor Mortgage Loan was a
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Balloon Mortgage Loan and such Due Date coincides with or follows what had been
its Stated Maturity Date, the Assumed Scheduled Payment that would have been
deemed due in respect of the predecessor Mortgage Loan on such Due Date had it
remained outstanding).
"Balloon Mortgage Loan": Any Mortgage Loan that by its original
terms or by virtue of any modification entered into as of the Closing Date
provides for an amortization schedule extending beyond its Stated Maturity Date
and as to which, in accordance with such terms, the Scheduled Payment due on its
Stated Maturity Date is larger than the Scheduled Payment due on the Due Date
immediately preceding its Stated Maturity Date.
"Balloon Payment": With respect to any Balloon Mortgage Loan as of
any date of determination, the Scheduled Payment payable on the Stated Maturity
Date of such Mortgage Loan.
"Bankruptcy Code": The federal Bankruptcy Code, as amended from time
to time (Title 11 of the United States Code).
"Bond": Any one of the Issuer's Collateralized Mortgage Obligations,
Series 199__-____, issued and Outstanding under the Indenture.
"Breach": As defined in Section 2.02(a).
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, either of the cities in which
the Primary Servicing Offices of the Master Servicer and the Special Servicer
are located or the city in which the Corporate Trust Office of the Trustee is
located, are authorized or obligated by law or executive order to remain closed.
"CERCLA": The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Class": Collectively, all of the Bonds bearing the same
alphabetical and, if applicable, numerical class designation.
"Closing Date": _____________, 199__.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The account or accounts created and maintained
by the Trustee pursuant to the Indenture in trust for the Bondholders.
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"Collection Period": With respect to any Payment Date, the period
commencing immediately following the prior such period (or, in the case of the
initial Collection Period, commencing immediately following the Cut-off Date)
and ending on and including the related Determination Date.
"Company": Structured Asset Securities Corporation, or its successor
in interest.
"Compensating Interest Payment": Any payment made by the Master
Servicer pursuant to Section 3.19(a) to cover Prepayment Interest Shortfalls.
"Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at __________________, Attention:
_________________.
"Corrected Mortgage Loan": Any Mortgage Loan that had been a
Specially Serviced Mortgage Loan but has ceased to be such in accordance with
the definition of "Specially Serviced Mortgage Loan" (other than by reason of a
Liquidation Event occurring in respect of such Mortgage Loan or the related
Mortgaged Property becoming an REO Property).
"Custodial Account": The segregated account or accounts created and
maintained by the Master Servicer pursuant to Section 3.04(a) on behalf of the
Trustee in trust for the Bondholders and, subject to the lien of the Indenture,
the Issuer, which shall be entitled "_________________, as Master Servicer, in
trust for the registered holders of Structured Asset Securities Corporation
Trust [I] , Collateralized Mortgage Obligations, Series 199__-____ and, subject
to the lien of the related Indenture, for Structured Asset Securities
Corporation Trust [I]".
"Custodian": A Person who is at any time appointed by the Trustee as
a document custodian for the Mortgage Files, which Person shall not be the Owner
Trustee or an Affiliate of the Owner Trustee.
"Cut-off Date": ______________, 199__.
"Cut-off Date Balance": With respect to any Mortgage Loan, the
outstanding principal balance of such Mortgage Loan as of the Cut-off Date,
after application of all payments of principal due on or before such date,
whether or not received.
"Default Interest": With respect to any Mortgage Loan (or successor
REO Loan), any amounts collected thereon, other than late payment charges,
Prepayment Premiums or Yield Maintenance Premiums, that represent penalty
interest in excess of interest on the principal balance of such Mortgage Loan
(or successor REO Loan) accrued at the related Mortgage Rate.
"Defaulted Mortgage Loan": A Mortgage Loan (i) that is delinquent in
an amount equal to at least two Monthly Payments (not including the Balloon
Payment) or is delinquent thirty
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days or more in respect of its Balloon Payment, in either case such delinquency
to be determined without giving effect to any grace period permitted by the
related Mortgage or Mortgage Note and without regard to any acceleration of
payments under the related Mortgage and Mortgage Note, or (ii) as to which the
Special Servicer has, by written notice to the related Mortgagor, accelerated
the maturity of the indebtedness evidenced by the related Mortgage Note.
"Deposit Trust Agreement": The Deposit Trust Agreement dated as of
_________, 199__, between the Company and the Owner Trustee.
"Determination Date": With respect to any Payment Date, the earlier
of (i) the __th day of the month in which such Payment Date occurs, or if such
__th day is not a Business Day, the immediately preceding Business Day or (ii)
the third Business Day preceding such Payment Date.
"Determination Date Report": As defined in Section 4.02(a).
["Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by the REMIC Pool in which
it is included (other than through an Independent Contractor), provided,
however, that the Special Servicer (or any Sub-Servicer on behalf of the Special
Servicer) shall not be considered to Directly Operate an REO Property solely
because the Special Servicer (or any Sub-Servicer on behalf of the Special
Servicer) establishes rental terms, chooses tenants, enters into or renews
leases, deals with taxes and insurance, or makes decisions as to repairs or
capital expenditures with respect to such REO Property.]
"Document Defect": As defined in Section 2.02(a).
"Due Date": With respect to any Mortgage Loan (and any successor REO
Loan), the day of the month set forth in the related Mortgage Note on which each
Monthly Payment on such Mortgage Loan is scheduled to be first due.
"Eligible Account": Any of (i) an account maintained with a federal
or state chartered depository institution or trust company, the long-term
deposit or long-term unsecured debt obligations of which (or of such
institution's parent holding company) are rated at least "[AA]" (or the
equivalent) by each Rating Agency (if the deposits are to be held in the account
for more than 30 days), or the short-term deposit or short-term unsecured debt
obligations of which (or of such institution's parent holding company) are rated
at least "[A-1]" (or the equivalent) by ____ and at least ____ (or the
equivalent) by ____ (if the deposits are to be held in the account for 30 days
or less), in any event at any time funds are on deposit therein, or (ii) a
segregated trust account maintained with a federal or state chartered depository
institution or trust company acting in its fiduciary capacity, which, in the
case of a state chartered depository institution or trust company is subject to
regulations regarding fiduciary funds on deposit therein
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substantially similar to 12 CFR ss. 9.10(b), and which, in either case, has a
combined capital and surplus of at least $50,000,000 and is subject to
supervision or examination by federal or state authority, or (iii) any other
account that is acceptable to the Rating Agencies (as evidenced by written
confirmation from each Rating Agency that the use of such account would not, in
and of itself, cause a qualification, downgrading or withdrawal of the
then-current rating assigned thereby to any Class of Bonds).
"Emergency Advance:" Any Servicing Advance that must be made within
five Business Days in order to avoid any penalty, any material harm to a
Mortgaged Property or any other material adverse consequence to the Trust
Estate.
"Escrow Payment": Any payment received by the Master Servicer or the
Special Servicer for the account of any Mortgagor for application toward the
payment of real estate taxes, assessments, insurance premiums, ground rents (if
applicable) and similar items in respect of the related Mortgaged Property.
"Event of Default": One or more of the events described in Section
6.01(a).
"Exchange Act": The Securities Exchange Act of 1934, as amended.
"Extraordinary S&A Expense". Any expense incurred in connection with
the servicing and administration of the Mortgage Loans and any REO Properties or
otherwise incurred hereunder and not otherwise included in the calculation of a
Realized Loss that would result in the Bondholders' receiving less than the full
amount of principal and/or interest on their Bonds, or the Issuer's receiving
less than the full amount of principal and/or interest on the Mortgage Pool, to
which they or it are otherwise entitled on any Payment Date pursuant to the
Indenture.
"FDIC": The Federal Deposit Insurance Corporation or any successor.
"FHLMC": The Federal Home Loan Mortgage Corporation or any
successor.
"Final Recovery Determination": A determination made by the Special
Servicer, in its reasonable good faith judgment, and in any event subject to the
Servicing Standard, with respect to any defaulted Mortgage Loan or REO Property
(other than a Mortgage Loan or REO Property, as the case may be, purchased by
the Mortgage Loan Seller pursuant to the Mortgage Loan Purchase Agreement or
purchased or otherwise removed from the Trust Estate by the Issuer, the Master
Servicer or the Special Servicer pursuant to or as contemplated by Section
3.18), that there has been a recovery of all related Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries that will ultimately be
recoverable.
"FNMA": The Federal National Mortgage Association or any successor.
"Hazardous Materials": Any dangerous, toxic or hazardous pollutants,
chemicals, wastes, or substances, including, without limitation, those so
identified pursuant to CERCLA or
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any other federal, state or local environmental related laws and regulations now
existing or hereafter enacted, and specifically including, without limitation,
asbestos and asbestos-containing materials, polychlorinated biphenyls ("PCBs"),
radon gas, petroleum and petroleum products, urea formaldehyde and any
substances classified as being "in inventory", "usable work in process" or
similar classification which would, if classified as unusable, be included in
the foregoing definition.
"Indenture": That certain Trust Indenture, dated as of ________,
____, between the [Company][Owner Trustee] and the Trustee, relating to the
Bonds.
"Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Issuer, the Master Servicer,
the Special Servicer, the Trustee and any and all Affiliates thereof, (ii) does
not have any direct financial interest in or any material indirect financial
interest in any of the Issuer, the Master Servicer, the Special Servicer, the
Trustee or any Affiliate thereof, and (iii) is not connected with the Issuer,
the Master Servicer, the Special Servicer, the Trustee or any Affiliate thereof
as an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions; provided, however, that a Person shall not
fail to be Independent of the Issuer, the Master Servicer, the Special Servicer,
the Trustee or any Affiliate thereof merely because such Person is the
beneficial owner of 1% or less of any class of securities issued by the Issuer,
the Master Servicer, the Special Servicer, the Trustee or any Affiliate thereof,
as the case may be.
["Independent Contractor": Any Person that would be an "independent
contractor" with respect to a REMIC Pool within the meaning of Section 856(d)(3)
of the Code if such REMIC Pool were a real estate investment trust (except that
the ownership test set forth in that section shall be considered to be met by
any Person that owns, directly or indirectly, 35% or more of any Class of Bonds,
or such other interest in any Class of Bonds as is set forth in an Opinion of
Counsel, which shall be at no expense to the Trustee, the Issuer or the
Bondholders, delivered to the Trustee), so long as such REMIC Pool does not
receive or derive any income from such Person and provided that the relationship
between such Person and such REMIC Pool is at arm's length, all within the
meaning of Treasury regulation Section 1.856-4(b)(5), or any other Person upon
receipt by the Trustee of an Opinion of Counsel, which shall be at no expense to
the Trustee, Issuer or the Bondholders, to the effect that the taking of any
action in respect of any REO Property by such Person, subject to any conditions
therein specified, that is otherwise herein contemplated to be taken by an
Independent Contractor will not cause such REO Property to cease to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code, or
cause any income realized in respect of such REO Property to fail to qualify as
Rents from Real Property.]
"Insurance Policy": With respect to any Mortgage Loan or REO
Property, any hazard insurance policy, flood insurance policy, title insurance
policy or other insurance policy that is maintained from time to time in respect
of such Mortgage Loan (or the related Mortgaged Property) or such REO Property,
as the case may be.
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"Insurance Proceeds": Proceeds paid under any Insurance Policy, to
the extent such proceeds are not applied to the restoration of the related
Mortgaged Property or REO Property or released to the related Mortgagor, in any
case, in accordance with the Servicing Standard.
"Interested Person": The Issuer, the Master Servicer, the Special
Servicer, the Mortgage Loan Seller, any Bondholder, or any Affiliate of any such
Person.
"Investment Account": As defined in Section 3.06(a).
"Issuer": Structured Asset Securities Corporation Trust [I], or its
successor in interest.
"Late Collections": With respect to any Mortgage Loan, all amounts
received thereon during any Collection Period, whether as payments, Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late collections of
the principal and/or interest portions of a Scheduled Payment (other than a
Balloon Payment) or an Assumed Scheduled Payment in respect of such Mortgage
Loan due or deemed due on a Due Date in a previous Collection Period, or on a
Due Date coinciding with or preceding the Cut-off Date, and not previously
recovered. With respect to any REO Loan, all amounts received in connection with
the related REO Property during any Collection Period, whether as Insurance
Proceeds, Liquidation Proceeds, REO Revenues or otherwise, which represent late
collections of the principal and/or interest portions of a Scheduled Payment
(other than a Balloon Payment) or an Assumed Scheduled Payment in respect of the
predecessor Mortgage Loan or late collections of the principal and/or interest
portions of an Assumed Scheduled Payment in respect of such REO Loan due or
deemed due on a Due Date in a previous Collection Period and not previously
recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final Recovery
Determination is made with respect to such Mortgage Loan; (iii) such Mortgage
Loan is purchased by the Mortgage Loan Seller pursuant to the Mortgage Loan
Purchase Agreement; or (iv) such Mortgage Loan is purchased or otherwise removed
from the Trust Estate by the Issuer, the Special Servicer or the Master Servicer
pursuant to or as contemplated by Section 3.18. With respect to any REO Property
(and the related REO Loan), a Final Recovery Determination is made with respect
to such REO Property.
"Liquidation Fee": With respect to each Specially Serviced Mortgage
Loan or REO Property (other than any Specially Serviced Mortgage Loan or REO
Property that is purchased or otherwise removed from the Trust Estate by the
Issuer, the Special Servicer or the Master Servicer pursuant to or as
contemplated by Section 3.18 or that is purchased by the Mortgage Loan Seller
pursuant to the Mortgage Loan Purchase Agreement), the fee designated as such
and payable to the Special Servicer pursuant to the fourth paragraph of Section
3.11(c).
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"Liquidation Fee Rate": With respect to each Specially Serviced
Mortgage Loan or REO Property as to which a Liquidation Fee is payable, ____%.
"Liquidation Proceeds": All cash amounts (other than Insurance
Proceeds and REO Revenues) received by the Master Servicer or the Special
Servicer in connection with: (i) the taking of all or a part of a Mortgaged
Property by exercise of the power of eminent domain or condemnation; (ii) the
liquidation of a Mortgaged Property or other collateral constituting security
for a defaulted Mortgage Loan, through trustee's sale, foreclosure sale, REO
Disposition or otherwise, exclusive of any portion thereof required to be
released to the related Mortgagor in accordance with applicable law and the
terms and conditions of the related Mortgage Note and Mortgage; (iii) the
realization upon any deficiency judgment obtained against a Mortgagor; (iv) the
purchase or other removal from the Trust Estate of a Defaulted Mortgage Loan by
the Issuer pursuant to or as contemplated by Section 3.18(b) or by the Master
Servicer or the Special Servicer pursuant to or as contemplated by Section
3.18(c) or any other sale thereof pursuant to Section 3.18(d); or (v) the
purchase of a Mortgage Loan by the Mortgage Loan Seller pursuant to the Mortgage
Loan Purchase Agreement.
"Master Servicer": _____________________, its successor in interest,
or any successor servicer appointed as herein provided.
"Master Servicer Remittance Amount": With respect to any Master
Servicer Remittance Date, an amount equal to (a) all amounts on deposit in the
Custodial Account as of the commencement of business on such Master Servicer
Remittance Date, net of (b) any portion of the amounts described in clause (a)
of this definition that represents one or more of the following: (i) collected
Monthly Payments that are due on a Due Date following the end of the related
Collection Period, (ii) any payments of principal (including, without
limitation, Principal Prepayments) and interest, Liquidation Proceeds and
Insurance Proceeds received after the end of the related Collection Period,
(iii) any Prepayment Premiums and/or Yield Maintenance Premiums received after
the end of the related Collection Period, (iv) any amounts payable or
reimbursable to any Person from the Custodial Account pursuant to clauses (ii)
through (xvi) of Section 3.05(a), and (v) any amounts deposited in the Custodial
Account in error; provided that the Master Servicer Remittance Amount for the
final Master Servicer Remittance Date shall be calculated without regard to
clauses (b)(i), (b)(ii) and (b)(iii) of this definition.
"Master Servicer Remittance Date": The _______ Business Day
preceding each Payment Date.
"Master Servicing Fee": With respect to each Mortgage Loan and REO
Loan, the fee designated as such and payable to the Master Servicer pursuant to
Section 3.11(a).
"Master Servicing Fee Rate": With respect to each Mortgage Loan and
REO Loan, _______% per annum.
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"Modified Mortgage Loan": Any Mortgage Loan as to which any
Servicing Transfer Event has occurred and which has been modified by the Special
Servicer pursuant to Section 3.20 in a manner that:
(A) affects the amount or timing of any payment of principal or
interest due thereon (other than, or in addition to, bringing current
Monthly Payments with respect to such Mortgage Loan);
(B) except as expressly contemplated by the related Mortgage,
results in a release of the lien of the Mortgage on any material portion
of the related Mortgaged Property without a corresponding Principal
Prepayment in an amount not less than the fair market value (as is), as
determined by an Appraisal delivered to the Special Servicer (at the
expense of the related Mortgagor and upon which the Special Servicer may
conclusively rely) of the property to be released; or
(C) in the reasonable good faith judgment of the Special Servicer,
otherwise materially impairs the security for such Mortgage Loan or
reduces the likelihood of timely payment of amounts due thereon.
"Monthly Payment": With respect to any Mortgage Loan as of any Due
Date, the scheduled monthly payment of principal and interest or interest only
on such Mortgage Loan, including any Balloon Payment, that is actually payable
by the related Mortgagor from time to time under the terms of the related
Mortgage Note (as such terms may be changed or modified in connection with a
bankruptcy or similar proceeding involving the related Mortgagor or by reason of
a modification, waiver or amendment granted or agreed to by the Special Servicer
pursuant to Section 3.20).
"Mortgage": A mortgage, deed of trust, deed to secure debt or
similar document that secures a Mortgage Note and creates a lien on a Mortgaged
Property.
"Mortgage Loan": Each of the mortgage loans listed on the Mortgage
Loan Schedule and from time to time held in the Trust Estate. As used herein,
the term "Mortgage Loan" includes the related Mortgage Note, Mortgage and other
security documents contained in the related Mortgage File.
"Mortgage Loan Purchase Agreement": That certain Mortgage Loan
Purchase and Sale Agreement, dated as of ____________, 199__, between the
Company and the Mortgage Loan Seller relating to the transfer of the Mortgage
Loans by the Mortgage Loan Seller to the Company.
"Mortgage Loan Schedule": The list of Mortgage Loans attached hereto
as Exhibit A. Such list shall set forth the following information with respect
to each Mortgage Loan:
(i) the Mortgage Loan number;
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(ii) the street address (including city, state and zip code) of the
related Mortgaged Property;
(iii) the Cut-off Date Balance;
(iv) the amount of the Monthly Payment due on the first Due Date
following the Closing Date;
(v) the Mortgage Rate;
(vi) the (A) remaining term to stated maturity and (B) the Stated
Maturity Date; and
(vii) in the case of a Balloon Mortgage Loan, the remaining amortization
term.
"Mortgage Loan Seller": ___________________ or its successor in
interest.
"Mortgage Note": The original executed note evidencing the
indebtedness of a Mortgagor under a Mortgage Loan, together with any rider,
addendum or amendment thereto, or any renewal, substitution or replacement of
such note.
"Mortgage Pool": Collectively, all of the Mortgage Loans and any
successor REO Loans.
"Mortgage Rate": With respect to any Mortgage Loan (and any
successor REO Loan), the fixed annualized rate at which interest is scheduled
(in the absence of a default) to accrue on such Mortgage Loan from time to time
in accordance with the related Mortgage Note and applicable law, as such rate
may be modified in accordance with Section 3.20 or in connection with a
bankruptcy, insolvency or similar proceeding involving the related Mortgagor.
"Mortgaged Property": A property subject to the lien of a Mortgage.
"Mortgagor": The obligor or obligors on a Mortgage Note, including
without limitation, any Person that has acquired the related Mortgaged Property
and assumed the obligations of the original obligor under the Mortgage Note.
"Net Investment Earnings": With respect to any Investment Account
for any Collection Period, the amount, if any, by which the aggregate of all
interest and other income realized during such Collection Period on funds held
in such Investment Account, exceeds the aggregate of all losses, if any,
incurred during such Collection Period in connection with the investment of such
funds in accordance with Section 3.06.
"Net Investment Loss": With respect to any Investment Account for
any Collection Period, the amount by which the aggregate of all losses, if any,
incurred during such Collection Period in connection with the investment of
funds held in such Investment Account in accordance
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with Section 3.06, exceeds the aggregate of all interest and other income
realized during such Collection Period on such funds.
"Net Mortgage Rate": With respect to any Mortgage Loan (or successor
REO Loan), as of any date of determination, the related Mortgage Rate minus ___
basis points.
"Net Operating Income": With respect to any Mortgaged Property, the
net operating income derived from such Mortgaged Property, calculated in
accordance with Exhibit E.
"Net Penalty Charges": With respect to any Mortgage Loan, any
Penalty Charges actually collected thereon (based on the allocations specified
in Section 1.02), net of any portion thereof allocable to pay the Special
Servicer any Liquidation Fee or Workout Fee in respect of such Mortgage Loan and
further net of any Advance Interest accrued on Advances made in respect of such
Mortgage Loan and reimbursable from such Penalty Charges in accordance with
Section 3.05(a).
"Net Yield Maintenance Premium:" With respect to any Mortgage Loan,
any Yield Maintenance Premium actually collected thereon, net of any portion
thereof allocable to pay a Liquidation Fee or a Workout Fee.
"Nonrecoverable Advance": Any Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance.
"Nonrecoverable P&I Advance": [Any P&I Advance previously made or to
be made in respect of any Mortgage Loan or any REO Loan that, as determined by
the Master Servicer or, if applicable, the Trustee, in its reasonable good faith
judgment, and in any event subject to the Servicing Standard, will not be
ultimately recoverable from Late Collections or any other recovery on or in
respect of such Mortgage Loan or REO Loan.]
"Nonrecoverable Servicing Advance": [Any Servicing Advance
previously made or to be made in respect of a Mortgage Loan or REO Property
that, as determined by the Master Servicer, the Special Servicer or, if
applicable, the Trustee, in its reasonable good faith judgment, and in any event
subject to the Servicing Standard, will not be ultimately recoverable from Late
Collections or any other recovery on or in respect of such Mortgage Loan or REO
Property.]
"Officer's Certificate": A certificate signed by a Servicing Officer
of the Master Servicer or the Special Servicer or a Responsible Officer of the
Trustee, as the case may be.
"Operating Statement Analysis": As defined in Section 4.02(c).
"Opinion of Counsel": A written opinion of counsel (which counsel
shall be Independent of the Owner Trustee, the Master Servicer, the Special
Servicer and the Trustee)
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acceptable to and delivered to the addressee(s) thereof and which Opinion of
Counsel shall not be at the expense of the Trustee.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Owner Trustee": __________ or its successor in interest.
"P&I Advance": As to any Mortgage Loan or REO Loan, any advance made
by the Master Servicer [or the Trustee] pursuant to Section 4.03 [or any
comparable advance made by the Trustee pursuant to the Indenture].
"P&I Advance Date": The second Business Day preceding each Payment
Date.
"Penalty Charges": Default Interest, late payment charges and/or
charges for checks returned for insufficient funds that are paid or payable, as
the context may require, in respect of any Mortgage Loan or REO Loan.
"Permitted Investments": Any one or more of the following
obligations or securities:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States
or any agency or instrumentality thereof, provided such
obligations are backed by the full faith and credit of the
United States, have a predetermined, fixed amount of principal
due at maturity (that cannot vary or change), do not have an
"r" highlight attached to any rating, and each obligation has
a fixed interest rate or has its interest rate tied to a
single interest rate index plus a single fixed spread;
(ii) certain obligations of agencies or instrumentalities of the
United States that are not backed by the full faith and credit
of the United States, provided such obligations have a
predetermined, fixed amount of principal due at maturity (that
cannot vary or change), do not have an "r" highlight attached
to any rating, and each obligation has a fixed interest rate
or has its interest rate tied to a single interest rate index
plus a single fixed spread;
(iii) federal funds, uncertificated certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements
having maturities of not more than 365 days, of any bank or
trust company organized under the laws of the United States or
any state thereof, provided that such items are rated in the
highest short-term debt rating category of each of the Rating
Agencies or, in the case of each Rating Agency, such lower
rating as will not result in a qualification, downgrading or
withdrawal of the rating then assigned to any Class of Bonds
by such Rating Agency (as evidenced in writing by such
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Rating Agency), do not have an "r" highlight affixed to its
rating and its terms have a predetermined fixed amount of
principal due at maturity (that cannot vary or change), and
each obligation has a fixed interest rate or has its interest
rate tied to a single interest rate index plus a single fixed
spread;
(iv) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of
the United States or any state thereof (or of any corporation
not so incorporated, provided that the commercial paper is
United States Dollar denominated and amounts payable
thereunder are not subject to any withholding imposed by any
non-United States jurisdiction) which is rated in the highest
short-term debt rating category of each of the Rating Agencies
or, in the case of each Rating Agency, such lower rating as
will not result in a qualification, downgrading or withdrawal
of the rating then assigned to any Class of Bonds by such
Rating Agency (as evidenced in writing by such Rating Agency),
do not have an "r" highlight affixed to its rating and its
terms have a predetermined fixed amount of principal due at
maturity (that cannot vary or change), and each obligation has
a fixed interest rate or has its interest rate tied to a
single interest rate index plus a single fixed spread;
(v) units of money market funds which maintain a constant net
asset value and which are rated in the highest applicable
rating category of each of the Rating Agencies or, in the case
of each Rating Agency, such lower rating as will not result in
a qualification, downgrading or withdrawal of the rating then
assigned to any Class of Bonds by such Rating Agency (as
evidenced in writing by such Rating Agency); or
(vi) any other obligation or security acceptable to each Rating
Agency, which will not result in a qualification, downgrading
or withdrawal of the rating then assigned to any Class of
Bonds by such Rating Agency (as evidenced in writing by such
Rating Agency);
provided that (1) no investment described hereunder shall evidence either the
right to receive (x) only interest with respect to such investment or (y) a
yield to maturity greater than 120% of the yield to maturity at par of the
underlying obligations; and (2) that no investment described hereunder may be
purchased at a price greater than par if such investment may be prepaid or
called at a price less than its purchase price prior to stated maturity (that
cannot vary or change).
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Phase I Environmental Assessment": A "Phase I assessment" as
described in and meeting the criteria of Chapter 5 of the FNMA Multifamily
Guide, as amended from time to time.
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"Prepayment Interest Excess": With respect to any Mortgage Loan that
was subject to a Principal Prepayment in full or in part made on or prior to the
Determination Date in any calendar month but after the first day of such month,
any payment of interest (net of related Master Servicing Fees and Property
Servicing Fees) actually collected from the related Mortgagor and intended to
cover the period from the commencement of such month to the date of prepayment
(exclusive, however, of any related Prepayment Premium or Yield Maintenance
Premium that may have been collected).
"Prepayment Interest Shortfall": With respect to any Mortgage Loan
that was subject to a Principal Prepayment in full or in part made and applied
to such Mortgage Loan after the Determination Date in any calendar month, the
amount of interest, to the extent not collected from the related Mortgagor
(without regard to any Prepayment Premium or Yield Maintenance Premium that may
have been collected), that would have accrued at a rate per annum equal to the
Mortgage Rate for such Mortgage Loan (net of the Master Servicing Fee Rate and
Property Servicing Fee Rate) on the amount of such Principal Prepayment during
the period commencing on the date as of which such Principal Prepayment was
applied to such Mortgage Loan and ending on the last day of such month,
inclusive.
"Prepayment Premium": With respect to any Mortgage Loan, any
premium, penalty or fee paid or payable, as the context requires, by a Mortgagor
in connection with a Principal Prepayment on, or other early collection of
principal of, a Mortgage Loan or any successor REO Loan, to the extent such
premium, penalty or fee is expressed as a percentage of the principal amount
being prepaid or a specified amount.
"Primary Servicing Office": The office of the Master Servicer or the
Special Servicer, as the context may require, that is primarily responsible for
such party's servicing obligations hereunder.
"Prime Rate": The "prime rate" published in the "Money Rates"
section of The Wall Street Journal, as such "prime rate" may change from time to
time. If The Wall Street Journal ceases to publish the "prime rate," then the
Trustee, in its sole discretion, shall select an equivalent publication that
publishes such "prime rate"; and if such "prime rate" is no longer generally
published or is limited, regulated or administered by a governmental or
quasi-governmental body, then the Trustee shall select a comparable interest
rate index. In either case, such selection shall be made by the Trustee in its
sole discretion and the Trustee shall notify the Master Servicer and the Special
Servicer in writing of its selection.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan that is received in advance of its scheduled Due
Date and that is not accompanied by an amount of interest (without regard to any
Prepayment Premium or Yield Maintenance Premium that may have been collected)
representing scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment.
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"Property Servicing Fee": With respect to each Mortgage Loan and REO
Loan, the fee designated as such and payable to the Special Servicer pursuant to
the first paragraph of Section 3.11(c).
"Property Servicing Fee Rate": With respect to each Mortgage Loan
and REO Loan, _______% per annum.
"Purchase Price": With respect to any Mortgage Loan (or REO
Property), a cash price equal to the aggregate of: (a) the outstanding principal
balance of such Mortgage Loan (or the related REO Loan) as of the date of
purchase, (b) all accrued and unpaid interest on such Mortgage Loan (or the
related REO Loan) at the related Mortgage Rate to but not including the date of
purchase (or, if such purchase occurs after the Determination Date in any
calendar month, through the end of such calendar month), (c) all related and
unreimbursed Servicing Advances, and (d) solely in the case of a purchase by the
Mortgage Loan Seller pursuant to the Mortgage Loan Purchase Agreement, all
accrued and unpaid Advance Interest in respect of related Advances.
"Qualified Appraiser": In connection with the appraisal of any
Mortgaged Property or REO Property, an Independent MAI-designated appraiser with
at least five years of experience in respect of the relevant geographic location
and property type.
"Qualified Insurer": An insurance company or security or bonding
company qualified to write the related Insurance Policy in the relevant
jurisdiction.
"Rating Agency": Each of _______ and _______.
"Realized Loss": With respect to: (1) each defaulted Mortgage Loan
as to which a Final Recovery Determination has been made, or with respect to any
successor REO Loan as to which a Final Recovery Determination has been made as
to the related REO Property, an amount (not less than zero) equal to (a) the
unpaid principal balance of such Mortgage Loan or REO Loan, as the case may be,
as of the commencement of the Collection Period in which the Final Recovery
Determination was made, plus (b) without taking into account the amount
described in subclause (1)(d) of this definition, all accrued but unpaid
interest on such Mortgage Loan or REO Loan, as the case may be, at the related
Mortgage Rate to but not including the related Due Date in the Collection Period
in which the Final Recovery Determination was made, plus (c) any related
unreimbursed Servicing Advances as of the commencement of the Collection Period
in which the Final Recovery Determination was made, together with any new
related Servicing Advances made during such Collection Period, minus (d) all
payments and proceeds, if any, received in respect of such Mortgage Loan or REO
Loan, as the case may be, during the Collection Period in which such Final
Recovery Determination was made; (2) each defaulted Mortgage Loan as to which
any portion of the principal or past due interest payable thereunder was
canceled in connection with a bankruptcy or similar proceeding involving the
related Mortgagor or a modification, waiver or amendment of such Mortgage Loan
granted or agreed to by the Special Servicer pursuant to Section 3.20, the
amount of such principal or past due interest
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(other than any Default Interest) so canceled; and (3) each defaulted Mortgage
Loan as to which the Mortgage Rate thereon has been permanently reduced and not
recaptured for any period in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or a modification, waiver or amendment of such
Mortgage Loan granted or agreed to by the Special Servicer pursuant to Section
3.20, the amount of the consequent reduction in the interest portion of each
successive Monthly Payment due thereon (each such Realized Loss to be deemed to
have been incurred on the Due Date for each affected Monthly Payment).
"Reimbursement Rate": The rate per annum applicable to the accrual
of Advance Interest, which rate per annum is equal to the Prime Rate.
["REMIC": A "real estate mortgage investment conduit" as defined in
Section 860D of the Code.]
["REMIC Pool": Any of the REMICs created pursuant to the Indenture.]
["REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and proposed, temporary and final Treasury regulations and any
published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.]
["Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.]
"REO Account": A segregated custodial account or accounts created
and maintained by the Special Servicer pursuant to Section 3.16(b) on behalf of
the Trustee in trust for the Bondholders and, subject to the lien of the
Indenture, the Issuer, which shall be entitled " ____________________, as
Special Servicer, on behalf of and in trust for registered holders of Structured
Asset Securities Corporation Trust [I] , Collateralized Mortgage Obligations,
Series 199__-____" and, subject to the lien of the related Indenture, for
Structured Asset Securities Corporation Trust [I].
"REO Acquisition": The acquisition of any REO Property pursuant to
Section 3.09.
"REO Disposition": The sale or other disposition of any REO Property
pursuant to Section 3.18(d).
["REO Extension": As defined in Section 3.16(a).]
"REO Loan": The mortgage loan deemed for purposes hereof to be
outstanding with respect to each REO Property. Each REO Loan shall be deemed to
provide for monthly payments of principal and/or interest equal to its Assumed
Scheduled Payment and otherwise to
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have the same terms and conditions as its predecessor Mortgage Loan (such terms
and conditions to be applied without regard to the default on such predecessor
Mortgage Loan). Each REO Loan shall be deemed to have an initial unpaid
principal balance and Stated Principal Balance equal to the unpaid principal
balance and Stated Principal Balance, respectively, of its predecessor Mortgage
Loan as of the date of the related REO Acquisition. All Scheduled Payments
(other than any Balloon Payment), Assumed Scheduled Payments (in the case of a
Balloon Mortgage Loan delinquent in respect of its Balloon Payment) and other
amounts due and owing, or deemed to be due and owing, in respect of the
predecessor Mortgage Loan as of the date of the related REO Acquisition, shall
be deemed to continue to be due and owing in respect of an REO Loan. In
addition, all amounts payable or reimbursable to the Master Servicer, the
Special Servicer or the Trustee in respect of the predecessor Mortgage Loan as
of the date of the related REO Acquisition, including, without limitation, any
unpaid or unreimbursed Master Servicing Fees, Property Servicing Fees, Special
Servicing Fees and Advances (together with any related unpaid Advance Interest),
shall continue to be payable or reimbursable to the Master Servicer, the Special
Servicer or the Trustee, as the case may be, in respect of an REO Loan.
"REO Property": A Mortgaged Property acquired by the Special
Servicer on behalf of the Trustee for the benefit of the Bondholders and,
subject to the lien of the Indenture, the Issuer, through foreclosure,
acceptance of a deed in lieu of foreclosure or otherwise in accordance with
applicable law in connection with the default or imminent default of a Mortgage
Loan.
"REO Revenues": All income, rents, profits and proceeds derived from
the ownership, operation or leasing of any REO Property.
["REO Tax": As defined in Section 3.17(a)(i).]
"Request for Release": A request signed by a Servicing Officer of,
as applicable, the Master Servicer in the form of Exhibit B-1 attached hereto or
the Special Servicer in the form of Exhibit B-2 attached hereto.
"Required Appraisal Loan": As defined in Section 3.19(c).
"Reserve Account": The account or accounts created and maintained
pursuant to Section 3.03(d).
"Reserve Funds": With respect to any Mortgage Loan, any amounts
delivered by the related Mortgagor to be held in escrow by or on behalf of the
mortgagee representing: (i) reserves for repairs, replacements, capital
improvements and/or environmental testing and remediation with respect to the
related Mortgaged Property; or (ii) amounts to be applied as a Principal
Prepayment on such Mortgage Loan in the event that certain leasing criteria in
respect of the related Mortgaged Property are not met.
"Responsible Officer": When used with respect to the Trustee, any
Vice President, Assistant Vice President, Trust Officer, Assistant Secretary or
any other officer of the Trustee
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customarily performing functions similar to those performed by any of the above
designated officers and having direct responsibility for the administration of
this Agreement. When used with respect to any Bond Registrar (other than the
Trustee), any officer or assistant officer thereof.
"Scheduled Payment": With respect to any Mortgage Loan, for any Due
Date following the Cut-off Date as of which it is outstanding, the scheduled
monthly payment of principal and interest on such Mortgage Loan that is or would
be, as the case may be, payable by the related Mortgagor on such Due Date under
the terms of the related Mortgage Note as in effect on the Closing Date, without
regard to any subsequent change in or modification of such terms in connection
with a bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Special Servicer pursuant to Section 3.20, and assuming that each prior
Scheduled Payment has been made in a timely manner.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.03(a).
"Servicing Advances": All customary, reasonable and necessary "out
of pocket" costs and expenses paid or to be paid, as the context requires, by
the Master Servicer or the Special Servicer (or, if applicable, the Trustee) in
connection with the servicing of a Mortgage Loan after a default, delinquency or
other unanticipated event, or in connection with the administration of any REO
Property, including, but not limited to, the cost of (a) compliance with the
obligations of the Master Servicer and/or the Special Servicer set forth in
Sections 2.02(a), 2.02(c), 3.03(c) and 3.09, (b) the preservation, insurance,
restoration, protection and management of a Mortgaged Property, including the
cost of any "force placed" insurance policy purchased by the Master Servicer or
the Special Servicer to the extent such cost is allocable to a particular
Mortgaged Property that the Master Servicer or the Special Servicer is required
to cause to be insured pursuant to Section 3.07(a), (c) obtaining any
Liquidation Proceeds or Insurance Proceeds in respect of any Mortgage Loan or
REO Property, (d) any enforcement or judicial proceedings with respect to a
Mortgaged Property, including, without limitation, foreclosures, and (e) the
operation, management, maintenance and liquidation of any REO Property; provided
that notwithstanding anything to the contrary, "Servicing Advances" shall not
include allocable overhead of the Master Servicer or the Special Servicer, such
as costs for office space, office equipment, supplies and related expenses,
employee salaries and related expenses and similar internal costs and expenses,
or costs incurred by either such party in connection with its purchase of any
Mortgage Loan or REO Property pursuant to any provision of this Agreement.
"Servicing File": Any documents (other than documents required to be
part of the related Mortgage File) in the possession of the Master Servicer or
the Special Servicer and relating to the origination and servicing of any
Mortgage Loan or the administration of any REO Property.
"Servicing Officer": Any officer or employee of the Master Servicer
or the Special Servicer involved in, or responsible for, the administration and
servicing of the Mortgage Loans,
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whose name and specimen signature appear on a list of servicing officers
furnished by such party to the Trustee and the Issuer on the Closing Date, as
such list may be amended from time to time.
"Servicing Return Date": With respect to any Corrected Mortgage
Loan, the date that servicing thereof is returned by the Special Servicer to the
Master Servicer pursuant to Section 3.21(a).
"Servicing Standard": To service and administer the Mortgage Loans
and REO Properties with the higher of the care, skill and diligence with which
prudent institutional commercial mortgage lenders and loan servicers service
comparable mortgage loans and the care, skill, prudence and diligence with which
the Master Servicer or Special Servicer, as the case may be, generally services
comparable mortgage loans owned by it, and in any event with a view to the
timely collection of all scheduled payments of principal and interest under the
Mortgage Loans or, if a Mortgage Loan comes into and continues in default and no
satisfactory arrangements can be made for the collection of the delinquent
payments, the maximization of the recovery on such Mortgage Loan to the Issuer
and the Bondholders (as a collective whole) on a present value basis (the
relevant discounting of anticipated collections that will be payable to the
Issuer and the Bondholders to be performed at the related Net Mortgage Rate),
but without regard to: (i) any relationship that the Master Servicer or the
Special Servicer, as the case may be, or any Affiliate thereof may have with the
related Mortgagor or any other party hereto; (ii) the ownership of any Bond by
the Master Servicer or the Special Servicer, as the case may be, or by any
Affiliate thereof; (iii) the Master Servicer's obligation to make Advances; (iv)
the Special Servicer's obligation to make Servicing Advances; and (v) the right
of the Master Servicer (or any Affiliate thereof) or the Special Servicer (or
any Affiliate thereof), as the case may be, to receive compensation for its
services or reimbursement of costs hereunder or with respect to any particular
transaction.
"Servicing Transfer Event": With respect to any Mortgage Loan, the
occurrence of any of the events described in clauses (a) through (h) of the
definition of "Specially Serviced Mortgage Loan".
"Special Servicer": ___________________, its successor in interest,
or any successor special servicer appointed as herein provided.
"Special Servicer Report": As defined in Section 4.02(b).
"Special Servicing Fee": With respect to each Specially Serviced
Mortgage Loan and each REO Loan, the fee designated as such and payable to the
Special Servicer pursuant to the second paragraph of Section 3.11(c).
"Special Servicing Fee Rate": With respect to each Specially
Serviced Mortgage Loan and each REO Loan, _______% per annum.
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"Specially Serviced Mortgage Loan": Any Mortgage Loan as to which
any of the following events has occurred:
(a) the related Mortgagor has failed to make when due any Balloon
Payment, which failure continues, or the Master Servicer
determines in its reasonable good faith judgment will
continue, unremedied for 30 days; or
(b) the related Mortgagor has failed to make when due any Monthly
Payment (other than a Balloon Payment) or any other payment
required under the related Mortgage Note or the related
Mortgage, which failure continues unremedied for 60 days; or
(c) the Master Servicer has determined, in its reasonable good
faith judgment, that a default in the making a Monthly Payment
or any other payment required under the related Mortgage Note
or the related Mortgage is likely to occur within 30 days and
is likely to remain unremedied for at least 60 days or, in the
case of a Balloon Payment, for at least 30 days; or
(d) the Master Servicer has determined, in its reasonable good
faith judgment, that a default, other than as described in
clause (a) or (b) above, has occurred that may materially
impair the value of the related Mortgaged Property as security
for the Mortgage Loan, which default has continued unremedied
for the applicable cure period under the terms of the Mortgage
Loan (or, if no cure period is specified, for 30 days); or
(e) there has been commenced in any court or agency or supervisory
authority having jurisdiction in the premises an involuntary
action against the related Mortgagor under any present or
future federal or state bankruptcy, insolvency or similar law
for the appointment of a conservator or receiver or liquidator
in any insolvency, readjustment of debt, marshaling of assets
and liabilities or similar proceedings, or for the winding-up
or liquidation of its affairs; provided, however, that no
Workout Fee or Liquidation Fee shall be payable with respect
to a Specially Serviced Mortgage Loan that has become such
pursuant to the provisions of this subsection (e) if such
involuntary action is dismissed within 30 days of commencement
of such action (or is dismissed between 31 and 60 days after
such commencement in the absence of the Special Servicer
having provided substantial services in connection with such
dismissal) and no other Servicing Transfer Event then exists;
or
(f) the related Mortgagor shall have consented to the appointment
of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or
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relating to such Mortgagor or of or relating to all or
substantially all of its property; or
(g) the related Mortgagor shall have admitted in writing its
inability to pay its debts generally as they become due, filed
a petition to take advantage of any applicable insolvency or
reorganization statute, made an assignment for the benefit of
its creditors, or voluntarily suspended payment of its
obligations; or
(h) the Master Servicer shall have received notice of the
commencement of foreclosure or similar proceedings with
respect to the related Mortgaged Property;
provided, however, that a Mortgage Loan shall cease to be a Specially Serviced
Mortgage Loan, when a Liquidation Event has occurred in respect of such Mortgage
Loan, when the related Mortgaged Property has become an REO Property or, so long
as at such time no circumstance identified in clauses (a) through (h) above
exists that would cause the Mortgage Loan to continue to be characterized as a
Specially Serviced Mortgage Loan:
(w) with respect to the circumstances described in clauses (a) and
(b) above, when the related Mortgagor has made three
consecutive full and timely Monthly Payments under the terms
of such Mortgage Loan (as such terms may be changed or
modified in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or by reason of a
modification, waiver or amendment granted or agreed to by the
Special Servicer pursuant to Section 3.20);
(x) with respect to the circumstances described in clauses (c),
(e), (f) and (g) above, when such circumstances cease to exist
in the reasonable good faith judgment of the Special Servicer;
(y) with respect to the circumstances described in clause (d)
above, when such default is cured; and
(z) with respect to the circumstances described in clause (h)
above, when such proceedings are terminated.
"Stated Maturity Date": With respect to any Mortgage Loan, the Due
Date specified in the Mortgage Note (as in effect on the Closing Date) on which
the last payment of principal is due and payable under the terms of the Mortgage
Note (as in effect on the Closing Date), without regard to any change in or
modification of such terms in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or a modification, waiver or amendment of such
Mortgage Loan granted or agreed to by the Special Servicer pursuant to Section
3.20.
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"Stated Principal Balance": With respect to any Mortgage Loan (and
any successor REO Loan), the Cut-off Date Balance of such Mortgage Loan, as
reduced on each Payment Date (to not less than zero) by (i) all payments (or P&I
Advances in lieu thereof) and other collections of principal of such Mortgage
Loan (or successor REO Loan) that are (or, if they had not been applied to cover
any Extraordinary S&A Expense, would have been) paid to Bondholders and/or
distributed to the Issuer on such Payment Date, and (ii) the principal portion
of any Realized Loss incurred in respect of such Mortgage Loan (or successor or
REO Loan) during the related Collection Period. Notwithstanding the foregoing,
if a Liquidation Event occurs in respect of any Mortgage Loan or REO Property,
then the "Stated Principal Balance" of such Mortgage Loan or of the related REO
Loan, as the case may be, shall be zero commencing as of the Payment Date in the
Collection Period next following the Collection Period in which such Liquidation
Event occurred.
"Sub-Servicer": Any Person with which the Master Servicer or the
Special Servicer has entered into a Sub-Servicing Agreement.
"Sub-Servicing Agreement": The written contract between the Master
Servicer or the Special Servicer, on the one hand, and any Sub-Servicer, on the
other hand, relating to servicing and administration of Mortgage Loans as
provided in Section 3.22.
"Trustee": ___________________, its successor in interest, or any
successor trustee appointed as provided pursuant to the Indenture.
"Trustee's Fee Rate": _______% per annum, which is the rate at which
the Trustee's fee accrues, as specified in the Indenture.
"Trust Indenture Act": The Trust Indenture Act of 1939, as amended.
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
"UCC Financing Statement": A financing statement executed and filed
pursuant to the Uniform Commercial Code, as in effect in any relevant
jurisdiction.
"UCC-1", "UCC-2" and "UCC-3": UCC Financing Statements on Form
UCC-1, Form UCC-2 and Form UCC-3, respectively.
"USPAP": The Uniform Standards of Professional Appraisal Practices.
"Workout Fee": With respect to each Corrected Mortgage Loan, the fee
designated as such and payable to the Special Servicer pursuant to the third
paragraph of Section 3.11(c).
"Workout Fee Rate": With respect to each Corrected Mortgage Loan,
___%.
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"Yield Maintenance Premium": With respect to any Mortgage Loan, any
premium, penalty or fee paid or payable, as the context requires, by a Mortgagor
in connection with a Principal Prepayment on, or other early collection of
principal of, a Mortgage Loan, other than any Prepayment Premium.
(b) Whenever used in this Agreement, including in the Preliminary
Statement, the following words and phrases, unless the context otherwise
requires, shall have the meanings specified in the Indenture.
"Bond Owner"
"Bondholder"
"Bond Principal Amount"
"Bond Register"
"Bond Registrar"
"Book-Entry Bond"
"Grant"
"Mortgage Collateral"
"Mortgage File"
"Outstanding"
["REMIC Administrator"]
["Startup Day"]
"TIA"
"Trust Estate"
"Voting Rights"
SECTION 1.02. Certain Calculations in Respect of the Mortgage Pool.
(a) All amounts collected in respect of any Mortgage Loan in the
form of payments from Mortgagors, Liquidation Proceeds or Insurance Proceeds
shall be applied to amounts due and owing under the related Mortgage Note and
Mortgage (including, without limitation, for principal and accrued and unpaid
interest) in accordance with the express provisions of the related Mortgage Note
and Mortgage and, in the absence of such express provisions, shall be applied
for purposes of this Agreement: first, as a recovery of any related and
unreimbursed Servicing Advances; second, as a recovery of accrued and unpaid
interest at the related Mortgage Rate on such Mortgage Loan to but not
including, as appropriate, the date of receipt (or, in the case of a full
Monthly Payment from any Mortgagor, through the related Due Date); third, as a
recovery of principal of such Mortgage Loan then due and owing, including,
without limitation, by reason of acceleration of the Mortgage Loan following a
default thereunder (or, if a Liquidation Event has occurred in respect of such
Mortgage Loan, as a recovery of principal to the extent of its entire remaining
unpaid principal balance); fourth, as a recovery of amounts to be currently
applied to the payment of, or escrowed for the future payment of, real estate
taxes, assessments, insurance premiums, ground rents (if applicable) and similar
items; fifth, as a recovery of Reserve Funds to the extent then required to be
held in escrow; sixth, as a recovery of any Prepayment Premium or Yield
Maintenance Premium then due and owing under such
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Mortgage Loan; seventh, as a recovery of any other amounts then due and owing
under such Mortgage Loan; and eighth, as a recovery of any remaining principal
of such Mortgage Loan to the extent of its entire remaining unpaid principal
balance.
(b) Collections in respect of each REO Property (exclusive of
amounts to be applied to the payment of the costs of operating, managing,
maintaining and disposing of such REO Property) shall be treated: first, as a
recovery of any related and unreimbursed Servicing Advances; second, as a
recovery of accrued and unpaid interest on the related REO Loan at the related
Mortgage Rate to but not including the Due Date in the Collection Period of
receipt; third, as a recovery of principal of the related REO Loan to the extent
of its entire unpaid principal balance; and fourth, as a recovery of any other
amounts deemed to be due and owing in respect of the related REO Loan.
(c) Insofar as amounts received in respect of any Mortgage Loan or
REO Property and allocable to fees and charges owing in respect of such Mortgage
Loan or the related REO Loan, as the case may be, that constitute additional
servicing compensation payable to the Master Servicer and/or Special Servicer,
are insufficient to cover the full amount of such fees and charges, such amounts
shall be allocated between such of those fees and charges as are payable to the
Master Servicer, on the one hand, and such of those fees and charges as are
payable to the Special Servicer, on the other, pro rata in accordance with their
respective entitlements.
(d) The foregoing applications of amounts received in respect of any
Mortgage Loan or REO Property shall be determined by the Master Servicer and
reflected in the appropriate monthly Determination Date Report.
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ARTICLE II
CERTAIN MATTERS REGARDING THE
MORTGAGE LOANS; REPRESENTATIONS
AND WARRANTIES OF THE PARTIES
SECTION 2.01. Delivery of Mortgage Loan Files and Related Documents.
(a) In connection with the Grant of the Trust Estate by the Issuer
to secure the Bonds, the Issuer is required to deliver to and deposit with, or
cause to be delivered to and deposited with, the Trustee, on or before the
Closing Date, the Mortgage File for each Mortgage Loan. Also in connection
therewith, the Issuer shall deliver to and deposit with, or cause to be
delivered to and deposited with, the Master Servicer, on or before the Closing
Date: (i) copies of the Indenture and the Mortgage Loan Purchase Agreement; (ii)
copies of the documents comprising the Mortgage File for each Mortgage Loan; and
(iii) all other documents and records in the possession of the Issuer or the
Mortgage Loan Seller that relate to the Mortgage Loans, are necessary for the
servicing of the Mortgage Loans and are not required to be a part of a Mortgage
File in accordance with the definition thereof. The Master Servicer shall hold
all such documents and records delivered to it on behalf of the Trustee in trust
for the benefit of the Bondholders and, subject to the lien of the Indenture,
the Issuer.
(b) The Trustee shall deliver to the Master Servicer within 15 days
after the Closing Date each assignment of Mortgage and assignment of Assignment
of Leases in favor of the Trustee delivered to it as part of a Mortgage File and
each UCC-2 and UCC-3 in favor of the Trustee delivered to it as part of a
Mortgage File, and the Master Servicer shall, at the Mortgage Loan Seller's
expense, as to each Mortgage Loan, promptly (and in any event within 45 days
following the Closing Date) cause each such document to be submitted for
recording or filing, as the case may be, in the appropriate public office for
real property records or UCC Financing Statements, as the Master Servicer deems
appropriate. Each such assignment shall reflect that it should be returned by
the public recording office to the Trustee following recording, and each such
UCC-2 and UCC-3 shall reflect that the file copy thereof should be returned to
the Trustee following filing; provided that in those instances where the public
recording office retains the original assignment of Mortgage or assignment of
Assignment of Leases the Master Servicer shall obtain therefrom a certified copy
of the recorded original. If any such document or instrument is lost or returned
unrecorded or unfilled, as the case may be, because of a defect therein, the
Issuer shall promptly prepare or cause to be prepared a substitute therefor or
cure such defect, as the case may be, and thereafter the Master Servicer shall
upon receipt thereof cause the same to be duly recorded or filed, as
appropriate.
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SECTION 2.02. Document Defects and Breaches.
(a) If any party hereto discovers that any document constituting a
part of a Mortgage File has not been properly executed, is missing, contains
information that does not conform in any respect with the corresponding
information set forth in the Mortgage Loan Schedule (and the terms of such
document have not been modified by written instrument contained in the Mortgage
File), or does not appear to be regular on its face (each, a "Document Defect"),
or if any party hereto discovers a breach of any representation or warranty of
the Mortgage Loan Seller relating to any Mortgage Loan set forth in the Mortgage
Loan Purchase Agreement (a "Breach"), such party shall give prompt written
notice thereof to the other parties hereto.
(b) Promptly upon its discovery or receipt of notice of any Document
Default or Breach that materially and adversely affects the value of any
Mortgage Loan or the interests of the Issuer and/or the Bondholders therein, the
Master Servicer shall request that the Mortgage Loan Seller, not later than [90]
days (or such other period as is provided in the Mortgage Loan Purchase
Agreement) from the receipt by the Mortgage Loan Seller of such request, cure
such Document Defect or Breach in all material respects or repurchase the
affected Mortgage Loan at the applicable Purchase Price as, if and to the extent
required by the Mortgage Loan Purchase Agreement; provided that if (i) such
Breach [does not relate to whether the affected Mortgage Loan is a "qualified
mortgage" within the meaning of Section 860(a)(3) of the Code, (ii) such Breach]
is capable of being cured but not within such 90-day (or other) period, [(iii)]
the Mortgage Loan Seller has commenced and is diligently proceeding with the
cure of such Breach within such 90-day (or other) period, and [(iv)] the
Mortgage Loan Seller shall have delivered to the Trustee and the Master Servicer
a certification executed on behalf of the Mortgage Loan Seller by an officer
thereof setting forth the reason that such Breach is not capable of being cured
within an initial 90-day (or other) period, specifying what actions the Mortgage
Loan Seller is pursuing in connection with the cure thereof and stating that the
Mortgage Loan Seller anticipates that such Breach will be cured within an
additional period not to exceed 90 more days, then the Mortgage Loan Seller
shall have up to an additional 90 days to complete such cure. If the affected
Mortgage Loan is to be repurchased, the Master Servicer shall designate the
Custodial Account as the account to which funds in the amount of the Purchase
Price are to be wired, and the Master Servicer shall promptly notify the Trustee
(by delivery thereto of an Officer's Certificate) when such deposit is made. Any
such purchase of a Mortgage Loan shall be on a whole loan, servicing released
basis, and shall be subject to all applicable terms and conditions set forth in
the Indenture. In connection with any such purchase by the Mortgage Loan Seller,
each of the Master Servicer and the Special Servicer shall deliver any portion
of the related Servicing File that is in its possession to such purchaser or its
designee.
(c) If the Mortgage Loan Seller defaults on its obligations to
repurchase any Mortgage Loan as contemplated by this Section 2.02, the Master
Servicer shall promptly notify the Trustee, the Issuer and the Bondholders and
shall take such actions with respect to the enforcement of such repurchase
obligations, including, without limitation, the institution and prosecution of
appropriate legal proceedings, as the Master Servicer shall determine, in its
reasonable good faith judgment, are in the best interests of the Bondholders
(taken as a collective
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whole) and are not inconsistent with the Indenture. Any and all expenses
incurred by the Master Servicer with respect to the foregoing shall constitute
Servicing Advances in respect of the affected Mortgage Loan.
SECTION 2.03. Representations and Warranties of the Issuer.
(a) The Issuer hereby represents and warrants to each of the other
parties hereto and for the benefit of the Bondholders, as of the Closing Date,
that:
(i) The Issuer is a __________ duly organized, validly
existing and in good standing under the laws of the State of
__________ .
(ii) The execution and delivery of this Agreement by the
Issuer, and the performance and compliance with the terms of this
Agreement by the Issuer, will not violate the Issuer's
organizational documents or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material agreement or other
instrument to which it is a party or by which it is bound.
(iii) The Issuer has the full power and authority to own its
properties, to conduct its business as presently conducted by it and
to enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and delivered
this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Issuer, enforceable against the
Issuer in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally,
and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(v) The Issuer is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with
the terms of this Agreement will not constitute a violation of, any
law, any order or decree of any court or arbiter, or any order,
regulation or demand of any federal, state or local governmental or
regulatory authority, which violation, in the Issuer's reasonable
good faith judgment, is likely to affect materially and adversely
either the ability of the Issuer to perform its obligations under
this Agreement or the financial condition of the Issuer.
(vi) No litigation is pending or, to the best of the Issuer's
knowledge, threatened against the Issuer that, if determined
adversely to the Issuer, would
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prohibit the Issuer from entering into this Agreement or that, in
the Issuer's reasonable good faith judgment, is likely to materially
and adversely affect either the ability of the Issuer to perform its
obligations under this Agreement or the financial condition of the
Issuer.
(vii) No regulatory or governmental approval is required for
the consummation by the Issuer of the transactions contemplated
herein, other than any such approvals as have been obtained.
(b) The representations and warranties of the Issuer set forth in
Section 2.03(a) shall survive the execution and delivery of this Agreement and
shall inure to the benefit of the Persons for whose benefit they were made until
this Agreement is terminated in accordance with its terms. Upon discovery by any
party hereto of any breach of any of the foregoing representations and
warranties, the party discovering such breach shall given prompt written notice
thereof to the other parties hereto.
SECTION 2.04. Representations and Warranties of the Master Servicer.
(a) The Master Servicer hereby represents and warrants to each of
the other parties hereto and for the benefit of the Bondholders, as of the
Closing Date, that:
(i) The Master Servicer is a _____________ duly organized,
validly existing and in good standing under the laws of the State of
_____________ and is, and shall remain, in compliance with the laws
of each State in which any Mortgaged Property is located to the
extent necessary to perform its obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the
Master Servicer, and the performance and compliance with the terms
of this Agreement by the Master Servicer, will not violate the
Master Servicer's organizational documents or constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or by
which it is bound.
(iii) The Master Servicer has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and delivered
this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Master Servicer, enforceable
against the Master Servicer in accordance with the terms hereof,
subject to (A) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights generally,
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and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
(v) The Master Servicer is not in violation of, and its
execution and delivery of this Agreement and its performance and
compliance with the terms of this Agreement will not constitute a
violation of, any law, any order or decree of any court or arbiter,
or any order, regulation or demand of any federal, state or local
governmental or regulatory authority, which violation, in the Master
Servicer's reasonable good faith judgment, is likely to affect
materially and adversely either the ability of the Master Servicer
to perform its obligations under this Agreement or the financial
condition of the Master Servicer.
(vi) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer that,
if determined adversely to the Master Servicer, would prohibit the
Master Servicer from entering into this Agreement or that, in the
Master Servicer's reasonable good faith judgment, is likely to
materially and adversely affect either the ability of the Master
Servicer to perform its obligations under this Agreement or the
financial condition of the Master Servicer.
(vii) Each officer, director, employee, consultant or advisor
of the Master Servicer with responsibilities concerning the
servicing and administration of any Mortgage Loan is covered by
errors and omissions insurance in the amounts and with the coverage
required by Section 3.07(c). Neither the Master Servicer nor any of
its officers, directors, employees, consultants or advisors involved
in the servicing or administration of Mortgage Loans has been
refused such coverage or insurance.
(viii) No regulatory or governmental approval is required for
the consummation by the Master Servicer of the transactions
contemplated herein, other than any such approvals as have been
obtained.
(b) The representations and warranties of the Master Servicer set
forth in Section 2.04(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made until this Agreement terminates in accordance with its terms. Upon
discovery by any party hereto of any breach of any of the foregoing
representations and warranties, the party discovering such breach shall given
prompt written notice thereof to the other parties hereto.
(c) Any successor Master Servicer shall be deemed to have made, as
of the date of its succession, each of the representations and warranties set
forth in Section 2.04(a), subject to such appropriate modifications to the
representation and warranty set forth in Section 2.04(a)(i)
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to accurately reflect such successor's jurisdiction of organization and whether
it is a corporation, partnership, bank, association or other type of
organization.
SECTION 2.05. Representations and Warranties of the Special
Servicer.
(a) The Special Servicer hereby represents and warrants to each of
the other parties hereto and for the benefit of the Bondholders, as of the
Closing Date, that:
(i) The Special Servicer is a ___________________ duly
organized, validly existing and in good standing under the laws of
the State of ____________ and is in compliance with the laws of each
State in which any Mortgaged Property is located to the extent
necessary to perform its obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the
Special Servicer, and the performance and compliance with the terms
of this Agreement by the Special Servicer, will not violate the
Special Servicer's organizational documents or constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party or by
which it is bound.
(iii) The Special Servicer has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement, has duly authorized the execution, delivery and
performance of this Agreement, and has duly executed and delivered
this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Special Servicer, enforceable
against the Special Servicer in accordance with the terms hereof,
subject to (A) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights generally, and (B) general principles of equity, regardless
of whether such enforcement is considered in a proceeding in equity
or at law.
(v) The Special Servicer is not in violation of, and its
execution and delivery of this Agreement and its performance and
compliance with the terms of this Agreement will not constitute a
violation of, any law, any order or decree of any court or arbiter,
or any order, regulation or demand of any federal, state or local
governmental or regulatory authority, which violation, in the
Special Servicer's reasonable good faith judgment, is likely to
affect materially and adversely either the ability of the Special
Servicer to perform its obligations under this Agreement or the
financial condition of the Special Servicer.
(vi) No litigation is pending or, to the best of the Special
Servicer's knowledge, threatened against the Special Servicer that,
if determined adversely
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to the Special Servicer, would prohibit the Special Servicer from
entering into this Agreement or that, in the Special Servicer's
reasonable good faith judgment, is likely to materially and
adversely affect either the ability of the Special Servicer to
perform its obligations under this Agreement or the financial
condition of the Special Servicer.
(vii) Each officer, director, employee, consultant or advisor
of the Special Servicer with responsibilities concerning the
servicing and administration of any Specially Serviced Mortgage Loan
or REO Property is covered by errors and omissions insurance in the
amounts and with the coverage required by Section 3.07(c). Neither
the Special Servicer nor any of its officers, directors, employees,
consultants or advisors involved in the servicing or administration
of Mortgage Loans has been refused such coverage or insurance.
(viii) No regulatory or governmental approval is required for
the consummation by the Special Servicer of the transactions
contemplated herein, other than any such approvals as have been
obtained.
(b) The representations and warranties of the Special Servicer set
forth in Section 2.05(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made until this Agreement terminates in accordance with its terms. Upon
discovery by any party hereto of any breach of any of the foregoing
representations and warranties, the party discovering such breach shall given
prompt written notice thereof to the other parties hereto.
(c) Any successor Special Servicer shall be deemed to have made, as
of the date of its succession, each of the representations and warranties set
forth in Section 2.05(a), subject to such appropriate modifications to the
representation and warranty set forth in Section 2.05(a)(i) to accurately
reflect such successor's jurisdiction of organization and whether it is a
corporation, partnership, bank, association or other type of organization.
SECTION 2.06. Representations, Warranties and Covenants of the
Trustee.
(a) The Trustee hereby represents and warrants to each of the other
parties hereto and for the benefit of the Bondholders, as of the Closing Date,
that:
(i) The Trustee is a _____________ duly organized, validly
existing and in good standing under the laws of the State of
_____________ and is, shall be or, if necessary, shall appoint a
co-trustee that is, in compliance with the laws of each State in
which any Mortgaged Property is located to the extent necessary to
ensure the enforceability of each Mortgage Loan and to perform its
obligations under this Agreement.
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(ii) The execution and delivery of this Agreement by the
Trustee, and the performance and compliance with the terms of this
Agreement by the Trustee, will not violate the Trustee's
organizational documents or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in a material breach of, any material agreement or
other instrument to which it is a party or by which it is bound.
(iii) The Trustee has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement,
has duly authorized the execution, delivery and performance of this
Agreement, and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Trustee, enforceable against the
Trustee in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting the enforcement of creditors' rights generally
and the rights of creditors of banks, and (B) general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(v) The Trustee is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with
the terms of this Agreement will not constitute a violation of, any
law, any order or decree of any court or arbiter, or any order or
regulation of any federal, state or local governmental or regulatory
authority, which violation, in the Trustee's reasonable good faith
judgment, is likely to affect materially and adversely either the
ability of the Trustee to perform its obligations under this
Agreement or the financial condition of the Trustee.
(vi) No litigation is pending or, to the best of the Trustee's
knowledge, threatened against the Trustee that, if determined
adversely to the Trustee, would prohibit the Trustee from entering
into this Agreement or that, in the Trustee's reasonable good faith
judgment, is likely to materially and adversely affect either the
ability of the Trustee to perform its obligations under this
Agreement or the financial condition of the Trustee.
(vii) No regulatory or governmental approval is required for
the consummation by the Trustee of the transactions contemplated
herein, other than any such approvals as have been obtained.
(b) The representations, warranties and covenants of the Trustee set
forth in Section 2.06(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons for whose benefit they
were made until this Agreement terminates in accordance with its terms. Upon
discovery by any party hereto of any breach of any of the
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foregoing representations, warranties and covenants, the party discovering such
breach shall given prompt written notice thereof to the other parties hereto.
(c) Any successor Trustee shall be deemed to have made, as of the
date of its succession, each of the representations, warranties and covenants
set forth in Section 2.06(a), subject to such appropriate modifications to the
representation and warranty set forth in Section 2.06(a)(i) to accurately
reflect such successor's jurisdiction of organization and whether it is a
corporation, partnership, bank, association or other type of organization.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Administration of the Mortgage Loans; Collection of
Mortgage Loan Payments.
(a) Each of the Master Servicer and the Special Servicer shall
service and administer the Mortgage Loans that it is obligated to service and
administer pursuant to this Agreement, for the benefit of the Bondholders and
the Issuer, in accordance with any and all applicable laws and the terms of this
Agreement, the Insurance Policies and the respective Mortgage Loans and, to the
extent consistent with the foregoing, in accordance with the Servicing Standard.
Without limiting the foregoing, and subject to Section 3.21, (i) the Master
Servicer shall service and administer all Mortgage Loans as to which no
Servicing Transfer Event has occurred and all Corrected Mortgage Loans, and (ii)
the Special Servicer shall service and administer (x) each Mortgage Loan (other
than a Corrected Mortgage Loan) as to which a Servicing Transfer Event has
occurred, and (y) each REO Property; provided, however, that the Special
Servicer shall provide certain services with respect to Mortgage Loans that are
not Specially Serviced Mortgage Loans, as specifically provided herein, and the
Master Servicer shall continue to collect information and prepare all reports to
the Trustee required hereunder with respect to any Specially Serviced Mortgage
Loans and REO Properties (and the related REO Loans), and further to render such
incidental services with respect to any Specially Serviced Mortgage Loans and
REO Properties as are specifically provided for herein. The Master Servicer
shall not, on behalf of the Trustee, obtain title to a Mortgaged Property.
(b) Subject to Section 3.01(a), the Master Servicer and the Special
Servicer each shall have full power and authority, acting alone, to do or cause
to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, each of the Master Servicer and the Special
Servicer, in its own name, with respect to each of the Mortgage Loans it is
obligated to service hereunder, is hereby authorized and empowered by the
Trustee to execute and deliver, on behalf of the Bondholders, the Issuer and the
Trustee or any of them: (i) any and all financing statements, continuation
statements and other documents or instruments necessary to maintain the lien
created by any Mortgage or other security document in the related Mortgage File
on the related Mortgaged Property and related collateral; and (ii) any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments. In addition, without limiting
the generality of the foregoing, the Special Servicer is authorized and
empowered by the Trustee to execute and deliver, in accordance with the
Servicing Standard and subject to Sections 3.08 and 3.20, any and all
modifications, waivers, amendments or consents to or with respect to any
documents contained in the related Mortgage File. Subject to Section 3.10, the
Trustee shall, at the written request of a Servicing Officer of the Master
Servicer or the Special Servicer, furnish, or cause to be so furnished, to the
Master Servicer or the Special Servicer, as appropriate, any limited powers of
attorney and other documents necessary or
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appropriate to enable it to carry out its servicing and administrative duties
hereunder; provided, however, that the Trustee shall not be held liable for any
misuse of any such power of attorney by the Master Servicer or the Special
Servicer.
(c) The relationship of each of the Master Servicer and the Special
Servicer to the Trustee under this Agreement is intended by the parties to be
that of an independent contractor and not that of a joint venturer, partner or
agent.
SECTION 3.02 Collection of Mortgage Loan Payments.
(a) Each of the Master Servicer or the Special Servicer shall
undertake reasonable efforts to collect all payments called for under the terms
and provisions of the Mortgage Loans it is obligated to service hereunder and
shall, to the extent such procedures shall be consistent with this Agreement,
follow such collection procedures as are consistent with the Servicing Standard.
In addition, if a Mortgagor becomes delinquent with respect to any Monthly
Payment (including, without limitation, a Balloon Payment), the Master Servicer
shall promptly so notify the Special Servicer, shall keep the Special Servicer
apprised of all collection and customer service matters with respect to the
related Mortgage Loan and shall furnish to the Special Servicer copies of all
written communications between the Master Servicer and such Mortgagor.
(b) Any funds received by the Master Servicer or the Special
Servicer as payments in respect of any Mortgage Loan or which otherwise are
collected by the Master Servicer or the Special Servicer as REO Revenues in
respect of any REO Property or as Liquidation Proceeds or Insurance Proceeds in
respect of any Mortgage Loan or REO Property shall be held by the Master
Servicer or the Special Servicer, as the case may be, on behalf of, and shall be
and remain the sole and exclusive property of, the Trustee, the Bondholders and,
subject to the lien of the Indenture, the Issuer, in any event subject to the
Master Servicer's and the Special Servicer's rights as set forth in this
Agreement to retain or withdraw from the Custodial Account or REO Account, as
applicable, the Master Servicing Fee, the Property Servicing Fee, the Special
Servicing Fee, the Workout Fee, the Liquidation Fee, and other amounts provided
in this Agreement.
(c) The Master Servicer and the Special Servicer each hereby
acknowledges that the Issuer, subject to the lien of the Indenture, owns and
that, following the execution of the Indenture, the Trustee on behalf of the
Bondholders shall have a first priority perfected security interest in, the
Mortgage Loans and all funds now or hereafter held by, or under the control of,
the Master Servicer, the Special Servicer or any Sub-Servicer retained thereby
in connection with the Mortgage Loans, whether as scheduled installment of
principal and interest or as full or partial prepayments of principal or
interest or as Liquidation Proceeds or Insurance Proceeds, and all proceeds of
the foregoing and proceeds of proceeds (but excluding any Master Servicing Fees,
Property Servicing Fees, Special Servicing Fees, [reimbursement of] Advances
and all other amounts to which the Sub-Servicer is entitled under its
Sub-Servicing Agreement or each of the Master Servicer or the Special Servicer
is entitled to hereunder).
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(d) It is hereby acknowledged that possession by the Master Servicer
and the Special Servicer of collections on the Mortgage Loans is solely to
facilitate the servicing of the Mortgage Loans and, accordingly, each of the
Master Servicer and the Special Servicer does hereby agree to retain such
collections in accordance with the provisions of this Agreement prior to the
time such collections are remitted for deposit in the Collection Account and, in
connection therewith, does hereby accept its designation as agent and bailee for
the Trustee made pursuant to [Section ___ of] the Terms Indenture, but solely
for the purposes expressed in Section 3.06 and in the following sentence. By the
designation made by the Trustee pursuant to [Section ___ of] the Terms Indenture
and the acceptance of such designation by the Master Servicer and the Special
Servicer pursuant to this Section, the Trustee, as secured party, is deemed to
have possession of all collections on the Mortgage Loans for purposes of Section
9-305 and Section 8-313 of the UCC.
(e) Each of the Master Servicer and the Special Servicer also agrees
that it shall not take any action to create, incur or subject any Mortgage
Loans, or any funds that are deposited in the Custodial Account, the REO Account
or any Servicing Account or Reserve Account, as applicable, or any other funds
that otherwise are or may become due or payable to the Trustee, to any claim,
lien, security interest, judgment, levy, writ of attachment or other
encumbrance, nor assert by legal action or otherwise any claim or right of
setoff against any Mortgage Loan or any funds, including without limitation
funds in the Custodial Account, the REO Account or any Servicing Account or
Reserve Account, as applicable, collected on, or in connection with, a Mortgage
Loan (other than any claim, lien, security interest, judgment, levy, writ of
attachment, other encumbrance, legal action or right of setoff with respect to
any Master Servicing Fees, Property Servicing Fees, Special Servicing Fees,
Workout Fees, Liquidation Fees and any other amounts that are properly due and
payable to the Master Servicer and the Special Servicer under this Agreement).
SECTION 3.03. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts; Reserve Accounts.
(a) The Master Servicer shall establish and maintain one or more
accounts (the "Servicing Accounts"), into which all Escrow Payments with respect
to the Mortgage Loans shall be deposited and retained. Subject to any terms of
the related Mortgage Loan documents that specify the nature of the account in
which Escrow Payments shall be held, each Servicing Account shall be an Eligible
Account. Withdrawals of amounts so collected in respect of any Mortgage Loan
(and interest earned thereon) from a Servicing Account may be made only: (i) to
effect payment of real estate taxes, assessments, insurance premiums, ground
rents (if applicable) and comparable items in respect of the related Mortgaged
Property; (ii) to reimburse the Master Servicer, the Special Servicer or the
Trustee, as applicable, for any unreimbursed Servicing Advances made thereby to
cover any of the items described in the immediately preceding clause (i); (iii)
to refund to the related Mortgagor any sums as may be determined to be overages;
(iv) to pay interest, if required and as described below, to the related
Mortgagor on balances in the Servicing Account (or, if and to the extent not
payable to the related Mortgagor, to pay such interest to the Master Servicer);
or (v) to clear and terminate the Servicing Account at the
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termination of this Agreement in accordance with Section 7.01. The Master
Servicer shall pay or cause to be paid to the Mortgagors interest earned on the
investment of funds in Servicing Accounts maintained thereby, if and to the
extent required by law or the terms of the related Mortgage Loan. If the Master
Servicer shall deposit in a Servicing Account any amount not required to be
deposited therein, it may at any time withdraw such amount from such Servicing
Account, any provision herein to the contrary notwithstanding. Promptly after
any Escrow Payments are received by the Special Servicer from any Mortgagor, and
in any event within one Business Day after any such receipt, the Special
Servicer shall remit such Escrow Payments to the Servicing Account or Servicing
Accounts specified by the Master Servicer.
(b) Each of the Master Servicer and the Special Servicer shall, as
to those Mortgage Loans it is obligated to service hereunder, (i) maintain
accurate records with respect to the related Mortgaged Property reflecting the
status of real estate taxes, assessments and other similar items that are or may
become a lien thereon and the status of insurance premiums and any ground rents
payable in respect thereof and (ii) use reasonable efforts to obtain, from time
to time, all bills for the payment of such items (including renewal premiums)
and shall effect payment thereof prior to the applicable penalty or termination
date. The Master Servicer, for purposes of effecting any such payment for which
it is responsible, shall disburse Escrow Payments as allowed under the terms of
the related Mortgage Loan, and, for purposes of effecting any such payment for
which the Special Servicer is responsible, the Master Servicer, upon the written
request of the Special Servicer, shall apply Escrow Payments as allowed under
the terms of the related Mortgage Loan; provided, however, that if such Mortgage
Loan does not require the related Mortgagor to escrow for the payment of real
estate taxes, assessments, insurance premiums, ground rents (if applicable) and
similar items, each of the Master Servicer and the Special Servicer shall, as to
those Mortgage Loans it is obligated to service hereunder, enforce the
requirement of the related Mortgage that the Mortgagor make payments in respect
of such items at the time they first become due.
(c) In accordance with the Servicing Standard, each of the Master
Servicer and the Special Servicer shall, as to those Mortgage Loans it is
obligated to service hereunder, advance with respect to the related Mortgaged
Property, all such funds as are necessary for the purpose of effecting the
payment of (i) real estate taxes, assessments and other similar items, (ii)
ground rents (if applicable), and (iii) premiums on Insurance Policies, in each
instance if and to the extent Escrow Payments (if any) collected from the
related Mortgagor are insufficient to pay such item when due and the related
Mortgagor has failed to pay such item on a timely basis, and provided that the
particular advance would not, if made, constitute a Nonrecoverable Servicing
Advance. All such advances shall be reimbursable in the first instance from
related collections from the Mortgagors and further as provided in Section
3.05(a) and, if made by the Special Servicer, Section 3.19(b).
(d) The Master Servicer shall establish and maintain, as applicable,
one or more accounts (the "Reserve Accounts"), into which all Reserve Funds, if
any, shall be deposited and retained. As and to the extent appropriate,
withdrawals of amounts so deposited may be made to pay for, or to reimburse the
related Mortgagor in connection with, the related repairs,
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replacements, capital improvements and/or environmental testing and remediation
at the related Mortgaged Property if such repairs, replacements, capital
improvements and/or environmental testing and remediation have been completed,
and such withdrawals are made, in accordance with the Servicing Standard and the
terms of the related Mortgage Note, Mortgage and any agreement with the related
Mortgagor governing such Reserve Funds. Subject to the terms of the related
Mortgage Loan documents, each Reserve Account shall be an Eligible Account.
(e) To the extent an operations and maintenance plan is required to
be established and executed pursuant to the terms of a Mortgage Loan, the Master
Servicer shall request from the Mortgagor written confirmation thereof within a
reasonable time after the later of the Closing Date and the date as of which
such plan is required to be established or completed. To the extent any action
or remediations are required to have been taken or completed pursuant to the
terms of the Mortgage Loan, the Master Servicer shall request from the Mortgagor
written confirmation of such action and remediations within a reasonable time
after the later of the Closing Date and the date as of which such action or
remediations are required to be or to have been taken or completed. To the
extent a Mortgagor shall fail to promptly respond to any inquiry described in
this Section 3.03(e), the Master Servicer shall determine whether the related
Mortgagor has failed to perform its obligations under the related Mortgage Loan.
SECTION 3.04. Custodial Account.
(a) The Master Servicer shall establish and maintain one or more
accounts (collectively, the "Custodial Account"), held on behalf of the Trustee
in trust for the benefit of the Bondholders and, subject to the lien of the
Indenture, the Issuer. The Custodial Account shall be an Eligible Account. The
Master Servicer shall deposit or cause to be deposited in the Custodial Account,
upon receipt (in the case of payments by Mortgagors or other collections on the
Mortgage Loans) or as otherwise required hereunder, the following payments and
collections received or made by or on behalf of the Master Servicer in respect
of the Mortgage Pool subsequent to the Cut-off Date (other than in respect of
principal and interest on the Mortgage Loans due and payable on or before the
Cut-off Date, which payments shall be delivered promptly to the Mortgage Loan
Seller or its designee, with negotiable instruments endorsed as necessary and
appropriate without recourse):
(i) all payments on account of principal of the Mortgage
Loans, including, without limitation, Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans
and all late payment charges and charges for checks returned for
insufficient funds collected on the Mortgage Loans;
(iii) all Prepayment Premiums and Yield Maintenance Premiums
received in respect of any Mortgage Loan;
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(iv) all Insurance Proceeds and Liquidation Proceeds received
in respect of any Mortgage Loan;
(v) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.06 in connection with losses incurred with
respect to investments of funds held in the Custodial Account;
(vi) any amounts required to be deposited by the Master
Servicer or the Special Servicer pursuant to Section 3.07(b) in connection
with losses resulting from a deductible clause in a blanket hazard policy;
(vii) any amounts required to be transferred from any REO
Account pursuant to Section 3.16(c); and
(viii) insofar as they do not constitute Escrow Payments, any
amounts paid by a Mortgagor specifically to cover items for which a
Servicing Advance has been made.
The foregoing requirements for deposit in the Custodial Account
shall be exclusive. Without limiting the generality of the foregoing, actual
payments from Mortgagors in the nature of Escrow Payments, and amounts that the
Master Servicer and the Special Servicer are entitled to retain as additional
servicing compensation pursuant to Section 3.11(b) and Section 3.11(d),
respectively, need not be deposited by the Master Servicer in the Custodial
Account. If the Master Servicer shall deposit in the Custodial Account any
amount not required to be deposited therein, it may at any time withdraw such
amount from the Custodial Account, any provision herein to the contrary
notwithstanding. The Master Servicer shall promptly deliver to the Special
Servicer, as additional servicing compensation in accordance with Section
3.11(d), _____% of any assumption fees and _____% of any modification fees
collected by the Master Servicer with respect to Mortgage Loans other than
Specially Serviced Mortgage Loans and _____% of any assumption fees,
modification fees and Net Penalty Charges received by the Master Servicer with
respect to Specially Serviced Mortgage Loans. The Custodial Account shall be
maintained as a segregated account, separate and apart from trust funds created
for mortgage-backed securities of other series serviced by the Master Servicer
and the other accounts of the Master Servicer.
Upon receipt of any of the amounts described in clauses (i) through
(iv) above with respect to any Mortgage Loan, the Special Servicer shall
promptly, but in no event later than one Business Day after receipt, remit such
amounts to the Master Servicer for deposit into the Custodial Account in
accordance with the second preceding paragraph, unless the Special Servicer
determines, consistent with the Servicing Standard, that a particular item
should not be deposited because of a restrictive endorsement or other
appropriate reason. Any such amounts received by the Special Servicer with
respect to an REO Property shall be deposited by the Special Servicer into the
REO Account and remitted to the Master Servicer for deposit into the Custodial
Account pursuant to Section 3.16(c). With respect to any such amounts paid by
check to the order of the Special Servicer, the Special Servicer shall endorse
such check to the order of the Master Servicer,
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without recourse or warranty, and shall deliver promptly, but in no event later
than one Business Day after receipt, any such check to the Master Servicer by
overnight courier, unless the Special Servicer determines, consistent with the
Servicing Standard, that a particular item cannot be so endorsed and delivered
because of a restrictive endorsement or other appropriate reason.
(b) Funds in the Custodial Account may be invested in Permitted
Investments in accordance with the provisions of Section 3.06. The Master
Servicer shall give notice to the other parties hereto of the location of the
Custodial Account as of the Closing Date and of the new location of the
Custodial Account prior to any change thereof.
SECTION 3.05. Permitted Withdrawals from the Custodial Account.
(a) The Master Servicer may, from time to time, make withdrawals
from the Custodial 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 Collection
Account the Master Servicer Remittance Amount for each Master
Servicer Remittance Date and any amounts that may be applied to make
P&I Advances pursuant to Section 4.03(a);
(ii) to reimburse itself or the Trustee, as applicable, for
unreimbursed P&I Advances made thereby, the Master Servicer's and
the Trustee's respective rights to reimbursement pursuant to this
clause (ii) with respect to any P&I Advance (other than
Nonrecoverable Advances, which are reimbursable pursuant to clause
(vii) below) being limited to amounts that represent Late
Collections of interest and principal received in respect of the
particular Mortgage Loan or REO Loan as to which such P&I Advance
was made (net of the related Master Servicing Fees and Workout
Fees);
(iii) to pay to itself earned and unpaid Master Servicing Fees
in respect of each Mortgage Loan and REO Loan, the Master Servicer's
right to payment pursuant to this clause (iii) with respect to any
Mortgage Loan or REO Loan being limited to amounts received on or in
respect of such Mortgage Loan (whether in the form of payments,
Liquidation Proceeds or Insurance Proceeds) or such REO Loan
(whether in the form of REO Revenues, Liquidation Proceeds or
Insurance Proceeds) that are allocable as interest thereon;
(iv) to pay to the Special Servicer, out of general
collections on the Mortgage Loans and any REO Properties, earned and
unpaid Property Servicing Fees in respect of each Mortgage Loan and
REO Loan and Special Servicing Fees in respect of each Specially
Serviced Mortgage Loan and REO Loan;
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(v) to pay the Special Servicer (or, if applicable, any
predecessor thereto) earned and unpaid Workout Fees and Liquidation
Fees to which it is entitled pursuant to, and from the sources
contemplated by, the third and fourth paragraphs of Section 3.11(c);
(vi) to reimburse itself, the Special Servicer or the Trustee,
as applicable, for any unreimbursed Servicing Advances made thereby,
the Master Servicer's, the Special Servicer's and the Trustee's
respective rights to reimbursement pursuant to this clause (vi) with
respect to any Servicing Advance being limited to (A) payments made
by the related Mortgagor that are allocable to cover the item in
respect of which such Servicing Advance was made, and (B)
Liquidation Proceeds, Insurance Proceeds and, if applicable, REO
Revenues received in respect of the particular Mortgage Loan or REO
Property as to which such Servicing Advance was made;
(vii) to reimburse itself, the Special Servicer or the
Trustee, as applicable, out of general collections on the Mortgage
Loans and any REO Properties, for any unreimbursed Advances made
thereby that have been determined to be Nonrecoverable Advances;
(viii) to pay itself, the Special Servicer or the Trustee, as
applicable, any Advance Interest due and owing thereto, the Master
Servicer's, the Special Servicer's and the Trustee's respective
rights to payment pursuant to this clause (viii) being limited to
Penalty Charges collected in respect of the Mortgage Loan or REO
Loan as to which the related Advances were made thereby;
(ix) at or following such time as it reimburses itself, the
Special Servicer or the Trustee, as applicable, for any unreimbursed
Advance pursuant to clause (ii), (vi) or (vii) above or Section
3.03(c), and insofar as payment has not already been made pursuant
to clause (viii) above, to pay itself, the Special Servicer or the
Trustee, as the case may be, out of general collections on the
Mortgage Loans and any REO Properties, any related Advance Interest
accrued and payable on such Advance;
(x) to pay itself, as additional servicing compensation in
accordance with Section 3.11(b), (A) interest and investment income
earned in respect of amounts held in the Custodial Account as
provided in Section 3.06(b), but only to the extent of the Net
Investment Earnings with respect to the Custodial Account for any
Collection Period, (B) any Prepayment Interest Excesses collected on
any of the Mortgage Loans and (C) to the extent allocable to the
period when the related Mortgage Loan did not constitute a Specially
Serviced Mortgage Loan or REO Property, any Net Penalty Charges
collected on the Mortgage Loans;
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(xi) to pay to the Special Servicer, as additional servicing
compensation in accordance with Section 3.11(b), any Net Penalty
Charges collected on the Mortgage Loans and not otherwise payable to
the Master Servicer pursuant to clause (xi) above;
(xii) to pay itself, the Special Servicer, or any of their
respective directors, officers, employees and agents, as the case
may be, out of general collections on the Mortgage Loans and any REO
Properties, any amounts payable to any such Person pursuant to
Section 5.03;
(xiii) to pay, out of general collections on the Mortgage
Loans and any REO Properties, for (A) the advice of counsel or
financial advisers contemplated by Section 3.17(a), (B) the cost of
the Opinion of Counsel contemplated by 8.02(a), (C) the cost of
recording this Agreement in accordance with Section 8.02(a), and (D)
the expense of any consultant hired by the Trustee pursuant to
Section 3.18(e).
(xiv) to pay itself, the Special Servicer, the Mortgage Loan
Seller, the Issuer or any other Person, as the case may be, with
respect to each Mortgage Loan, if any, previously purchased or
otherwise removed from the Trust Estate by such Person pursuant to
this Agreement, all amounts received thereon subsequent to the date
of purchase;
(xv) to pay any cost or expense in respect of any Mortgage
Loan or REO Property that the Master Servicer, the Special Servicer
or the Trustee, as the case may be, has incurred pursuant to Section
3.11(h); and
(xvi) to clear and terminate the Custodial Account at the
termination of this Agreement pursuant to Section 7.01.
If amounts on deposit in the Custodial Account at any particular
time (after withdrawing any portion of such amounts deposited in the Custodial
Account in error) are insufficient to satisfy all payments, reimbursements and
remittances to be made therefrom as set forth in clauses (ii) through (xv)
above, then the corresponding withdrawals from the Custodial Account shall be
made in the following priority and subject to the following rules: (s) if the
payment, reimbursement or remittance is to be made from a specific source of
funds, then such payment, reimbursement or remittance shall be made from that
specific source of funds on a pro rata basis with any and all other payments,
reimbursements and remittances to be made from such specific source of funds;
and (t) if the payment, reimbursement or remittance can be made from any funds
on deposit in the Custodial Account, then (following any withdrawals made from
the Custodial Account in accordance with the immediately preceding clause (s)
above) such payment, reimbursement or remittance shall be made from such general
funds remaining on a pro rata basis with any and all other payments,
reimbursements or remittances to be made from such general funds.
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The Master Servicer shall keep and maintain separate accounting
records, on a loan-by-loan and property-by-property basis when appropriate, in
connection with any withdrawal from the Custodial Account pursuant to any of
clauses (ii) through (xv) above.
The Master Servicer shall pay to the Special Servicer (or to third
party contractors at the direction of the Special Servicer) from the Custodial
Account amounts permitted to be paid to it (or to such third party contractors)
therefrom promptly upon receipt of a certificate of a Servicing Officer of the
Special Servicer describing the item and amount to which the Special Servicer
(or such third party contractors) is entitled. The Master Servicer may rely
conclusively on any such certificate and shall have no duty to recalculate the
amounts stated therein. The Special Servicer shall keep and maintain separate
accounting for each Specially Serviced Mortgage Loan and REO Property, on a
loan-by-loan and property-by-property basis, for the purpose of justifying any
request for withdrawal from the Custodial Account.
(b) The Trustee, the Master Servicer and the Special Servicer shall
in all cases have a right prior to the Bondholders to any particular funds on
deposit in the Custodial Account from time to time for the reimbursement or
payment of compensation, Advances (with interest thereon at the Reimbursement
Rate) and their respective expenses hereunder (or, in the case of such expenses,
to have such funds paid directly to third party contractors from any invoices
approved by the Trustee, the Master Servicer or the Special Servicer, as
applicable), but only if and to the extent such compensation, Advances (with
interest) and expenses are to be reimbursed or paid from such particular funds
on deposit in the Custodial Account pursuant to the express terms of this
Agreement. Any reimbursements of Advances in respect of any particular Mortgage
Loan or REO Property out of the Custodial Account pursuant to any of clauses
(ii), (vi) and (vii) of Section 3.05(a), and any payments of interest thereon
out of the Custodial Account pursuant to either of clauses (viii) and (ix) of
Section 3.05(a), shall be made (to the extent of their respective entitlements
to such reimbursements and/or payments): first, to the Trustee; and second, pro
rata, to the Master Servicer and Special Servicer.
SECTION 3.06. Investment of Funds in the Custodial Account and the
REO Account.
(a) The Master Servicer may direct (pursuant to a standing order or
otherwise) any depository institution maintaining the Custodial Account, and the
Special Servicer may direct (pursuant to a standing order or otherwise) any
depository institution maintaining the REO Account, to invest, or if it is such
depository institution, may itself invest, the funds held therein (each such
account, for purposes of this Section 3.06, an "Investment Account") in one or
more Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, no later than the Business Day immediately preceding
the next following date on which such funds are required to be withdrawn from
such account pursuant to this Agreement. All such Permitted Investments shall be
held to maturity, unless payable on demand. Any investment of funds in an
Investment Account shall be made in the name of the Trustee (in its capacity as
such). The Master Servicer (with respect to Permitted Investments of amounts in
the Custodial Account) and the Special Servicer (with respect to Permitted
Investments of amounts in the REO Account),
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on behalf of the Trustee, shall (and the Trustee hereby designates the Master
Servicer and the Special Servicer, as applicable, as the person that shall)
maintain continuous possession of any Permitted Investment that is either (i) a
"certificated security", as such term is defined in the UCC, or (ii) other
property in which a secured party may perfect its security interest by
possession under the UCC or any other applicable law. Possession of any such
Permitted Investment by the Master Servicer or the Special Servicer shall
constitute possession by a person designated by the Trustee for purposes of
Section 8-313 of the UCC and possession by the Trustee, as secured party, for
purposes of Section 9-305 of the UCC and any other applicable law. If amounts on
deposit in an Investment Account are at any time invested in a Permitted
Investment payable on demand, the Master Servicer (in the case of the Custodial
Account) or the Special Servicer (in the case of the REO Account) shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount
equal to the lesser of (1) all amounts then payable thereunder and
(2) the amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder promptly upon
determination by the Master Servicer, the Trustee or the Special
Servicer, as the case may be, that such Permitted Investment would
not constitute a Permitted Investment in respect of funds thereafter
on deposit in the Investment Account.
(b) Whether or not the Master Servicer directs the investment of
funds in the Custodial Account, interest and investment income realized on funds
deposited therein, to the extent of the Net Investment Earnings, if any, for
such Investment Account for each Collection Period, shall be for the sole and
exclusive benefit of the Master Servicer and shall be subject to its withdrawal
in accordance with Section 3.05(a). Whether or not the Special Servicer directs
the investment of funds in the REO Account, interest and investment income
realized on funds deposited therein, to the extent of the Net Investment
Earnings, if any, for such Investment Account for each Collection Period, shall
be for the sole and exclusive benefit of the Special Servicer and shall be
subject to its withdrawal in accordance with Section 3.16(b). If any loss shall
be incurred in respect of any Permitted Investment on deposit in either
Investment Account, the Master Servicer (in the case of the Custodial Account)
and the Special Servicer (in the case of the REO Account) shall promptly deposit
therein from its own funds, without right of reimbursement, no later than the
end of the Collection Period during which such loss was incurred, the amount of
the Net Investment Loss, if any, for such Collection Period.
(c) Notwithstanding the investment of funds held in any Investment
Account, for purposes of the calculations hereunder, including, without
limitation, the calculation of the Master Servicer Remittance Amount, the
amounts so invested shall be deemed to remain on deposit in such Investment
Account.
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SECTION 3.07. Maintenance of Insurance Policies; Errors and
Omissions and Fidelity Coverage.
(a) The Master Servicer (with respect to Mortgage Loans other than
Specially Serviced Mortgaged Loans) and the Special Servicer (with respect to
Specially Serviced Mortgage Loans) shall cause to be maintained for each
Mortgaged Property all insurance coverage as is required under the related
Mortgage; provided that if and to the extent that any such Mortgage permits the
holder thereof any discretion (by way of consent, approval or otherwise) as to
the insurance coverage that the related Mortgagor is required to maintain, the
Master Servicer or the Special Servicer, as the case may be, shall exercise such
discretion in a manner consistent with the Servicing Standard, with a view
towards requiring insurance comparable to that required under other Mortgage
Loans with express provisions governing such matters; and provided further that,
if and to the extent that a Mortgage so permits, the related Mortgagor shall be
required to obtain the required insurance coverage from Qualified Insurers that,
in each case, have a claims-paying rating no lower than two rating categories
below the highest rated Bonds outstanding, and in any event no lower than "[A]"
(or an equivalent rating), from each of the Rating Agencies. Subject to Section
3.17(b), the Special Servicer shall also cause to be maintained for each REO
Property no less insurance coverage than was previously required of the
Mortgagor under the related Mortgage and at a minimum, (i) hazard insurance with
a replacement cost rider, (ii) business interruption or rental loss insurance
for at least 12 months, and (iii) comprehensive general liability insurance, in
each case, in an amount customary for the type and geographic location of such
REO Property and consistent with the Servicing Standard; provided that all such
insurance shall be obtained from Qualified Insurers that, in each case, if
providing casualty insurance, shall have a claims-paying rating no lower than
two rating categories below the highest rated Bonds outstanding, and in any
event no lower than "[A]" (or an equivalent rating), from each of the Rating
Agencies. All such insurance policies shall contain (if they insure against loss
to property) a "standard" mortgagee clause, with loss payable to the Master
Servicer on behalf of the Trustee (in the case of insurance maintained in
respect of Mortgage Loans), or shall name the Trustee as the insured, with loss
payable to the Special Servicer on behalf of the Trustee (in the case of
insurance maintained in respect of REO Properties), and shall be issued by an
insurer authorized under applicable law to issue such insurance. Any amounts
collected by the Master Servicer or the Special Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the related
Mortgaged Property or REO Property or amounts to be released to the related
Mortgagor, in each case in accordance with the Servicing Standard) shall be
deposited in the Custodial Account, subject to withdrawal pursuant to Section
3.05(a), in the case of amounts received in respect of a Mortgage Loan, or in
the REO Account, subject to withdrawal pursuant to Section 3.16(c), in the case
of amounts received in respect of an REO Property.
(b) If the Master Servicer or the Special Servicer shall obtain and
maintain, or cause to be obtained and maintained, a blanket policy insuring
against hazard losses on all of the Mortgage Loans and/or REO Properties that it
is required to service and administer, then, to the extent such policy (i) is
obtained from a Qualified Insurer having a claims-paying rating no lower than
two rating categories below the highest rated Bonds outstanding, and in any
event no lower than "[A]" (or an equivalent rating), from each of the Rating
Agencies, and (ii) provides
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protection equivalent to the individual policies otherwise required, the Master
Servicer or the Special Servicer, as the case may be, shall conclusively be
deemed to have satisfied its obligation to cause hazard insurance to be
maintained on the related Mortgaged Properties and/or REO Properties. Such
policy may contain a deductible clause (not in excess of a customary amount), in
which case the Master Servicer or the Special Servicer, as appropriate, shall,
if there shall not have been maintained on the related Mortgaged Property or REO
Property a hazard insurance policy complying with the requirements of Section
3.07(a), and there shall have been one or more losses that would have been
covered by such policy, promptly deposit into the Custodial Account from its own
funds the amount not otherwise payable under the blanket policy in connection
with such loss or losses because of such deductible clause. The Master Servicer
or the Special Servicer, as appropriate, shall prepare and present, on behalf of
itself, the Trustee, the Issuer and Bondholders, claims under any such blanket
policy in a timely fashion in accordance with the terms of such policy.
(c) Each of the Master Servicer and the Special Servicer shall at
all times during the term of this Agreement (or, in the case of the Special
Servicer, at all times during the term of this Agreement during which Specially
Serviced Mortgage Loans or REO Properties exist as part of the Trust Estate)
keep in force with a Qualified Insurer having a claims-paying rating no lower
than two rating categories below the highest rated Bonds outstanding, and in any
event no lower than investment grade, from each of the Rating Agencies, a
fidelity bond in such form and amount as would permit it to be a qualified FNMA
seller-servicer of multifamily mortgage loans, or in such other form and amount
as would not adversely affect any rating assigned by either Rating Agency to the
Bonds (as evidenced in writing from each such Rating Agency). Each of the Master
Servicer and the Special Servicer shall be deemed to have complied with the
foregoing provision if an Affiliate thereof has such fidelity bond coverage and,
by the terms of such fidelity bond, the coverage afforded thereunder extends to
the Master Servicer or the Special Servicer, as the case may be. Such fidelity
bond shall provide that it may not be canceled without ten days' prior written
notice to the Trustee.
Each of the Master Servicer and the Special Servicer shall at all
times during the term of this Agreement (or, in the case of the Special
Servicer, at all times during the term of this Agreement during which Specially
Serviced Mortgage Loans and/or REO Properties exist as part of the Trust Estate)
also keep in force with a Qualified Insurer having a claims-paying rating no
lower than two rating categories below the highest rated Bonds outstanding, and
in any event no lower than investment grade, from each of the Rating Agencies, a
policy or policies of insurance covering loss occasioned by the errors and
omissions of its officers, employees and agents in connection with its servicing
obligations hereunder, which policy or policies shall be in such form and amount
as would permit it to be a qualified FNMA seller-servicer of multifamily
mortgage loans, or in such other form and amount as would not adversely affect
any rating assigned by either Rating Agency to the Bonds (as evidenced in
writing from each such Rating Agency). Each of the Master Servicer and the
Special Servicer shall be deemed to have complied with the foregoing provisions
if an Affiliate thereof has such insurance and, by the terms of such policy or
policies, the coverage afforded thereunder extends to the Master Servicer or the
Special
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Servicer, as the case may be. Any such errors and omissions policy shall provide
that it may not be canceled without ten days' prior written notice to the
Trustee.
SECTION 3.08. Enforcement of Alienation Clauses.
The Master Servicer (at the direction of the Special Servicer), in
the case of Mortgage Loans other than Specially Serviced Mortgage Loans, and the
Special Servicer, in the case of Specially Serviced Mortgage Loans, on behalf of
the Trustee as the mortgagee of record, shall enforce the restrictions contained
in any Mortgage on transfers or further encumbrances of the related Mortgaged
Property and on transfers of interests in the related Mortgagor, unless the
Special Servicer has determined, in its reasonable good faith judgment, that
waiver of such restrictions would be in accordance with the Servicing Standard;
provided that the Special Servicer shall not waive, or instruct the Master
Servicer to waive, any right it has, or grant any consent, or instruct the
Master Servicer to grant any consent, it is otherwise entitled to withhold,
under any related "due-on-encumbrance" clause until it has received written
confirmation from each Rating Agency that such action would not result in the
downgrade, qualification or withdrawal of the rating then assigned by such
Rating Agency to any Class of Bonds. After having made any such determination,
the Special Servicer shall deliver to the Trustee and the Master Servicer an
Officer's Certificate setting forth the basis for such determination. The Master
Servicer shall provide the Special Servicer with all information as it may
reasonably request in order to make such determination.
SECTION 3.09. Realization upon Defaulted Mortgage Loans.
(a) The Special Servicer shall, subject to Sections 3.09(b) through
3.09(d), exercise reasonable efforts, consistent with the Servicing Standard, to
foreclose upon or otherwise comparably convert the ownership of properties and
other collateral securing such of the Mortgage Loans as come into and continue
in default and as to which no satisfactory arrangements can be made for
collection of delinquent payments, including, without limitation, pursuant to
Section 3.20. All costs and expenses incurred by the Special Servicer in any
such proceedings shall be Servicing Advances. Nothing contained in this Section
3.09 shall be construed so as to require the Special Servicer, on behalf of the
Bondholders and the Issuer, to make a bid on any Mortgaged Property at a
foreclosure sale or similar proceeding that is in excess of the fair market
value of such property, as determined by the Special Servicer in its reasonable
good faith judgment taking into account the factors described in Section 3.18(e)
and the results of any appraisal obtained pursuant to the following sentence or
otherwise, all such bids to be made in a manner consistent with the Servicing
Standard. If and when the Special Servicer deems it necessary and prudent for
purposes of establishing the fair market value of any Mortgaged Property
securing a defaulted Mortgage Loan, whether for purposes of bidding at
foreclosure or otherwise, the Special Servicer is authorized to have an
Appraisal completed with respect to such property (the cost of which appraisal
shall constitute a Servicing Advance).
(b) [Notwithstanding any other provision of this Agreement, no
Mortgaged Property shall be acquired by the Special Servicer on behalf of the
Bondholders and the Issuer in
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such circumstances or manner or pursuant to any terms that would (i) cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code (unless all such REO Property not
treated as "foreclosure property" held by any REMIC Pool at any given time
constitutes not more than a de minimis amount of the assets of any REMIC Pool
within the meaning of Treasury regulation Section 1.860D-1(b)(3)(i) and (ii)),
or (ii) except as permitted by Section 3.17(a), subject the Issuer or the Trust
Estate to the imposition of any federal income taxes under the Code.
In addition, the Special Servicer shall not acquire any personal
property on behalf of the Bondholders and the Issuer pursuant to this Section
3.09 unless either:
(i) such personal property is incident to real property
(within the meaning of Section 856(e)(1) of the Code) so acquired by
the Special Servicer, or
(ii) the Special Servicer shall have obtained an Opinion of
Counsel (the cost of which shall be a Servicing Advance) to the
effect that the holding of such personal property as part of the
Trust Estate will not cause the imposition of a tax on any REMIC
Pool under the REMIC Provisions or cause any REMIC Pool to fail to
qualify as a REMIC at any time that any Bond is Outstanding.
(c)] Notwithstanding the foregoing provisions of this Section 3.09,
the Special Servicer shall not, on behalf of the Trustee, obtain title to a
Mortgaged Property by foreclosure, deed in lieu of foreclosure or otherwise, or
take any other action with respect to any Mortgaged Property, if, as a result of
any such action, the Trustee, on behalf of the Bondholders and the Issuer,
could, in the reasonable good faith judgment of the Special Servicer, exercised
in accordance with the Servicing Standard, be considered to hold title to, to be
a "mortgagee-in-possession" of, or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of CERCLA or any comparable law, unless:
(i) the Special Servicer has previously determined in
accordance with the Servicing Standard, based on a Phase I
Environmental Assessment (and any additional environmental testing
that the Special Servicer deems necessary and prudent) of such
Mortgaged Property conducted by an Independent Person who regularly
conducts Phase I Environmental Assessments and performed during the
twelve-month period preceding any such acquisition of title or other
action, that the Mortgaged Property is in compliance with applicable
environmental laws and regulations and there are no circumstances or
conditions present at the Mortgaged Property relating to the use,
management or disposal of Hazardous Materials for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any applicable environmental
laws and regulations; or
(ii) in the event that the determination described in clause
[(c)(i)] above cannot be made, the Special Servicer has previously
determined in accordance with the Servicing Standard, on the same
basis as described in clause [(c)(i)] above, that
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it would maximize the recovery to the Bondholders and the Issuer (as
a collective whole) on a present value basis (the relevant
discounting of anticipated collections that will be paid to
Bondholders and the Issuer to be performed at the related Net
Mortgage Rate) to acquire title to or possession of the Mortgaged
Property and to take such remedial, corrective and/or other further
actions as are necessary to bring the Mortgaged Property into
compliance with applicable environmental laws and regulations and to
appropriately address any of the circumstances and conditions
referred to in clause [(c)(i)] above.
Any such determination by the Special Servicer contemplated by
clause (i) or clause (ii) of the preceding paragraph shall be evidenced by an
Officer's Certificate to such effect delivered to the Trustee, the Master
Servicer and the Issuer, specifying all of the bases for such determination,
such Officer's Certificate to be accompanied by all related environmental
reports. The cost of such Phase I Environmental Assessment and any such
additional environmental testing, as well as the cost of any remedial,
corrective or other further action contemplated by clause (ii) of the preceding
paragraph, shall be advanced by the Master Servicer at the direction of the
Special Servicer given in accordance with the Servicing Standard; provided,
however, that the Master Servicer shall not be obligated in connection therewith
to advance any funds which, if so advanced, would constitute a Nonrecoverable
Servicing Advance. Amounts so advanced shall be subject to reimbursement as
Servicing Advances in accordance with Section 3.05(a).
[(d)] If neither of the conditions set forth in clauses (i) and (ii)
of the first sentence of Section [3.09(c)] has been satisfied with respect to
any Mortgaged Property securing a defaulted Mortgage Loan, the Special Servicer
shall take such action as is in accordance with the Servicing Standard (other
than proceeding against the Mortgaged Property) and, at such time as it deems
appropriate, may, on behalf of the Trustee, release all or a portion of such
Mortgaged Property from the lien of the related Mortgage.
[(e)] The Special Servicer shall report to the Trustee, the Master
Servicer and the Issuer monthly in writing as to any actions taken by the
Special Servicer with respect to any Mortgaged Property as to which neither of
the conditions set forth in clauses (i) and (ii) of the first sentence of
Section [3.09(c)] has been satisfied, in each case until the earliest to occur
of satisfaction of either of such conditions, release of the lien of the related
Mortgage on such Mortgaged Property and the related Mortgage Loan becoming a
Corrected Mortgaged Loan.
[(f)] The Special Servicer shall have the right to determine, in
accordance with the Servicing Standard, the advisability of seeking to obtain a
deficiency judgment if the state in which the Mortgaged Property is located and
the terms of the Mortgage Loan permit such an action and shall, in accordance
with the Servicing Standard, seek such deficiency judgment if it deems
advisable.
[(g)] [The Special Servicer shall prepare and file information
returns with respect to the receipt of mortgage interest received in a trade or
business from individuals, reports of foreclosures and abandonments of any
Mortgaged Property and information returns relating to
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cancellation of indebtedness income with respect to any Mortgaged Property
required by Sections 6050H, 6050J and 6050P of the Code and deliver to the
Trustee an Officer's Certificate stating that such reports have been filed. Such
information returns and reports shall be in form and substance sufficient to
meet the reporting requirements imposed by Sections 6050H, 6050J and 6050P of
the Code. The Special Servicer shall provide to the Master Servicer on a timely
basis all information to be included in such reports and information returns.]
[(h)] The Special Servicer shall maintain accurate records, prepared
by a Servicing Officer, of each Final Recovery Determination in respect of any
Mortgage Loan or REO Property and the basis thereof. Each Final Recovery
Determination shall be evidenced by an Officer's Certificate delivered to the
Trustee and the Master Servicer no later than the third Business Day following
such Final Recovery Determination.
SECTION 3.10. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Master Servicer of a notification that payment in full shall be escrowed in
a manner customary for such purposes, the Master Servicer shall promptly so
notify the Trustee and request delivery to it of the related Mortgage File (such
notice and request to be effected by delivering to the Trustee a Request for
Release in the form of Exhibit B-1 attached hereto, which Request for Release
shall be accompanied by the form of any release or discharge to be executed by
the Trustee and shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Custodial Account pursuant to Section 3.04(a) have been or
will be so deposited). Upon receipt of such Request for Release, the Trustee
shall promptly release, or cause any related Custodian to release, the related
Mortgage File to the Master Servicer and shall deliver to the Master Servicer
such accompanying release or discharge, duly executed. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Custodial Account or the Collection Account.
(b) If from time to time, and as appropriate for servicing or
foreclosure of any Mortgage Loan, the Master Servicer or the Special Servicer
shall otherwise require any Mortgage File (or any portion thereof), the Trustee,
upon request of the Master Servicer and receipt from the Master Servicer of a
Request for Release in the form of Exhibit B-1 attached hereto signed by a
Servicing Officer thereof, or upon request of the Special Servicer and receipt
from the Special Servicer of a Request for Release in the form of Exhibit B-2
attached hereto, shall release, or cause any related Custodian to release, such
Mortgage File (or portion thereof) to the Master Servicer or the Special
Servicer, as the case may be. Upon return of such Mortgage File (or portion
thereof) to the Trustee or the related Custodian, or upon the Special Servicer's
delivery to the Trustee of an Officer's Certificate stating that (i) such
Mortgage Loan was liquidated and all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Custodial Account pursuant to Section 3.04(a) have been or will be so deposited
or (ii) such Mortgage Loan has become an REO Property, a copy of the Request for
Release shall be released by the Trustee to the Master Servicer or the Special
Servicer, as applicable.
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(c) Within seven Business Days of the Special Servicer's request
therefor (or, if the Special Servicer notifies the Trustee of an exigency,
within such shorter period as is reasonable under the circumstances), the
Trustee shall execute and deliver to the Special Servicer, in the form supplied
to the Trustee by the Special Servicer, any court pleadings, requests for
trustee's sale or other documents reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or to any legal action brought
to obtain judgment against any Mortgagor on the Mortgage Note or Mortgage or to
obtain a deficiency judgment, or to enforce any other remedies or rights
provided by the Mortgage Note or Mortgage or otherwise available at law or in
equity or to defend any legal action or counterclaim filed against the Trustee,
the Issuer, the Master Servicer, the Special Servicer or the Bondholders;
provided that the Trustee may alternatively execute and deliver to the Special
Servicer, in the form supplied to the Trustee by the Special Servicer, a limited
power of attorney issued in favor of the Special Servicer and empowering the
Special Servicer to execute and deliver any or all of such pleadings or
documents on behalf of the Trustee. Together with such pleadings or documents
(or such power of attorney empowering the Special Servicer to execute the same
on behalf of the Trustee), the Special Servicer shall deliver to the Trustee an
Officer's Certificate requesting that such pleadings or documents (or such power
of attorney empowering the Special Servicer to execute the same on behalf of the
Trustee) be executed by the Trustee and certifying as to the reason such
pleadings or documents are required and that the execution and delivery thereof
by the Trustee (or by the Special Servicer on behalf of the Trustee) will not
invalidate or otherwise affect the lien of the Mortgage, except for the
termination of such a lien upon completion of the foreclosure or trustee's sale.
(d) All Mortgage Files and other documents relating to the Mortgage
Loans now or hereafter held by, or under the control of, the Master Servicer or
the Special Servicer in respect of any Mortgage Loan, shall be held by the
Master Servicer or the Special Servicer, as the case may be, for and on behalf
of, and shall be and remain the sole and exclusive property of, the Trustee, the
Bondholders and, subject to the lien of the Indenture, the Issuer.
(e) The Master Servicer and the Special Servicer each hereby
acknowledges that the Issuer, subject to the lien of the Indenture owns and that
following the execution of the Indenture, the Trustee on behalf of the
Bondholders shall have a first priority perfected security interest in, the
Mortgage Loans, the Mortgage Files and all other documents now or hereafter held
by, or under the control of, the Master Servicer, the Special Servicer or any
Sub-Servicer retained thereby in connection with the Mortgage Loans.
(f) It is hereby acknowledged that possession by the Master Servicer
and the Special Servicer of any Mortgage File or of any particular document
required to be part thereof or otherwise relating to the Mortgage Loans is
solely to facilitate the servicing of the Mortgage Loans and, accordingly, the
Master Servicer and the Special Servicer each hereby agrees to retain any
Mortgage File or any particular document required to be part thereof or
otherwise relating to the Mortgage Loans that may come into its or their
possession in accordance with the provisions of this Agreement and, in
connection therewith, does hereby accept its designation as agent and bailee for
the Trustee, but solely for the purpose expressed in the following sentence. By
the
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designation made by the Trustee pursuant to [Section ___ of] the Terms Indenture
and the acceptance of such designation by the Master Servicer and the Special
Servicer pursuant to this Section, the Trustee, as a secured party, is deemed to
have possession of such Mortgage File or such particular Mortgage Loan document
for purposes of Section 9-305 of the UCC.
SECTION 3.11. Servicing Compensation; Interest on Servicing
Advances; Payment of Certain Expenses; Obligations of
the Trustee regarding Back-up Servicing Advances.
(a) As compensation for its activities hereunder, the Master
Servicer shall be entitled to receive the Master Servicing Fee with respect to
each Mortgage Loan (including, without limitation, each Specially Serviced
Mortgage Loan) and REO Loan. As to each such Mortgage Loan and REO Loan, the
Master Servicing Fee shall accrue at the Master Servicing Fee Rate on the basis
of the same principal amount and for the same period respecting which the
related interest payment due on such Mortgage Loan or deemed to be due on such
REO Loan is computed. The Master Servicing Fee with respect to any Mortgage Loan
or REO Loan shall cease to accrue if a Liquidation Event occurs in respect
thereof. Earned but unpaid Master Servicing Fees shall be payable monthly, on a
loan-by-loan basis, from payments of interest on each Mortgage Loan and REO
Revenues allocable as interest on each REO Loan. The Master Servicer shall be
entitled to recover unpaid Master Servicing Fees in respect of any Mortgage Loan
or REO Loan out of Insurance Proceeds or Liquidation Proceeds, to the extent
permitted by Section 3.05(a). The right to receive the Master Servicing Fee may
not be transferred in whole or in part except in connection with the transfer of
all of the Master Servicer's responsibilities and obligations under this
Agreement.
(b) The Master Servicer shall also be entitled to additional
servicing compensation in the form of: (i) any Prepayment Interest Excesses;
(ii) to the extent allocable to the period when the related Mortgage Loan did
not constitute a Specially Serviced Mortgage Loan or REO Property, any Net
Penalty Charges or any similar charges collected on the Mortgage Loans; (iii)
interest or other income earned on deposits in the Custodial Account, in
accordance with Section 3.06(b) (but only to the extent of the Net Investment
Earnings, if any, with respect to the Custodial Account for each Collection
Period); and (iv) to the extent not required to be paid to any Mortgagor under
applicable law or under the related Mortgage, any interest or other income
earned on deposits in the Servicing Accounts maintained thereby. The Master
Servicer shall be required to pay out of its own funds all expenses incurred by
it in connection with its servicing activities hereunder (including, without
limitation, payment of any amounts due and owing to any of Sub-Servicers
retained by it and the premiums for any blanket policy insuring against hazard
losses pursuant to Section 3.07(b)), if and to the extent such expenses are not
payable directly out of the Custodial Account, and the Master Servicer shall not
be entitled to reimbursement therefor except as expressly provided in this
Agreement.
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(c) As compensation for its activities hereunder, the Special
Servicer shall be entitled to receive the Property Servicing Fee with respect to
each Mortgage Loan (including, without limitation, each Specially Serviced
Mortgage Loan) and REO Loan. As to each such Mortgage Loan and REO Loan, the
Property Servicing Fee shall accrue from time to time at the Property Servicing
Fee Rate on the basis of the same principal amount and for the same period
respecting which any related interest payment due on such Mortgage Loan or
deemed to be due on such REO Loan is computed. The Property Servicing Fee with
respect to any Mortgage Loan or REO Loan shall cease to accrue if a Liquidation
Event occurs in respect thereof. Earned but unpaid Property Servicing Fees shall
be payable monthly out of general collections on the Mortgage Loans and any REO
Properties on deposit in the Custodial Account pursuant to Section 3.05(a).
As further compensation for its activities hereunder, the Special
Servicer shall be entitled to receive the Special Servicing Fee with respect to
each Specially Serviced Mortgage Loan and each REO Loan. As to each Specially
Serviced Mortgage Loan and REO Loan, the Special Servicing Fee shall accrue from
time to time at the Special Servicing Fee Rate on the basis of the same
principal amount and for the same period respecting which any related interest
payment due on such Mortgage Loan or deemed to be due on such REO Loan is
computed. The Special Servicing Fee with respect to any Specially Serviced
Mortgage Loan or REO Loan shall cease to accrue as of the date a Liquidation
Event occurs in respect thereof or it becomes a Corrected Mortgage Loan. Earned
but unpaid Special Servicing Fees shall be payable monthly out of general
collections on the Mortgage Loans and any REO Properties on deposit in the
Custodial Account pursuant to Section 3.05(a).
As further compensation for its activities hereunder, the Special
Servicer shall be entitled to receive the Workout Fee with respect to each
Corrected Loan. As to each Corrected Mortgage Loan, the Workout Fee shall be
payable, subject to the proviso to clause (e) of the definition of "Specially
Serviced Mortgage Loan", out of, and shall be calculated by application of the
Workout Fee Rate to, each collection of interest and principal (net of related
unpaid or unreimbursed Master Servicing Fees, Property Servicing Fees, Special
Servicing Fees and Advances), together with any collection of a Prepayment
Premium or Yield Maintenance Premium, received on such Mortgage Loan for so long
as it remains a Corrected Mortgage Loan. The Workout Fee with respect to any
Corrected Mortgage Loan will cease to be payable if a Servicing Transfer Event
occurs with respect thereto or if the related Mortgaged Property becomes an REO
Property; provided that a new Workout Fee would become payable if and when such
Mortgage Loan again became a Corrected Mortgage Loan. If the Special Servicer is
terminated other than for cause or resigns in accordance with Section 5.04, it
shall retain the right to receive any and all Workout Fees payable in respect of
Mortgage Loans that became Corrected Mortgage Loans during the period that it
acted as Special Servicer and were still such at the time of such termination or
resignation (and the successor Special Servicer shall not be entitled to any
portion of such Workout Fees), in each case until the Workout Fee for any such
Mortgage Loan ceases to be payable in accordance with the preceding sentence.
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As further compensation for its activities hereunder, the Special
Servicer shall also be entitled to receive a Liquidation Fee with respect to
each Specially Serviced Mortgage Loan or REO Property as to which it receives
any full or discounted payoff from the related Mortgagor or any Liquidation
Proceeds or Insurance Proceeds (other than in connection with the purchase or
other removal from the Trust Estate of any such Specially Serviced Mortgage Loan
or REO Property by the Issuer, the Special Servicer or the Master Servicer
pursuant to or as contemplated by Section 3.18 or by the Mortgage Loan Seller
pursuant to the Mortgage Loan Purchase Agreement). As to each such Specially
Serviced Mortgage Loan or REO Property, the Liquidation Fee shall be payable,
subject to the proviso to clause (e) of the definition of "Specially Serviced
Mortgage Loan", out of, and shall be calculated by application of the
Liquidation Fee Rate to, such full or discounted payoff, Liquidation Proceeds
and/or Insurance Proceeds, in each case net of any portion of such payment or
proceeds payable or reimbursable to the Master Servicer or the Special Servicer
to cover related unpaid or unreimbursed Master Servicing Fees, Property
Servicing Fees, Special Servicing Fees and/or Advances. The Liquidation Fee with
respect to any such Specially Serviced Mortgage Loan will not be payable if such
Mortgage Loan becomes a Corrected Mortgage Loan. Notwithstanding anything herein
to the contrary, no Liquidation Fee will be payable in connection with the
receipt of, or out of, Liquidation Proceeds collected as a result of the
purchase of any Specially Serviced Mortgage Loan or REO Property described in
the parenthetical to the first sentence of this paragraph.
The Special Servicer's right to receive the Property Servicing Fee,
the Special Servicing Fee, the Workout Fee and/or the Liquidation Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Special Servicer's responsibilities and obligations under this Agreement.
(d) Additional servicing compensation in the form of ____% of any
modification fees and ___% of any assumption fees received on or with respect to
Mortgage Loans other than Specially Serviced Mortgage Loans and any modification
fees and assumption fees received on or with respect to any Specially Serviced
Mortgage Loans, may be retained by the Special Servicer (to the extent collected
by the Special Servicer), or shall be promptly paid to the Special Servicer by
the Master Servicer (to the extent collected by the Master Servicer), and in any
event shall not be required to be deposited in the Custodial Account pursuant to
Section 3.04(a). The Special Servicer shall also be entitled to any Net Penalty
Charges received on the Mortgage Loans that are not required to be paid as
additional servicing compensation to the Master Servicer. To the extent
collected by the Special Servicer, additional servicing compensation in the form
of any Net Penalty Charges that the Master Servicer is entitled to as additional
servicing compensation shall be paid promptly by the Special Servicer to the
Master Servicer. The Special Servicer shall be required to pay out of its own
funds all expenses incurred by it in connection with its servicing activities
hereunder (including, without limitation, payment of any amounts due and owing
to any of Sub-Servicers retained by it and the premiums for any blanket policy
obtained by it insuring against hazard losses pursuant to Section 3.07(b)), if
and to the extent such expenses are not payable directly out of the Custodial
Account or the REO Account, and the Special Servicer shall not be entitled to
reimbursement except as expressly provided in this Agreement.
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(e) If the Master Servicer or Special Servicer is required under
this Agreement to make a Servicing Advance, but neither does so within 15 days
after such Advance is required to be made, the Trustee shall, if it has actual
knowledge of such failure on the part of the Master Servicer or Special
Servicer, as the case may be, give notice of such failure, as applicable, to the
Master Servicer and the Special Servicer. If such Advance is not made by the
Master Servicer or the Special Servicer within three days after such notice then
(subject to Section 3.11(g) below), the Trustee shall make such Advance.
(f) The Special Servicer and the Trustee shall each be entitled to
receive interest at the Reimbursement Rate in effect from time to time, accrued
on the amount of each Servicing Advance made thereby for so long as such
Servicing Advance is outstanding, such interest to be payable: first, out of
Penalty Charges collected on the Mortgage Loan or REO Loan as to which such
Advance relates; and then, to the extent such Penalty Charges are insufficient,
and only after such Advance has been reimbursed pursuant to this Agreement, out
of general collections on the Mortgage Loans and REO Properties on deposit in
the Custodial Account. The Master Servicer shall reimburse itself, the Special
Servicer or the Trustee, as appropriate, for any Servicing Advance made thereby
as soon as practicable after funds available for such purpose are deposited in
the Custodial Account.
(g) Notwithstanding anything to the contrary set forth herein, none
of the Master Servicer, the Special Servicer or the Trustee shall be required to
make any Servicing Advance that it determines in its reasonable good faith
judgment would constitute a Nonrecoverable Servicing Advance. A determination by
any Person with an obligation hereunder to make Servicing Advances that it has
made a Nonrecoverable Servicing Advance or that any proposed Servicing Advance,
if made, would constitute a Nonrecoverable Servicing Advance, shall be made by
such Person in its reasonable good faith judgment and shall be evidenced by an
Officer's Certificate delivered promptly to the Trustee and the Issuer, setting
forth the basis for such determination, together with a copy of an Appraisal of
the related Mortgaged Property or REO Property performed within the twelve
months preceding such determination, and further accompanied by any other
information, including engineers' reports, environmental surveys or similar
reports, that such Person may have obtained and that support such determination.
Notwithstanding the foregoing, the Trustee shall be entitled to conclusively
rely on any determination of nonrecoverability that may have been made by the
Master Servicer or the Special Servicer with respect to a particular Servicing
Advance, and the Master Servicer shall be entitled to conclusively rely on any
determination of nonrecoverability that may have been made by the Special
Servicer with respect to a particular Servicing Advance. A copy of any such
Officer's Certificate (and accompanying information) of the Master Servicer
shall also be delivered promptly to the Special Servicer, a copy of any such
Officer's Certificate (and accompanying information) of the Special Servicer
shall also be promptly delivered to the Master Servicer, and a copy of any such
Officer's Certificate (and accompanying information) of the Trustee shall also
be promptly delivered to the Master Servicer and the Special Servicer.
(h) Notwithstanding anything to the contrary set forth herein, any
of the Master Servicer, the Special Servicer or the Trustee, as applicable, may,
in its sole discretion, make any
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Nonrecoverable Servicing Advance if it has determined in its reasonable good
faith judgment that making such Nonrecoverable Servicing Advance is in the best
interests of the Bondholders, as evidenced by an Officer's Certificate delivered
promptly to the Trustee (unless it is the Person making such Advance), setting
forth the basis for such determination and accompanied by any information that
such Person may have obtained that supports such determination. A copy of any
such Officer's Certificate (and accompanying information) of the Master Servicer
shall also be delivered promptly to the Special Servicer, a copy of any such
Officer's Certificate (and accompanying information) of the Special Servicer
shall also be promptly delivered to the Master Servicer and a copy of any such
Officer's Certificate (and accompanying information) of the Trustee shall also
be promptly delivered to the Master Servicer and the Special Servicer.
SECTION 3.12. Property Inspections; Collection of Financial
Statements; Delivery of Certain Reports.
(a) The Special Servicer shall at its expense perform or cause to be
performed an inspection of each Mortgaged Property at least once per calendar
year and as soon as practicable (but in any event not later than 60 days) after
the related Mortgage Loan becomes a Specially Serviced Mortgage Loan. The
Special Servicer shall prepare a written report of each such inspection
performed by it that sets forth in detail the condition of the Mortgaged
Property and that specifies the existence of: (i) any sale, transfer or
abandonment of the Mortgaged Property of which the Special Servicer is aware,
(ii) any change in the condition, occupancy, or value of the Mortgaged Property
that the Special Servicer, in its reasonable good faith judgment, considers
material, or (iii) any waste committed on the Mortgaged Property. The Special
Servicer shall deliver to the Trustee, the Master Servicer and the Issuer a copy
of each such written report prepared by it within ____ days of the related
inspection.
(b) The Special Servicer shall make reasonable efforts to collect
promptly from each related Mortgagor quarterly and annual operating statements,
budgets and rent rolls of the related Mortgaged Property, and financial
statements of such Mortgagor, whether or not delivery of such items is required
pursuant to the terms of the related Mortgage. In addition, the Special Servicer
shall cause quarterly and annual operating statements, budgets and rent rolls to
be regularly prepared in respect of each REO Property and shall collect all such
items promptly following their preparation and deliver a report summarizing such
information as described in the second paragraph of Section 4.02(b). The Special
Servicer shall deliver copies of all the foregoing items so collected to the
Trustee, the Master Servicer and the Issuer within ____ days of the receipt
thereof.]
SECTION 3.13. Annual Statement as to Compliance.
Each of the Master Servicer and the Special Servicer shall deliver
to the Trustee, to the Issuer and, in the case of the Special Servicer, to the
Master Servicer, on or before March 15 of each year, beginning March 15, _____,
an Officer's Certificate stating, as to the signer thereof, that (i) a review of
the activities of the Master Servicer or the Special Servicer, as the case may
be, during the preceding calendar year and of its performance under this
Agreement has
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been made under such officer's supervision[,] [and] (ii) to the best of such
officer's knowledge, based on such review, the Master Servicer or the Special
Servicer, as the case may be, has fulfilled all of its obligations under this
Agreement in all material respects throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof [and (iii) the Master
Servicer or the Special Servicer, as the case may be, has received no notice
regarding the qualification, or challenging the status, of any REMIC Pool as a
REMIC from the Internal Revenue Service or any other governmental agency or body
or, if it has received any such notice, specifying the details thereof].
SECTION 3.14. Reports by Independent Public Accountants.
On or before March 15 of each year, beginning March 15, 199__, each
of the Master Servicer and the Special Servicer at its expense shall cause a
firm of independent public accountants (which may also render other services to
the Master Servicer or the Special Servicer) with at least 250 professionals and
that is a member of the American Institute of Certified Public Accountants to
furnish a statement to the Trustee, to the Issuer and, in the case of the
Special Servicer, to the Master Servicer to the effect that (i) it has obtained
a letter of representation regarding certain matters from the management of the
Master Servicer or the Special Servicer, as the case may be, which includes an
assertion that the Master Servicer or the Special Servicer, as the case may be,
has complied with certain minimum mortgage loan servicing standards (to the
extent applicable to commercial and multifamily mortgage loans), identified in
the Uniform Single Attestation Program for Mortgage Bankers established by the
Mortgage Bankers Association of America, with respect to the servicing of
commercial and multifamily mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering its report such firm may rely, as to matters relating
to the direct servicing of commercial and multifamily mortgage loans by
Sub-Servicers, upon comparable reports of firms of independent certified public
accountants rendered on the basis of examinations conducted in accordance with
the same standards (rendered within one year of such report) with respect to
those Sub-Servicers.
SECTION 3.15. Access to Certain Information.
Each of the Master Servicer and the Special Servicer shall afford to
the Trustee, the Rating Agencies, the Issuer and the OTS, the FDIC and any other
banking or insurance regulatory authority that may exercise authority over any
Bondholder, access to any records regarding the Mortgage Loans and the servicing
thereof within its control, except to the extent it is prohibited from doing so
by applicable law or contract [or to the extent such information is subject to a
privilege under applicable law to be asserted on behalf of the Bondholders.]
Such access shall be afforded without charge but only upon reasonable prior
written request and during normal business hours at the offices of the Master
Servicer or the Special Servicer, as the case may be, designated by it.
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SECTION 3.16. Title to REO Property; REO Account.
(a) If title to any REO Property is acquired, the deed or
certificate of sale shall be issued to the Trustee on behalf of the Bondholders.
In accordance with Section 3.18, and subject to all applicable terms and
conditions of the Indenture, the Special Servicer, on behalf of the Bondholders
and, subject to the lien of the Indenture, the Issuer, shall sell any REO
Property [as promptly as possible within a commercially reasonable time period]
[within two years after any REMIC Pool acquires ownership of such REO Property
for purposes of Section 860G(a)(8) of the Code, unless the Special Servicer
either (i) applies, more than sixty days prior to the expiration of such two
year period, and is granted an extension of time (an "REO Extension") by the
Internal Revenue Service to sell such REO Property or (ii) obtains for the
Trustee an Opinion of Counsel, addressed to the Trustee and the Special
Servicer, to the effect that the holding by such REMIC Pool of such REO Property
subsequent to the second anniversary of such acquisition will not result in the
imposition of taxes on "prohibited transactions" (as defined in Section 860F of
the Code) of any REMIC Pool or cause any REMIC Pool to fail to qualify as a
REMIC at any time that any Bonds are Outstanding. Regardless of whether the
Special Servicer applies for or is granted the REO Extension contemplated by
clause (i) of the immediately preceding sentence or obtains the Opinion of
Counsel referred to in clause (ii) of such sentence, the Special Servicer shall
act diligently and prudently to liquidate such REO Property on a timely basis.
If the Special Servicer is granted such REO Extension or obtains such Opinion of
Counsel, the Special Servicer shall sell such REO Property within such period
longer than two years as is permitted by such REO Extension or contemplated by
such Opinion of Counsel, as the case may be. Any expense incurred by the Special
Servicer in connection with its applying for and being granted the REO Extension
contemplated by clause (i) of the second preceding sentence or its obtaining the
Opinion of Counsel contemplated by clause (ii) of the second preceding sentence,
shall be a Servicing Advance.]
(b) The Special Servicer shall segregate and hold all funds
collected and received in connection with any REO Property separate and apart
from its own funds and general assets. If an REO Acquisition shall occur, the
Special Servicer shall establish and maintain one or more accounts
(collectively, the "REO Account"), held on behalf of the Trustee in trust for
the benefit of the Bondholders and, subject to the lien of the Indenture, the
Issuer, for the retention of revenues and other proceeds derived from each REO
Property. The REO Account shall be an Eligible Account. The Special Servicer
shall deposit, or cause to be deposited, in the REO Account, upon receipt, all
REO Revenues, Insurance Proceeds and Liquidation Proceeds received in respect of
an REO Property. Funds in the REO Account may be invested in Permitted
Investments in accordance with Section 3.06. The Special Servicer shall be
entitled to make withdrawals from the REO Account to pay itself, as additional
servicing compensation in accordance with Section 3.11(d), interest and
investment income earned in respect of amounts held in the REO Account as
provided in Section 3.06(b) (but only to the extent of the Net Investment
Earnings with respect to the REO Account for any Collection Period). The Special
Servicer shall give notice to the other parties hereto of the location of the
REO Account when first established and of the new location of the REO Account
prior to any change thereof.
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(c) The Special Servicer shall withdraw from the REO Account funds
necessary for the proper operation, management, leasing, maintenance and
disposition of any REO Property, but only to the extent of amounts on deposit in
the REO Account relating to such REO Property. Within one Business Day following
the end of each Collection Period, the Special Servicer shall withdraw from the
REO Account and deposit into the Custodial Account or deliver to the Master
Servicer (which shall deposit such amounts into the Custodial Account) the
aggregate of all amounts received in respect of each REO Property during such
Collection Period, net of any withdrawals made out of such amounts pursuant to
the preceding sentence; provided that the Special Servicer may retain in the REO
Account such portion of such proceeds and collections as may be necessary to
maintain a reserve of sufficient funds for the proper operation, management,
leasing, maintenance and disposition of the related REO Property (including,
without limitation, the creation of a reasonable reserve for repairs,
replacements and necessary capital improvements and other related expenses),
such reserve not to exceed an amount sufficient to cover such items to be
incurred during the following twelve-month period.
(d) The Special Servicer shall keep and maintain separate records,
on a property-by-property basis, for the purpose of accounting for all deposits
to, and withdrawals from, the REO Account pursuant to Section 3.16(b) or (c).
SECTION 3.17. Management of REO Property.
(a) [Prior to the acquisition of title to any Mortgaged Property
securing a defaulted Mortgaged Loan, the Special Servicer shall review the
operation of such Mortgaged Property and determine the nature of the income that
would be derived from such property if it were acquired by the Trustee, on
behalf of the Bondholders and, subject to the lien of the Indenture, the
Trustee. If the Special Servicer determines from such review that:
(i) None of the income from Directly Operating such Mortgaged
Property would be subject to tax as "net income from foreclosure
property" within the meaning of the REMIC Provisions or would be
subject to the tax imposed on "prohibited transactions" under
Section 860F of the Code (either such tax referred to herein as an
"REO Tax"), such Mortgaged Property may be Directly Operated by the
Special Servicer as REO Property;
(ii) Directly Operating such Mortgaged Property as an REO
Property could result in income from such property that would be
subject to an REO Tax, but that a lease of such property to another
party to operate such property, or the performance of some services
by an Independent Contractor with respect to such property, or
another method of operating such property would not result in income
subject to an REO Tax, then the Special Servicer may (provided, that
in the reasonable good faith judgment of the Special Servicer , it
is commercially feasible) so lease or otherwise operate such REO
Property; or
(iii) It is reasonable to believe that Directly Operating such
property as REO Property could result in income subject to an REO
Tax and that no commercially feasible
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means exists to operate such property as REO Property without a
REMIC Pool incurring or possibly incurring an REO Tax on income from
such property, the Special Servicer shall deliver to the Trustee or
any REMIC Administrator appointed thereby, in writing, a proposed
plan (the "Proposed Plan") to manage such property as REO Property.
Such plan shall include potential sources of income, and to the
extent commercially feasible, estimates of the amount of income from
each such source. Within a reasonable time after the submission of
such plan, the Special Servicer shall consult with the Trustee or
such REMIC Administrator with respect to, and shall seek advice from
the Trustee or such REMIC Administrator concerning, the respective
REMIC Pools' federal income tax reporting position with respect to
the various sources of income that the Trust Estate would derive
under the Proposed Plan and the estimated amount of taxes that the
respective REMIC Pools would be required to pay with respect to each
such source of income. Pursuant to its consultations with the
Trustee or such REMIC Administrator, the Special Servicer shall
either (A) implement the Proposed Plan (after acquiring the
respective Mortgaged Property as REO Property) or (B) manage and
operate such property in a manner that would not result in the
imposition of an REO Tax on the income derived from such property.]
[The Special Servicer's decision as to how each REO Property shall
be managed and operated shall be based in either case on the reasonable good
faith judgment of the Special Servicer as to which means would be in the best
interest of the Bondholders and the Issuer (as a collective whole) and, to the
extent consistent with the foregoing, in the same manner as would prudent
mortgage loan servicers and asset managers operating acquired mortgaged property
comparable to the respective REO Property under the same circumstances.
(b)] If title to any REO Property is acquired, the Special Servicer
shall manage, conserve, protect and operate such REO Property for the benefit of
the Bondholders and, subject to the lien of the Indenture, the Issuer solely for
the purpose of its prompt disposition and sale [in the same manner as would
prudent mortgage loan servicers and asset managers operating acquired mortgaged
property comparable to the respective REO Property under the same circumstances]
[in a manner that does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or,
except as contemplated by Section 3.17(a), result in the receipt by any REMIC
Pool of any "income from non-permitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or in an Adverse REMIC Event in respect of any such
REMIC. Except as provided in Section 3.17(a), the Special Servicer shall not
enter into any lease, contract or other agreement that causes a REMIC Pool to
receive, and (unless required to do so under any lease, contract or agreement to
which the Special Servicer or the Trustee on behalf of the Issuer and the
Bondholders may become a party or successor to a party due to a foreclosure,
deed in lieu of foreclosure or other similar exercise of a creditor's rights or
remedies with respect to a Mortgage Loan) shall not cause or allow a REMIC Pool
to receive, any "net income from foreclosure property" that is subject to
taxation under the REMIC Provisions]. Subject to the foregoing, however, the
Special Servicer shall have full power and authority to do any and all things in
connection therewith as are consistent with the Servicing Standard and,
consistent therewith, shall withdraw from the REO Account, to the extent
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of amounts on deposit therein with respect to any REO Property, funds necessary
for the proper operation, management, maintenance and disposition of such REO
Property, including, without limitation:
(i) all insurance premiums due and payable in respect of such
REO Property;
(ii) all real estate taxes and assessments in respect of such
REO Property that may result in the imposition of a lien thereon;
(iii) any ground rents in respect of such REO Property; and
(iv) all other costs and expenses necessary to maintain,
lease, sell, protect, manage, operate and restore such REO Property.
To the extent that amounts on deposit in the REO Account in respect of any REO
Property are insufficient for the purposes set forth in clauses (i) through (iv)
above with respect to such REO Property, the Special Servicer shall (subject to
its right to be reimbursed therefor as provided in Sections 3.05(a) and 3.19(b)
hereof) advance such amounts as are necessary for such purposes unless (as
evidenced by an Officer's Certificate delivered to the Trustee) the Special
Servicer would not make such advances if the Special Servicer owned such REO
Property or the Special Servicer determines, in its reasonable good faith
judgment, that such advances would be Nonrecoverable Servicing Advances;
provided, however, that the Special Servicer may make any such Servicing Advance
without regard to recoverability if it is a necessary fee or expense incurred in
connection with the defense or prosecution of legal proceedings.
[(c) The Special Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract may not be
inconsistent herewith and shall reflect an agreement reached at
arm's length;
(ii) the fees of such Independent Contractor (which shall be
expenses payable out of the Trust Estate) shall be reasonable and
customary in consideration of the nature and locality of the REO
Property;
(iii) any such contract shall require, or shall be
administered to require, that the Independent Contractor, in a
timely manner, (A) pay all costs and expenses incurred in connection
with the operation and management of such REO Property, including,
without limitation, those listed in Section 3.17(b) above, and (B)
remit all related revenues collected (net of its fees and such costs
and expenses) to the Special Servicer upon receipt;
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(iv) none of the provisions of this Section 3.17(c) relating
to any such contract or to actions taken through any such
Independent Contractor shall be deemed to relieve the Special
Servicer of any of its duties and obligations hereunder with respect
to the operation and management of any such REO Property;
(v) the Special Servicer shall be obligated with respect
thereto to the same extent as if it alone were performing all duties
and obligations in connection with the operation and management of
such REO Property; and
(vi) such Independent Contractor is acceptable to each Rating
Agency, and such appointment will not result in a qualification,
downgrading or withdrawal of any of the ratings then assigned to the
Bonds by such Rating Agency (as evidenced in writing by each such
Rating Agency).
The Special Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Special Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. To the extent the costs of any contract with any
Independent Contractor for the operation and management of any REO Property are
greater than the revenues available from such property, such excess costs shall
be covered by, and be reimbursable as, a Servicing Advance.]
SECTION 3.18. Sale of Mortgage Loans and REO Properties.
(a) The parties hereto may sell or purchase, or permit the sale or
purchase of, a Mortgage Loan or REO Property only as expressly provided in or
contemplated by this Section 3.18 or Section 2.02 and, in either case, subject
to the applicable terms and conditions set forth in the Indenture.
(b) If the Special Servicer has determined, in its reasonable good
faith judgment, that any Defaulted Mortgage Loan will become subject to
foreclosure proceedings, the Special Servicer shall promptly so notify in
writing the Trustee, the Master Servicer and the Issuer. The Issuer may at its
option have any such Defaulted Mortgage Loan released from the lien of the
Indenture by delivering to the Master Servicer for deposit in the Custodial
Account a cash amount equal to the Purchase Price. The Trustee, upon receipt of
an Officer's Certificate from the Master Servicer to the effect that such
deposit has been made, shall release or cause to be released to the Issuer or
its designee the related Mortgage File, and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, and other
documents as shall be provided to it and are reasonably necessary to release the
Mortgage Loan from the lien of the Indenture and to vest in the Issuer ownership
thereof. In connection with any such purchase, the Special Servicer shall
deliver the related Servicing File to the Issuer.
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(c) If the Issuer has not removed from the Trust Estate any
Defaulted Mortgage Loan described in the first sentence of Section 3.18(b) above
within 30 days after receipt by the Issuer of the notice contemplated by Section
3.18(b), then the Trustee shall promptly notify the Master Servicer and Special
Servicer that the Issuer has not so removed such Mortgage Loan, and either the
Special Servicer or, subject to the Special Servicer's prior rights in such
regard, the Master Servicer may at its option, within 30 days after receipt of
such notice, purchase such Mortgage Loan from the Trust Estate, at a price equal
to the Purchase Price. The Purchase Price for any such Mortgage Loan purchased
under this paragraph (c) shall be deposited into the Custodial Account, and the
Trustee, upon receipt of an Officer's Certificate from the Master Servicer to
the effect that such deposit has been made, shall release or cause to be
released to the Master Servicer or the Special Servicer, as applicable, the
related Mortgage File, and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, and other documents as
shall be provided to it and are reasonably necessary to release the Mortgage
Loan from the lien of the Indenture and to vest in the Master Servicer or the
Special Servicer, as applicable, ownership thereof. In connection with any such
purchase by the Master Servicer, the Special Servicer shall deliver the related
Servicing File to the Master Servicer.
(d) The Special Servicer may offer to sell any Defaulted Mortgage
Loan not otherwise purchased pursuant to Section 3.18(c) above, if and when the
Special Servicer determines, consistent with the Servicing Standard, that such a
sale would be in the best economic interests of the Bondholders and the Issuer
(as a collective whole). Such offer shall be made in a commercially reasonable
manner (which, for purposes hereof, includes an offer to sell without
representation or warranty other than customary warranties of title and
condition, if liability for breach thereof is limited to recourse against the
Trust Estate) for a period of not less than 10 days. Unless the Special Servicer
determines that acceptance of any bid would not be in the best economic
interests of the Bondholders and the Issuer (as a collective whole), the Special
Servicer shall accept the highest cash bid received from any Person that
constitutes a fair price for such Mortgage Loan. In the absence of any bid
determined as provided below to be fair, the Special Servicer shall proceed with
respect to such Defaulted Mortgage Loan in accordance with Section 3.09.
The Special Servicer shall use its best efforts to solicit bids for
each REO Property in such manner as will be reasonably likely to realize a fair
price [within a commercially reasonable time period] [within the time period
provided for by Section 3.16(a)]. The Special Servicer shall accept the first
(and, if multiple bids are received contemporaneously, highest) cash bid
received from any Person that constitutes a fair price for such REO Property.
[If the Special Servicer reasonably believes that it will be unable to realize a
fair price for any REO Property within the time constraints imposed by Section
3.16(a), the Special Servicer shall dispose of such REO Property upon such terms
and conditions as the Special Servicer shall deem necessary and desirable to
maximize the recovery thereon under the circumstances and, in connection
therewith, shall accept the highest outstanding cash bid, regardless of from
whom received.]
The Special Servicer shall give the Trustee and the Master Servicer
not less than _____ Business Days' prior written notice of its intention to sell
any Defaulted Mortgage Loan
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or REO Property pursuant to this Section 3.18(d). No Interested Person shall be
obligated to submit a bid to purchase any such Mortgage Loan or REO Property,
and notwithstanding anything to the contrary herein, neither the Trustee, in its
individual capacity, nor any of its Affiliates may bid for or purchase any
Defaulted Mortgage Loan or REO Property pursuant hereto.
(e) Whether any cash bid constitutes a fair price for any Defaulted
Mortgage Loan or REO Property, as the case may be, for purposes of Section
3.18(d), shall be determined by the Special Servicer or, if such cash bid is
from an Interested Person, by the Trustee.
In determining whether any bid received from an Interested Person
represents a fair price for any such Mortgage Loan or REO Property, the Trustee
shall be supplied with and shall be entitled to rely on the most recent
Appraisal in the related Servicing File conducted in accordance with this
Agreement within the preceding 12-month period or, in the absence of any such
Appraisal, on a new Appraisal, or if the most recent Appraisal is not more than
12 months old but there has been a material change in such Mortgaged Property or
REO Property during the prior 12 months, on an updated Appraisal, in any case to
be obtained by the Special Servicer (the cost of which shall constitute a
Servicing Advance). On making any such determination of fair price based on the
Appraisal, the Trustee shall be entitled to retain and may rely on the
determinations of professional consultants. The cost of any such consultants
shall be reimbursable to the Trustee from the funds on deposit in the Custodial
Account. The appraiser conducting any such new Appraisal shall be selected by
the Special Servicer if the Special Servicer is not bidding with respect to a
Defaulted Mortgage Loan or REO Property and shall be selected by the Master
Servicer if the Special Servicer is bidding and by the Trustee if both the
Master Servicer and the Special Servicer are bidding. Where any Interested
Person is among those bidding with respect to a Defaulted Mortgage Loan or REO
Property, the Special Servicer shall require that all bids be submitted to it
(and, if the Special Servicer is bidding, shall be submitted by it to the
Trustee) in writing and be accompanied by a refundable deposit of cash in an
amount equal to 5% of the bid amount.
In determining whether any bid from a Person other than an
Interested Person constitutes a fair price for any such Mortgage Loan or REO
Property, the Special Servicer shall take into account the results of any
Appraisal described above, and any appraiser or other expert in real estate
matters shall be instructed to take into account, as applicable, among other
factors, the period and amount of any delinquency on the affected Mortgage Loan,
the occupancy level and physical condition of the Mortgaged Property or REO
Property, the state of the local economy and the obligation to dispose of any
REO Property within the time period specified in Section 3.16(a).
The Purchase Price for any such Mortgage Loan or REO Property shall
in all cases be deemed a fair price. Notwithstanding the other provisions of
this Section 3.18, no cash bid from the Special Servicer or any Affiliate
thereof shall constitute a fair price for any Defaulted Mortgage Loan or REO
Property unless such bid is the highest cash bid received and at least two
independent bids (not including the bid of the Special Servicer or any
Affiliate) have been received. In the event the bid of the Special Servicer or
any Affiliate thereof is the only bid
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received or is the higher of only two bids received, then additional bids shall
be solicited. If an additional bid or bids, as the case may be, are received and
the original bid of the Special Servicer or any Affiliate thereof is the highest
of all cash bids received, then the bid of the Special Servicer or such
Affiliate shall no longer be deemed not to constitute a fair price. A bid of the
Special Servicer shall not be accepted in the absence of a determination by the
Trustee, as provided above in this Section 3.18(e), that such bid constitutes a
fair price for any Defaulted Mortgage Loan or REO Property. Any bid by the
Special Servicer shall be unconditional and if accepted the Defaulted Mortgage
Loan or REO Property shall be transferred to the Special Servicer without
recourse, representation or warranty other than customary representations as to
title given in connection with the sale of a mortgage loan or real property.
(f) Subject to Sections 3.18(a) through 3.18(e) above, the Special
Servicer shall act on behalf of the Trustee in negotiating with independent
third parties and taking any other action necessary or appropriate in connection
with the sale of any Defaulted Mortgage Loan or REO Property, and the collection
of all amounts payable in connection therewith. In connection therewith, the
Special Servicer may charge prospective bidders, and may retain, fees that
approximate the Special Servicer's actual costs in the preparation and delivery
of information pertaining to such sales or evaluating bids without obligation to
deposit such amounts into the Custodial Account. Any sale of a Defaulted
Mortgage Loan or any REO Property shall be final and without recourse to the
Trustee or the Trust Estate, and if such sale is consummated in accordance with
the terms of this Agreement, neither the Special Servicer nor the Trustee shall
have any liability to any Bondholder with respect to the purchase price therefor
accepted by the Special Servicer or the Trustee.
(g) Any sale of a Defaulted Mortgage Loan or an REO Property shall
be for cash only.
(h) In connection with any sale or other transfer of a Defaulted
Mortgage Loan or an REO Property pursuant to this Section 3.18, the Issuer shall
deliver to the Trustee all certificates and opinions, if any, required by TIA
ss.ss. 314(c) and 314(d) and by Sections 8.04(b) and 12.01 of the Standard
Indenture Provisions; and, notwithstanding anything herein to the contrary, no
such sale may be consummated and none of the Trustee, the Master Servicer or the
Special Servicer shall release any documents relating to such Defaulted Mortgage
Loan or REO Property to the prospective purchaser or other transferee unless and
until the Trustee receives any such certificates and opinions.
(i) Notwithstanding any of the foregoing paragraphs of this Section
3.18, the Special Servicer shall not be obligated to accept the highest cash bid
if the Special Servicer determines, in accordance with the Servicing Standard,
that rejection of such bid would be in the best interests of the Bondholders and
the Issuer (taken as a collective whole), and the Special Servicer may accept a
lower cash bid (from any Person other than itself or an Affiliate) if it
determines, in accordance with the Servicing Standard, that acceptance of such
bid would be in the best interests of the Bondholders and the Issuer (taken as a
collective whole) (for example, if
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the prospective buyer making the lower bid is more likely to perform its
obligations or the terms offered by the prospective buyer making the lower bid
are more favorable).
SECTION 3.19. Additional Obligations of Master Servicer.
(a) The Master Servicer shall deliver to the Trustee for deposit in
the Collection Account on each Master Servicer Remittance Date, without any
right of reimbursement therefor, an amount equal to the lesser of (i) the
aggregate amount of Prepayment Interest Shortfalls incurred in connection with
Principal Prepayments received during the most recently ended Collection Period,
and (ii) the total amount of Master Servicing Fees received by the Master
Servicer during such Collection Period plus any Prepayment Interest Excesses
received during such Collection Period.
(b) No more frequently than once per calendar month, the Special
Servicer may require the Master Servicer, and the Master Servicer shall be
obligated, to reimburse the Special Servicer from its own funds for any
Servicing Advances made by but not previously reimbursed to the Special
Servicer, and to pay the Special Servicer interest thereon at the Reimbursement
Rate from the date made to, but not including, the date of reimbursement. Such
reimbursement and any accompanying payment of interest shall be made within ten
(10) days of the request therefor by wire transfer of immediately available
funds to an account designated by the Special Servicer. Upon the Master
Servicer's reimbursement to the Special Servicer of any Servicing Advance and
payment to the Special Servicer of interest thereon, all in accordance with this
Section 3.19(b), the Master Servicer shall for all purposes of this Agreement be
deemed to have made such Servicing Advance at the same time as the Special
Servicer actually made such Advance, and accordingly, the Master Servicer shall
be entitled to reimbursement for such Advance, together with interest thereon in
accordance with Sections 3.05(a) and 3.11(f), at the same time, in the same
manner and to the same extent as the Master Servicer would otherwise have been
entitled if it had actually made such Servicing Advance at the time the Special
Servicer did.
Notwithstanding anything to the contrary contained in this
Agreement, if the Special Servicer is required under this Agreement to make any
Servicing Advance but does not desire to do so, the Special Servicer may, in its
sole discretion, request that the Master Servicer make such Advance, such
request to be made in writing and in a timely manner that does not adversely
affect the interests of the Issuer or any Bondholder; provided, however, that
the Special Servicer shall have an obligation to make any Emergency Advance. The
Master Servicer shall have the obligation to make any such Servicing Advance
(other than an Emergency Advance) that it is requested by the Special Servicer
to make within ten days of the Master Servicer's receipt of such request. The
Special Servicer shall be relieved of any obligations with respect to an Advance
that it requests the Master Servicer to make (regardless of whether or not the
Master Servicer shall make such Advance) other than an Emergency Advance. The
Master Servicer shall be entitled to reimbursement for any Servicing Advance
made by it at the direction of the Special Servicer, together with interest
thereon in accordance with Sections 3.05(a) and 3.11(f), at the same time, in
the same manner and to the same extent as the Master Servicer is entitled with
respect to any other Servicing Advance made thereby.
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Notwithstanding the foregoing provisions of this Section 3.19(b),
the Master Servicer shall not be required to reimburse the Special Servicer for,
or to make at the Special Servicer's direction, any Servicing Advance if the
Master Servicer determines in its reasonable good faith judgment that the
Servicing Advance for which the Special Servicer is requesting reimbursement, or
which the Special Servicer is directing the Master Servicer to make, hereunder,
although not characterized by the Special Servicer as a Nonrecoverable Servicing
Advance, is in fact a Nonrecoverable Servicing Advance. The Master Servicer
shall notify the Special Servicer in writing of such determination and, if
applicable, such Nonrecoverable Servicing Advance shall be reimbursed to the
Special Servicer pursuant to Section 3.05(a).
(c) Promptly (and, in any event, within 60 days) following the
earliest of (i) the date on which any Mortgage Loan becomes a Modified Mortgage
Loan, (ii) the 60th day (or, in the case of a Modified Mortgage Loan, the 30th
day) after the occurrence of any uncured delinquency in Monthly Payments with
respect to any Mortgage Loan, (iii) the date on which a receiver is appointed
and continues in such capacity in respect of the Mortgaged Property securing any
Mortgage Loan and (iv) the date on which the Mortgaged Property securing any
Mortgage Loan becomes an REO Property (each such Mortgage Loan, a "Required
Appraisal Loan"), the Special Servicer shall obtain an Appraisal of the related
Mortgaged Property, unless an Appraisal thereof had previously been obtained
within the prior twelve months. The cost of such Appraisal shall be a Servicing
Advance.
With respect to each Required Appraisal Loan (unless such Required
Appraisal Loan has become a Corrected Mortgage Loan and has remained current for
twelve consecutive Monthly Payments, and no other Servicing Transfer Event has
occurred with respect thereto during such twelve months), the Special Servicer
shall, within 30 days of each anniversary of such Required Appraisal Loan's
having become such, order an update of the prior Appraisal (the cost of which
will be a Servicing Advance). Based upon such Appraisal, the Special Servicer
shall redetermine and report to the Trustee the Appraisal Reduction Amount, if
any, with respect to such Required Appraisal Loan.
SECTION 3.20. Modifications, Waivers, Amendments and Consents.
(a) The Special Servicer may, consistent with the Servicing Standard
(but the Master Servicer may not) agree to any modification, waiver or amendment
of any term of, forgive interest (including, without limitation, Default
Interest and late payment fees) on and principal of, capitalize interest on,
permit the release, addition or substitution of collateral securing, and/or
permit the release of the Mortgagor on or any guarantor of any Mortgage Loan
without the consent of any other party hereto or any Bondholder, subject,
however, to each of the following limitations, conditions and restrictions:
(i) other than as provided in Section 3.08 and in subsection
(c) below, the Special Servicer shall not agree to any modification,
waiver or amendment of any term of, or take any of the other acts
referenced in this Section 3.20(a) with respect to, any Mortgage
Loan that would affect the amount or timing of any related payment
of principal,
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interest or other amount payable thereunder or, in the Special
Servicer's reasonable good faith judgment, would materially impair
the security for such Mortgage Loan or reduce the likelihood of
timely payment of amounts due thereon, unless a material default on
such Mortgage Loan has occurred or, in the Special Servicer's
reasonable good faith judgment, a default in respect of payment on
such Mortgage Loan is reasonably foreseeable, and such modification,
waiver, amendment or other action is reasonably likely to produce a
greater recovery to the Bondholders and the Issuer (taken as a
collective whole) on a present value basis (the relevant discounting
of anticipated collections that will be payable to Bondholders and
the Issuer to be done at the related Net Mortgage Rate), than would
liquidation;
(ii) the Special Servicer may not extend the date on which any
Balloon Payment is scheduled to be due on any Specially Serviced
Mortgage Loan more than three times and, in the case of any such
extension, for more than one year; and, furthermore, the Special
Servicer may not grant any such extension unless (A) the Special
Servicer's recovery determination contemplated by the immediately
preceding clause (i) is supported by an Appraisal performed within
the preceding 12-month period and (B) the Mortgagor agrees to
deliver to the Special Servicer, the Trustee and the Issuer
quarterly operating statements with respect to the related Mortgaged
Property (the Special Servicer to request that such statements be
audited, provided that the Special Servicer may waive such condition
relating to such statements being audited, in its sole discretion);
[(iii) the Special Servicer shall not make or permit any
modification, waiver or amendment of any term of, or take any of the
other acts referenced in this Section 3.20(a) with respect to, any
Mortgage Loan that would (A) cause any REMIC Pool to fail to qualify
as a REMIC under the Code or result in the imposition of any tax on
"prohibited transactions" or "contributions" after the Startup Day
of any such REMIC Pool under the REMIC Provisions or (B) cause any
Mortgage Loan to cease to be a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code; ]
[(iv)] the Special Servicer shall not permit any Mortgagor to
add or substitute any collateral pursuant to this Section 3.20
unless the Special Servicer shall have first determined in
accordance with the Servicing Standard, based upon a Phase I
Environmental Assessment prepared by an Independent Person who
regularly conducts Phase I Environmental Assessments, at the expense
of the Mortgagor, that such additional or substitute collateral is
in compliance with applicable environmental laws and regulations and
that there are no circumstances or conditions present with respect
to such new collateral relating to the use, management or disposal
of any Hazardous Materials for which investigation, testing,
monitoring, containment, clean-up or remediation would be required
under any then applicable environmental laws and/or regulations; and
[(v)] the Special Servicer shall not release or substitute any
collateral securing an outstanding Mortgage Loan except as provided
in Section 3.09(d), except where a Mortgage Loan is satisfied and
except in the case of a release where (A) the use of the
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collateral to be released will not, in the Special Servicer's
reasonable good faith judgment, materially and adversely affect the
Net Operating Income being generated by or the use of the related
Mortgaged Property, (B) there is a corresponding principal paydown
of such Mortgage Loan in an amount at least equal to the appraised
value of the collateral to be released (or substitute collateral
with an appraised value at least equal to that of the collateral to
be released, is delivered), (C) the remaining Mortgaged Property
(together with any substitute collateral) is, in the Special
Servicer's reasonable good faith judgment, adequate security for the
remaining Mortgage Loan and (D) such release would not result in the
downgrade, qualification or withdrawal of the rating then assigned
by either Rating Agency to any Class of Bonds (as confirmed in
writing by each Rating Agency);
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through [(v)] above shall not apply to any modification of any term
of any Mortgage Loan that is required under the terms of such Mortgage Loan in
effect on the Closing Date or that is solely within the control of the related
Mortgagor, and (y) notwithstanding clauses (i) through [(v)] above, neither the
Master Servicer nor the Special Servicer shall be required to oppose the
confirmation of a plan in any bankruptcy or similar proceeding involving a
Mortgagor if in its reasonable good faith judgment such opposition would not
ultimately prevent the confirmation of such plan or one substantially similar.
(b) The Special Servicer shall have no liability to the Issuer, the
Bondholders or any other Person if the Special Servicer's analysis and
determination that the modification, waiver, amendment or other action
contemplated by Section 3.20(a) is reasonably likely to produce a greater
recovery to the Bondholders and the Issuer (as a collective whole) on a present
value basis than would liquidation, should prove to be wrong or incorrect, so
long as the analysis and determination were made on a reasonable basis in good
faith by the Special Servicer.
(c) Any payment of interest, which is deferred pursuant to Section
3.20(a), shall not, for purposes hereof, including, without limitation,
calculating monthly payments to Bondholders, be added to the unpaid principal
balance of the related Mortgage Loan, notwithstanding that the terms of such
Mortgage Loan so permit or that such interest may actually be capitalized.
(d) The Special Servicer may, as a condition to its granting any
request by a Mortgagor for consent, modification, waiver or indulgence or any
other matter or thing, the granting of which is within the Special Servicer's
discretion pursuant to the terms of the instruments evidencing or securing the
related Mortgage Loan and is permitted by the terms of this Agreement, require
that such Mortgagor pay to it, as additional servicing compensation, a
reasonable or customary fee (not to exceed ___% of the unpaid principal balance
of the related Mortgage Loan) for the additional services performed in
connection with such request, together with any related costs and expenses
incurred by it.
(e) All modifications, waivers, amendments and other actions entered
into or taken in respect of the Mortgage Loans pursuant to this Section 3.20
shall be in writing. The
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Special Servicer shall notify the Master Servicer and the Trustee, in writing,
of any modification, waiver, amendment or other action entered into or taken in
respect of any Mortgage Loan pursuant to this Section 3.20 and the date thereof,
and shall deliver to the Trustee or the related Custodian for deposit in the
related Mortgage File (with a copy to the other such party), an original
counterpart of the agreement relating to such modification, waiver, amendment or
other action, promptly (and in any event within 10 Business Days) following the
execution thereof. In addition, following the execution of any modification,
waiver or amendment agreed to by the Special Servicer pursuant to Section
3.20(a) above, the Special Servicer shall deliver to the Master Servicer and the
Trustee an Officer's Certificate certifying that all of the requirements of
Section 3.20(a) have been met and setting forth in reasonable detail the basis
of the determination made by it pursuant to Section 3.20(a)(i).
SECTION 3.21. Transfer of Servicing Between Master Servicer and
Special Servicer; Record Keeping.
(a) Upon determining that a Servicing Transfer Event has occurred
with respect to any Mortgage Loan and if the Master Servicer is not also the
Special Servicer, the Master Servicer shall immediately give notice thereof, and
shall deliver the related Servicing File, to the Special Servicer and shall use
its reasonable best efforts to provide the Special Servicer with all
information, documents (or copies thereof) and records (including records stored
electronically on computer tapes, magnetic discs and the like) relating to the
Mortgage Loan and reasonably requested by the Special Servicer to enable it to
assume its functions hereunder with respect thereto without acting through a
Sub-Servicer. The Master Servicer shall use its reasonable best efforts to
effect compliance with the preceding sentence within five Business Days of the
occurrence of each related Servicing Transfer Event. The Special Servicer may,
as to any delinquent Mortgage Loan, prior to the occurrence of a Servicing
Transfer Event with respect thereto, request and obtain the foregoing documents
and information in order to perform its duties described in Section 3.02(a).
Upon determining that a Specially Serviced Mortgage Loan has become
a Corrected Mortgage Loan and if the Master Servicer is not also the Special
Servicer, the Special Servicer shall immediately give notice thereof, and shall
return the related Servicing File within 10 Business Days, to the Master
Servicer; and, upon giving such notice and returning such Servicing File to the
Master Servicer, the Special Servicer's obligation to service such Mortgage
Loan, and the Special Servicer's right to receive the Special Servicing Fee with
respect to such Mortgage Loan, shall terminate, and the obligations of the
Master Servicer to service and administer such Mortgage Loan shall resume.
(b) In servicing any Specially Serviced Mortgage Loans, the Special
Servicer shall provide to the Trustee originals of documents included within the
definition of "Mortgage File" and generated while such Mortgage Loan is a
Specially Serviced Mortgage Loan for inclusion in the related Mortgage File
(with a copy of each such original to the Master Servicer), and copies of any
additional related Mortgage Loan information, including correspondence with
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the related Mortgagor generated while such Mortgage Loan is a Specially Serviced
Mortgage Loan.
(c) The Master Servicer and Special Servicer shall each furnish to
the other, upon reasonable request, such reports, documents, certifications and
information in its possession, and access to such books and records maintained
thereby, as may relate to the Mortgage Loans and any REO Properties and as shall
be reasonably required by the requesting party in order to perform its duties
hereunder.
(d) Notwithstanding anything in this Agreement to the contrary, in
the event that the Master Servicer and the Special Servicer are the same Person,
all notices, certificates, information and consents required to be given by the
Master Servicer to the Special Servicer or vice versa shall be deemed to be
given without the necessity of any action on such Person's part.
(e) In connection with the performance of its obligations hereunder,
each of the Master Servicer and the Special Servicer shall be entitled to rely
upon written information provided to it by the other.
SECTION 3.22. Sub-Servicing Agreements.
(a) The Master Servicer and the Special Servicer may enter into
Sub-Servicing Agreements to provide for the performance by third parties of any
or all of their respective obligations hereunder, provided that, in each case,
the Sub-Servicing Agreement: (i) is consistent with this Agreement in all
material respects and requires the Sub-Servicer to comply with all of the
applicable conditions of this Agreement; (ii) provides that if the Master
Servicer or the Special Servicer, as the case may be, shall for any reason no
longer act in such capacity hereunder (including, without limitation, by reason
of an Event of Default), the Trustee or its designee may thereupon assume all of
the rights and, except to the extent they arose prior to the date of assumption,
obligations of the Master Servicer or the Special Servicer, as the case may be,
under such agreement or, alternatively, may terminate such subservicing
agreement [without cause and without payment of any penalty or termination fee];
(iii) provides that the Trustee, for the benefit of the Bondholders and the
Issuer, shall be a third party beneficiary under such agreement, but that
(except to the extent the Trustee or its designee assumes the obligations of the
Master Servicer or the Special Servicer, as the case may be, thereunder as
contemplated by the immediately preceding clause (ii)) none of the Trustee, the
Issuer, any successor Master Servicer or Special Servicer, as the case may be,
or any Bondholder shall have any duties under such agreement or any liabilities
arising therefrom; (iv) permits any purchaser of a Mortgage Loan pursuant to
this Agreement to terminate such agreement with respect to such purchased
Mortgage Loan at its option and without penalty; (v) does not permit the
Sub-Servicer to enter into or consent to any modification, waiver or amendment
or otherwise take any action on behalf of the Master Servicer or Special
Servicer, as the case may be, contemplated by Section 3.20 hereof without the
consent of the Master Servicer or Special Servicer, as the case may be; and (vi)
does not permit the Sub-Servicer any rights of indemnification that may be
satisfied out of assets of the Trust Estate. In addition, each Sub-Servicing
Agreement entered into by the Master Servicer shall provide that
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such agreement shall terminate with respect to any Mortgage Loan serviced
thereunder at the time such Mortgage Loan becomes a Specially Serviced Mortgage
Loan, and each Sub-Servicing Agreement entered into by the Special Servicer
shall relate only to Specially Serviced Mortgage Loans and shall terminate with
respect to any such Mortgage Loan which ceases to be a Specially Serviced
Mortgage Loan. The Master Servicer and the Special Servicer shall each deliver
to the Trustee copies of all Sub-Servicing Agreements, and any amendments
thereto and modifications thereof, entered into by it promptly upon its
execution and delivery of such documents. References in this Agreement to
actions taken or to be taken by the Master Servicer or the Special Servicer
include actions taken or to be taken by a Sub-Servicer on behalf of the Master
Servicer or the Special Servicer, as the case may be; and, in connection
therewith, all amounts advanced by any Sub-Servicer to satisfy the obligations
of the Master Servicer or the Special Servicer hereunder to make Advances shall
be deemed to have been advanced by the Master Servicer or the Special Servicer,
as the case may be, out of its own funds and, accordingly, such Advances shall
be recoverable by such Sub-Servicer in the same manner and out of the same funds
as if such Sub-Servicer were the Master Servicer or the Special Servicer, as the
case may be. For so long as they are outstanding, Advances shall accrue interest
in accordance with Sections 3.11(f) and/or 4.03(d), such interest to be
allocable between the Master Servicer or the Special Servicer, as the case may
be, and such Sub-Servicer as they may agree. For purposes of this Agreement, the
Master Servicer and the Special Servicer each shall be deemed to have received
any payment when a Sub-Servicer retained by it receives such payment. The Master
Servicer and the Special Servicer each shall notify the other, the Trustee and
the Issuer in writing promptly of the appointment by it of any Sub-Servicer.
(b) Each Sub-Servicer shall be authorized to transact business in
the state or states in which the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law.
(c) The Master Servicer and the Special Servicer, for the benefit of
the Trustee, the Issuer and the Bondholders, shall (at no expense to the other
such party or to the Trustee, the Issuer or the Bondholders) monitor the
performance and enforce the obligations of their respective Sub-Servicers under
the related Sub-Servicing Agreements. Such enforcement, including, without
limitation, the legal prosecution of claims, termination of Sub-Servicing
Agreements in accordance with their respective terms and the pursuit of other
appropriate remedies, shall be in such form and carried out to such an extent
and at such time as the Master Servicer or the Special Servicer, as applicable,
in its reasonable good faith judgment, would require were it the owner of the
Mortgage Loans. Subject to the terms of the related Servicing Agreement, the
Master Servicer and the Special Servicer shall each have the right to remove a
Sub-Servicer retained by it at any time it considers such removal to be in the
best interests of Bondholders and the Issuer (as a collective whole).
(d) If the Master Servicer or the Special Servicer ceases to serve
as such under this Agreement for any reason (including by reason of an Event of
Default) and no successor Master Servicer or Special Servicer, as the case may
be, has succeeded to its rights and assumed its obligations hereunder, then the
Trustee or its designee shall succeed to the rights and assume
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the obligations of the Master Servicer or the Special Servicer under any
Sub-Servicing Agreement, unless the Trustee elects to terminate any such
Sub-Servicing Agreement in accordance with its terms. In any event, if a
Sub-Servicing Agreement is to be assumed by the Trustee or another successor
thereto, then the Master Servicer or the Special Servicer, as applicable, at its
expense shall, upon request of the Trustee, deliver to the assuming party all
documents and records relating to such Sub-Servicing Agreement and the Mortgage
Loans then being serviced thereunder and an accounting of amounts collected and
held on behalf of it thereunder, and otherwise use its best efforts to effect
the orderly and efficient transfer of the Sub-Servicing Agreement to the
assuming party.
(e) Notwithstanding any Sub-Servicing Agreement, the Master Servicer
and the Special Servicer shall remain obligated and liable to the Trustee, the
Issuer and the Bondholders for the performance of their respective obligations
and duties under this Agreement in accordance with the provisions hereof to the
same extent and under the same terms and conditions as if each alone were
servicing and administering the Mortgage Loans or REO Properties for which it is
responsible. No appointment of a Sub-Servicer shall result in any additional
expense to the Trustee, the Issuer or the Bondholders.
[SECTION 3.23 Certain Tax Related Matters.
(a) To the extent reasonably requested by the Trustee or any REMIC
Administrator appointed thereby, the Master Servicer and the Special Servicer
each agrees to assist the Trustee or such REMIC Administrator, as the case may
be, in its duties and obligations under Section __ of the Terms Indenture in
causing each REMIC Pool to take such action as is necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions. Neither the
Master Servicer nor the Special Servicer shall take or fail to take any action
(whether or not authorized hereunder) as to which the Trustee or any REMIC
Administrator appointed thereby has advised it in writing that it has received
an Opinion of Counsel to the effect that an Adverse REMIC Event could occur with
respect to such action. In addition, prior to taking any action with respect to
any REMIC Pool or the assets of any of them, or causing any REMIC Pool to take
any action, which is not expressly permitted under the terms of this Agreement,
each of the Master Servicer and the Special Servicer shall consult with the
Trustee or any REMIC Administrator appointed thereby, in writing, with respect
to whether such action could cause an Adverse REMIC Event to occur, and neither
such party shall take any such action or cause any REMIC Pool to take any such
action as to which the Trustee or such REMIC Administrator has advised it in
writing that an Adverse REMIC Event could occur.
(b) In the event that any tax is imposed on any REMIC Pool,
including, without limitation, "prohibited transactions" taxes as defined in
Section 860F(a)(2) of the Code, any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code, any taxes on contributions
to any REMIC Pool after the Startup Day pursuant to Section 860G(d) of the Code,
and any other tax imposed by the Code or any applicable provisions of state or
local tax laws (other than any tax permitted to be incurred by the Special
Servicer pursuant to Section 3.17(a)), such tax, together with all incidental
costs and expenses (including, without limitation,
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penalties and reasonable attorneys' fees), shall be charged to and paid by (i)
the Master Servicer, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under this Article III; or (ii) the
Special Servicer, if such tax arises out of or results from a breach by the
Special Servicer of any of its obligations under this Article III. Any tax
permitted to be incurred by the Special Servicer pursuant to Section 3.17(a)
shall be charged to and payable out of the Trust Estate.
(c) Neither the Master Servicer nor the Special Servicer shall
consent to or, to the extent it is within its control, permit: (i) the sale or
disposition of any Mortgage Loan (except in connection with (A) a Breach or
Document Defect contemplated by Section 2.02, (B) the foreclosure, default or
reasonably foreseeable material default of a Mortgage Loan, including but not
limited to, the sale or other disposition of a Mortgaged Property acquired by
foreclosure, deed in lieu of foreclosure or otherwise or (C) the qualified
liquidation (under Section 860F of the Code) or bankruptcy of any REMIC Pool ;
(ii) the sale or disposition of any investments in the Custodial Account or the
REO Account for gain; or (iii) the acquisition of any assets as part of the
Trust Estate (other than a Mortgaged Property acquired through foreclosure, deed
in lieu of foreclosure or otherwise in respect of a defaulted Mortgage Loan and
other than Permitted Investments acquired in connection with the investment of
funds in the Custodial Account or the REO Account); in any event unless it has
received an Opinion of Counsel (at the expense of the party seeking to cause
such sale, disposition or acquisition) to the effect that such sale, disposition
or acquisition will not cause (x) any REMIC Pool to fail to qualify as a REMIC
at any time that any Bonds are Outstanding or (y) the imposition of any tax on
any REMIC Pool under the REMIC Provisions or other applicable provisions of
federal, state and local law or ordinances.
(d) Except as otherwise permitted by Section 3.17(a), neither the
Master Servicer nor the Special Servicer shall enter into any arrangement by
which any REMIC Pool will receive a fee or other compensation for services or,
to the extent it is within the control of such Person, permit any REMIC Pool to
receive any income from assets other than "qualified mortgages" as defined in
Section 860G(a)(3) of the Code or "permitted investments" as defined in Section
860G(a)(5) of the Code.]
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ARTICLE IV
MASTER SERVICER REMITTANCES; REPORTS; P&I ADVANCES
SECTION 4.01. Master Servicer Remittances.
On each Master Servicer Remittance Date, the Master Servicer shall
withdraw from the Custodial Account and deliver to the Trustee, for deposit in
the Collection Account, an aggregate amount of immediately available funds equal
to the Master Servicer Remittance Amount for such Master Servicer Remittance
Date.
SECTION 4.02. Reports.
(a) By 1:00 p.m. New York City time one Business Day after the last
day of each Collection Period, the Master Servicer shall deliver to the Trustee
and the Special Servicer a report substantially in the form of Exhibit C-1 (the
"Determination Date Report"), reflecting information as of the close of business
on the last day of the Collection Period, in a mutually agreeable electronic
format. The Determination Date Report and any written information supplemental
thereto shall include such information with respect to the Mortgage Loans and
any REO Properties as is required by the Trustee for purposes of making the
calculations and reports required of it pursuant to the Indenture, as set forth
in written specifications or guidelines issued by the Trustee from time to time.
Such information may be delivered by the Master Servicer to the Trustee by
telecopy or in such electronic or other form as may be reasonably acceptable to
the Trustee. The Special Servicer shall from time to time (and, in any event, as
may be reasonably required by the Master Servicer) provide the Master Servicer
with such information in its possession regarding the Specially Serviced
Mortgage Loans and REO Properties as may be necessary for the Master Servicer to
prepare each Determination Date Report and any supplemental information to be
provided by the Master Servicer to the Trustee.
(b) By the Determination Date in each month, the Special Servicer
shall deliver to the Master Servicer and the Trustee a report substantially in
the form of Exhibit C-2 (the "Special Servicer Report") reflecting information
as of the close of business on the last day of the Collection Period.
(c) Not later than the 30th day following the end of each calendar
quarter, commencing in __________, 199__, the Special Servicer shall deliver to
the Trustee and the Master Servicer a report in the form of Exhibit C-3 (an
"Operating Statement Analysis") with respect to all operating statements and
other financial information collected or otherwise obtained by the Special
Servicer pursuant to Section 3.12(b) during such calendar quarter (together with
copies of the operating statements and other financial information on which it
is based).
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SECTION 4.03. P&I Advances; Advances relating to the Master Servicer
Remittance Amount.
[(a) On or before 1:00 p.m., New York City time, on each P&I Advance
Date, the Master Servicer shall, subject to Section 4.03(c) below, either (i)
remit from its own funds to the Trustee for deposit into the Collection Account
an amount equal to the aggregate amount of P&I Advances, if any, to be made in
respect of the related Payment Date, (ii) apply amounts held in the Custodial
Account for future distribution to Bondholders in subsequent months in discharge
of any such obligation to make P&I Advances, or (iii) make P&I Advances in the
form of any combination of (i) and (ii) aggregating the total amount of P&I
Advances to be made. Any amounts held in the Custodial 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 Custodial Account prior to the next succeeding Master Servicer Remittance
Date (to the extent not previously replaced through the deposit of Late
Collections of the delinquent principal and interest in respect of which such
P&I Advances were made). If, as of ____, New York City time, on any P&I Advance
Date, the Master Servicer shall not have made any P&I Advance required to be
made on such date pursuant to this Section 4.03(a) (and shall not have delivered
to the Trustee the Officer's Certificate and documentation related to a
determination of nonrecoverability of a P&I Advance pursuant to Section 4.03(c))
or shall not have remitted any portion of the Master Servicer Remittance Amount
required to be remitted on such date, then the Trustee shall provide notice of
such failure to a Servicing Officer of the Master Servicer by facsimile
transmission sent to telecopy no. ____________ (or such alternative number
provided by the Master Servicer to the Trustee in writing) and notice by
telephone to the Master Servicer at telephone no. ____________ (or such
alternative number provided by the Master Servicer to the Trustee in writing) as
soon as possible, but in any event before ____, New York City time, on such P&I
Advance Date. [If after such notice the Trustee does not receive the full amount
of such P&I Advances and/or Master Servicer Remittance Amount by _____, New York
City time, on the Business Day immediately preceding the related Payment Date,
then (i) the Trustee shall make the portion of such P&I Advances and advance the
portion of such Master Servicer Remittance Amount that was required to be, but
was not, made or remitted, as the case may be, by the Master Servicer on or
prior to such Payment Date and (ii) such failure shall constitute an Event of
Default on the part of the Master Servicer. The Trustee shall be entitled to
reimbursement of the amount of any Master Servicer Remittance Amount advanced
thereby (together with any interest accrued thereon at the Reimbursement Rate)
from general collections on the Mortgage Loans and REO Properties on deposit in
the Custodial Account, and the defaulting Master Servicer shall indemnify the
Trust Estate for any such interest so paid to the Trustee out of the Custodial
Account.]]
(b) [The aggregate amount of P&I Advances to be made by the Master
Servicer in respect of any Payment Date, subject to Section 4.03(c) below, shall
equal the aggregate of all Scheduled Payments (other than Balloon Payments) and
any Assumed Scheduled Payments, in each case net of related Master Servicing
Fees and Workout Fees, due or deemed due, as the case may be, in respect of the
Mortgage Loans (including, without limitation, Balloon Mortgage Loans delinquent
as to their respective Balloon Payments) and any REO Loans on their respective
Due
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Dates during the related Collection Period, in each case to the extent such
amount was not paid by or on behalf of the related Mortgagor or otherwise
collected as of the close of business on the related Determination Date;
provided that, if the Monthly Payment on any Mortgage Loan has been reduced in
connection with a bankruptcy or similar proceeding involving the related
Mortgagor or a modification, waiver or amendment granted or agreed to by the
Special Servicer pursuant to Section 3.20, or if the final maturity on any
Mortgage Loan shall be extended in connection with a bankruptcy or similar
proceeding involving the related Mortgagor or a modification, waiver or
amendment granted or agreed to by the Special Servicer pursuant to Section 3.20,
and the Monthly Payment due and owing during the extension period is less than
the related Assumed Scheduled Payment, then the Master Servicer shall, as to
such Mortgage Loan only, advance only the amount of the Monthly Payment due and
owing after taking into account such reduction, net of related Master Servicing
Fees and Workout Fees, in the event of subsequent delinquencies thereon; and
provided further that, if an Appraisal Reduction Amount exists with respect to
any Required Appraisal Loan, then, in the event of subsequent delinquencies
thereon, the interest portion of the P&I Advance in respect of such Required
Appraisal Loan for the related Payment Date shall be reduced (it being herein
acknowledged that there shall be no reduction in the principal portion of such
P&I Advance) to equal the product of (i) the amount of the interest portion of
such P&I Advance for such Required Appraisal Loan for such Payment Date without
regard to this proviso, multiplied by (ii) a fraction, expressed as a
percentage, the numerator of which is equal to the Stated Principal Balance of
such Required Appraisal Loan immediately prior to such Payment Date, net of the
related Appraisal Reduction Amount, if any, and the denominator of which is
equal to the Stated Principal Balance of such Required Appraisal Loan
immediately prior to such Payment Date.]
(c) [Notwithstanding anything herein to the contrary, no P&I Advance
shall be required to be made hereunder if such P&I Advance would, if made,
constitute a Nonrecoverable P&I Advance. The determination by the Master
Servicer (or, if applicable, the Trustee) that it has made a Nonrecoverable P&I
Advance or that any proposed P&I Advance, if made, would constitute a
Nonrecoverable P&I Advance, shall be evidenced by an Officer's Certificate
delivered to the Issuer and, if made by the Master Servicer, to the Trustee on
or before the related P&I Advance Date, setting forth the basis for such
determination, together with a copy of an Appraisal of the related Mortgaged
Property or REO Property performed within the twelve months preceding such
determination by a Qualified Appraiser, and further accompanied by any other
information, including engineers' reports, environmental surveys or similar
reports, that the Person making such determination may have obtained and that
support such determination. Notwithstanding the foregoing, the Trustee shall be
entitled to conclusively rely on any nonrecoverability determination made by the
Master Servicer with respect to a particular P&I Advance.]
(d) [The Master Servicer and the Trustee shall each be entitled to
receive interest at the Reimbursement Rate in effect from time to time, accrued
on the amount of each P&I Advance made thereby (out of its own funds) for so
long as such P&I Advance is outstanding, such interest to be payable: first, out
of Penalty Charges collected on the Mortgage Loan or REO Loan as to which such
Advance relates; and, then, to the extent that such Penalty
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Charges are insufficient, and only after such Advance has been reimbursed
pursuant to this Agreement, out of general collections on the Mortgage Loans and
REO Properties on deposit in the Custodial Account. The Master Servicer shall
reimburse itself or the Trustee, as applicable, for any outstanding P&I Advance
made thereby as soon as practicable after funds available for such purpose are
deposited in the Custodial Account.]
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ARTICLE V
THE MASTER SERVICER AND
THE SPECIAL SERVICER
SECTION 5.01. Liability of the Master Servicer and the Special
Servicer.
The Master Servicer and the Special Servicer shall be liable in
accordance herewith only to the extent of the respective obligations
specifically imposed upon and undertaken by the Master Servicer and the Special
Servicer herein.
SECTION 5.02. Merger, Consolidation or Conversion of the Master
Servicer or the Special Servicer.
Subject to the following paragraph, the Master Servicer and the
Special Servicer shall each keep in full effect its existence, rights and
franchises as a corporation, bank, trust company, partnership or association
under the laws of the jurisdiction wherein it was organized, and each will
obtain and preserve its qualification to do business as a foreign corporation,
bank, trust company, partnership or association in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Bonds or any of the Mortgage Loans and to
perform its respective duties under this Agreement.
The Master Servicer or the Special Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Master Servicer or the Special Servicer shall be a
party, or any Person succeeding to the business of the Master Servicer or the
Special Servicer shall be the successor of the Master Servicer or the Special
Servicer, as the case may be, hereunder, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding; provided, however, that no successor or
surviving Person shall succeed to the rights of the Master Servicer or the
Special Servicer unless such succession will not result in any withdrawal,
downgrade or qualification of the rating then assigned by either Rating Agency
to any Class of Bonds (as confirmed in writing by each Rating Agency).
SECTION 5.03. Limitation on Liability of the Master Servicer and the
Special Servicer.
Neither the Master Servicer nor the Special Servicer shall be under
any liability to the Issuer, the Trustee or the Bondholders for any action
taken, or not taken, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Master
Servicer or the Special Servicer against any liability to the Issuer, the
Trustee or the Bondholders for the breach of a representation, warranty or
covenant made herein, or against any expense or liability specifically required
to be borne by such party without right of reimbursement pursuant to the terms
hereof, or against any liability which would otherwise be
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imposed by reason of misfeasance, bad faith or negligence in the performance of,
or reckless disregard of, obligations or duties hereunder. The Master Servicer,
the Special Servicer and any director, officer, employee or agent of any such
party may rely in good faith on any document of any kind which, prima facie, is
properly executed and submitted by any Person respecting any matters arising
hereunder. The Master Servicer, the Special Servicer and any director, officer,
employee or agent of any such party shall be indemnified and held harmless out
of the Trust Estate against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Bonds, other
than any loss, liability or expense: (i) specifically required to be borne
thereby pursuant to the terms hereof or otherwise incidental to the performance
of obligations and duties hereunder, including, without limitation, in the case
of the Master Servicer or Special Servicer, the prosecution of an enforcement
action in respect of any specific Mortgage Loan or Mortgage Loans (except as any
such loss, liability or expense shall be otherwise reimbursable pursuant to this
Agreement); or (ii) incurred in connection with any legal action against such
party resulting from any breach of a representation, warranty or covenant made
herein, any misfeasance, bad faith or negligence in the performance of, or
reckless disregard of, obligations or duties hereunder or any violation of any
state or federal securities law. Neither the Master Servicer nor the Special
Servicer shall be under any obligation to appear in, prosecute or defend any
legal action unless such action is related to its respective duties under this
Agreement and, except in the case of a legal action the costs of which it is
specifically required hereunder to bear, in its opinion does not involve it in
any ultimate expense or liability; provided, however, that the Master Servicer
or the Special Servicer may in its discretion undertake any such action which it
may reasonably deem necessary or desirable with respect to the enforcement
and/or protection of the rights and duties of the parties hereto and the
interests of the Bondholders hereunder. In such event, the legal expenses and
costs of such action, and any liability resulting therefrom, shall be
reimbursable to the Master Servicer or the Special Servicer, as the case may be,
out of the Custodial Account as provided in Section 3.05(a).
SECTION 5.04. Master Servicer and Special Servicer Not to Resign.
Neither the Master Servicer nor the Special Servicer shall resign
from the obligations and duties hereby imposed on it, except upon determination
that its duties hereunder are no longer permissible under applicable law or are
in material conflict by reason of applicable law with any other activities
carried on by it, the other activities of the Master Servicer or the Special
Servicer, as the case may be, so causing such a conflict being of a type and
nature carried on by the Master Servicer or the Special Servicer, as the case
may be, at the date of this Agreement. Any such determination permitting the
resignation of the Master Servicer or the Special Servicer, as applicable, shall
be evidenced by an Opinion of Counsel to such effect which shall be delivered to
the Trustee. No such resignation shall become effective until the Trustee or
other successor shall have assumed the responsibilities and obligations of the
resigning party hereunder.
Consistent with the foregoing, neither the Master Servicer nor the
Special Servicer shall, except as expressly provided herein, assign or transfer
any of its rights, benefits or privileges hereunder to any other Person or
delegate to, subcontract with, or authorize or appoint
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any other Person to perform any of the duties, covenants or obligations to be
performed by it hereunder. If, pursuant to any provision hereof, the duties of
the Master Servicer or the Special Servicer are transferred to a successor
thereto, the entire amount of compensation payable to the Master Servicer or the
Special Servicer, as the case may be, that accrues pursuant hereto from and
after the date of such transfer shall be payable to such successor.
SECTION 5.05. Rights of the Issuer and the Trustee in Respect of the
Master Servicer and the Special Servicer.
The Master Servicer and the Special Servicer shall each afford the
Issuer, the Trustee and each Rating Agency, upon reasonable notice, during
normal business hours access to all records maintained by it in respect of its
rights and obligations hereunder and access to such of its officers as are
responsible for such obligations. Upon reasonable request, the Master Servicer
and the Special Servicer shall each furnish the Issuer, the Trustee and each
Rating Agency with its most recent financial statements and such other
information as it possesses, and which it is not prohibited by applicable law or
contract from disclosing, regarding its business, affairs, property and
condition, financial or otherwise. The Issuer may, but is not obligated to,
enforce the obligations of the Master Servicer, the Special Servicer hereunder
and may, but is not obligated to, perform, or cause a designee to perform, any
defaulted obligation of the Master Servicer or the Special Servicer hereunder or
exercise the rights of the Master Servicer or the Special Servicer hereunder;
provided, however, that none of the Master Servicer or the Special Servicer
shall be relieved of any of its obligations hereunder by virtue of such
performance by the Issuer or its designee. The Issuer shall not have any
responsibility or liability for any action or failure to act by the Master
Servicer or the Special Servicer and, except to the extent required by the
Indenture, is not obligated to supervise the performance of the Master Servicer
or the Special Servicer under this Agreement or otherwise.
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ARTICLE VI
DEFAULT
SECTION 6.01. Events of Default.
(a) "Event of Default", wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to deposit into the
Custodial Account any amount required to be so deposited under this
Agreement which continues unremedied for one Business Day following
the date on which such deposit was first required to be made; or
(ii) any failure by the Special Servicer to deposit into, or
to remit to the Master Servicer for deposit into, the Custodial
Account any amount required to be so deposited or remitted under
this Agreement; or any failure by the Special Servicer to deposit
into the REO Account any amount required to be so deposited under
this Agreement which continues unremedied for one Business Day
following the date on which such deposit was first required to be
made; or
(iii) any failure by the Master Servicer to remit to the
Trustee for deposit into the Collection Account, on any P&I Advance
Date, the full amount of P&I Advances required to be made on such
date and/or the full amount of the Master Servicer Remittance Amount
required to be remitted on such date, which failure continues
unremedied until ______, New York City time, on the Business Day
immediately preceding the related Payment Date; or
(iv) any failure by the Master Servicer to timely make any
Servicing Advance required to be made by it pursuant to the second
paragraph of Section 3.19(b) which continues unremedied for a period
of three days following the date on which notice shall have been
given to the Master Servicer by the Trustee as provided in Section
3.11(e); or
(v) any failure by the Special Servicer to timely make any
Emergency Advance required to be made by it pursuant to the second
paragraph of Section 3.19(b) which continues unremedied for a period
of three days following the date on which notice has been given to
the Special Servicer by the Trustee as provided in Section 3.11(e);
or
(vi) any failure on the part of the Master Servicer or the
Special Servicer duly to observe or perform in any material respect
any other of the covenants or agreements on the part of the Master
Servicer or the Special Servicer, as the case may be, contained in
this Agreement which continues unremedied for a period of
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30 days (or, in the case of payment of insurance premiums, for a
period of 15 days) after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Master Servicer or the Special Servicer, as the case may be, by
any other party hereto or to the Master Servicer or the Special
Servicer, as the case may be, (with a copy to each other party
hereto) by the Holders of Bonds entitled to at least 25% of the
Voting Rights; or
(vii) any breach on the part of the Master Servicer or the
Special Servicer of any representation or warranty contained in this
Agreement that materially and adversely affects the interests of the
Issuer or any Class of Bondholders and which continues unremedied
for a period of 30 days after the date on which notice of such
breach, requiring the same to be remedied, shall have been given to
the Master Servicer or the Special Servicer, as the case may be, by
any other party hereto or to the Master Servicer or the Special
Servicer, as the case may be, (with a copy to each other party
hereto) by the Holders of Bonds entitled to at least 25% of the
Voting Rights; or
(viii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency
or similar law for the appointment of a conservator, receiver,
liquidator, trustee or similar official in any bankruptcy,
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the
Master Servicer or the Special Servicer and such decree or order
shall have remained in force undischarged or unstayed for a period
of 60 days; or
(ix) the Master Servicer or the Special Servicer shall consent
to the appointment of a conservator, receiver, liquidator, trustee
or similar official in any bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings
of or relating to it or of or relating to all or substantially all
of its property; or
(x) the Master Servicer or the Special Servicer shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take any corporate action in furtherance of the
foregoing; or
(xi) the Trustee shall have received written notice from
either Rating Agency that the continuation of the Master Servicer or
the Special Servicer in such capacity would result in a downgrade,
qualification or withdrawal of any rating then assigned by such
Rating Agency to any Class of Bonds.
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When a single entity acts as Master Servicer and Special Servicer an Event of
Default in one capacity shall constitute an Event of Default in the other
capacity.
(b) If any Event of Default with respect to the Master Servicer or
the Special Servicer (in either case, for purposes of this Section 6.01(b), the
"Defaulting Party") shall occur and be continuing, then, and in each and every
such case, so long as the Event of Default shall not have been remedied, the
Issuer and the Trustee each may, and at the written direction of the Holders of
Bonds entitled to at least 25% of the Voting Rights or if the relevant Event of
Default is one described in clause (iii) or clause (xi) of Section 6.01(a), the
Trustee shall, terminate, by notice in writing to the Defaulting Party (with a
copy of such notice to each other party hereto), all of the rights and
obligations (accruing from and after such notice) of the Defaulting Party under
this Agreement and in and to the Trust Estate (other than as a Holder of any
Bond). From and after the receipt by the Defaulting Party of such written
notice, all authority and power of the Defaulting Party under this Agreement,
whether with respect to the Bonds (other than as a Holder of any Bonds) or the
Mortgage Loans or otherwise, shall pass to and be vested in the Trustee pursuant
to and under this Section, and, without limitation, the Trustee is hereby
authorized and empowered to execute and deliver, on behalf of and at the expense
of the Defaulting Party, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement or assignment of the Mortgage
Loans and related documents, or otherwise. Each of the Master Servicer and the
Special Servicer agrees that, if it is terminated pursuant to this Section
6.01(b), it shall promptly (and in any event no later than ten Business Days
subsequent to its receipt of the notice of termination) provide the Trustee with
all documents and records requested thereby to enable the Trustee to assume the
Master Servicer's or Special Servicer's, as the case may be, functions
hereunder, and shall cooperate with the Trustee in effecting the termination of
the Master Servicer's or Special Servicer's, as the case may be,
responsibilities and rights hereunder, including, without limitation, the
transfer within two Business Days to the Trustee for administration by it of all
cash amounts which shall at the time be or should have been credited by the
Master Servicer to the Custodial Account, the Collection Account or any
Servicing Account (if it is the Defaulting Party) or by the Special Servicer to
the REO Account, the Custodial Account or any Servicing Account (if it is the
Defaulting Party) or thereafter be received by or on behalf of it with respect
to any Mortgage Loan or REO Property (provided, however, that the Master
Servicer and the Special Servicer each shall, if terminated pursuant to this
Section 6.01(b), continue to be obligated to pay and entitled to receive all
amounts accrued or owing by or to it under this Agreement on or prior to the
date of such termination, whether in respect of Advances or otherwise, and it
and its directors, officers, employees and agents shall continue to be entitled
to the benefits of Section 5.03 notwithstanding any such termination). Any costs
or expenses in connection with any actions to be taken by the Master Servicer or
Special Servicer pursuant to this paragraph shall be borne by the Master
Servicer or Special Servicer, as the case may be.
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SECTION 6.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer or the Special Servicer
resigns pursuant to the first paragraph of Section 5.04 or receives a notice of
termination pursuant to Section 6.01, the Trustee shall be the successor in all
respects to the Master Servicer or the Special Servicer, as the case may be, in
its capacity as such under this Agreement and the transactions set forth or
provided for herein and shall be subject to all the responsibilities, duties and
liabilities relating thereto and arising thereafter placed on the Master
Servicer or the Special Servicer, as the case may be, by the terms and
provisions hereof, including, without limitation, if the Master Servicer is the
resigning or terminated party, the Master Servicer's obligation to make P&I
Advances; provided that any failure to perform such duties or responsibilities
caused by the Master Servicer's or the Special Servicer's, as the case may be,
failure to cooperate or to provide information or monies required by Section
6.01 shall not be considered a default by the Trustee hereunder. Neither the
Trustee nor any other successor shall be liable for any of the representations
and warranties of the resigning or terminated party or for any losses incurred
by the resigning or terminated party pursuant to Section 3.06 hereunder nor
shall the Trustee nor any other successor be required to purchase any Mortgage
Loan hereunder. As compensation therefor, the Trustee shall be entitled to all
fees and other compensation which the resigning or terminated party would have
been entitled to for future services rendered if the resigning or terminated
party had continued to act hereunder. Notwithstanding the above, the Trustee
may, if it shall be unwilling to so act, or shall, if it is unable, or is not
approved as a successor master servicer or special servicer, as the case may be,
by each Rating Agency, or if the Holders of Bonds entitled to at least 51% of
the Voting Rights shall request in writing to the Trustee, promptly appoint, or
petition a court of competent jurisdiction to appoint, any established and
qualified institution as the successor to the Master Servicer or the Special
Servicer, as the case may be, hereunder in the assumption of all or any part of
the responsibilities, duties or liabilities of the Master Servicer or the
Special Servicer, as the case may be, hereunder; provided that such appointment
does not result in the downgrading, withdrawal or qualification of any rating
then assigned by either Rating Agency to any Class of Bonds (as evidenced by
written confirmation to such effect from each Rating Agency). No appointment of
a successor to the Master Servicer or the Special Servicer hereunder shall be
effective until the assumption of the successor to such party of all its
responsibilities, duties and liabilities hereunder, and pending such appointment
and assumption, the Trustee shall act in such capacity as hereinabove provided.
In connection with any such appointment and assumption, the Trustee may make
such arrangements for the compensation of such successor out of payments on the
Mortgage Loans or otherwise as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
resigning or terminated party hereunder. The Owner Trustee, the Trustee, such
successor and each other party hereto shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
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SECTION 6.03. Waiver of Events of Default.
Subject to the applicable terms and conditions of the Indenture, the
Trustee, acting on behalf of the Bondholders, and the Issuer may jointly waive
any Event of Default hereunder. Upon any such waiver of an Event of Default,
such Event of Default shall cease to exist and shall be deemed to have been
remedied for every purpose hereunder. No such waiver shall extend to any
subsequent or other Event of Default or impair any right consequent thereon
except to the extent expressly so waived.
SECTION 6.04. Additional Remedies of Trustee upon Event of Default.
During the continuance of any Event of Default, so long as such
Event of Default shall not have been remedied, the Trustee, in addition to the
rights specified in Section 6.01, shall have the right (exercisable subject to
the provisions of the Indenture), in its own name and as trustee of an express
trust, to take all actions now or hereafter existing at law, in equity or by
statute to enforce its rights and remedies and to protect the interests, and
enforce the rights and remedies, of the Bondholders (including the institution
and prosecution of all judicial, administrative and other proceedings and the
filings of proofs of claim and debt in connection therewith). Except as
otherwise expressly provided in this Agreement, no remedy provided for by this
Agreement shall be exclusive of any other remedy, and each and every remedy
shall be cumulative and in addition to any other remedy, and no delay or
omission to exercise any right or remedy shall impair any such right or remedy
or shall be deemed to be a waiver of any Event of Default.
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ARTICLE VII
TERMINATION
SECTION 7.01. Termination Upon Liquidation of All Mortgage Loans.
(a) The respective obligations and responsibilities under this
Agreement of the Issuer, the Master Servicer, the Special Servicer and the
Trustee shall terminate upon the earlier of (i) payment to the Trustee of all
amounts held by or on behalf of the Master Servicer or Special Servicer and
required hereunder to be so paid on the first Master Servicer Remittance Date
following the end of the Collection Period in which occurs the final payment or
other liquidation of the last Mortgage Loan or REO Property subject hereto and
(ii) satisfaction and discharge of the Indenture and receipt by each of the
Master Servicer and the Special Servicer of all amounts then payable or
reimbursable thereto hereunder.
(b) Subject to the receipt thereby of all amounts then payable or
reimbursable thereto hereunder, each of the Master Servicer and the Special
Servicer acknowledges and agrees that, upon the satisfaction and discharge of
the Indenture as described in clause (ii) above, it shall promptly (and in any
event no later than____ Business Days) following its receipt of notice of such
satisfaction and discharge from the Trustee provide the Issuer with all
documents and records in its possession and shall cooperate with the Issuer or
its designee in effecting the termination of the Master Servicer's or Special
Servicer's, as the case may be, responsibilities and rights with respect to the
Mortgage Loans, including, without limitation, the transfer within_____ Business
Days to the Issuer of all cash amounts which shall at the time be or should have
been credited by the Master Servicer to the Custodial Account or any Servicing
Account or by the Special Servicer to the REO Account, the Custodial Account or
any Servicing Account or thereafter be received by or on behalf of it with
respect to any Mortgage Loan or REO Property. Any costs or expenses in
connection with any actions to be taken by the Master Servicer or Special
Servicer pursuant to this paragraph shall be borne by the Master Servicer or
Special Servicer, as the case may be.
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ARTICLE VIII
MISCELLANEOUS PROVISIONS
SECTION 8.01. Amendments; Successors to the Issuer and the Trustee.
(a) This Agreement may be amended from time to time by the mutual
agreement of the parties hereto, provided that the Trustee shall not be required
to enter into any amendment that (i) it is prohibited from entering into under
the Indenture or (ii) affects its rights, duties and immunities under this
Agreement.
(b) The Issuer and the Trustee each hereby agrees that it will not
knowingly consent to any amendment, supplement or other modification of the
Indenture that would have a material adverse effect on the Master Servicer and
the Special Servicer in their capacities as such hereunder. No amendment,
supplement or other modification to the Indenture shall materially and adversely
affect the rights and/or obligations of the Master Servicer or the Special
Servicer hereunder without the written consent of the Master Servicer or the
Special Servicer, as the case may be.
SECTION 8.02. Successors to the Issuer and the Trustee.
The parties hereto hereby acknowledge and agree that any successor
to the Issuer or the Trustee pursuant to the Indenture shall be the successor of
the Issuer or the Trustee, as the case may be, hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto or thereto, anything herein or therein to the contrary notwithstanding.
SECTION 8.03. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Trust Estate on direction
by the Trustee, but only upon direction accompanied by an Opinion of Counsel
(the cost of which may be paid out of the Custodial Account) to the effect that
such recordation materially and beneficially affects the interests of the
Bondholders.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
-90-
<PAGE>
SECTION 8.04. Governing Law.
This Agreement shall be construed in accordance with the internal
laws of the State of New York applicable to agreements made and to be performed
in said state, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
SECTION 8.05. Notices.
Any communications provided for or permitted hereunder shall be in
writing and, unless otherwise expressly provided herein, shall be deemed to have
been duly given when delivered to: (i) in the case of the Issuer (or the Owner
Trustee on behalf of the Issuer), c/o ________________, ________________,
Attention: ______________________, telecopy number: _________________; (ii) in
the case of the Master Servicer, ________________, _________________, Attention:
___________, telecopy number: ____________; (iii) in the case of the Special
Servicer,________________, _________________, Attention: ___________, telecopy
number: ____________ (with copies to ________________, _________________,
Attention: ___________, telecopy number: ____________); (iv) in the case of the
Trustee, ________________, _________________, Attention: ___________, telecopy
number: ____________; (v) in the case of the Ratings Agencies:
(A)________________, _________________, Attention: ___________, telecopy number:
____________; and (B)________________, _________________, Attention:
___________, telecopy number: ____________; or as to each such Person such other
address and/or telecopy number as may hereafter be furnished by such Person to
the parties hereto in writing.
SECTION 8.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement.
SECTION 8.07. Successors and Assigns; Beneficiaries.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto, their respective successors and assigns and
the directors, officers, employees and agents referred to in Section 5.03, and
all such provisions shall inure to the benefit of the Bondholders. No other
person, including, without limitation, any Mortgagor, shall be entitled to any
benefit or equitable right, remedy or claim under this Agreement.
-91-
<PAGE>
SECTION 8.08. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
SECTION 8.09. Notices to Rating Agencies.
(a) The Trustee shall promptly provide notice to each Rating Agency
with respect to each of the following of which a Responsible Officer of the
Trustee has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default that has not been
cured; and
(iii) the resignation or termination of the Master Servicer,
the Special Servicer and the appointment of a successor.
(b) The Master Servicer shall promptly provide notice to each Rating
Agency with respect to each of the following of which it has actual knowledge:
(i) the resignation or removal of the Trustee and the
appointment of a successor; and
(ii) any change in the location of the Custodial Account.
(c) Each of the Master Servicer and the Special Servicer, as the
case may be, shall furnish each Rating Agency such information with respect to
the Mortgage Loans as the Rating Agency shall reasonably request and which the
Master Servicer or the Special Servicer, as the case may be, can reasonably
provide.
(d) Each of the Master Servicer and the Special Servicer, as the
case may be, shall promptly furnish each Rating Agency copies of the following
items:
(i) each of its annual statements as to compliance described
in Section 3.13;
(ii) each of its annual independent public accountants'
servicing reports described in Section 3.14; and
(iii) each report prepared pursuant to Section 3.09(e) and
Section 3.12.
-92-
<PAGE>
SECTION 8.10. Complete Agreement.
This Agreement embodies the complete agreement among the parties and
may not be varied or terminated except by a written agreement conforming to the
provisions of Section 8.01. All prior negotiations or representations of the
parties are merged into this Agreement and shall have no force or effect unless
expressly stated herein.
-93-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized, in each
case as of the day and year first above written.
Structured Asset Securities Corporation
Trust [I]
by: ,
-------------------------------------
not in its individual capacity but solely as
Owner Trustee
By:
-------------------------------------
Name:
Title:
[---------------------------------------]
Master Servicer
By:
-------------------------------------
Name:
Title:
[---------------------------------------]
Special Servicer
By:
-------------------------------------
Name:
Title:
[---------------------------------------]
Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
STATE OF ________________________________ )
) ss.:
COUNTY OF ________________________________ )
On this ______ day of _____________ 199__, before me, the
undersigned officer, personally appeared ____________________, and acknowledged
himself to me to be the _________________________ of _____________________, and
that as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On this ______ day of _____________ 199__, before me, the
undersigned officer, personally appeared ____________________, and acknowledged
himself to me to be the _________________________ of _____________________, and
that as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On this ______ day of _____________ 199__, before me, the
undersigned officer, personally appeared ____________________, and acknowledged
himself to me to be the _________________________ of _____________________, and
that as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On this ______ day of _____________ 199__, before me, the
undersigned officer, personally appeared ____________________, and acknowledged
himself to me to be the _________________________ of _____________________, and
that as such officer, being duly authorized to do so pursuant to such entity's
by-laws or a resolution of its board of directors, executed and acknowledged the
foregoing instrument for the purposes therein contained, by signing the name of
such entity by himself or herself as such officer as his or her free and
voluntary act and deed and the free and voluntary act and deed of said entity.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
-------------------------------------
Notary Public
NOTARIAL SEAL
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<PAGE>
EXHIBIT B-1
FORM OF MASTER SERVICER REQUEST FOR RELEASE
[Date]
- - --------------------------
- - --------------------------
- - --------------------------
Attention:
-------------------------
Re: Structured Asset Securities Corporation Trust [I] Series 199_-___
In connection with the administration of the Mortgage Files held by or on
behalf of you as trustee under a certain Servicing and Administration Agreement,
dated as of__________, 199_ (the "Servicing and Administration Agreement"),
among Structured Asset Securities Corporation Trust [I], as issuer, the
undersigned as master servicer, ___________________________________________ as
special servicer, and you as trustee (the "Trustee"), the undersigned hereby
requests a release of the Mortgage File (or the portion thereof specified below)
held by or on behalf of you as Trustee with respect to the following described
Mortgage Loan for the reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
If only particular documents in the Mortgage File are requested, please specify
which:
Reason for requesting file (or portion thereof):
______ 1. Mortgage Loan paid in full.
The undersigned hereby certifies that all amounts received in
connection with the Mortgage Loan that are required to be credited
to the Custodial Account pursuant to the Servicing and
Administration Agreement, have been or will be so credited.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage File (or
requested portion thereof) will be held by the undersigned in accordance with
the provisions of the Servicing and Administration Agreement and will be
returned to you or your designee within ten (10) days of our receipt thereof,
unless the Mortgage Loan has been paid in full, in which case the Mortgage File
(or such portion thereof) will be retained by us permanently.
<PAGE>
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Servicing and Administration Agreement.
------------------------
as Master Servicer
By:
----------------------------------
Name:
Title:
B-1-2
<PAGE>
EXHIBIT B-2
FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
[Date]
- - -------------------------
- - -------------------------
- - -------------------------
Attention:
---------------------------------
Re: Structured Asset Securities Corporation Trust [I], Series 199_-___
In connection with the administration of the Mortgage Files held by or on
behalf of you as trustee under a certain Servicing and Administration Agreement,
dated as of ____________, 199_ (the "Servicing and Administration Agreement"),
among Structured Asset Securities Corporation Trust [I], as issuer,
____________________ ____________________ as master servicer, the undersigned as
special servicer, and you as trustee (the "Trustee"), the undersigned hereby
requests a release of the Mortgage File (or the portion thereof specified below)
held by or on behalf of you as Trustee with respect to the following described
Mortgage Loan for the reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
If only particular documents in the Mortgage File are requested, please specify
which:
Reason for requesting file (or portion thereof):
______ 1. The Mortgage Loan is being foreclosed.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage File (or
requested portion thereof) will be held by the undersigned in accordance with
the provisions of the Servicing and Administration Agreement and will be
returned to you or your designee within ten (10) days of our receipt thereof,
unless the Mortgage Loan is being foreclosed, in which case the Mortgage File
(or such portion thereof) will be returned when no longer required by us for
such purpose.
<PAGE>
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Servicing and Administration Agreement.
------------------------
as Master Servicer
By:
----------------------------------
Name:
Title:
B-2-2
