- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 29, 1996
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
(AS DEPOSITOR UNDER THE POOLING AND SERVICING AGREEMENT, DATED AS
OF FEBRUARY 1, 1996, PROVIDING FOR THE ISSUANCE OF MORTGAGE
PASS-THROUGH CERTIFICATES, SERIES 1996-C1
Salomon Brothers Mortgage Securities VII, Inc.
(Exact name of registrant as specified in its charter)
DELAWARE 33-84924 13-3439681
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification Number)
Seven World Trade Center
NEW YORK, NEW YORK 10048
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code: (212) 783-7000
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<PAGE>
-2-
Item 1, Items 3 through 6, and Item 8 are not included because they are not
applicable.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On February 29, 1996, a single series of mortgage pass-through
certificates, entitled Salomon Brothers Mortgage Securities VII, Inc., Mortgage
Pass-Through Certificates, Series 1996-C1 (the "Certificates"), was issued
pursuant to a pooling and servicing agreement (the "Pooling Agreement") attached
hereto as Exhibit 4.1 and dated as of February 1, 1996 (the "Cut-off Date"),
among Salomon Brothers Mortgage Securities VII, Inc. as depositor (the
"Registrant"), Midland Loan Services, L.P. as master servicer and special
servicer, LaSalle National Bank as trustee and ABN AMRO Bank N.V. as fiscal
agent. The Certificates consist of twelve classes (each, a "Class") of
Certificates, five of which Classes are designated as the Class A-1
Certificates, Class A-2 Certificates, Class B Certificates, Class C
Certificates, and Class D Certificates (collectively, the "Offered
Certificates"); and seven of which Classes are designated as the Class IO
Certificates, Class E Certificates, Class F Certificates, Class G Certificates,
Class R-I Certificates, Class R-II Certificates and Class R-III Certificates
(collectively, the "Private Certificates"). The Certificates evidence in the
aggregate the entire beneficial ownership interest in a trust fund (the "Trust
Fund") consisting primarily of 43 first priority, multifamily and commercial
mortgage loans (the "Mortgage Loans") having an aggregate principal balance as
of the Cut-off Date of $212,045,633.94. Each Mortgage Loan is secured by a first
lien on a commercial or multifamily property (or, in the case of four Mortgage
Loans, cross-collateralized by four commercial properties).
The Mortgage Loans were acquired by the Registrant from
Salomon Brothers Realty Inc. (the "Seller") pursuant to a Mortgage Loan Purchase
Agreement, dated as of February 27, 1996 (the "Purchase Agreement"), between the
Registrant and the Seller. The Certificates were sold by the Depositor to
Salomon Brothers Inc (the "Underwriter") pursuant to an underwriting agreement,
dated as of February 27, 1996 (the "Underwriting Agreement"), between the
Registrant and the Underwriter.
<PAGE>
-3-
The Certificates have the following initial Certificate
Balances and initial PassThrough Rates:
Initial Initial
Certificate Pass-Through
Class Balance Rate(2)
A-1 $50,000,000.00 6.4690%
A-2 $81,468,000.00 6.7803%
B $14,843,000.00 7.1267%
C $14,843,000.00 7.3011%
D $9,542,000.00 7.7490%
IO N/A(1) 1.7265%
E $21,204,000.00 9.1839%
F $11,132,000.00 9.1839%
G $9,013,633.94 9.1839%
R-I N/A(3) N/A(3)
R-II N/A(3) N/A(3)
R-III N/A(3) N/A(3)
- --------------------------
(1) $170,696,000 initial Class IO Notional Amount.
(2) The Pass-Through Rate for each of the Class B, Class C, Class D, Class
IO, Class E, Class F and Class G Certificates is variable and subject
to change.
(3) The Class R-I, Class R-II and Class R-III Certificates have no
Certificate Balance and do not bear interest.
The Offered Certificates and the Mortgage Loans are more
particularly described in the Prospectus, dated February 14, 1996, and the
Prospectus Supplement, dated February 27, 1996, as previously filed with the
Securities and Exchange Commission pursuant to Rule 424(b). Capitalized terms
used but not otherwise defined herein have the meanings set forth in the
Prospectus Supplement.
<PAGE>
-4-
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Not applicable
(b) Not applicable
(c) Exhibits
EXHIBIT NO. DESCRIPTION
4.1 Pooling and Servicing Agreement,
dated as of February 1, 1996,
attached hereto as Exhibit 4.1,
among Salomon Brothers Mortgage
Securities VII, Inc. as
depositor (the "Depositor"),
Midland Loan Services, L.P. as
master servicer and special
servicer, LaSalle National Bank
as trustee and ABN AMRO Bank
N.V. as fiscal agent relating to
Mortgage Pass-Through
Certificates Series 1996-C1.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC.
By: /s/ Ian McColough
Name: Ian McColough
Title: Assistant Vice President
Dated: February 29, 1996
<PAGE>
<TABLE>
<CAPTION>
Index To Exhibits
Sequentially
Exhibit No. Description Numbered Page
<S> <C> <C>
4.1 Pooling and Servicing Agreement, dated as of
February 1, 1996, attached hereto as Exhibit 4.1,
among Salomon Brothers Mortgage Securities
VII, Inc. as depositor (the "Depositor"), Midland
Loan Services, L.P. as master servicer and
special servicer, LaSalle National Bank as trustee
and ABN AMRO Bank N.V. as fiscal agent
relating to Mortgage Pass-Through Certificates
Series 1996-C1.
</TABLE>
Exhibit 4.1
<PAGE>
================================================================================
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
Depositor
and
MIDLAND LOAN SERVICES, L.P.
Master Servicer and Special Servicer
and
LASALLE NATIONAL BANK,
Trustee
and
ABN AMRO BANK N.V.
Fiscal Agent
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of February 1, 1996
---------------------------------
$212,045,633.94
Mortgage Pass-Through Certificates
Series 1996-C1
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
SECTION PAGE
ARTICLE I
DEFINITIONS
1.01. Defined Terms............................................. 4
Accrued Certificate Interest........................................ 4
Acquisition Date.................................................... 4
Additional Trust Fund Expense....................................... 5
Adjusted Treasury Yield............................................. 5
Advance .......................................................... 5
Adverse REMIC Event................................................. 5
Affiliate .......................................................... 5
Agreement .......................................................... 5
Appraisal .......................................................... 5
Appraisal .......................................................... 5
Assigned Asset Value................................................ 6
Assignment of Leases................................................ 6
Assumed Final Distribution Date..................................... 6
Assumed Scheduled Payment........................................... 6
Available Distribution Amount....................................... 7
Balloon Payment..................................................... 7
Breach .......................................................... 7
Book-Entry Certificate.............................................. 7
Business Day........................................................ 7
CERCLA .......................................................... 8
Certificate......................................................... 8
Certificate Account................................................. 8
Certificate Factor.................................................. 8
Certificateholder................................................... 8
Certificate Notional Amount......................................... 8
Certificate Owner................................................... 8
Certificate Principal Balance....................................... 9
Certificate Register................................................ 9
Certificate Registrar............................................... 9
Class .......................................................... 9
Class A Certificate................................................. 9
Class A-1 Certificate............................................... 9
Class A-2 Certificate............................................... 9
Class A Principal Distribution Cross-Over Date...................... 9
Class B Certificate................................................. 9
Class C Certificate................................................. 9
Class D Certificate................................................. 9
i
<PAGE>
SECTION PAGE
Class E Certificate................................................. 10
Class F Certificate................................................. 10
Class G Certificate................................................. 10
Class IO Certificate................................................ 10
Class Notional Amount............................................... 10
Class Principal Balance............................................. 10
Class R-I Certificate............................................... 10
Class R-II Certificate.............................................. 10
Class R-II Distribution Amount...................................... 10
Class R-III Certificate............................................. 11
Closing Date........................................................ 11
Code .......................................................... 11
Collection Period................................................... 11
Collection Report................................................... 11
Component .......................................................... 11
Component Notional Amount........................................... 11
Controlling Class................................................... 11
Comparative Financial Status Report................................. 12
Corporate Trust Office.............................................. 12
Corrected Mortgage Loan............................................. 12
Cross-Collateralized Mortgage Loan.................................. 12
Custodian .......................................................... 12
Cut-off Date........................................................ 12
Cut-off Date Balance................................................ 12
Debt Service Coverage Ratio......................................... 12
Defaulted Mortgage Loan............................................. 13
Definitive Certificate.............................................. 13
Delinquent Loan Status Report....................................... 13
Depositor .......................................................... 13
Depository.......................................................... 13
Depository Participant.............................................. 13
Determination Date.................................................. 13
Directly Operate.................................................... 13
Disqualified Organization........................................... 14
Distribution Account................................................ 14
Distribution Date................................................... 14
Distribution Date Statement......................................... 14
Document Defect..................................................... 14
Due Date .......................................................... 14
Effective Pass-Through Rate......................................... 14
Eligible Account.................................................... 15
ERISA .......................................................... 15
Escrow Payment...................................................... 15
Event of Default.................................................... 15
ii
<PAGE>
SECTION PAGE
Exchange Act........................................................ 15
Extension Adviser................................................... 15
FDIC .......................................................... 15
FHLMC .......................................................... 15
Final Recovery Determination........................................ 15
Fiscal Agent........................................................ 16
Fitch .......................................................... 16
FNMA .......................................................... 16
Hazardous Materials................................................. 16
Historical Loan Modification Report................................. 16
Historical Loss Estimate Report..................................... 16
Holder .......................................................... 16
HUD-Approved Servicer............................................... 17
Independent......................................................... 17
Independent Contractor.............................................. 17
Initial Class Notional Amount....................................... 17
Initial Class Principal Balance..................................... 17
Insurance Policy.................................................... 18
Insurance Proceeds.................................................. 18
Interest Distribution Amount........................................ 18
Interested Person................................................... 18
Issue Price......................................................... 18
Investment Account.................................................. 18
Late Collections.................................................... 18
Liquidation Event................................................... 19
Liquidation Expenses................................................ 19
Liquidation Proceeds................................................ 19
Loss Reimbursement Amount........................................... 19
LPAS Report......................................................... 20
Majority Subordinate Certificateholder.............................. 20
Master Servicer..................................................... 20
Master Servicer Reports............................................. 20
Master Servicing Advances........................................... 20
Master Servicing Fee................................................ 20
Master Servicing Fee Rate........................................... 21
Modification Fee.................................................... 21
Modified Mortgage Loan.............................................. 21
Monthly Payment..................................................... 21
Mortgage .......................................................... 21
Mortgage File....................................................... 21
Mortgage Loan....................................................... 24
Mortgage Loan Purchase Agreement.................................... 24
Mortgage Loan Schedule.............................................. 24
Mortgage Loan Seller................................................ 24
iii
<PAGE>
SECTION PAGE
Mortgage Note....................................................... 24
Mortgage Pool....................................................... 24
Mortgage Rate....................................................... 24
Mortgaged Property.................................................. 25
Mortgagor .......................................................... 25
Net Aggregate Prepayment Interest Shortfall......................... 25
Net Investment Earnings............................................. 25
Net Investment Loss................................................. 25
Net Mortgage Rate................................................... 25
Net Operating Income................................................ 25
NOI Adjustment Worksheet............................................ 25
Nonrecoverable Advance.............................................. 26
Nonrecoverable P&I Advance.......................................... 26
Nonrecoverable Servicing Advance.................................... 26
Non-Registered Certificate.......................................... 26
Non-United States Person............................................ 26
OA Extension........................................................ 26
OA Extension Period................................................. 26
Officer's Certificate............................................... 26
Operating Adviser................................................... 26
Operating Statement Analysis........................................ 26
Opinion of Counsel.................................................. 27
OTS .......................................................... 27
Ownership Interest.................................................. 27
Pass-Through Rate................................................... 27
Penalty Interest.................................................... 28
Percentage Interest................................................. 28
Permitted Investments............................................... 28
Permitted Transferee ............................................... 30
Person .......................................................... 30
Phase I Environmental Assessment.................................... 30
P&I Advance......................................................... 30
P&I Advance Date.................................................... 30
Plan .......................................................... 30
Plurality Residual Certificateholder................................ 30
Prepayment Assumption............................................... 30
Prepayment Interest Excess.......................................... 30
Prepayment Interest Shortfall....................................... 30
Prepayment Premium.................................................. 31
Prime Rate.......................................................... 31
Principal Balance Certificate....................................... 31
Principal Distribution Amount....................................... 31
Principal Prepayment................................................ 32
Prospectus.......................................................... 32
iv
<PAGE>
SECTION PAGE
Prospectus Supplement............................................... 32
PTCE .......................................................... 32
Purchase Price...................................................... 32
Qualified Institutional Buyer....................................... 33
Qualified Insurer................................................... 33
Rated Final Distribution Date....................................... 33
Rating Agency....................................................... 33
Realized Loss....................................................... 33
Record Date......................................................... 34
Registered Certificate.............................................. 34
Reimbursement Rate.................................................. 34
REMIC .......................................................... 34
REMIC I .......................................................... 34
REMIC I Regular Interest............................................ 34
REMIC I Remittance Rate............................................. 35
REMIC II .......................................................... 35
REMIC II Regular Interest........................................... 35
REMIC II Remittance Rate............................................ 35
REMIC III .......................................................... 35
REMIC III Certificate............................................... 35
REMIC III Regular Certificate....................................... 35
REMIC Provisions.................................................... 35
Rents from Real Property............................................ 36
REO Account......................................................... 36
REO Acquisition..................................................... 36
REO Disposition..................................................... 36
REO Extension....................................................... 36
REO Loan .......................................................... 36
REO Property........................................................ 36
REO Revenues........................................................ 37
REO Status Report................................................... 37
REO Tax .......................................................... 37
Request for Release................................................. 37
Required Appraisal Loan............................................. 37
Reserve Account..................................................... 37
Reserve Funds....................................................... 37
Residual Certificate................................................ 37
Resolution Fee...................................................... 37
Responsible Officer................................................. 37
Rule 144A .......................................................... 38
Salomon Brothers.................................................... 38
Scheduled Payment................................................... 38
Securities Act...................................................... 38
Security Agreement.................................................. 38
v
<PAGE>
SECTION PAGE
Senior Certificate.................................................. 38
Servicing Account................................................... 38
Servicing Advances.................................................. 38
Servicing Fees...................................................... 38
Servicing File...................................................... 38
Servicing Officer................................................... 38
Servicing Standard.................................................. 39
Servicing Transfer Event............................................ 39
Single Certificate.................................................. 39
Special Servicer.................................................... 39
Special Servicing Advances.......................................... 39
Special Servicing Fee............................................... 40
Special Servicing Fee Rate.......................................... 40
Specially Serviced Mortgage Loan.................................... 40
Standard & Poor's................................................... 42
Startup Day......................................................... 42
Stated Maturity Date................................................ 42
Stated Principal Balance............................................ 42
Subordinated Certificate............................................ 43
Sub-Servicer........................................................ 43
Sub-Servicing Agreement............................................. 43
Tax Matters Person.................................................. 43
Tax Returns......................................................... 43
Transfer ........................................................... 43
Transferee.......................................................... 43
Transferor.......................................................... 43
Trust Fund.......................................................... 43
Trustee ............................................................ 43
Trustee's Fee....................................................... 43
Trustee's Fee Rate.................................................. 44
UCC ................................................................ 44
UCC Financing Statement............................................. 44
Uncertificated Accrued Interest..................................... 44
Uncertificated Distributable Interest............................... 44
Uncertificated Principal Balance.................................... 45
Underwriter......................................................... 45
United States Person................................................ 45
Unmodified Net Mortgage Rate........................................ 45
USPAP .............................................................. 45
Voting Rights....................................................... 46
Weighted Average REMIC I Remittance Rate............................ 46
Weighted Average REMIC II Remittance Rate........................... 46
Weighted Average Unmodified Net Mortgage Rate....................... 46
vi
<PAGE>
SECTION PAGE
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES;
ORIGINAL ISSUANCE OF CERTIFICATES
2.01. Conveyance of Mortgage Loans.............................. 47
2.02. Acceptance of REMIC I by Trustee.......................... 48
2.03. Mortgage Loan Seller's Repurchase of Mortgage Loans for
Document Defects and Breaches of Representations and
Warranties................................................ 49
2.04. Representations and Warranties of Depositor............... 50
2.05. Execution, Authentication and Delivery of Class R-I
Certificates; Creation of REMIC I Regular
Interests................................................. 52
2.06. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by Trustee....................................... 52
2.07. Execution, Authentication and Delivery of Class R-II
Certificates.............................................. 53
2.08. Conveyance of REMIC II Regular Interests; Acceptance of
REMIC III by Trustee...................................... 53
2.09. Execution, Authentication and Delivery of REMIC III
Certificates.............................................. 53
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
3.01. Administration of the Mortgage Loans; Reimbursement of
Special Servicing Advances................................ 54
3.02. Collection of Mortgage Loan Payments...................... 55
3.03. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts........................................ 56
3.04. Certificate Account and Distribution
Account................................................... 58
3.05. Permitted Withdrawals From the Certificate Account and
the Distribution Account.................................. 61
vii
<PAGE>
SECTION PAGE
3.06. Investment of Funds in the Certificate Account, the
Distribution Account and the REO
Account............................................... 65
3.07. Maintenance of Insurance Policies; Errors and Omissions
and Fidelity Coverage..................................... 67
3.08. Enforcement of Alienation Clauses......................... 69
3.09. Realization Upon Defaulted Mortgage
Loans..................................................... 69
3.10. Trustee to Cooperate; Release of Mortgage
Files..................................................... 73
3.11. Servicing Compensation.................................... 74
3.12. Property Inspections; Collection of Financial
Statements; Delivery of Certain Reports................... 77
3.13. Annual Statement as to Compliance......................... 78
3.14. Reports by Independent Public
Accountants............................................... 78
3.15. Access to Certain Information............................. 79
3.16. Title to REO Property; REO Account........................ 79
3.17. Management of REO Property................................ 80
3.18. Sale of Mortgage Loans and REO
Properties................................................ 83
3.19. Additional Obligations of the Master Servicer, Special
Servicer and Trustee...................................... 87
3.20. Modifications, Waivers, Amendments and
Consents.................................................. 88
3.21. Transfer of Servicing Between Master Servicer and
Special Servicer; Record Keeping.......................... 90
3.22. Sub-Servicing Agreements.................................. 91
3.23. Representations and Warranties of Master
Servicer.................................................. 93
3.24. Representations and Warranties of Special
Servicer.................................................. 95
3.25. Operating Adviser; Extension Adviser;
Elections................................................. 96
3.26. Limitation on Liability of Operating Advis- er and
Extension Adviser......................................... 98
3.27. Duties of Operating Adviser and Extension
Adviser................................................... 99
3.28 Special Servicer to Cooperate with the Operating
Adviser and the Extension Adviser.........................101
3.29. Servicing Advances........................................102
viii
<PAGE>
SECTION PAGE
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
4.01. Distributions.............................................104
4.02. Statements to Certificateholders..........................113
4.03. P&I Advances..............................................121
4.04. Allocation of Realized Losses and Additional Trust Fund
Expenses..................................................123
4.05. Calculations..............................................124
4.06. Use of Agents.............................................124
ARTICLE V
THE CERTIFICATES
5.01. The Certificates..........................................125
5.02. Registration of Transfer and Exchange of
Certificates..............................................126
5.03. Book-Entry Certificates...................................132
5.04. Mutilated, Destroyed, Lost or Stolen
Certificates..............................................133
5.05. Persons Deemed Owners.....................................133
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SPECIAL SERVICER
6.01. Liability of Depositor, Master Servicer and Special
Servicer..................................................134
6.02. Merger, Consolidation or Conversion of Depositor or
Master Servicer or Special Servicer.......................134
6.03. Limitation on Liability of Depositor, Master Servicer
and Special Servicer......................................135
6.04. Master Servicer and the Special Servicer Not to
Resign....................................................136
6.05. Rights of Depositor and Trustee in Respect of Master
Servicer and the Special Servicer.........................136
ix
<PAGE>
SECTION PAGE
6.06. Depositor, Master Servicer and Special Servicer to
Cooperate with Trustee....................................137
6.07. Depositor, Trustee and Special Servicer to Cooperate
with Master Servicer......................................137
6.08. Depositor, Master Servicer and Trustee to Cooperate
with Special Servicer.....................................137
6.09 Termination of Special Servicer at the Direction of the
Operating Advisor.........................................137
ARTICLE VII
DEFAULT
7.01. Events of Default.........................................139
7.02. Trustee to Act; Appointment of Successor..................141
7.03. Notification to Certificateholders........................143
7.04. Waiver of Events of Default...............................143
7.05. Additional Remedies of Trustee Upon Event of
Default...................................................143
ARTICLE VIII
CONCERNING THE TRUSTEE AND THE FISCAL AGENT
8.01. Duties of Trustee.........................................145
8.02. Certain Matters Affecting Trustee.........................147
8.03. Trustee and Fiscal Agent Not Liable for Validity or
Sufficiency of Certificates or Mortgage
Loans.....................................................148
8.04. Trustee and Fiscal Agent May Own
Certificates..............................................150
8.05. Fees and Expenses of Trustee; Indemnification of
Trustee...................................................150
8.06. Eligibility Requirements for Trustee......................151
8.07. Resignation and Removal of Trustee........................152
8.08. Successor Trustee.........................................153
8.09. Merger or Consolidation of Trustee........................154
8.10. Appointment of Co-Trustee or Separate
Trustee...................................................154
8.11. Appointment of Custodians.................................155
8.12. Access to Certain Information.............................155
x
<PAGE>
SECTION PAGE
8.13. Representations and Warranties of
Trustee...................................................156
8.14. Access to Information Reports to the Securities and
Exchange Commission.......................................158
8.15. The Fiscal Agent..........................................159
ARTICLE IX
TERMINATION
9.01. Termination Upon Repurchase or Liquida- tion of All
Mortgage Loans............................................161
9.02. Additional Termination Requirements.......................166
ARTICLE X
ADDITIONAL REMIC PROVISIONS
10.01. REMIC Administration......................................168
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Amendment.................................................173
11.02. Counterparts..............................................175
11.03. Limitation on Rights of Certificateholders................175
11.04. Governing Law.............................................176
11.05. Notices...................................................176
11.06. Severability of Provisions................................176
11.07. Grant of a Security Interest..............................176
11.08. Successors and Assigns; Beneficiaries.....................177
11.09. Article and Section Headings..............................177
11.10. Notices to Rating Agencies................................178
11.11. Complete Agreement........................................179
xi
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
SECTION
EXHIBIT DESCRIPTION EXHIBIT NO. REFERENCE
<S> <C> <C>
Form of Class A-1 Certificate A-1 Section 1.01 Definition of
"Class A-1 Certificate"
Form of Class A-2 Certificate A-2 Section 1.01 Definition of
"Class A-2 Certificate"
Form of Class B Certificate A-3 Section 1.01 Definition of
"Class B Certificate"
Form of Class C Certificate A-4 Section 1.01 Definition of
"Class C Certificate"
Form of Class D Certificate A-5 Section 1.01 Definition of
"Class D Certificate"
Form of Class E Certificate A-6 Section 1.01 Definition of
"Class E Certificate"
Form of Class F Certificate A-7 Section 1.01 Definition of
"Class F Certificate"
Form of Class G Certificate A-8 Section 1.01 Definition of
"Class G Certificate"
Form of Class IO Certificate A-9 Section 1.01 Definition of
"Class IO Certificate"
Form of Class R-I Certificate A-10 Section 1.01 Definition of
"Class R-I Certificate"
Form of Class R-II Certificate A-11 Section 1.01 Definition of
"Class R-II Certificate"
Form of Class R-III Certificate A-12 Section 1.01 Definition of
"Class R-III Certificate"
Mortgage Loan Schedule B Section 1.01 Definition of
"Mortgage Loan
Schedule"
Schedule of Exceptions to Mortgage
</TABLE>
xii
<PAGE>
<TABLE>
<CAPTION>
SECTION
EXHIBIT DESCRIPTION EXHIBIT NO. REFERENCE
<S> <C> <C>
File Delivery C Section 2.02(a)
Form of Master Servicer Request
for Release D-1 Section 1.01 Definition of
"Request for Release";
Section 2.03(b); Section
3.10(a); and Section
3.10(b)
Form of Special Servicer
Request for Release D-2 Section 1.01 Definition of
"Request for Release";
Section 3.10(b)
Comparative Financial Status Report E-1 Section 1.01 Definitions
of "Comparative
Financial Status Report"
and "Master Servicer
Reports"; Section 4.02(b)
Delinquent Loan Status Report E-2 Section 1.01 Definitions
of "Delinquent Loan
Status Report" and
"Master Servicer
Reports"; Section 4.02(b)
Historical Loan Modification Report E-3 Section 1.01 Definitions
of "Historical Loan
Modification Report" and
"Master Servicer
Reports"; Section 4.02(b)
Historical Loss Estimate Report E-4 Section 1.01 Definitions
of "Historical Loss
Estimate Report" and
"Master Servicer
Reports"; Section 4.02(b)
</TABLE>
xiii
<PAGE>
<TABLE>
<CAPTION>
SECTION
EXHIBIT DESCRIPTION EXHIBIT NO. REFERENCE
<S> <C> <C>
REO Status Report E-5 Section 1.01 Definitions
of "REO Status Report"
and "Master Servicer
Reports"; Section 4.02(b)
Operating Statement Analysis E-6 Section 1.01 Definitions
of "Operating Statement
Analysis" and "Master
Servicer Reports";
Section 4.02(b)
Copy of Letter of Representations
among Depositor, Trustee
and initial Depository F Section 4.01(d)
Form of Certificate from Holder
(Transferor) of a Certificate
to the Certificate Registrar G-1 Section 5.02(b)
Form of Certificate from Proposed
Transferee to Certificate
Registrar G-2 Section 5.02(b)
Form of Certificate from Transferee
to Certificate Registrar G-3 Section 5.02(b)
Form of Transfer Affidavit and
Agreement regarding Class R-I
Certificates H-1 Section 5.02(d)(i)(B)
Form of Transferor Certificate
regarding Class R-I Certificates H-2 Section 5.02(d)(i)(D)
Form of Transfer Affidavit and
Agreement regarding Class R-II
Certificates I-1 Section 5.02(d)(i)(B)
</TABLE>
xiv
<PAGE>
<TABLE>
<CAPTION>
SECTION
EXHIBIT DESCRIPTION EXHIBIT NO. REFERENCE
<S> <C> <C>
Form of Transferor Certificate
regarding Class R-II Certificates I-2 Section 5.02(d)(i)(D)
Form of Transfer Affidavit and
Agreement regarding Class R-III
Certificates J-1 Section 5.02(d)(i)(B)
Form of Transferor Certificate
regarding Class R-III Certificates J-2 Section 5.02(d)(i)(D)
Form of UCC-1 financing
statement K Section 11.07
Mortgage Loan
Representations and Warranties L Section 2.01(e)
Form of Lost Note Affidavit
and Indemnity M Section 1.01 Definition of
"Mortgage File"
</TABLE>
xv
<PAGE>
This Pooling and Servicing Agreement (this "Agreement"), is
dated and effective as of February 1, 1996, among SALOMON BROTHERS MORTGAGE
SECURITIES VII, INC., as Depositor, MIDLAND LOAN SERVICES, L.P., as Master
Servicer and Special Servicer, LASALLE NATIONAL BANK, as Trustee, and ABN AMRO
BANK N.V., 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.
Each of the REMIC I Regular Interests will relate to a specific Mortgage Loan.
Each REMIC I Regular Interest will have a REMIC I Remittance Rate equal to the
Net Mortgage Rate of the Mortgage Loan to which such REMIC I Regular Interest
relates, an initial Uncertificated Principal Balance equal to the Cut-off Date
Balance of the Mortgage Loan to which such REMIC I Regular Interest relates and,
solely for purposes of satisfying Treasury regulation Section 1.860G-
1(a)(4)(iii), a "latest possible maturity date" set to the Stated Maturity Date
of the Mortgage Loan to which such REMIC I Regular Interest relates. 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 irrevocably sets forth the
designation, the REMIC II Remittance Rate, the initial Uncertificated Principal
Balance and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the latest possible maturity date for each of the REMIC II
Regular Interests. None of the REMIC II Regular Interests will be certificated.
<TABLE>
<CAPTION>
REMIC II INITIAL UNCERTIFICATED LATEST POSSIBLE
DESIGNATION REMITTANCE RATE PRINCIPAL BALANCE MATURITY DATE (2)
- ----------- ----------------------- ----------------------- -----------------
<S> <C> <C> <C>
U Variable(1) $50,000,000 January 20, 2006
V Variable(1) $81,468,000 January 20, 2006
W Variable(1) $14,843,000 January 20, 2006
X Variable(1) $14,843,000 January 20, 2006
Y Variable(1) $ 9,542,000 January 20, 2006
Z Variable(1) $41,349,634 January 20, 2006
</TABLE>
- ----------------------
(1) Calculated in accordance with the definition of "REMIC II Remittance
Rate".
<PAGE>
-2-
(2) Set to the first Distribution Date that follows the Stated Maturity Date
for the Mortgage Loan with the longest remaining term to scheduled
maturity.
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 designation, the Pass-Through Rate, the initial Class Principal
Balance and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the latest possible maturity date for each of the Classes
of Certificates or Components thereof representing "regular interests" in REMIC
III.
<TABLE>
<CAPTION>
CLASS INITIAL CLASS LATEST POSSIBLE
DESIGNATION PASS-THROUGH RATE PRINCIPAL BALANCE MATURITY DATE (5)
- ----------- ------------------------- ------------------------ -----------------
<S> <C> <C> <C>
Component IO-U(1) 0.5344% per annum N/A(4) January 20, 2006
Component IO-V(1) Variable(3) N/A(4) January 20, 2006
Component IO-W(1) Variable(3) N/A(4) January 20, 2006
Component IO-X(1) Variable(3) N/A(4) January 20, 2006
Component IO-Y(1) Variable(3) N/A(4) January 20, 2006
Class A-1 6.4690% per annum $50,000,000.00 January 20, 2006
Class A-2 6.7803% per annum $81,468,000.00 January 20, 2006
Class B 7.1267% per annum $14,843,000.00 January 20, 2006
Class C 7.3011% per annum $14,843,000.00 January 20, 2006
Class D 7.7490% per annum $ 9,542,000.00 January 20, 2006
Class E Variable(3) $21,204,000.00 January 20, 2006
Class F Variable(3) $11,132,000.00 January 20, 2006
Class G Variable(3) $ 9,013,633.94 January 20, 2006
</TABLE>
- ---------------------------------
(1) Constitutes a separate "regular interest" in REMIC III represented by
the Class IO Certificates. For purposes of the discussion in the
Prospectus Supplement, Component IO-U, Component IO-V, Component IO-W,
Component IO-X and Component IO-Y generally correspond to "Component
A-1", "Component A-2", "Component B,", Component C" and Component D",
respectively, referred to in the Prospectus Supplement.
(2) Only applicable to the calculation of Accrued Certificate Interest in
respect of such component for Distribution Dates through and including
the Distribution Date in January 2006. Thereafter, 0% per annum.
(3) Calculated in accordance with the definition of "Pass-Through Rate".
(4) Component IO-U, Component IO-V, Component IO-W, Component IO-X and
Component IO-Y will not have stated principal amounts. Rather each will
accrue interest as provided herein on a Component Notional Amount equal
to: (i) in the case of Component IO-U, the Uncertificated Principal
Balance of REMIC II Regular Interest U outstanding from time to time;
(ii) in the case of Component IO-V, the Uncertificated Principal
Balance of REMIC II Regular Interest V outstanding from time to time;
(iii) in the case of Component IO-W, the Uncertificated Principal
Balance of REMIC II Regular Interest W outstanding from time to time;
(iv) in the case of Component IO-X, the Uncertificated Principal
Balance of REMIC II Regular Interest X outstanding from time to time;
and (v) in the case of Component IO-Y, the Uncertificated Principal
Balance of REMIC II Regular Interest Y outstanding from time to time.
<PAGE>
-3-
(5) Set to the first Distribution Date that follows the Stated Maturity
Date for the Mortgage Loan with the longest remaining term to scheduled
maturity.
The aggregate Cut-off Date Balance of the Mortgage Loans, the
aggregate Uncertificated Principal Balance of the REMIC I Regular Interests, the
aggregate Uncertificated Principal Balance of the REMIC II Regular Interests,
and the aggregate Class Principal Balance of the respective Classes of REMIC III
Regular Certificates in each case will be $212,045,633.94.
Capitalized terms used but not otherwise defined in this
Preliminary Statement, have the meanings assigned thereto in Article I.
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:
<PAGE>
-4-
ARTICLE I
DEFINITIONS
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
Principal Balance Certificates for any Distribution Date, one month's interest
at the Pass-Through Rate applicable to such Class of Certificates for such
Distribution Date, accrued on the related Class Principal Balance outstanding
immediately prior to such Distribution Date. With respect to the Class IO
Certificates for any Distribution Date up to and including the Distribution Date
in January 2006, the aggregate of: (i) one month's interest at the Pass-Through
Rate applicable to Component IO-U for such Distribution Date, accrued on the
Component Notional Amount of Component IO-U outstanding immediately prior to
such Distribution Date; (ii) one month's interest at the Pass-Through Rate
applicable to Component IO-V for such Distribution Date, accrued on the
Component Notional Amount of Component IO-V outstanding immediately prior to
such Distribution Date; (iii) one month's interest at the Pass-Through Rate
applicable to Component IO-W for such Distribution Date, accrued on the
Component Notional Amount of Component IO-W outstanding immediately prior to
such Distribution Date; (iv) one month's interest at the Pass-Through Rate
applicable to Component IO-X for such Distribution Date, accrued on the
Component Notional Amount of Component IO-X outstanding immediately prior to
such Distribution Date; and (v) one month's interest at the Pass-Through Rate
applicable to Component IO-Y for such Distribution Date, accrued on the
Component Notional Amount of Component IO-Y outstanding immediately prior to
such Distribution Date. With respect to the Class IO Certificates for any
Distribution Date after the Distribution Date in January 2006, zero. Accrued
Certificate Interest for each Class of REMIC III Regular Certificates shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Without affecting the amount of Accrued Certificate Interest in respect of any
Class of REMIC III Regular Certificates for any Distribution Date, the "accrual
period" in respect of each such Class for such Distribution Date shall be deemed
to be the period ending on the first day of the calendar month in which such
Distribution Date occurs and commencing on the second day of the calendar month
immediately preceding the calendar month in which such Distribution Date occurs.
"Acquisition Date": With respect to any REO Property, the
first day on which such REO Property is considered to be acquired by the Trust
Fund within the meaning of Treasury regulation Section 1.856-6(b)(1), which is
the first day on which the Trust Fund is treated as the owner of such REO
Property for federal income tax purposes.
<PAGE>
-5-
"Additional Trust Fund Expense": Any expense experienced with
respect to the Trust Fund that would result in the Certificateholders' receiving
less than the full amount of interest and/or principal to which they are
entitled on any Distribution Date.
"Adjusted Treasury Yield": With respect to any Class of
Registered Certificates, for purposes of allocating Prepayment Premiums between
the Holders of such Class and the Class IO Certificates, an annual rate equal to
the monthly equivalent yield of the sum of (a) the annual rate on the U.S.
Treasury issue (primary issue) with a maturity date closest to the earlier of
(i) the Stated Maturity Date of the related prepaid Mortgage Loan and (ii) the
Assumed Final Distribution Date for such Class of Registered Certificates, plus
(b) .50%.
"Advance": Any P&I Advance or Servicing Advance.
"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 and 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 conducted by an
Independent MAI-designated appraiser, who has a minimum of five years of
experience in the subject property type and market 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
conducted by an Independent MAI-designated appraiser, who has a minimum of five
years of experience in the subject property type and market 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 Master Servicer or Special Servicer, as
the case may be, 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, the Trustee or the Fiscal
Agent, 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 related Net Mortgage Rate, (iii) all accrued but unpaid Master
Servicing Fees and Special Servicing Fees in respect of such
<PAGE>
-6-
Required Appraisal Loan, (iv) all related unreimbursed Advances made by or on
behalf of the Master Servicer, the Special Servicer, the Trustee or the Fiscal
Agent in respect of such Required Appraisal Loan, together with all unpaid
interest accrued on such Advances in accordance with Section 3.29(d) and/or
Section 4.03(d) at the Reimbursement Rate, 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, over (b) 90% of the
appraised value (as is) of the related Mortgaged Property or REO Property, as
applicable, as determined by the Appraisal (net of any liens on such property
that are prior to the lien of the Required Appraisal Loan).
"Assigned Asset Value": With respect to any Mortgage Loan or
REO Loan, as of any date of determination, the then Stated Principal Balance of
such Mortgage Loan or REO Loan, reduced by any then applicable related Appraisal
Reduction Amount.
"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 related Mortgage
Loan.
"Assumed Final Distribution Date": With respect to any Class
of Registered Certificates, the Distribution Date on which the Class Principal
Balance of such Class of Certificates 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 "Modeling Assumptions" set forth in the
Prospectus Supplement under the caption "YIELD AND MATURITY
CONSIDERATIONS--Weighted Average Life", which Distribution Date shall in each
such case be as follows:
CLASS DESIGNATION ASSUMED FINAL DISTRIBUTION DATE
Class A-1 September 20, 2001
Class A-2 November 20, 2004
Class B September 20, 2005
Class C October 20, 2005
Class D January 20, 2006
"Assumed Scheduled Payment": With respect to any Mortgage Loan
for its Stated Maturity Date (provided that such Mortgage Loan has not been paid
in full, and no other Liquidation Event has occurred in respect thereof, on or
before such date) and for any subsequent Due Date therefor as of which such
Mortgage Loan remains outstanding and part of the Trust Fund, the scheduled
monthly payment of principal and/or interest deemed to be due in respect thereof
on such Due Date equal to the Scheduled Payment (other than any Balloon Payment)
that would have been due in respect of such Mortgage Loan on such Due Date if it
had been required to continue to pay in accordance with the amortization
schedule, if any, in effect as of the Cut-off 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
<PAGE>
-7-
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 (other than any Balloon Payment) that would have been due
in respect of the predecessor Mortgage Loan on such Due Date had it remained
outstanding or, if such Due Date coincides with or follows what had been its
Stated Maturity Date, the Assumed Scheduled Payment that would have been deemed
due in respect of the predecessor Mortgage Loan on such Due Date had it remained
outstanding.
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to: (a) without duplication, the sum of (i)
the aggregate amount on deposit in the Certificate Account and the Distribution
Account as of the commencement of business on the related P&I Advance Date, and
(ii) to the extent not already included as part of the aggregate amount
described in the immediately preceding subclause (a)(i), (A) the aggregate
amount of any P&I Advances made by or on behalf of the Master Servicer, the
Trustee and/or the Fiscal Agent for distribution on the Certificates on such
Distribution Date, (B) the aggregate amount transferred from the REO Account (if
established) to the Certificate 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), (C) the aggregate amount deposited by the Master Servicer in the
Distribution Account for such Distribution Date pursuant to Section 3.19(a) in
connection with Prepayment Interest Shortfalls, and (D) in the case of the final
Distribution Date, if applicable, any amounts paid by the Depositor, the Master
Servicer or the Holders of Residual Certificates in connection with the purchase
of all the Mortgage Loans and any REO Properties remaining in the Trust Fund, as
contemplated by Section 9.01; net of (b) that portion of the amounts described
in subclauses (a)(i), (a)(ii)(B) and (a)(ii)(D) of this definition that
represents one or more of the following: (i) 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 the Certificate Account pursuant to
clauses (ii) through (xv) of Section 3.05(a), (iii) any amounts payable or
reimbursable to any Person from the Distribution Account pursuant to clauses
(ii) through (vi) of Section 3.05(b), (iv) Prepayment Premiums and assumption
fees, (v) any amounts collected subsequent to the end of the related Collection
Period, and (vi) any amounts deposited in the Certificate Account or the
Distribution Account that were not required to be deposited therein.
"Balloon Payment": With respect to any Mortgage Loan as of any
date of determination, the Scheduled Payment payable on the Stated Maturity Date
of such Mortgage Loan.
"Breach": As defined in Section 2.03(a).
"Book-Entry Certificate": Any Certificate registered in the
name of the Depository or its nominee.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking institutions in New York, New York or the city in which the
Corporate Trust Office
<PAGE>
-8-
of the Trustee is located or the city in which the Certificate Account is
located, are authorized or obligated by law or executive order to remain closed.
"CERCLA": The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Certificate": Any one of the Depositor's Mortgage
Pass-Through Certificates, Series 1996-C1, as executed by the Trustee and
authenticated and delivered hereunder by the Certificate Registrar.
"Certificate Account": As defined in Section 3.04(a).
"Certificate Factor": With respect to any Class of REMIC III
Regular Certificates, as of any date of determination, a fraction, expressed as
a decimal carried to eight places, the numerator of which is the then related
Class Principal Balance or Class Notional Amount, as the case may be, and the
denominator of which is the related Initial Class Principal Balance or Initial
Class Notional Amount, as the case may be.
"Certificateholder": 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 a Certificateholder in
respect of a Residual 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 Master Servicer, the Special
Servicer, the Trustee or the Fiscal Agent in its respective capacity as such,
any Certificate registered in the name of the Depositor, the Master Servicer,
the Special Servicer, the Trustee or the Fiscal Agent, 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 "Holders" or
"Certificateholders" shall reflect the rights of Certificate Owners only insofar
as they may indirectly exercise such rights through the Depository and the
Depository Participants, except as otherwise expressly set forth herein; and the
parties hereto shall be required to recognize as a "Holder" or
"Certificateholder" only the Person in whose name a Certificate is registered in
the Certificate Register.
"Certificate Notional Amount": The hypothetical or notional
principal amount on which a Class IO Certificate accrues interest equal to the
product of (a) the Percentage Interest evidenced by such Certificate, multiplied
by (b) the Class Notional Amount of the Class IO Certificates outstanding from
time to time.
"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
<PAGE>
-9-
books of a Depository Participant or on the books of an indirect participating
brokerage firm for which a Depository Participant acts as agent.
"Certificate Principal Balance": With respect to any Principal
Balance Certificate, as of any date of determination, the then outstanding
principal amount of such Certificate equal to the product of (a) the Percentage
Interest evidenced by such Certificate, multiplied by (b) the then Class
Principal Balance of the Class of Certificates to which such Certificate
belongs.
"Certificate Register" and "Certificate Registrar": The
register maintained and the registrar appointed pursuant to Section 5.02.
"Class": Collectively, all of the Certificates bearing the
same alphabetical and, if applicable, numerical class designation.
"Class A Certificate": Any Class A-1 or Class A-2 Certificate.
"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 "regular interest" in REMIC III
for purposes of the REMIC Provisions.
"Class A-2 Certificate": Any one of the Certificates with a
"Class A-2" designation on the face thereof, substantially in the form of
Exhibit A-2 attached hereto, and evidencing a "regular interest" in REMIC III
for purposes of the REMIC Provisions.
"Class A Principal Distribution Cross-Over Date": The first
Distribution Date as of which the aggregate Certificate Principal Balance of the
Class A Certificates outstanding immediately prior thereto exceeds the sum of
(a) the aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following such Distribution Date, plus (b) the lesser of
(i) the Principal Distribution Amount for such Distribution Date and (ii) the
portion of the Available Distribution Amount for such Distribution Date that
will remain after the distributions of interest to be made on the Senior
Certificates on such Distribution Date have been so made.
"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 "regular interest" in REMIC III for
purposes of the REMIC Provisions.
"Class C Certificate": Any one of the Certificates with a
"Class C" designation on the face thereof, substantially in the form of Exhibit
A-4 attached hereto, and evidencing a "regular interest" 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-5 attached hereto, and evidencing a "regular interest" in REMIC III for
purposes of the REMIC Provisions.
<PAGE>
-10-
"Class E Certificate": Any one of the Certificates with a
"Class E" designation on the face thereof, substantially in the form of Exhibit
A-6 attached hereto, and evidencing a "regular interest" in REMIC III for
purposes of the REMIC Provisions.
"Class F Certificate": Any one of the Certificates with a
"Class F" designation on the face thereof, substantially in the form of Exhibit
A-7 attached hereto, and evidencing a "regular interest" in REMIC III for
purposes of the REMIC Provisions.
"Class G Certificate": Any one of the Certificates with a
"Class G" designation on the face thereof, substantially in the form of Exhibit
A-8 attached hereto, and evidencing a "regular interest" in REMIC III for
purposes of the REMIC Provisions.
"Class IO Certificate": Any one of the Certificates with a
"Class IO" designation on the face thereof, substantially in the form of Exhibit
A-9 attached hereto, and evidencing a "regular interest" in REMIC III for
purposes of the REMIC Provisions.
"Class Notional Amount": The aggregate hypothetical or
notional principal amount on which the Class IO Certificates accrue interest
from time to time, which, as of any date of determination, is equal to the
aggregate of the Component Notional Amounts for Component IO-U, Component IO-V,
Component IO-W, Component IO-X and Component IO-Y then outstanding (such
interest accruing at different Pass-Through Rates on such Component Notional
Amounts).
"Class Principal Balance": The aggregate principal amount of
any Class of Principal Balance Certificates outstanding as of any date of
determination. As of the Closing Date, the Class Principal Balance of each such
Class of Certificates shall equal the Initial Class Principal Balance thereof.
On each Distribution Date, the Class Principal Balance of each such Class of
Certificates shall be reduced by the amount of any distributions of principal
made thereon on such Distribution Date pursuant to Section 4.01(a) or 9.01, as
applicable, and if and to the extent necessary and appropriate, shall be further
reduced on such Distribution Date as provided in Section 4.04(a).
"Class R-I Certificate": Any one of the Certificates with a
"Class R-I" designation on the face thereof, substantially in the form of
Exhibit A-10 attached hereto, and evidencing the sole class of "residual
interests" in REMIC I for purposes of the REMIC Provisions.
"Class R-II Certificate": Any one of the Certificates with a
"Class R-II" designation on the face thereof, substantially in the form of
Exhibit A-11 attached hereto, and evidencing the sole class of "residual
interests" in REMIC II for purposes of the REMIC Provisions.
"Class R-II Distribution Amount": With respect to any
Distribution Date, the excess, if any, of the aggregate of all deemed
distributions in respect of the REMIC I Regular
<PAGE>
-11-
Interests on such Distribution Date pursuant to Section 4.01(i), over the
aggregate of all deemed distributions in respect of the REMIC II Regular
Interests on such Distribution Date pursuant to Section 4.01(h).
"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-12 attached hereto, and evidencing the sole class of "residual
interests" in REMIC III for purposes of the REMIC Provisions.
"Closing Date": February 29, 1996.
"Code": The Internal Revenue Code of 1986.
"Collection Period": With respect to any Distribution Date,
the period commencing immediately following the Determination Date for the
preceding Distribution Date (or, in the case of the initial Distribution Date,
commencing immediately following the Cut-off Date) and ending on and including
the related Determination Date.
"Collection Report": As defined in Section 4.02(b).
"Component": Any of the five components of the partial
beneficial ownership interest evidenced by the Class IO Certificates in the
Trust Fund, designated as "Component IO- U", "Component IO-V", "Component IO-W",
"Component IO-X" and "Component IO-Y", respectively, each such component
constituting a separate "regular interest" in REMIC III.
"Component Notional Amount": The hypothetical or notional
principal amount on which any of the Components of the Class IO Certificates
accrues interest equal to: (1) in the case of Component IO-U, the Uncertificated
Principal Balance of REMIC II Regular Interest U outstanding from time to time;
(2) in the case of Component IO-V, the Uncertificated Principal Balance of REMIC
II Regular Interest V outstanding from time to time; (3) in the case of
Component IO-W, the Uncertificated Principal Balance of REMIC II Regular
Interest W outstanding from time to time; (4) in the case of Component IO-X, the
Uncertificated Principal Balance of REMIC II Regular Interest X outstanding from
time to time; and (5) in the case of Component IO-Y, the Uncertificated
Principal Balance of REMIC II Regular Interest Y outstanding from time to time.
"Controlling Class": As of any date of determination, the
outstanding Class of Principal Balance Certificates, (a) which bears the latest
alphabetical Class designation and (b) the Class Principal Balance of which (net
of any Uncovered Portion thereof) is at least equal to 25% of the Initial Class
Principal Balance thereof; provided, however, that if no such Class of
Certificates has a Class Principal Balance (net of any Uncovered Portion
thereof) that is at least equal to 25% of its Initial Class Balance, the
Controlling Class shall be the outstanding Class of Principal Balance
Certificates bearing the latest alphabetical Class designation. For purposes of
this definition, the Class A-1 and Class A-2 Certificates shall be treated as a
single Class and,
<PAGE>
-12-
if appropriate under the terms of this definition, shall collectively constitute
the Controlling Class.
"Comparative Financial Status Report": A monthly report
substantially containing the content in Exhibit E-1 attached hereto, setting
forth, among other things, the occupancy, revenue, Net Operating Income and Debt
Service Coverage Ratio for each Mortgage Loan 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 calendar years; and (iii) the "base
year" (representing the original underwriting information used as of the Cut-off
Date).
"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 135 South LaSalle Street, Suite 200,
Chicago, Illinois 60674, Attention: Asset-Backed Securities Trust Services
Group, Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1996-C1.
"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 with respect to such Mortgage Loan or the related
Mortgaged Property becoming an REO Property).
"Cross-Collateralized Mortgage Loan": Any Mortgage Loan that
is cross- defaulted and cross-collateralized with any other Mortgage Loan.
"Custodian": A Person who is at any time appointed by the
Trustee pursuant to Section 8.11 as a document custodian for the Mortgage Files,
which Person shall not be the Depositor or an Affiliate of the Depositor.
"Cut-off Date": February 1, 1996.
"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 thereon on or before such
date, whether or not received.
"Debt Service Coverage Ratio": With respect to any Mortgage
Loan or REO Loan, as of any date of determination, without regard to the
cross-collateralization in the case of the Cross-Collateralized Mortgage Loans,
the ratio of (x) the Net Operating Income (before payment or, in the case of an
REO Loan, the deemed payment of any debt service on such Mortgage Loan or REO
Loan) generated by the related Mortgaged Property as set forth in the most
recent Comparative Financial Status Report setting forth such information, to
(y) twelve times the amount of the Monthly Payment (other than any Balloon
Payment) or, in the case of an REO Loan, the Assumed Scheduled Payment in effect
for such Mortgage Loan or REO Loan as of such date of determination; provided
that prior to the preparation of the initial Comparative
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Financial Status Report the Debt Service Coverage Ratio shall be as specified in
the Prospectus Supplement on Annex A thereto.
"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 30 days or more in respect of its Balloon
Payment, in any such case such delinquency to be determined without giving
effect to any grace period permitted by the related Mortgage or Mortgage Note
and without regard to any acceleration of payments under the related Mortgage
and Mortgage Note, or (ii) as to which the Special Servicer has, by written
notice to the related Mortgagor, accelerated the maturity of the indebtedness
evidenced by the related Mortgage Note.
"Definitive Certificate": As defined in Section 5.03(a).
"Delinquent Loan Status Report": A monthly report
substantially containing the content in Exhibit E-2 hereto, 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, were
delinquent 30-59 days, delinquent 60-89 days, delinquent 90 days or more,
current but specially serviced, or in foreclosure but not converted to REO
Property.
"Depositor": Salomon Brothers Mortgage Securities VII, Inc. or
its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named as contemplated by Section 5.03(c). The nominee of
the initial Depository for purposes of registering those Certificates that are
to be Book-Entry Certificates, is Cede & Co. The Depository shall at all times
be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Exchange Act.
"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date": With respect to any Distribution Date,
the 12th day of the month in which such Distribution Date occurs or, if such
12th day is not a Business Day, the Business Day immediately preceding such 12th
day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; provided, however, that the 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
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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.
"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 based upon an Opinion of Counsel that the holding of
an Ownership Interest in a Residual Certificate by such Person may cause the
Trust Fund or any Person having an Ownership Interest in any Class of
Certificates, other than such Person, to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a Residual Certificate to such Person. The terms
"United States", "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
"Distribution Account": As defined in Section 3.04(b).
"Distribution Date": The 20th day of any month or, if such
20th day is not a Business Day, the Business Day immediately following such 20th
day, commencing in March 1996.
"Distribution Date Statement": As defined in Section 4.02(a).
"Document Defect": As defined in Section 2.03(a).
"Due Date": With respect to any Mortgage Loan on or prior to
its Stated Maturity Date, the day of each month set forth in the related
Mortgage Note on which the Monthly Payment on such Mortgage Loan is scheduled to
be first due; with respect to any Mortgage Loan after its Stated Maturity Date,
the day of each month set forth in the related Mortgage Note on which the
Monthly Payment on such Mortgage Loan had been scheduled to be first due; and
with respect to any REO Loan, the day of each 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.
"Effective Pass-Through Rate": With respect to the Class IO
Certificates for any Distribution Date, the rate per annum equal to the weighted
average, expressed as a percentage and rounded to four decimal places, of the
respective Pass-Through Rates for the five
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Components of such Class of Certificates for such Distribution Date, weighted on
the basis of the respective Component Notional Amounts of such Components
outstanding immediately prior to such Distribution Date.
"Eligible Account": Any of (i) an account maintained with a
federal or state chartered depository institution or trust company, the
long-term deposit or unsecured debt obligations of which (or of such
institution's parent holding company) are rated in the highest applicable rating
category by each Rating Agency at any time funds are on deposit therein (or, if
deposits are to be held in such account for less than 30 days, then the
short-term unsecured debt obligations of such depository institution or trust
company are rated in the highest applicable rating category by each Rating
Agency), or (ii) a segregated trust account maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity, which, in the case of a state chartered depository institution or
trust company is subject to regulations regarding fiduciary funds on deposit
therein substantially similar to 12 CFR ss. 9.10(b), and which, in either case,
has or is part of a system with 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 to any Class of Certificates).
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
"Escrow Payment": Any payment received by the Master Servicer
or the Special Servicer for the account of any Mortgagor for application toward
the payment of real estate taxes, assessments, insurance premiums, ground rents
(if applicable) and similar items in respect of the related Mortgaged Property.
"Event of Default": Any of the events described in Section
7.01(a).
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Extension Adviser": As defined in Section 3.25(a).
"FDIC": Federal Deposit Insurance Corporation or any
successor.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor.
"Final Recovery Determination": A determination by the Special
Servicer with respect to any defaulted Mortgage Loan or REO Property (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 Holders of Residual Certificates or the Master Servicer pursuant
to or as
<PAGE>
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contemplated by 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 its good faith and reasonable judgment (acting in
accordance with the Servicing Standard), will be ultimately recoverable.
"Fiscal Agent": ABN AMRO BANK N.V., its successor in interest,
or any successor fiscal agent appointed as herein provided.
"Fitch": Fitch Investors Service, L.P. or its successor in
interest. If neither such rating agency nor any successor remains in existence,
"Fitch" shall be deemed to refer to such other nationally recognized statistical
rating agency or other comparable Person designated by the Depositor, notice of
which designation shall be given to the Trustee, the Master Servicer and the
Special Servicer, and specific ratings of Fitch herein referenced shall be
deemed to refer to the equivalent ratings of the party so designated.
"FNMA": Federal National Mortgage Association or any
successor.
"Hazardous Materials": Any dangerous, toxic or hazardous
pollutants, chemicals, wastes, or substances, including, without limitation,
those so identified pursuant to CERCLA or any other federal, state or local
environmental related laws and regulations now existing or hereafter enacted,
and specifically including, without limitation, asbestos and asbestos-containing
materials, polychlorinated biphenyls ("PCBs"), radon gas, petroleum and
petroleum products, urea formaldehyde and any substances classified as being "in
inventory", "usable work in process" or similar classification which would, if
classified as unusable, be included in the foregoing definition.
"Historical Loan Modification Report": A monthly report
substantially containing the content in Exhibit E-3 hereto, 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 Collection Period ending
on such Determination Date and (ii) since the Cut-off Date, showing the original
and revised terms thereof.
"Historical Loss Estimate Report": A monthly report
substantially containing the content in Exhibit E-4 hereto, 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 collected and Liquidation Expenses incurred both during the
Collection Period ending on such Determination Date and historically since the
Cut-off Date, and (ii) the amount of Realized Losses incurred during the
Collection Period ending on such Determination Date, set forth on a loan-by-loan
basis.
"Holder": A Certificateholder.
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"HUD-Approved Servicer": A servicer approved by the Secretary
of Housing and Urban Development pursuant to Section 207 of the National Housing
Act.
"Independent": When used with respect to any specified Person,
any such Person who (i) is in fact independent of the Depositor, the Master
Servicer, the Special Servicer, the Trustee, the Fiscal Agent and any and all
Affiliates thereof, (ii) does not have any direct financial interest in or any
material indirect financial interest in any of the Depositor, the Master
Servicer, the Special Servicer, the Trustee, the Fiscal Agent or any Affiliate
thereof, and (iii) is not connected with the Depositor, the Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent or any Affiliate thereof as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions; provided, however, that a Person shall not fail to
be Independent of the Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent or any Affiliate thereof merely because such Person is
the beneficial owner of 1% (or, in the case of a public company, 5%) or less of
any class of securities issued by the Depositor, the Master Servicer, the
Special Servicer,the Trustee, the Fiscal Agent or any Affiliate thereof, as the
case may be. Each party hereto shall be entitled to request and rely upon a
certificate of any other party hereto in determining whether any particular
Person is Independent of such other party.
"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, the Fiscal Agent 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 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 Master Servicer, the
Special Servicer, the Trustee, the Fiscal Agent or the Trust Fund, to the effect
that the taking of any action in respect of any REO Property by such Person,
subject to any conditions therein specified, that is otherwise herein
contemplated to be taken by an Independent Contractor will not cause such REO
Property to cease to qualify as "foreclosure property" within the meaning of
Section 860G(a)(8) of the Code, or cause any income realized in respect of such
REO Property to fail to qualify as Rents from Real Property.
"Initial Class Notional Amount": With respect to the Class IO
Certificates, the initial Class Notional Amount thereof as of the Closing Date
equal to $170,696,000.
"Initial Class Principal Balance": With respect to any Class
of Principal Balance Certificates, the initial Class Principal Balance thereof
as of the Closing Date, in each case as specified in the Preliminary Statement.
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"Insurance Policy": With respect to any Mortgage Loan or REO
Property, 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 or such REO Property, as the
case may be.
"Insurance Proceeds": Proceeds paid under any Insurance
Policy, to the extent such proceeds are not applied to the restoration of the
related Mortgaged Property or REO Property or released to the related Mortgagor,
in either case, in accordance with the Servicing Standard.
"Interest Distribution Amount": With respect to any Class of
REMIC III Regular Certificates, for any Distribution Date, the Accrued
Certificate Interest in respect of such Class of Certificates for such
Distribution Date, reduced (to not less than zero) by the product of (i) any Net
Aggregate Prepayment Interest Shortfall for such Distribution Date, multiplied
by (ii) a fraction, 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 an amount equal to one month's interest (calculated on
the basis of a 360-day year consisting of twelve 30-day months) at the Weighted
Average Unmodified Net Mortgage Rate for such Distribution Date accrued on the
aggregate Stated Principal Balance of the Mortgage Pool outstanding immediately
prior to such Distribution Date.
"Interested Person": The Depositor, the Master Servicer, the
Special Servicer, any Holder of a Certificate, or any Affiliate of any such
Person.
"Issue Price": With respect to each Class of Certificates, the
"issue price" as defined in the Code and Treasury regulations promulgated
thereunder.
"Investment Account": As defined in Section 3.06(a).
"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 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.
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"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 Servicer pursuant to Section 3.18(c) or by the
Depositor, the Holders of Residual Certificates or the Master Servicer pursuant
to or as contemplated by 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 Holders of Residual Certificates or
the Master Servicer pursuant to or as contemplated by Section 9.01.
"Liquidation Expenses": All customary, reasonable and
necessary costs and expenses payable on behalf of the Trust Fund in connection
with the liquidation of any Specially Serviced Mortgage Loan or REO Property
acquired in respect thereof (including, without limitation, legal fees and
expenses, committee or referee fees and, if applicable, brokerage commissions
and conveyance taxes).
"Liquidation 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, to the extent such amounts are not applied to the restoration of
such property or released to the related Mortgagor, in either case, in
accordance with the Servicing Standard; (ii) the liquidation of the real
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);
(v) other sale of a Defaulted Mortgage Loan pursuant to Section 3.18(d); (vi)
the repurchase of a Mortgage Loan by the Mortgage Loan Seller pursuant to the
Mortgage Loan Purchase Agreement; or (vii) the purchase of a Mortgage Loan or
REO Property by the Depositor, the Holders of Residual Certificates or the
Master Servicer pursuant to or as contemplated by Section 9.01.
"Loss Reimbursement Amount": With respect to any REMIC I
Regular Interest, for any Distribution Date subsequent to the initial
Distribution Date, an amount equal to (1)(a) the Loss Reimbursement Amount in
respect of such REMIC I Regular Interest for the immediately preceding
Distribution Date, plus (b) any reduction in the Uncertificated Principal
Balance of such REMIC I Regular Interest made on the immediately preceding
Distribution Date pursuant to Section 4.04(c) and deemed to be an allocation to
such REMIC I Regular Interest of Realized Losses and Additional Trust Fund
Expenses, minus (c) any deemed distributions made on such REMIC I Regular
Interest on the immediately preceding Distribution Date
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pursuant to Section 4.01(i) as reimbursement (with compounded interest thereon)
of Realized Losses and Additional Trust Fund Expenses that were previously
deemed allocated to such REMIC I Regular Interest, plus (2) one month's interest
(calculated on the basis of a 360-day year consisting of twelve 30-day months)
at the REMIC I Remittance Rate applicable to such REMIC I Regular Interest for
such Distribution Date accrued on the amount described in the immediately
preceding clause (1). With respect to any REMIC I Regular Interest for the
initial Distribution Date, zero.
"LPAS Report": As defined in Section 4.02(b).
"Majority Subordinate Certificateholder": As of any date of
determination, any single Holder of Certificates entitled to more than 50% of
the Voting Rights allocated to the Controlling Class.
"Master Servicer": Midland Loan Services, L.P., its successor
in interest, or any successor master servicer appointed as herein provided.
"Master Servicer Reports": Collectively, the Comparative
Financial Status Report, the Collection Report, the Delinquent Loan Status
Report, the Historical Loan Modification Report, the Historical Loss Estimate
Report, the REO Status Report, the NOI Adjustment Worksheet, the Operating
Statement Analysis and the LPAS Report, in each case, together with any and all
exhibits and schedules thereto and other accompanying documentation.
"Master Servicing Advances": (i) All customary, reasonable and
necessary "out of pocket" costs and expenses incurred by the Master 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 an REO
Property, including, but not limited to, the cost of (a) compliance with the
obligations of the Master Servicer set forth in Section 3.03(c), (b) the
preservation, insurance, restoration, protection and management of a Mortgaged
Property, (c) obtaining any Insurance Proceeds, (d) obtaining any Liquidation
Proceeds (provided that such Liquidation Proceeds were not paid by the Master
Servicer in connection with the purchase of one or more Mortgage Loans and/or
REO Properties, and provided further that, if such Liquidation Proceeds are of
the nature described in clause (vii) of the definition thereof, such costs and
expenses were specifically included in the amounts paid), (e) any modification,
waiver, amendment, workout or restructuring of a Mortgage Loan permitted on the
part of the Master Servicer by this Agreement, (f) any enforcement or judicial
proceedings with respect to a Mortgaged Property, including, without limitation,
foreclosures, and (g) the operation, management, maintenance and liquidation of
any REO Property. Notwithstanding anything to the contrary, "Master Servicing
Advances" shall not include allocable overhead of the Master Servicer, such as
costs for office space, office equipment, supplies and related expenses,
employee salaries and related expenses and similar internal costs and expenses.
"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).
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"Master Servicing Fee Rate": With respect to each Mortgage
Loan, 0.0725% per annum, which includes the Trustee's Fee Rate.
"Modification Fee": With respect to certain Corrected Mortgage
Loans, the fee payable to the Special Servicer pursuant to the second paragraph
of Section 3.11(c).
"Modified Mortgage Loan": Any Mortgage Loan as to which any
Servicing Transfer Event has occurred and a material payment term thereof has
been modified by the Special Servicer pursuant to Section 3.20. For purposes of
this definition, a material payment term of any Mortgage Loan is any term that:
(A) affects the amount or timing of any payment of principal,
interest or other amount;
(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 Mortgage 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 good faith and reasonable 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, the
scheduled monthly payment of principal and interest (exclusive of Penalty
Interest) on such Mortgage Loan, including the 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": With respect to any Mortgage Loan, the mortgage,
deed of trust, deed to secure debt or similar document 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 Mortgage Note, endorsed (without
recourse) to the Trustee in the following form: "Pay
to the order of LaSalle National Bank, as trustee for
the registered holders of Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1996-C1, without
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recourse", together with all prior endorsements
showing a complete chain of endorsement from the
original payee of the Mortgage Note to the Person
endorsing the Mortgage Note to the Trustee (or, in
those cases where the original Mortgage Note has been
lost or misplaced, a photocopy of the original
Mortgage Note, together with a lost note affidavit
and indemnity in the form of Exhibit M hereto, from
the Mortgage Loan Seller);
(ii) the original Mortgage (or a certified copy thereof)
with evidence of recording thereon;
(iii) an original assignment of the Mortgage, in recordable
form, in favor of the Trustee in the following form:
"LaSalle National Bank, as trustee for the registered
holders of Salomon Brothers Mortgage Securities VII,
Inc., Mortgage Pass-Through Certificates, Series
1996-C1";
(iv) the original (or a certified copy) of each prior
assignment of the Mortgage, with evidence of
recording thereon, showing a complete chain of
assignment from the original mortgagee or beneficiary
to the Person assigning the Mortgage to the Trustee;
(v) if separate from the Mortgage, the original
Assignment of Leases (or a certified copy thereof),
with evidence of recording thereon;
(vi) if the Assignment of Leases is separate from the
Mortgage, an original assignment thereof, in
recordable form, in favor of the Trustee in the
following form: "LaSalle National Bank, as trustee
for the registered holders of Salomon Brothers
Mortgage Securities VII, Inc., Mortgage
Pass-Through Certificates, Series 1996-C1";
(vii) if the Assignments of Leases is separate from the
Mortgage, the original (or a certified copy) of each
prior assignment thereof, with evidence of recording
thereon, showing a complete chain of assignment from
the original mortgagee or beneficiary to the Person
assigning the Assignment of Leases to the Trustee;
(viii) if separate from the Mortgage, the original Security
Agreement (or a certified copy thereof);
(ix) if the Security Agreement is separate from the
Mortgage, an original assignment thereof, in favor of
the Trustee in the following form: "LaSalle National
Bank, as trustee for the registered holders of
Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1996-C1";
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(x) if the Security Agreement is separate from the
Mortgage, the original (or a certified copy) of each
prior assignment thereof showing a complete chain of
assignment from the original secured party to the
Person assigning the Security Agreement to the
Trustee;
(xi) the original (or a certified copy) of each
assumption, modification, written assurance or
substitution agreement, if any (including, without
limitation, any rider, addendum or amendment or any
renewal, substitution or replacement to any Mortgage
Note), with evidence of recording thereon where
appropriate;
(xii) the original (or a copy) of the lender's title
insurance policy, together with all endorsements or
riders that were issued with or subsequent to the
issuance of such policy, insuring the priority of the
Mortgage as a first lien on the Mortgagor's fee or
leasehold interest in the Mortgaged Property;
(xiii) the original of any guaranty of the obligations of
the Mortgagor, together with the original (or a copy)
of each prior assignment thereof showing a complete
chain of assignment from the original beneficiary to
the Person assigning such guaranty to the Trustee,
and an original assignment of such guaranty, in favor
of the Trustee in the following form: "LaSalle
National Bank, as trustee for the registered holders
of Salomon Brothers Mortgage Securities VII, Inc.,
Mortgage Pass-Through Certificates, Series 1996- C1";
(xiv) all Uniform Commercial Code financing statements and
continuation statements that have been filed in order
to perfect (and maintain the perfection of) the
security interest held by the originator of the
Mortgage Loan (and each assignee prior to the
Trustee) in and to the personalty of the Mortgagor at
the Mortgaged Property (in each case with evidence of
filing thereon) and to transfer such security
interest to the Trustee; and
(xv) the original (or a certified copy) of any power of
attorney (with evidence of recording thereon where
appropriate) granted by the Mortgagor if the Mortgage
Note, Mortgage or any other document or instrument
referred to above was not signed by, but rather on
behalf of, such Mortgagor;
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
(xi) of this definition, shall be deemed to include only such documents to the
extent the Trustee or Custodian has actual knowledge of their existence.
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"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,
Assignment of Leases (if separate from the Mortgage) and other security
documents contained in the related Mortgage File.
"Mortgage Loan Purchase Agreement": that certain Mortgage Loan
Purchase Agreement, dated as of February 27, 1996, between the Depositor and the
Mortgage Loan Seller 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. Such list shall set forth the following information with
respect to each Mortgage Loan:
(i) the Mortgage Loan number;
(ii) the street address (including city, state and zip code) of the
related Mortgaged Property;
(iii) the Cut-off Date Balance;
(iv) the amount of the Monthly Payment due on the first Due Date
following the Closing Date;
(v) the Mortgage Rate as of the Cut-off Date; and
(vi) the (A) remaining term to stated maturity and (B) the Stated
Maturity Date.
"Mortgage Loan Seller": Salomon Brothers Realty Corp. or its
successor in interest.
"Mortgage Note": The original executed note or other evidence
of the indebt- edness 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 (i) any Mortgage Loan on or
prior to its Stated Maturity Date, 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;
(ii) any Mortgage Loan after its Stated Maturity Date, the annualized rate
described in clause (i) above determined without regard to the passage of such
Stated Maturity Date but giving effect to any modification thereof as
contemplated by Section
<PAGE>
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3.20; and (iii) any REO Loan, the annualized rate described in clause (i) or
(ii), as applicable, above determined as if the predecessor Mortgage Loan had
remained outstanding.
"Mortgaged Property": The 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 Aggregate Prepayment Interest Shortfall": With respect to
any Distribution Date, the amount, if any, by which (a) the aggregate of all
Prepayment Interest Shortfalls incurred in connection with the receipt of
Principal Prepayments on the Mortgage Loans during the related Collection
Period, exceeds (b) the aggregate amount deposited by the Master Servicer in the
Distribution Account for such Distribution Date pursuant to Section 3.19(a) in
connection with such Prepayment Interest Shortfalls.
"Net Investment Earnings": With respect to the Certificate
Account, the Distribution 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 Certificate
Account, the Distribution 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 related
Mortgage Rate minus the Master Servicing Fee Rate.
"Net Operating Income": With respect to any Mortgaged Property
or REO Property, for any determination thereof, an amount calculated generally
in the same manner as was "Assumed Net Cash Flow" in the Prospectus Supplement.
"NOI Adjustment Worksheet": A report relating to the annual
operating statements, if any, received with respect to any Mortgaged Property or
REO Property presenting computations made generally in accordance with the
methodology described in the Prospectus Supplement under the heading
"DESCRIPTION OF THE MORTGAGE POOL--Additional Mortgage Loan Information" to
"normalize" the full year net operating income and debt service coverage numbers
used by the Master Servicer with respect to such Mortgaged Property or REO
Property, as the case may be, in the other Master Servicer Reports.
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"Nonrecoverable Advance": Any Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance.
"Nonrecoverable P&I Advance": Any P&I Advance previously made
or proposed to be made in respect of any Mortgage Loan or any REO Loan that, as
determined by the Master Servicer or, if required hereunder to make such P&I
Advance, the Trustee or the Fiscal Agent, as the case may be, in its reasonable
and good faith judgment, will not (or, in the case of a proposed P&I Advance,
would 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 that, as determined by the Master Servicer or the Special Servicer or,
if required hereunder to make such Servicing Advance, the Trustee or the Fiscal
Agent, as the case may be, will not (or, in the case of a proposed Servicing
Advance, would 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": Unless and until registered
under the Securities Act, any Class IO, Class E, Class F, Class G, Class R-I,
Class R-II or Class R-III Certificate.
"Non-United States Person": Any person other than a United
States Person.
"OA Extension": An extension of the maturity date of a
Mortgage Loan, which extension, but for the direction of the Operating Adviser,
the Special Servicer would not have agreed to pursuant to Section 3.20.
"OA Extension Period": With respect to any Mortgage Loan as to
which there has been an OA Extension, the three-year period from and after the
date of the first such OA Extension with respect to such Mortgage Loan.
"Officer's Certificate": A certificate signed by a Servicing
Officer of the Master Servicer or the Special Servicer or a Responsible Officer
of the Trustee or the Fiscal Agent, as the case may be.
"Operating Adviser": As defined in Section 3.25(a).
"Operating Statement Analysis": An annual report with respect
to each Mortgaged Property and REO Property substantially containing the content
set forth in Exhibit E-6 as of the end of the most recently ended calendar year
preceding the preparation of such report.
<PAGE>
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"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 the Master
Servicer, as the case may be.
"OTS": The Office of Thrift Supervision or any successor
thereto.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate as the Holder thereof and any other
interest therein, whether direct or indirect, legal or beneficial, as owner or
as pledgee.
"Pass-Through Rate": With respect to:
(i) Component IO-U, for any Distribution Date up to and
including the Distribution Date in January 2006, a
fixed rate equal to 0.5344% per annum, and for any
Distribution Date after the Distribution Date in
January 2006, 0% per annum;
(ii) Component IO-V, for any Distribution Date up to and
including the Distribution Date in January 2006, the
excess, if any, of the REMIC II Remittance Rate for
REMIC II Regular Interest V for such Distribution
Date, over 6.7803% per annum, and for any
Distribution Date after the Distribution Date in
January 2006, 0% per annum;
(iii) Component IO-W, for any Distribution Date up to and
including the Distribution Date in January 2006, the
excess, if any, of the REMIC II Remittance Rate for
REMIC II Regular Interest W for such Distribution
Date, over 7.1267% per annum, and for any
Distribution Date after the Distribution Date in
January 2006, 0% per annum;
(iv) Component IO-X, for any Distribution Date up to and
including the Distribution Date in January 2006, the
excess, if any, of the REMIC II Remittance Rate for
REMIC II Regular Interest X for such Distribution
Date, over 7.3011% per annum, and for any
Distribution Date after the Distribution Date in
January 2006, 0% per annum;
(v) Component IO-Y, for any Distribution Date up to and
including the Distribution Date in January 2006, the
excess, if any, of the REMIC II Remittance Rate for
REMIC II Regular Interest Y for such Distribution
Date, over 7.7490% per annum, and for any
Distribution Date after the Distribution Date in
January 2006, 0% per annum;
(vi) the Class A-1 Certificates, for any Distribution
Date, a fixed rate equal to 6.4690% per annum;
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(vii) the Class A-2 Certificates, for any Distribution
Date, a fixed rate equal to 6.7803% per annum;
(viii) the Class B Certificates, for any Distribution Date,
a fixed rate equal to 7.1267% per annum;
(ix) the Class C Certificates, for any Distribution Date,
a fixed rate equal to 7.3011% per annum;
(x) the Class D Certificates, for any Distribution Date,
a fixed rate equal to 7.7490% per annum;
(xi) the Class E Certificates, for any Distribution Date,
the Weighted Average REMIC II Remittance Rate for
such Distribution Date;
(xii) the Class F Certificates, for any Distribution Date,
the Weighted Average REMIC II Remittance Rate for
such Distribution Date; and
(xiii) the Class G Certificates, for any Distribution Date,
the Weighted Average REMIC II Remittance Rate for
such Distribution Date.
"Penalty Interest": With respect to any Mortgage Loan (or
successor REO Loan), any amounts collected thereon, other than late payment
charges, late fees, NSF check charges and other similar charges or Prepayment
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.
"Percentage Interest": With respect to any REMIC III Regular
Certificate, the portion of the relevant Class evidenced by such Certificate,
expressed as a percentage, the numerator of which is the Certificate Principal
Balance or Certificate Notional Amount, as the case may be, of such Certificate
as of the Closing Date, as specified on the face thereof, and the denominator of
which is the Initial Class Principal Balance or Initial Class Notional Amount,
as the case may be, of the relevant Class. With respect to a Residual
Certificate, the percentage interest in distributions to be made with respect to
the relevant Class, as stated on the face of such Certificate.
"Permitted Investments": Any one or more of the following
obligations or securities:
(i) direct obligations of, or obligations fully
guaranteed as to timely payment of principal and
interest by, the United States or any agency or
instrumentality thereof, provided such obligations
are backed by the full faith and credit of the United
States;
<PAGE>
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(ii) repurchase obligations with respect to any security
described in clause (i) above, provided that the
long-term unsecured debt obligations, or the
short-term deposit or debt obligations, of the party
agreeing to repurchase such obligations are 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 the qualification,
downgrading or withdrawal of the rating then assigned
thereby to any Class of Certificates, as evidenced in
writing by such Rating Agency);
(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, provided that such items
are rated in the highest short term rating category
of each Rating Agency (or, in the case of either
Rating Agency, such lower rating as will not result
in the qualification, downgrading or withdrawal of
the rating then assigned thereby to any Class of
Certificates, as evidenced in writing by the Rating
Agency);
(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
Rating Agency;
(v) units of money market funds rated in the highest
short term rating category of each Rating Agency and
that seek 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 by each Rating Agency in writing to the
Master Servicer, the Special Servicer and the
Trustee;
provided that (a) an investment enumerated above shall be a Permitted Investment
notwithstanding that Fitch has not assigned any rating thereto (provided, that
one other nationally recognized statistical rating organization besides Standard
& Poor's has assigned the related applicable rating thereto), and (b) no
investment described hereunder shall evidence either the right to receive (i)
only interest with respect to such investment or (ii) a yield to maturity (at
the time of purchase) greater than 120% of the yield to maturity at par of the
underlying obligations; and provided, further, 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.
<PAGE>
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"Permitted Transferee ": Any Transferee of a Residual
Certificate other than a Disqualified Organization or Non-United States Person.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Phase I Environmental Assessment": A "Phase I assessment" as
described in and meeting the criteria of Chapter 5 of the FNMA Multifamily
Guide, as amended from time to time.
"P&I Advance": As to any Mortgage Loan or REO Loan, any
advance made by or on behalf of the Master Servicer, the Trustee and/or the
Fiscal Agent pursuant to Section 4.03 for distribution to Certificateholders.
"P&I Advance Date": The Business Day immediately prior to each
Distribution Date.
"Plan": As defined in Section 5.02(c).
"Plurality Residual Certificateholder": As to any taxable year
of REMIC I, REMIC II or REMIC III, the Holder of Certificates evidencing the
largest Percentage Interest in the Class of Residual Certificates constituting
the sole class of "residual interests" in such REMIC.
"Prepayment Assumption": For purposes of determining the
accrual of original issue discount, market discount and premium, if any, on the
Certificates for federal income tax purposes, 0% CPR (within the meaning of the
Prospectus).
"Prepayment Interest Excess": With respect to any Mortgage
Loan that was subject to a Principal Prepayment in full or in part during any
Collection Period (other than a principal prepayment made in connection with the
liquidation of a defaulted Mortgage Loan or any REO Property acquired in respect
thereof), which Principal Prepayment was applied to such Mortgage Loan following
such Mortgage Loan's Due Date in such Collection Period, the amount of interest
(net of related Master Servicing Fees and exclusive of Prepayment Premiums)
accrued on the amount of such Principal Prepayment during the period from and
after such Due Date, to the extent collected.
"Prepayment Interest Shortfall": With respect to any Mortgage
Loan that was subject to a Principal Prepayment in full or in part during any
Collection Period (other than a principal prepayment made in connection with the
liquidation of a defaulted Mortgage Loan or any REO Property acquired in respect
thereof), which Principal Prepayment was applied to such Mortgage Loan prior to
such Mortgage Loan's Due Date in such Collection Period, the amount of interest,
to the extent not collected from the related Mortgagor, without regard to any
<PAGE>
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Prepayment Premiums that were so collected, that would have accrued at a rate
per annum equal to the Net Mortgage Rate for such Mortgage Loan 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
day immediately preceding such Due Date, inclusive.
"Prepayment Premium": Any premium, penalty or fee paid or
payable, as the context requires, by a Mortgagor in connection with a Principal
Prepayment.
"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 Master Servicer and the Special Servicer in writing of its
selection.
"Principal Balance Certificate": Any Class A-1, Class A-2,
Class B, Class C, Class D, Class E, Class F or Class G Certificate.
"Principal Distribution Amount": With respect to any
Distribution Date, the aggregate of the following:
(a) the aggregate of the principal portions of all
Scheduled Payments (other than Balloon Payments) and any
Assumed Scheduled Payments due or deemed due 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 (including
a Balloon Payment, but exclusive of any amounts described in
clause (d) below) made by or on behalf of the related
Mortgagor during the related Collection Period, net of any
portion of such payment that represents a recovery of
principal amounts that have previously been advanced;
(d) the aggregate of all Liquidation Proceeds and
Insurance Proceeds that were received on the Mortgage Loans
during the related Collection Period and that were identified
and applied by the Master Servicer as recoveries of principal
of such Mortgage Loans, in each case net of any portion of
such proceeds that represents a recovery of principal amounts
that have previously been advanced;
<PAGE>
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(e) with respect to any REO Properties, the aggregate
of the principal portions of all Assumed Scheduled Payments
deemed due in respect of the related REO Loans for their
respective Due Dates occurring during the related Collection
Period; and
(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 as recoveries of principal of
the related REO Loans, in each case net of any portion of such
proceeds and/or revenues that represents a recovery of
principal amounts that have previously been advanced;
provided that, if any amount collected in respect of any Mortgage Loan or REO
Property and constituting part of the Principal Distribution Amount for any
Distribution Date in accordance with the foregoing is not distributed on such
Distribution Date, but is distributed on any subsequent Distribution Date, then
solely for purposes of calculating the Principal Distribution Amount for such
subsequent Distribution Date, such amount will be deemed to have been received
during the Collection Period for such subsequent Distribution Date.
"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 representing scheduled
interest due on any date or dates in any month or months subsequent to the month
of prepayment.
"Prospectus": The prospectus dated February 14, 1996, as
supplemented by the Prospectus Supplement, relating to the Registered
Certificates.
"Prospectus Supplement": The prospectus supplement dated
February 27, 1996 relating to the Registered Certificates.
"PTCE": A Prohibited Transaction Class Exemption issued by the
U.S. Department of Labor.
"Purchase Price": With respect to any Mortgage Loan to be
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 Holders of Residual Certificates or the Master
Servicer pursuant to or as contemplated by Section 9.01 or to be otherwise sold
pursuant to Section 3.18(d), a cash price equal to the outstanding principal
balance of such Mortgage Loan as of the date of purchase, together with (a) all
accrued and unpaid interest on such Mortgage Loan at the related Mortgage Rate
in effect to but not including the Due Date in the Collection Period of
purchase, (b) all related and unreimbursed Servicing Advances, (c) solely in the
case of any purchase by the Mortgage Loan Seller pursuant to the Mortgage Loan
<PAGE>
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Purchase Agreement, all accrued and unpaid interest on any related Advances in
accordance with Section 3.29(d) and/or Section 4.03(d), and (d) any fees and
expenses incurred by the Trustee, the Master Servicer (unless it is the party
effecting the purchase) or the Special Servicer (unless it is the party
effecting the purchase) in connection with such purchase.
"Qualified Institutional Buyer": A "qualified institutional
buyer" within the meaning of Rule 144A under the Securities Act.
"Qualified Insurer": With respect to each Insurance Policy, an
insurance company or security or bonding company qualified to write the related
Insurance Policy in the relevant jurisdiction and that has a claims paying
ability rated at least "A:IX" by A.M. Best's Key Rating Guide and at least "A"
by each of Standard & Poor's and, if rated thereby, Fitch (or such other entity
as has been confirmed in writing by each Rating Agency will not result in a
downgrade, qualification or withdrawal of the then current rating assigned by it
to any Class of Certificates); and with respect to errors and omissions
insurance policies or fidelity bonds, an insurance company or security or
bonding company qualified to write the related errors and omissions insurance
policy or fidelity bond in the relevant jurisdiction and that has a claims
paying ability rated at least "A:VII" by A.M. Best's Key Rating Guide and at
least "A" by each of Standard & Poor's and, if rated thereby, Fitch (or such
other entity as has been confirmed in writing by each Rating Agency will not
result in a downgrade, qualification or withdrawal of the then current rating
assigned by it to any Class of Certificates); provided that, notwithstanding the
absence of any written confirmation of such, Gulf Insurance Company (solely in
the case of errors and omissions insurance policies and fidelity bonds) and
CIGNA Insurance (solely in the case of hazard insurance policies force placed by
the Master Servicer or Special Servicer) shall each be acceptable to Fitch as a
"Qualified Insurer" with respect to the indicated insurance until such time as
such Rating Agency gives notice to the Trustee, the Master Servicer and the
Special Servicer that the continued maintenance of such insurance with either or
both of such carriers will result in a downgrade, qualification or withdrawal of
the then current rating assigned by such Rating Agency to any Class of
Certificates.
"Rated Final Distribution Date": With respect to the Class
A-1, Class A-2, Class B, Class C, Class D, Class E and Class F Certificates, the
Distribution Date in January 2028.
"Rating Agency": Each of Fitch and Standard & Poor's.
"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 Due Date in the Collection Period in
which the Final Recovery Determination was made, plus
<PAGE>
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(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 and
any related Nonrecoverable Servicing Advances reimbursed prior to such
Collection Period pursuant to Section 3.05(a)(vi), 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 accrued but unpaid interest payable thereunder was cancelled
in connection with a bankruptcy or similar proceeding involving the related
Mortgagor or a modification, waiver or amendment of such Mortgage Loan granted
or agreed to by the Special Servicer pursuant to Section 3.20, the amount of
such principal or interest so cancelled; and (3) 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 or deemed due thereon (each such Realized Loss to be deemed to have been
incurred on the Due Date for each affected Monthly Payment).
"Record Date": With respect to any Distribution Date, the last
Business Day of the month immediately preceding the month in which such
Distribution Date occurs.
"Registered Certificate": Any Class A-1, Class A-2, Class B,
Class C or Class D Certificate.
"Reimbursement Rate": The rate per annum applicable to the
accrual of interest on Servicing Advances in accordance with Section 3.29(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 I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
consisting of: (i) the Mortgage Loans as from time to time are subject to this
Agreement and all payments under and proceeds of such Mortgage Loans received
after the Closing Date, together with all documents included in the related
Mortgage Files and any 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 Certificate Account, the Distribution
Account and, if established, the REO Account; and (iv) the rights of the
Depositor under the Mortgage Loan Purchase Agreement (other than under Sections
6, 7, 8, 9, 11 and 16 thereof).
"REMIC I Regular Interest": Any of the 43 separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I, each of which shall correspond to
a separate Mortgage Loan. Each REMIC I Regular
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Interest shall accrue interest at the related REMIC I 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. The designation for each REMIC I Regular
Interest is the loan number for the related Mortgage Loan.
"REMIC I Remittance Rate": With respect to any REMIC I Regular
Interest for any Distribution Date, the Net Mortgage Rate in effect for the
related Mortgage Loan as of the Cut-off Date.
"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 six separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Principal Balance as set forth in the Preliminary Statement
hereto. The designations for the respective REMIC II Regular Interests are set
forth in the Preliminary Statement hereto.
"REMIC II Remittance Rate": With respect to any REMIC II
Regular Interest for any Distribution Date, the Weighted Average 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 B,
Class C, Class D, Class E, Class F, Class G, Class IO or Class R-III
Certificate.
"REMIC III Regular Certificate": Any REMIC III Certificate
other than a Class R-III Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 of the Code, and related
provisions, and proposed, temporary and final Treasury regulations and any
published rulings, notices and announcements promulgated thereunder, as the
foregoing may be in effect from time to time.
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"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": As defined in Section 3.16(b).
"REO Acquisition": The acquisition of any REO Property
pursuant to Section 3.09.
"REO Disposition": The sale or other disposition of any REO
Property pursuant to Section 3.18(d).
"REO Extension": As defined in Section 3.16(a).
"REO Loan": The mortgage loan deemed for purposes hereof to be
outstanding with respect to each REO Property. Each REO Loan shall be deemed to
provide for monthly payments of principal and/or interest equal to its Assumed
Scheduled Payment and otherwise to have the same terms and conditions as its
predecessor Mortgage Loan (such terms and conditions to be applied without
regard to the default on such predecessor Mortgage Loan). Each REO Loan shall be
deemed to have an initial unpaid principal balance and Stated Principal Balance
equal to the unpaid principal balance and Stated Principal Balance,
respectively, of its predecessor Mortgage Loan as of the date of the related REO
Acquisition. All Scheduled Payments (other than a Balloon Payment), Assumed
Scheduled Payments (in the case of a 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 (exclusive of amounts to be
applied to the payment of the costs of operating, managing, maintaining or
disposing of the related REO Property) shall be treated: FIRST, as a recovery of
related unreimbursed Servicing Advances; SECOND, 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; THIRD, as a recovery
of principal of such REO Loan to the extent of its entire unpaid principal
balance; and FOURTH, 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 3.29(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.
"REO Property": A Mortgaged Property acquired by the Special
Servicer on behalf and in the name of the Trustee for the benefit of the
Certificateholders through
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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 monthly report substantially containing
the content in Exhibit E-5 hereto, setting forth, among other things, with
respect to each REO Property that was included in the Trust Fund as of the close
of business on the Determination Date immediately preceding the preparation of
such report, (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 Collection
Period ending on such Determination Date and (iii) the value of the REO Property
based on the most recent Appraisal.
"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 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 reserves for repairs and/or capital improvements
to the related Mortgaged Property.
"Residual Certificate": A Class R-I, Class R-II or Class R-III
Certificate.
"Resolution Fee": With respect to certain Specially Serviced
Mortgage Loans and/or REO Properties liquidated by the Special Servicer, the fee
payable to the Special Servicer pursuant to the second paragraph of Section
3.11(c)
"Responsible Officer": When used with respect to the initial
Trustee, any Vice President, Assistant Vice President, corporate trust officer
or assistant corporate trust officer in the Asset-Backed Securities Trust
Services Group of LaSalle National Bank, and with respect to any successor
Trustee, any officer or assistant officer in the Corporate Trust Department of
the Trustee, or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers to
whom a particular matter is referred by the Trustee because of such officer's
knowledge of and familiarity with the particular subject.
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When used with respect to the Fiscal Agent or any Certificate Registrar (other
than the Trustee), any officer or assistant officer thereof.
"Rule 144A": Rule 144A under the Securities Act.
"Salomon Brothers": Salomon Brothers Inc or its successor in
interest.
"Scheduled Payment": With respect to any Mortgage Loan (other
than an REO Loan), for any Due Date following the Cut-off Date as of which it is
outstanding, the Monthly Payment 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 and that such Mortgage Loan is not otherwise in
default.
"Securities Act": The Securities Act of 1933, as amended.
"Security Agreement": With respect to any Mortgage Loan, any
security agreement or equivalent document or instrument, whether contained in
the related Mortgage or executed separately, creating in favor of the holder of
such Mortgage a security interest in the personal property constituting security
for repayment of such Mortgage Loan.
"Senior Certificate": Any Class A-1, Class A-2 or Class IO
Certificate.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.03(a).
"Servicing Advances": All Master Servicing Advances and all
Special Servicing Advances, collectively.
"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.
"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
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by the Master Servicer or the Special Servicer, as applicable, from time to
time, without the consent of any other party.
"Servicing Standard": The same care, skill, prudence and
diligence with which prudent institutional commercial mortgage loan servicers
service mortgage loans comparable to the Mortgage Loans for third parties in the
jurisdictions where the related Mortgaged Properties are located (but, in any
event, with no less care, skill, prudence and diligence than that with which the
Master Servicer or the Special Servicer, as the case may be, services mortgage
loans owned by it that are comparable to the Mortgage Loans), and with a view to
the timely collection of all scheduled payments of principal and interest under
the Mortgage Loans or, if a Mortgage Loan comes into and continues in default
and no satisfactory arrangements can be made for the collection of the
delinquent payments, the maximization of the recovery on such Mortgage Loan to
Certificateholders on a present value basis (the relevant discounting of
anticipated collections that will be distributable to Certificateholders to be
performed at the related Mortgage Rate), 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; (ii) the
ownership of any Certificate by the Master Servicer or the Special Servicer, as
the case may be, or by any Affiliate thereof; (iii) the Master Servicer's
obligation to make P&I Advances and Master Servicing Advances; (iv) the Special
Servicer's obligation to make Special 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 (g) of the
definition of "Specially Serviced Mortgage Loan".
"Single Certificate": For purposes of Section 4.02, a
hypothetical Certificate of any Class of REMIC III Regular Certificates
evidencing a $1,000 denomination or, in the case of a Class IO Certificate, a
10% Percentage Interest in the relevant Class.
"Special Servicer": Midland Loan Services, L.P., its successor
in interest, or any successor special servicer appointed as herein provided.
"Special Servicing Advances": All customary, reasonable and
necessary "out of pocket" costs and expenses incurred by the Special Servicer in
connection with the servicing of a Specially Serviced Mortgage Loan or the
administration of an REO Property, including, but not limited to, the cost of
(a) compliance with the obligations of the Special Servicer set forth in Section
3.03(c), (b) the preservation, insurance, restoration, protection and management
of a Mortgaged Property, (c) obtaining any Insurance Proceeds, (d) obtaining any
Liquidation Proceeds (provided that such Liquidation Proceeds were not paid by
the Special Servicer in connection with the purchase of one or more Mortgage
Loans and/or REO Properties, and provided further that, if such Liquidation
Proceeds are of the nature described in clause (vii) of the definition thereof,
such costs and expenses were specifically included in the amounts paid),
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(e) any modification, waiver, amendment, workout or restructuring of a Mortgage
Loan permitted on the part of the Special Servicer under this Agreement, (f) any
enforcement or judicial proceedings with respect to a Mortgaged Property,
including, without limitation, foreclosures and (g) the operation, management,
maintenance and liquidation of any REO Property. Notwithstanding anything to the
contrary, "Special Servicing Advances" shall not include allocable overhead of
the Special Servicer, which shall include costs for office space, office
equipment, supplies and related expenses, employee salaries and related expenses
and similar internal costs and expenses.
"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, 0.350% 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, which failure continues unremedied
for 60 or more days (or 120 or more days if, in the
case of a Balloon Payment, the Master Servicer
receives within 60 days after scheduled maturity
written evidence from an institutional lender of such
lender's commitment to refinance such Mortgage Loan,
such refinancing is to occur within 120 days after
scheduled maturity, and the related Mortgagor
continues 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); or
(b) the Master Servicer shall have determined, in its
good faith and reasonable judgment, based on
communications with the related Mortgagor, that a
default in making a Monthly Payment is likely to
occur within 30 days and is likely to remain
unremedied for at least 60 days (unless, in the case
of a Balloon Payment, (i) the Master Servicer has
received or, within 60 days after scheduled maturity,
reasonably expects to receive written evidence from
an institutional lender of such lender's commitment
to refinance such Mortgage Loan within 120 days after
scheduled maturity and (ii) the Master Servicer
reasonably expects the related Mortgagor to 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); or
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(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 (as determined by the Master
Servicer, in its good faith and reasonable judgment)
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 for
the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of
its affairs, shall have been entered against the
related Mortgagor; or
(e) the related Mortgagor shall consent to the
appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar
proceedings of or relating to 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 occurs with respect to such Mortgage
Loan, or when the related Mortgaged Property becomes an REO Property, or, 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:
(w) with respect to the circumstances described in clause
(a) 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
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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, when such
circumstances cease to exist in the good faith and
reasonable judgment of the Special Servicer;
(y) with respect to the circumstances described in clause
(c) above, when such default is cured; and
(z) with respect to the circumstances described in clause
(g) above, when such proceedings are terminated.
"Standard & Poor's": Standard & Poor's Ratings Services, A
Division of the McGraw-Hill Companies, Inc. or its successor in interest. If
neither such rating agency nor any successor remains in existence, "Standard &
Poor's" shall be deemed to refer to such other nationally recognized statistical
rating agency or other comparable Person designated by the Depositor, notice of
which designation shall be given to the Trustee, the Master Servicer and the
Special Servicer, and specific ratings of Standard & Poor's herein referenced
shall be deemed to refer to the equivalent ratings of the party so designated.
"Startup Day": With respect to each of REMIC I, REMIC II and
REMIC III, the day designated as such in Section 10.01(c).
"Stated Maturity Date": With respect to any Mortgage Loan, the
Due Date specified in the Mortgage Note (as in effect on the Closing Date) on
which the last payment of principal is due and payable under the terms of the
Mortgage Note (as in effect on the Closing Date), without regard to any change
in or modification of such terms in connection with a bankruptcy or similar
proceeding involving the related Mortgagor or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Special Servicer
pursuant to Section 3.20.
"Stated Principal Balance": With respect to any Mortgage Loan
(and any successor REO Loan), the Cut-off Date Balance of such Mortgage Loan, as
reduced on each Distribution Date (to not less than zero) by (i) all payments
(or advances in lieu thereof) and other collections of principal of such
Mortgage Loan (or successor REO Loan) that are (or, if they had not been applied
to cover any Additional Trust Fund 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.
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"Subordinated Certificate": Any Class B, Class C, Class D,
Class E, Class F, Class G, 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.
"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 applicable Plurality Residual Certificateholder.
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
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, together with any and all
other information, reports or returns that may be required to be furnished to
the Certificateholders or filed with the Internal Revenue Service under any
applicable provisions of federal tax law or any other governmental taxing
authority under applicable state or local tax laws.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer any
Ownership Interest in a Certificate.
"Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II and REMIC III.
"Trustee": LaSalle National Bank, its successor in interest,
or any successor trustee appointed as herein provided.
"Trustee's Fee": With respect to each Mortgage Loan and each
REO Loan, the fee designated as such and payable to the Trustee pursuant to
Section 8.05(a). The Master Servicer shall remit the Trustee's Fee with respect
to each Mortgage Loan and each REO Loan
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to the Trustee out of its aggregate Master Servicing Fees on each Distribution
Date pursuant to Section 8.05(a).
"Trustee's Fee Rate": 0.015% per annum.
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
"UCC Financing Statement": A financing statement executed and
filed pursuant to the UCC.
"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 on the Uncertificated Principal Balance of such REMIC
I Regular Interest outstanding immediately prior to such Distribution Date and,
to the extent permitted under applicable law, also on any Uncertificated
Distributable Interest in respect of such REMIC I Regular Interest from prior
Distribution Dates that was not previously deemed paid. 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 on the Uncertificated Principal Balance of such
REMIC II Regular Interest outstanding immediately prior to such Distribution
Date. Uncertificated Accrued Interest in respect of any REMIC I Regular Interest
or REMIC II Regular 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 an amount equal to one month's interest (calculated on
the basis of a 360-day year consisting of twelve 30-day months) at the Weighted
Average Unmodified Net Mortgage Rate for such Distribution Date accrued on the
aggregate Stated Principal Balance of the Mortgage Pool outstanding immediately
prior to 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, 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 an amount
equal to one month's interest (calculated on the basis of a 360-day year
consisting of twelve 30-day months) at the Weighted Average Unmodified Net
Mortgage Rate for such Distribution Date accrued on the aggregate Stated
Principal Balance of the Mortgage Pool outstanding immediately prior to such
Distribution Date.
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"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 stated principal amount. On each Distribution
Date, the Uncertificated Principal Balance of each REMIC II Regular Interest
shall be reduced by all distributions of principal deemed to have been made on
such REMIC II Regular Interest on such Distribution Date pursuant to Section
4.01(h) and, if and to the extent necessary and appropriate, shall be further
reduced on such Distribution Date as provided in Section 4.04(b). On each
Distribution Date, the Uncertificated Principal Balance of each REMIC I Regular
Interest shall be reduced by all distributions of principal deemed to have been
made in respect of such REMIC I Regular Interest on such Distribution Date
pursuant to Section 4.01(i), and, if and to the extent necessary and
appropriate, shall be further reduced on such Distribution Date as provided in
Section 4.04(c).
"Uncovered Portion": As the context may require, either: (a)
that portion, if any, of the then aggregate Certificate Principal Balance of all
the Principal Balance Certificates that is in excess of the then aggregate
Assigned Asset Value of the Mortgage Pool; and (b) that portion, if any, of the
then Class Principal Balance of any Class of Principal Balance Certificates (or,
in the case of the Class A-1 and Class A-2 Certificates, the then aggregate
Certificate Principal Balance of such Certificates) that is in excess of an
amount equal to (i) the then aggregate Assigned Asset Value of the Mortgage
Pool, reduced (to not less than zero) by (ii) the then aggregate Certificate
Principal Balance of each other Class of Principal Balance Certificates, if any,
with a letter Class designation that is earlier in alphabetical order.
"Underwriter": Salomon Brothers.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
"Unmodified Net Mortgage Rate": With respect to any Mortgage
Loan (or successor REO Loan), the Net Mortgage Rate in effect for such Mortgage
Loan as of the Cut-off Date, without regard to any change in the related
Mortgage Rate subsequent to the Cut-off Date as a result of any modification,
waiver or amendment agreed to by the Special Servicer pursuant to Section 3.20
or in connection with any bankruptcy, insolvency or similar proceeding involving
the related Mortgagor.
"USPAP": The Uniform Standards of Professional Appraisal
Practices.
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"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. At all times during the
term of this Agreement, 98% of the Voting Rights shall be allocated among the
Holders of the various Classes of Principal Balance Certificates in proportion
to the respective Class Principal Balances thereof, 1% of the Voting Rights
shall be allocated to the Holders of the Class IO Certificates (but only for so
long as the Class Notional Amount of such Class is greater than zero), and any
Voting Rights not otherwise allocated to the REMIC III Regular Certificates
shall be allocated equally among the respective Classes of Residual
Certificates. Voting Rights allocated to a Class of Certificateholders shall be
allocated among such Certificateholders in proportion to the Percentage
Interests evidenced by their respective Certificates.
"Weighted Average 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 four decimal places, of the respective
REMIC I Remittance Rates in respect of the REMIC I Regular Interests for such
Distribution Date, weighted on the basis of the respective Uncertificated
Principal Balances of the REMIC I Regular Interests outstanding immediately
prior to such Distribution Date.
"Weighted Average REMIC II Remittance Rate": With respect to
any Distribution Date, the rate per annum equal to the weighted average,
expressed as a percentage and rounded to four decimal places, of the respective
REMIC II Remittance Rates in respect of the REMIC II Regular Interests for such
Distribution Date, weighted on the basis of the respective Uncertificated
Principal Balances of the REMIC II Regular Interests outstanding immediately
prior to such Distribution Date.
"Weighted Average Unmodified Net Mortgage Rate": With respect
to any Distribution Date, the rate per annum equal to the weighted average,
expressed as a percentage and rounded to four decimal places, of the respective
Unmodified Net Mortgage Rates in respect of the Mortgage Loans and any REO Loans
constituting the Mortgage Pool as of the commencement of the Collection Period
for such Distribution Date, weighted on the basis of the respective Stated
Principal Balances of such Mortgage Loans and REO Loans outstanding immediately
prior to such Distribution Date.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and
delivery hereof, does hereby assign to the Trustee without recourse for the
benefit of the Certificateholders all the right, title and interest of the
Depositor, in, to and under (i) the Mortgage Loans identified on the Mortgage
Loan Schedule, (ii) the Mortgage Loan Purchase Agreement (other than under
Sections 6, 7, 8, 9, 11 and 16 thereof), and (iii) all other assets included or
to be included in REMIC I. Such assignment includes all interest and principal
received or receivable on or with respect to the Mortgage Loans and, except for
Principal Prepayments received prior to the Cutoff Date, 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 45 days following the receipt thereof) cause to be submitted
at the expense of the Depositor 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 in favor of the Trustee referred to
in clauses (iii) and (vi) of the definition of "Mortgage File" and each UCC-2
and UCC-3 in favor of the Trustee delivered as part of the "Mortgage File". Each
such assignment shall reflect that it should be returned by the public recording
office to the Trustee following recording, and each such UCC-2 and UCC-3 shall
reflect that the file copy thereof should be returned to the Trustee following
filing; provided that in those instances where the public recording office
retains the original assignment of Mortgage or assignment of Assignment of
Leases the Trustee shall obtain therefrom at the expense of the Depositor a
certified copy of the recorded original. If any such document or instrument is
lost or returned unrecorded or unfiled, as the case may be, because of a defect
therein, the Trustee shall give the Depositor notice and the Depositor shall
cause the Mortgage Loan Seller pursuant to the Mortgage Loan Purchase Agreement
promptly to prepare or cause to be prepared a substitute therefor or cure
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such defect, as the case may be, and thereafter the Trustee shall upon receipt
thereof cause the same to be duly recorded or filed, as appropriate, at the
expense of the Depositor.
(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 shall be delivered to the Master Servicer 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 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, which
Mortgage Loan Purchase Agreement shall contain the representations and
warranties made by the Mortgage Loan Seller with respect to each Mortgage Loan
as of the Closing Date as are set forth on Exhibit L hereto.
SECTION 2.02. Acceptance of REMIC I by Trustee.
(a) The Trustee, by its execution and delivery of this
Agreement, acknowledges receipt by it or a Custodian on its behalf, subject to
the proviso in the definition of "Mortgage File" and the provisions of Section
2.01 and subject to the further review provided for in Section 2.02(b), of (i)
the Mortgage File for each Mortgage Loan, (ii) a copy of a fully executed
counterpart of the Mortgage Loan Purchase Agreement, and (iii) all other assets
delivered to it and included in REMIC I, in good faith and without notice of any
adverse claim, and declares that it or a Custodian on its behalf holds and will
hold such documents and the other documents received by it that constitute
portions of the Mortgage Files, and that it holds and will hold such other
assets included in REMIC I, in trust for the exclusive use and benefit of all
present and future Holders of the Certificates. In addition, the Trustee hereby
certifies to each of the Depositor, the Master Servicer, the Special Servicer
and the Mortgage Loan Seller that, except as specifically identified in the
Schedule of Exceptions to Mortgage File Delivery attached hereto as Exhibit C,
(1) all documents specified in clauses (i) through (x), (xii), (xiv) and (xv) of
the definition of "Mortgage File" are in its possession or the possession of a
Custodian on its behalf, (2) such documents have been reviewed by it or by a
Custodian on its behalf and appear regular on their face and relate to the
Mortgage Loans, and (3) based on such examination and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule with respect
to the items specified in clauses (ii), (v) and (vi)(B) of the definition of
"Mortgage Loan Schedule" is correct.
(b) On or before the 75th day following the Closing Date, the
Trustee shall certify in writing to each of the Depositor, the Master Servicer,
the Special Servicer and the Mortgage Loan Seller that, as to each Mortgage Loan
listed on the Mortgage Loan Schedule (other than any Mortgage Loan as to which a
Liquidation Event has occurred or any Mortgage Loan specifically identified in
any exception report annexed thereto as not being covered by such certification)
(1) all documents specified in clauses (i) through (x), (xii), (xiv) and (xv) of
the
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definition of "Mortgage File" are in its possession or the possession of a
Custodian on its behalf or, as required by Section 2.01(c), have been submitted
by it for recordation or filing, as appropriate, (2) all documents received by
it or any Custodian in respect of such Mortgage Loan have been reviewed by it or
by such Custodian on its behalf and appear regular on their face and relate to
such Mortgage Loan, and (3) 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" is correct.
(c) On or about the first anniversary of the Closing Date, the
Trustee shall certify in writing to each of the Depositor, the Master Servicer,
the Special Servicer and the Mortgage Loan Seller that, as to each Mortgage Loan
listed on the Mortgage Loan Schedule (other than any Mortgage Loan as to which a
Liquidation Event has occurred or any Mortgage Loan specifically identified in
any exception report annexed thereto as not being covered by such certification)
(1) all documents specified in clauses (i) through (x), (xii), (xiv) and (xv) of
the definition of "Mortgage File" are in its possession or the possession of a
Custodian on its behalf, (2) all documents received by it or any Custodian in
respect of such Mortgage Loan have been reviewed by it or by such Custodian on
its behalf and appear regular on their face and relate to such Mortgage Loan,
and (3) based on the examinations referred to in Section 2.02(a) and Section
2.02(b) above and this Section 2.02(c) 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" is correct.
(d) None of the Trustee, the Master Servicer, the Special
Servicer or any Custodian is under any duty or obligation to inspect, review or
examine any of the documents, instruments, certificates or other papers relating
to the Mortgage Loans delivered to it to determine that the same are valid,
legal, effective, genuine, enforceable, in recordable form, sufficient or
appropriate for the represented purpose or that they are other than what they
purport to be on their face.
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
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, 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 relating to the
Mortgage Loans set forth in Exhibit B to the Mortgage Loan Purchase Agreement (a
"Breach"), such party shall give prompt written notice thereof to the other
parties hereto and to the Rating Agencies. Promptly upon becoming aware of any
such Document Defect or Breach that materially and adversely affects the
interests of the Certificateholders, the Master Servicer shall so notify the
Mortgage Loan Seller and shall request that the Mortgage Loan Seller, not later
than 90 days
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from the Mortgage Loan Seller's receipt of such notice, cure such Document
Defect or Breach, as the case may be, in all material respects or repurchase the
affected Mortgage Loan at the applicable Purchase Price in accordance with the
Mortgage Loan Purchase Agreement. If the affected Mortgage Loan is to be
repurchased, the purchaser shall remit to the Master Servicer for deposit into
the Certificate Account the amount of the Purchase Price. Any such purchase of a
Mortgage Loan shall be on a whole loan, servicing released basis.
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 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 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 manner, and pursuant to appropriate forms of
assignment, substantially similar to the manner and forms pursuant to which
documents were previously assigned to the Trustee, and without representation or
warranty whatsoever and without recourse 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, which the Master Servicer is required to
deliver in connection with any such repurchase. 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 or the Special Servicer, and the Master Servicer and Special Servicer
hereby agree to indemnify the Trustee and hold the Trustee harmless from any
loss or liability arising from any misuse of any such power of attorney.
(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.
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 Master Servicer, the Special Servicer and the Fiscal Agent, 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.
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(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 bylaws 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.
(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, 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 has marketable title to,
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and is 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.
(ix) The Depositor is transferring the Mortgage Loan 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
to the other parties.
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 REMIC I. Concurrently with such assignment and in exchange
therefor, the Trustee, pursuant to the written request of the Depositor executed
by an officer of the Depositor, has executed, 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 the REMIC III Certificates. The Trustee acknowledges the
assignment to it of the REMIC I Regular Interests and declares that it holds and
will hold the same in trust for the exclusive use and benefit of all present and
future Holders of the Class R-II Certificates and the REMIC III Certificates.
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 2.07. Execution, Authentication and Delivery of Class
R-II Certificates.
Concurrently with the assignment to it of the REMIC I Regular
Interests and in exchange therefor, the Trustee, pursuant to the written request
of the Depositor executed by an officer of the Depositor, has executed,
authenticated and delivered to or upon the order of the Depositor, the Class
R-II Certificates in authorized denominations. The interests evidenced by the
Class R-II Certificates, together with the REMIC II Regular Interests,
constitute the entire beneficial ownership of REMIC II.
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 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 it of the REMIC II Regular
Interests and in exchange therefor, the Trustee, pursuant to the written request
of the Depositor executed by an officer of the Depositor, has executed,
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;
Reimbursement of Special Servicing Advances.
(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 Trust Fund, for the
benefit of the Certificateholders, in accordance with applicable law, the terms
of this Agreement (including, without limitation, the provisions regarding the
authority of the Operating Adviser and the Extension Adviser) and of 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 that are not Specially Serviced Mortgage Loans, and (ii) the
Special Servicer shall service and administer (x) each Specially Serviced
Mortgage Loan, and (y) each REO Property; provided, however, that the Master
Servicer shall continue to collect information and prepare all reports to the
Trustee for benefit of the Certificateholders required hereunder with respect to
any Specially Serviced Mortgage Loans and REO Properties (and the related REO
Loans), and to render such incidental services with respect to any Specially
Serviced 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. Notwithstanding anything herein to
the contrary, all actions to be taken by the Special Servicer with respect to
the servicing and administration of any Specially Serviced Mortgage Loan or REO
Property shall be subject to such rights and powers regarding directions,
consents, approvals and objections as the Operating Adviser and/or the Extension
Adviser are authorized to exercise pursuant to Sections 3.18 and 3.27.
(b) Subject to Section 3.01(a) and Section 3.27, the Master
Servicer and the Special Servicer each shall have full power and authority,
acting alone, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, each of the Master Servicer
and the Special Servicer, in its own name, with respect to each of the Mortgage
Loans it is obligated to service hereunder, is hereby authorized and empowered
by the Trustee to execute and deliver, on behalf of the Certificateholders and
the Trustee or any of them, (i) any and all financing statements, continuation
statements and other documents or instruments necessary to maintain the lien
created by any Mortgage or other security document in the related Mortgage File
on the related Mortgaged Property and other related collateral; (ii) subject to
Section 3.20 and Section 3.27, 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
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Master Servicer or the Special Servicer, as the case may be, furnish, or cause
to be so furnished, to the Master Servicer or the Special Servicer any limited
powers of attorney and other documents 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, and the Master
Servicer and Special Servicer hereby agree to indemnify the Trustee and hold the
Trustee harmless from any loss or liability arising from any misuse of any such
power of attorney.
(c) In the event that any two or more Mortgage Loans are
cross-collateralized and cross-defaulted with each other, the Master Servicer or
the Special Servicer, as applicable in accordance with this Agreement, shall
service and administer such Mortgage Loans as a single Mortgage Loan as and when
it deems necessary and appropriate consistent with the Servicing Standard.
(d) 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 and 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,
including, without limitation, the Servicing Standard, follow such collection
procedures as it would follow for comparable mortgage loans serviced by it on
behalf of other third parties. Consistent with the foregoing, the Special
Servicer or Master Servicer may waive any Penalty Interest, late payment charge,
NSF check charges or similar fees in connection with any delinquent payment on a
Mortgage Loan it is obligated to service hereunder.
(b) Amounts collected on any group of related
Cross-Collateralized Mortgage Loans in the form of payments from Mortgagors,
Insurance Proceeds and Liquidation Proceeds, shall be applied by the Master
Servicer among such Mortgage Loans in accordance with the express provisions of
the related Mortgage Loan documents and, in the absence of such express
provisions, in accordance with the normal servicing practices of the Master
Servicer. All amounts collected on any Mortgage Loan (whether or not such
Mortgage Loan is a CrossCollateralized Mortgage Loan) in the form of payments
from Mortgagors, Insurance Proceeds and Liquidation Proceeds, shall be applied
to amounts due and owing under the related Mortgage Loan documents (including,
without limitation, for principal and accrued and unpaid interest) in accordance
with the express provisions of such documents and, in the absence of such
express provisions, shall be applied by the Master Servicer (after reimbursement
first to the Fiscal Agent, second to the Trustee and third, PRO RATA, to the
Special Servicer and Master Servicer for any related Servicing Advances and, if
applicable, after payment of any Liquidation Expenses
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not previously covered by Servicing Advances): FIRST, 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; SECOND, as a recovery of Reserve Funds to the
extent then required to be held in escrow; THIRD, as a recovery of accrued and
unpaid interest on such Mortgage Loan at the related Mortgage Rate in effect
from time to time through the date of receipt (or, in the case of a full Monthly
Payment from any Mortgagor, through the related Due Date); FOURTH, 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 with respect to such
Mortgage Loan, as a recovery of principal of such Mortgage Loan to the extent of
its entire remaining unpaid principal balance); FIFTH, as a recovery of any
Prepayment Premiums then due and owing under such Mortgage Loan; SIXTH, in
accordance with the normal servicing practices of the Master Servicer, as a
recovery of any other amounts then due and owing under such Mortgage Loan,
including, without limitation, Penalty Interest, late payment charges and NSF
check charges; and SEVENTH, as a recovery of any remaining principal of such
Mortgage Loan to the extent of its entire remaining unpaid principal balance.
Amounts collected on any REO Loan shall be deemed to be applied in accordance
with the definition thereof. The provisions of this Section 3.02(b) with respect
to the application of amounts collected shall not alter in any way the right of
the Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent to
receive payments from the Certificate Account as set forth in clauses (ii)
through (xv) of Section 3.05(a) from amounts so applied.
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 (each, a "Servicing Account"), into which all Escrow Payments
shall be deposited and retained. Unless otherwise required by the related
Mortgage Loan documents, each Servicing Account shall be an Eligible Account.
Withdrawals of amounts so collected 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 (to the extent amounts have
been escrowed for such purpose); (ii) to reimburse the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent, as applicable, for any
Servicing Advances made thereby in respect of the related Mortgage Loan; (iii)
to refund to Mortgagors any sums as may be determined to be overages; (iv) to
pay interest, if required and as described below, to Mortgagors on balances in
the Servicing Account, or otherwise to pay such interest to the Master Servicer;
(v) for application to the restoration or repair of the related Mortgaged
Property in accordance with the related Mortgage Loan documents and the
Servicing Standard; (vi) as otherwise permitted by the terms of the related
Mortgage Loan; or (vii) to clear and terminate the Servicing Account at the
termination of this Agreement in accordance with Section 9.01. The Master
Servicer shall pay or cause to be paid to the Mortgagors interest on funds in
Servicing Accounts 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
the Servicing Account, any provision herein to the contrary notwithstanding.
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(b) The Master Servicer, in the case of any Mortgage Loan, and
the Special Servicer, in the case of any REO Property, shall (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. 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 enforce the requirement of the related Mortgage that the Mortgagor make
payments in respect of such items at the time they first become due. The Special
Servicer shall cooperate with the Master Servicer in the fulfillment of its
obligations under this Section 3.03(b).
(c) In accordance with the Servicing Standard, the Master
Servicer shall, in the case of each Mortgage Loan, 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. The Master Servicer shall be reimbursed 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 or any
other party hereto 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 hereof, including, without limitation, calculating monthly
distributions to Certificateholders, be added to the unpaid principal balances
of the related Mortgage Loans, notwithstanding that the terms of such Mortgage
Loans so permit.
(d) The Master Servicer shall establish and maintain, as
applicable, one or more accounts (the "Reserve Accounts"), into which all
Reserve Funds, if any, shall be deposited and retained. Withdrawals of amounts
so deposited may be made: (i) to pay for, or to reimburse the related Mortgagor
in connection with, the related repairs and/or capital improvements at the
related Mortgaged Property if the repairs and/or capital improvements 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; (ii) to reimburse the
Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent, as
applicable, for any Servicing Advances made thereby with respect to the related
Mortgage Loan for the cost of repairs and/or capital improvements; (iii) to
refund to Mortgagors any sums as may be determined to be overages; (iv) to pay
interest, if required and as described below, to Mortgagors on balances in the
Reserve Account, or otherwise to pay such interest to the Master Servicer; (v)
as otherwise permitted by the terms
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of the related Mortgage Loan; or (vi) to clear and terminate the Reserve Account
at the termination of this Agreement in accordance with Section 9.01. The Master
Servicer shall pay or cause to be paid to the Mortgagors interest on funds in
Reserve Accounts if required by law or the terms of the related Mortgage Loan.
If the Master Servicer shall deposit in a Reserve Account any amount not
required to be deposited therein, it may at any time withdraw such amount from
the Reserve Account, any provision herein to the contrary not withstanding.
Unless otherwise required by the related Mortgage Loan documents, all Reserve
Accounts shall be Eligible Accounts.
(e) No later than the Closing Date, the Depositor shall cause
all Escrow Payments and Reserve Funds then held by or on behalf of it or the
Mortgage Loan Seller with respect to the Mortgage Loans to be delivered to the
Master Servicer.
SECTION 3.04. Certificate Account and Distribution Account.
(a) The Master Servicer shall establish and maintain one or
more accounts (collectively, the "Certificate Account") to be held on behalf of
the Trustee in trust for the benefit of the Certificateholders. Each account
constituting part of the Certificate Account shall be an Eligible Account and
shall be entitled generally as follows: "Midland Loan Services, L.P., as Master
Servicer, in trust for the registered holders of Salomon Brothers Mortgage
Securities VII, Inc., Mortgage Pass-Through Certificates, Series 1996-C1
Certificate Account". The Master Servicer shall deposit or cause to be deposited
in the Certificate Account, within one Business Day after 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 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 shall be paid to the Mortgage Loan
Seller, with negotiable instruments endorsed as necessary and appropriate
without recourse) or (except for 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;
(ii) all payments on account of interest on the Mortgage
Loans, including Penalty Interest, but excluding Prepayment Interest
Excesses;
(iii) all Prepayment Premiums;
(iv) all Insurance Proceeds and Liquidation Proceeds
(other than Liquidation Proceeds described in clause (vi) of the
definition thereof that are required to be deposited in the
Distribution Account pursuant to Section 9.01) received in respect of
any Mortgage Loan;
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(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 Certificate
Account;
(vi) any amounts required to be deposited by the Master
Servicer or the Special Servicer pursuant to Section 3.07(b) in
connection with losses resulting from a deductible clause in a blanket
or master single interest insurance policy;
(vii) any amounts required to be transferred from an REO
Account pursuant to Section 3.16(c);
(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; and
(ix) to the extent not otherwise payable to the Master
Servicer or Special Servicer as additional servicing compensation,
assumption fees.
The foregoing requirements for deposit in the Certificate
Account shall be exclusive. Without limiting the generality of the foregoing,
actual payments from Mortgagors in the nature of Escrow Payments, amounts that
the Master Servicer is entitled to retain as additional servicing compensation
pursuant to Section 3.11(b), and amounts that the Special Servicer is entitled
to retain as additional servicing compensation pursuant to Section 3.11(d), need
not be deposited by the Master Servicer in the Certificate Account. If the
Master Servicer shall deposit in the Certificate Account any amount not required
to be deposited therein, it may at any time withdraw such amount from the
Certificate 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 (in
each case, up to the lesser of (i) 1.0% of the unpaid principal balance of the
related Mortgage Loan and (ii) $75,000), late charges and other transaction fees
received by the Master Servicer with respect to Specially Serviced Mortgage
Loans. The Certificate Account shall be maintained as a segregated account,
separate and apart from trust funds created for mortgage pass-through
certificates 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
Certificate 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 Certificate
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
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the order of the Master Servicer and shall deliver promptly, but in no event
later than three Business Days after receipt, any such check to the Master
Servicer by overnight courier, unless the Special Servicer determines,
consistent with the Servicing Standard, that a particular item cannot be so
endorsed and delivered because of a restrictive endorsement or other appropriate
reason.
(b) The Trustee shall establish and maintain one or more trust
accounts (collectively, the "Distribution Account") to be held in trust for the
benefit of the Certificateholders. Each account constituting part of the
Distribution Account shall be an Eligible Account and shall be entitled
generally as follows: "LaSalle National Bank, as Trustee, in trust for the
registered holders of Salomon Brothers Mortgage Securities VII, Inc., Mortgage
Pass-Through Certificates, Series 1996-C1 Distribution Account". On each P&I
Advance Date, the Master Servicer shall deliver to the Trustee, for deposit in
the Distribution Account, an aggregate amount of immediately available funds
equal to that portion of the Available Distribution Amount (calculated without
regard to clause (b)(iii) of the definition thereof) for the related
Distribution Date then on deposit in the Certificate Account, together with (i)
any Prepayment Premiums and, to the extent not payable to the Master Servicer or
Special Servicer as additional servicing compensation, assumption fees received
on the Mortgage Loans during the related Collection Period and (ii) 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 for deposit in the Distribution Account:
(i) any P&I Advances required to be made by the Master Servicer
in accordance with Section 4.03(a);
(ii) any 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 Distribution
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) any Liquidation Proceeds paid by the Master Servicer in
connection with the purchase of all of the Mortgage Loans and any REO
Properties pursuant to Section 9.01, exclusive of the portion of such
Liquidation Proceeds required to be deposited in the Certificate
Account pursuant to Section 9.01.
Any and all amounts payable by any Person pursuant to this
Agreement to reimburse or indemnify the Trust Fund shall be delivered to the
Trustee for deposit in the Distribution Account.
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The Trustee shall, upon receipt, deposit in the Distribution 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 Certificate Account and the Distribution
Account may be invested in Permitted Investments in accordance with the
provisions of Section 3.06. The Master Servicer shall give notice to the Trustee
and the Special Servicer of the location of the Certificate Account as of the
Closing Date and of the new location of the Certificate Account prior to any
change thereof. The Trustee shall give notice to the Master Servicer and the
Special Servicer of the location of the Distribution Account as of the Closing
Date and of the new location of the Distribution Account prior to any change
thereof.
SECTION 3.05. Permitted Withdrawals From the Certificate
Account and the Distribution Account.
(a) The Master Servicer may, from time to time, make
withdrawals from the Certificate Account for any of the following purposes (the
order set forth below not constituting an order of priority for such
withdrawals):
(i) to remit to the Trustee for deposit in the Distribution
Account the amounts required to be so deposited pursuant to the first
paragraph of Section 3.04(b) and/or that may be applied to make P&I
Advances pursuant to Section 4.03(a);
(ii) to reimburse itself, the Trustee or the Fiscal Agent, as the
case may be, for unreimbursed P&I Advances, the Master Servicer's,
Trustee's and Fiscal Agent's respective rights to reimbursement
pursuant to this clause (ii) with respect to any P&I Advance made
thereby (other than Nonrecoverable Advances, which are reimbursable
pursuant to clause (vi)) being limited to amounts that represent Late
Collections of interest (net of the related Master Servicing Fees) and
principal 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 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 a recovery of interest thereon;
(iv) to pay the Special Servicer earned but unpaid Special
Servicing Fees, Modification Fees and Resolution Fees;
(v) to reimburse itself, the Special Servicer, the Trustee or
the Fiscal Agent, as applicable, for unreimbursed Servicing Advances
made thereby, the Master Servicer's, Special Servicer's, Trustee's and
Fiscal Agent's respective rights to reimbursement
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pursuant to this clause (v) with respect to any Servicing Advance made
thereby being limited to payments, 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;
(vi) to reimburse itself, the Special Servicer, the Trustee or
the Fiscal Agent, as applicable, for any unreimbursed Advances made
thereby that have been or are determined to be Nonrecoverable Advances;
(vii) at such time as it reimburses itself, the Trustee or the
Fiscal Agent for any unreimbursed P&I Advance made thereby pursuant to
clause (ii) or (vi) above or otherwise pursuant to this Agreement, to
pay itself, the Trustee or the Fiscal Agent, as applicable, any
interest accrued and payable thereon in accordance with Section
4.03(d), and at such time as it reimburses itself, the Special
Servicer, the Trustee or the Fiscal Agent for any unreimbursed
Servicing Advance made thereby pursuant to clause (v) or (vi) above or
otherwise pursuant to this Agreement, to pay itself, the Special
Servicer, the Trustee or the Fiscal Agent, as applicable, any interest
accrued and payable thereon in accordance with Section 3.29(d);
(viii) to pay any outstanding Liquidation Expenses, but only out of
Liquidation Proceeds received in respect of the particular Mortgage
Loan or REO Property as to which such Liquidation Expenses were
incurred;
(ix) to pay itself, as additional servicing compensation in
accordance with Section 3.11(b), interest and investment income earned
in respect of amounts held in the Certificate Account as provided in
Section 3.06(b), but only to the extent of the Net Investment Earnings
with respect to the Certificate Account for any Collection Period;
(x) to the extent deposited in the Certificate Account, to pay
itself or the Special Servicer, as the case may be, any amounts
collected on the Mortgage Loans that are otherwise payable to it or the
Special Servicer as additional servicing compensation pursuant to
Section 3.11(b) or Section 3.11(d), as the case may be;
(xi) to pay for the cost of an independent appraiser retained
pursuant to Section 3.09(a), Section 3.18(e), the second paragraph of
Section 3.19(c), Section 3.29(c) or Section 4.03(c);
(xii) to pay itself, the Special Servicer, the Depositor, any of
their partners or any of their (or their partners') respective
directors, officers, employees and agents, as the case may be, any
amounts payable to any such Person pursuant to Section 6.03;
(xiii) to pay for (A) the cost of the Opinions of Counsel
contemplated by Sections 3.09(b)(ii), 3.16(a) and 3.17(b), (B) to pay
for the cost of an Opinion of Counsel contemplated by Section 11.01(a)
or 11.01(c) in connection with any amendment
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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, (C) the cost of obtaining the REO Extension
sought by the Special Servicer as contemplated by Section 3.16(a), (D)
the costs and expenses incurred on behalf of the Trust Fund, and to be
paid directly out of the Certificate Account, pursuant to Section
3.09(c), and (E) the costs and expenses incurred by the Special
Servicer or Trustee pursuant to Section 3.17(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 (or, in the
case of a purchase effected pursuant to Section 9.01, subsequent to the
date on which the relevant purchase price was calculated);
(xv) to the extent not otherwise reimbursable or payable pursuant
to any other clause of this Section 3.05(a) or pursuant to any clause
of Section 3.05(b), to reimburse or pay the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent, as applicable, for
unpaid items incurred by such Person pursuant to any other section of
this Agreement pursuant to which such Person is expressly entitled to
reimbursement or payment from the Trust Fund, in each case only to the
extent and from the sources reimbursable or payable under such other
section, it being acknowledged that this clause (xv) shall not be
deemed to modify the substance of any such other section, including the
provisions of such section that set forth the extent to which one of
the foregoing Persons is or is not entitled to payment or
reimbursement; and
(xvi) to clear and terminate the Certificate 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 Certificate Account
pursuant to any of clauses (ii) through (viii), (x), (xi), (xiii), (xiv) and
(xv) above in this Section 3.05(a) above.
The Master Servicer shall pay to the Special Servicer (or to
third party contractors at the direction of the Special Servicer) from the
Certificate Account amounts permitted to be paid to it (or to such third party
contractors) therefrom promptly upon receipt of a certificate of a Servicing
Officer of the Special Servicer describing the item and amount to which the
Special Servicer (or such third party contractors) is entitled. The Master
Servicer may rely conclusively on any such certificate and shall have no duty to
re-calculate the amounts stated therein. The Special Servicer shall keep and
maintain separate accounting for each Specially Serviced Mortgage Loan and REO
Property, on a loan-by-loan and property-by-property basis, for the purpose of
justifying any request for withdrawal from the Certificate Account.
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(b) The Trustee may, from time to time, make withdrawals from
the Distribution Account for any of the following purposes:
(i) to make distributions to Certificateholders on each
Distribution Date pursuant to Section 4.01 or 9.01, as applicable;
(ii) to pay itself or any of its directors, officers, employees
and agents, as the case may be, any amounts payable or reimbursable to
any such Person pursuant to Section 8.05, and to pay itself for any
amounts reimbursable to it pursuant to Section 10.01(f);
(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 Distribution
Account as provided in Section 3.06(b), but only to the extent of the
Net Investment Earnings with respect to the Distribution Account for
any Collection Period;
(iv) to pay for the cost of the Opinions of Counsel sought by the
Trustee (1) as provided in clause (v) of the definition of
"Disqualified Organization", (2) as contemplated by Sections 9.01,
9.02(a) and 10.01(i), or (3) as contemplated by Section 11.01(a) or
11.01(c) in connection with any amendment to this Agreement requested
by the Trustee which amendment is in furtherance of the rights and
interests of Certificateholders;
(v) to pay any and all federal, state and local taxes imposed on
any of the REMICs created hereunder or on the assets or transactions of
any such REMIC, together with all incidental costs and expenses;
provided that, with respect to any taxes for which the Trustee, the
Master Servicer or the Special Servicer is liable pursuant to Section
10.01(j), such taxes have not been paid by the Person liable for such
taxes;
(vi) on each Distribution Date, prior to the distributions to be
made on the Certificates on such Distribution Date, to reimburse the
Fiscal Agent, the Trustee and the Special Servicer, in that order, for
any Servicing Advances made pursuant to the second paragraph of Section
3.09(c) in respect of any particular Mortgaged Property or REO
Property, but only insofar as the total amount of such Servicing
Advances then outstanding in respect of such Mortgaged Property or REO
Property exceeds $250,000, the respective rights of the Fiscal Agent,
the Trustee and the Special Servicer pursuant to this clause (vi) being
limited to those amounts otherwise distributable on such Distribution
Date on those Certificates that are not rated at least "BBB" by either
Rating Agency; and
(vii) to clear and terminate the Distribution Account at the
termination of this Agreement pursuant to Section 9.01.
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(c) The Trustee, the Fiscal Agent, the Depositor, the Master
Servicer and the Special Servicer shall in all cases have a right prior to the
Certificateholders to any particular funds on deposit in the Certificate Account
and the Distribution Account from time to time for the reimbursement or payment
of servicing 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 Fiscal Agent, the Depositor, the Master Servicer or
the Special Servicer, as applicable), if and to the extent such fees and
expenses are to be reimbursed or paid from such particular funds on deposit in
the Certificate Account or the Distribution Account pursuant to the express
terms of this Agreement. Any reimbursements of Advances in respect of any
particular Mortgage Loan out of the Certificate Account pursuant to any of
clauses (ii), (v) and (vi) of Section 3.05(a), and any payments of interest
thereon out of the Certificate Account pursuant to clause (vii) of Section
3.05(a), shall be made (to the extent of their respective entitlements to such
reimbursements and/or payments): first, to the Fiscal Agent; second, to the
Trustee; and third, PRO RATA, to the Master Servicer and Special Servicer.
SECTION 3.06. Investment of Funds in the Certificate
Account, the Distribution Account and the
REO Account.
(a) The Master Servicer may direct in writing any depository
institution maintaining the Certificate Account and may direct in writing the
Trustee with respect to the Distribution 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,
(i) in the case of the Distribution Account, no later than the Business Day
prior to the next succeeding Distribution Date and (ii) in the case of each of
the Certificate Account and REO Account, (A) no later than the Business Day
prior to the next succeeding date on which such funds are required to be
withdrawn from such account pursuant to this Agreement, if a Person other than
the depository institution maintaining such account is the obligor thereon, and
(B) no later than the next succeeding date on which such funds are required to
be withdrawn from such account pursuant to this Agreement, if the depository
institution maintaining such account is the obligor thereon. 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 Certificate 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. The Trustee shall (except
with respect to investment direction) possess, to the extent possible, each
Permitted Investment of amounts in the Distribution Account or, if possession is
not possible, shall
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maintain ownership in the name of the Trustee. 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 Certificate Account), the
Trustee (in the case of the Distribution 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 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 either the Certificate Account or the Distribution 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) 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 Investment Account has a Net
Investment Loss for any Collection Period, the Master Servicer (in the case of
the Certificate Account and the Distribution Account) and the Special Servicer
(in the case of the REO Account) shall promptly deposit therein from its own
funds, without right of reimbursement, prior to the P&I Advance Date following
the end of such Collection Period, the amount of the Net Investment Loss.
(c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the 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.
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(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.
SECTION 3.07. Maintenance of Insurance Policies; Errors and
Omissions and Fidelity Coverage.
(a) With respect to those Mortgage Loans it is required to
service hereunder, each of the Master Servicer and the Special Servicer shall
use reasonable efforts to cause each related Mortgagor to maintain for the
related 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 applicable, 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 obtain the required insurance coverage
from Qualified Insurers. If any Mortgagor fails to maintain such insurance, then
the Master Servicer shall, to the extent that the Trustee as mortgagee has an
insurable interest (and to the extent such insurance coverage is available at
commercially reasonable rates), cause such insurance to be maintained (subject
to the provisions of this Agreement regarding Nonrecoverable Advances). Subject
to Section 3.17(a), 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 (to the extent such insurance coverage is
available at commercially reasonable rates); provided that all such insurance
shall be obtained from Qualified Insurers. All such insurance policies shall
contain (if they insure against loss to property) a "standard" mortgagee clause,
with loss payable to the Master Servicer (in the case of insurance maintained in
respect of Mortgage Loans), or shall name as the insured the Special Servicer
(in the case of insurance maintained in respect of REO Properties), in either
case on behalf of the Trustee, 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
Certificate 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, the Special Servicer or any other party hereto in maintaining any such
insurance shall be reimbursable as a Servicing Advance and shall not, for
purposes hereof, including, without limitation, calculating monthly
distributions to Certificateholders, be added to unpaid principal balance of the
related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so
permit.
(b)(i) If the Master Servicer or the Special Servicer shall
obtain and maintain, or cause to be obtained and maintained, a blanket policy
insuring all of the Mortgage Loans (in
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the case of the Master Servicer) or all of the REO Properties (in the case of
the Special Servicer), as the case may be, then, to the extent such policy (i)
is obtained from a Qualified Insurer, 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 such insurance to be maintained on the related Mortgaged
Properties 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 an 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
Certificate Account from its own funds the amount not otherwise payable under
the blanket policy because of such deductible clause to the extent that any such
deductible exceeds the deductible limitation that pertained to the related
Mortgage Loan or, in the absence of any such deductible limitation, the
deductible limitation which is consistent with the Servicing Standard. The
Master Servicer or the Special Servicer, as appropriate, shall prepare and
present, on behalf of itself, the Trustee and Certificateholders, claims under
any such blanket policy in a timely fashion in accordance with the terms of such
policy.
(ii) If the Master Servicer or the Special Servicer cause any
Mortgaged Property or REO Property that it is required to service and administer
to be covered by a master single interest insurance policy naming the Master
Servicer or the Special Servicer, as applicable, on behalf of the Trustee as the
loss payee, then to the extent such policy (i) is obtained from a Qualified
Insurer and (ii) provides protection equivalent to the individual policies
otherwise required, the Master Servicer or the Special Servicer, as applicable,
shall conclusively be deemed to have satisfied its obligation to cause such
insurance to be maintained on the related Mortgage Properties and REO
Properties. If the Master Servicer or the Special Servicer shall cause any
Mortgaged Property as to which the related Mortgagor has failed to maintain the
required insurance coverage or any REO Property to be covered by such master
single interest insurance policy, then the incremental costs of such insurance
applicable to such Mortgaged Property or REO Property (i.e., other than any
minimum or standby premium payable for such policy whether or not any Mortgaged
Property or REO Property is covered thereby) paid by the Master Servicer or the
Special Servicer, as applicable, shall constitute a Servicing Advance. All other
costs associated with any such master single interest insurance policy shall be
borne by the Master Servicer or Special Servicer, as the case may be, without
right of reimbursement. Such master single interest insurance policy may contain
a deductible clause (not in excess of a customary amount), in which case the
Master Servicer or the Special Servicer, as applicable shall, in the event that
there shall not have been maintained on the related Mortgaged Property or REO
Property a policy otherwise complying with the provisions of Section 3.07(a),
and there shall have been one or more losses which would have been covered by
such policy had it been maintained, deposit into the Certificate Account from
its own funds the amount not otherwise payable under the master single interest
policy because of such deductible clause, to the extent that any such deductible
exceeds the deductible limitation that pertained to the related Mortgage Loan,
or, in the absence of any such deductible limitation, the deductible limitation
which is consistent with the Servicing Standard.
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(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 exist as part of the Trust Fund) keep
in force with Qualified Insurers a fidelity bond in such form and amount as
would permit it to be a qualified FNMA seller-servicer of multifamily mortgage
loans. 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 in which Specially
Serviced Mortgage Loans and/or REO Properties exist as part of the Trust Fund)
also keep in force with Qualified Insurers a policy or policies of insurance
covering loss occasioned by the errors and omissions of its officers and
employees 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. Each of the Master
Servicer and the Special Servicer shall be deemed to have complied with the
foregoing provisions if an Affiliate thereof has such insurance and, by the
terms of such policy or policies, the coverage afforded thereunder extends to
the Master Servicer or the Special Servicer, as the case may be. Any such errors
and omissions policy shall provide that it may not be canceled without ten days'
prior written notice to the Trustee.
SECTION 3.08. Enforcement of Alienation Clauses.
With respect to those Mortgage Loans it is obligated to
service hereunder, each of the Master Servicer and the Special Servicer, on
behalf of the Trustee as the mortgagee of record, shall 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 the Master Servicer or, subject to Section 3.27(a), the Special
Servicer, as applicable, has determined, consistent with the Servicing Standard,
that waiver of such restrictions would be in accordance with the Servicing
Standard. Promptly after the Master Servicer or Special Servicer, as applicable,
has made any such determination, it shall deliver to the other, the Trustee and
the Operating Adviser an Officer's Certificate setting forth the basis for 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), and further subject to Section 3.27(a), 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
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limitation, pursuant to Section 3.20. The Special Servicer shall be responsible
for 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 Special
Servicing Advances 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 is, 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 pursuant to the following sentence,
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, as is, 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
MAI-designated appraiser.
(b) 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 Certificate
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 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 (A)
(as evidenced by an Officer's Certificate to such effect delivered to the
Trustee that shall specify all of the bases for such determination) the Special
Servicer has previously determined in accordance with the Servicing Standard,
and based on a Phase I Environmental Assessment of such Mortgaged Property
performed within twelve months prior to any such acquisition of title or other
action by an Independent Person who regularly conducts Phase I Environmental
Assessments (a copy of which Phase I Environmental Assessment shall be delivered
to the Trustee), that:
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(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
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 maximize the recovery to the
Trust Fund on a present value basis (the relevant discounting of
anticipated collections that will be distributable to
Certificateholders to be performed at the related Mortgage Rate) to
acquire title to or possession of the Mortgaged Property and to take
such actions with respect to the affected Mortgaged Property; and
(B) if the Special Servicer has determined that the Mortgaged Property is not in
compliance with applicable environmental laws or regulations, or that any such
circumstances or conditions described in clause (A)(ii) above are present at the
Mortgaged Property, the Special Servicer shall have notified the Trustee in
writing that (i) it has determined whether or not it or the Trustee could
reasonably be considered to be a potentially responsible party, and (ii) if it
has determined that it or the Trustee could reasonably be considered to be a
potentially responsible party, it has also determined that its and the Trustee's
interests are adequately protected, by indemnification or otherwise.
The Special Servicer shall undertake, in good faith,
reasonable efforts to make the determination referred to in clause (B)(i), and
may conclusively rely on the Phase I Environmental Assessment referred to above,
and upon an Opinion of Counsel, in making such determination. In addition, if
any such Phase I Environmental Assessment so warrants, the Special Servicer
shall perform such additional environmental testing as it deems necessary and
prudent to determine whether the conditions described in clauses (A)(i) and
(A)(ii) of the preceding paragraph have been satisfied. The cost of such Phase I
Environmental Assessment and any such Opinion of Counsel and additional
environmental testing, as well as the cost of any remedial, corrective or other
further action contemplated by clause (A)(i) and/or clause (A)(ii) of the
preceding paragraph, shall be advanced by the Special Servicer; provided that
the Special Servicer shall not be obligated in connection therewith to advance
any funds which, if so advanced, would constitute a Nonrecoverable Servicing
Advance; and provided further that, the total amount of such advances
outstanding as to any particular Mortgaged Property or REO Property at any
particular time shall not exceed the greater of (i) $250,000 and (ii) 25% of the
then unpaid principal balance of the related Mortgage Loan or REO Loan, as the
case may be. Amounts so advanced shall be subject to reimbursement as Servicing
Advances in accordance
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with Section 3.05(a) and, to the extent that the total of such advances
outstanding in respect of any particular Mortgaged Property or REO Property
exceeds $250,000, out of amounts otherwise payable on the Certificates that are
not rated at least "BBB" by either Rating Agency in accordance with Section
3.05(b). To the extent that the foregoing costs exceed the amount of the
advances required to be made by the Special Servicer, the Special Servicer
shall, in accordance with the Servicing Standard, pay such costs out of the
Certificate Account as an expense of the Trust Fund, using reasonable efforts to
conduct any necessary remedial, corrective or other action contemplated by
clause (A)(i) and/or (A)(ii) of the preceding paragraph in such manner as to
allow such nonadvanced costs to be payable out of amounts otherwise
distributable on the Certificates that are not rated at least "BBB" by either
Rating Agency.
(d) If the environmental testing contemplated by Section
3.09(c) above establishes that any of the conditions set forth in clauses (A)(i)
and (A)(ii) of the first paragraph thereof has not been satisfied with respect
to any Mortgaged Property securing a defaulted Mortgage Loan, or if the Special
Servicer is otherwise prevented from proceeding against the Mortgaged Property
based on an objection of the Operating Adviser authorized to be given pursuant
to Section 3.27(a), 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, subject to Section 3.27(a), 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
$1,000,000, 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 Trustee in writing of its intention to so release all or a
portion of such Mortgaged Property, (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 have consented to
such release within 30 days of the Trustee's distributing such notice (failure
to respond by the end of such 30-day period being deemed consent).
(e) The Special Servicer shall report to the Trustee and the
Operating Adviser 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 (A)(i) and (A)(ii) of the first sentence thereof has not been satisfied,
in each case until the earlier to occur of (i) satisfaction of all such
conditions and (ii) 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, subject to Section 3.27(a), seek such deficiency
judgment if it deems advisable.
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(g) The Special Servicer shall prepare and file 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 6050J and 6050P of the Code and deliver
to the Trustee an Officer's 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 6050J and 6050P of the Code.
(h) To the extent not filed by the Special Servicer pursuant
to Section 3.9(g) above, the Master Servicer shall file information returns with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code, respectively, and
promptly deliver upon such filing to the Trustee an Officer's Certificate
stating that such reports have been filed. Such reports shall be in form and
substance sufficient to meet the reporting requirements imposed by such Sections
6050H, 6050J and 6050P of the Code.
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 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 any 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
Certificate 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 promptly release, or cause any related Custodian to release, the
related Mortgage File to the Master Servicer and shall return to the Master
Servicer such release or discharge, duly executed without representation or
warranty whatsoever and without recourse. No expenses incurred in connection
with any instrument of satisfaction or deed of reconveyance shall be chargeable
to the Certificate Account or the Distribution Account.
(b) If from time to time, and as appropriate for servicing or
foreclosure of any Mortgage Loan, the Master Servicer or the Special Servicer
shall otherwise require any Mortgage File (or any portion thereof), the Trustee,
upon request of the Master Servicer and receipt from the Master Servicer of a
Request for Release in the form of Exhibit D-1 attached hereto signed by a
Servicing Officer thereof, or upon request of the Special Servicer and receipt
from the Special Servicer of a Request for Release in the form of Exhibit D-2
attached hereto signed by a Servicing Officer thereof, 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
the delivery to the Trustee of a certificate of a Servicing Officer of the
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Special Servicer stating that such Mortgage Loan was liquidated and that all
amounts received or to be received in connection with such liquidation that are
required to be deposited into the Certificate 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 to the Master Servicer or the Special Servicer, as applicable.
(c) Promptly after the Special Servicer's request therefor
(but in no event later than seven Business Days), 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
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 or involving the Trust Fund; 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, and the Master
Servicer and Special Servicer hereby agree to indemnify the Trustee and hold the
Trustee harmless from any loss or liability arising from any misuse of any such
power of attorney. Together with such documents or pleadings, the Special
Servicer shall deliver to the Trustee a certificate of a Servicing Officer
thereof 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 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 related Master Servicing Fee Rate, computed on a basis that
assumes a 360-day year consisting of twelve 30-day months and 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 or 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 interest, to the extent permitted by Section 3.05(a). The
Master Servicer shall remit to the Trustee, promptly upon receipt, that portion
of the Master Servicing Fee representing the Trustee's Fee. The right to receive
the Master Servicing Fee may not be transferred in whole or in part except in
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connection with the transfer of all of the Master Servicer's responsibilities
and obligations under this Agreement.
(b) Additional servicing compensation in the form of
assumption fees (in each case, up to the lesser of $75,000 and 1.0% of the
unpaid principal balance of the related Mortgage Loan), late charges,
modification fees, charges for beneficiary statements or demands, amounts
collected for checks returned for insufficient funds and any similar fees
(excluding Prepayment Premiums and Penalty Interest), 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, may be retained by the Master Servicer and are
not required to be deposited in the Certificate 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 Certificate Account and the Distribution 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 any Servicing Account or Reserve
Account maintained by the Master Servicer. 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 insurance policy obtained by it as contemplated by Section 3.07(b)), if
and to the extent such expenses are not payable directly out of the Certificate
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 at the applicable Special Servicing Fee Rate, computed on a basis
that assumes a 360-day year consisting of twelve 30-day months and 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. The Special Servicing Fee shall be payable monthly from general
collections on the Mortgage Pool on deposit in the Certificate Account as
provided in Section 3.05(a).
The Special Servicer shall be entitled to a "Modification Fee"
with respect to each Corrected Mortgage Loan (other than a Corrected Mortgage
Loan that previously has become a Corrected Mortgage Loan two or more times) if,
during the time the Mortgage Loan was most recently a Specially Serviced
Mortgage Loan: (i) the stated maturity thereof was extended, (ii) the amount of
the Monthly Payment payable with respect thereto was reduced for a period in
excess of 12 consecutive months following the date it became a Corrected
Mortgage Loan, or (iii) any amount of scheduled principal or interest thereunder
was forgiven following the Special
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Servicer's good faith negotiations with the related Mortgagor, in any event in
connection with and in furtherance of its becoming a Corrected Mortgage Loan.
The Modification Fee will equal 0.50% (or, if there was solely an extension of
the stated maturity of such Mortgage Loan, 0.25%) of the principal balance of
the Mortgage Loan at the time it became a Corrected Mortgage Loan, less the
amount of any modification fees collected by the Special Servicer from the
related Mortgagor. With respect to any Specially Serviced Mortgage Loan or REO
Property liquidated by the Special Servicer (other than by way of the sale
thereof to the Master Servicer, the Mortgage Loan Seller, the Depositor, the
Majority Subordinate Certificateholder or the Holders of Residual Certificates
or the purchase thereof by the Special Servicer), the Special Servicer shall
also be entitled to a "Resolution Fee" in an amount (not less than zero) equal
to 1.00% of the related Liquidation Proceeds (net of related unpaid Liquidation
Expenses, Advances (together with interest thereon at the Reimbursement Rate)
and Servicing Fees) if such liquidation occurs within twelve (12) months of the
date on which the related Mortgage Loan became a Specially Serviced Mortgage
Loan, or in an amount (not less than zero) equal to 0.75% of the related
Liquidation Proceeds (net of related unpaid Liquidation Expenses, Advances
(together with interest thereon at the Reimbursement Rate) and Servicing Fees)
if such liquidation occurs thereafter. Any such Modification Fee or Resolution
Fee to which the Special Servicer shall become entitled, shall be payable to the
Special Servicer from general collections on the Mortgage Pool on deposit in the
Certificate Account as provided in Section 3.05(a).
The Special Servicer's right to receive the Special Servicing
Fee and any Modification Fees and Resolution Fees 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
assumption fees (in each case, up to the lesser of $75,000 and 1.0% of the
unpaid principal balance of the related Mortgage Loan), modification fees,
amounts collected for checks returned for insufficient funds and late charges
received on or with respect to Specially Serviced Mortgage Loans shall be
promptly paid to the Special Servicer by the Master Servicer and shall not be
required to be deposited in the Certificate Account pursuant to Section 3.04(a).
The Special Servicer shall also be entitled to additional servicing compensation
in the form of interest or other income earned on deposits in the REO Account,
if established, in accordance with Section 3.16(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 insurance policy
obtained by it as contemplated by Section 3.07(b)), if and to the extent such
expenses are not payable directly out of the Certificate Account or the REO
Account, and the Special Servicer shall not be entitled to reimbursement
therefor as expressly provided in this Agreement.
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SECTION 3.12. Property Inspections; Collection of Financial
Statements; Delivery of Certain Reports.
(a) The Special Servicer shall at its expense perform a
physical inspection of a Mortgaged Property as soon as possible after a related
Mortgage Loan becomes a Specially Serviced Mortgage Loan. The Master Servicer
shall at its expense perform an inspection of each Mortgaged Property (other
than with respect to any Mortgaged Property related to a Specially Serviced
Mortgage Loan) at least once per calendar year (if the Special Servicer has not
already done so in that calendar year pursuant to the immediately preceding
sentence), unless each of the Rating Agencies has confirmed in writing that a
less frequent period between inspections shall not result, in and of itself, in
a downgrading, withdrawal or qualification of the rating then assigned by such
Rating Agency to any Class of the Certificates. The Master Servicer shall be
entitled to utilize a third-party property inspector with expertise in
commercial real estate matters; provided that all fees and expenses of such
inspector shall be borne by the Master Servicer. The Master Servicer and the
Special Servicer shall each prepare a written report of each such inspection
performed by it (or on its behalf, in the case of the Master Servicer) that sets
forth in detail the condition of the Mortgaged Property and that specifies the
existence of (i) any vacancy in the Mortgaged Property that it, in its
reasonable judgment, considers material, (ii) any sale, transfer or abandonment
of the Mortgaged Property, (iii) any change in the condition or value of the
Mortgaged Property that it, in its reasonable judgment, considers material, or
(iv) any waste committed on the Mortgaged Property. The Master Servicer and the
Special Servicer shall each deliver to the other, to the Rating Agencies, to the
Trustee and, upon request, to the Depositor, the Majority Subordinate
Certificateholder and the Operating Adviser, a copy of each such written report
prepared by it.
(b) The Special Servicer, in the case of any Specially
Serviced Mortgage Loan, and Master Servicer, in the case of all other Mortgage
Loans, 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 prepared with respect
to each REO Property. The Special Servicer, in the case of any Specially
Serviced Mortgage Loans and REO Properties, and the Master Servicer, in the case
of all other Mortgage Loans, shall promptly: (i) review all such items as may be
collected or prepared; (ii) prepare written reports based on such reviews
identifying the Debt Service Coverage Ratios for the related Mortgage Loans (if
still outstanding) and any increase or decrease in expenses or revenues
associated with the related Mortgaged Properties or REO Properties if such
increase or decrease represents a change in such items from the prior year of
more than 5% (or from the Cut-off Date of more than 10%) and explaining any such
increase or decrease; and (iii) deliver copies of the collected items, and of
the written reports prepared in respect thereof to the other, to Trustee and,
upon request, to the Depositor, the Majority Subordinate Certificateholder and
the Operating Adviser.
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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 and, in the case of the Special Servicer,
to the Master Servicer, on or before March 15 of each year, beginning March 15,
1997, an Officer's Certificate stating, as to the signer thereof, that (i) a
review of the activities of the Master Servicer or the Special Servicer, as the
case may be, during the preceding calendar year and of its performance under
this Agreement has been made under such officer's supervision, (ii) to the best
of such officer's knowledge, based on such review, the Master Servicer or the
Special Servicer, as the case may be, has fulfilled all of its obligations under
this Agreement in all material respects throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and (iii) the
Master Servicer or the Special Servicer, as the case may be, has received no
notice regarding the qualification, or challenging the status, of any of REMIC
I, REMIC II or REMIC III 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, 1997,
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 Depositor and, in the case of the
Special Servicer, to the Master Servicer a report stating that (i) it has
obtained a letter of representation regarding certain matters from the
management of the Master Servicer which includes an assertion that the Master
Servicer has complied with certain minimum mortgage loan servicing standards (to
the extent applicable to commercial and multifamily mortgage loans), identified
in the Uniform Single Attestation Program for Mortgage Bankers established by
the Mortgage Bankers Association of America, with respect to the 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.
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SECTION 3.15. Access to Certain Information.
Each of the Master Servicer and the Special Servicer shall
afford to the Trustee and the Depositor and, to the extent required by
applicable regulations, 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 its 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. Such access shall be afforded without charge but
only upon reasonable prior written request and during normal business hours at
the offices of the Master Servicer or the Special Servicer, as the case may be,
designated by it.
SECTION 3.16. Title to REO Property; REO Account.
(a) If title to any REO Property is acquired, the deed or
certificate of sale shall be issued to the Trustee on behalf of the
Certificateholders. The Special Servicer, on behalf of the Trust Fund, shall
sell any REO Property within two years after REMIC I acquires ownership of such
REO Property for purposes of Section 860G(a)(8) of the Code, unless the Special
Servicer either (i) applies, more than sixty days prior to the expiration of
such two year period, and is granted an extension of time (an "REO Extension")
by the Internal Revenue Service to sell such REO Property or (ii) obtains for
the Trustee 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 second anniversary of such acquisition will
not result in the imposition of taxes on "prohibited transactions" (as defined
in Section 860F of the Code) of any of REMIC I, REMIC II or REMIC III or cause
any of REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time
that any Certificates are outstanding. 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 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 an expense of the Trust Fund payable out
of the Certificate 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"), to be held on behalf of the Trustee in trust
for the benefit of the Certificateholders, for the retention of revenues and
other proceeds derived from each REO Property. Each account constituting part of
the REO Account shall be an Eligible Account and shall be entitled generally as
follows:" Midland Loan Services, L.P., as Special Servicer, in trust for
registered holders of Salomon Brothers Mortgage
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Securities VII, Inc., Mortgage Pass-Through Certificates, Series 1996-C1 [Name
of REO Property]". The Special Servicer shall deposit, or cause to be deposited,
in the REO Account, within one Business Day of 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 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 the second Business Day
following each Determination Date, the Special Servicer shall withdraw from the
REO Account and deposit into the Certificate Account or deliver to the Master
Servicer (which shall deposit such amounts into the Certificate 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 as may be
necessary to maintain a reserve of sufficient funds for the proper operation,
management and maintenance 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) during the following
six months.
(d) The Special Servicer shall keep and maintain separate
records, on a property-by-property basis, for the purpose of accounting for all
deposits to, and withdrawals from, the REO Account pursuant to Section 3.16(b)
or (c).
SECTION 3.17. Management of REO Property.
(a) Prior to the acquisition of title to any Mortgaged
Property securing a defaulted Mortgage Loan, the Special Servicer shall review
the operation of such Mortgaged Property and determine the nature of the income
that would be derived from such property if it were acquired by the Trust Fund.
If the Special Servicer determines from such review that:
(i) None of the income from Directly Operating such
Mortgaged Property would be subject to tax as "net income from
foreclosure property" within the meaning of the REMIC
Provisions or would be subject to the tax imposed on
"prohibited transactions" under Section 860F of the Code
(either such tax referred to herein as an "REO Tax"), such
Mortgaged Property may be Directly Operated by the Special
Servicer as REO Property;
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(ii) Directly Operating such Mortgaged Property as an
REO Property could result in income from such property that
would be subject to an REO Tax, but that a lease of such
property to another party to operate such property, or the
performance of some services by an Independent Contractor with
respect to such property, or another method of operating such
property would not result in income subject to an REO Tax,
then the Special Servicer may (provided, that in the good
faith and reasonable judgment of the Special Servicer, it is
commercially feasible) 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 feasible means exists
to operate such property as REO Property without the Trust
Fund incurring or possibly incurring an REO Tax on income from
such property, the Special Servicer shall deliver to the
Trustee, in writing, a proposed plan (the "Proposed Plan") to
manage such property as REO Property. Such plan shall include
potential sources of income, and to the extent commercially
feasible, estimates of the amount of income from each such
source. Within a reasonable period of time after receipt of
such plan, the Trustee shall consult with the Special Servicer
and shall advise the Special Servicer of the Trustee'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 Trustee shall (to the maximum
extent possible) advise the Special Servicer of the estimated
amount of taxes that the Trust Fund would be required to pay
with respect to each such source of income. After receiving
the information described in the two preceding sentences from
the Trustee, 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
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
feasible) 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. Both the Special Servicer and the Trustee
may consult with counsel at the expense of the Trust Fund
(payable out of general collections on the Mortgage Pool on
deposit in the Certificate Account) in connection with
determinations required under this Section 3.17(a). Neither
the Special Servicer nor the Trustee shall be liable to the
Certificateholders, the Trust Fund, the other parties hereto
or each other for errors in judgment made in good faith in the
exercise of their discretion while performing their respective
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responsibilities under this Section 3.17(a). Nothing in this
Section 3.17(a) is intended to prevent the sale of a Defaulted
Mortgage Loan or REO Property pursuant to the terms and
subject to the conditions of Section 3.18.
(b) If title to any REO Property is acquired, the Special
Servicer shall manage, conserve, protect and operate such REO Property for the
benefit of the Certificateholders solely for the purpose of its prompt
disposition and sale in a manner that does not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or, except as provided in Section 3.17(a), result in (i) 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 (ii) an Adverse REMIC Event
in respect of any such REMIC. Except as provided in Section 3.17(a), the Special
Servicer shall not enter into any lease, contract or other agreement that causes
REMIC I to receive, and (unless required to do so under any lease, contract or
agreement to which the Special Servicer or the Trust Fund may become a party or
successor to a party due to a foreclosure, deed-in-lieu of foreclosure or other
similar exercise of a creditor's rights or remedies with respect to a Mortgage
Loan) shall not cause or allow REMIC I to receive, any "net income from
foreclosure property" that is subject to taxation under the REMIC Provisions.
Subject to the foregoing and Section 3.27(a), 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, restore and dispose of
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) - (iv) above
with respect to such REO Property, the Special Servicer shall make Special
Servicing Advances in 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 and good faith
judgment, that such payment would, if made, be a Nonrecoverable Servicing
Advance; provided, however, that the Special Servicer may make any such Special
Servicing Advance without regard to
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recoverability if it is a necessary fee or expense incurred in connection with
the defense or prosecution of legal proceedings.
(c) If consistent with the determinations made pursuant to
Section 3.17(a), the Special Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract may
not be inconsistent herewith and shall reflect an agreement
reached at arm's length;
(ii) the fees of such Independent Contractor (which
shall be expenses of the Trust Fund) shall be reasonable and
customary in consideration of the nature and locality of the
REO Property;
(iii) any such contract shall require, or shall be
administered to require, that the Independent Contractor, in a
timely manner, (A) pay all costs and expenses incurred in
connection with the operation and management of such REO
Property, including, without limitation, those listed in
Section 3.17(b) above, and (B) remit all related revenues
collected (net of its fees and such costs and expenses) to the
Special Servicer as soon as practicable, but in no event later
than 20 days following the receipt thereof by such Independent
Contractor;
(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.
SECTION 3.18. Sale of Mortgage Loans and REO Properties.
(a) The Master Servicer, the Special Servicer (subject to
Section 3.27(a)) 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.
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(b) Subject to Section 2.03(a), 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, the Master Servicer and the Operating Adviser, 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 purchase from the Trust
Fund, at a price equal to the applicable Purchase Price, any such Mortgage Loan.
The Purchase Price for any Mortgage Loan purchased under this Section 3.18(b)
shall be deposited by the Master Servicer into the Certificate Account within
one Business Day of receipt thereof, and the Trustee, upon receipt of an
Officer's Certificate from the Master Servicer to the effect that such funds
have been received by the Master Servicer, 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 without
representation or warranty whatsoever and, 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.
(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 may at its option purchase such Mortgage Loan
from the Trust Fund, at a price equal to the applicable Purchase Price. The
Purchase Price for any such Mortgage Loan purchased under this Section 3.18(c)
shall be deposited by the Master Servicer into the Certificate Account within
one Business Day after receipt, and the Trustee, upon receipt of an Officer's
Certificate from the Master Servicer to the effect that such funds have been
received by the Master Servicer, 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
without representation or warranty whatsoever and, 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) Subject to Section 3.27(a), the Special Servicer may offer
to sell any Defaulted Mortgage Loan not otherwise purchased pursuant to Sections
3.18(b) and 3.18(c) above, if and when the Special Servicer determines,
consistent with, and in the manner contemplated by, the Servicing Standard, that
such a sale would maximize the recovery on such Defaulted Mortgage Loan to
Certificateholders on a present value basis (and shall so offer any such
Defaulted Mortgage Loan at the direction of the Operating Adviser). 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 Section 3.27(a), unless the Special Servicer determines that
acceptance
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of any bid would not be in the best economic interests of the Trust Fund, the
Special Servicer shall accept the highest cash bid received from any Person that
constitutes a fair price for such Mortgage Loan. In the absence of any bid
determined as provided below to be fair, the Special Servicer shall proceed with
respect to such Defaulted Mortgage Loan in accordance with Section 3.09.
The Special Servicer shall use its reasonable efforts to
solicit bids for each REO Property in such manner as will be reasonably likely
to realize a fair price within the time period provided for by Section 3.16(a).
Subject to Section 3.27(a), the Special Servicer shall accept the first (and, if
multiple bids are receive 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), then
subject to Section 3.27(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 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 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 (except as
otherwise provided below in this Section 3.18(e)). In determining whether any
bid received from an Interested Person represents a fair price for any such
Defaulted Mortgage Loan or REO Property, the Special Servicer shall be supplied
with and may rely on a Appraisal prepared at the expense of the Trust Fund by an
Independent MAIdesignated appraiser, retained by the Special Servicer, and who
has a minimum of five years of experience in the subject property type and
market. (The Special Servicer may rely on a certification of any bidder to the
effect that such bidder is not an Interested Person.) Such appraiser 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. (The Special Servicer
shall not bid with respect to a Defaulted Mortgage Loan or REO Property if the
Master Servicer has informed it that the Master Servicer intends to submit a
bid.) Where any Interested Person is among those bidding with respect to a
Mortgage Loan or REO Property, the Special Servicer shall require that all bids
be submitted 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 or from an Interested Person other than
the Special Servicer constitutes a fair price for any such Defaulted Mortgage
Loan or REO Property, the Special Servicer shall take
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into account (in addition to the results of any Appraisal described above and
any Appraisal that it may have otherwise obtained pursuant to this Agreement),
and any appraiser shall be instructed to take into account, as applicable, among
other factors, the period and amount of any delinquency on the affected
Defaulted 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 Defaulted 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 that is less than the Purchase Price shall constitute a fair
price for any Defaulted Mortgage Loan or REO Property unless (i) such bid is the
highest bid received, (ii) 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) and (iii) such bid is acceptable to the Operating Adviser or, if
none, to the Holders of Certificates evidencing a majority of the Voting Rights
allocated to the Controlling Class.
(f) Subject to Sections 3.18(a) through 3.18(e) above, the
Special Servicer shall negotiate and take any other action necessary or
appropriate in connection with the sale of any Defaulted Mortgage Loan or REO
Property, and collect 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 Certificate Account. Any sale of a
Defaulted Mortgage Loan or any REO Property shall be final and without recourse
to the Trustee or the Trust Fund, and if such sale is consummated in accordance
with the terms of this Agreement, the Special Servicer shall have no liability
to any Certificateholder with respect to the purchase price therefor accepted by
the Special Servicer.
(g) Any sale of a Defaulted Mortgage Loan or any REO Property
shall be for cash only (unless changes in the REMIC Provisions made subsequent
to the Startup Day allow a sale for other consideration).
(h) Subject to Section 3.27(a), the Special Servicer shall not
be obligated by any of Section 3.18(a) through Section 3.18(g) to accept the
highest 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. In addition, subject to Section 3.27(a), the Special
Servicer may accept a lower bid if it determines, in accordance with the
Servicing Standard, that acceptance of such bid would be in the best interests
of the Certificateholders (for example, if the prospective buyer making the
lower bid is more likely to perform its obligations or the terms offered by the
prospective buyer making the lower bid are more favorable.)
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SECTION 3.19. Additional Obligations of the Master Servicer,
Special Servicer and Trustee.
(a) The Master Servicer shall deliver to the Trustee for
deposit in the Distribution 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 during the most recently ended Collection Period, and (ii)
the total amount of all servicing compensation received by the Master Servicer
during such Collection Period.
(b) Notwithstanding the provisions of any Mortgage Note that
permit the holder thereof to adjust the related Mortgage Rate on a specified
date or during a specified period, neither the Master Servicer nor the Special
Servicer shall adjust or cause the adjustment of the Mortgage Rate on any
Mortgage Loan following the Cut-off Date, except in connection with a
modification, waiver or amendment of such Mortgage Loan pursuant to Section
3.20.
(c) Upon the earliest of (i) the date on which any Mortgage
Loan becomes a Modified Mortgage Loan, (ii) the 120th day (or, in the case of a
Modified Mortgage Loan, the 30th day) following 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 Master Servicer or the
Special Servicer (whichever is then responsible for servicing such Mortgage
Loan) shall request and, within 60 days of such Mortgage Loan becoming a
Required Appraisal Loan, 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 shall be advanced by the Master Servicer or the Special Servicer, as
the case may be, subject to its right to be reimbursed therefor as a Servicing
Advance pursuant to Section 3.05(a).
With respect to each Required Appraisal Loan as to which there
is an Appraisal Reduction Amount, which has become a Corrected Mortgage Loan and
has remained current for twelve consecutive Monthly Payments, and with respect
to which no other Servicing Transfer Event has occurred and is continuing, the
Master Servicer shall, within 30 days of the date of such twelfth Monthly
Payment, order an Appraisal (which may be an update of a prior Appraisal) (the
cost of which will be an expense of the Trust Fund payable out of general
collections on the Mortgage Pool on deposit in the Certificate Account). Based
upon such Appraisal, the Master Servicer shall redetermine and report to the
Trustee the Appraisal Reduction Amount, if any, with respect to such Mortgage
Loan.
(d) Commencing in June 1996, the Master Servicer shall prepare
for filing, execute and properly file with the Securities and Exchange
Commission (the "SEC"), any and all reports, statements and information
respecting the Trust Fund and/or the Certificates required
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or specifically provided herein to be filed on behalf of the Trust Fund under
the Exchange Act. Prior to June 1996, the Trustee shall be responsible for such
duties and obligations in respect of Distribution Date Statements and any other
reports, statements and information as may be delivered to it by the Master
Servicer and Special Servicer for filing (provided that, in the case of any such
filing to be made electronically through the SEC Edgar System, the Depositor
shall pay to the Trustee a mutually agreed upon fee as compensation for
processing such filing or, alternatively, may cause the filing to be processed
upon receipt from the Trustee of a hard copy of the relevant information). 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 SEC regarding the usual and customary
exemption from certain reporting requirements granted to issuers of securities
similar to the Certificates.
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 3.27, the Master Servicer and the Special Servicer
each may, on behalf of the Trust Fund, agree to any modification, waiver or
amendment of any term of any Mortgage Loan that it is then required to service
and administer without the consent of the Trustee or any Certificateholder.
(b) All modifications, waivers or amendments of any Mortgage
Loan shall be in writing and shall be considered and effected in accordance with
the Servicing Standard.
(c) Except as provided in Section 3.20(d) below, neither the
Master Servicer nor the Special Servicer, on behalf of the Trust Fund, shall
agree or consent to any modification, waiver or amendment of any term of any
Mortgage Loan if such modification, waiver or amendment would:
(i) affect the amount or timing of any scheduled payment of
principal, interest or other amount (excluding late payment charges,
Penalty Interest and any amounts payable to it as additional servicing
compensation) payable thereunder; or
(ii) 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
MAI-designated appraiser delivered to the Master Servicer or the
Special Servicer, as applicable, at the expense of the related
Mortgagor and upon which the Master Servicer or the Special Servicer,
as applicable, may conclusively rely) of the property, as is, to be
released; or
(iii) in the judgment of the Master Servicer or the Special
Servicer, as applicable, otherwise materially impair the security for
such Mortgage Loan or reduce the likelihood of timely payment of
amounts due thereon; or
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(iv) affect the amount of any assumption fee payable under
express terms of any Mortgage Loan; or
(v) result in an exchange or reissuance of such Mortgage Loan
under Section 1001 of the Code (or final, temporary or proposed
Treasury regulations proposed thereunder).
(d) Subject to Section 3.20(b) above, and further subject to
Section 3.27, the Special Servicer may, on behalf of the Trust Fund, without the
consent of the Trustee or any Certificateholder, agree to modify, waive or amend
any term of a Specially Serviced Mortgage Loan if, but only if, (i) the related
Mortgagor is in default with respect to the Mortgage Loan or, in the judgment of
the Special Servicer, such default is reasonably foreseeable, (ii) in the sole
good faith judgment of the Special Servicer, such modification, waiver or
amendment would increase the recovery on such Mortgage Loan to
Certificateholders on a present value basis (the relevant discounting of amounts
that will be distributable to Certificateholders to be performed at the related
Mortgage Rate) and (iii) such modification, waiver or amendment would not cause
the Trust Fund 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 (as evidenced by an Opinion of Counsel
delivered to the Trustee by the Special Servicer, the cost of which shall not be
an expense of the Trustee or the Trust Fund). The determination of the Special
Servicer contemplated by clause (ii) of the preceding sentence shall be
evidenced by an Officer's Certificate to such effect delivered to the Trustee,
the Operating Adviser, the Extension Adviser and the Rating Agencies and
describing in reasonable detail the basis for the Special Servicer's
determination. Notwithstanding the foregoing, the Special Servicer shall not
extend the maturity of any Mortgage Loan beyond the date that is two years prior
to the Rated Final Distribution Date.
(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 of the related
Mortgage Loan, notwithstanding that the terms of such modification, waiver or
amendment so permit.
(f) The Master Servicer or the Special Servicer, as
applicable, 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, require that such Mortgagor pay to it, as
additional servicing compensation, a reasonable or customary fee (not to exceed
the lesser of 1.0% of the unpaid principal balance of the Mortgage Loan to be
modified and $75,000) for the additional services performed in connection with
such request, together with any related costs and expenses incurred by it.
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(g) The Master Servicer or the Special Servicer, as
applicable, shall notify the other, the Operating Adviser, the Extension Adviser
and the Trustee, in writing, of any modification, waiver or amendment of any
term of any Mortgage Loan, the date thereof and the amount of any related fees
charged the Mortgagor and shall deliver to the Trustee or the related Custodian
for deposit in the related Mortgage File, an original counterpart of the
agreement relating to such modification, waiver or amendment, promptly (and in
any event within ten Business Days) following the execution thereof.
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, the Master Servicer shall promptly
give notice thereof to the Mortgage Loan Seller, the Trustee, the Special
Servicer and the Operating Adviser, shall deliver 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 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 after
becoming aware of the occurrence of each related Servicing Transfer Event and in
any event shall continue to act as Master Servicer and administrator of such
Mortgage Loan until the Special Servicer has commenced the servicing of such
Mortgage Loan.
Upon determining that a Specially Serviced Mortgage Loan has
become a Corrected Mortgage Loan, the Special Servicer shall promptly give
notice thereof to the Mortgage Loan Seller, the Trustee, the Master Servicer and
the Operating Adviser and shall return the related Servicing File to the Master
Servicer. 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" for inclusion in the related Mortgage
File (with a copy of each such original to the Master Servicer), and copies of
any additional related Mortgage Loan information, including correspondence with
the related Mortgagor.
(c) Not later than the Business Day following each
Determination Date (and, in any event, not later than the fourth Business Day
prior to the related Distribution Date), the Special Servicer shall forward (1)
to the Master Servicer all information the Master Servicer will be required to
include in the Master Servicer Reports that the Master Servicer is obligated to
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deliver to the Trustee prior to the next Distribution Date, to the extent such
information relates to any Specially Serviced Mortgage Loan or any REO Property.
(d) Not later than the Business Day following each
Determination Date (and, in any event, not later than the fourth Business Day
prior to the related Distribution Date), the Special Servicer shall deliver to
the Master Servicer a statement in writing and in computer readable format
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 (x) through (xiv) of Section 4.02(a) and, insofar as it
relates to the Special Servicer, the information described in clauses (xxiv),
(xxv) and (xxvi) 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 or Trustee reasonably requests to enable it to perform
its responsibilities under this Agreement. Notwithstanding the foregoing
provisions of this Section 3.21(d), 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
required by the Special Servicer to perform its duties under this Agreement.
(e) 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.
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 a successor master servicer or special
servicer, as the case may be, may thereupon assume all of the rights and, except
to the extent they arose prior to the date of assumption, obligations of the
Master Servicer or the Special Servicer, as the case may be, under such
agreement, or, alternatively, may terminate such Sub-Servicing Agreement without
cause and without payment of any penalty or termination fee; (iii) provides that
the Trustee, for the benefit of the Certificateholders, shall be a third party
beneficiary under such agreement, but that (except to
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the extent the Trustee or a successor master servicer or special servicer, as
the case may be, assumes the obligations of the Master Servicer or the Special
Servicer, as the case may be, thereunder as contemplated by the immediately
preceding clause (ii)) none of the Trustee, any successor Master Servicer or
Special Servicer, as the case may be, or any Certificateholder shall have any
duties under such agreement or any liabilities arising therefrom; (iv) permits
any purchaser of a Mortgage Loan pursuant to this Agreement to terminate such
agreement with respect to such purchased Mortgage Loan at its option and without
penalty, (v) does not permit the Sub-Servicer to enter into or consent to any
modification, waiver or amendment without the consent of the Master Servicer or
the Special Servicer, as applicable, and (vi) does not permit the Sub-Servicer
any rights of indemnification that may be satisfied out of assets of the Trust
Fund. In addition, each Sub-Servicing Agreement entered into by the Master
Servicer shall provide that such agreement shall terminate with respect to any
Mortgage Loan serviced thereunder at the time such Mortgage Loan becomes a
Specially Serviced Mortgage Loan, and each Sub-Servicing Agreement entered into
by the Special Servicer shall relate only to Specially Serviced Mortgage Loans
and shall terminate with respect to any such Mortgage Loan which ceases to be a
Specially Serviced Mortgage Loan. The Master Servicer and the Special Servicer
each shall 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 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
SubServicer 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 3.29(d) and 4.03(d), such interest to be allocable
between the Master Servicer or the Special Servicer, as applicable, and any
Sub-Servicer retained by it as they may agree. For purposes of this Agreement,
the Master Servicer and the Special Servicer each shall be deemed to have
received any payment when a Sub-Servicer retained by it receives such payment.
The Master Servicer and the Special Servicer each shall notify the other, the
Trustee and the Depositor in writing promptly of the appointment by it of any
Sub-Servicer.
(b) Each Sub-Servicer shall be authorized to transact business
in the state or states in which the related Mortgaged Properties it is to
service are situated, if and to the extent required by applicable law.
(c) The Master Servicer and the Special Servicer, for the
benefit of the Trustee and the Certificateholders, shall (at no expense to the
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
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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 Servicing Agreement, the Master Servicer and the Special
Servicer shall each have the right to remove a Sub-Servicer retained by it at
any time it considers such removal to be in the best interests of
Certificateholders.
(d) If the Master Servicer or the Special Servicer ceases to
serve as such under this Agreement for any reason (including by reason of an
Event of Default), then the Trustee or another successor thereto shall succeed
to the rights and assume the obligations of the Master Servicer or the Special
Servicer under any Sub-Servicing Agreement, unless the Trustee or such successor
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 or
such successor, deliver to such 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 reasonable efforts to effect the orderly and
efficient transfer of the Sub-Servicing Agreement to such assuming party.
(e) Notwithstanding any Sub-Servicing Agreement, the Master
Servicer and the Special Servicer shall remain obligated and liable to the
Trustee and the Certificateholders for the performance of their respective
obligations and duties under this Agreement in accordance with the provisions
hereof to the same extent and under the same terms and conditions as if each
alone were servicing and administering the Mortgage Loans or REO Properties for
which it is responsible.
SECTION 3.23. Representations and Warranties of Master
Servicer.
(a) The Master Servicer hereby represents and warrants to the
Trustee, for its own benefit and the benefit of the Certificateholders, and to
the Depositor, the Special Servicer and the Fiscal Agent, as of the Closing
Date, that:
(i) The Master Servicer is a Missouri limited partnership duly
organized, validly existing and in good standing under the laws under
which it was organized 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 in all material respects 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 certificate of limited partnership or partnership agreement
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
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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.
(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 or employee 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 required by Section 3.07(c). Neither the
Master Servicer nor any of its officers, directors or employees
involved in the servicing or administration of Mortgage Loans has been
refused such coverage or insurance.
(viii) The net worth of the Master Servicer, determined in
accordance with generally accepted accounting principles, is not less
than $10,000,000.
(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
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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 to the other parties.
SECTION 3.24. Representations and Warranties of Special
Servicer.
(a) The Special Servicer hereby represents and warrants to the
Trustee, for its own benefit and the benefit of the Certificateholders, and to
the Depositor, the Master Servicer and the Fiscal Agent, as of the Closing Date,
that:
(i) The Special Servicer is a Missouri limited partnership
duly organized, validly existing and in good standing under the laws
under which it was organized, 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 in all material respects its
obligations under this Agreement, except that with respect to any
obligation to qualify to conduct business in any state, the Special
Servicer is so qualified or will be so qualified on the date of the
first Servicing Transfer Event.
(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 certificate of limited partnership and partnership agreement
or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the
breach of, any material agreement or other instrument to which it is a
party or which is applicable to it or any of its assets, which default
or breach would adversely affect its ability to perform its obligations
under this Agreement.
(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,
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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.
(vii) Each officer or employee of the Special Servicer that
has or, following the occurrence of a Servicing Transfer Event, would
have responsibilities concerning the servicing and administration of
Specially Serviced Mortgage Loans and/or REO Properties 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 or employees that is or, following the
occurrence of a Servicing Transfer Event, would be involved in the
servicing or administration of Specially Serviced Mortgage Loans and/or
REO Properties has been refused such coverage or insurance.
(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 only 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 to the other parties.
SECTION 3.25. Operating Adviser; Extension Adviser;
Elections.
(a) After the initial receipt by the Trustee of written
requests therefor from the Holder or Holders of Certificates representing a
majority of the Voting Rights allocated to the then Controlling Class, the
Holders of the Certificates of the Controlling Class shall vote to elect an
operating adviser having the rights and powers specified in Section 3.27(a) (the
"OPERATING ADVISER"), as provided in this Section 3.25. Upon (i) the receipt by
the Trustee of written requests for an election of an Operating Adviser from the
Holder or Holders of Certificates representing a majority of the Voting Rights
allocated to the then Controlling Class, (ii) the resignation or removal of the
Person acting as Operating Adviser or (iii) a determination by the Trustee that
the Controlling Class has changed, an election of an Operating Adviser shall be
held commencing as soon as practicable thereafter. The Operating Adviser shall
be elected for the purpose of advising, approving and directing the actions of
the Special Servicer specified herein in respect of the Specially Serviced
Mortgage Loans and REO Properties.
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After the initial receipt by the Trustee of written requests
therefor from the Holder or Holders of Certificates representing more than 50%
by Certificate Principal Balance of all the Principal Balance Certificates, if
any, with letter Class designations that are earlier in alphabetical order than
that of the then Controlling Class, the Holders of such Principal Balance
Certificates shall vote to elect an extension adviser having the rights and
powers specified in Section 3.27(b) (the "EXTENSION ADVISER"), as provided in
this Section 3.25. Upon (i) the receipt by the Trustee of written requests for
an election of an Extension Adviser from the Holder or Holders of Certificates
representing more than 50% by Certificate Principal Balance of all the Principal
Balance Certificates, if any, with letter Class designations that are earlier in
alphabetical order than that of the then Controlling Class or (ii) the
resignation or removal of the Person acting as Extension Adviser, an election of
an Extension Adviser shall be held commencing as soon as practicable thereafter.
The Extension Adviser shall be elected for the purpose of approving the actions
of the Special Servicer specified herein in respect of extending the maturity of
any Specially Serviced Mortgage Loan beyond the third anniversary of its Stated
Maturity Date.
(b) After any such receipt, resignation, removal or
determination contemplated by Section 3.25(a), the Trustee shall call a meeting
of: (i) for purposes of electing an Operating Adviser, the Holders of the
Controlling Class; and (ii) for purposes of electing an Extension Adviser, the
Holders of all Principal Balance Certificates, if any, with letter Class
designations that are earlier in alphabetical order than that of the then
Controlling Class. Notice of the meeting of such Holders shall be mailed or
delivered to each such Holder not less than 10 nor more than 60 days prior to
the meeting. The notice shall state the place and the time of the meeting, which
may be held by telephone. Holders of the Certificates representing a majority of
the Voting Rights allocated to the applicable Class or Classes, present in
person or represented by proxy, shall constitute a quorum for the nomination of
an Operating Adviser or an Extension Adviser, as the case may be. At the
meeting, each such Holder shall be entitled to nominate one Person to act as
Operating Adviser or Extension Adviser, as the case may be. The Trustee shall
cause the election of the Operating Adviser or the Extension Adviser, as the
case may be, to be held as soon thereafter as convenient.
(c) Each Holder of Certificates of the Controlling Class shall
be entitled to vote in each election of the Operating Adviser. Each Holder of
Principal Balance Certificates, if any, with a letter Class designation that is
earlier in alphabetical order than that of the Controlling Class, shall be
entitled to vote in each election of the Extension Adviser. The voting in each
election of the Operating Adviser or the Extension Adviser, as the case may be,
shall be in writing mailed, delivered or sent by courier and actually received
by the Trustee on or prior to the date of such election. Immediately upon
receipt by the Trustee of votes (which have not been rescinded) from the Holders
of Certificates representing more than 50% of the Voting Rights allocated to the
then Controlling Class, which votes are cast for a single Person, such Person
shall be, upon such Person's acceptance, the Operating Adviser. Immediately upon
receipt by the Trustee of votes (which have not been rescinded) from the Holders
of Certificates representing more than 50% by Certificate Principal Balance of
all the Principal Balance Certificates, if any, with letter Class designations
that are earlier in alphabetical order than that
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of the then Controlling Class, which votes are cast for a single Person, such
Person shall be, upon such Person's acceptance, the Extension Adviser. Prior to
the election of the initial Operating Adviser, and in the event that an
Operating Adviser shall have resigned or been removed and a successor Operating
Adviser shall not have been elected, there shall be no Operating Adviser. Prior
to the initial election of an Extension Adviser, and in the event that an
Extension Adviser shall have resigned or been removed and a successor Extension
Adviser shall not have been elected, the Operating Adviser shall act as
Extension Adviser (and, if there is then no Operating Adviser, there shall be no
Extension Adviser). Notwithstanding anything to the contrary herein, the Special
Servicer shall not have any right or obligation to consult with or to seek
and/or obtain approval from an Operating Adviser or an Extension Adviser prior
to acting, and provisions of this Agreement relating thereto or requiring such
shall be of no effect, in any event during any such period that there is no
Operating Adviser or Extension Adviser, as the case may be.
(d) The Operating Adviser may be removed at any time by the
written vote, copies of which must be delivered to the Trustee, of the Holders
of Certificates representing more than 50% of the Voting Rights allocated to the
then Controlling Class. The Extension Adviser may be removed at any time by the
written vote, copies of which must be delivered to the Trustee, of the Holders
of Certificates representing more than 50% by Certificate Principal Balance of
all the Principal Balance Certificates, if any, with a letter Class designation
that is earlier in alphabetical order than that of the then Controlling Class.
(e) The Trustee shall act as judge of each election of an
Operating Adviser or an Extension Adviser and, absent manifest error, the
determination of the results of any such election by the Trustee shall be
conclusive. Notwithstanding any other provisions of this Section 3.25, the
Trustee may make such reasonable regulations as it may deem advisable for any
such election.
SECTION 3.26. Limitation on Liability of Operating Adviser
and Extension Adviser.
Each of the Operating Adviser and the Extension Adviser may act solely
as a representative of the interests of the Class or Classes of
Certificateholders that elected it. Neither the Operating Adviser nor the
Extension Adviser shall have any liability to the Trust Fund or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in judgment;
provided that this provision shall not protect the Operating Adviser or the
Extension Adviser against any liability which would otherwise be imposed by
reason of willful 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 each of the Operating Adviser and the Extension Adviser may take actions
that favor the interests of one or more Classes of the Certificates over other
Classes of the Certificates and that each of the Operating Adviser and the
Extension Adviser may have special relationships and interests that conflict
with those of Holders of some Classes of the Certificates and, absent willful
misfea-
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sance, bad faith, negligence or reckless disregard of obligations and duties on
the part of the Operating Adviser or the Extension Adviser, agree to take no
action against the Operating Adviser, the Extension Adviser or any of their
respective officers, directors, employees, principals or agents as a result of
such a special relationship or conflict.
SECTION 3.27. Duties of Operating Adviser and Extension
Adviser.
(a) The Operating Adviser shall be entitled to advise the
Special Servicer with respect to the following actions of the Special Servicer
and as otherwise provided in Sections 3.18 and 3.28. In addition, prior to the
Special Servicer's taking any of the following actions, the Special Servicer
shall notify the Operating Adviser of its intention to take such action and
shall supply the Operating Adviser with such information as the Operating
Adviser may reasonably request to allow the Operating Adviser to make an
informed decision. Except as otherwise provided herein, the Special Servicer
shall not take any of the following actions as to which the Operating Adviser
shall have objected in writing within ten days of its receiving from the Special
Servicer written notice thereof (with a copy of such notice to be forwarded to
the Holders of the Controlling Class) and sufficient information to make an
informed decision (provided that if such written objection has not been received
by the Special Servicer within such ten day period, then the Operating Adviser's
approval shall be deemed to have been given):
(i) the initiation or consummation of foreclosure upon or
comparable conversion (which may include acquisition of an REO
Property) of the ownership of any Mortgaged Property securing any
Specially Serviced Mortgage Loan that comes into and continues in
default; provided that if immediate initiation of foreclosure
proceedings is necessary to preserve or protect the Mortgaged Property
or income therefrom, the Special Servicer may initiate such proceedings
and notify the Operating Adviser thereof within 72 hours thereafter;
and provided further that, with respect to any Specially Serviced
Mortgage Loan which has been the subject of an OA Extension, the
Operating Adviser will no longer be entitled to approve or object to
the actions set forth in this clause (i) with respect to such Specially
Serviced Mortgage Loan after the termination of the related OA
Extension Period;
(ii) any modification, amendment or waiver of, or with respect
to, any Specially Serviced Mortgage Loan other than a modification
consisting of the extension of the original maturity date of a
Specially Serviced Mortgage Loan for twelve months or less; provided
that, with respect to any Specially Serviced Mortgage Loan which has
been the subject of an OA Extension, the Operating Adviser will no
longer be entitled to approve or object to the actions set forth in
this clause (ii) with respect to such Specially Serviced Mortgage Loan
after the termination of the related OA Extension Period;
(iii) any acceptance of a discounted payoff of a Specially
Serviced Mortgage Loan; and
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(iv) any proposed sale of a Specially Serviced Mortgage Loan
or REO Property (other than in connection with the purchase of any
Defaulted Mortgage Loan by the Majority Subordinate Holder pursuant to
Section 3.18(a) or by the Master Servicer or Special Servicer pursuant
to Section 3.18(b) or in connection with the termination of the Trust
Fund pursuant to Section 9.01); provided that, with respect to any
Specially Serviced Mortgage Loan which has been the subject of an OA
Extension, the Operating Adviser will no longer be entitled to approve
or object to the actions set forth in this clause (iv) with respect to
such Specially Serviced Mortgage Loan after the termination of the
related OA Extension Period.
Notwithstanding the foregoing, if the Operating Adviser
rejects the recommendations of the Special Servicer with respect to clause (iii)
above, the Special Servicer shall so notify the Trustee, in writing, and deliver
thereto a list of eligible members of the American Arbitration Association or
other comparable nationally recognized organization, and the Trustee shall
select from such list an Independent arbitrator (whose fees and expenses shall
be paid by the Holders of the Controlling Class on a PRO RATA basis in
accordance with the Percentage Interests in such Class evidenced by their
respective Certificates), such selection to be made within seven days of receipt
by the Trustee of such written notice from the Special Servicer. The Special
Servicer shall prepare and/or deliver to the Trustee, and the Trustee shall
deliver to such arbitrator, a present value analysis and any other relevant
information within five days of the selection of such arbitrator by the Trustee.
The Trustee shall request that such arbitrator make its decision in the best
economic interests of the Trust Fund based upon the maximization of net present
value of expected collections on the affected Mortgage Loan that will be
distributable to Certificateholders. The Trustee shall request such arbitrator
to (i) select a course of action based solely upon the respective
recommendations provided by the Operating Adviser and the Special Servicer
(rather than on an alternative recommendation provided by itself), and (ii)
provide a decision within five Business Days of receipt of the aforementioned
analyses and other relevant information. Following a decision of such
arbitrator, the Special Servicer shall act in accordance therewith. Pending a
decision of such arbitrator, the Special Servicer may not take the action in
question. The Trustee shall have no responsibility or liability with respect to
the arbitrator's decision or actions.
No direction, objection or withholding of a required consent
or approval by, of or on the part of the Operating Adviser shall: (i) require or
cause the Special Servicer to violate the terms of any Mortgage Loan, applicable
law or any provision of this Agreement, including, without limitation, the
Special Servicer's obligation to act in accordance with the Servicing Standard
and to maintain the REMIC status of each of REMIC I, REMIC II and REMIC III; or
(ii) result in the imposition of a tax on any "prohibited transaction" of or
"contribution" after the Startup Day to any of REMIC I, REMIC II or REMIC III
under the REMIC Provisions; or (iii) expose the Master Servicer, the Special
Servicer, the Fiscal Agent or the Trustee, or their officers, directors,
employees, agents or partners, or the Trust Fund to any claim, suit or
liability; or (iv) materially expand the scope of the Special Servicer's
responsibilities under this Agreement.
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(b) If there is an Extension Adviser, the Special Servicer may
not extend the maturity of any Specially Serviced Mortgage Loan beyond the third
anniversary of its Stated Maturity Date, unless: (i) the Special Servicer has
notified the Extension Adviser of its intention to take such action and has
supplied the Extension Adviser with such information as the Extension Adviser
may reasonably request to allow the Extension Adviser to make an informed
decision; and (ii) the Extension Adviser has not objected to such extension in
writing within ten days of receiving from the Special Servicer written notice
thereof (with a copy of such notice to be forwarded to the Holders of the
Controlling Class) and sufficient information to make an informed decision
(provided that if such written objection to such extension has not been received
by the Special Servicer within such ten day period, then the Extension Adviser's
approval will be deemed to have been given). In addition, the Extension Adviser
shall be entitled to confirm to its reasonable satisfaction that all conditions
precedent to the granting of any such extension set forth in this Agreement have
been satisfied.
SECTION 3.28 Special Servicer to Cooperate with the
Operating Adviser and the Extension Adviser.
(a) Within ninety days after the occurrence of a Servicing
Transfer Event with respect to any Mortgage Loan and the transfer of servicing
with respect to such Mortgage Loan to the Special Servicer, or such longer
period as the Operating Adviser shall approve, the Special Servicer shall
prepare or cause to be prepared and delivered to the Operating Adviser a
business plan outlining the strategy which the Special Servicer contemplates
using in resolving the event giving rise to such Servicing Transfer Event. In
addition, the Special Servicer shall from time to time make reports and
recommendations and provide analyses to the Operating Adviser with respect to
the following matters:
(i) whether the foreclosure of a Mortgaged Property relating to
a Specially Serviced Mortgage Loan would be in the best economic
interests of the Certificateholders (taken as a whole);
(ii) if the Operating Adviser elects to proceed with a
foreclosure, whether a deficiency judgment should or should not be
sought because the likely recovery will or will not be sufficient to
warrant the cost, time and exposure of pursuing such a judgment;
(iii) whether the waiver or enforcement of any "due-on-sale"
clause or "due-on-encumbrance" clause contained in a Specially Serviced
Mortgage Loan is in the best economic interests of the
Certificateholders (taken as a whole);
(iv) in connection with any proposed assumption agreement with a
Person to whom a Mortgaged Property securing a Specially Serviced
Mortgage Loan is to be conveyed, or the release of the original
Mortgagor from liability upon a Specially Serviced Mortgage Loan and
the substitution of a new Mortgagor, whether the credit status of the
prospective new or substitute Mortgagor would meet a prudent lender's
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underwriting standards for multifamily and commercial mortgage loans
originated by it; and
(v) in connection with the foreclosure or comparable action on a
Specially Serviced Mortgage Loan secured by a Mortgaged Property which
is not in compliance with all applicable environmental laws, including,
without limitation, CERCLA, whether it is in the best economic
interests of the Certificateholders (taken as a whole) to take the
actions and incur the expense that would be required in order to bring
the Mortgaged Property into compliance therewith and an estimate of the
cost of doing so.
(b) In addition to providing assistance to the Operating
Adviser as provided in Section 3.28(a), the Special Servicer shall, with respect
to any proposed modification (which shall include any proposed release,
substitution or addition of collateral), extension, waiver, amendment,
discounted payoff or sale of a Specially Serviced Mortgage Loan, prepare and
deliver to the Operating Adviser and, if it may prevent such action by objecting
thereto in accordance with Section 3.27(b), the Extension Adviser a summary of
such proposed action and an analysis of whether such action is reasonably likely
to produce a greater recovery to Certificateholders on a present value basis
(the relevant discounting to be performed at the related Mortgage Rate) than
liquidation of such Mortgage Loan. Such analysis shall specify the basis on
which the Special Servicer has made such determination, including the status of
any existing material default or the grounds for concluding that a payment
default is reasonably foreseeable.
(c) All correspondence and communications with the Operating
Adviser and Extension Adviser may be conducted with the officers or employees of
the Operating Adviser and Extension Adviser whose names appear on a list of
officers or employees furnished to the Special Servicer by the Operating Adviser
and Extension Adviser, as such list may from time to time be amended.
(d) Any and all reports provided by the Special Servicer to
either the Operating Adviser or the Extension Adviser shall also be delivered to
the Trustee.
SECTION 3.29. Servicing Advances.
(a) Each of the Master Servicer and 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 as contemplated by Section 3.07(b)), if and to
the extent such expenses are not payable directly out of the Certificate Account
or REO Account, and neither the Master Servicer nor the Special Servicer shall
be entitled to reimbursement for any such expense except as expressly provided
in this Agreement, including, without limitation, as a Servicing Advance.
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(b) If the Master Servicer or Special Servicer is required
under this Agreement to make a Servicing Advance, but does not do so within
three days after such Advance is required to be made, the Trustee shall, subject
to Section 3.29(c) below, if it has knowledge of such failure on the part of the
Master Servicer or Special Servicer, as the case may be, make such Advance.
(c) Notwithstanding anything herein to the contrary, none of
the Master Servicer, the Special Servicer, the Trustee or the Fiscal Agent shall
be required to make any Servicing Advance which would, if made, constitute a
Nonrecoverable Servicing Advance. The determination by any such party 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 its reasonable and good faith judgment and shall be evidenced by an
Officer's Certificate delivered promptly to the Depositor, the Operating Advisor
and, in the case of the Master Servicer or the Special Servicer, to the Trustee,
setting forth the basis for such determination, together with a copy of an
Appraisal of the related Mortgaged Property or REO Property, as the case may be,
performed within the twelve months preceding such determination by an
Independent MAI-designated appraiser (or, if more than one such Appraisal has
been performed within such time period, the most recent such Appraisal), and
further accompanied by any engineers' reports, environmental surveys or similar
reports that the Master Servicer, the Special Servicer or any other party hereto
may have obtained and that support such determination.
(d) In connection with its recovery of any Servicing Advance
made thereby under this Agreement, the Master Servicer, the Special Servicer,
the Trustee and the Fiscal Agent shall each be entitled to receive, out of any
amounts then on deposit in the Certificate Account, interest at the
Reimbursement Rate in effect from time to time, 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 applicable, for any outstanding Servicing
Advance made thereby as soon as practicable after funds available for such
purpose are deposited in the Certificate Account. The Trustee and the Fiscal
Agent shall be entitled to rely on the Master Servicer's or the Special
Servicer's determination of nonrecoverability with respect to any Servicing
Advance.
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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 in respect of such Distribution Date pursuant to Section 4.02(b), apply
amounts on deposit in the Distribution Account, after payment of amounts payable
from the Distribution Account in accordance with Section 3.05(b)(ii) through
(vi), for the following purposes and in the following order of priority, in each
case to the extent of the remaining portion of the applicable Available
Distribution Amount:
(i) to distributions of interest to the Holders of the
respective Classes of Senior Certificates, PRO RATA in accordance with
the respective amounts of interest distributable on such Classes of
Certificates on such Distribution Date as described in this clause (i),
in an amount equal to the Interest Distribution Amount in respect of
each such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for each prior Distribution Date;
(ii) to distributions of principal to the Holders of the Class
A-1 Certificates and the Holders of the Class A-2 Certificates,
allocable as between the Holders of such two Classes of Certificates as
provided below, in an amount (not to exceed the aggregate of the Class
Principal Balances of the Class A-1 Certificates and the Class A-2
Certificates outstanding immediately prior to such Distribution Date)
equal to the entire Principal Distribution Amount for such Distribution
Date;
(iii) to distributions to the Holders of the Class A-1
Certificates and the Holders of the Class A-2 Certificates, PRO RATA in
accordance with the respective amounts of Realized Losses and
Additional Trust Fund Expenses reimbursable on such Classes of
Certificates on such Distribution Date as described in this clause
(iii), in an amount equal to, and in reimbursement of, all Realized
Losses and Additional Trust Fund Expenses, if any, previously deemed
allocated to each such Class of Certificates and not previously
reimbursed;
(iv) to distributions of interest to the Holders of the Class B
Certificates, in an amount equal to the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(v) if the Class Principal Balances of the Class A-1 and Class
A-2 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
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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 and/or Class A-2 Certificates pursuant
to clause (ii) above);
(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 deemed 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 the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date, and,
to the extent not previously paid, for each prior Distribution Date;
(viii) if the Class Principal Balances of the Class A-1, Class A-2
and Class B Certificates have been reduced to zero, to distributions of
principal to the Holders of the Class C Certificates, in an amount (not
to exceed the Class Principal Balance of the Class C Certificates
outstanding immediately prior to such Distribution Date) equal to the
entire Principal Distribution Amount for such Distribution Date (net of
any portion thereof distributed on such Distribution Date to the
Holders of the Class A-1 and/or Class A-2 Certificates pursuant to
clause (ii) above or to the Holders of the Class B Certificates
pursuant to clause (v) above);
(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 deemed allocated to
the Class C Certificates and not previously reimbursed;
(x) to distributions of interest to the Holders of the Class D
Certificates, in an amount equal to the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(xi) if the Class Principal Balances of the Class A-1, Class A-2,
Class B and Class C Certificates have been reduced to zero, to
distributions of principal to the Holders of the Class D Certificates,
in an amount (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 the Class A-1 and/or Class A-2 Certificates pursuant
to clause (ii) above, to the Holders of the Class B Certificates
pursuant to clause (v) above or to the Holders of the Class C
Certificates pursuant to clause (viii) above);
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(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 deemed 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 the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(xiv) if the Class Principal Balances of the Class A-1, Class A-2,
Class B, Class C and Class D Certificates have 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 the Class A-1 and/or Class A-2 Certificates pursuant
to clause (ii) above, to the Holders of the Class B Certificates
pursuant to clause (v) above, to the Holders of the Class C
Certificates pursuant to clause (viii) above or to the Holders the
Class D Certificates pursuant to clause (xi) above);
(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 deemed 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 the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(xvii) If the Class Principal Balances of the Class A-1, Class A-2,
Class B, Class C, Class D and Class E Certificates have 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 the Class A-1 and/or Class A-2
Certificates pursuant to clause (ii) above, to the Holders of the Class
B Certificates pursuant to clause (v) above, to the Holders of the
Class C Certificates pursuant to clause (viii) above, to the Holders of
the Class D Certificates pursuant to clause (xi) above or to the
Holders of the Class E Certificates pursuant to clause (xiv) above);
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(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 deemed 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 the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(xx) if the Class Principal Balances of the Class A-1, Class A-2,
Class B, Class C, Class D, Class E and Class F Certificates have 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 the Class A-1
and/or Class A-2 Certificates pursuant to clause (ii) above, to the
Holders of the Class B Certificates pursuant to clause (v) above, to
the Holders of the Class C Certificates pursuant to clause (viii)
above, to the Holders of the Class D Certificates pursuant to clause
(xi) above, to the Holders of the Class E Certificates pursuant to
clause (xiv) above or to the Holders of the Class F Certificates
pursuant to clause (xvii) above);
(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 deemed allocated to
the Class G Certificates and not previously reimbursed;
(xxii) to distributions of principal to the Holders of the Class G
Certificates until the Class Principal Balance thereof is reduced to
zero;
(xxiii) to distributions of principal to the Holders of the Class F
Certificates until the Class Principal Balance thereof is reduced to
zero;
(xxiv) to distributions of principal to the Holders of the Class E
Certificates until the Class Principal Balance thereof is reduced to
zero;
(xxv) to distributions of principal to the Holders of the Class D
Certificates until the Class Principal Balance thereof is reduced to
zero;
(xxvi) to distributions of principal to the Holders of the Class C
Certificates until the Class Principal Balance thereof is reduced to
zero;
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(xxvii) to distributions of principal to the Holders of the Class B
Certificates until the Class Principal Balance thereof is reduced to
zero;
(xxviii) to distributions of principal to the Holders of the Class
A-1 Certificates and the Holders of the Class A-2 Certificates,
allocable as between the Holders of such two Classes of Certificates as
provided below, until the Class Principal Balance thereof is reduced to
zero;
(xxix) to distributions to the Holders of the Class R-II
Certificates, in an amount equal to the Class R-II Distribution Amount
for such Distribution Date; and
(xxx) 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 (xxix) above.
On each Distribution Date prior to the earlier of (i) the
Class A Principal Distribution Cross-Over Date and (ii) the final Distribution
Date in connection with the termination of the Trust Fund as provided in Section
9.01, the Trustee shall pay the distributions of principal made on the Class A-1
and Class A-2 Certificates pursuant to clauses (ii) and (xxviii) above, FIRST,
to the Holders of the Class A-1 Certificates, until the Class Principal Balance
of such Class has been reduced to zero, and THEREAFTER, to the Holders of the
Class A-2 Certificates, until the Class Principal Balance of such Class has been
reduced to zero. On any Distribution Date coinciding with or following the Class
A Principal Distribution Cross-Over Date, and in any event on the final
Distribution Date in connection with the termination of the Trust Fund, the
Trustee shall pay the distributions of principal made on the Class A-1 and Class
A-2 Certificates pursuant to clauses (ii) and (xxviii) above to the Holders of
the Class A-1 Certificates and the Holders of the Class A-2 Certificates, PRO
RATA in accordance with the respective Class Principal Balances of such Classes
outstanding immediately prior to such Distribution Date, until the Class
Principal Balance of each such Class has been reduced to zero.
All distributions of interest made in respect of the Class IO
Certificates on any Distribution Date pursuant to clause (i) above, shall be
deemed to have been made in respect of Component IO-U, Component IO-V, Component
IO-W, Component IO-X and Component IO-Y, PRO RATA in accordance with the
respective amounts of interest that would be payable on such Components on such
Distribution Date if each such Component were treated as a separate Class of
REMIC III Regular Certificates.
Distributions in reimbursement of Realized Losses and
Additional Trust Fund Expenses previously deemed allocated to a Class of
Principal Balance Certificates shall not constitute distributions of principal
and shall not result in reduction of the related Class Principal Balance.
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(b) (i) On each Distribution Date, the Trustee shall withdraw
any amounts then on deposit in the Distribution Account that represent
assumption fees, as specified by the Master Servicer, collected during or prior
to the related Collection Period and shall distribute such amounts to the
Holders of the Class R-I Certificates.
(ii) On each Distribution Date, up to and including
the earlier of (x) the Distribution Date on which the aggregate Certificate
Principal Balance of the Registered Certificates has been reduced to zero and
(y) the Distribution Date in January 2006, the Trustee shall withdraw any
amounts then on deposit in the Distribution Account that represent Prepayment
Premiums, as specified by the Master Servicer, collected during or prior to the
related Collection Period and shall distribute each such Prepayment Premium,
subject to the following sentence, as follows: (A) to the Holders of the Class
IO Certificates up to an amount equal to the product of (1) such Prepayment
Premium, multiplied by (2) the quotient of (x) the Net Mortgage Rate of the
related prepaid Mortgage Loan minus the Pass-Through Rate of the Class of
Registered Certificates referred to in the next succeeding clause (B), divided
by (y) the Net Mortgage Rate of the related prepaid Mortgage Loan minus the
lesser of the Pass-Through Rate and the applicable Adjusted Treasury Yield in
respect of the Class of Registered Certificates referred to in the next
succeeding clause (B); and (B) to the Holders of the Class of Registered
Certificates then entitled to distributions of principal out of the Principal
Distribution Amount in an amount equal to any remaining portion of such
Prepayment Premium. On any such Distribution Date on which one Class of
Registered Certificates will be retired, and the Holders of one or more other
Classes of Registered Certificates will commence receiving distributions of
principal out of the Principal Distribution Amount, any Prepayment Premium
distributable on such Distribution Date shall first be divided into two or more,
as appropriate, separate amounts based on, and attributable to, the respective
portions of the related prepayment of principal distributable in respect of each
such Class of Registered Certificates, and each such separate amount shall then
be allocated, as if it were a separate Prepayment Premium, between the Holders
of the Class IO Certificates and the Holders of the corresponding Class of
Registered Certificates as provided in the immediately preceding sentence. For
purposes of the preceding sentence, that portion of the Principal Distribution
Amount described in clauses (a) and (e) of the definition thereof shall be
deemed distributed pursuant to Section 4.01(a) prior to the portion of the
Principal Distribution Amount described in the remaining clauses of the
definition thereof (each such portion being deemed distributed as a collective
whole).
On each Distribution Date following the earlier of (x) the
Distribution Date on which the aggregate Certificate Principal Balance of the
Registered Certificates has been reduced to zero and (y) the Distribution Date
in January 2006, the Trustee shall withdraw any amounts then on deposit in the
Distribution Account that represent Prepayment Premiums, as specified by the
Master Servicer, collected during or prior to the related Collection Period and
shall distribute such amounts to the Holders of the Class R-I Certificates.
(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
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respect to each Class on each Distribution Date shall be made to the
Certificateholders of the respective Class of record at the close of business on
the related Record Date and shall be made by wire transfer of immediately
available funds to the account of any such Certificateholder at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided the Trustee with wiring instructions no less than five Business
Days prior to the related Record Date (which wiring instructions may be in the
form of a standing order applicable to all subsequent Distribution Dates) and is
the registered owner of Certificates the aggregate initial Certificate Principal
Balance of which as of the Closing Date is at least $5,000,000 or the aggregate
initial Certificate Notional Amount of which as of the Closing Date is at least
$10,000,000, or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate Register. The final
distribution on each Certificate (determined without regard to any possible
future reimbursement of any Realized Loss or Additional Trust Fund Expense
previously deemed allocated to such Certificate) will be made in like manner,
but only upon presentation and surrender of such Certificate at the location
specified in the notice to Certificateholders of such final distribution. Any
distribution that is to be made with respect to a Certificate in reimbursement
of a Realized Loss or Additional Trust Fund Expense previously deemed 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, 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 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, or any other party hereto shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law. The Trustee and the Depositor shall perform their respective
obligations under the Letter of Representations among the Depositor, the Trustee
and the initial Depository, a copy of which Letter of Representations is
attached hereto as Exhibit F.
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(e) The rights of the Certificateholders to receive
distributions from the proceeds of the Trust Fund on their respective
Certificates, and all rights and interests of the Certificateholders in and to
such distributions, shall be as set forth in this Agreement. Neither the Holders
of any Class of Certificates nor any party hereto shall in any way be
responsible or liable to the Holders of any other Class of Certificates in
respect of amounts properly previously distributed on the Certificates.
(f) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Certificates (determined without regard to any possible future reimbursement of
any Realized Loss or Additional Trust Fund Expense previously deemed 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:
(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
location therein specified, and
(ii) no interest shall accrue on such Certificates from and after
such Distribution Date.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held uninvested
in trust and credited to the account or accounts of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(f) shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Trustee shall mail a second notice to the remaining non-tendering
Certificateholders to surrender their Certificates for cancellation in order to
receive the final distribution with respect thereto. If within one year after
the second notice all such Certificates shall not have been surrendered for
cancellation, the Trustee, directly or through an agent, shall take such steps
to contact the remaining nontendering 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 Certificateholder on any
amount held in trust hereunder by the Trustee as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 4.01(f). If all of the Certificates
shall not have been surrendered for cancellation by the second anniversary of
the delivery of the second notice, the Trustee shall distribute to the Class
R-III Certificateholders all unclaimed funds and other assets which remain
subject thereto.
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(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 the Class A-1
Certificates on each Distribution Date pursuant to Section 4.01(a), 4.01(b) or
9.01 shall be deemed to have first been distributed from REMIC II to REMIC III
in respect of REMIC II Regular Interest U; all distributions made in respect of
the Class A-2 Certificates on each Distribution Date pursuant to Section
4.01(a), 4.01(b) or 9.01 shall be deemed to have first been distributed from
REMIC II to REMIC III in respect of REMIC II Regular Interest V; all
distributions made in respect of the Class B Certificates on each Distribution
Date pursuant to Section 4.01(a), 4.01(b) or 9.01 shall be deemed to have first
been distributed from REMIC II to REMIC III in respect of REMIC II Regular
Interest W; all distributions made in respect of the Class C Certificates on
each Distribution Date pursuant to Section 4.01(a), 4.01(b) or 9.01 shall be
deemed to have first been distributed from REMIC II to REMIC III in respect of
REMIC II Regular Interest X; all distributions made in respect of the Class D
Certificates on each Distribution Date pursuant to Section 4.01(a), 4.01(b) or
9.01 shall be deemed to have first been distributed from REMIC II to REMIC III
in respect of REMIC II Regular Interest Y; all distributions made in respect of
the Class E, Class F and/or Class G Certificates on each Distribution Date
pursuant to Section 4.01(a) or 9.01 shall be deemed to have first been
distributed from REMIC II to REMIC III in respect of REMIC II Regular Interest
Z; all distributions made in respect of the Class IO Certificates on each
Distribution Date pursuant to Section 4.01(a), 4.01(b) or 9.01, and allocable to
Component IO-U, shall be deemed to have first been distributed from REMIC II to
REMIC III in respect of REMIC II Regular Interest U; all distributions made in
respect of the Class IO Certificates on each Distribution Date pursuant to
Section 4.01(a), 4.01(b) or 9.01, and allocable to Component IO-V, shall be
deemed to have first been distributed from REMIC II to REMIC III in respect of
REMIC II Regular Interest V; all distributions made in respect of the Class IO
Certificates on each Distribution Date pursuant to Section 4.01(a), 4.01(b) or
9.01, and allocable to Component IO-W, shall be deemed to have first been
distributed from REMIC II to REMIC III in respect of REMIC II Regular Interest
W; all distributions made in respect of the Class IO Certificates on each
Distribution Date pursuant to Section 4.01(a), 4.01(b) or 9.01, and allocable to
Component IO-X, shall be deemed to have first been distributed from REMIC II to
REMIC III in respect of REMIC II Regular Interest X; and all distributions made
in respect of the Class IO Certificates on each Distribution Date pursuant to
Section 4.01(a), 4.01(b) or 9.01, and allocable to Component IO-Y, shall be
deemed to have first been distributed from REMIC II to REMIC III in respect of
REMIC II Regular Interest Y. In each such case, if such distribution on any such
Class of REMIC III Certificates was a distribution of interest, of principal, of
additional interest (in the form of Prepayment Premiums), or in reimbursement of
any Realized Losses and/or Additional Trust Fund Expenses previously deemed
allocated in respect of such Class of REMIC III Certificates, then the
corresponding distribution deemed to be made on a
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REMIC II Regular Interest pursuant to the preceding sentence shall be deemed
also to be a distribution of interest, of principal, of additional interest (in
the form of Prepayment Premiums), or in reimbursement of any Realized Losses
and/or Additional Trust Fund Expenses previously deemed allocated in respect of
such REMIC II Regular Interest. The actual distributions made by the Trustee on
each Distribution Date in respect of the REMIC III Certificates pursuant to
Sections 4.01(a), 4.01(b) and/or 9.01 shall be deemed to have been so made from
the amounts deemed distributed in respect of the REMIC II Regular Interests on
such Distribution Date pursuant to this Section 4.01(h). Notwithstanding the
deemed distributions on the REMIC II Regular Interests described in this Section
4.01(h), actual distributions of funds from the Distribution Account shall be
made only in accordance with Section 4.01(a), 4.01(b) or 9.01, as applicable.
(i) On each Distribution Date, the portion of the Available
Distribution Amount for such date distributed in respect of the Class R-II
Certificates and the REMIC III Certificates pursuant to Section 4.01(a) or 9.01
shall be deemed to have first been distributed from REMIC I to REMIC II in
respect of the REMIC I Regular Interests, for the following purposes and in the
following order of priority, in each case to the extent of the remaining portion
of such funds:
(i) to pay 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 REMIC I
Regular Interest for such Distribution Date and, to the extent not
previously deemed distributed, for all prior Distribution Dates;
(ii) to pay principal in respect of the REMIC I
Regular Interests, in an amount equal to, and PRO RATA in accordance
with, as to each 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) to reimburse the REMIC I Regular Interests for
any Realized Losses and Additional Trust Fund Expenses previously
deemed allocated thereto (with compounded interest), in an amount equal
to, and PRO RATA in accordance with, the Loss Reimbursement Amount for
each REMIC I Regular Interest.
Any Prepayment Premium distributed in respect of the Class IO
Certificates and/or the Registered Certificates on any Distribution Date
pursuant to Section 4.01(b) or 9.01 shall be deemed to have first been
distributed from REMIC I to REMIC II, in the case of each such Prepayment
Premium, in respect of the REMIC I Regular Interest created with respect to the
Mortgage Loan as to which such Prepayment Premium was received.
SECTION 4.02. Statements to Certificateholders; Collection
Reports.
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(a) On each Distribution Date, the Trustee shall forward by
mail to all of the Holders of each Class of REMIC III Regular Certificates a
statement (a "Distribution Date Statement") as to the distributions made on such
Distribution Date, based on and to the extent of information provided to it by
the Master Servicer, setting forth:
(i) the amount of the distribution on such Distribution Date to
the Holders of each Class of REMIC III Regular 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 REMIC III Regular Certificates allocable
to interest;
(iii) the amount of the distribution on such Distribution Date to
the Holders of each Class of REMIC III Regular Certificates allocable
to Prepayment Premiums;
(iv) the amount of the distribution on such Distribution Date to
the Holders of each Class of REMIC III Regular Certificates in
reimbursement of Realized Losses and Additional Trust Fund Expenses
previously deemed allocated thereto;
(v) the Available Distribution Amount for such Distribution
Date;
(vi) the aggregate amount of P&I Advances made in respect of such
Distribution Date pursuant to Section 4.03, including, without
limitation, any amounts applied pursuant to Section 4.03(a)(ii), 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 and/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;
(vii) the aggregate unpaid principal balance of the Mortgage Pool
outstanding as of the close of business on the related Determination
Date;
(viii) the aggregate Stated Principal Balance and Assigned Asset
Value of the Mortgage Pool outstanding immediately before and
immediately after such Distribution Date;
(ix) the number, aggregate 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)
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delinquent two months, (C) delinquent three or more months, (D) that
are Specially Serviced Mortgage Loans that are not delinquent one month
or more, and (E) 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, if any, 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) if a Phase I Environmental
Assessment of the related Mortgaged Property has been performed as
contemplated by Section 3.09(c) and the assessment is such that the
Special Servicer cannot make the determination set forth in clauses
(A)(i) and (A)(ii) of the first sentence of Section 3.09(c), a brief
description of the results of such Phase I 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 each REO Property included in the Trust Fund
as of the close of business on the related Determination Date, (A) the
loan number of the related Mortgage Loan, (B) the date of acquisition
of such REO Property by the Trust Fund, (C) the book value (within the
meaning of 12 C.F.R. ss.571.13) of such REO Property, (D) the aggregate
of all REO Revenues 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),
(E) the Stated Principal Balance of the related REO Loan immediately
following such Distribution Date and the unpaid principal balance of
such REO Loan as of the related Determination Date, and (F) a brief
description of the Special Servicer's efforts since the last
Distribution Date to stabilize the tenancy of such REO Property, to
repair and restore such REO Property to marketable condition and to
sell such REO Property at its then current fair market value;
(xiv) 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 during the related Collection Period (separately
identifying the portion thereof allocable to distributions on the
Certificates), and (D) the amount of any Realized
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Loss in respect of the related REO Loan in connection with such Final
Recovery Determination;
(xv) the Accrued Certificate Interest and Interest Distribution
Amount in respect of each Class of REMIC III Regular Certificates for
such Distribution Date;
(xvi) any unpaid interest in respect of each Class of REMIC III
Regular Certificates after giving effect to the distributions made on
such Distribution Date;
(xvii) the Pass-Through Rate (or, in the case of the Class IO
Certificates, the Effective Pass-Through Rate) for each Class of REMIC
III Regular Certificates for such Distribution Date;
(xviii) 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);
(xix) the aggregate of all Realized Losses and Additional Trust
Fund Expenses incurred during the related Collection Period;
(xx) the amount of any Appraisal Reduction Amounts determined
during the related Collection Period, on a loan-by-loan basis, and the
total Appraisal Reduction Amounts as of the related Determination Date,
on a loan-by-loan basis;
(xxi) the Class Principal Balance or Class Notional Amount, as
applicable, of each Class of REMIC III Regular Certificates outstanding
immediately before and immediately after such Distribution Date,
separately identifying any reduction therein due to the deemed
allocation of Realized Losses and Additional Trust Fund Expenses on
such Distribution Date;
(xxii) the Certificate Factor for each Class of REMIC III Regular
Certificates immediately following such Distribution Date;
(xxiii) the aggregate amount of interest on P&I Advances paid to the
Master Servicer, the Trustee and/or the Fiscal Agent during the related
Collection Period in accordance with Section 4.03(d);
(xxiv) the aggregate amount of interest on Servicing Advances paid
to the Master Servicer, the Special Servicer, the Trustee and/or the
Fiscal Agent during the related Collection Period in accordance with
Section 3.29(d);
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(xxv) (A) the aggregate amount of servicing 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, 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;
(xxvi) a brief description of any waiver, modification or amendment
of the terms of any Mortgage Loan entered into by the Special Servicer
pursuant to Section 3.20 during the related Collection Period; and
(xxvii) the aggregate amount of any Prepayment Premiums and
assumption fees paid to the Holders of the Class R-I Certificates on
such Distribution Date.
Each Distribution Date Statement shall be accompanied by all
Master Servicer Reports received since the preceding Distribution Date (or, in
the case of the initial Distribution Date, since the Closing Date). In addition,
for so long as the Certificates are outstanding, the Trustee shall make
available to Certificateholders, via facsimile transmission through its
Automated Statements Accessed by Phone (or any comparable service offered by any
successor Trustee), all of the information contained in the Distribution Date
Statements.
In the case of information to be furnished pursuant to clauses
(i) through (iv) and (xxv) above, the amounts shall be expressed as a dollar
amount in the aggregate for all Certificates of each applicable Class and per
Single Certificate thereof.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a REMIC III Regular Certificate a statement
containing the information set forth in clauses (i) through (iv) and (xxv) above
as to the applicable Class, aggregated for the portion of such calendar year
that such Person was a Holder. Such obligation of the Trustee shall be deemed to
have been satisfied to the extent that substantially comparable information
shall be provided by the Trustee pursuant to any requirements of the Code as
from time to time are in force.
On each Distribution Date, commencing with the Distribution
Date in June 1996, the Trustee shall forward by mail to each Holder of a REMIC
III Certificate a report containing information regarding the Mortgage Pool as
of the end of the related Collection Period, which report shall contain: (x) the
categories of information regarding the Mortgage Pool (other than with regard to
Prepayment Premiums) set forth in the Prospectus Supplement in the tables under
the caption "DESCRIPTION OF THE MORTGAGE POOL--Additional Mortgage Loan
Information" (calculated, where applicable, on the basis of the most recent
relevant information provided by the Mortgagors to the Master Servicer or the
Special Servicer and by the Master Servicer or the Special Servicer, as the case
may be, to the Trustee) and such information shall be presented in a tabular
format substantially similar to the format utilized in the Prospectus Supplement
under such caption; and (y) a loan-by-loan listing (in descending balance order)
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showing loan name, property type, location, unpaid principal balance, Mortgage
Rate, paid through date, maturity date, remaining term to maturity, Debt Service
Coverage Ratio, net interest portion of the Monthly Payment and principal
portion of the Monthly Payment (such loan-by-loan listing to also be made
available to Certificateholders electronically by the Trustee and the Master
Servicer, upon written request).
On each Distribution Date, the Trustee shall forward a copy of
the reports forwarded to the Holders of the REMIC III Regular Certificates on
such Distribution Date and a statement setting forth the amounts, if any,
actually distributed with respect to each Class of Residual Certificates on such
Distribution Date (i) to the Depositor, (ii) to the Master Servicer, (iii) to
the Special Servicer, (iv) to the Operating Adviser, (v) to the Extension
Adviser, (vi) to each Rating Agency, (vii) to each Holder of a Residual
Certificate, (viii) to Salomon Brothers at Seven World Trade Center, New York,
New York 10048, Attention: P&I Dept., or such other address as Salomon Brothers
may hereafter designate), and (ix) in the case of reports regarding the
respective Classes of Book-Entry Certificates, 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).
Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Holder of a Residual Certificate a statement containing
the information provided pursuant to the previous paragraph in respect of
distributions on each Class of Residual Certificates and pursuant to clauses (i)
through (iv) and (xxv) above in respect of distributions on each Class of REMIC
III Regular Certificates, aggregated for the portion of such calendar year that
such Person was a Holder. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as from time to
time are in force.
Upon written request of the Depositor or the Underwriter,
without payment of any fee, and upon written request of any Certificateholder,
together with payment of a reasonable fee specified by the Trustee, the Trustee
shall provide any information contemplated by this Section 4.02(a) on electronic
medium to such party (such computer diskette and such information thereon to
bear such appropriate disclaimers and qualifications as the Depositor and the
Trustee shall agree.)
The Trustee's responsibility for providing the above
information to the Certificateholders is subject to the availability, timeliness
and accuracy of the information provided to the Trustee by the Master Servicer.
The Trustee shall forward or otherwise make available to any
Certificate Owner in respect of a Book-Entry Certificate all information and/or
reports that would otherwise be available to a Holder of such Certificate
pursuant to this Section 4.02(a), upon written request to the Trustee
(accompanied by verification of such Certificate Owner's Ownership Interest).
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(b) Not later than the third Business Day following each
Determination Date (but, in any event, no later than the third Business Day
prior to the related Distribution Date, as the case may be), commencing in March
1996 in the case of the report described in clause (6) below and otherwise in
June 1996, the Master Servicer shall furnish to the Trustee (for receipt thereby
not later than such third Business Day following each Determination Date (but,
in any event, no later than the third Business Day prior to the related
Distribution Date, as the case may be), 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 fourth Business Day following such Determination Date,
the following reports: (1) a Comparative Financial Status Report, (2) a
Delinquent Loan Status Report, (3) a Historical Loss Estimate Report, (4) a
Historical Loan Modification Report, (5) an REO Status Report, and (6) a single
report (the "Collection Report") setting forth the information specified in
clauses (i) through (v) below (the amounts and allocations of payments,
collections, fees and expenses with respect to Specially Serviced Mortgage Loans
and REO Properties to be based upon the report to be delivered by the Special
Servicer to the Servicer within one Business Day after the Determination Date,
but in no event later than four Business Days prior to the immediately
succeeding Distribution Date):
(i) with respect to each Mortgage Loan (and any
successor REO Loan) that was included in the Trust Fund as of the
commencement of the Collection Period ending on such Determination
Date, (A) the loan number thereof, (B) the Mortgage Rate and Net
Mortgage Rate in effect as of the commencement of such Collection
Period, (C) the Stated Principal Balance outstanding immediately before
and that will be outstanding immediately after the related Distribution
Date, (D) the date on which the final payment is scheduled to be due,
(E) the amount of the Monthly Payment due on the Due Date in such
Collection Period, (F) all related payment and/or collection activity
since the preceding Collection Report (or, in the case of the initial
Collection Report, since the Closing Date) relevant to the Trustee's
calculations of amounts to be distributed on the Certificates on the
related Distribution Date and the application of such amounts in
accordance with Section 3.02(b) (or the definition of "REO Loan"), (G)
the delinquency status as of the end of such Collection Period, (H) in
the case of an REO Loan, the date of acquisition of the related REO
Property by the Trust Fund and the book value (within the meaning of 12
C.F.R. ss.571.13) of such REO Property, (I) whether a Liquidation Event
occurred during such Collection Period and, if so, a brief description
thereof, and (J) the amount of any Realized Loss incurred during such
Collection Period;
(ii) the information to be provided to Certificateholders on
the related Distribution Date pursuant to clauses (vi) through (xiv),
(xxv)(A), and (xxvi) of Section 4.02(a);
(iii) the aggregate amount of the Prepayment Premiums and, to
the extent not otherwise payable to the Master Servicer or Special
Servicer as additional servicing compensation, assumption fees received
during such Collection Period;
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(iv) any information supplemental hereto with respect to the
Mortgage Loans and REO Properties necessary for the Trustee to prepare
the reports contemplated by Section 4.02(a); and
(v) such other information regarding the Mortgage Loans and
any REO Properties as the Trustee may reasonably request to perform its
duties hereunder, including, without limitation, calculating and making
distributions on the Certificates.
The Master Servicer shall also deliver to the Trustee the
following materials:
(i) annually, on or before June 30 of each year, commencing
with June 30, 1996, with respect to each Mortgaged Property and REO
Property, an Operating Statement Analysis, together with copies of the
operating statements and rent rolls (but only to the extent the related
Mortgagor is required by the Mortgage to deliver, or otherwise agrees
to provide, such information) for such Mortgaged Property or REO
Property as of the end of the preceding calendar year; and
(ii) commencing in June 1996, within 30 days of receipt by the
Master Servicer (or, with respect to any Specially Serviced Mortgage
Loan or REO Property, by the Special Servicer) of annual operating
statements, if any, with respect to any Mortgaged Property or REO
Property, an NOI Adjustment Worksheet for such Mortgaged Property or
REO Property, as the case may be (with such annual operating statements
attached thereto as an exhibit).
The Master Servicer shall provide to the other parties hereto,
the Certificateholders and, if their Ownership Interests can be verified, the
Certificate Owners, as well as potential Certificateholders, Certificate Owners
and any other Person the Master Servicer may deem appropriate, viewing access,
to the extent available and subject to such reasonable operating rules and
procedures as the Master Servicer may adopt from time to time, to certain of its
electronic records relating to the Mortgage Pool. The information so available
in such electronic format (collectively, a "LPAS Report") shall be filed monthly
with the SEC pursuant to Section 3.19(d) for so long as there are reporting
requirements under the Exchange Act with respect to the Trust Fund (such LPAS
Report to be converted to hard copy and delivered monthly to the Trustee prior
to the Master Servicer taking over such filing obligations). If and when the
Master Servicer determines it is required under applicable law to do so, the
Master Servicer may convert the LPAS Report to hard copy and deliver such to the
Trustee for distribution to Certificateholders.
For purposes of satisfying its obligations set forth in
Section 4.05, the Trustee may, absent manifest error, conclusively rely on the
Master Servicer Reports 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
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until it has received such information from the Special Servicer and may, absent
manifest error, conclusively rely on the reports to be provided by the Special
Servicer.
SECTION 4.03. P&I Advances.
(a) On or before 1:00 p.m., New York City time, on each P&I
Advance Date, the Master Servicer shall, subject to Section 4.03(c) below,
either (i) remit from its own funds to the Trustee for deposit into the
Distribution Account an amount equal to the aggregate amount of P&I Advances, if
any, to be made in respect of the related Distribution Date, (ii) apply amounts
held in the Certificate 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
Certificate 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 Certificate 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 the Trustee does not
receive, or there is not deposited in the Distribution Account, on or before
4:00 p.m. New York City time, on any P&I Advance Date, the full amount of P&I
Advances, if any, required to be made in respect of the related Distribution
Date, then the Trustee promptly shall provide notice thereof to a Servicing
Officer of the Master Servicer. If after such notice the Trustee does not
receive the full amount of P&I Advances by 5:00 p.m. New York Time on such P&I
Advance Date for the related Distribution Date, then the provisions of Sections
7.01 and 7.02 shall apply.
(b) The aggregate amount of P&I Advances to be made by the
Master Servicer 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, net of related Master Servicing
Fees due or deemed due, as the case may be, in respect of the Mortgage Loans
(including, without limitation, Mortgage Loans delinquent as to their respective
Balloon Payments) and any REO Loans on their respective Due Dates during the
related Collection Period, in each case to the extent such amount was not paid
by or on behalf of the related Mortgagor or otherwise collected as of the close
of business on the related Determination Date; provided, however, 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) in the event of subsequent
delinquencies thereon; and provided, further, that the amount of P&I Advances
required to be made by the Master Servicer
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in respect of any Required Appraisal Loan shall be an amount equal to the
product of (i) the amount of the P&I Advance that would be required to be made
in respect of such Required Appraisal Loan without regard to the application of
this proviso, multiplied by (ii) a fraction, the numerator of which is equal to
the Stated Principal Balance of such Required Appraisal Loan immediately prior
to such Distribution Date, net of the related Appraisal Reduction Amount, if
any, and the denominator of which is equal to the Stated Principal Balance of
such Required Appraisal Loan immediately prior to such Distribution Date.
(c) Notwithstanding anything herein to the contrary, no P&I
Advance shall be required to be made hereunder if such P&I Advance would, if
made, constitute a Nonrecoverable P&I Advance. The determination by the Master
Servicer, the Trustee or the Fiscal Agent that it has made a Nonrecoverable P&I
Advance or that any proposed P&I Advance, if made, would constitute a
Nonrecoverable P&I Advance, shall be evidenced by an Officer's Certificate
delivered to the Depositor, the Operating Adviser and, in the case of the Master
Servicer, the Trustee (no later than, in the case of a proposed P&I Advance, the
earlier of the third Business Day following the related Determination Date and
the third Business Day preceding the related Distribution Date), setting forth
the basis for such determination, together with (i) a copy of an Appraisal of
the related Mortgaged Property or REO Property, as the case may be, performed
within the twelve months preceding such determination by an Independent
MAI-appraiser (or, if more than one such Appraisal was performed within such
time period, the most recent such Appraisal) and (ii) any other information,
including any engineers' reports, environmental surveys or similar reports that
the Master Servicer, the Trustee or the Fiscal Agent, as the case may be, 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
or the Fiscal Agent, as the case may be. The Trustee and the Fiscal Agent shall
be entitled to rely on the determination by the Master Servicer of the
nonrecoverability of any P&I Advance.
(d) In connection with its recovery of any P&I Advance made
thereby out of its own funds, the Master Servicer, the Trustee or the Fiscal
Agent, as applicable, shall be entitled to pay itself, out of any amounts then
on deposit in the Certificate Account, interest at the Reimbursement Rate in
effect 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. The Master Servicer
shall 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 Certificate Account.
(e) If, as of 5:00 p.m., New York City time, on any P&I
Advance Date, the Master Servicer shall not (i) have made any P&I Advance
required to have been made on such date pursuant to Section 4.03(a) or (ii)
delivered the Officer's Certificate and documentation related to a determination
of nonrecoverability of a P&I Advance pursuant to Section 4.03(c), the Trustee
shall immediately notify the Fiscal Agent by telephone promptly confirmed in
writing, and the Trustee shall no later than 10:00 a.m., New York City time, on
the related Distribution Date deposit into the Distribution Account in
immediately available funds an amount equal to the P&I Advances otherwise
required to have been made by the Master Servicer. If
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the Trustee fails to make any P&I Advance required to be made under this Section
4.03(e) on any Distribution Date, the Fiscal Agent shall make such P&I Advance
not later than 11:00 a.m., New York City time, on such Distribution Date and,
thereby, the Trustee shall not be in default under this Agreement.
SECTION 4.04. Allocation of Realized Losses and Additional
Trust Fund Expenses.
(a) On each Distribution Date, following the distributions to
be made on such date pursuant to Section 4.01(a) or 9.01, as the case may be,
the Trustee shall determine the amount, if any, by which (i) the then aggregate
Certificate Principal Balance of the Principal Balance Certificates, exceeds
(ii) the aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following such Distribution Date. If such excess does
exist, then the respective Class Principal Balances of the Class G Certificates,
Class F Certificates, Class E Certificates, Class D Certificates, Class C
Certificates and Class B Certificates shall be reduced, sequentially in that
order, in each case until the Class Principal Balance of the particular Class of
Principal Balance Certificates is reduced to zero or the amounts described in
clauses (i) and (ii) of the preceding sentence are equal. If, after the
foregoing reductions, the amount described in clause (i) of the second preceding
sentence still exceeds the amount described in clause (ii) of such sentence,
then the respective Class Principal Balances of the Class A-1 Certificates and
Class A-2 Certificates shall be reduced on a PRO RATA basis in accordance with
the relative sizes of such Class Principal Balances. All such reductions shall
be deemed to be an allocation of Realized Losses and Additional Trust Fund
Expenses.
(b) On each Distribution Date, following the deemed
distributions to be made on such date pursuant to Section 4.01(h), the Trustee
shall determine the amount, if any, by which (i) the then aggregate
Uncertificated Principal Balance of the REMIC II Regular Interests, exceeds (ii)
the aggregate Stated Principal Balance of the Mortgage Pool that will be
outstanding immediately following such Distribution Date. If such excess does
exist, then the respective Uncertificated Principal Balances of REMIC II Regular
Interest Z, REMIC II Regular Interest Y, REMIC II Regular Interest X and REMIC
II Regular Interest W shall be reduced, sequentially in that order, in each case
until the Uncertificated Principal Balance of the particular REMIC II Regular
Interest is reduced to zero or the amounts described in clauses (i) and (ii) of
the preceding sentence are equal. If, after the foregoing reductions, the amount
described in clause (i) of the second preceding sentence still exceeds the
amount described in clause (ii) of such sentence, then the respective
Uncertificated Principal Balances of REMIC II Regular Interest U and REMIC II
Regular Interest V shall be reduced on a PRO RATA basis in accordance with
relative sizes of such Uncertificated Principal Balances. All such reductions
shall be deemed to be an allocation of Realized Losses and Additional Trust Fund
Expenses.
(c) On each Distribution Date, following the distributions
deemed to be made in respect of the REMIC I Regular Interests pursuant to
Section 4.01(i), the Uncertificated Principal Balance of each REMIC I Regular
Interest shall be reduced to equal the Stated Principal Balance of the related
Mortgage Loan (or any successor REO Loan) that will be
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outstanding immediately following such Distribution Date. Such reductions shall
be deemed to be an allocation of Realized Losses and Additional Trust Fund
Expenses.
SECTION 4.05. Calculations.
The Trustee shall, provided it receives the necessary
information from the Master Servicer, be responsible for performing all
calculations necessary in connection with the actual and deemed distributions to
be made pursuant to Section 4.01 and Section 9.01 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.
SECTION 4.06. Use of Agents.
The Master Servicer or the Trustee may at its own expense
utilize agents or attorneys-in-fact in performing any of its obligations under
this Article IV (except the obligation to make P&I Advances), but no such
utilization shall relieve the Master Servicer or the Trustee from any of such
obligations, and the Master Servicer or the Trustee, as applicable, shall remain
responsible for all acts and omissions of any such agent or attorney-in-fact.
The Master Servicer or the Trustee shall have all the limitations upon liability
and all the indemnities for the actions and omissions of any such agent or
attorney-in-fact that it has for its own actions hereunder pursuant to Article
VI or Article VIII hereof, as applicable, and any such agent or attorney-in-fact
shall have the benefit of all the limitations upon liability, if any, and all
the indemnities provided to the Master Servicer under Section 6.03 or to the
Trustee under Sections 8.01, 8.02 and 8.05, as applicable.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates will be substantially in the respective
forms attached hereto as Exhibits A-1, A-2, A-3, A-4, A-5, A-6, A-7, A-8, A-9,
A-10, A-11 and A-12; 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 for 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 shall initially be held and
transferred through the book-entry facilities of the Depository. The REMIC III
Regular Certificates will be issuable only in denominations corresponding to
initial Certificate Principal Balances as of the Closing Date of not less than
$100,000 in the case of the Registered Certificates, and initial Certificate
Principal Balances or Certificate Notional Amounts, as the case may be, as of
the Closing Date of not less than $250,000 in the case of the Class IO, Class E,
Class F and Class G Certificates, and in each such case in integral multiples of
$1 in excess thereof; provided, however, that a single additional Class F
Certificate may be issued in a denomination corresponding to an initial
Certificate Principal Balance as of the Closing Date that includes the excess of
(i) the Initial Class Principal Balance of the Class F Certificates, over (ii)
the largest whole dollar denomination that does not exceed such amount. Each
Class of Residual Certificates will be issuable only in denominations
representing Percentage Interests of not less than 10.0%.
(b) The Certificates shall be executed by manual or facsimile
signature on behalf of the Trustee in its capacity as trustee hereunder by an
authorized officer. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the authorized officers of the Trustee shall be
entitled to all benefits under this Agreement, subject to the following
sentence, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates. No Certificate
shall be entitled to any benefit under this Agreement, or be valid for any
purpose, however, unless there appears on such Certificate a certificate of
authentication substantially in the form provided for herein executed by the
Certificate Registrar by manual signature, and such certificate of
authentication upon any Certificate shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
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SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
(a) At all times during the term of this Agreement, there
shall be maintained at the office of the Certificate Registrar a Certificate
Register in which, subject to such reasonable regulations as the Certificate
Registrar may prescribe, the Certificate Registrar shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee is hereby initially appointed (and hereby agrees to
act in accordance with the terms hereof) as Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. The 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 predecessor's duties as Certificate Registrar. The
Depositor, 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. Upon written
request of any Certificateholder made for purposes of communicating with other
Certificateholders with respect to their rights under this Agreement or upon
written request of the Depositor, the Master Servicer or the Special Servicer,
the Certificate Registrar shall promptly furnish such Certificateholder, the
Depositor, the Master Servicer or the Special Servicer, as the case may be, with
a list of the Certificateholders of record identified in the Certificate
Register at the time of the request and the Certificate Registrar shall be
indemnified and held harmless by the Trust Fund for any loss, liability or
expense (other than allocable overhead) incurred by the Certificate Registrar in
connection with its provision of such list to such Certificateholder or to the
Depositor, the Master Servicer or the Special Servicer.
(b) No Transfer of any Non-Registered Certificate or Ownership
Interest therein shall be made unless that transfer is made pursuant to an
effective registration statement under the Securities Act, and effective
registration or qualification under applicable state securities laws, or is made
in a transaction that does not require such registration or qualification.
Furthermore, for so long as the Class IO Certificates constitute Book-Entry
Certificates, no Transfer of any Ownership Interest therein may be made by a
Certificate Owner except in reliance on Rule 144A under the Securities Act to a
Qualified Institutional Buyer that is acquiring such Ownership Interest for its
own account or for the account of another Qualified Institutional Buyer. If a
Transfer of any Non-Registered Certificate (including, without limitation, if
held as a Definitive Certificate, any Class IO Certificate) is to be made
without registration under the Securities Act (other than in connection with the
initial issuance thereof or the initial Transfer thereof by the Depositor or its
Affiliates), then the Certificate Registrar shall refuse to register such
Transfer unless it receives (and upon receipt, may conclusively rely upon)
either: (i) a certificate from the Certificateholder desiring to effect such
transfer substantially in the form attached as Exhibit G-1 hereto, and a
certificate from such
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Certificateholder's prospective Transferee substantially in the form attached as
either Exhibit G-2 hereto or as Exhibit G-3 hereto; or (ii) an Opinion of
Counsel satisfactory to the Certificate Registrar 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 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, during the period that the Class IO Certificates constitute
Book-Entry Certificates, any Transfer of an Ownership Interest therein is to be
made without registration under the Securities Act, the Transferee will be
deemed to have made each of the representations and warranties set forth on
Exhibit G-2 hereto in respect of such Ownership Interest as if it was evidenced
by a Definitive Certificate. None of the Depositor, the Trustee or the
Certificate Registrar is obligated to register or qualify any Class of
Non-Registered Certificates under the Securities Act or any other securities law
or to take any action not otherwise required under this Agreement to permit the
Transfer of any Non-Registered Certificate or Ownership Interest therein without
registration or qualification. Any Holder of a Non-Registered Certificate, or
any Certificate Owner with an Ownership Interest in a Non-Registered Certificate
that constitutes a Book-Entry Certificate, desiring to effect such a Transfer
shall, and upon acquisition of such a Certificate or Ownership Interest shall be
deemed to have agreed to, indemnify the Trustee, the Certificate Registrar and
the Depositor against any liability that may result if the Transfer is not so
exempt or is not made in accordance with such federal and state laws.
(c) No Transfer of a Class IO or Subordinated Certificate or
any Ownership 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, 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 Ownership Interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan (including,
without limitation, any insurance company using assets in its general or
separate account that may constitute "plan assets" of a Plan), unless: (i) the
purchase and holding of such Certificate or Ownership Interest therein is exempt
from the prohibited transaction provisions of Section 406 of ERISA and Section
4975 of the Code under a PTCE or, in the case of a Class IO Certificate,
Prohibited Transaction Exemption No. 89-89; or (ii) the prospective transferee
provides the Certificate Registrar and the Master Servicer with a certification
of facts and an Opinion of Counsel which establish to the reasonable
satisfaction of the Certificate Registrar and the Master Servicer that such
transfer will not result in a violation of Section 406 of ERISA or Section 4975
of the Code or result in the imposition of an excise tax under Section 4975 of
the Code. Each Person who acquires a Class IO or Subordinated Certificate or any
Ownership Interest therein (unless it shall have delivered the certification of
facts and Opinion of Counsel referred to in clause (ii) of the preceding
sentence) will be required to deliver to the Certificate Registrar and the
Master Servicer a certification to the effect that (or, in the case of any such
Certificate that is a BookEntry Certificate, will be deemed to have represented
and certified that): (i) it is neither a Plan
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nor any Person who is directly or indirectly purchasing such Certificate or
Ownership 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 Ownership Interest therein is exempt from the prohibited transaction
provisions of Section 406 of ERISA and Section 4975 of the Code under a PTCE; or
(iii) in the case of a Class IO Certificate or Ownership Interest therein being
acquired by or on behalf of a Plan in reliance on Prohibited Transaction
Exemption No. 89-89, such Plan (X) is an accredited investor as defined in Rule
501(a)(1) of Regulation D of the Securities Act, (Y) is not sponsored (within
the meaning of Section 3(16)(B) of ERISA) by the Trustee, the Depositor, the
Fiscal Agent, the Mortgage Loan Seller, the Master Servicer, the Special
Servicer, any Sub-Servicer or any Mortgagor with respect to Mortgage Loans
constituting more than five percent of the aggregate unamortized principal
balance of the Mortgage Loans determined on the date of the initial issuance of
the Certificates, or by any Affiliate of such Person, and (Z) agrees that it
will obtain from each of its Transferees a written representation that such
Transferee, if a Plan, satisfies the requirements of the immediately preceding
clauses (iii)(X) and (iii)(Y), together with a written agreement that such
Transferee will obtain from each of its Transferees that are Plans a similar
written representation regarding satisfaction of the requirements of the
immediately preceding clauses (iii)(X) and (iii)(Y). Any Holder of a Class IO or
Subordinated Certificate desiring to effect a Transfer of such Certificate or
Ownership Interest therein shall, and upon acquisition of such Certificate shall
be deemed to have agreed to, indemnify the Trustee, the Certificate Registrar,
the Master Servicer, the Special Servicer, the Depositor and the Trust Fund
against any liability that may result if the Transfer is not made in accordance
with this Section 5.02(c).
(d) (i) Each Person who has or who acquires any Ownership
Interest in a Residual Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee under clause
(ii)(A) below to deliver payments to a Person other than such Person and to have
irrevocably authorized the Trustee under clause (ii)(B) below to negotiate the
terms of any mandatory sale and to execute all instruments of Transfer and to do
all other things necessary in connection with any such sale. The rights of each
Person acquiring any Ownership Interest in a Residual Certificate are expressly
subject to the following provisions:
(A) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall be
a Permitted Transferee and shall promptly notify the
Master Servicer and the Trustee of any change or
impending change in its status as a Permitted
Transferee.
(B) In connection with any proposed Transfer
of any Ownership Interest in a Residual Certificate,
the Certificate Registrar shall require delivery to
it, and shall not register the Transfer of any
Residual Certificate until its receipt of an
affidavit and agreement substantially in the form
attached hereto as Exhibit H-1, I-1 or J-1, as
applicable (in any such case, a "Transfer Affidavit
and Agreement"), from the proposed Transferee, in
form and substance satisfactory to the Certificate
Registrar,
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and upon which the Certificate Registrar may, in the
absence of actual knowledge by a Responsible Officer
of either the Trustee or the Certificate Registrar to
the contrary, conclusively rely, representing and
warranting, among other things, that such Transferee
is a Permitted Transferee, that it is not acquiring
its Ownership Interest in the Residual Certificate
that is the subject of the proposed Transfer as a
nominee, trustee or agent for any Person that is not
a Permitted Transferee, that for so long as it
retains its Ownership Interest in a Residual
Certificate, it will endeavor to remain a Permitted
Transferee, and that it has reviewed the provisions
of this Section 5.02(d) and agrees to be bound by
them.
(C) Notwithstanding the delivery of a
Transfer Affidavit and Agreement by a proposed
Transferee under clause (B) above, if a Responsible
Officer of either the Trustee or the Certificate
Registrar has actual knowledge that the proposed
Transferee is not a Permitted Transferee, no Transfer
of an Ownership Interest in a Residual Certificate to
such proposed Transferee shall be effected.
(D) Each Person holding or acquiring any
Ownership Interest in a Residual Certificate shall
agree (1) to require a Transfer Affidavit and
Agreement from any prospective Transferee to whom
such Person attempts to transfer its Ownership
Interest in such Residual Certificate and (2) not to
transfer its Ownership Interest in such Residual
Certificate unless it provides to the Certificate
Registrar a certificate substantially in the form
attached hereto as Exhibit H-2, I-2 or J-2, as
applicable, stating that, among other things, it has
no actual knowledge that such prospective Transferee
is not a Permitted Transferee.
(E) Each Person holding or acquiring an
Ownership Interest in a Residual Certificate, by
purchasing an Ownership Interest in such Certificate,
agrees to give the Master Servicer and the Trustee
written notice that it is a "pass-through interest
holder" within the meaning of temporary Treasury
regulation Section 1.67-3T(a)(2)(i)(A) immediately
upon acquiring an Ownership Interest in a Residual
Certificate, if it is, or is holding an Ownership
Interest in a Residual Certificate on behalf of, a
"pass-through interest holder".
(ii) (A) If any purported Transferee shall become a
Holder of a Residual Certificate in violation of the
provisions of this Section 5.02(d), then the last preceding
Holder of such Residual Certificate that was in compliance
with the provisions of this Section 5.02(d) shall be restored,
to the extent permitted by law, to all rights as Holder
thereof retroactive to the date of registration of such
Transfer of such Residual Certificate. None of the Trustee,
the Master Servicer or the Certificate Registrar shall be
under any liability to any Person for any
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registration of Transfer of a Residual Certificate that is in
fact not permitted by this Section 5.02(d) or for making any
payments due on such Certificate to the Holder thereof or for
taking any other action with respect to such Holder under the
provisions of this Agreement.
(B) If any purported Transferee shall become
a Holder of a Residual Certificate in violation of the
restrictions in this Section 5.02(d) and to the extent that
the retroactive restoration of the rights of the Holder of
such Residual Certificate as described in clause (ii)(A) above
shall be invalid, illegal or unenforceable, then the Trustee
shall have the right, but not the obligation, without notice
to the Holder or any prior Holder of such Residual
Certificate, to sell such Residual Certificate to a purchaser
selected by the Trustee on such terms as the Trustee may
choose. Such purported Transferee shall promptly endorse and
deliver such Residual Certificate in accordance with the
instructions of the Trustee. Such purchaser may be the Trustee
itself or any Affiliate of the Trustee. The proceeds of such
sale, net of the commissions (which may include commissions
payable to the Trustee or its Affiliates), expenses and taxes
due, if any, will be remitted by the Trustee to such purported
Transferee. The terms and conditions of any sale under this
clause (ii)(B) shall be determined in the sole discretion of
the Trustee, and the Trustee shall not be liable to any Person
having an Ownership Interest in a Residual Certificate as a
result of its exercise of such discretion.
(iii) The Trustee shall make available to the Internal
Revenue Service and to those Persons specified by the REMIC
Provisions all information necessary to compute any tax
imposed (A) as a result of the Transfer of an Ownership
Interest in a Residual Certificate to any Person who is a
Disqualified Organization, including the information described
in Treasury regulations sections 1.860D-1(b)(5) and
1.860E-2(a)(5) with respect to the "excess inclusions" of such
Residual Certificate and (B) as a result of any regulated
investment company, real estate investment trust, common trust
fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a
Residual Certificate having as among its record holders at any
time any Person which is a Disqualified Organization. The
Person holding such Ownership Interest shall be responsible
for the reasonable compensation of the Trustee 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, without the consent of any Certificateholder,
provided that there shall have been delivered to the Trustee
and the Master Servicer the following:
(A) written confirmation from each Rating
Agency to the effect that the modification of,
addition to or elimination of such provisions will
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not cause such Rating Agency to downgrade, withdraw
or qualify 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 Master
Servicer, 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 Trust, the Trustee, the Master
Servicer or the Trust Fund), to the effect that doing
so will not cause any of REMIC I, REMIC II or REMIC
III to (x) cease to qualify as a REMIC or (y) be
subject to an entity-level tax caused by the Transfer
of any Residual Certificate to a Person which is not
a Permitted Transferee, or cause a Person other than
the prospective Transferee to be subject to a
REMIC-related tax caused by the Transfer of a
Residual Certificate to a Person that is not a
Permitted Transferee.
(e) Subject to the preceding provisions of this Section 5.02,
upon surrender for registration of transfer of any Certificate at the offices of
the Certificate Registrar maintained for such purpose, the Trustee shall execute
and the Certificate Registrar shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of the same
Class of a like aggregate Percentage Interest.
(f) At the option of any Holder, its Certificates may be
exchanged for other Certificates of authorized denominations of the same Class
of a like aggregate Percentage Interest, upon surrender of the Certificates to
be exchanged at the offices of the Certificate Registrar maintained for such
purpose. Whenever any Certificates are so surrendered for exchange, the Trustee
shall execute and the Certificate Registrar shall authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(g) 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.
(h) No service charge shall be imposed for any transfer or
exchange of Certificates, but the Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Certificates.
(i) All Certificates surrendered for transfer or 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.
(j) The Certificate Registrar shall provide to the Master
Servicer, the Special Servicer, the Depositor and, if it is no longer the
Certificate Registrar, the Trustee notice of
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each transfer of a Certificate and, upon request, shall provide to each such
Person an updated copy of the Certificate Register.
SECTION 5.03. Book-Entry Certificates.
(a) The Registered Certificates and the Class IO Certificates
shall, in the case of each Class thereof, initially be issued as one or more
Certificates registered in the name of the Depository or its nominee and, except
as provided in Section 5.03(c) below, 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, the Fiscal Agent and the Certificate Registrar may for all
purposes, including the making of payments due on the Book-Entry Certificates,
deal with the Depository as the authorized representative of the Certificate
Owners with respect to such Certificates for the purposes of exercising the
rights of Certificateholders hereunder. The rights of Certificate Owners with
respect to the Book-Entry Certificates shall be limited to those established by
law and agreements between such Certificate Owners and the Depository
Participants and brokerage firms representing such Certificate Owners. Multiple
requests and directions from, and votes of, the Depository as Holder of the
Book-Entry Certificates with respect to any particular matter shall not be
deemed inconsistent if they are made with respect to different Certificate
Owners. The Trustee may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and shall give
notice to the Depository of such record date.
(c) If (i)(A) the Depositor advises the Trustee and the
Certificate Registrar in writing that the Depository is no longer willing or
able to properly discharge its responsibilities with respect to a Class of the
Book-Entry Certificates, and (B) the Depositor is unable to locate a qualified
successor, or (ii) the Depositor at its option advises the Trustee and the
Certificate Registrar in writing that it elects to terminate the book-entry
system through the Depository with respect to a Class of Book-Entry
Certificates, 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
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transfer, the Trustee shall execute, at the Depositor's expense, and the
Certificate Registrar 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 Trustee 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.
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 required by them to save each of them harmless, then, in the
absence of actual notice to the Trustee or the Certificate Registrar that such
Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of the same Class and like Percentage Interest.
Upon the issuance of any new Certificate under this Section, the Trustee and the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) connected therewith. Any replacement Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership in the applicable REMIC created hereunder, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
SECTION 5.05. Persons Deemed Owners.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent, the Certificate Registrar and any agent of any of
them may treat the person in whose name any Certificate is registered as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Section 4.01 and for all other purposes whatsoever, and none of the Depositor,
the Master Servicer, the Special Servicer, the Trustee, the Fiscal Agent, 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 AND THE SPECIAL SERVICER
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 or 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 or limited partnership, as applicable,
under the laws of the jurisdiction of its organization, and each will obtain and
preserve its qualification to do business as a foreign corporation or limited
partnership, as applicable, in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, the Certificates or any of the Mortgage Loans and to perform its
respective duties under this Agreement.
The Depositor, the Master Servicer 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, or, in the case of the Master
Servicer or Special Servicer, transfer all or substantially all of its
commercial/multifamily mortgage loan servicing and asset management portfolio 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, or any Person acquiring such servicing and
asset management portfolio from the Master Servicer or 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 (i) no successor or surviving
Person shall succeed to the rights of any of the Master Servicer or the Special
Servicer unless (A) such succession is approved by the Trustee (whose approval
shall not be unreasonably withheld), (B) in the case of a successor to the
Master Servicer, such successor has a net worth of not less than $10,000,000 and
(C) each Rating Agency has confirmed in writing that such succession in and of
itself will not result in a downgrade, qualification or withdrawal of the then
current rating assigned by it to any Class of Certificates.
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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 or the
Certificateholders for any action taken, or not taken, in good faith pursuant to
this Agreement (or pursuant to any direction or objection of the Operating
Advisor or the Extension Advisor which it is obligated to follow pursuant to
Section 3.27), 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 or warranty made herein, or against any
expense or liability specifically required to be borne by such party without
right of reimbursement pursuant to the terms hereof, or against any liability
which would otherwise be imposed by reason of misfeasance, bad faith or
negligence in the performance of obligations or duties hereunder, or by reason
of reckless disregard of such obligations and duties. The Depositor, the Master
Servicer, the Special Servicer, any of their partners, or any of their (or their
partners') directors, officers, employees or agents 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, any of their partners, or any of their
(or their partners') directors, officers, employees or agents shall be
indemnified and held harmless by the Trust Fund against any loss, liability or
expense incurred in connection with any legal action relating to this Agreement
or the Certificates, other than any loss, liability or expense: (i) specifically
required to be borne by such party without right of reimbursement pursuant to
the terms hereof; (ii) incurred in connection with any breach of a
representation or warranty made herein; or (iii) incurred by reason of
misfeasance, bad faith or negligence in the performance of obligations or duties
hereunder, or by reason of reckless disregard of such obligations or duties.
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 Certificate 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 or by the Depositor, the Trustee (except with respect to
Section 8.05(c)) or any Certificateholder.
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SECTION 6.04. Master Servicer and the 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 and the Operating Advisor. Unless applicable
law requires the Master Servicer's or Special Servicer's resignation to become
effective immediately, 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.
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 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. Notwithstanding anything to the contrary
contained herein, each of the Master Servicer and the Special Servicer may
pledge or assign its respective rights hereunder to be reimbursed for Advances
made thereby out of its own funds.
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 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, which records it is not prohibited by applicable law or contract
from disclosing, except to the extent such information constitutes proprietary
information or is subject to privilege under applicable law. Upon reasonable
request, the Master Servicer and the Special Servicer shall each furnish the
Depositor 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
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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 relieved of any of its obligations hereunder by virtue of such
performance by the Depositor or its designee and, further provided, 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 . Neither
the Depositor nor the Trustee shall have any responsibility or liability for any
action or failure to act by the Master Servicer or the Special Servicer and 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, Trustee and Special Servicer to
Cooperate with Master Servicer.
The Depositor, the Trustee and the Special Servicer 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 Termination of Special Servicer at the
Direction of the Operating Advisor.
The Trustee shall terminate the services of the Special
Servicer under this Agreement by delivering to the Special Servicer (with a copy
to the other parties hereto) a written notice of such termination if (i) it
receives from the Operating Adviser written notice that the Operating Adviser
wishes to appoint a successor Special Servicer and (ii) such proposed successor
(A) shall have agreed to serve as such, (B) shall be reasonably satisfactory to
the Trustee and to the Depositor, (C) shall have executed and delivered to the
Trustee an agreement, in form and substance reasonably satisfactory to the
Trustee, pursuant to which the successor special servicer has agreed, upon the
termination of the current Special Servicer, to assume and perform the duties of
the Special Servicer set forth in this Agreement; provided that no such
successor shall become special servicer unless the Trustee shall have received
written assurance
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from each of Standard and Poor's and Fitch that the succession of such proposed
successor would not, in and of itself, result in a qualification, downgrading or
withdrawal of the then current ratings on the Certificates. The existing Special
Servicer shall be deemed to have been terminated simultaneously with such
proposed successor's becoming the Special Servicer hereunder; provided, however,
that the terminated 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 termination, whether in respect of reimbursement of
Servicing Advances or otherwise, and it shall continue to be entitled to the
benefits of Section 6.03 notwithstanding any such termination. Such terminated
Special Servicer shall cooperate with the Trustee and the replacement Special
Servicer in effecting the termination of the terminated 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 REO Account or delivered to
the Master Servicer or that are thereafter received with respect to Specially
Serviced Mortgage Loans and REO Properties.
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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 timely to deposit into
the Certificate Account, or to deposit into, or remit to the Trustee
for deposit into, the Distribution Account, any amount (other than P&I
Advances) required to be so deposited or distributed by it under this
Agreement; or
(ii) any failure by the Special Servicer timely to deposit into
the REO Account, or to deposit into, or to remit to the Master Servicer
for deposit into, the Certificate Account, any amount required to be so
deposited or remitted under this Agreement; or
(iii) 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 30 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 (with a copy
to each other party hereto) by the Holders of Certificates entitled to
at least 25% of the Voting Rights; or
(iv) any breach on the part of the Master Servicer or the Special
Servicer of any representation or warranty contained in this Agreement
that materially and adversely affects the interests of any Class of
Certificateholders and which continues unremedied for a period of 30
days after the date on which notice of such breach, requiring the same
to be remedied, shall have been given to the Master Servicer or the
Special Servicer, as the case may be, by any other party hereto or to
the Master Servicer or the Special Servicer, as the case may be, (with
a copy to each other party hereto) by the Holders of Certificates
entitled to at least 25% of the Voting Rights; or
(v) 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
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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
(vi) 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
(vii) 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 action in furtherance of the foregoing; or
(viii) either Rating Agency confirms in writing that it would
downgrade, withdraw or qualify the outstanding rating of any Class of
the Certificates because the existing or prospective financial
condition or mortgage loan servicing capability of the Master Servicer
or the Special Servicer is insufficient to maintain such outstanding
rating;
(ix) the Master Servicer shall fail to remit to the Trustee for
deposit into the Distribution Account, on any P&I Advance Date, the
full amount of P&I Advances required to be made on such date, which
failure continues unremedied until 5:00 p.m.
on such P&I Advance Date.
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 with respect to the Master
Servicer or the Special Servicer (in either case, for purposes of this Section
7.01(b), the "Defaulting Party") occurs 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, by
notice in writing to the Defaulting Party (with a copy of such notice to each
other party hereto), shall 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 and otherwise as specifically
provided herein. 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 instru-
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ments, 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, or another successor Master
Servicer or Special Servicer, as applicable, designated by the Trustee, with all
documents and records, including those in electronic form, requested thereby to
enable the Trustee, or another successor Master Servicer or Special Servicer, as
applicable, designated by 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 transfer within two Business Days 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 Certificate
Account, the Distribution Account or a Servicing Account or 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 or the Certificate
Account or 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, servicing compensation 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 a Defaulting Party pursuant to this Section 7.01(b)
shall be borne by the related Defaulting Party and to the extent not paid by
such Defaulting Party, such expense shall be borne by the Trust Fund. For
purposes of this Section 7.01, the Trustee shall not be deemed to have knowledge
of an Event of Default unless a Responsible Officer of the Trustee 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.
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 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
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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)(ix),
the unmade P&I Advances that gave rise to such an Event of Default; provided
that if the Master Servicer is the resigning or terminated party, and if the
Trustee is prohibited by law or regulation from obligating itself to make P&I
Advances, the Trustee shall not be obligated to make such P&I Advances; and
provided, further, 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 accruing from and after the date of the
Trustee's succession, to 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 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, in the case of the Master Servicer
only, has a net worth of not less than $10,000,000 and, in the case of either
the Master Servicer or the Special Servicer, is otherwise acceptable to each
Rating Agency (as evidenced by written confirmation therefrom to the effect that
the appointment of such institution would not adversely affect its rating on any
Class of Certificates), 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. Except with respect to an
appointment provided below, 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. Notwithstanding the above, the Trustee shall, if the
Master Servicer is the resigning or terminated party, and the Trustee is
prohibited by law or regulation from making P&I Advances, promptly appoint any
established mortgage loan servicing institution that has a net worth of not less
than $10,000,000 and is otherwise acceptable to each Rating Agency (as evidenced
by written confirmation therefrom to the effect that the appointment of such
institution would not adversely affect its rating on any Class of Certificates),
as the successor to the Master Servicer hereunder in the assumption of all or
any part of the responsibilities, duties or liabilities of the Master Servicer
hereunder (including, without limitation, the obligation to make P&I Advances),
which appointment will become effective immediately. 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 Business Days after a
Responsible Officer of the Trustee has notice of the occurrence of such an event
in accordance with Section 8.01(c)(iv), the Trustee shall transmit by mail to
the Depositor and all Certificateholders notice of such occurrence, unless such
default shall have been cured.
SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 66-2/3% of the Voting Rights
allocated to the Classes of Certificates affected by any Event of Default
hereunder may waive such Event of Default; provided, however, that an Event of
Default under clause (i) or clause (ii) of Section 7.01(a) may be waived only by
all of the Certificateholders of the affected Classes; and provided further that
such waiver must be effected prior to a successor assuming the rights, duties
and obligations of the defaulting party 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. 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, 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
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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 THE 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 that 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 and if the instrument is not
corrected to the Trustee's reasonable satisfaction, then the Trustee shall
provide notice thereof to the Certificateholders. 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 or 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.
(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
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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 51% (or, in the
case of a direction to terminate pursuant to Section 7.01(b),
25%) of the Voting Rights of an affected Class relating to the
time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Agreement.
(iv) For purposes of this Agreement, the Trustee shall
not be deemed to have notice of any default, Event of Default
or any other fact, event or circumstance the occurrence or
existence of which may impose duties upon the Trustee
hereunder unless a Responsible Officer of the Trustee has
actual knowledge thereof.
(v) The Trustee and the Fiscal Agent shall not be under
any obligation to appear in, prosecute or defend any legal
action that is not incidental to their respective duties as
Trustee and Fiscal Agent in accordance with this Agreement,
and if either does, then to the extent provided by Section
8.05(b), all legal expenses and costs of such action shall be
expenses and costs of the Trust Fund, and the Trustee and the
Fiscal Agent shall be entitled to be reimbursed therefor from
the Distribution Account.
(vi) Neither the Trustee nor the Fiscal Agent nor any of
their respective directors, officers, employees, agents or
control persons shall be responsible for any act or omission
of any Custodian, paying agent or Certificate Registrar that
is not an Affiliate of the Trustee and that is selected other
than by the Trustee, performed or omitted in compliance with
any custodial or other agreement, or any act or omission of
the Master Servicer, the Special Servicer, the Depositor or
any other Person, including without limitation, in connection
with actions taken pursuant to this Agreement.
(vii) The execution by the Trustee of any forms or plans
of liquidation in connection with REMIC I, REMIC II or REMIC
III shall not constitute a representation by the Trustee as to
the adequacy of such form or plan of liquidation.
(viii) Neither the Trustee nor the Fiscal Agent shall be
charged with knowledge of any act, failure to act or breach of
any Person upon the occurrence of which the Trustee may be
required to act, unless a Responsible Officer of the Trustee
or the Fiscal Agent, as applicable, obtains actual knowledge
of such failure.
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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, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document reasonably believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ii) the Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance therewith;
(iii) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to make any investigation
of matters arising hereunder or, except as provided in Section 10.01(d), 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; the right of
the Trustee to perform any discretionary act enumerated in this Agreement shall
not be construed as a duty and the Trustee shall not be answerable for other
than its negligence, bad faith or willful misconduct in the performance of any
such act; except to the extent that any particular cost, expense or liability is
expressly required by this Agreement to be borne by the Trustee, 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 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) none of the Trustee or any of its directors, officers,
employees, agents or "control persons" (within the meanings of the Securities
Act) shall be personally liable for any action reasonably taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement;
(v) prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper or
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document, unless requested in writing to do so by Holders of Certificates
entitled to at least 51% of the Voting Rights of any affected Class; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity from the Certificateholders requesting
such action 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;
(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 of the Depositor;
(viii) Neither the Trustee nor the Fiscal Agent (in their
respective capacities as such) shall be liable for any loss on any investment of
funds pursuant to this Agreement;
(ix) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
the proceeding relating thereto, and any such suit, action or proceedings
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement;
(x) None of the provisions contained in this Agreement shall in
any event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Master Servicer or the Special
Servicer under this Agreement, except during such time, if any, as the Trustee
shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Master Servicer or the Special Servicer in accordance with
the terms of this Agreement, and except for the making of Advances. The Trustee
shall have no duty to conduct any affirmative investigation as to the occurrence
of any condition requiring the repurchase or substitution of any Mortgage Loan,
or the transfer and repurchase or eligibility of any Mortgage Loan for purposes
of this Agreement; and
(xi) Unless otherwise specifically required by law, neither the
Trustee nor the Fiscal Agent shall be required to post any surety or bond of any
kind in connection with the execution or performance of its duties hereunder.
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/or the Fiscal Agent in Article
II and Section 8.13 and the signature of the Trustee set forth on each
outstanding Certificate, shall be taken as the statements of the
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Depositor, the Master Servicer or the Special Servicer, as the case may be, and
the Trustee and the Fiscal Agent assume no responsibility for their correctness.
Neither the Trustee nor the Fiscal Agent shall at any time have any
responsibility for or with respect to the legality, validity and enforceability
of any Mortgage or any Mortgage Loan, or the perfection and priority of any
Mortgage or the maintenance of any such perfection and priority (other than if
the Trustee shall assume the duties of the Master Servicer or the Special
Servicer pursuant to Section 7.02), or for or with respect to the sufficiency of
the Trust Fund or its ability to generate the payments to be distributed to
Certificateholders, under this Agreement, including without limitation: the
existence and condition of any Mortgaged Property or the existence and
enforceability of any hazard or other insurance thereon (other than if the
Trustee shall assume the duties of the Master Servicer or the Special Servicer
pursuant to Section 7.02); the existence of any Mortgage Loan or the contents of
the related Mortgage File on any computer or other record thereof (other than
its review procedures set forth in Section 2.02 or if the Trustee shall assume
the duties of the Master Servicer pursuant to Section 7.02); the validity of the
assignment of any Mortgage Loan to the Trust Fund or of any intervening
assignment; the completeness of any Mortgage File (other than as set forth in
Section 2.02); the performance or enforcement of any Mortgage Loan (other than
if the Trustee shall assume the duties of the Master Servicer or the Special
Servicer pursuant to Section 7.02); the compliance by the Depositor, the Master
Servicer or the Special Servicer with any warranty or representation made under
this Agreement or in any related document or the accuracy of any such warranty
or representation prior to the Trustee's receipt of notice or other discovery of
any non-compliance therewith or any breach thereof; any investment of monies by
or at the direction of the Master Servicer or any loss resulting therefrom, it
being understood that the Trustee shall remain responsible for any Trust Fund
property that it may hold in its individual capacity; the acts or omission of
any of the Depositor, the Master Servicer (other than the failure to make
Advances and other than if the Trustee shall assume the duties of the Master
Servicer pursuant to Section 7.02), the Special Servicer (other than the failure
to make Advances and other than if the Trustee shall assume the duties of the
Special Servicer pursuant to Section 7.02), or any subservicer or any borrower;
the acts of any of the Depositor, the Master Servicer (other than if the Trustee
shall assume the duties of the Master Servicer pursuant to Section 7.02), the
Special Servicer (other than if the Trustee shall assume the duties of the
Special Servicer pursuant to Section 7.02) or any subservicer or any borrower
taken in the name of the Trustee, except to the extent such action is taken at
the express written direction of the Trustee; the failure of the Master
Servicer, the Special Servicer or any subservicer to act or perform any duties
required of it as agent of the Trustee hereunder; or any action by the Trustee
taken at the instruction of the Master Servicer (other than if the Trustee shall
assume the duties of the Master Servicer pursuant to Section 7.02), the Special
Servicer (other than if the Trustee shall assume the duties of the Special
Servicer pursuant to Section 7.02) unless the taking of such action is not
permitted by the express terms of this Agreement; provided, however, that the
foregoing shall not relieve the Trustee of its obligation to perform its duties
under this Agreement. The Trustee and the Fiscal Agent make no representations
as to the validity or sufficiency of this Agreement (other than as specifically
set forth in Section 8.13) 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
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to it or of the proceeds of such Certificates, or for the use or application of
any funds paid to the Depositor in respect of the assignment of the Mortgage
Loans to the Trust Fund, or any funds deposited in or withdrawn from the
Certificate Account or any other account by or on behalf of the Depositor, the
Master Servicer or the Special Servicer. Neither the Trustee nor the Fiscal
Agent shall have responsibility for filing any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain
the perfection of any security interest or lien granted to it hereunder (unless
the Trustee shall have become the successor Master Servicer) or to record this
Agreement. In making any calculation hereunder which includes as a component
thereof the payment or distribution of interest for a stated period at a stated
rate, to the extent permitted by applicable law, the Trustee shall assume that
such payment is so permitted unless a Responsible Officer of the Trustee has
actual knowledge, or receives an Opinion of Counsel to the effect, that such
payment is not permitted by applicable law.
SECTION 8.04. Trustee and Fiscal Agent May Own Certificates.
The Trustee, the Fiscal Agent or any agent of the Trustee or
the Fiscal Agent, in its individual or any other capacity, may become the owner
or pledgee of Certificates with the same rights it would have if it were not
Trustee, Fiscal Agent or such agent.
SECTION 8.05. Fees and Expenses of Trustee; Indemnification
of Trustee and the Fiscal Agent.
(a) The Master Servicer covenants and agrees to pay to the
Trustee or any successor Trustee monthly out of its aggregate Master Servicing
Fees, and the Trustee or successor Trustee shall be entitled to so receive from
the Master Servicer, the Trustee's Fee for all services rendered by the Trustee
in exercise and performance of any of the powers and duties of the Trustee
hereunder. As to each Mortgage Loan and REO Loan, the Trustee's Fee shall accrue
at the related Trustee's Fee Rate, computed on a basis that assumes a 360-day
year consisting of twelve 30-day months and 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
Trustee's Fee (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.
(b) The Trustee, and any director, officer, employee or agent
of the Trustee, and any Person that "controls" the Trustee within the meaning of
the Securities Act, shall be entitled to be indemnified for and held harmless by
the Trust Fund against any loss, liability or "out-of-pocket" expense
(including, without limitation, costs and expenses of litigation, and of
investigation, counsel fees, damages, judgments and amounts paid in settlement)
arising out of, or incurred in connection with (i) the enforcement by the
Trustee of its rights and remedies and the protection of the interests, and
enforcement of the rights and remedies, of the Certificateholders during the
continuance of an Event of Default, (ii) the defense or prosecution of any legal
action or claim or any pending or threatened legal action or claim relating to
this Agreement or the Certificates, (iii) its status as the owner of record of
the Mortgage Loans and
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of any REO Property, (iv) its distribution of the information contemplated by
the fifth paragraph of Section 4.02(a), or (v) its action or refraining from
action in good faith at the direction of the Holders of Certificates entitled to
not less than 51% (or such higher percentage as is specified herein with respect
to any particular matter) of the Voting Rights of any affected Class; provided
that neither the Trustee nor any of the other above specified Persons shall be
entitled to indemnification pursuant to this Section 8.05(b) for (1) any expense
or liability specifically required to be borne thereby pursuant to the terms
hereof, or (2) any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Trustee's
obligations and duties hereunder or by reason of reckless disregard of such
obligations or duties, 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) shall survive any resignation or removal of the Trustee and appointment
of a successor trustee.
(c) Each of the Master Servicer and the Special Servicer shall
indemnify the Trustee and the Fiscal Agent from and hold them harmless against
any loss, liability or expense arising in respect of its acts or omissions in
connection with this Agreement including, without limitation, the use by the
Master Servicer or the Special Servicer, as the case may be, of any powers of
attorney delivered to it by the Trustee pursuant to the provisions hereof and
the Mortgage Loans serviced by the Master Servicer or the Special Servicer, as
the case may be.
(d) This Section 8.05 shall survive the termination of this
Agreement or the resignation or removal of the Trustee, the Fiscal Agent, the
Master Servicer and the Special Servicer as regards rights accrued prior to such
termination, resignation or removal.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be an association, a
bank, a trust company 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 $100,000,000 and subject to supervision or
examination by federal or state authority. If such association, bank, trust
company 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 association, bank, trust company 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 long-term unsecured debt of the Trustee shall at all
times be rated not lower than "AA" by each Rating Agency (or, in the case of
either Rating Agency, such lower rating as confirmed by such Rating Agency in
writing would not adversely affect any of the ratings then assigned thereby to
the Certificates), unless the long-term unsecured debt of the Fiscal Agent is
rated at least "AA" by each Rating Agency (or, in the case of either Rating
Agency, such lower rating as confirmed by such Rating Agency in writing would
not adversely affect any of the ratings then assigned thereby to the
Certificates) in which case the long-term unsecured debt of the Trustee shall be
rated no lower than (i) "BBB" by Standard & Poor's and (ii) "A-" by Fitch or
another nationally recognized statistical rating organization other than
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Standard & Poor's; provided that, notwithstanding that the long-term unsecured
debt of LaSalle National Bank and ABN AMRO Bank N.V. is not rated by Fitch, such
parties shall not fail to qualify as Trustee and Fiscal Agent, respectively,
solely by virtue of the lack of such ratings until such time as Fitch shall
notify the Trustee, the Fiscal Agent, the Master Servicer and the Special
Servicer that the continued performance by LaSalle National Bank and/or ABN AMRO
Bank N.V. of their respective duties as Trustee and Fiscal Agent hereunder will
result in a downgrade, qualification or withdrawal of the then current rating
assigned by such Rating Agency to any Class of Certificates. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07. The corporation, bank, trust company 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 Master Servicer by written instrument, in
duplicate, which instrument shall be delivered to the resigning Trustee and to
the successor trustee. A copy of such instrument shall be delivered to the
Master Servicer, the Special Servicer and the Certificateholders by the
Depositor. If no successor trustee shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor or the Master Servicer, or if at any
time the Trustee shall become incapable of acting, or shall be adjudged bankrupt
or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor may remove the Trustee and appoint a successor
trustee acceptable to the Master Servicer by written instrument, in duplicate,
which instrument shall be delivered to the Trustee so removed and to the
successor trustee. A copy of such instrument shall be delivered to the Master
Servicer, the Special Servicer and the Certificateholders by the Depositor.
(c) The Holders of Certificates entitled to at least 51% (or,
if such removal is in connection with the Trustee's and Fiscal Agent's joint
failure to make any required Advance hereunder, 25%) of the Voting Rights may at
any time remove the Trustee and appoint a successor trustee by written
instrument or instruments, in triplicate, signed by such Holders or their
attorneys-in-fact duly authorized, one complete set of which instruments shall
be delivered to the Master Servicer, one complete set to the Trustee so removed
and one complete
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set to the successor 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.
(d) Any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to any of the provisions of this Section 8.07
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 8.08 and written confirmation from each Rating
Agency that the appointment of such successor Trustee shall not result in the
downgrade, qualification or withdrawal of any rating assigned thereby to any
Class of Certificates. If the Trustee shall be removed as Trustee pursuant to
this Section 8.07, it shall continue to be entitled to receive all amounts
accrued or owing to it under this Agreement on or prior to the date of such
removal, whether in respect of Advances or otherwise, and it shall continue to
be entitled to the benefits of Section 8.05 notwithstanding any such
termination)
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 its predecessor trustee an instrument
accepting such appointment hereunder, and thereupon the resignation or removal
of the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor hereunder, with
the like effect as if originally named as trustee herein. The predecessor
trustee shall deliver to the successor trustee all Mortgage Files and related
documents and statements held by it hereunder, 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 and the
Certificateholders.
(d) No predecessor Trustee or Fiscal Agent shall be
responsible for any act or omission of any successor Trustee or Fiscal Agent.
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SECTION 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted
or with which it may be consolidated or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any entity
succeeding to the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such entity shall be eligible under
the provisions of Section 8.06, without the execution or filing of any paper or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions hereof, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Fund or property securing the same may at the time be
located, the Master Servicer and the Trustee acting jointly shall have the power
and shall execute and deliver all instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee or co-trustees, jointly with the
Trustee, or separate trustee or separate trustees, of all or any part of the
Trust Fund, and to vest in such Person or Persons, in such capacity, such title
to the Trust Fund, or any part thereof, and, subject to the other provisions of
this Section 8.10, such powers, duties, obligations, rights and trusts as the
Master Servicer and the Trustee may consider necessary or desirable. If the
Master Servicer shall not have joined in such appointment within 15 days after
the receipt by it of a request to do so, or in case an Event of Default in
respect of the Master Servicer shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 8.06 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 and the Trustee shall not be liable for the actions of
any such separate trustee or co-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
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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 or resign, or be removed by
the Trustee with the consent of the Depositor, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
(e) The appointment of a co-trustee or separate trustee under
this Section 8.10 shall not relieve the Trustee of its duties and
responsibilities hereunder.
SECTION 8.11. Appointment of Custodians.
The Trustee may appoint at the Trustee's own expense one or
more Custodians to hold all or a portion of the Mortgage Files as agent for the
Trustee. Each Custodian shall be a depository institution supervised and
regulated by a federal or state banking authority, shall have combined capital
and surplus of at least $10,000,000, shall be qualified to do business in the
jurisdiction in which it holds any Mortgage File and shall not be the Depositor
or any Affiliate of the Depositor. 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. Each Custodian shall be
subject to the same obligations, standard of care, protection and indemnities as
would be imposed on, or would protect, the Trustee hereunder in connection with
the retention of Mortgage Files directly by the Trustee. The appointment of one
or more Custodians shall not relieve the Trustee from any of its obligations
hereunder, and the Trustee shall remain responsible for all acts and omissions
of any Custodian.
SECTION 8.12. Access to Certain Information.
The Trustee shall afford to the Master Servicer, the Special
Servicer and 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 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.
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SECTION 8.13. Representations and Warranties of Trustee and
the Fiscal Agent.
(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 banking corporation, duly
organized, validly existing and in good
standing under the laws governing its
creation and existence and has full
corporate power and authority to own its
property, to carry on its business as
presently conducted, and to enter into and
perform its obligations under this
Agreement;
(ii) The execution and delivery by the Trustee of
this Agreement have been duly authorized by
all necessary corporate action on the part
of the Trustee; neither the execution and
delivery of this Agreement, nor the
consummation of the transactions
contemplated in this Agreement, nor
compliance with the provisions of this
Agreement, will conflict with or result in a
breach of, or constitute a default under,
(i) any of the provisions of any law,
governmental rule, regulation, judgment,
decrees or order binding on the Trustee or
its properties that would materially and
adversely affect the Trustee's ability to
perform its obligations under this
Agreement, (ii) the organizational documents
of the Trustee, or (iii) the terms of any
material agreement or instrument to which
the Trustee is a party or by which it is
bound; the Trustee is not in default with
respect to any order or decree of any court
or any order, regulation or demand of any
federal, state, municipal or other
governmental agency, which default would
materially and adversely affect its
performance under this Agreement;
(iii) The execution, delivery and performance by
the Trustee of this Agreement and the
consummation of the transactions
contemplated by this Agreement do not
require the consent, approval, authorization
or order of, the giving of notice to or the
registration with any state, federal or
other governmental authority or agency,
except such as has been or will be obtained,
given, effected or taken in order for the
Trustee to perform its obligations under
this Agreement;
(iv) This Agreement has been duly executed and
delivered by the Trustee and, assuming due
authorization, execution and delivery by the
other parties hereto, constitutes a valid
and binding obligation of the Trustee,
enforceable against the Trustee in
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accordance with its terms, subject, as to
enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency,
moratorium and other similar laws affecting
creditors' rights generally as from time to
time in effect, and to general principles of
equity (regardless of whether such
enforceability is considered in a proceeding
in equity or at law);
(v) There are no actions, suits or proceedings
pending or, to the best of the Trustee's
knowledge, threatened, against the Trustee
that, either in one instance or in the
aggregate, would draw into question the
validity of this Agreement, or which would
be likely to impair materially the ability
of the Trustee to perform under the terms of
this Agreement; and
(vi) No more than five percent of the outstanding
voting stock of the Trustee is owned by any
of the Depositor, the Seller, the Servicer
or the Special Servicer.
(b) The Fiscal Agent 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 Fiscal Agent is a foreign banking
corporation duly organized, validly existing
and in good standing under the laws
governing its creation and existence and has
full corporate power and authority to own
its property, to carry on its business as
presently conducted, and to enter into and
perform its obligations under this
Agreement;
(ii) The execution and delivery by the Fiscal
Agent of this Agreement have been duly
authorized by all necessary corporate action
on the part of the Fiscal Agent; neither the
execution and delivery of this Agreement,
nor the consummation of the transactions
contemplated in this Agreement, nor
compliance with the provisions of this
Agreement, will conflict with or result in a
breach of, or constitute a default under,
(i) any of the provisions of any law,
governmental rule, regulation, judgement,
decrees or order binding on the Fiscal Agent
or its properties that would materially and
adversely affect the Fiscal Agent's ability
to perform its obligations under this
Agreement, (ii) the organizational documents
of the Fiscal Agent, or (iii) the terms of
any material agreement or instrument to
which the Fiscal Agent is a party or by
which it is bound; the Fiscal Agent is not
in default with respect to any order or
decree of any court or any order, regulation
or demand of any Federal, state,
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municipal or other governmental agency,
which default would materially and adversely
affects its performance under this
Agreement;
(iii) The execution, delivery and performance by
the Fiscal Agent of this Agreement and the
consummation of the transactions
contemplated by this Agreement do not
require the consent, approval, authorization
or order of, the giving notice to, or the
registration with, any state, federal or
other governmental authority or agency,
except such as has been obtained, given,
effected or taken prior to the date hereof.;
(iv) This Agreement has been duly executed and
delivered by the Fiscal Agent and, assuming
due authorization, execution and delivery by
the other parties hereto, constitutes a
valid and binding obligation of the Fiscal
Agent, enforceable against the Fiscal Agent
in accordance with its terms, subject, as to
enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency,
moratorium and other similar laws affecting
creditors' rights generally as from time to
time in effect, and to general principles of
equity (regardless of whether such
enforceability is considered in a proceeding
in equity or at law); and
(v) There are no actions, suits or proceedings
pending or, to the best of the Fiscal
Agent's knowledge, threatened, against the
Fiscal Agent that, either in any one
instance or in the aggregate, would draw
into question the validity of this
Agreement, or which would be likely to
impair materially the ability of the Fiscal
Agent to perform under the terms of this
Agreement.
SECTION 8.14. Access to Information Reports to the Securities
and Exchange Commission.
The Trustee shall maintain at its office primarily responsible
for administration of the Trust Fund and shall, upon reasonable advance notice,
make available during normal business hours for review by the Depositor, the
Underwriter, any Holder of a Certificate, any Certificate Owner whose Ownership
Interest can be verified or any Person identified to the Trustee as a
prospective transferee of a Certificate or, in the case of a Book-Entry
Certificate, an Ownership Interest therein, originals or copies of the following
items: (i) in the case of a Holder or prospective transferee of a Non-Registered
Certificate, any private placement memorandum or other disclosure document
relating to the Certificates of such Class, in the form most recently provided
to the Trustee by the Depositor or by any Person designated by the Depositor;
and (ii) in all cases (A) this Agreement and any amendments hereto entered into
pursuant to Section 11.01, (B) all statements and reports delivered to
Certificateholders of the
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relevant Class pursuant to Section 4.02(a) since the Closing Date, (C) all
Officer's Certificates delivered by the Master Servicer and the Special Servicer
to the Trustee since the Closing Date pursuant to Section 3.13, (D) all
accountants' reports caused to be delivered by the Master Servicer and the
Special Servicer to the Trustee since the Closing Date pursuant to Section 3.14,
(E) the most recent inspection report prepared by the Master Servicer or the
Special Servicer and delivered to the Trustee in respect of each Mortgaged
Property pursuant to Section 3.12(a), (F) the most recent quarterly and annual
operating statement and rent roll of each related Mortgaged Property and
financial statements of the related Mortgagor collected by the Master Servicer
or the Special Servicer and delivered to the Trustee pursuant to Section
3.12(b), together with the accompanying written reports to be prepared by the
Master Servicer or the Special Servicer, as the case may be, and delivered to
the Trustee pursuant to Section 3.12(b), (G) any and all notices and reports
delivered to the Trustee with respect to any Mortgaged Property as to which the
environmental testing contemplated by Section 3.09(c) revealed that any of the
conditions set forth in clauses (A)(i) and (A)(ii) of the first sentence thereof
was not satisfied, (H) all Master Servicer Reports delivered by the Master
Servicer to the Trustee since the Closing Date pursuant to Section 4.02(b), (I)
the Mortgage Files, including, without limitation, any and all modifications,
waivers and amendments of the terms of a Mortgage Loan entered into or consented
to by the Master Servicer or the Special Servicer and delivered to the Trustee
pursuant to Section 3.20, and (J) any and all Officer's Certificates and other
evidence delivered by the Trustee, the Fiscal Agent, the Master Servicer or the
Special Servicer, as the case may be, to support its determination that any
Advance was or, if made, would be, a Nonrecoverable Advance. The Trustee shall
make available copies of any and all of the foregoing items upon request of any
of the parties set forth in the previous sentence; however, the Trustee shall be
permitted to require payment of a sum sufficient to cover the reasonable costs
and expenses of providing such copies.
SECTION 8.15. The Fiscal Agent.
(a) 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 8.15, 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.
(b) 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 the 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.
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(c) The obligations of the initial Fiscal Agent set forth in
this Section 8.15 shall exist for so long as the initial Trustee shall act as
Trustee hereunder. The obligations of the initial Fiscal Agent set forth in this
Section 8.15 shall cease to exist to the extent that the initial Trustee is no
longer acting as Trustee hereunder. The responsibility for appointing a
successor Fiscal Agent shall belong to the successor Trustee insofar as such
appointment is necessary for such successor Trustee to satisfy the eligibility
requirements of Section 8.06.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of
All Mortgage Loans.
Subject to Section 9.02, the Trust Fund and the respective
obligations and responsibilities under this Agreement of the Depositor, the
Master Servicer, the Special Servicer the Trustee and the Fiscal Agent (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 or the Holders of Certificates representing a
majority of the Voting Rights allocated to the Residual Certificates, of all
Mortgage Loans and each REO Property remaining in REMIC I at a price equal to
(1) the aggregate Purchase Price of all the Mortgage Loans included in REMIC I,
plus (2) the appraised value of each REO Property, if any, included in REMIC I,
based on an Appraisal to be conducted by an Independent MAI-designated appraiser
selected by the Master Servicer and approved by the Trustee, minus (3) if the
purchaser is the Master Servicer, the aggregate amount of unreimbursed Advances
made by the Master Servicer, together with any interest accrued and payable to
the Master Servicer in respect of such unreimbursed Advances in accordance with
Sections 3.29(d) and 4.03(d) and any unpaid Master Servicing Fees remaining
outstanding (which items shall be deemed to have been paid or reimbursed to the
Master Servicer in connection with such purchase), 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, any of their partners, and any
of their (or their partners') directors, officers, employees or agents 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. Any termination of the Trust must be conducted
so as to qualify as a "qualified liquidation" of each of REMIC I, REMIC II and
REMIC III under Section 860F of the Code, as evidenced by an Opinion of Counsel
obtained by the Trustee at the expense of the Trust Fund.
The Depositor, the Master Servicer or the Holders of
Certificates representing a majority of the Voting Rights allocated to the
Residual Certificates, may, at its or their 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 of the Class Principal Balances of the
respective Classes of Principal Balance Certificates at the time of such
election is less than 5% of the aggregate of the Class Principal Balances of the
respective Classes of Principal Balance Certificates as of the Closing
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Date set forth in the Preliminary Statement, and (ii) neither the Master
Servicer nor the Holders of Residual Certificates shall have the right to effect
such a purchase if, within 30 days following the Master Servicer's or such
delivery, as the case may be, of a notice of election pursuant to this
paragraph, the Depositor shall give notice of its election to purchase 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 and (iii)
the Master Servicer shall not have the right to effect such a purchase if,
within 30 days following the Master Servicer's delivery, as the case may be of a
notice of election pursuant to this paragraph, the Holders of Certificates
representing a majority of the Voting Rights allocated to the Residual
Certificates shall give notice of their election to purchase 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 purchase by the Master Servicer, the Holders
of Certificates representing a majority of the Voting Rights allocated to the
Residual Certificates or the Depositor of all of the Mortgage Loans and each REO
Property remaining in REMIC I, the purchasing party shall deliver to the Trustee
for deposit in the Distribution Account not later than the P&I Advance 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 thereof payable to any
Person other than the Certificateholders pursuant to Section 3.05(a), which
portion shall be deposited in the Certificate Account). In addition, the Master
Servicer shall transfer to the Distribution Account all amounts required to be
transferred thereto on such P&I Advance Date from the Certificate Account
pursuant to the first paragraph of Section 3.04(b), together with any other
amounts on deposit in the Certificate Account that would otherwise be held for
future distribution. Upon confirmation that such final deposit has been made,
the Trustee shall release or cause to be released to the purchasing party or its
or their designee the Mortgage Files for the remaining Mortgage Loans and shall
execute without representation or warranty whatsoever and without recourse all
assignments, endorsements and other instruments furnished to it by the
purchasing party as shall be necessary to effectuate transfer of the Mortgage
Loans and REO Properties to the purchasing party or its or their designee. 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 purchase of the Mortgage Loans and each REO Property
remaining in REMIC I by the Master Servicer, Holders of Certificates
representing a majority of the Voting Rights allocated to the Residual
Certificates or the Depositor, 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
with respect to 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 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.
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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 Distribution Account that are allocable to payments on the
applicable Class of Certificates. Amounts on deposit in the Distribution 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 assumption fees, shall be allocated for the following purposes and
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
respective Classes of Senior Certificates, PRO RATA in accordance with
the respective amounts of interest distributable on such Classes of
Certificates on such Distribution Date as described in this clause (i),
in an amount equal to the Interest Distribution Amount in respect of
each such Class of Certificates for such Distribution Date and, to the
extent not previously paid, for each prior Distribution Date;
(ii) to distributions of principal to the Holders of the Class
A-1 Certificates and the Holders of the Class A-2 Certificates, PRO
RATA based upon their respective Class Principal Balances, until such
Class Principal Balances have been reduced to zero;
(iii) to distributions to the Holders of the Class A-1
Certificates and the Holders of the Class A-2 Certificates, PRO RATA in
accordance with the respective amounts of Realized Losses and
Additional Trust Fund Expenses reimbursable on such Classes of
Certificates on such Distribution Date as described in this clause
(iii), in an amount equal to, and in reimbursement of, all Realized
Losses and Additional Trust Fund Expenses, if any, previously deemed
allocated to each such Class of Certificates and not previously
reimbursed;
(iv) to distributions of interest to the Holders of the Class B
Certificates, in an amount equal to the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(v) if the Class Principal Balances of the Class A-1 and Class
A-2 Certificates have been reduced to zero, to distributions of
principal to the Holders of the Class B Certificates, until the Class
Principal Balance of the Class B Certificates is reduced to zero;
(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 deemed allocated to
the Class B Certificates and not previously reimbursed;
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(vii) to distributions of interest to the Holders of the Class C
Certificates, in an amount equal to the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(viii) if the Class Principal Balances of the Class A-1, Class A-2
and Class B Certificates have been reduced to zero, to distributions of
principal to the Holders of the Class C Certificates, until the Class
Principal Balance of the Class C Certificates is reduced to zero;
(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 deemed allocated to
the Class C Certificates and not previously reimbursed;
(x) to distributions of interest to the Holders of the Class D
Certificates, in an amount equal to the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(xi) if the Class Principal Balances of the Class A-1, Class A-2,
Class B and Class C Certificates have been reduced to zero, to
distributions of principal to the Holders of the Class D Certificates,
until the Class Principal Balance of the Class D Certificates is
reduced to zero;
(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 deemed 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 the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(xiv) if the Class Principal Balances of the Class A-1, Class A-2,
Class B, Class C and Class D Certificates have been reduced to zero, to
distributions of principal to the Holders of the Class E Certificates,
until the Class Principal Balance of the Class E Certificates is
reduced to zero;
(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 deemed allocated to
the Class E Certificates and not previously reimbursed;
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(xvi) to distributions of interest to the Holders of the Class F
Certificates, in an amount equal to the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(xvii) If the Class Principal Balances of the Class A-1, Class A-2,
Class B, Class C, Class D and Class E Certificates have been reduced to
zero, to distributions of principal to the Holders of the Class F
Certificates, until the Class Principal Balance of the Class F
Certificates is reduced to zero;
(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 deemed 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 the Interest Distribution Amount in
respect of such Class of Certificates for such Distribution Date and,
to the extent not previously paid, for each prior Distribution Date;
(xx) if the Class Principal Balances of the Class A-1, Class A-2,
Class B, Class C, Class D, Class E and Class F Certificates have been
reduced to zero, to distributions of principal to the Holders of the
Class G Certificates, until the Class Principal Balance of the Class G
Certificates is reduced to zero;
(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 deemed allocated to
the Class G Certificates and not previously reimbursed;
(xxii) to distributions to the Holders of the Class R-II
Certificates, in an amount equal to the Class R-II Distribution Amount
for such Distribution Date; and
(xxiii) to distributions to the Holders of the Class R-I
Certificates, in an amount equal to the balance, if any, of available
funds remaining after the distributions to be made on such Distribution
Date pursuant to clauses (i) through (xxii) above.
Any Prepayment Premiums and assumption fees on deposit in the
Distribution Account as of the final Distribution Date shall be distributed in
accordance with Section 4.01(b).
Any funds not distributed to any Holder or Holders of
Certificates on the final Distribution Date because of the failure of such
Holder or Holders to tender their Certificates shall, on such date, be set aside
and held uninvested in trust and credited to the account or accounts of the
appropriate non-tendering Holder or Holders. If any Certificates as to which
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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, on the second anniversary of the delivery of the
second notice, all of the Certificates shall not have been surrendered for
cancellation, the Class R-III Certificateholders shall be entitled to all
unclaimed funds and other assets which remain subject thereto.
All actual distributions on the Class R-II Certificates and
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
have first been distributed from REMIC I to REMIC II on the various REMIC I
Regular Interests in accordance with Section 4.01(i) and, solely in the case of
the REMIC III Certificates, 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 Holders of Residual Certificates or
the Master Servicer purchases all of the Mortgage Loans and each REO Property
remaining in REMIC I as provided in Section 9.01, the Trust Fund (and,
accordingly, REMIC I, REMIC II and REMIC III) shall be terminated in accordance
with the following additional requirements, unless the purchasing party obtains
at its or their own expense and delivers to the Trustee and, in the case of the
Depositor or the Holders of Residual Certificates, to the Trustee and the Master
Servicer, an Opinion of Counsel, addressed to the Trustee and the Master
Servicer, 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" of REMIC I, REMIC II or REMIC III as defined in
Section 860F of the Code or cause REMIC I, REMIC II or REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding:
(i) the Trustee 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;
(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 applicable Holders of Residual Certificates or
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the Depositor, as applicable, for cash and at the price specified in
the first paragraph of Section 9.01; 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 Trustee 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 REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee 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 are hereby designated as
"regular interests" (within the meaning of Section 860G(a)(1) of the Code), and
the Class R-I Certificates are hereby designated as the single class of
"residual interests" (within the meaning of Section 860G(a)(2) of the Code), in
REMIC I. The REMIC II Regular Interests are hereby designated as "regular
interests" (within the meaning of Section 860G(a)(1) of the Code), and the Class
R-II Certificates are hereby designated as the single class of "residual
interests" (within the meaning of Section 860G(a)(2) of the Code), in REMIC II.
The Class A-1, Class A-2, Class B, Class C, Class D, Class E, Class F and Class
G Certificates, together with Component IO-U, Component IO-V, Component IO-W,
Component IO-X and Component IO-Y, are hereby designated as "regular interests"
(within the meaning of Section 860G(a)(1) of the Code), and the Class R-III
Certificates are hereby designated as the single class of "residual interests"
(within the meaning of Section 860G(a)(2) of the Code), in REMIC III. None of
the Master Servicer, the Special Servicer or the Trustee shall, to the extent
within the control of such Person, create or permit the creation of any other
"interests" in REMIC I, REMIC II or REMIC III (within the meaning of Treasury
regulation Section 1.860D-1(b)(1)).
(c) The Closing Date is hereby designated as the "startup day"
of each of REMIC I, REMIC II and REMIC III within the meaning of Section
860G(a)(9) of the Code.
(d) The applicable Plurality Residual Certificateholder 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
Trustee 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) Solely for purposes of Treasury regulation Section
1.860G-1(a)(4)(iii), the Distribution Date in January 2006 has been designated
the "latest possible maturity date" of each REMIC I Regular Interest, each REMIC
II Regular Interest and each Class of REMIC III Regular Certificates and
Component thereof.
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(f) Except as otherwise provided in Sections 10.01(i) and
10.01(j) below, the Trustee shall pay out of its own funds, subject to
reimbursement by the Trust Fund, any and all tax related expenses of the Trust
Fund (including, but not limited to, 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).
(g) Within 30 days after the Closing Date, the Trustee 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 Trustee
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 Trustee without any right of reimbursement therefor. The other
parties hereto shall provide on a timely basis to the Trustee 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 Trustee to enable it to
perform its obligations under this Article. In order to enable the Trustee to
perform its duties as set forth herein, the Depositor shall provide, or cause to
be provided, to the Trustee within ten (10) days after the Closing Date all
information or data that the Trustee reasonably determines to be relevant for
tax purposes on the valuations and offering prices of the Certificates,
including, without limitation, the yield, prepayment assumption, issue prices
and projected cash flows of the REMIC III Certificates and Residual
Certificates, as applicable, and the projected cash flows of the Mortgage Loans.
Thereafter, the Depositor shall provide to the Trustee, promptly upon request
therefor, any such additional information or data that the Trustee may, from
time to time, reasonably request in order to enable the Trustee to perform its
duties as set forth herein. The Trustee is hereby directed to use any and all
such information or data provided by the Depositor in the preparation of all
federal and state income or franchise tax and information returns and reports
for REMIC I, REMIC II and REMIC III to Certificateholders as required herein.
The Depositor hereby agrees to indemnify the Trust Fund, the Trustee, the Fiscal
Agent, the Master Servicer and the Special Servicer for any losses, liabilities,
damages, claims or expenses of the Trust Fund, the Trustee, the Fiscal Agent,
the Master Servicer or the Special Servicer arising from any errors or
miscalculations of the Trustee pursuant to this Section 10.01 that result from
any failure of the Depositor to provide, or to cause to be provided, accurate
information or data to the Trustee (but not resulting from the methodology
employed by the Trustee) on a timely basis and such indemnifications shall
survive the termination of this Agreement and the termination or resignation of
the Trustee, the Fiscal Agent, the Master Servicer or the Special Servicer under
this Agreement.
The Master Servicer and the Special Servicer shall provide on
a timely basis to the Trustee or its designee such information with respect to
the Trust Fund, REMIC I, REMIC II, and REMIC III in each case, as is in its
possession, which the Master Servicer and the Special Servicer has received or
prepared by virtue of its role as master servicer or special servicer, as the
case may be, under this Agreement and reasonably requested by the Trustee to
enable it to perform its obligations under this Section 10.01, and the Trustee
shall be entitled to conclusively rely on such information in the performance of
its obligations under this Section 10.01. The Master Servicer and the Special
Servicer shall indemnify the Trust Fund, the
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Trustee, the Fiscal Agent and the Depositor for any liability or assessment
against the Trust Fund, the Trustee, the Fiscal Agent or the Depositor and any
expenses incurred in connection with such liability or assessment (including
reasonable attorney's fees) resulting from any error in any tax or information
returns resulting from errors in the information provided by the Master Servicer
or Special Servicer, as the case may be, caused by the negligence, willful
misconduct or bad faith of the Master Servicer or Special Servicer, as the case
may be. Such indemnification shall survive the termination of this Agreement and
any resignation or termination of the Trustee, the Fiscal Agent, the Master
Servicer and the Special Servicer under this Agreement.
(h) The Trustee 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 Trustee shall provide
to: (i) any Transferor of a Residual Certificate, such information as is
necessary for the application of any tax relating to the transfer of a Residual
Certificate to any Person who is not a Permitted Transferee; (ii) the
Certificateholders, such information or reports as are required by the Code or
the REMIC Provisions, including, without limitation, reports relating to
interest, original issue discount and market discount or premium (using the
Prepayment Assumption as required 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 Trustee 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 Master Servicer and the Special Servicer shall
assist the Trustee to the extent reasonably requested by the Trustee and to the
extent of information within the Master Servicer's or the Special Servicer's
possession or control). None of the 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 (ii)
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, the tax on contributions to a REMIC set forth in
Section 860G(d) of the Code or (iii) except as provided in Section 3.17(a),
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 or imposition, an
"Adverse REMIC Event"), unless the Trustee 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 Trustee 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. The Trustee shall
not take any action or fail to take any action (whether or not authorized
hereunder) as to which the Master Servicer or the Special Servicer has advised
it in writing that either the Master Servicer or the Special Servicer has
received or obtained an Opinion of Counsel (a copy of which shall be provided to
the
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Trustee) to the effect that an Adverse REMIC Event could occur with respect to
the taking or failure to take such action. In addition, prior to taking any
action with respect to any of 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 Trustee or its designee, in writing, with
respect to whether such action could cause an Adverse REMIC Event to occur.
Neither the Master Servicer nor the Special Servicer shall take any such action
or cause any of REMIC I, REMIC II or REMIC III to take any such action as to
which the Trustee has advised it in writing that an Adverse REMIC Event could
occur, and neither the Master Servicer nor the Special Servicer shall have any
liability hereunder for any action taken by it in accordance with the written
instruments of the Trustee. The Trustee 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, and to the extent that such is within the Trustee's control, the Trustee
shall not take any action that would result in less than substantially all of
the assets of REMIC I, REMIC II and REMIC III consisting 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, 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 Trustee, if such tax
arises out of or results from a breach by the Trustee of any of its obligations
under this Article X; (ii) the Special Servicer, if such tax arises out of or
results from a breach by the Special Servicer of any of its obligations under
Article III or this Article X; (iii) the Master Servicer, if such tax arises out
of or results from a breach by the Master Servicer of any of its obligations
under Article III or this Article X; or (iv) the Trust Fund in all other
instances, including taxes permitted to be incurred by the Special Servicer
pursuant to Section 3.17(a). Any such amounts payable by the Trust Fund shall be
paid by the Trustee out of amounts on deposit in the Distribution Account in
reduction of the Available Distribution Amount pursuant to Section 3.05(b).
(k) The Trustee 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
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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 foreclosure 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 Certificate Account, the Distribution
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 Certificate Account, Distribution 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.
(o) Except as contemplated 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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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 provided in Section
5.02(d)(iv), to modify, add to or eliminate any of the provisions of Section
5.02(d)(i), (ii) or (iii); or (vi) if such amendment, as evidenced by an Opinion
of Counsel delivered to the Master Servicer, the Special Servicer and the
Trustee, is reasonably necessary to comply with any requirements imposed by the
Code or any successor or amendatory statute or any temporary or final
regulation, revenue ruling, revenue procedure or other written official
announcement or interpretation relating to federal income tax laws or any such
proposed action which, if made effective, would apply retroactively to any of
the REMICs created hereunder at least from the effective date of such amendment,
or would be necessary to avoid the occurrence of a prohibited transaction or to
reduce the incidence of any tax that would arise from any actions taken with
respect to the operation of any such REMIC; provided that such action (except
any amendment described in either clause (v) or (vi) above) shall not, as
evidenced by an Opinion of Counsel obtained by or delivered to the Master
Servicer, the Special Servicer and the Trustee (which opinion, insofar as
economic issues are concerned, may rely upon the assurance of the Rating
Agencies described below), adversely affect in any material respect the
interests of any Certificateholder; and provided further that the Master
Servicer, the Special Servicer and the Trustee shall have first obtained from
each Rating Agency written assurance that such amendment would not, in and of
itself, cause a qualification, downgrading or withdrawal of the then-current
rating assigned by such Rating Agency to any Class of Certificates.
(b) This Agreement may also be amended from time to time by
the agreement of the Depositor, the Master Servicer, the Special Servicer and
the Trustee with the consent of the Holders of Certificates entitled to at least
51% of the Voting Rights allocated to the affected Classes for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received or
advanced on Mortgage Loans 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
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consent of the Holders of all Certificates then outstanding, or (iv) modify the
specified percentage of Voting Rights which are required to be held by
Certificateholders to consent or not to object to any 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 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 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 Certificate Account or the Distribution
Account pursuant to Section 3.05.
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SECTION 11.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 11.03. 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 the Holders of Certificates entitled
to at least 25% of the Voting Rights shall have made written request upon the
Trustee to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 60 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding. It is understood and intended, and expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner whatsoever by virtue of any provision of this Agreement to affect,
disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, which priority or preference is not otherwise provided for
herein, or to enforce any right under this Agreement, except in the manner
herein provided and for the equal, ratable and common benefit of all
Certificateholders except as provided herein. For the protection and enforcement
of the provisions of this Section, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
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SECTION 11.04. 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 (A) the Depositor,
Salomon Brothers Mortgage Securities VII, Inc., and (B) Salomon Brothers, Seven
World Trade Center, New York, New York 10048, Attention: Managing Director,
Commercial Mortgage Finance, facsimile number: 212-783-2096; (ii) in the case of
the Master Servicer or the Special Servicer, Midland Loan Services, L.P., 2001
Shawnee Mission Parkway, Shawnee Mission, Kansas 66205, Attention: Alan L.
Atterbury, facsimile number: 913-384-0413; (iii) in the case of the Trustee, its
Corporate Trust Office, facsimile number: (312) 904-2084; and (iv) in the case
of the Rating Agencies, (A) Fitch Investors Service, L.P., One State Street
Plaza, New York, New York 10048, Attention: Attention: Commercial Mortgage
Surveillance, facsimile number: (212) 635-0295; and (B) Standard & Poor's
Ratings Services, 26 Broadway, 10th Floor, New York, New York 10004, Attention:
Commercial Mortgage Surveillance Manager, facsimile number: 212-412-0597; 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 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
<PAGE>
-177-
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 prior to the Cut-off Date), all amounts held from
time to time in the Certificate Account, the Distribution Account and, if
established, the REO Account and all reinvestment earnings on such amounts, and
all of the Depositor's right, title and interest in and to the proceeds of any
title, hazard or other Insurance Policies related to such Mortgage Loans, (ii)
this Agreement shall constitute a security agreement under applicable law, (iii)
the possession by the Trustee (or the Custodian on its behalf) of Mortgage Notes
or such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9-305 of the Missouri, Illinois and New York Uniform Commercial Codes, and (iii)
notifications to Persons holding such property, and acknowledgements, receipts
or confirmations from Persons holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interests under applicable law. Any assignment of
the interest of the Trustee pursuant to any provision hereof shall also be
deemed to be an assignment of any security interest created hereby. The
Depositor shall, and upon the request of the Master Servicer, the Trustee shall,
to the extent consistent with this Agreement (and at the expense of the Trust
Fund), take such actions as may be necessary to insure that, if this Agreement
were deemed to create a security interest in the Mortgage Loans, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and will be maintained as such throughout the term of this
Agreement. It is the intent of the parties that such a security interest would
be effective whether any of the Certificates are sold, pledged or assigned. This
Section 11.07 shall constitute notice to the Trustee pursuant to any of the
requirements of Section 9-305 of the New York UCC.
SECTION 11.08. 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. No other person, including, without limitation, any
Mortgagor, shall be entitled to any benefit or equitable right, remedy or claim
under this Agreement.
SECTION 11.09. 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.
<PAGE>
-178-
SECTION 11.10. Notices to Rating Agencies.
(a) The Trustee shall use its best efforts promptly to 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 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 location of the Distribution
Account;
(vi) the election of an Operating Adviser or an
Extension Adviser; and
(vii) the final payment to any Class of
Certificateholders.
(b) The Master Servicer shall use its best efforts promptly to
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
Certificate Account.
(c) Each of the Master Servicer and the Special Servicer, as
the case may be, 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 Master Servicer or the Special Servicer,
as the case may be, can reasonably provide in accordance with applicable law and
the related Mortgage Loan documents.
(d) Each of the Master Servicer and the Special Servicer shall
promptly furnish to each Rating Agency a copy of each notice, report document or
other writing furnished by such party to the Trustee or to any
Certificateholder, including, without limitation, the following items to the
extent permitted by applicable law:
(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;
<PAGE>
-179-
(iii) any Officer's Certificate delivered to the Trustee
pursuant to Section 4.03(c), 3.29 or 3.20(g); and
(iv) each of the reports described in Section 3.12(a)
and (b).
(e) The Trustee shall (i) make available, at the office
primarily responsible for administration of the Trust Fund, to each Rating
Agency, upon reasonable notice, the items described in Section 8.14 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 notice, report, document or other writing furnished by the Trustee
to any Certificateholder, including, without limitation, the statement to
Certificateholders described in Section 4.02(a).
SECTION 11.11. Complete Agreement.
This Agreement embodies the complete agreement among the
parties and may not be varied or terminated except by a written agreement
conforming to the provisions of Section 11.01. All prior negotiations or
representations of the parties are merged into this Agreement and shall have no
force or effect unless expressly stated herein.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement through a duly authorized officer as of the day and year first
above written.
SALOMON BROTHERS MORTGAGE SECURITIES VII,
INC.
Depositor
By:
Name:
Title:
MIDLAND LOAN SERVICES, L.P.
Master Servicer and Special Servicer
By: Midland Data Systems, Inc.,
its general partner
By:
Name:
Title:
LASALLE NATIONAL BANK
Trustee
By:
Name:
Title:
ABN AMRO BANK N.V.
Fiscal Agent
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ______ day of February 1996, before me, a notary public
in and for said State, personally appeared _________________________ known to me
to be a ________________________ of SALOMON BROTHERS MORTGAGE SECURITIES VII,
INC., 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 corporation, and
acknowledged to me that such corporation 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 ILLINOIS )
) ss.:
COUNTY OF COOK )
On the ______ day of February 1996, before me, a notary public
in and for said State, personally appeared _________________________ known to me
to be a ________________________ of LASALLE NATIONAL BANK 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 company, and acknowledged to me that such
_______________________ 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 February 1996 before me, a notary
public in and for said State, personally appeared _______________________, known
to me to be a ________________________ of MIDLAND DATA SYSTEMS, INC., the
general partner of MIDLAND LOAN SERVICES, L.P., 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 limited partnership, and acknowledged to me that
such person 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 ILLINOIS )
) ss.:
COUNTY OF COOK )
On the ________ day of February 1996 before me,
________________________, a Notary Public in and for said State, personally
appeared _________________________, Group Vice President of ABN AMRO BANK N.V.
and _______________________, Vice President of ABN AMRO BANK N.V., personally
known to me or proved to me on the basis of satisfactory evidence to be the
persons whose names are subscribed to the within instrument and acknowledged to
me that they executed the within instrument in their authorized capacity, and
that by their signatures on the instrument the corporation upon behalf of which
the persons acted 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>
CLASS A-1 CERTIFICATE EXHIBIT A-1
CLASS A-1 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class A-1
6.4690% per annum Certificates as of the Closing Date:
$50,000,000.00
Date of Pooling and Servicing Initial Certificate Principal
Agreement: February 1, 1996 Balance of this Class A-1
Certificate as of the Closing Date:
$50,000,000.00
Cut-off Date: February 1, 1996
Aggregate Stated Principal
Closing Date: February 29, 1996 Balance of the Mortgage Loans
as of the Closing Date:
First Distribution Date: $212,045,633.94
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___ CUSIP No. 79548KQD3
</TABLE>
<PAGE>
-2-
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE, THE FISCAL AGENT, 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 SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING 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").
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE CERTIFICATE
PRINCIPAL BALANCE OF THE CLASS B, CLASS C, CLASS D, CLASS E, CLASS F AND CLASS G
CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES
EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-1 Certificate (obtained by
dividing the principal amount of this Class A-1 Certificate (its "Certificate
Principal Balance") as of the Closing Date by the aggregate principal amount of
all the Class A-1 Certificates (their "Class Principal Balance") as of the
Closing Date) in that certain beneficial ownership interest evidenced by all the
Class A-1 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor",
which term includes any successor entity under the Agreement), Midland Loan
Services, L.P. as master servicer (in such capacity, hereinafter called the
"Master Servicer", which term includes any
<PAGE>
-3-
successor entity under the Agreement), Midland Loan Services, L.P. as special
servicer (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), LaSalle National Bank
(hereinafter called the "Trustee", which term includes any successor entity
under the Agreement) and ABN AMRO Bank N.V. (hereinafter called 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 20th day of each month or, if such 20th day is not a Business Day,
the Business Day immediately following (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
the Class A-1 Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class A-1
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account of the Person entitled thereto at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided the Trustee with wiring instructions no less than five Business
Days prior to the related Record Date (which wiring instructions may be in the
form of a standing order applicable to all subsequent distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which as of the Closing Date is at least $5,000,000, or otherwise by
check mailed to the address of such Certificateholder as it appears in the
Certificate Register. Notwithstanding the foregoing, the final distribution on
this Certificate (determined without regard to any possible future reimbursement
of any Realized Loss or Additional Trust Fund Expense previously deemed
allocated to this Certificate) will be made in like manner, but only upon
presentation and surrender of this Certificate at the offices of the Certificate
Registrar or such other location specified in the notice to the Holder hereof of
such final distribution. 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 deemed 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 appears in the Certificate Register or to any
such other address of which the Trustee is subsequently notified in writing.
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 Certificate Account, the Distribution 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.
<PAGE>
-4-
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
The Class A-1 Certificates are issuable in fully registered
form only without coupons in minimum denominations specified in the Agreement.
As provided in the Agreement and subject to certain limitations therein set
forth, Class A-1 Certificates are exchangeable for new Class A-1 Certificates in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class A-1 Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No service charge will be imposed for any registration of
transfer or exchange of Class A-1 Certificates, but the Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Class A-1 Certificates.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, the Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect
<PAGE>
-5-
early retirement of the Class A-1 Certificates; however, such right to purchase
is subject to the aggregate Certificate Principal Balance of the Principal
Balance Certificates at the time of purchase being less than 5% of the aggregate
Certificate Principal Balance of the Principal Balance Certificates as of the
Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of the Trust Fund (or designated portions thereof) as a REMIC, without
the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ______________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
_______________________________________________________________
_________________________________________________________________ for the
account of
--------------------------------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS A-2 CERTIFICATE EXHIBIT A-2
CLASS A-2 MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class A-2
6.7803% per annum Certificates as of the Closing Date:
$81,468,000.00
Date of Pooling and Servicing Initial Certificate Principal
Agreement: February 1, 1996 Balance of this Class A-2
Certificate as of the Closing Date:
$81,468,000.00
Cut-off Date: February 1, 1996
Aggregate Stated Principal
Closing Date: February 29, 1996 Balance of the Mortgage Loans
as of the Closing Date:
First Distribution Date: $212,045,633.94
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___ CUSIP No. 79548KQH4
</TABLE>
<PAGE>
-2-
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE, THE FISCAL AGENT, 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 SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING 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").
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE CERTIFICATE
PRINCIPAL BALANCE OF THE CLASS B, CLASS C, CLASS D, CLASS E, CLASS F AND CLASS G
CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES
EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class A-2 Certificate (obtained by
dividing the principal amount of this Class A-2 Certificate (its "Certificate
Principal Balance") as of the Closing Date by the aggregate principal amount of
all the Class A-2 Certificates (their "Class Principal Balance") as of the
Closing Date) in that certain beneficial ownership interest evidenced by all the
Class A-2 Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Salomon
Brothers Mortgage Securities VII, Inc. (hereinafter called the "Depositor",
which term includes any successor entity under the Agreement), Midland Loan
Services, L.P. as master servicer (in such capacity, hereinafter called the
"Master Servicer", which term includes any
<PAGE>
-3-
successor entity under the Agreement), Midland Loan Services, L.P. as special
servicer (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), LaSalle National Bank
(hereinafter called the "Trustee", which term includes any successor entity
under the Agreement) and ABN AMRO Bank N.V. (hereinafter called 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 20th day of each month or, if such 20th day is not a Business Day,
the Business Day immediately following (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
the Class A-2 Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class A-2
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account of the Person entitled thereto at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided the Trustee with wiring instructions no less than five Business
Days prior to the related Record Date (which wiring instructions may be in the
form of a standing order applicable to all subsequent distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which as of the Closing Date is at least $5,000,000, or otherwise by
check mailed to the address of such Certificateholder as it appears in the
Certificate Register. Notwithstanding the foregoing, the final distribution on
this Certificate (determined without regard to any possible future reimbursement
of any Realized Loss or Additional Trust Fund Expense previously deemed
allocated to this Certificate) will be made in like manner, but only upon
presentation and surrender of this Certificate at the offices of the Certificate
Registrar or such other location specified in the notice to the Holder hereof of
such final distribution. 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 deemed 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 appears in the Certificate Register or to any
such other address of which the Trustee is subsequently notified in writing.
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 Certificate Account, the Distribution 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.
<PAGE>
-4-
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
The Class A-2 Certificates are issuable in fully registered
form only without coupons in minimum denominations specified in the Agreement.
As provided in the Agreement and subject to certain limitations therein set
forth, Class A-2 Certificates are exchangeable for new Class A-2 Certificates in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class A-2 Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No service charge will be imposed for any registration of
transfer or exchange of Class A-2 Certificates, but the Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Class A-2 Certificates.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, the Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect
<PAGE>
-5-
early retirement of the Class A-2 Certificates; however, such right to purchase
is subject to the aggregate Certificate Principal Balance of the Principal
Balance Certificates at the time of purchase being less than 5% of the aggregate
Certificate Principal Balance of the Principal Balance Certificates as of the
Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of the Trust Fund (or designated portions thereof) as a REMIC, without
the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ____________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address:
Dated:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
_______________________________________________________________
_________________________________________________________________ for the
account of
--------------------------------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS B CERTIFICATE EXHIBIT A-3
CLASS B MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class B
7.1267% per annum Certificates as of the Closing Date:
$14,843,000.00
Date of Pooling and Servicing Initial Certificate Principal
Agreement: February 1, 1996 Balance of this Class B
Certificate as of the Closing Date:
Cut-off Date: February 1, 1996 $14,843,000.00
Closing Date: February 29, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
First Distribution Date: $212,045,633.94
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___ CUSIP No. 79548KQE1
</TABLE>
<PAGE>
-2-
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE, THE FISCAL AGENT, 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 SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR
ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2 AND CLASS IO
CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"),
OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE ON
BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED 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.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF
THE CLASS C, CLASS D, CLASS E, CLASS F AND CLASS G CERTIFICATES OF THE SAME
SERIES IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE
MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
<PAGE>
-3-
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class B Certificate (obtained by dividing
the principal amount of this Class B Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class B Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class B
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor", which term
includes any successor entity under the Agreement), Midland Loan Services, L.P.
as master servicer (in such capacity, hereinafter called the "Master Servicer",
which term includes any successor entity under the Agreement), Midland Loan
Services, L.P. as special servicer (in such capacity, hereinafter called the
"Special Servicer", which term includes any successor entity under the
Agreement), LaSalle National Bank (hereinafter called the "Trustee", which term
includes any successor entity under the Agreement) and ABN AMRO Bank N.V.
(hereinafter called 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 20th day of each month or, if such 20th day is not a Business Day,
the Business Day immediately following (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
the Class B Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class B
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account of the Person entitled thereto at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided the Trustee with wiring instructions no less than five Business
Days prior to the related Record Date (which wiring instructions may be in the
form of a standing order applicable to all subsequent distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which as of the Closing Date is at least $5,000,000, or otherwise by
check mailed to the address of such Certificateholder as it appears in the
Certificate Register. Notwithstanding the foregoing, the final distribution on
this Certificate (determined without regard to any possible future reimbursement
of any Realized Loss or Additional Trust Fund Expense previously deemed
allocated to this Certificate) will be made in like manner, but only upon
presentation and surrender of this Certificate at the offices of the Certificate
Registrar or such other location specified in the notice to the Holder hereof of
such final distribution. 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 deemed 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
<PAGE>
-4-
Holder that surrenders this Certificate as such address last appears in the
Certificate Register or to any such other address of which the Trustee is
subsequently notified in writing.
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 Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
The Class B Certificates are issuable in fully registered form
only without coupons in minimum denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Class B Certificates are exchangeable for new Class B Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class B Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of a Class B Certificate or any Ownership Interest
shall be made to (A) a Plan or (B) any Person who is directly or indirectly
purchasing such Class B Certificate or Ownership Interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, unless: (i) the
purchase and holding of such Class B Certificate or Ownership Interest therein
is exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under a PTCE; or (ii) the prospective transferee
provides the Certificate Registrar and the Master Servicer with a certification
of facts and an Opinion of Counsel which establish to the reasonable
satisfaction of the Certificate Registrar and the Master Servicer that such
transfer will not result in a violation of Section 406 of ERISA or Section 4975
of the Code or result in the imposition of an excise tax under Section 4975 of
the Code. Each Person who acquires a Class B Certificate or any Ownership
Interest (unless it shall have delivered the certification of facts and Opinion
of Counsel referred to in clause (ii) of the preceding sentence) will be deemed
to have represented and certified that: (i) it is neither a Plan nor any Person
who is directly or indirectly purchasing such Certificate or Ownership 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 Ownership Interest
therein is exempt from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code under a PTCE. Any Holder of a Class B
Certificate or Ownership Interest therein desiring
<PAGE>
-5-
to effect a transfer of such Certificate or Ownership Interest therein shall,
and upon acquisition of such Class B Certificate shall be deemed to have agreed
to, indemnify the Trustee, the Certificate Registrar, the Master Servicer, the
Special Servicer, the Depositor and the Trust Fund against any liability that
may result if the transfer is not made in accordance with Section 5.02(c) of the
Agreement.
No service charge will be imposed for any registration of
transfer or exchange of Class B Certificates, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Class B Certificates.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, the Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect early retirement of the Class B Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Certificate Principal Balance of the
Principal Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not
<PAGE>
-6-
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, including any
amendment necessary to maintain the status of the Trust Fund (or designated
portions thereof) as a REMIC, without the consent of the Holders of any of the
Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _________________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: _______________
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
_______________________________________________________________
_________________________________________________________________ for the
account of
---------------------------------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS C CERTIFICATE EXHIBIT A-4
CLASS C MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class C
7.3011% per annum Certificates as of the Closing Date:
$14,843,000.00
Date of Pooling and Servicing Initial Certificate Principal
Agreement: February 1, 1996 Balance of this Class C
Certificate as of the Closing Date:
Cut-off Date: February 1, 1996 $14,843,000.00
Closing Date: February 29, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
First Distribution Date: $212,045,633.94
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___ CUSIP No. 79548KQF8
</TABLE>
<PAGE>
-2-
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE, THE FISCAL AGENT, 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 SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR
ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS IO AND CLASS
B CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"),
OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE ON
BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. 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.
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS D, CLASS E, CLASS F
AND CLASS G CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND
EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO
<PAGE>
-3-
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class C Certificate (obtained by dividing
the principal amount of this Class C Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class C Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class C
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor", which term
includes any successor entity under the Agreement), Midland Loan Services, L.P.
as master servicer (in such capacity, hereinafter called the "Master Servicer",
which term includes any successor entity under the Agreement), Midland Loan
Services, L.P. as Special Servicer (in such capacity, hereinafter called the
"Special Servicer", which term includes any successor entity under the
Agreement), LaSalle National Bank (hereinafter called the "Trustee", which term
includes any successor entity under the Agreement) and ABN AMRO Bank N.V.
(hereinafter called 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 20th day of each month or, if such 20th day is not a Business Day,
the Business Day immediately following (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
the Class C Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class C
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account of the Person entitled thereto at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided the Trustee with wiring instructions no less than five Business
Days prior to the related Record Date (which wiring instructions may be in the
form of a standing order applicable to all subsequent distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which as of the Closing Date is at least $5,000,000, or otherwise by
check mailed to the address of such Certificateholder as it appears in the
Certificate Register. Notwithstanding the foregoing, the final distribution on
this Certificate (determined without regard to any possible future reimbursement
of any Realized Loss or Additional Trust Fund Expense previously deemed
allocated to this Certificate) will be made in like manner, but only upon
presentation and surrender of this Certificate at the offices of the Certificate
Registrar or such other location specified in the notice to the Holder hereof of
such final distribution. 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 deemed 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
<PAGE>
-4-
Holder that surrenders this Certificate as such address last appears in the
Certificate Register or to any such other address of which the Trustee is
subsequently notified in writing.
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 Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
The Class C Certificates are issuable in fully registered form
only without coupons in minimum denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Class C Certificates are exchangeable for new Class C Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class C Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of a Class C Certificate or any Ownership Interest
shall be made to (A) a Plan or (B) any Person who is directly or indirectly
purchasing such Class C Certificate or Ownership Interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, unless: (i) the
purchase and holding of such Class C Certificate or Ownership Interest therein
is exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under a PTCE; or (ii) the prospective transferee
provides the Certificate Registrar and the Master Servicer with a certification
of facts and an Opinion of Counsel which establish to the reasonable
satisfaction of the Certificate Registrar and the Master Servicer that such
transfer will not result in a violation of Section 406 of ERISA or Section 4975
of the Code or result in the imposition of an excise tax under Section 4975 of
the Code. Each Person who acquires a Class C Certificate or any Ownership
Interest (unless it shall have delivered the certification of facts and Opinion
of Counsel referred to in clause (ii) of the preceding sentence) will be deemed
to have represented and certified that: (i) it is neither a Plan nor any Person
who is directly or indirectly purchasing such Certificate or Ownership 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 Ownership Interest
therein is exempt from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code under a PTCE. Any Holder of a Class C
Certificate or Ownership Interest therein desiring
<PAGE>
-5-
to effect a transfer of such Certificate or Ownership Interest therein shall,
and upon acquisition of such Class C Certificate shall be deemed to have agreed
to, indemnify the Trustee, the Certificate Registrar, the Master Servicer, the
Special Servicer, the Depositor and the Trust Fund against any liability that
may result if the transfer is not made in accordance with Section 5.02(c) of the
Agreement.
No service charge will be imposed for any registration of
transfer or exchange of Class C Certificates, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Class C Certificates.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, the Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect early retirement of the Class C Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Stated Principal Balance of the Principal
Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not
<PAGE>
-6-
notation of such consent is made upon this Certificate. The Agreement also
permits the amendment thereof, in certain limited circumstances, including any
amendment necessary to maintain the status of the Trust Fund (or designated
portions thereof) as a REMIC, without the consent of the Holders of any of the
Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _____________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class C Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ______________
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
____________________________________________________________
_________________________________________________________________ for the
account of
-----------------------------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS D CERTIFICATE EXHIBIT A-5
CLASS D MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class D
7.7490% per annum Certificates as of the Closing Date:
$9,542,000.00
Date of Pooling and Servicing Initial Certificate Principal
Agreement: February 1, 1996 Balance of this Class D
Certificate as of the Closing Date:
Cut-off Date: February 1, 1996 $9,542,000.00
Closing Date: February 29, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
First Distribution Date: $212,045,633.94
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. __ CUSIP No. 79548KQG6
</TABLE>
<PAGE>
-2-
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE, THE FISCAL AGENT, 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 SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR
ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS IO, CLASS B
AND CLASS C CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"),
OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE ON
BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED 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.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF
THE CLASS E, CLASS F AND CLASS G CERTIFICATES OF THE SAME SERIES IS REDUCED TO
ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY
CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE
<PAGE>
-3-
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class D Certificate (obtained by dividing
the principal amount of this Class D Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class D Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class D
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor", which term
includes any successor entity under the Agreement), Midland Loan Services, L.P.
as master servicer (in such capacity, hereinafter called the "Master Servicer",
which term includes any successor entity under the Agreement), Midland Loan
Services, L.P. as special servicer (in such capacity, hereinafter called the
"Special Servicer", which term includes any successor entity under the
Agreement), LaSalle National Bank (hereinafter called the "Trustee", which term
includes any successor entity under the Agreement) and ABN AMRO Bank N.V.
(hereinafter called 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 20th day of each month or, if such 20th day is not a Business Day,
the Business Day immediately following (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
the Class D Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class D
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account of the Person entitled thereto at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided the Trustee with wiring instructions no less than five Business
Days prior to the related Record Date (which wiring instructions may be in the
form of a standing order applicable to all subsequent distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which as of the Closing Date is at least $5,000,000, or otherwise by
check mailed to the address of such Certificateholder as it appears in the
Certificate Register. Notwithstanding the foregoing, the final distribution on
this Certificate (determined without regard to any possible future reimbursement
of any Realized Loss or Additional Trust Fund Expense previously deemed
allocated to this Certificate) will be made in like manner, but only upon
presentation and surrender of this Certificate at the offices of the Certificate
Registrar or such other location specified in the notice to the Holders hereof
of such final distribution. 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 deemed allocated to
this Certificate, which reimbursement is to occur after the date on which this
Certificate is surrendered
<PAGE>
-4-
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
appears in the Certificate Register or to any such other address of which the
Trustee is subsequently notified in writing.
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 Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
The Class D Certificates are issuable in fully registered form
only without coupons in minimum denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Class D Certificates are exchangeable for new Class D Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class D Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of a Class D Certificate or any Ownership Interest
shall be made to (A) a Plan or (B) any Person who is directly or indirectly
purchasing such Class D Certificate or Ownership Interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, unless: (i) the
purchase and holding of such Class D Certificate or Ownership Interest therein
is exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under a PTCE; or (ii) the prospective transferee
provides the Certificate Registrar and the Master Servicer with a certification
of facts and an Opinion of Counsel which establish to the reasonable
satisfaction of the Certificate Registrar and the Master Servicer that such
transfer will not result in a violation of Section 406 of ERISA or Section 4975
of the Code or result in the imposition of an excise tax under Section 4975 of
the Code. Each Person who acquires a Class D Certificate or any Ownership
Interest (unless it shall have delivered the certification of facts and Opinion
of Counsel referred to in clause (ii) of the preceding sentence) will be deemed
to have represented and certified that: (i) it is neither a Plan nor any Person
who is directly or indirectly purchasing such Certificate or Ownership 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 Ownership Interest
therein is exempt from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of
<PAGE>
-5-
the Code under a PTCE. Any Holder of a Class D Certificate or Ownership Interest
therein desiring to effect a transfer of such Certificate or Ownership Interest
therein shall, and upon acquisition of such Class D Certificate shall be deemed
to have agreed to, indemnify the Trustee, the Certificate Registrar, the Master
Servicer, the Special Servicer, the Depositor and the Trust Fund against any
liability that may result if the transfer is not made in accordance with Section
5.02(c) of the Agreement.
No service charge will be imposed for any registration of
transfer or exchange of Class D Certificates, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Class D Certificates.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect early retirement of the Class D 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 5% of the
aggregate Stated Principal Balance of the Mortgage Loans as of the Cut-off Date
specified on the face hereof.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor, the Master Servicer, the Special Servicer, the
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any
<PAGE>
-6-
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, including any amendment necessary to maintain the status of the
Trust Fund (or designated portions thereof) as a REMIC, without the consent of
the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ___________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class D Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ______________
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
____________________________________________________________
_________________________________________________________________ for the
account of
---------------------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS E CERTIFICATE EXHIBIT A-6
CLASS E MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Initial Pass-Through Class Principal Balance of the Class E
Rate: 9.1839% per annum Certificates as of the Closing Date:
$21,204,000.00
Date of Pooling and Servicing Initial Certificate Principal
Agreement: February 1, 1996 Balance of this Class E
Certificate as of the Closing Date:
Cut-off Date: February 1, 1996 $21,204,000.00
Closing Date: February 29, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
First Distribution Date: $212,045,633.94
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___ CUSIP No. 79548S9F0
</TABLE>
<PAGE>
-2-
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING 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
FEBRUARY 29, 1996. 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 (AS DEFINED IN THE PROSPECTUS DATED FEBRUARY 14,
1996 AND THE PROSPECTUS SUPPLEMENT DATED FEBRUARY 29, 1996 RELATING TO THE CLASS
A-1, CLASS A-2, CLASS B, CLASS C AND CLASS D CERTIFICATES OF THE SAME SERIES) OF
0% (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 THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS IO, CLASS B,
CLASS C AND CLASS D CERTIFICATES OF THE SAME SERIES TO THE EXTENT DESCRIBED IN
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, 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 TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL
<PAGE>
-3-
REVENUE CODE OF 1986 (THE "CODE"), OR TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS CERTIFICATE ON BEHALF OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF
THE CLASS F AND CLASS G CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, THE
CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN
LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ABOVE.
This certifies that _____________________________ is the
registered owner of the Percentage Interest evidenced by this Class E
Certificate (obtained by dividing the principal amount of this Class E
Certificate (its "Certificate Principal Balance") as of the Closing Date by the
aggregate principal amount of all the Class E Certificates (their "Class
Principal Balance") as of the Closing Date) in that certain beneficial ownership
interest evidenced by all the Class E Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor", which term includes any successor entity under the
Agreement), Midland Loan Services, L.P. as master servicer (in such capacity,
hereinafter called the "Master Servicer", which term includes any successor
entity under the Agreement), Midland Loan Services, L.P. as special servicer (in
such capacity, hereinafter called the "Special Servicer", which term includes
any successor entity under the Agreement), LaSalle National Bank (hereinafter
called the "Trustee", which term includes any successor entity under the
Agreement) and ABN AMRO Bank N.V. (hereinafter called 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 20th day of each month or, if such 20th day is not a Business Day,
the Business Day immediately following (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
the Class E Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class E
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account of the Person entitled thereto at a bank or other
entity having appropriate facilities therefor, if such
<PAGE>
-4-
Certificateholder shall have provided the Trustee with wiring instructions no
less than five Business Days prior to the related Record Date (which wiring
instructions may be in the form of a standing order applicable to all subsequent
distributions) and is the registered owner of Certificates the aggregate initial
Certificate Principal Balance of which as of the Closing Date is at least
$5,000,000, or otherwise by check mailed to the address of such
Certificateholder as it appears in the Certificate Register. Notwithstanding the
foregoing, the final distribution on this Certificate (determined without regard
to any possible future reimbursement of any Realized Loss or Additional Trust
Fund Expense previously deemed allocated to this Certificate) will be made in
like manner, but only upon presentation and surrender of this Certificate at the
offices of the Certificate Registrar or such other location specified in the
notice to the Holder hereof of such final distribution. 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
deemed 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 appears in the Certificate
Register or to any such other address of which the Trustee is subsequently
notified in writing.
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 Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
The Class E Certificates are issuable in fully registered form
only without coupons in minimum denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Class E Certificates are exchangeable for new Class E Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class E Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of any Class E Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
Securities Act, and effective registration or qualification under applicable
state securities laws, or is made in a transaction which does not require
<PAGE>
-5-
such registration or qualification. If a transfer of any Class E Certificate is
to be made without registration under the Securities Act (other than in
connection with the initial issuance thereof or the initial transfer thereof by
the Depositor or any of its affiliates), then the Certificate Registrar shall
refuse to register such transfer unless it receives either: (i) a certificate
from the Certificateholder desiring to effect such transfer substantially in the
form attached as Exhibit G-1 to the Agreement, and a certificate from such
Certificateholder's prospective transferee substantially in the form attached as
either Exhibit G-2 or Exhibit G-3 to the Agreement; or (ii) an Opinion of
Counsel satisfactory to the Certificate Registrar 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 or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify the Class E Certificates under the Securities
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of any Class E Certificate without
registration or qualification. Any Class E Certificateholder desiring to effect
such a transfer shall, and by the acceptance of its Class E Certificate agrees
to, indemnify the Trustee, the Certificate Registrar and the Depositor against
any liability that may result if the transfer is not so exempt or is not made in
accordance with such federal and state laws.
No transfer of a Class E Certificate or any Ownership Interest
shall be made to (A) a Plan or (B) any Person who is directly or indirectly
purchasing such Class E Certificate or Ownership Interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, unless: (i) the
purchase and holding of such Class E Certificate or Ownership Interest therein
is exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under a PTCE; or (ii) the prospective transferee
provides the Certificate Registrar and the Master Servicer with a certification
of facts and an Opinion of Counsel which establish to the reasonable
satisfaction of the Certificate Registrar and the Master Servicer that such
transfer will not result in a violation of Section 406 of ERISA or Section 4975
of the Code or result in the imposition of an excise tax under Section 4975 of
the Code. Each Person who acquires a Class E Certificate or any Ownership
Interest (unless it shall have delivered the certification of facts and Opinion
of Counsel referred to in clause (ii) of the preceding sentence) will be deemed
to have represented and certified that: (i) it is neither a Plan nor any Person
who is directly or indirectly purchasing such Certificate or Ownership 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 Ownership Interest
therein is exempt from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code under a PTCE. Any Holder of a Class E
Certificate or Ownership Interest therein desiring to effect a transfer of such
Certificate or Ownership Interest therein shall, and upon acquisition of such
Class E Certificate shall be deemed to have agreed to, indemnify the Trustee,
the Certificate Registrar, the Master Servicer, the Special Servicer, the
Depositor and the Trust Fund against any liability that may result if the
transfer is not made in accordance with Section 5.02(c) of the Agreement.
No service charge will be imposed for any registration of
transfer or exchange of Class E Certificates, but the Trustee or the Certificate
Registrar may require payment of a sum
<PAGE>
-6-
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Class E Certificates.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, the Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect early retirement of the Class E Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Certificate Principal Balance of the
Principal Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of the Trust Fund (or designated portions thereof) as a REMIC, without
the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
<PAGE>
-7-
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ____________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class E Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ______________
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
____________________________________________________________
_________________________________________________________________ for the
account of
-----------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS F CERTIFICATE EXHIBIT A-7
CLASS F MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Initial Pass-Through Class Principal Balance of the Class F
Rate: 9.1839% per annum Certificates as of the Closing Date:
$11,132,000.00
Date of Pooling and Servicing Initial Certificate
Agreement: February 1, 1996 Principal Balance of this Class F
Certificate as of the Closing Date:
Cut-off Date: February 1, 1996 $11,132,000.00
Closing Date: February 29, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
First Distribution Date: $212,045,633.94
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___ CUSIP No. 79548S9G8
</TABLE>
<PAGE>
-2-
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING 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
FEBRUARY 29, 1996. 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 (AS DEFINED IN THE PROSPECTUS DATED FEBRUARY 14,
1996 AND THE PROSPECTUS SUPPLEMENT DATED FEBRUARY 29, 1996 RELATING TO THE CLASS
A-1, CLASS A-2, CLASS B, CLASS C AND CLASS D CERTIFICATES OF THE SAME SERIES) OF
0% (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 THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS IO, CLASS B,
CLASS C, CLASS D AND CLASS E CERTIFICATES OF THE SAME SERIES TO THE EXTENT
DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, 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 TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL
<PAGE>
-3-
REVENUE CODE OF 1986 (THE "CODE"), OR TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS CERTIFICATE ON BEHALF OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF
THE CLASS G CERTIFICATES OF THE SAME SERIES IS REDUCED TO ZERO, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND
EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that __________________________ is the
registered owner of the Percentage Interest evidenced by this Class F
Certificate (obtained by dividing the principal amount of this Class F
Certificate (its "Certificate Principal Balance") as of the Closing Date by the
aggregate principal amount of all the Class F Certificates (their "Class
Principal Balance") as of the Closing Date) in that certain beneficial ownership
interest evidenced by all the Class F Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor", which term includes any successor entity under the
Agreement), Midland Loan Services, L.P. as master servicer (in such capacity,
hereinafter called the "Master Servicer", which term includes any successor
entity under the Agreement), Midland Loan Services, L.P. as special servicer (in
such capacity, hereinafter called the "Special Servicer", which term includes
any successor entity under the Agreement), LaSalle National Bank (hereinafter
called the "Trustee", which term includes any successor entity under the
Agreement) and ABN AMRO Bank N.V. (hereinafter called 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 20th day of each month or, if such 20th day is not a Business Day,
the Business Day immediately following (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
the Class F Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class F
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account
<PAGE>
-4-
of the Person entitled thereto at a bank or other entity having appropriate
facilities therefor, if such Certificateholder shall have provided the Trustee
with wiring instructions no less than five Business Days prior to the related
Record Date (which wiring instructions may be in the form of a standing order
applicable to all subsequent distributions) and is the registered owner of
Certificates the aggregate initial Certificate Principal Balance of which as of
the Closing Date is at least $5,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously deemed allocated to this
Certificate) will be made in like manner, but only upon presentation and
surrender of this Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to the Holder hereof of such final
distribution. 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 deemed 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 appears in the Certificate Register or to any such other address of
which the Trustee is subsequently notified in writing.
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 Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
The Class F Certificates are issuable in fully registered form
only without coupons in minimum denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Class F Certificates are exchangeable for new Class F Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class F Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of any Class F Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
Securities Act, and effective registration or
<PAGE>
-5-
qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. If a
transfer of any Class F Certificate is to be made without registration under the
Securities Act (other than in connection with the initial issuance thereof or
the initial transfer thereof by the Depositor or any of its affiliates), then
the Certificate Registrar shall refuse to register such transfer unless it
receives either: (i) a certificate from the Certificateholder desiring to effect
such transfer substantially in the form attached as Exhibit G-1 to the
Agreement, and a certificate from such Certificateholder's prospective
transferee substantially in the form attached as either Exhibit G-2 or Exhibit
G-3 to the Agreement; or (ii) an Opinion of Counsel satisfactory to the
Certificate Registrar 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 or the Certificate Registrar in their respective
capacities as such), together with the written certification(s) as to the facts
surrounding such transfer from the Certificateholder desiring to effect such
transfer and/or such Certificateholder's prospective transferee on which such
Opinion of Counsel is based. None of the Depositor, the Trustee or the
Certificate Registrar is obligated to register or qualify the Class F
Certificates under the Securities Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of any
Class F Certificate without registration or qualification. Any Class F
Certificateholder desiring to effect such a transfer shall, and by the
acceptance of its Class F Certificate agrees to, indemnify the Trustee, the
Certificate Registrar and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of a Class F Certificate or any Ownership Interest
shall be made to (A) a Plan or (B) any Person who is directly or indirectly
purchasing such Class F Certificate or Ownership Interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, unless: (i) the
purchase and holding of such Class F Certificate or Ownership Interest therein
is exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under a PTCE; or (ii) the prospective transferee
provides the Certificate Registrar and the Master Servicer with a certification
of facts and an Opinion of Counsel which establish to the reasonable
satisfaction of the Certificate Registrar and the Master Servicer that such
transfer will not result in a violation of Section 406 of ERISA or Section 4975
of the Code or result in the imposition of an excise tax under Section 4975 of
the Code. Each Person who acquires a Class F Certificate or any Ownership
Interest (unless it shall have delivered the certification of facts and Opinion
of Counsel referred to in clause (ii) of the preceding sentence) will be deemed
to have represented and certified that: (i) it is neither a Plan nor any Person
who is directly or indirectly purchasing such Certificate or Ownership 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 Ownership Interest
therein is exempt from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code under a PTCE. Any Holder of a Class F
Certificate or Ownership Interest therein desiring to effect a transfer of such
Certificate or Ownership Interest therein shall, and upon acquisition of such
Class F Certificate shall be deemed to have agreed to, indemnify the Trustee,
the Certificate Registrar, the Master Servicer, the Special Servicer, the
Depositor and the Trust Fund against any liability that may result if the
transfer is not made in accordance with Section 5.02(c) of the Agreement.
No service charge will be imposed for any registration of
transfer or exchange of Class F Certificates, but the Trustee or the Certificate
Registrar may require payment of a sum
<PAGE>
-6-
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Class F Certificates.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, the Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect early retirement of the Class F Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Certificate Principal Balance of the
Principal Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of the Trust Fund (or designated portions thereof) as a REMIC, without
the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
<PAGE>
-7-
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: _______________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class F Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ______________
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
____________________________________________________________
_________________________________________________________________ for the
account of
---------------------------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS G CERTIFICATE EXHIBIT A-8
CLASS G MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Initial Pass-Through Class Principal Balance of the Class G
Rate: 9.1839% per annum Certificates as of the Closing Date:
$9,013,633.94
Date of Pooling and Servicing Initial Certificate
Agreement: February 1, 1996 Principal Balance of this Class G
Certificate as of the Closing Date:
Cut-off Date: February 1, 1996 $9,013,633.94
Closing Date: February 29, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
as of the Closing Date:
First Distribution Date: $212,045,633.94
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___ CUSIP No. 79548S9H6
</TABLE>
<PAGE>
-2-
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING 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
FEBRUARY 29, 1996. 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 (AS DEFINED IN THE PROSPECTUS DATED FEBRUARY 14,
1996 AND THE PROSPECTUS SUPPLEMENT DATED FEBRUARY 29, 1996 RELATING TO THE CLASS
A-1, CLASS A-2, CLASS B, CLASS C AND CLASS D CERTIFICATES OF THE SAME SERIES) OF
0% (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 THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON
THE PREPAYMENT ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS IO, CLASS B,
CLASS C, CLASS D, CLASS E AND CLASS F CERTIFICATES OF THE SAME SERIES TO THE
EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, 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 TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL
<PAGE>
-3-
REVENUE CODE OF 1986 (THE "CODE"), OR TO ANY PERSON WHO IS DIRECTLY OR
INDIRECTLY PURCHASING THIS CERTIFICATE ON BEHALF OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF, OR WITH ASSETS OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT, WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES
DESCRIBED HEREIN.
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE
TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that ____________________________ is the
registered owner of the Percentage Interest evidenced by this Class G
Certificate (obtained by dividing the principal amount of this Class G
Certificate (its "Certificate Principal Balance") as of the Closing Date by the
aggregate principal amount of all the Class G Certificates (their "Class
Principal Balance") as of the Closing Date) in that certain beneficial ownership
interest evidenced by all the Class G Certificates in the Trust Fund created
pursuant to a Pooling and Servicing Agreement, dated as specified above (the
"Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. (hereinafter
called the "Depositor", which term includes any successor entity under the
Agreement), Midland Loan Services, L.P. as master servicer (in such capacity,
hereinafter called the "Master Servicer", which term includes any successor
entity under the Agreement), Midland Loan Services, L.P. as special servicer (in
such capacity, hereinafter called the "Special Servicer", which term includes
any successor entity under the Agreement), LaSalle National Bank (hereinafter
called the "Trustee", which term includes any successor entity under the
Agreement) and ABN AMRO Bank N.V. (hereinafter called 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 20th day of each month or, if such 20th day is not a Business Day,
the Business Day immediately following (each, a "Distribution Date"), commencing
on the first Distribution Date specified above, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the month immediately preceding the month of such distribution (the "Record
Date"), in an amount equal to the product of the Percentage Interest evidenced
by this Certificate and the amount required to be distributed to the Holders of
the Class G Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class G
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account of the Person entitled thereto at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided the Trustee with wiring instructions no less than five Business
<PAGE>
-4-
Days prior to the related Record Date (which wiring instructions may be in the
form of a standing order applicable to all subsequent distributions) and is the
registered owner of Certificates the aggregate initial Certificate Principal
Balance of which as of the Closing Date is at least $5,000,000, or otherwise by
check mailed to the address of such Certificateholder as it appears in the
Certificate Register. Notwithstanding the foregoing, the final distribution on
this Certificate (determined without regard to any possible future reimbursement
of any Realized Loss or Additional Trust Fund Expense previously deemed
allocated to this Certificate) will be made in like manner, but only upon
presentation and surrender of this Certificate at the offices of the Certificate
Registrar or such other location specified in the notice to the Holder hereof of
such final distribution. 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 deemed 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 appears in the Certificate Register or to any
such other address of which the Trustee is subsequently notified in writing.
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 Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
Any distribution to the Holder of this Certificate in
reduction of the Certificate Principal Balance hereof is binding on such Holder
and all future Holders of this Certificate and any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such distribution is made upon this Certificate.
The Class G Certificates are issuable in fully registered form
only without coupons in minimum denominations specified in the Agreement. As
provided in the Agreement and subject to certain limitations therein set forth,
Class G Certificates are exchangeable for new Class G Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices of the Certificate Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class G Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of any Class G Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
Securities Act, and effective registration or qualification under applicable
state securities laws, or is made in a transaction which does not require such
registration or qualification. If a transfer of any Class G Certificate is to be
made without
<PAGE>
-5-
registration under the Securities Act (other than in connection with the initial
issuance thereof or the initial transfer thereof by the Depositor or any of its
affiliates), then the Certificate Registrar shall refuse to register such
transfer unless it receives either: (i) a certificate from the Certificateholder
desiring to effect such transfer substantially in the form attached as Exhibit
G-1 to the Agreement, and a certificate from such Certificateholder's
prospective transferee substantially in the form attached as either Exhibit G-2
or Exhibit G-3 to the Agreement; or (ii) an Opinion of Counsel satisfactory to
the Certificate Registrar 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 or the Certificate Registrar in their respective
capacities as such), together with the written certification(s) as to the facts
surrounding such transfer from the Certificateholder desiring to effect such
transfer and/or such Certificateholder's prospective transferee on which such
Opinion of Counsel is based. None of the Depositor, the Trustee or the
Certificate Registrar is obligated to register or qualify the Class G
Certificates under the Securities Act or any other securities law or to take any
action not otherwise required under the Agreement to permit the transfer of any
Class G Certificate without registration or qualification. Any Class G
Certificateholder desiring to effect such a transfer shall, and by the
acceptance of its Class G Certificate agrees to, indemnify the Trustee, the
Certificate Registrar and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of a Class G Certificate or any Ownership Interest
shall be made to (A) a Plan or (B) any Person who is directly or indirectly
purchasing such Class G Certificate or Ownership Interest therein on behalf of,
as named fiduciary of, as trustee of, or with assets of a Plan, unless: (i) the
purchase and holding of such Class G Certificate or Ownership Interest therein
is exempt from the prohibited transaction provisions of Section 406 of ERISA and
Section 4975 of the Code under a PTCE; or (ii) the prospective transferee
provides the Certificate Registrar and the Master Servicer with a certification
of facts and an Opinion of Counsel which establish to the reasonable
satisfaction of the Certificate Registrar and the Master Servicer that such
transfer will not result in a violation of Section 406 of ERISA or Section 4975
of the Code or result in the imposition of an excise tax under Section 4975 of
the Code. Each Person who acquires a Class G Certificate or any Ownership
Interest (unless it shall have delivered the certification of facts and Opinion
of Counsel referred to in clause (ii) of the preceding sentence) will be deemed
to have represented and certified that: (i) it is neither a Plan nor any Person
who is directly or indirectly purchasing such Certificate or Ownership 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 Ownership Interest
therein is exempt from the prohibited transaction provisions of Section 406 of
ERISA and Section 4975 of the Code under a PTCE. Any Holder of a Class G
Certificate or Ownership Interest therein desiring to effect a transfer of such
Certificate or Ownership Interest therein shall, and upon acquisition of such
Class G Certificate shall be deemed to have agreed to, indemnify the Trustee,
the Certificate Registrar, the Master Servicer, the Special Servicer, the
Depositor and the Trust Fund against any liability that may result if the
transfer is not made in accordance with Section 5.02(c) of the Agreement.
No service charge will be imposed for any registration of
transfer or exchange of Class G Certificates, but the Trustee or the Certificate
Registrar may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Class G Certificates.
<PAGE>
-6-
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, the Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect early retirement of the Class F Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Certificate Principal Balance of the
Principal Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of the Trust Fund (or designated portions thereof) as a REMIC, without
the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ____________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class G Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ______________
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
____________________________________________________________
_________________________________________________________________ for the
account of
---------------------------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS IO CERTIFICATE EXHIBIT A-9
CLASS IO MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Initial Pass-Through Class Notional
Rate: 1.7265% per annum Amount of the Class IO Certificates
as of the Closing Date: $170,696,000.00
Date of Pooling and Servicing Initial Certificate Notional Amount of this
Agreement: February 1, 1996 Class IO Certificate as of the
the Closing Date: $______________
Cut-off Date: February 1, 1996
Aggregate Stated Principal
Closing Date: February 29, 1996 Balance of the Mortgage Loans
as of the Closing Date:
$212,045,633.94
First Distribution Date: Trustee:
March 20, 1996 LaSalle National Bank
Master Servicer and Special Servicer: Fiscal Agent:
Midland Loan Services, L.P. ABN AMRO Bank N.V.
Certificate No. ___ CUSIP No. 79548KQJ0
</TABLE>
<PAGE>
-2-
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST CORPORATION, A NEW YORK CORPORATION ("DTC"), TO THE DEPOSITOR,
THE MASTER SERVICER, THE TRUSTEE, THE FISCAL AGENT, 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 SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING 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
FEBRUARY 29, 1996. 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 (AS DEFINED IN THE PROSPECTUS DATED FEBRUARY 14,
1996 AND THE PROSPECTUS SUPPLEMENT DATED FEBRUARY 27, 1996 RELATING TO THE CLASS
A-1, CLASS A-2, CLASS B, CLASS C AND CLASS D CERTIFICATES OF THE SAME SERIES) OF
0% (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 THAT THE MORTGAGE LOANS WILL PREPAY AT A RATE BASED ON THE PREPAYMENT
ASSUMPTION OR AT ANY OTHER RATE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH
REGISTRATION OR
<PAGE>
-3-
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 TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"),
OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE ON
BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
REDUCTIONS OF THE CERTIFICATE NOTIONAL AMOUNT OF THIS CERTIFICATE MAY BE MADE
MONTHLY AS SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE NOTIONAL AMOUNT HEREOF AT ANY TIME MAY
BE LESS THAN THE AMOUNT SHOWN ABOVE. THIS CERTIFICATE DOES NOT HAVE A
CERTIFICATE PRINCIPAL BALANCE AND WILL NOT ENTITLE THE HOLDER HEREOF TO
DISTRIBUTIONS OF PRINCIPAL.
This certifies that Cede & Co. is the registered owner of the
Percentage Interest evidenced by this Class IO Certificate (obtained by dividing
the notional amount of this Class IO Certificate (its "Certificate Notional
Amount") as of the Closing Date by the aggregate notional amount of all the
Class IO Certificates (their "Class Notional Amount") as of the Closing Date) in
that certain beneficial ownership interest evidenced by all the Class IO
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Salomon Brothers
Mortgage Securities VII, Inc. (hereinafter called the "Depositor", which term
includes any successor entity under the Agreement), Midland Loan Services, L.P.
as master servicer (in such capacity, hereinafter called the "Master Servicer",
which term includes any successor entity under the Agreement), Midland Loan
Services, L.P. as special servicer (in such capacity, hereinafter called the
"Special Servicer", which term includes any successor entity under the
Agreement), LaSalle National Bank (hereinafter called the "Trustee", which term
includes any successor entity under the Agreement) and ABN AMRO Bank N.V.
(hereinafter called 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 20th day of each month or, if such 20th 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
<PAGE>
-4-
amount equal to the product of the Percentage Interest evidenced by this
Certificate and the amount required to be distributed to the Holders of the
Class IO Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on this Class IO
Certificate will be made by the Trustee by wire transfer of immediately
available funds to the account of the Person entitled thereto at a bank or other
entity having appropriate facilities therefor, if such Certificateholder shall
have provided the Trustee with wiring instructions no less than five Business
Days prior to the related Record Date (which wiring instructions may be in the
form of a standing order applicable to all subsequent distributions) and is the
registered owner of Class IO Certificates the aggregate initial Certificate
Notional Amount of which as of the Closing Date is at least $10,000,000, or
otherwise by check mailed to the address of such Certificateholder as it appears
in the Certificate Register. Notwithstanding the foregoing, the final
distribution on this Certificate will be made in like manner, but only upon
presentation and surrender of this Certificate at the offices of the Certificate
Registrar or such other location specified in the notice to Certificateholders
of such final distribution.
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
The Class IO Certificates are issuable in fully registered
form only without coupons in minimum denominations specified in the Agreement.
As provided in the Agreement and subject to certain limitations therein set
forth, Class IO Certificates are exchangeable for new Class IO Certificates in
authorized denominations evidencing the same aggregate Percentage Interest, as
requested by the Holder surrendering the same.
No transfer of any Class IO Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
Securities Act, and effective registration or qualification under applicable
state securities laws, or is made in a transaction which does not require such
registration or qualification. If a transfer of any Class IO Certificate is to
be made without registration under the Securities Act (other than in connection
with the initial issuance thereof or the initial transfer thereof by the
Depositor or any of its affiliates), then the Certificate Registrar shall refuse
to register such transfer unless it receives either: (i) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit G-1 to the Agreement, and a certificate from such
Certificateholder's prospective transferee substantially in the form attached as
either Exhibit G-2 or Exhibit G-3 to the Agreement; or (ii) an Opinion of
Counsel satisfactory to the Certificate Registrar 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 or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify the Class IO Certificates under the Securities
Act or any other securities law or to take any action not otherwise
<PAGE>
-5-
required under the Agreement to permit the transfer of any Class IO Certificate
without registration or qualification. Any Class IO Certificateholder desiring
to effect such a transfer shall, and by the acceptance of its Class IO
Certificate agrees to, indemnify the Trustee, the Certificate Registrar and the
Depositor against any liability that may result if the transfer is not so exempt
or is not made in accordance with such federal and state laws.
No transfer of a Class IO Certificate or any Ownership
Interest shall be made to (A) a Plan or (B) any Person who is directly or
indirectly purchasing such Class IO Certificate or Ownership Interest therein on
behalf of, as named fiduciary of, as trustee of, or with assets of a Plan,
unless: (i) the purchase and holding of such Class IO Certificate or Ownership
Interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under a PTCE or Prohibited Transaction
Exemption No. 89-89; or (ii) the prospective transferee provides the Certificate
Registrar and the Master Servicer with a certification of facts and an Opinion
of Counsel which establish to the reasonable satisfaction of the Certificate
Registrar and the Master Servicer that such transfer will not result in a
violation of Section 406 of ERISA or Section 4975 of the Code or result in the
imposition of an excise tax under Section 4975 of the Code. Each Person who
acquires a Class IO Certificate or any Ownership Interest (unless it shall have
delivered the certification of facts and Opinion of Counsel referred to in
clause (ii) of the preceding sentence) will be deemed to have represented and
certified that: (i) it is neither a Plan nor any Person who is directly or
indirectly purchasing such Certificate or Ownership 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 Ownership Interest therein is exempt
from the prohibited transaction provisions of Section 406 of ERISA and Section
4975 of the Code under a PTCE; or (iii) such Certificate or Ownership Interest
herein being acquired by or on behalf of a Plan in reliance on Prohibited
Transaction Exemption No. 89-89, such Plan (X) is an accredited investor as
defined in Rule 501(a)(1) of Regulation D of the Securities Act, (Y) is not
sponsored (within the meaning of Section 3(16)(B) of ERISA) by the Trustee, the
Depositor, the Fiscal Agent, the Mortgage Loan Seller, the Master Servicer, the
Special Servicer, any Sub-Servicer or any Mortgagor with respect to Mortgage
Loans constituting more than five percent of the aggregate unamortized principal
balance of the Mortgage Loans determined on the date of the initial issuance of
the Certificates, or by any Affiliate of such Person, and (Z) agrees that it
will obtain from each of its transferees a written representation that such
transferee, if a Plan, satisfies the requirements of the immediately preceding
clauses (iii)(X) and (iii)(Y), together with a written agreement that such
transferee will obtain from each of its transferees that are Plans a similar
written representation regarding satisfaction of the requirements of the
immediately preceding clauses (iii)(X) and (iii)(Y). Any Holder of a Class IO
Certificate or Ownership Interest therein desiring to effect a transfer of such
Certificate or Ownership Interest therein shall, and upon acquisition of such
Class IO Certificate shall be deemed to have agreed to, indemnify the Trustee,
the Certificate Registrar, the Master Servicer, the Special Servicer, the
Depositor and the Trust Fund against any liability that may result if the
Transfer is not made in accordance with Section 5.02(c) of the Agreement.
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
<PAGE>
-6-
or more new Class IO Certificates in authorized denominations evidencing the
same aggregate Percentage Interest will be issued to the designated transferee
or transferees.
No service charge will be imposed for any registration of
transfer or exchange of Class IO Certificates, but the Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Class IO Certificates.
Notwithstanding the foregoing, for so long as this Certificate
is registered in the name of Cede & Co. or in such other name as is requested by
an authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required to be distributed to them pursuant to the Agreement following the
earlier of (i) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund, and (ii) the purchase by the Master Servicer, the Holders of
Certificates representing a majority of the Voting Rights allocated to the Class
or Classes of Residual Certificates specified in the Agreement or the Depositor
at a price determined as provided in the Agreement of all Mortgage Loans and
each REO Property remaining in the Trust Fund. The Agreement permits, but does
not require, the Master Servicer, the Holders of Certificates representing a
majority of the Voting Rights allocated to the Class or Classes of Residual
Certificates specified in the Agreement or the Depositor to purchase from the
Trust Fund all Mortgage Loans and each REO Property remaining therein. The
exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Certificate Principal Balance of the
Principal Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status
<PAGE>
-7-
of the Trust Fund (or designated portions thereof) as a REMIC, without the
consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ____________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class IO Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new Mortgage
Pass-Through Certificate of a like Percentage Interest and Class to the above
named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ______________
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall, if permitted, be made by wire transfer or
otherwise, in immediately available funds, to
____________________________________________________________
_________________________________________________________________ for the
account of
---------------------------------------------------------------.
Distributions made by check (such check to be made payable to
____________________) and all applicable statements and notices should be mailed
to _____________________________
- -------------------------------------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS R-I CERTIFICATE EXHIBIT A-10
CLASS R-I MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Date of Pooling and Servicing Percentage Interest evidenced by
Agreement: February 1, 1996 this Class R-I Certificate: ____%
Cut-off Date: February 1, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
Closing Date: February 29, 1996 as of the Closing Date:
$212,045,633.94
First Distribution Date:
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___
</TABLE>
<PAGE>
-2-
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR
ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS IO, CLASS B,
CLASS C, CLASS D, CLASS E, CLASS F AND CLASS G CERTIFICATES OF THE SAME SERIES
TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, 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 TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"),
OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE ON
BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER OR UNDER THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE.
This certifies that ________________________ is the registered
owner of the Percentage Interest evidenced by this Class R-I Certificate (as
specified above) in that certain
<PAGE>
-3-
beneficial ownership interest evidenced by all the Class R-I Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Salomon Brothers Mortgage Securities
VII, Inc. (hereinafter called the "Depositor", which term includes any successor
entity under the Agreement), Midland Loan Services, L.P. as master servicer (in
such capacity, hereinafter called the "Master Servicer", which term includes any
successor entity under the Agreement), Midland Loan Services, L.P. as special
servicer (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), LaSalle National Bank
(hereinafter called the "Trustee", which term includes any successor entity
under the Agreement) and ABN AMRO Bank N.V. (hereinafter called 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 20th day of each month or, if such 20th 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, if any, required to be distributed to the
Holders of the Class R-I Certificates on the applicable Distribution Date
pursuant to the Agreement. All distributions made under the Agreement on this
Class R-I Certificate will be made by check mailed to the address of the Person
entitled thereto, as such name and address appear in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate will
be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
The Class R-I Certificates are issuable in fully registered
form only without coupons in minimum denominations representing Percentage
Interests specified in the Agreement. As provided in the Agreement and subject
to certain limitations therein set forth, Class R-I Certificates are
exchangeable for new Class R-I Certificates in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
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
<PAGE>
-4-
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class R-I Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of any Class R-I Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
Securities Act, and effective registration or qualification under applicable
state securities laws, or is made in a transaction which does not require such
registration or qualification. If a transfer of any Class R-I Certificate is to
be made without registration under the Securities Act (other than in connection
with the initial issuance thereof or the initial transfer thereof by the
Depositor or any of its affiliates), then the Certificate Registrar shall refuse
to register such transfer unless it receives either: (i) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit G-1 to the Agreement, and a certificate from such
Certificateholder's prospective transferee substantially in the form attached as
either Exhibit G-2 or Exhibit G-3 to the Agreement; or (ii) an Opinion of
Counsel satisfactory to the Certificate Registrar 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 or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify the Class R-I Certificates under the Securities
Act or any other securities law or to take any action not otherwise required
under the Agreement to permit the transfer of any Class R-I Certificate without
registration or qualification. Any Class R-I Certificateholder desiring to
effect such a transfer shall, and by the acceptance of its Class R-I Certificate
agrees to, indemnify the Trustee, the Certificate Registrar and the Depositor
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
No transfer of a Class R-I Certificate or any Ownership
Interest shall be made to (A) a Plan or (B) any Person who is directly or
indirectly purchasing such Class R-I Certificate or Ownership Interest therein
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan,
unless: (i) the purchase and holding of such Class R-I Certificate or Ownership
Interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under a PTCE; or (ii) the prospective
transferee provides the Certificate Registrar and the Master Servicer with a
certification of facts and an Opinion of Counsel which establish to the
reasonable satisfaction of the Certificate Registrar and the Master Servicer
that such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or result in the imposition of an excise tax under
Section 4975 of the Code. Each Person who acquires a Class R-I Certificate or
any Ownership Interest (unless it shall have delivered the certification of
facts and Opinion of Counsel referred to in clause (ii) of the preceding
sentence) will be deemed to have represented and certified that: (i) it is
neither a Plan nor any Person who is directly or indirectly purchasing such
Certificate or Ownership 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 Ownership Interest therein is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code
under a PTCE. Any Holder of a Class R-I Certificate or Ownership Interest
therein desiring to effect a transfer of such Certificate or Ownership Interest
therein shall, and upon
<PAGE>
-5-
acquisition of such Class R-I Certificate shall be deemed to have agreed to,
indemnify the Trustee, the Certificate Registrar, the Master Servicer, the
Special Servicer, the Depositor and the Trust Fund against any liability that
may result if the transfer is not made in accordance with Section 5.02(c) of the
Agreement.
Each Person who has or who acquires any Ownership Interest in
this Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the provisions of Section
5.02(d) of the Agreement and, if any purported Transferee shall become a Holder
of this Certificate in violation of the provisions of such Section 5.02(d), to
have irrevocably authorized the Trustee under clause (ii)(A) of such Section
5.02(d) to deliver payments to a Person other than such Person and to have
irrevocably authorized the Trustee under clause (ii)(B) of such Section 5.02(d)
to negotiate the terms of any mandatory sale and to execute all instruments of
Transfer and to do all other things necessary in connection with any such sale.
Each Person holding or acquiring any Ownership Interest in this Certificate must
be a Permitted Transferee and shall promptly notify the Master Servicer and the
Trustee of any change or impending change in its status as a Permitted
Transferee. In connection with any proposed Transfer of any Ownership Interest
in this Certificate, the Certificate Registrar shall require delivery to it, and
shall not register the Transfer of this Certificate until its receipt of, an
affidavit and agreement substantially in the form attached as Exhibit H-1 to the
Agreement (a "Transfer Affidavit and Agreement") from the proposed Transferee,
in form and substance satisfactory to the Certificate Registrar, representing
and warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in this Certificate
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in this
Certificate, it will endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of Section 5.02(d) of the Agreement and agrees to be
bound by them. Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee, if a Responsible Officer of 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 this Certificate to such proposed Transferee shall be effected.
Each Person holding or acquiring any Ownership Interest in
this Certificate shall agree (x) to require a Transfer Affidavit and Agreement
from any other Person to whom such Person attempts to transfer its Ownership
Interest herein and (y) not to transfer its Ownership Interest 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 Master Servicer
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 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 Master Servicer the following: (a) written confirmation
from each Rating Agency to the effect that the modification of, addition to or
elimination of such provisions will not cause such Rating Agency to downgrade
its then-current ratings of any Class of Certificates; and (b) an Opinion of
Counsel, in form and substance satisfactory to the Trustee and the Master
Servicer, obtained at the expense of the party
<PAGE>
-6-
seeking such modification of, addition to or elimination of such provisions (but
in no event at the expense of the Trustee, the Master Servicer or the Trust
Fund), to the effect that such modification of, addition to or elimination of
such provisions will not cause any of REMIC I, REMIC II or REMIC III to (x)
cease to qualify as a REMIC or (y) be subject to an entity-level tax caused by
the Transfer of any Residual Certificate to a Person which is not a Permitted
Transferee, or cause a Person other than the prospective Transferee to be
subject to a REMIC-related tax caused by the Transfer of a Residual Certificate
to a Person which is not a Permitted Transferee.
A "Permitted Transferee" is any Transferee other than a
"Disqualified Organization" or a "Non-United States Person". A "Disqualified
Organization" is any of (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for the
FHLMC, a majority of its board of directors is not selected by such governmental
unit), (ii) a foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (unless such organization
is subject to the tax imposed by Section 511 of the Code on unrelated business
taxable income), (iv) rural electric and telephone cooperatives described in
Section 1381 of the Code and (v) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided to it that the holding of an Ownership
Interest in a Class R-I 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 Class R-I Certificate to such Person. The terms "United States",
"State" and "international organization" shall have the meanings set forth in
Section 7701 of the Code or successor provisions.
A "Non-United States Person" is any Person other than a United
States Person. A "United States Person" is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
No service charge will be imposed for any registration of
transfer or exchange of Class R-I Certificates, but the Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Class R-I Certificates.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on
<PAGE>
-7-
behalf of the Trustee and required to be distributed to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in the Trust Fund, and (ii) the purchase by the Master Servicer, the
Holders of Certificates representing a majority of the Voting Rights allocated
to the Class or Classes of Residual Certificates specified in the Agreement or
the Depositor at a price determined as provided in the Agreement of all Mortgage
Loans and each REO Property remaining in the Trust Fund. The Agreement permits,
but does not require, the Master Servicer, the Holders of Certificates
representing a majority of the Voting Rights allocated to the Class or Classes
of Residual Certificates specified in the Agreement or the Depositor to purchase
from the Trust Fund all Mortgage Loans and each REO Property remaining therein.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Certificate Principal Balance of the
Principal Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of the Trust Fund (or designated portions thereof) as a REMIC, without
the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ____________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-I Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ___________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be by check made payable to
__________________________________ and mailed to
____________________________________________________________________.
Applicable statements and notices should be mailed to
_________________________________________________________________.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS R-II CERTIFICATE EXHIBIT A-11
CLASS R-II MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Date of Pooling and Servicing Percentage Interest evidenced by
Agreement: February 1, 1996 this Class R-II Certificate: _____%
Cut-off Date: February 1, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
Closing Date: February 29, 1996 as of the Closing Date:
$212,045,633.94
First Distribution Date:
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___
</TABLE>
<PAGE>
-2-
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. FISCAL AGENT OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES OR ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS IO, CLASS B,
CLASS C, CLASS D, CLASS E, CLASS F AND CLASS G CERTIFICATES OF THE SAME SERIES
TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, 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 TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"),
OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE ON
BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER OR UNDER THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE.
This certifies that __________________________ is the
registered owner of the Percentage Interest evidenced by this Class R-II
Certificate (as specified above) in that certain
<PAGE>
-3-
beneficial ownership interest evidenced by all the Class R-II Certificates in
the Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Salomon Brothers Mortgage Securities
VII, Inc. (hereinafter called the "Depositor", which term includes any successor
entity under the Agreement), Midland Loan Services, L.P. as master servicer (in
such capacity, hereinafter called the "Master Servicer", which term includes any
successor entity under the Agreement), Midland Loan Services, L.P. as special
servicer (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), LaSalle National Bank
(hereinafter called the "Trustee", which term includes any successor entity
under the Agreement) and ABN AMRO Bank N.V. (hereinafter called 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 20th day of each month or, if such 20th 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, if any, required to be distributed to the
Holders of the Class R-II Certificates on the applicable Distribution Date
pursuant to the Agreement. All distributions made under the Agreement on this
Class R-II Certificate will be made by check mailed to the address of the Person
entitled thereto, as such name and address appear in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate will
be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
The Class R-II Certificates are issuable in fully registered
form only without coupons in minimum denominations representing Percentage
Interests specified in the Agreement. As provided in the Agreement and subject
to certain limitations therein set forth, Class R-II Certificates are
exchangeable for new Class R-II Certificates in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
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
<PAGE>
-4-
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class R-II Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of any Class R-II Certificate shall be made unless
that transfer is made pursuant to an effective registration statement under the
Securities Act, and effective registration or qualification under applicable
state securities laws, or is made in a transaction which does not require such
registration or qualification. If a transfer of any Class R-II Certificate is to
be made without registration under the Securities Act (other than in connection
with the initial issuance thereof or the initial transfer thereof by the
Depositor or any of its affiliates), then the Certificate Registrar shall refuse
to register such transfer unless it receives either: (i) a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit G-1 to the Agreement, and a certificate from such
Certificateholder's prospective transferee substantially in the form attached as
either Exhibit G-2 or Exhibit G-3 to the Agreement; or (ii) an Opinion of
Counsel satisfactory to the Certificate Registrar 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 or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify the Class R-II Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Class R-II
Certificate without registration or qualification. Any Class R-II
Certificateholder desiring to effect such a transfer shall, and by the
acceptance of its Class R-II Certificate agrees to, indemnify the Trustee, the
Certificate Registrar and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of a Class R-II Certificate or any Ownership
Interest shall be made to (A) a Plan or (B) any Person who is directly or
indirectly purchasing such Class R-II Certificate or Ownership Interest therein
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan,
unless: (i) the purchase and holding of such Class R-II Certificate or Ownership
Interest therein is exempt from the prohibited transaction provisions of Section
406 of ERISA and Section 4975 of the Code under a PTCE; or (ii) the prospective
transferee provides the Certificate Registrar and the Master Servicer with a
certification of facts and an Opinion of Counsel which establish to the
reasonable satisfaction of the Certificate Registrar and the Master Servicer
that such transfer will not result in a violation of Section 406 of ERISA or
Section 4975 of the Code or result in the imposition of an excise tax under
Section 4975 of the Code. Each Person who acquires a Class R-II Certificate or
any Ownership Interest (unless it shall have delivered the certification of
facts and Opinion of Counsel referred to in clause (ii) of the preceding
sentence) will be deemed to have represented and certified that: (i) it is
neither a Plan nor any Person who is directly or indirectly purchasing such
Certificate or Ownership 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 Ownership Interest therein is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code
under a PTCE. Any Holder of a Class R-II Certificate or Ownership Interest
therein desiring to effect a transfer of such Certificate or Ownership Interest
therein shall, and upon
<PAGE>
-5-
acquisition of such Class R-II Certificate shall be deemed to have agreed to,
indemnify the Trustee, the Certificate Registrar, the Master Servicer, the
Special Servicer, the Depositor and the Trust Fund against any liability that
may result if the transfer is not made in accordance with Section 5.02(c) of the
Agreement.
Each Person who has or who acquires any Ownership Interest in
this Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the provisions of Section
5.02(d) of the Agreement and, if any purported Transferee shall become a Holder
of this Certificate in violation of the provisions of such Section 5.02(d), to
have irrevocably authorized the Trustee under clause (ii)(A) of such Section
5.02(d) to deliver payments to a Person other than such Person and to have
irrevocably authorized the Trustee under clause (ii)(B) of such Section 5.02(d)
to negotiate the terms of any mandatory sale and to execute all instruments of
Transfer and to do all other things necessary in connection with any such sale.
Each Person holding or acquiring any Ownership Interest in this Certificate must
be a Permitted Transferee and shall promptly notify the Master Servicer and the
Trustee 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 I-1 to the
Agreement (a "Transfer Affidavit and Agreement") from the proposed Transferee,
in form and substance satisfactory to the Certificate Registrar, representing
and warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in this Certificate
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in this
Certificate, it will endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of Section 5.02(d) of the Agreement and agrees to be
bound by them. Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee, if a Responsible Officer of 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 this Certificate to such proposed Transferee shall be effected.
Each Person holding or acquiring any Ownership Interest in
this Certificate shall agree (x) to require a Transfer Affidavit and Agreement
from any other Person to whom such Person attempts to transfer its Ownership
Interest herein and (y) not to transfer its Ownership Interest unless it
provides to the Certificate Registrar a certificate substantially in the form
attached as Exhibit I-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 Master Servicer
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 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 Master Servicer the following: (a) written confirmation
from each Rating Agency to the effect that the modification of, addition to or
elimination of such provisions will not cause such Rating Agency to downgrade
its then-current ratings of any Class of Certificates; and (b) an Opinion of
Counsel, in form and substance satisfactory to the Trustee and the Master
Servicer, obtained at the expense of the party
<PAGE>
-6-
seeking such modification of, addition to or elimination of such provisions (but
in no event at the expense of the Trustee, the Master Servicer or the Trust
Fund), to the effect that such modification of, addition to or elimination of
such provisions will not cause any of REMIC I, REMIC II or REMIC III to (x)
cease to qualify as a REMIC or (y) be subject to an entity-level tax caused by
the Transfer of any Residual Certificate to a Person which is not a Permitted
Transferee, or cause a Person other than the prospective Transferee to be
subject to a REMIC-related tax caused by the Transfer of a Residual Certificate
to a Person which is not a Permitted Transferee.
A "Permitted Transferee" is any Transferee other than a
"Disqualified Organization" or a "Non-United States Person". A "Disqualified
Organization" is any of (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for the
FHLMC, a majority of its board of directors is not selected by such governmental
unit), (ii) a foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (unless such organization
is subject to the tax imposed by Section 511 of the Code on unrelated business
taxable income), (iv) rural electric and telephone cooperatives described in
Section 1381 of the Code and (v) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided to it that the holding of an Ownership
Interest in a Class R-II 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 Class R-II Certificate to such Person. The terms "United States",
"State" and "international organization" shall have the meanings set forth in
Section 7701 of the Code or successor provisions.
A "Non-United States Person" is any Person other than a United
States Person. A "United States Person" is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
No service charge will be imposed for any registration of
transfer or exchange of Class R-II Certificates, but the Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Class R-II Certificates.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on
<PAGE>
-7-
behalf of the Trustee and required to be distributed to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in the Trust Fund, and (ii) the purchase by the Master Servicer, the
Holders of Certificates representing a majority of the Voting Rights allocated
to the Class or Classes of Residual Certificates specified in the Agreement or
the Depositor at a price determined as provided in the Agreement of all Mortgage
Loans and each REO Property remaining in the Trust Fund. The Agreement permits,
but does not require, the Master Servicer, the Holders of Certificates
representing a majority of the Voting Rights allocated to the Class or Classes
of Residual Certificates specified in the Agreement or the Depositor to purchase
from the Trust Fund all Mortgage Loans and each REO Property remaining therein.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Certificate Principal Balance of the
Principal Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of the Trust Fund (or designated portions thereof) as a REMIC, without
the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: ___________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-II Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ___________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be by check made payable to
__________________________________ and mailed to
____________________________________________________________________.
Applicable statements and notices should be mailed to
________________________________________________________________.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
CLASS R-III CERTIFICATE EXHIBIT A-12
CLASS R-III MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1996-C1
evidencing a beneficial ownership interest in a trust fund (the "Trust Fund")
consisting primarily of a pool of multifamily and commercial mortgage loans (the
"Mortgage Loans"), such pool being formed and sold by
SALOMON BROTHERS MORTGAGE SECURITIES VII, INC.
<TABLE>
<S> <C>
Date of Pooling and Servicing Percentage Interest evidenced by
Agreement: February 1, 1996 this Class R-III Certificate: ____%
Cut-off Date: February 1, 1996 Aggregate Stated Principal
Balance of the Mortgage Loans
Closing Date: February 29, 1996 as of the Closing Date:
$212,045,633.94
First Distribution Date:
March 20, 1996
Master Servicer and Special Servicer: Trustee:
Midland Loan Services, L.P. LaSalle National Bank
Fiscal Agent:
ABN AMRO Bank N.V.
Certificate No. ___
</TABLE>
<PAGE>
-2-
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN SALOMON
BROTHERS MORTGAGE SECURITIES VII, INC., SALOMON BROTHERS REALTY CORP., MIDLAND
LOAN SERVICES, L.P., LASALLE NATIONAL BANK, ABN AMRO BANK N.V. OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES OR
ANY OTHER PERSON.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A-1, CLASS A-2, CLASS IO, CLASS B,
CLASS C, CLASS D, CLASS E, CLASS F AND CLASS G CERTIFICATES OF THE SAME SERIES
TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE.
ANY RESALE, 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 TO AN EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT
ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE"),
OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE ON
BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF ANY SUCH
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER
FOR ANY PURPOSE HEREUNDER OR UNDER THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE.
This certifies that _________________________ is the
registered owner of the Percentage Interest evidenced by this Class R-III
Certificate (as specified above) in that certain
<PAGE>
-3-
beneficial ownership interest evidenced by all the Class R-III Certificates in
the Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Salomon Brothers Mortgage Securities
VII, Inc. (hereinafter called the "Depositor", which term includes any successor
entity under the Agreement), Midland Loan Services, L.P. as master servicer (in
such capacity, hereinafter called the "Master Servicer", which term includes any
successor entity under the Agreement), Midland Loan Services, L.P. as special
servicer (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), LaSalle National Bank
(hereinafter called the "Trustee", which term includes any successor entity
under the Agreement) and ABN AMRO Bank N.V. (hereinafter called 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 20th day of each month or, if such 20th 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, if any, required to be distributed to the
Holders of the Class R-III Certificates on the applicable Distribution Date
pursuant to the Agreement. All distributions made under the Agreement on this
Class R-III Certificate will be made by check mailed to the address of the
Person entitled thereto, as such name and address appear in the Certificate
Register. Notwithstanding the foregoing, the final distribution on this
Certificate will be made in like manner, but only upon presentation and
surrender of this Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to Certificateholders of such final
distribution.
The Certificates are limited in right of distribution to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Certificate Account, the Distribution Account
and, if established, the REO Account may be made from time to time for purposes
other than, and, in certain cases, prior to, distributions to
Certificateholders, such purposes including the reimbursement of advances made,
or certain expenses incurred, with respect to the Mortgage Loans and the payment
of interest on such advances and expenses.
The Class R-III Certificates are issuable in fully registered
form only without coupons in minimum denominations representing Percentage
Interests specified in the Agreement. As provided in the Agreement and subject
to certain limitations therein set forth, Class R-III Certificates are
exchangeable for new Class R-III Certificates in authorized denominations
evidencing the same aggregate Percentage Interest, as requested by the Holder
surrendering the same.
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
<PAGE>
-4-
accompanied by a written instrument of transfer in the form satisfactory to the
Certificate Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Class R-III Certificates in
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
No transfer of any Class R-III Certificate shall be made
unless that transfer is made pursuant to an effective registration statement
under the Securities Act, and effective registration or qualification under
applicable state securities laws, or is made in a transaction which does not
require such registration or qualification. If a transfer of any Class R-III
Certificate is to be made without registration under the Securities Act (other
than in connection with the initial issuance thereof or the initial transfer
thereof by the Depositor or any of its affiliates), then the Certificate
Registrar shall refuse to register such transfer unless it receives either: (i)
a certificate from the Certificateholder desiring to effect such transfer
substantially in the form attached as Exhibit G-1 to the Agreement, and a
certificate from such Certificateholder's prospective transferee substantially
in the form attached as either Exhibit G-2 or Exhibit G-3 to the Agreement; or
(ii) an Opinion of Counsel satisfactory to the Certificate Registrar 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 or the
Certificate Registrar in their respective capacities as such), together with the
written certification(s) as to the facts surrounding such transfer from the
Certificateholder desiring to effect such transfer and/or such
Certificateholder's prospective transferee on which such Opinion of Counsel is
based. None of the Depositor, the Trustee or the Certificate Registrar is
obligated to register or qualify the Class R-III Certificates under the
Securities Act or any other securities law or to take any action not otherwise
required under the Agreement to permit the transfer of any Class R-III
Certificate without registration or qualification. Any Class R-III
Certificateholder desiring to effect such a transfer shall, and by the
acceptance of its Class R-III Certificate agrees to, indemnify the Trustee, the
Certificate Registrar and the Depositor against any liability that may result if
the transfer is not so exempt or is not made in accordance with such federal and
state laws.
No transfer of a Class R-III Certificate or any Ownership
Interest shall be made to (A) a Plan or (B) any Person who is directly or
indirectly purchasing such Class R-III Certificate or Ownership Interest therein
on behalf of, as named fiduciary of, as trustee of, or with assets of a Plan,
unless: (i) the purchase and holding of such Class R-III Certificate or
Ownership Interest therein is exempt from the prohibited transaction provisions
of Section 406 of ERISA and Section 4975 of the Code under a PTCE; or (ii) the
prospective transferee provides the Certificate Registrar and the Master
Servicer with a certification of facts and an Opinion of Counsel which establish
to the reasonable satisfaction of the Certificate Registrar and the Master
Servicer that such transfer will not result in a violation of Section 406 of
ERISA or Section 4975 of the Code or result in the imposition of an excise tax
under Section 4975 of the Code. Each Person who acquires a Class R-III
Certificate or any Ownership Interest (unless it shall have delivered the
certification of facts and Opinion of Counsel referred to in clause (ii) of the
preceding sentence) will be deemed to have represented and certified that: (i)
it is neither a Plan nor any Person who is directly or indirectly purchasing
such Certificate or Ownership 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 Ownership Interest therein is exempt from the prohibited
transaction provisions of Section 406 of ERISA and Section 4975 of the Code
under a PTCE. Any Holder of a Class R-III Certificate or Ownership Interest
therein desiring to effect a transfer of such Certificate or Ownership Interest
therein shall,
<PAGE>
-5-
and upon acquisition of such Class R-III Certificate shall be deemed to have
agreed to, indemnify the Trustee, the Certificate Registrar, the Master
Servicer, the Special Servicer, the Depositor and the Trust Fund against any
liability that may result if the transfer is not made in accordance with Section
5.02(c) of the Agreement.
Each Person who has or who acquires any Ownership Interest in
this Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the provisions of Section
5.02(d) of the Agreement and, if any purported Transferee shall become a Holder
of this Certificate in violation of the provisions of such Section 5.02(d), to
have irrevocably authorized the Trustee under clause (ii)(A) of such Section
5.02(d) to deliver payments to a Person other than such Person and to have
irrevocably authorized the Trustee under clause (ii)(B) of such Section 5.02(d)
to negotiate the terms of any mandatory sale and to execute all instruments of
Transfer and to do all other things necessary in connection with any such sale.
Each Person holding or acquiring any Ownership Interest in this Certificate must
be a Permitted Transferee and shall promptly notify the Master Servicer and the
Trustee 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 J-1 to the
Agreement (a "Transfer Affidavit and Agreement") from the proposed Transferee,
in form and substance satisfactory to the Certificate Registrar, representing
and warranting, among other things, that such Transferee is a Permitted
Transferee, that it is not acquiring its Ownership Interest in this Certificate
as a nominee, trustee or agent for any Person that is not a Permitted
Transferee, that for so long as it retains its Ownership Interest in this
Certificate, it will endeavor to remain a Permitted Transferee, and that it has
reviewed the provisions of Section 5.02(d) of the Agreement and agrees to be
bound by them. Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee, if a Responsible Officer of 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 this Certificate to such proposed Transferee shall be effected.
Each Person holding or acquiring any Ownership Interest in
this Certificate shall agree (x) to require a Transfer Affidavit and Agreement
from any other Person to whom such Person attempts to transfer its Ownership
Interest herein and (y) not to transfer its Ownership Interest unless it
provides to the Certificate Registrar a certificate substantially in the form
attached as Exhibit J-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 Master Servicer
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 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 Master Servicer the following: (a) written confirmation
from each Rating Agency to the effect that the modification of, addition to or
elimination of such provisions will not cause such Rating Agency to downgrade
its then-current ratings of any Class of Certificates; and (b) an Opinion of
Counsel, in form and substance satisfactory to the Trustee and the Master
Servicer, obtained at the expense of the party
<PAGE>
-6-
seeking such modification of, addition to or elimination of such provisions (but
in no event at the expense of the Trustee, the Master Servicer or the Trust
Fund), to the effect that such modification of, addition to or elimination of
such provisions will not cause any of REMIC I, REMIC II or REMIC III to (x)
cease to qualify as a REMIC or (y) be subject to an entity-level tax caused by
the Transfer of any Residual Certificate to a Person which is not a Permitted
Transferee, or cause a Person other than the prospective Transferee to be
subject to a REMIC-related tax caused by the Transfer of a Residual Certificate
to a Person which is not a Permitted Transferee.
A "Permitted Transferee" is any Transferee other than a
"Disqualified Organization" or a "Non-United States Person". A "Disqualified
Organization" is any of (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for the
FHLMC, a majority of its board of directors is not selected by such governmental
unit), (ii) a foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Code) which is
exempt from the tax imposed by Chapter 1 of the Code (unless such organization
is subject to the tax imposed by Section 511 of the Code on unrelated business
taxable income), (iv) rural electric and telephone cooperatives described in
Section 1381 of the Code and (v) any other Person so designated by the Trustee
based upon an Opinion of Counsel provided to it that the holding of an Ownership
Interest in a Class R-III 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 Class R-III Certificate to such Person. The terms "United States",
"State" and "international organization" shall have the meanings set forth in
Section 7701 of the Code or successor provisions.
A "Non-United States Person" is any Person other than a United
States Person. A "United States Person" is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States.
No service charge will be imposed for any registration of
transfer or exchange of Class R-III Certificates, but the Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any transfer
or exchange of Class R-III Certificates.
The Depositor, the Master Servicer, the Special Servicer, the
Trustee, the Fiscal Agent and the Certificate Registrar and any agent of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent or the Certificate Registrar may treat the Person in whose name this
Certificate is registered as the owner hereof for all purposes, and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Fiscal
Agent, the Certificate Registrar or any such agent shall be affected by notice
to the contrary.
The Trust Fund and the obligations created by the Agreement
shall terminate upon distribution (or provision for distribution) to the
Certificateholders of all amounts held by or on
<PAGE>
-7-
behalf of the Trustee and required to be distributed to them pursuant to the
Agreement following the earlier of (i) the final payment or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan or REO Property
remaining in the Trust Fund, and (ii) the purchase by the Master Servicer, the
Holders of Certificates representing a majority of the Voting Rights allocated
to the Class or Classes of Residual Certificates specified in the Agreement or
the Depositor at a price determined as provided in the Agreement of all Mortgage
Loans and each REO Property remaining in the Trust Fund. The Agreement permits,
but does not require, the Master Servicer, the Holders of Certificates
representing a majority of the Voting Rights allocated to the Class or Classes
of Residual Certificates specified in the Agreement or the Depositor to purchase
from the Trust Fund all Mortgage Loans and each REO Property remaining therein.
The exercise of such right will effect early retirement of the Certificates;
however, such right to purchase is subject to the aggregate Certificate
Principal Balance of the Principal Balance Certificates at the time of purchase
being less than 5% of the aggregate Certificate Principal Balance of the
Principal Balance Certificates as of the Closing Date.
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
Fiscal Agent and the Trustee and the rights of the Certificateholders under the
Agreement at any time by the Depositor, the Master Servicer, the Special
Servicer, the Fiscal Agent and the Trustee with the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights allocated to the
affected Classes. Any such consent by the Holder of this Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances, including any amendment necessary to maintain the
status of the Trust Fund (or designated portions thereof) as a REMIC, without
the consent of the Holders of any of the Certificates.
Unless the certificate of authentication hereon has been
executed by the Certificate Registrar, by manual signature, this Certificate
shall not be entitled to any benefit under the Agreement or be valid for any
purpose.
The registered Holder hereof, by its acceptance hereof, agrees
that it will look solely to the Trust Fund (to the extent of its rights therein)
for distributions hereunder.
This Certificate shall be construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said State, and the obligations, rights and remedies of the Holder hereof
shall be determined in accordance with such laws.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
Dated: __________________
LASALLE NATIONAL BANK,
as Trustee
By:
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R-III Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Certificate Registrar
By:
Authorized Officer
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)
and transfer(s) unto
- --------------------------------------------------------------
- --------------------------------------------------------------
- --------------------------------------------------------------
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Mortgage Pass-Through Certificate and hereby authorize(s) the registration of
transfer of such interest to assignee on the Certificate Register of the Trust
Fund.
I (we) further direct the Certificate Registrar to issue a new
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Mortgage Pass-Through Certificate to the
following address: ___________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dated:
Signature by or on behalf of Assignor
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be by check made payable to
__________________________________ and mailed to
____________________________________________________________________.
Applicable statements and notices should be mailed to
____________________________ ------------------------------------.
This information is provided by ___________________________, the
Assignee named above, or ____________________________________, as its agent.
<PAGE>
MORTGAGE LOAN SCHEDULE EXHIBIT B
<PAGE>
SCHEDULE OF EXCEPTIONS TO EXHIBIT C
MORTGAGE FILE DELIVERY
<PAGE>
FORM OF MASTER SERVICER EXHIBIT D-1
REQUEST FOR RELEASE
[Date]
LaSalle National Bank
135 South LaSalle Street, Suite 200
Chicago, Illinois 60603-4017
Attention: Salomon Brothers Mortgage Securities VII, Inc., Series 1996-C1
In connection with the administration of the Mortgage Files
held by or on behalf of you as Trustee under a certain Pooling and Servicing
Agreement, dated as of February 1, 1996 (the "Pooling and Servicing Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. as depositor, Midland Loan
Services, L.P. as master servicer and special servicer, ABN AMRO Bank N.V. as
fiscal agent and you as 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 Master Servicer hereby certifies that all amounts
received in connection with the Mortgage Loan that
are required to be credited to the Certificate
Account pursuant to the Pooling and Servicing
Agreement, have been or will be so credited.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage File (or
requested portion thereof) will be held by the undersigned in accordance with
the provisions of the Pooling and Servicing Agreement and will be returned to
you or your designee within ten (10) days of our receipt thereof, unless the
Mortgage Loan has been paid in full, in which case the Mortgage File (or such
portion thereof) will be retained by us for a period of five years.
<PAGE>
-2-
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
MIDLAND LOAN SERVICES, L.P.
By: Midland Data Systems, Inc.,
its General Partner
By:
Name:
Title:
<PAGE>
FORM OF SPECIAL SERVICER EXHIBIT D-2
REQUEST FOR RELEASE
[Date]
LaSalle National Bank
135 South LaSalle Street, Suite 200
Chicago, Illinois 60603-4017
Attention: Salomon Brothers Mortgage Securities VII, Inc., Series 1996-C1
In connection with the administration of the Mortgage Files
held by or on behalf of you as Trustee under a certain Pooling and Servicing
Agreement, dated as of February 1, 1996 (the "Pooling and Servicing Agreement"),
among Salomon Brothers Mortgage Securities VII, Inc. as depositor, Midland Loan
Services, L.P. as master servicer and special servicer, ABN AMRO Bank N.V. as
fiscal agent and you as 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.
<PAGE>
-2-
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Pooling and Servicing Agreement.
MIDLAND LOAN SERVICES, L.P.
By: Midland Data Systems, Inc.,
its General Partner
By:
Name:
Title:
<PAGE>
EXHIBIT E-1
FORM OF COMPARATIVE FINANCIAL STATUS REPORT
<PAGE>
- --------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1996-C1
COMPARATIVE FINANCIAL STATUS REPORT
as of _____________________________
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Original Underwriting Information Prior Full Year Operating Information
Base Year as of ________ Normalized
- ------------------------------------------------------------------------------------------------------------------------------------
Financial
Curr. Last Infor- Last Financial
Sched. Paid Annual Property mation Occu- Property Infor- Occu-
Loan Princ. Thru Debt Inspec- as of pancy Total $ Inspec- mation as pancy Total $ DSCR
Num. City State Bal. Date Service tion Date Date Rate Revenue NOI DSCR(1) tion Date of Date Rate Revenue NOI (1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
List all loans currently in the Trust Fund (with or without information in
descending loan balance order.
- ------------------------------------------------------------------------------------------------------------------------------------
Total: $ WA $ $ WA WA $ $ WA
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
"Actual" (2)
Current Annual Operating Information YTD Financial Information Net Change
as of ___________ Normalized Month Reported Current & Base
- -------------------------------------------------------------------------------------------------------------
Financial
Last Infor- Financial
Property mation Occu- Infor- Occu- Occu-
Loan Inspec- as of pancy Total $ DSCR mation as pancy Total $ DSCR pancy Total DSCR
Num. tion Date Date Rate Revenue NOI (1) of Date Rate Revenue NOI (1) Rate Revenue (1)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Total: WA $ $ WA WA $ $ WA WA $ WA
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Received Required
----------------------------------------
Financial Information Loans Balance Loans Balance
----------------------------------------
$ % $ % $ % $ %
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current Full Year:
- --------------------------------------------------------------------------------
Current Full Year received with DSC <1:
- --------------------------------------------------------------------------------
Prior Full Year:
- --------------------------------------------------------------------------------
Prior Full Year received with DSC<1:
- --------------------------------------------------------------------------------
</TABLE>
- ---------------------
(1) DSCR calculated using NOI/Annual Debt Service
(2) Net change should compare the latest year to the underwriting year.
AP-1
<PAGE>
EXHIBIT E-2
FORM OF DELINQUENT LOAN STATUS REPORT
<PAGE>
- --------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1996-C1
DELINQUENT LOAN STATUS REPORT
as of _____________________________
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)=a+b+c+d
- ------------------------------------------------------------------------------------------------------------------------------------
Total
Loan Outstand. Total Other
Number, Sq. Ft. or Paid Sched. P&I Outstand. Advances Current Current LTM LTM
City & Prop. Units/Occ. Thru Principal Advances Expenses (Taxes & Total Monthly Mortgage Maturity NOI NOI,
State Type %, Date Date Balance To Date To Date Escrow) Exposure P&I Rate Date Date DSCR
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
90+ DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60-89 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30-59 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Specially Serviced Mortgage Loans that are
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
(f) (g)=(.92*f)-e
- --------------------------------------------------------------------------------
Loan Most Appraisal, Transfer
Number, Accurate BPO or Date/ Loss Using Date NOI
City & Valuation Property Internal Closing 92% Appr. Filed/FCL
State Date Value Value** Date or BPO(f) Sale Date Status*
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
FCL - Foreclosure
- -----------------------------------------------------------------------------------------------------------------------------------
LTM - Latest 12 Months
- -----------------------------------------------------------------------------------------------------------------------------------
* Status should contain a code indicating the current direction of each loan
such as (FCL - In Foreclosure, MOD - Modification, DPO - Discount Payoff, NS -
Note Sale, BK - Bankruptcy, PP - Payment Plan, Curr- Current, TBD - To Be
Determined, etc.). It is possible to combine the status codes if the loan is
going in more than one direction i.e. FCL/Mod, BK/Mod, BL/FCL/DPO).
- ------------------------------------------------------------------------------------------------------------------------------------
** App - Appraisal, BPO - Broker Opinion, Int. - Internal Value
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP-2
<PAGE>
EXHIBIT E-3
FORM OF HISTORICAL LOAN MODIFICATION REPORT
<PAGE>
- --------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1996-C1
HISTORICAL LOAN MODIFICATION REPORT
as of ______________________
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Total
Num.
Balance Balance at the Months
When Sent Effective Date Num. for
Loan City/ Mod./ Effective to Special of Months/ Old New Change of
Number State Extension Date Servicer Rehabilitation Old Rate New Rate Old P&I New P&I Maturity Maturity Mod.
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
THIS REPORT IS
HISTORICAL
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total For All
Loans:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
(2) Est.
Future
Interest Loan
(1) Realized to Trust $
Loan Loan to (Rate
Number Trust $ Reduction) COMMENTS
- ---------------------------------------------------
<S> <C> <C>
THIS REPORT IS HISTORICAL
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
- ---------------------------------------------------
Total For All Loans:
- ---------------------------------------------------
- ---------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total For Loans in Current Month:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
# of $ Balance
Loans
- ------------------------------------------------------------------------------------------------------------------------------------
Modifications:
- ------------------------------------------------------------------------------------------------------------------------------------
Maturity Date Extensions:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total:
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP-3
<PAGE>
EXHIBIT E-4
FORM OF HISTORICAL LOSS ESTIMATE REPORT
- --------------------------------------------------------------------------------
<PAGE>
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1996-C1
HISTORICAL LOSS ESTIMATE REPORT (REO-SOLD or DISCOUNTED PAYOFF)
as of _____________________________
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(c)=b/a (a) (b) (d) (e) (f) (g) (h) (i)=d-(f+g+h) (k)=i-e
- ------------------------------------------------------------------------------------------------------------------------------------
Latest Net Amt. Actual
Master % Rec. Appraisal Effect. Received Losses
Servicer from or Brokers Date of Sales from Scheduled Total P&I Total Servicing Net Passed
Loan ID City/State Sale Opinion Sale Price Sale Balance Advanced Expenses Fees Proceeds Thru
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
THIS REPORT IS HISTORICAL
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Total all Loans:
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Current Month
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------
(m) (n)=k+m (o)=n/e
- -----------------------------------------------------------
Minor
Master Date Loss Minor Adj. Total Loss Loss % of
Servicer Passed Adj. to Passed with Scheduled
Loan ID Thru Trust Thru Adjustment Balance
- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Total all Loans:
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Current Month
- ------------------------------------------------------------------
</TABLE>
AP-4
<PAGE>
EXHIBIT E-5
FORM OF REO STATUS REPORT
<PAGE>
- --------------------------------------------------------------------------------
Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates, Series 1996-C1
REO STATUS REPORT
as of _____________________________
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e)=a+b+c+d
- ------------------------------------------------------------------------------------------------------------------------------------
Other
Loan Sq. Ft. or Paid Sched. Total P&I Advances Total Current Current NOI (YTD) Most
Num./City Prop. Units/Occ. Thru Principal Advances (Taxes & Expenses Total Monthly Interest Maturity as of Recent
& State Type %/Date Date Balance To Date Escrow) To Date Exposure P&I Rate Date Date NOI/DSCR
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Real Estate Owned
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Use the following codes: Ap. - Appraisal; BPO - Brokers Opinion; Int. - Internal Value.
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
(f) (g)=(.92*f)-e
- --------------------------------------------------------------------------------
($1)
Most Appraisal, Transfer Loss
Loan Accurate BPO or Date/ Using REO
Num./City Appr. Property Internal Closing 92% Appr. Acquisition Pending
& State Date Value Value Date or BPO(f) Date Offers Comments
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
(1) Use the following codes: Ap. - Appraisal; BPO - Brokers Opinion; Int. - Internal Value.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP-5
<PAGE>
FORM OF OPERATING STATEMENT ANALYSIS EXHIBIT E-6
<PAGE>
Operating Statement Analysis
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
ASSET NAME: PROP TYPE: ACTUAL NORMALIZED
PROPERTY: SF/UNITS: NOI:
ASSET NO: CITY: DSCR:
STATE: SOURCE:
- -----------------------------------------------------------------------------------------------------------------------------
12/31/95 12 MONTHS
ACTUAL NORMALIZED
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUE
BASE RENT BASE RENT
BASE RENT -
OTHER INCOME OTHER INCOME - FORFEITED SECURITY DEP
OTHER INCOME - INTEREST
OTHER INCOME - DEVELOPERS FEE
OTHER INCOME - MISC
OTHER INCOME - LATE PYMT/OTHER RENTS ----------------------------
OPERATING EXPENSE
GENERAL AND ADMINISTRATIVE GENERAL AND ADMINISTRATIVE - POSTAGE & DELIVERY
GENERAL AND ADMINISTRATIVE - AUTO
GENERAL AND ADMINISTRATIVE - OFFICE
INSURANCE INSURANCE -
OTHER ADVERTISING -
LEGAL -
MISCELLANEOUS - EQUIPMENT RENTAL
MISCELLANEOUS -
OTHER TAXES -
OTHER TAXES - FICA
PAYROLL - EMPLOYEE HLTH INS
PAYROLL -
SERVICES - BANK CHARGES
SUPPLIES -
TELEPHONE -
PROPERTY MANAGEMENT MANAGEMENT FEES -
PROPERTY TAXES PROPERTY TAXES -
REPAIRS AND MAINTENANCE COMMON AREA MAINTENANCE - EXTERMINATING
COMMON AREA MAINTENANCE -
GROUNDS -
REPAIRS AND MAINTENANCE - CARPET
REPAlRS AND MAINTENANCE -
TENANT PREP -
UTILITIES ELECTRICITY
TRASH -
UTILITIES - OIL
WATERS/SEWER -
----------------------------
NET OPERATING INCOME
DEBT SERVICE
DEBT SERVICE DEBT SERVICE -
----------------------------
CASH FLOW AFTER DEBT SERVICE
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
AP-6-1
<PAGE>
Income Statement
<TABLE>
<CAPTION>
COLLATERAL:
BORROWER:
PROPERTY TYPE:
1993- 1994
1993 1994 01/01/1995 1994 PER 1994 VARIANCE
DESCRIPTION BASE LINE TOTAL TOTAL TO 11/30/1995 SF/UNIT VARIANCE (BASE LINE)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
REVENUE
BASE RENT
OTHER INCOME
EXPENSE REIMBURSEMENT ------------------------------------------------------------------------------------------
TOTAL REVENUE
OPERATING EXPENSE
PROPERTY MANAGEMENT
GENERAL AND ADMINISTRATIVE
UTILITIES
REPAIRS AND MAINTENANCE
PROPERTY TAXES
INSURANCE
OTHER
GROUND LEASE ------------------------------------------------------------------------------------------
TOTAL OPERATION EXPENSE
NOI
CAPITAL EXPENSES/RESERVES
CASH FLOW BEFORE DEBT SERVICE
DEBT SERVICE
JUNIOR DEBT SERVICE ------------------------------------------------------------------------------------------
TOTAL DEBT SERVICE
CASH FLOW AFTER DEBT SERVICE
DSCR: (NOI/DEBT SERVICE)
DSCR: (AFTER RESERVES/CAP EXP.)
</TABLE>
AP-6-2
<PAGE>
LETTER OF REPRESENTATIONS EXHIBIT F
<PAGE>
FORM OF TRANSFEROR CERTIFICATE EXHIBIT G-1
[Date]
LaSalle National Bank
135 South LaSalle Street, Suite 200
Chicago, Illinois 60603-4017
Attention: Salomon Brothers Mortgage Securities VII, Inc., Series 1996-C1
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates
Series 1996-C1, Class _______ (The "Certificates")
Dear Sirs:
This letter is delivered to you in connection with the
transfer by _________________ (the "Transferor") to _________________ (the
"Transferee") of a Certificate (the "Transferred Certificate") [having an
initial [principal balance][notional amount] as of February 29, 1996 (the
"Closing Date") of $__________] [evidencing a ____% percentage interest in the
Class to which it belongs]. The Certificates were issued pursuant to the Pooling
and Servicing Agreement, dated as of February 1, 1996 (the "Pooling and
Servicing Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. as
depositor, Midland Loan Services, L.P. as master servicer and special servicer,
ABN AMRO Bank N.V. as fiscal agent and LaSalle National Bank as trustee. All
terms used herein and not otherwise defined shall have the 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
Certificate with the full right to transfer such Certificate 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
Certificate, any interest in any Certificate or any other similar
security to any person in any manner, (b) solicited any offer to buy or
accept a transfer, pledge or other disposition of any Certificate, any
interest in any Certificate or any other similar security from any
person in any manner, (c) otherwise approached or negotiated with
respect to any Certificate, any interest in any Certificate or any
other similar security with any person in any manner, (d) made any
general solicitation by means of general advertising or in any other
manner, or (e) taken any other action, which (in the case of any of the
acts described in clauses (a) through (e) hereof) would constitute a
distribution of any Certificate under the Securities Act of 1933, as
amended (the "Securities Act"), or would render the disposition of any
Certificate a violation of Section 5 of the Securities Act
<PAGE>
-2-
or any state securities laws, or would require registration or
qualification of any Certificate pursuant to the Securities Act or any
state securities laws.
Very truly yours,
(Transferor)
By:
Name:
Title:
<PAGE>
FORM OF TRANSFEREE CERTIFICATE EXHIBIT G-2
FOR QIBs
[Date]
LaSalle National Bank
135 South LaSalle Street, Suite 200
Chicago, Illinois 60603-4017
Attention: Salomon Brothers Mortgage Securities VII, Inc., Series 1996-C1
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates
Series 1996-C1, Class ______ (The "Certificates")
Dear Sirs:
This letter is delivered to you in connection with the
transfer by _____________________ (the "Transferor") to ______________________
(the "Transferee") of a Certificate (the "Transferred Certificate") [having an
initial [principal balance][notional amount] as of February __, 1996 (the
"Closing Date") of $__________] [evidencing a ____% percentage interest in the
Class to which it belongs]. The Certificates were issued pursuant to the Pooling
and Servicing Agreement, dated as of February 1, 1996 (the "Pooling and
Servicing Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. as
depositor, Midland Loan Services, L.P. as master servicer and special servicer,
ABN AMRO Bank N.V. as fiscal agent and LaSalle National Bank as trustee. All
terms used herein and not otherwise defined shall have the 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" 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
Certificate for its own account or for the account of a qualified
institutional buyer, and understands that such Certificate may be
resold, pledged or transferred only (i) to a person reasonably believed
to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom
notice is given that the resale, pledge or transfer is being made in
reliance on Rule 144A, or (ii) pursuant to another exemption from
registration under the Securities Act.
2. The Transferee has been furnished with all information
regarding (a) the Certificates and distributions thereon, (b) the
nature, performance and servicing of the Mortgage Loans, (c) the
Pooling and Servicing Agreement, and (d) any credit enhancement
mechanism associated with the Certificates, that it has requested.
Very truly yours,
<PAGE>
-3-
(Transferee)
By:
Name:
Title:
<PAGE>
ANNEX 1 TO EXHIBIT G-2
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 certificate
being transferred (the "Transferred Certificate") 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 Certificate (the "Transferee").
2. The Transferee is a "qualified institutional buyer" as that
term is defined in Rule 144A under the Securities Act of 1933, as amended ("Rule
144A") because (i) the Transferee owned and/or invested on a discretionary basis
$______________________1 in securities (other than the excluded securities
referred to below) as of the end of the Transferee's most recent fiscal year
(such amount being calculated in accordance with Rule 144A) and (ii) the
Transferee satisfies the criteria in the category marked below.
___ CORPORATION, ETC. The Transferee is a corporation (other than
a bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986.
___ BANK. The Transferee (a) is a national bank or a banking
institution organized under the laws of any State, U.S.
territory or the District of Columbia, the business of which
is substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, A COPY OF WHICH IS
ATTACHED HERETO, as of a date not more than 16 months
preceding the date of sale of the Certificate in the case of a
U.S. bank, and not more than 18 months preceding such date of
sale for a foreign bank or equivalent institution.
___ SAVINGS AND LOAN. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated
- ------------------------
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.
<PAGE>
-2-
in its latest annual financial statements, A COPY OF WHICH IS
ATTACHED HERETO, as of a date not more than 16 months
preceding the date of sale of the Certificate in the case of a
U.S. savings and loan association, and not more than 18 months
preceding such date of sale for a foreign savings and loan
association or equivalent institution.
___ BROKER-DEALER. The Transferee is a dealer registered pursuant
to Section 15 of the Securities Exchange Act of 1934, as
amended.
___ INSURANCE COMPANY. The Transferee is an insurance company
whose primary and predominant business activity is the writing
of insurance or the reinsuring of risks underwritten by
insurance companies and which is subject to supervision by the
insurance commissioner or a similar official or agency of a
State, U.S. territory or the District of Columbia.
___ STATE OR LOCAL PLAN. The Transferee is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
___ ERISA PLAN. The Transferee is an employee benefit plan within
the meaning of Title I of the Employee Retirement Income
Security Act of 1974.
___ INVESTMENT ADVISOR. The Transferee is an investment advisor
registered under the Investment Advisers Act of 1940, as
amended.
___ OTHER. (Please supply a brief description of the entity and a
cross-reference to the paragraph and subparagraph under
subsection (a)(1) of Rule 144A pursuant to which it qualifies.
Note that registered investment companies should complete
Annex 2 rather than this Annex 1.)
---------------------------
-------------------------------------------------------------
-------------------------------------------------------------
-------------------------------------------------------------
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Transferee, (ii) securities
that are part of an unsold allotment to 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
<PAGE>
-3-
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 Certificate are relying and will continue to rely on the statements
made herein because one or more sales to the Transferee may be in reliance on
Rule 144A.
___ ___ Will the Transferee be purchasing the
Yes No Transferred Certificate only for the
Transferee's own account?
6. If the answer to the foregoing question is "no", then in
each case where the Transferee is purchasing for an account other than its own,
such account belongs to a third party that is itself a "qualified institutional
buyer" within the meaning of Rule 144A, and the "qualified institutional buyer"
status of such third party has been established by the Transferee through one or
more of the appropriate methods contemplated by Rule 144A.
7. The Transferee will notify each of the parties to which
this certification is made of any changes in the information and conclusions
herein. Until such notice is given, the Transferee's purchase of the Transferred
Certificate will constitute a reaffirmation of this certification as of the date
of such purchase. In addition, if the Transferee is a bank or savings and loan
as provided above, the Transferee agrees that it will furnish to such parties
any updated annual financial statements that become available on or before the
date of such purchase, promptly after they become available.
Print Name of Transferee
By:
Name:
Title:
Date:
<PAGE>
ANNEX 2 TO EXHIBIT G-2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That Are Registered Investment Companies]
The undersigned hereby certifies as follows to [name of
Transferor] (the "Transferor") and [name of Certificate Registrar], as
Certificate Registrar, with respect to the mortgage pass-through certificate
being transferred (the "Transferred Certificate") 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 Certificate (the "Transferee") or, if
the Transferee is a "qualified institutional buyer" as that term is defined in
Rule 144A under the Securities Act of 1933, as amended ("Rule 144A") because the
Transferee is part of a Family of Investment Companies (as defined below), is an
executive officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as
defined in Rule 144A because (i) the Transferee is an investment company
registered under the Investment Company Act of 1940, as amended and (ii) as
marked below, the Transferee alone owned and/or invested on a discretionary
basis, or the Transferee's Family of Investment Companies owned, at least
$100,000,000 in securities (other than the excluded securities referred to
below) as of the end of the Transferee's most recent fiscal year. For purposes
of determining the amount of securities owned by the Transferee or the
Transferee's Family of Investment Companies, the cost of such securities was
used, unless the Transferee or any member of the Transferee's Family of
Investment Companies, as the case may be, reports its securities holdings in its
financial statements on the basis of their market value, and no current
information with respect to the cost of those securities has been published, in
which case the securities of such entity were valued at market.
____ The Transferee owned and/or invested on a discretionary basis
$___________________ in securities (other than the excluded
securities referred to below) as of the end of the
Transferee's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Transferee is part of a Family of Investment Companies
which owned in the aggregate $______________ in securities
(other than the excluded securities referred to below) as of
the end of the Transferee's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein
means two or more registered investment companies (or series thereof) that have
the same investment adviser or investment advisers that are affiliated (by
virtue of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Transferee or are part of the
Transferee's Family of Investment
<PAGE>
-2-
Companies, (ii) bank deposit notes and certificates of deposit, (iii) loan
participations, (iv) repurchase agreements, (v) securities owned but subject to
a repurchase agreement and (vi) currency, interest rate and commodity swaps. For
purposes of determining the aggregate amount of securities owned and/or invested
on a discretionary basis by the Transferee, or owned by the Transferee's Family
of Investment Companies, the securities referred to in this paragraph were
excluded.
5. The Transferee is familiar with Rule 144A and understands
that the parties to which this certification is being made are relying and will
continue to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A.
____ ____ Will the Transferee be purchasing
Yes No the Transferred Certificate 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 Certificate will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
Print Name of Transferee or Adviser
By:
Name:
Title:
IF AN ADVISER:
Print Name of Transferee
Date:
<PAGE>
FORM OF TRANSFEREE CERTIFICATE EXHIBIT G-3
FOR NON-QIBs
[Date]
LaSalle National Bank
135 South LaSalle Street, Suite 200
Chicago, Illinois 60603-4017
Attention: Salomon Brothers Mortgage Securities VII, Inc., Series 1996-C1
Re: Salomon Brothers Mortgage Securities VII, Inc.
Mortgage Pass-Through Certificates
Series 1996-C1, Class ____ (The "Certificates")
Dear Sirs:
This letter is delivered to you in connection with the
transfer by _____________________ (the "Transferor") to ______________________
(the "Transferee") of a Certificate (the "Transferred Certificate") [having an
initial [principal balance][notional amount] as of February ___, 1996 (the
"Closing Date") of $__________] [evidencing a ____% percentage interest in the
Class to which it belongs]. The Certificates were issued pursuant to the Pooling
and Servicing Agreement, dated as of February 1, 1996 (the "Pooling and
Servicing Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. as
depositor (the "Depositor"), Midland Loan Services, L.P. as master servicer and
special servicer, ABN AMRO Bank N.V. as fiscal agent and LaSalle National Bank
as trustee. All terms used herein and not otherwise defined shall have the
meanings set forth in the Pooling and Servicing Agreement. The Transferee hereby
certifies, represents and warrants to you, as Certificate Registrar, that:
1. The Transferee is acquiring the Transferred Certificate 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 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 Certificates and (c)
the Certificates may not be resold or transferred unless they are (i) registered
pursuant to the Securities Act and registered or qualified pursuant to any
applicable state securities laws or (ii) sold or transferred in transactions
which are exempt from such registration and qualification and the Certificate
Registrar has received either (A) certifications from both the transferor
(substantially in the form attached to the Pooling and Servicing Agreement as
Exhibit G-1) and the transferee (substantially in the form attached to the
Pooling and Servicing Agreement as either Exhibit G-2 or Exhibit G-3) setting
forth the facts surrounding the transfer or (B) an opinion of counsel
satisfactory to the Certificate Registrar with respect to the availability of
such exemption,
<PAGE>
-2-
together with copies of the certification(s) from the transferor and/or
transferee setting forth the facts surrounding the transfer upon which such
opinion is based.
3. The Transferee understands that it may not sell or
otherwise transfer any portion of its interest in the Transferred Certificate
except in compliance with the provisions of Section 5.02 of the Pooling and
Servicing Agreement, which provisions it has carefully reviewed, and that the
Transferred Certificate will bear legends substantially to the following effect:
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER DISPOSITION
OF THIS CERTIFICATE 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.
- AND -
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR
OTHER RETIREMENT ARRANGEMENT THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986
(THE "CODE"), OR TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS
CERTIFICATE ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS
OF ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, WILL BE
REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED HEREIN.
4. Neither the Transferee nor anyone acting on its behalf has
(a) offered, pledged, sold, disposed of or otherwise transferred any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicited any offer to buy or accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approached or negotiated with respect to any Certificate, any interest
in any Certificate or any other similar security with any person in any manner,
(d) made any general solicitation 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 any Certificate under the Securities Act, would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law or would require registration or qualification of any Certificate
pursuant thereto. The Transferee will not act, nor has it authorized or will it
authorize any person to act, in any manner set forth in the foregoing sentence
with respect to any Certificate.
5. The Transferee has been furnished with all information
regarding (a) the Depositor, (b) the Certificates and distributions thereon, (c)
the Mortgage Loans, (d) the Pooling and Servicing Agreement, and (e) all related
matters, that it has requested.
<PAGE>
-3-
6. The Transferee is an "accredited investor" as defined in
Rule 501(a) under the Securities Act 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 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.
Very truly yours,
(Transferee)
By:
Name:
Title:
<PAGE>
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT EXHIBIT H-1
PURSUANT TO SECTION 5.02(d)(i)(B)
REGARDING TRANSFER OF THE CLASS R-I CERTIFICATES
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
[NAME OF OFFICER], being first duly sworn, deposes, represents
and warrants:
1. That he is [Title of Officer] of [Name of Owner] (the
"Owner"), a ____________________ duly organized and existing under the laws of
[the State of _________] [the United States], and the owner of the Salomon
Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through Certificates,
Series 1996-C1, Class R-I evidencing a ___% Percentage Interest (the "Class R-I
Certificates"). Capitalized terms used but not defined herein have the meanings
assigned to such terms in the Pooling and Servicing Agreement, dated as of
February 1, 1996, among Salomon Brothers Mortgage Securities VII, Inc. as
Depositor, Midland Loan Services, L.P. as Master Servicer and Special Servicer,
ABN AMRO Bank N.V. as Fiscal Agent and LaSalle National Bank as Trustee.
2. That the Owner (i) is a "Permitted Transferee" as of
_______________ and that for so long as it retains its Ownership Interest in the
Class R-I Certificates, it will endeavor to remain a Permitted Transferee and
(ii) is acquiring the Class R-I Certificates for its own account or for the
account of another Owner 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 any of the following: (i)
the United States, any State or political subdivision thereof, any possession of
the United States, or any agency or instrumentality of any of the foregoing
(other than an instrumentality which is a corporation if all of its activities
are subject to tax and, except for the FHLMC, a majority of its board of
directors is not selected by such governmental unit), (ii) a foreign government,
any international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (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(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel that the holding of an Ownership Interest in a Class R-I 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 Class R-I Certificate
to such Person. The terms "United States", "State" and "international
organization" shall have the meanings set forth in Section 7701 of the Code or
successor provisions.
A "Non-United States Person" is any Person other than a United
States Person. A "United States Person" is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
<PAGE>
-2-
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.
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of the Class R-I Certificates to disqualified organizations
under the Internal Revenue Code of 1986 that applies to all transfers of the
Class R-I Certificates after March 31, 1988; (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 disqualified organization, 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 not a disqualified organization and, at the time of
transfer, such person does not have actual knowledge that the affidavit is false
and; (iv) that the Class R-I Certificates may be "noneconomic residual
interests" within the meaning of Treasury regulation section 1.860E-1(c)(2) 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. That the Owner is aware of the tax imposed on a
"pass-through entity" holding the Class R-I Certificates if at any time during
the taxable year of the pass-through entity a nonPermitted 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. That the Owner is aware that the Certificate Registrar will
not register the transfer of any Class R-I Certificate unless the transferee, or
the transferee's agent, delivers to the Trustee, among other things, an
affidavit in substantially the same form as this affidavit. The Owner expressly
agrees that it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and agreement are
false.
6. That the Owner 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 Class R-I Certificates will only be
owned, directly or indirectly, by Permitted Transferees.
7. That the Owner's taxpayer identification number is
_______________.
8. That the Owner has reviewed the restrictions set forth on
the face of the Class R-I Certificates and the provisions of Section 5.02(d) of
the Pooling and Servicing Agreement under which the Class R-I Certificates were
issued (and, in particular, the Owner is aware that such Section authorizes the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
9. That the Owner is not acquiring and will not transfer the
Class R-I Certificates in order to impede the assessment or collection of any
tax.
10. That the Owner anticipates that it will, so long as it
holds any of the Class R-I Certificates, have sufficient assets to pay any taxes
owed by the holder of such Class R-I Certificates.
<PAGE>
-3-
11. That the Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds any of
the Class R-I Certificates.
12. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding. In this regard, the Owner hereby
represents to and for the benefit of the Person from whom it acquired the Class
R-I Certificates that the Owner intends to pay taxes associated with holding the
Class R-I Certificates as they become due, fully understanding that it may incur
tax liabilities in excess of any cash flows generated by the Class R-I
Certificates.
13. That the Owner is not acquiring the Class R-I Certificates
with the intent to transfer any of the Class R-I Certificates to any person or
entity that will not have sufficient assets to pay any taxes owed by the holder
of such Class R-I Certificates, or that may become insolvent or subject to a
bankruptcy proceeding, for so long as the Class R-I Certificates remain
outstanding.
14. That Owner will, in connection with any transfer that it
makes of any Class R-I Certificate, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class R-I Certificates were issued and will not
consummate any such transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.
15. That Owner will, in connection with any transfer that it
makes of any Class R-I Certificate, deliver to the Certificate Registrar an
affidavit, which represents and warrants that it is not transferring such Class
R-I Certificate to impede the assessment or collection of any tax and that it
has no actual knowledge that the proposed transferee: (i) has insufficient
assets to pay any taxes owed by such transferee as holder of such Class R-I
Certificate; (ii) may become insolvent or subject to a bankruptcy proceeding,
for so long as the Class R-I Certificates remain outstanding; or (iii) is not a
"Permitted Transferee".
<PAGE>
-4-
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, by its Authorized Signatory, attested by its [Assistant]
Secretary, this ___ day of _______, 199__.
[NAME OF OWNER]
By:
[Name of Officer]
[Title of Officer]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the foregoing
instrument and to be [Title of Officer] of the Owner, and acknowledged to me
that he or she executed the same as his or her free act and deed and the free
act and deed of the Owner.
Subscribed and sworn before me this _____ day of _______,
199__.
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the day of
, 19 .
<PAGE>
FORM OF TRANSFEROR CERTIFICATE EXHIBIT H-2
PURSUANT TO SECTION 5.02(d)(i)(D)
REGARDING TRANSFER OF THE CLASS R-I CERTIFICATES
[Date]
LaSalle National Bank
135 South LaSalle Street, Suite 200
Chicago, Illinois 60603-4017
Attention: Salomon Brothers Mortgage Securities VII, Inc., Series 1996-C1
Re: Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-
Through Certificates, Series 1996-C1, Class R-I, evidencing a
____% percentage interest in the Class to which they belong
Dear Sirs:
This letter is delivered to you in connection with the
transfer by (the "Transferor") to (the "Transferee") of the captioned Class R-I
Certificates (the "Class R-I Certificates"), pursuant to Section 5.02 of the
Pooling and Servicing Agreement, dated as of February 1, 1996 (the "Pooling and
Servicing Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. as
depositor, Midland Loan Services, L.P. as master servicer and special servicer,
ABN AMRO Bank N.V. as fiscal agent and LaSalle National Bank as trustee. All
terms used herein and not otherwise defined shall have the meanings set forth in
the Pooling and Servicing Agreement. The Transferor hereby represents and
warrants to you, as Certificate Registrar, that:
1. No purpose of the Transferor relating to the transfer of
the Class R-I 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 I-1. The Transferor does not know or
believe that any representation contained therein is false.
<PAGE>
-2-
3. The Transferor has at the time of this transfer conducted a
reasonable investigation of the financial condition of the Transferee as
contemplated by Treasury regulation section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Transferor has determined that the Transferee has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Transferee will not continue to pay its debts as
they become due in the future. The Transferor understands that the transfer of
the Class R-I Certificates may not be respected for United States income tax
purposes (and the Transferor may continue to be liable for United States income
taxes associated therewith) unless the Transferor has conducted such an
investigation.
Very truly yours,
(Transferor)
By:
Name:
Title:
<PAGE>
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT EXHIBIT I-1
PURSUANT TO SECTION 5.02(d)(i)(B)
REGARDING TRANSFER OF THE CLASS R-II CERTIFICATES
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
[NAME OF OFFICER], being first duly sworn, deposes, represents
and warrants:
1. That he is [Title of Officer] of [Name of Owner] (the
"Owner"), a ____________________________ duly organized and existing under the
laws of [the State of _________] [the United States], and the owner of the
Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1996-C1, Class R-II evidencing a ___% Percentage Interest
(the "Class R-II Certificates"). Capitalized terms used but not defined herein
have the meanings assigned to such terms in the Pooling and Servicing Agreement,
dated as of February 1, 1996 (the "Pooling and Servicing Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc., as Depositor, Midland Loan
Services, L.P., as Master Servicer and Special Servicer, ABN AMRO Bank N.V., as
Fiscal Agent and LaSalle National Bank, as Trustee.
2. That the Owner (i) is a "Permitted Transferee" as of
_______________ and that for so long as it retains its Ownership Interest in the
Class R-II Certificates, it will endeavor to remain a Permitted Transferee and
(ii) is acquiring the Class R-II Certificates for its own account or for the
account of another Owner 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 any of the following: (i)
the United States, any State or political subdivision thereof, any possession of
the United States, or any agency or instrumentality of any of the foregoing
(other than an instrumentality which is a corporation if all of its activities
are subject to tax and, except for the FHLMC, a majority of its board of
directors is not selected by such governmental unit), (ii) a foreign government,
any international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (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(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel that the holding of an Ownership Interest in a Class R-II 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 Class R-II
Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
A "Non-United States Person" is any Person other than a United
States Person. A "United States Person" is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
<PAGE>
-2-
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.
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of the Class R-II Certificates to disqualified
organizations under the Internal Revenue Code of 1986 that applies to all
transfers of the Class R-II Certificates after March 31, 1988; (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 disqualified organization,
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 not a disqualified organization and, at the
time of transfer, such person does not have actual knowledge that the affidavit
is false and; (iv) that the Class R-II Certificates may be "noneconomic residual
interests" within the meaning of Treasury regulation section 1.860E-1(c)(2) 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. That the Owner is aware of the tax imposed on a
"pass-through entity" holding the Class R-II Certificates if at any time during
the taxable year of the pass-through entity a nonPermitted 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. That the Owner is aware that the Certificate Registrar will
not register the transfer of any Class R-II Certificate unless the transferee,
or the transferee's agent, delivers to the Trustee, among other things, an
affidavit in substantially the same form as this affidavit. The Owner expressly
agrees that it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and agreement are
false.
6. That the Owner 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 Class R-II Certificates will only be
owned, directly or indirectly, by Permitted Transferees.
7. That the Owner's taxpayer identification number is
_______________.
8. That the Owner has reviewed the restrictions set forth on
the face of the Class R-II Certificates and the provisions of Section 5.02(d) of
the Pooling and Servicing Agreement under which the Class R-II Certificates were
issued (and, in particular, the Owner is aware that such Section authorizes the
Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
9. That the Owner is not acquiring and will not transfer the
Class R-II Certificates in order to impede the assessment or collection of any
tax.
<PAGE>
-3-
10. That the Owner anticipates that it will, so long as it
holds any of the Class RII Certificates, have sufficient assets to pay any taxes
owed by the holder of such Class R-II Certificates.
11. That the Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds any of
the Class R-II Certificates.
12. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding. In this regard, the Owner hereby
represents to and for the benefit of the Person from whom it acquired the Class
R-II Certificates that the Owner intends to pay taxes associated with holding
the Class R-II Certificates as they become due, fully understanding that it may
incur tax liabilities in excess of any cash flows generated by the Class R-II
Certificates.
13. That the Owner is not acquiring the Class R-II
Certificates with the intent to transfer any of the Class R-II Certificates to
any person or entity that will not have sufficient assets to pay any taxes owed
by the holder of such Class R-II Certificates, or that may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R-II Certificates
remain outstanding.
14. That Owner will, in connection with any transfer that it
makes of any Class R-II Certificate, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class R-II Certificates were issued and will not
consummate any such transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.
15. That Owner will, in connection with any transfer that it
makes of any Class R-II Certificate, deliver to the Certificate Registrar an
affidavit, which represents and warrants that it is not transferring such Class
R-II Certificate to impede the assessment or collection of any tax and that it
has no actual knowledge that the proposed transferee: (i) has insufficient
assets to pay any taxes owed by such transferee as holder of such Class R-II
Certificate; (ii) may become insolvent or subject to a bankruptcy proceeding,
for so long as the Class R-II Certificates remain outstanding; or (iii) is not a
"Permitted Transferee".
<PAGE>
-4-
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, by its Authorized Signatory, attested by its [Assistant]
Secretary, this ___ day of _______, 199__.
[NAME OF OWNER]
By:
[Name of Officer]
[Title of Officer]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the foregoing
instrument and to be [Title of Officer] of the Owner, and acknowledged to me
that he or she executed the same as his or her free act and deed and the free
act and deed of the Owner.
Subscribed and sworn before me this _____ day of _______, 199__.
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the day of
, 19 .
<PAGE>
FORM OF TRANSFEROR CERTIFICATE EXHIBIT I-2
PURSUANT TO SECTION 5.02(d)(i)(D)
REGARDING TRANSFER OF THE CLASS R-II CERTIFICATES
[Date]
LaSalle National Bank
135 South LaSalle Street, Suite 200
Chicago, Illinois 60603-4017
Attention: Salomon Brothers Mortgage Securities VII, Inc., Series 1996-C1
Re: Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-
Through Certificates, Series 1996-C1, Class R-II, evidencing a
____% percentage interest in the Class to which they belong
Dear Sirs:
This letter is delivered to you in connection with the
transfer by (the "Transferor") to (the "Transferee") of the captioned Class R-II
Certificates (the "Class R-II Certificates"), pursuant to Section 5.02 of the
Pooling and Servicing Agreement, dated as of February 1, 1996 (the "Pooling and
Servicing Agreement"), among Salomon Brothers Mortgage Securities VII, Inc. as
depositor, Midland Loan Services, L.P. as master servicer and special servicer,
ABN AMRO Bank N.V. as fiscal agent and LaSalle National Bank as trustee. All
terms used herein and not otherwise defined shall have the meanings set forth in
the Pooling and Servicing Agreement. The Transferor hereby represents and
warrants to you, as Certificate Registrar, that:
1. No purpose of the Transferor relating to the transfer of
the Class R-II 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 J-1. The Transferor does not know or
believe that any representation contained therein is false.
3. The Transferor has at the time of this transfer conducted a
reasonable investigation of the financial condition of the Transferee as
contemplated by Treasury regulation section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Transferor has determined that the Transferee has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Transferee will not continue to pay its debts as
they become due in the future.
<PAGE>
-2-
The Transferor understands that the transfer of the Class R-II Certificates may
not be respected for United States income tax purposes (and the Transferor may
continue to be liable for United States income taxes associated therewith)
unless the Transferor has conducted such an investigation.
Very truly yours,
(Transferor)
By:
Name:
Title:
<PAGE>
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT EXHIBIT J-1
PURSUANT TO SECTION 5.02(d)(i)(B)
REGARDING TRANSFER OF THE CLASS R-III CERTIFICATES
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
[NAME OF OFFICER], being first duly sworn, deposes, represents
and warrants:
1. That he is [Title of Officer] of [Name of Owner] (the
"Owner"), a ____________________________ duly organized and existing under the
laws of [the State of _________] [the United States], and the owner of the
Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-Through
Certificates, Series 1996-C1, Class R-III evidencing a ___% Percentage Interest
(the "Class R-III Certificates"). Capitalized terms used but not defined herein
have the meanings assigned to such terms in the Pooling and Servicing Agreement,
dated as of February 1, 1996 (the "Pooling and Servicing Agreement"), among
Salomon Brothers Mortgage Securities VII, Inc. as Depositor, Midland Loan
Services, L.P. as Master Servicer and Special Servicer, ABN AMRO Bank N.V. as
Fiscal Agent and LaSalle National Bank as Trustee.
2. That the Owner (i) is a "Permitted Transferee" as of
_______________ and that for so long as it retains its Ownership Interest in the
Class R-III Certificates, it will endeavor to remain a Permitted Transferee and
(ii) is acquiring the Class R-III Certificates for its own account or for the
account of another Owner 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 any of the following: (i)
the United States, any State or political subdivision thereof, any possession of
the United States, or any agency or instrumentality of any of the foregoing
(other than an instrumentality which is a corporation if all of its activities
are subject to tax and, except for the FHLMC, a majority of its board of
directors is not selected by such governmental unit), (ii) a foreign government,
any international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (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(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel that the holding of an Ownership Interest in a Class R-III
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 Class
R-III Certificate to such Person. The terms "United States", "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
A "Non-United States Person" is any Person other than a United
States Person. A "United States Person" is a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate or trust whose income from sources without the United States is
<PAGE>
-2-
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.
3. That the Owner is aware (i) of the tax that would be
imposed on transfers of the Class R-III Certificates to disqualified
organizations under the Internal Revenue Code of 1986 that applies to all
transfers of the Class R-III Certificates after March 31, 1988; (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 disqualified organization,
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 not a disqualified organization and, at the
time of transfer, such person does not have actual knowledge that the affidavit
is false and; (iv) that the Class R-III Certificates may be "noneconomic
residual interests" within the meaning of Treasury regulation section
1.860E-1(c)(2) 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. That the Owner is aware of the tax imposed on a
"pass-through entity" holding the Class R-III Certificates if at any time during
the taxable year of the pass-through entity a nonPermitted 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. That the Owner is aware that the Certificate Registrar will
not register the transfer of any Class R-III Certificate unless the transferee,
or the transferee's agent, delivers to the Trustee, among other things, an
affidavit in substantially the same form as this affidavit. The Owner expressly
agrees that it will not consummate any such transfer if it knows or believes
that any of the representations contained in such affidavit and agreement are
false.
6. That the Owner 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 Class R-III Certificates will only
be owned, directly or indirectly, by Permitted Transferees.
7. That the Owner's taxpayer identification number is
_______________.
8. That the Owner has reviewed the restrictions set forth on
the face of the Class R-III Certificates and the provisions of Section 5.02(d)
of the Pooling and Servicing Agreement under which the Class R-III Certificates
were issued (and, in particular, the Owner is aware that such Section authorizes
the Trustee to deliver payments to a person other than the Owner and negotiate a
mandatory sale by the Trustee in the event that the Owner holds such Certificate
in violation of Section 5.02(d)); and that the Owner expressly agrees to be
bound by and to comply with such restrictions and provisions.
9. That the Owner is not acquiring and will not transfer the
Class R-III Certificates in order to impede the assessment or collection of any
tax.
<PAGE>
-3-
10. That the Owner anticipates that it will, so long as it
holds any of the Class RIII Certificates, have sufficient assets to pay any
taxes owed by the holder of such Class R-III Certificates.
11. That the Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds any of
the Class R-III Certificates.
12. That the Owner has no present knowledge or expectation
that it will be unable to pay any United States taxes owed by it so long as any
of the Certificates remain outstanding. In this regard, the Owner hereby
represents to and for the benefit of the Person from whom it acquired the Class
R-III Certificates that the Owner intends to pay taxes associated with holding
the Class RIII Certificates as they become due, fully understanding that it may
incur tax liabilities in excess of any cash flows generated by the Class R-III
Certificates.
13. That the Owner is not acquiring the Class R-III
Certificates with the intent to transfer any of the Class R-III Certificates to
any person or entity that will not have sufficient assets to pay any taxes owed
by the holder of such Class R-III Certificates, or that may become insolvent or
subject to a bankruptcy proceeding, for so long as the Class R-III Certificates
remain outstanding.
14. That Owner will, in connection with any transfer that it
makes of any Class R-III Certificate, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class R-III Certificates were issued and will not
consummate any such transfer if it knows, or knows facts that should lead it to
believe, that any such representations are false.
15. That Owner will, in connection with any transfer that it
makes of any Class R-III Certificate, deliver to the Certificate Registrar an
affidavit, which represents and warrants that it is not transferring such Class
R-III Certificate to impede the assessment or collection of any tax and that it
has no actual knowledge that the proposed transferee: (i) has insufficient
assets to pay any taxes owed by such transferee as holder of such Class R-III
Certificate; (ii) may become insolvent or subject to a bankruptcy proceeding,
for so long as the Class R-III Certificates remain outstanding; or (iii) is not
a "Permitted Transferee".
<PAGE>
-4-
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, by its Authorized Signatory, attested by its [Assistant]
Secretary, this ___ day of _______, 199__.
[NAME OF OWNER]
By:
[Name of Officer]
[Title of Officer]
ATTEST:
[Assistant] Secretary
Personally appeared before me the above-named [Name of
Officer], known or proved to me to be the same person who executed the foregoing
instrument and to be [Title of Officer] of the Owner, and acknowledged to me
that he or she executed the same as his or her free act and deed and the free
act and deed of the Owner.
Subscribed and sworn before me this _____ day of _______, 199__.
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the day of
, 19 .
<PAGE>
FORM OF TRANSFEROR CERTIFICATE EXHIBIT J-2
PURSUANT TO SECTION 5.02(d)(i)(D)
REGARDING TRANSFER OF THE CLASS R-III CERTIFICATES
[Date]
LaSalle National Bank
135 South LaSalle Street, Suite 200
Chicago, Illinois 60603-4017
Attention: Salomon Brothers Mortgage Securities VII, Inc., Series 1996-C1
Re: Salomon Brothers Mortgage Securities VII, Inc., Mortgage Pass-
Through Certificates, Series 1996-C1, Class R-III, evidencing a
____% percentage interest in the Class to which they belong
Dear Sirs:
This letter is delivered to you in connection with the
transfer by (the "Transferor") to (the "Transferee") of the captioned Class
R-III Certificates (the "Class R-III Certificates"), pursuant to Section 5.02 of
the Pooling and Servicing Agreement, dated as of February 1, 1996 (the "Pooling
and Servicing Agreement"), among Salomon Brothers Mortgage Securities VII, Inc.
as depositor, Midland Loan Services, L.P. as master servicer and special
servicer, ABN AMRO Bank N.V. as fiscal agent and LaSalle National Bank as
trustee. All terms used herein and not otherwise defined shall have the meanings
set forth in the Pooling and Servicing Agreement. The Transferor hereby
represents and warrants to you, as Certificate Registrar, that:
1. No purpose of the Transferor relating to the transfer of
the Class R-III 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 J-1. The Transferor does not know or
believe that any representation contained therein is false.
3. The Transferor has at the time of this transfer conducted a
reasonable investigation of the financial condition of the Transferee as
contemplated by Treasury regulation section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Transferor has determined that the Transferee has
historically paid its debts as they became due and has found no significant
evidence to indicate that the Transferee will not continue to pay its debts as
they become due in the future.
<PAGE>
-2-
The Transferor understands that the transfer of the Class R-III Certificates may
not be respected for United States income tax purposes (and the Transferor may
continue to be liable for United States income taxes associated therewith)
unless the Transferor has conducted such an investigation.
Very truly yours,
(Transferor)
By:
Name:
Title:
<PAGE>
FORM OF UCC-1 FINANCING STATEMENT EXHIBIT K
<PAGE>
EXHIBIT A TO EXHIBIT K
This Exhibit A is attached to and incorporated in a financing
statement pertaining to SALOMON BROTHERS MORTGAGE SECURITIES VII, INC., as
Depositor (referred to as the "Debtor" for the purpose of this financing
statement only), and LASALLE NATIONAL BANK, as trustee for the holders of the
Series 1996-C1 Certificates (referred to as the "Secured Party" for purposes of
this financing statement only), under that certain Pooling and Servicing
Agreement, dated as of February 1, 1996 (the "Pooling and Servicing Agreement"),
among the Debtor, Midland Loan Services, L.P. as master servicer (in such
capacity, the "Master Servicer"), Midland Loan Services, L.P. as special
servicer (in such capacity, the "Special Servicer"), ABN AMRO Bank N.V. as
fiscal agent (the "Fiscal Agent") and the Secured Party, relating to the
issuance of the Debtor's Mortgage Pass-Through Certificates, Class A-1, Class
A-2, Class B, Class C, Class D, Class E, Class F, Class G, Class IO, Class R-I,
Class R-II and Class R-III, Series 1996-C1 (collectively, the "Series 1996- C1
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 by the Pooling and Servicing Agreement, consisting of the following:
1. The mortgage notes or other evidence of indebtedness
of a borrower (the "Mortgage Notes") with respect to
the mortgage loans (the "Mortgage Loans") listed on
the Mortgage Loan Schedule to the Pooling and
Servicing Agreement, which Mortgage Loan Schedule is
attached hereto as Annex J;
2. The related mortgages, deeds of trust or other
similar instruments securing such Mortgage Notes (the
"Mortgages");
3. With respect to each Mortgage Note and each Mortgage,
each other document in the related Mortgage File;
4. (a) the Certificate Account created by the Master
Servicer pursuant to the Pooling and Servicing
Agreement, (b) all funds from time to time on deposit
in the Certificate Account, (c) the investments of
any such funds consisting of securities, instruments
or other obligations (including the Permitted
Investments described on Annex I hereto), and (d) the
general intangibles consisting of the contractual
right to payment, including the right to payments of
principal and interest and the right to enforce the
related payment obligations, arising from or under
any such investments;
5. All REO Property;
6. (a) the REO Account required to be maintained by the
Special Servicer pursuant to the Pooling and
Servicing Agreement, (b) all funds from time to time
on deposit in the REO Account, (c) the investments of
any such funds consisting of securities, instruments
or other obligations (including the Permitted
Investments described on Annex I hereto), and (d) the
general intangibles consisting of the contractual
right to payment, including the right to payments of
principal and interest and the right to enforce the
related payment obligations, arising from or under
any such investments;
<PAGE>
-2-
7. (a) the Reserve Account(s) and Servicing Account(s)
maintained by the Master Servicer or Special Servicer
pursuant to the Pooling and Servicing Agreement, and
(b) all funds from time to time on deposit in such
accounts;
8. (a) the Distribution Account created by the Trustee
pursuant to the Pooling and Servicing Agreement, (b)
all funds from time to time on deposit in the
Distribution Account, (c) the investments of any such
funds consisting of securities, instruments or other
obligations (including the Permitted Investments
described on Annex I hereto), and (d) the general
intangibles consisting of the contractual right to
payment, including the right to payments of principal
and interest and the right to enforce the related
payment obligations, arising from or under any such
investments;
9. All insurance policies, including the right to
payments thereunder, with respect to the Mortgage
Loans required to be maintained pursuant to the
Pooling and Servicing Agreement, transferred to the
Trust Fund and to be serviced by the Master Servicer
or Special Servicer; and
10. All income, payments, products and proceeds of any of
the foregoing, together with any additions thereto or
substitutions therefor.
THE DEBTOR AND THE SECURED PARTY INTEND THE TRANSACTIONS CONTEMPLATED BY THE
POOLING AND SERVICING AGREEMENT TO CONSTITUTE A SALE OF THE INTEREST IN THE
MORTGAGE NOTES, THE RELATED MORTGAGES AND THE OTHER DOCUMENTS IN THE RELATED
MORTGAGE FILES EVIDENCED BY THE SERIES 1996-C1 CERTIFICATES, AND THIS FILING
SHOULD NOT BE CONSTRUED AS A CONCLUSION THAT A SALE HAS NOT OCCURRED. THE
REFERENCES HEREIN TO MORTGAGE NOTES SHOULD NOT BE CONSTRUED AS A CONCLUSION THAT
ANY MORTGAGE NOTE IS NOT AN INSTRUMENT WITHIN THE MEANING OF THE UNIFORM
COMMERCIAL CODE OR THAT A FILING IS NECESSARY TO PERFECT THE OWNERSHIP OR
SECURITY INTEREST OF THE SECURED PARTY IN ANY MORTGAGE NOTE, MORTGAGE OR OTHER
DOCUMENT IN A MORTGAGE FILE. IN ADDITION, THE REFERENCES HEREIN TO SECURITIES,
INSTRUMENTS AND OTHER OBLIGATIONS (INCLUDING WITHOUT LIMITATION, PERMITTED
INVESTMENTS) SHOULD NOT BE CONSTRUED AS A CONCLUSION THAT ANY SECURITY,
INSTRUMENT OR OTHER OBLIGATION (INCLUDING WITHOUT LIMITATION, ANY PERMITTED
INVESTMENT) IS NOT AN INSTRUMENT, A CERTIFICATED SECURITY OR AN UNCERTIFICATED
SECURITY WITHIN THE MEANING OF THE UNIFORM COMMERCIAL CODE, AS IN EFFECT IN ANY
APPLICABLE JURISDICTION, NOR SHOULD THIS FINANCING STATEMENT BE CONSTRUED AS A
CONCLUSION THAT A FILING IS NECESSARY TO PERFECT THE OWNERSHIP OR SECURITY
INTEREST OF THE SECURED PARTY IN THE CONTRACTUAL RIGHT TO PAYMENT, INCLUDING THE
RIGHT TO PAYMENTS OF PRINCIPAL AND INTEREST AND THE RIGHT TO ENFORCE THE RELATED
PAYMENT OBLIGATIONS, ARISING FROM OR UNDER ANY SECURITY, INSTRUMENT OR OTHER
OBLIGATION (INCLUDING WITHOUT LIMITATION, ANY PERMITTED INVESTMENT). WITH
RESPECT TO THE FOREGOING, THIS FILING IS MADE ONLY IN THE EVENT OF CONTRARY
ASSERTIONS BY THIRD PARTIES.
<PAGE>
ANNEX I TO EXHIBIT A TO EXHIBIT K
The term "Permitted Investments" shall include any of the
following instruments, securities or other obligations:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States;
(ii) repurchase obligations with respect to any security
described in clause (i) above, provided that the long-term unsecured
debt obligations, or the short-term deposit or debt obligations, of the
party agreeing to repurchase such obligations are 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 the
qualification, downgrading or withdrawal of the rating then assigned
thereby to any Class of Certificates, as evidenced in writing by such
Rating Agency);
(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, provided that such
items are rated in the highest short term rating category of each
Rating Agency (or, in the case of either Rating Agency, such lower
rating as will not result in the qualification, downgrading or
withdrawal of the rating then assigned thereby to any Class of
Certificates, as evidenced in writing by the Rating Agency);
(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 Rating Agency;
(v) units of money market funds rated in the highest short
term rating category of each Rating Agency and that seek 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 by
each Rating Agency in writing to the Master Servicer, the Special
Servicer and the Trustee;
provided that (a) an investment enumerated above shall be a Permitted Investment
notwithstanding that Fitch has not assigned any rating thereto (provided, that
one other nationally recognized statistical rating organization besides Standard
& Poor's has assigned the related applicable rating thereto), and (b) no
investment described hereunder shall evidence either the right to receive (i)
only interest with respect to such investment or (ii) a yield to maturity (at
the time of purchase) greater than 120% of the yield to maturity at par of the
underlying obligations; and provided, further, 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.
<PAGE>
ANNEX J TO EXHIBIT A TO EXHIBIT K
MORTGAGE LOAN SCHEDULE
<PAGE>
SALOMON BROTHERS REALTY CORP. (THE "SELLER") EXHIBIT L
REPRESENTATIONS AND WARRANTIES REGARDING
INDIVIDUAL MORTGAGE LOANS
FOR PURPOSES OF THIS EXHIBIT L, THE PHRASE "THE SELLER'S
ACTUAL KNOWLEDGE" AND OTHER WORDS AND PHRASES OF LIKE IMPORT SHALL MEAN THE
ACTUAL STATE OF KNOWLEDGE OF THE SELLER REGARDING THE MATTERS REFERRED TO, IN
EACH CASE WITHOUT HAVING CONDUCTED ANY INDEPENDENT INQUIRY INTO SUCH MATTERS AND
WITHOUT ANY OBLIGATION TO HAVE DONE SO.
With respect to each Mortgage Loan, the Seller hereby
represents and warrants to the Depositor that, as of the date hereinbelow
specified or, if no such date is specified, as of the Closing Date:
1. MORTGAGE LOAN SCHEDULE. The information set forth in the
Mortgage Loan Schedule is complete, true and correct in all material respects as
of the date of this Agreement and as of the Cut-off Date.
2. WHOLE LOAN; OWNERSHIP OF MORTGAGE LOANS. Each Mortgage Loan
is a whole loan and not a participation interest in a mortgage loan. Immediately
prior to the sale of the Mortgage Loans to the Depositor, the Seller had good
title to, and was the sole owner of, each Mortgage Loan. The Seller has full
right, power and authority to transfer and assign the Mortgage Loans to or at
the direction of the Depositor and has validly and effectively conveyed (or
caused to be conveyed) to the Depositor or its designee all of the Seller's
legal and beneficial interest in and to the Mortgage Loans free and clear of any
and all pledges, liens, charges, security interests and/or other encumbrances.
The sale of the Mortgage Loans to the Depositor or its designee does not require
the Seller to obtain any governmental or regulatory approval or consent that has
not been obtained, and no bulk sale law applies to such sale.
3. PAYMENT RECORD. As of the Cut-off Date, no scheduled
payment of principal and interest under any Mortgage Loan was 30 days or more
past due and no Mortgage Loan was 30 days or more delinquent in the twelve-month
period immediately preceding the Cut-off Date.
4. LIEN; VALID ASSIGNMENT. Each Mortgage constitutes a valid
and, subject to the exceptions set forth in paragraph 13 below, enforceable
first lien upon the related Mortgaged Property, prior to all other liens and
encumbrances except for (a) the lien for current real estate taxes and
assessments not yet due and payable, (b) covenants, conditions and restrictions,
rights of way, easements and other matters that are of public record and/or are
referred to in the related lender's title insurance policy, none of which
materially interferes with the security intended to be provided by such
Mortgage, (c) exceptions and exclusions specifically referred to in such
lender's title insurance policy none of which materially interferes with the
security intended to be provided by such Mortgage and (d) other matters to which
like properties are commonly subject, none of which materially interferes with
the security intended to be provided by such Mortgage, the use, enjoyment, value
or marketability of the related Mortgaged Property, or the ability of such
Mortgaged Property to generate net operating income sufficient to service the
related Mortgage Loan. The related assignment of Mortgage executed and delivered
by the Seller is in recordable form and constitutes a legal, valid and binding
assignment, sufficient to convey to the Depositor or its designee all of the
Seller's right, title and interest in, to and under such Mortgage. Each
Mortgage, together with any separate security agreements, chattel mortgages or
equivalent instruments, establishes and creates a valid and, subject to the
exceptions set forth in paragraph 13 below, enforceable security interest in
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favor of the Seller in all of the related Mortgagor's personal property used in,
and reasonably necessary to operate, the related Mortgaged Property. Either a
Uniform Commercial Code financing statement has been filed and/or recorded in
all places necessary to perfect a valid security interest in such personal
property or a Uniform Commercial Code financing statement with respect to such
personal property has been fully executed in accordance with applicable laws and
is in form and substance sufficient, upon recordation and/or filing thereof in
all necessary places, to perfect a valid security interest in such personal
property.
5. ASSIGNMENT OF LEASES AND RENTS. The assignment of leases
and/or rents related to and delivered in connection with each Mortgage Loan
establishes and creates a valid, subsisting and, subject to the exceptions set
forth in paragraph 13 below, enforceable first lien and first priority security
interest in the related Mortgagor's interest in all leases, sub-leases, licenses
or other agreements pursuant to which any Person is entitled to occupy, use or
possess all or any portion of the real property subject to the related Mortgage,
and each assignor thereunder has the full right to assign the same. The Seller
has the full right to assign to the Depositor or the Depositor's designee all of
the Seller's right, title and interest in, to and under such assignment of
leases and/or rents. The related assignment of such assignment of leases and/or
rents executed and delivered by the Seller is in recordable form and constitutes
a legal, valid and binding assignment, sufficient to convey to the Depositor or
its designee all of the Seller's right, title and interest in, to and under such
assignment of leases and/or rents. To the Seller's actual knowledge, no Person
other than the Mortgagor owns any interest in any payments due under the related
leases that is superior to the lien of the related Mortgage.
6. MORTGAGE STATUS; WAIVERS AND MODIFICATIONS. No Mortgage has
been satisfied, cancelled, rescinded or subordinated in whole or in material
part, and the related Mortgaged Property has not been released from the lien of
any Mortgage, in whole or in material part, nor has any instrument been executed
that would effect any such satisfaction, cancellation, subordination, rescission
or release. None of the terms of any Mortgage Note or Mortgage or any assignment
of leases and/or rents related to a Mortgage Loan have been impaired, waived,
altered or modified in any respect, except by written instruments, all of which
are included in the related Mortgage File.
7. CONDITION OF PROPERTY; CONDEMNATION. To the Seller's actual
knowledge and except as set forth in a property condition report previously
delivered by the Seller to the Depositor, each Mortgaged Property is free and
clear of any damage that would materially and adversely affect its value as
security for the related Mortgage Loan. There is no proceeding pending for the
total or partial condemnation of or affecting the Mortgaged Properties. To the
Seller's actual knowledge, as of the date of the origination of the Mortgage
Loan, all of the material improvements on the property of such Mortgaged
Property lie wholly within the boundaries and building restriction lines of such
property, except for encroachments that are insured against by the lender's
title insurance policy referred to herein or that do not materially and
adversely affect the value or marketability of such Mortgaged Property, and no
improvements on adjoining properties materially encroach upon such Mortgaged
Property so as to materially and adversely affect the value or marketability of
such Mortgaged Property.
8. TITLE INSURANCE. Each Mortgaged Property is covered by an
American Land Title Association lender's title insurance policy (or equivalent
form) in the original principal amount
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of the related Mortgage Loan after all advances of principal (the "Title
Policy") insuring that the related Mortgage is a valid first priority lien on
such Mortgaged Property, subject only to the exceptions stated therein. Such
Title Policy is in full force and effect, and to the Seller's actual knowledge,
no material claims have been made thereunder and no claims have been paid
thereunder. No holder of the related Mortgage has done, by act or omission,
anything that would materially impair the coverage of such Title Policy. Such
Title Policy is assignable to or endorsable in favor of the Trustee for the
benefit of the Certificateholders without the consent of or notice to the
insurer. On the date of the transfer and assignment of the related Mortgage Loan
to the Trustee, such Title Policy will be valid and in full force and effect,
with all premiums thereon having been paid, and immediately following the
transfer and assignment of such Mortgage Loan to the Trustee, such Title Policy
will inure to the benefit of the Trustee.
9. NO HOLDBACKS. The proceeds of each Mortgage Loan have been
fully disbursed and there is no obligation for future advances with respect to
the Mortgage Loans. Any and all requirements under each Mortgage Loan as to
completion of any on-site or off-site improvement and as to disbursements of any
escrow funds therefor that were to have been complied with on or before the
Closing Date have been complied with or any such escrow funds have not been
released.
10. MORTGAGE PROVISIONS. The related Mortgage Note or the
related Mortgage for each Mortgage Loan, together with applicable state law,
contains enforceable provisions (subject to the exceptions set forth in
paragraph 13) such as to render the rights and remedies of the holder thereof
adequate for the practical realization against the related Mortgaged Property of
the principal benefits of the security intended to be provided thereby.
11. TRUSTEE UNDER DEED OF TRUST. If a Mortgage is a deed of
trust, (1) a trustee, duly qualified under applicable law to serve as such, is
properly designated and serving under such Mortgage, and (2) except in
connection with a trustee's sale after default by the related Mortgagor, no fees
or expenses are payable to such trustee by the Seller, the Depositor or any
transferee thereof.
12. ENVIRONMENTAL CONDITIONS. An environmental site assessment
was performed with respect to each Mortgaged Property in connection with the
origination of the related Mortgage Loan, a report of each such assessment (an
"Environmental Report") has been delivered to the Depositor, and either (x) no
such Environmental Report reveals any known circumstances or conditions with
respect to the related Mortgaged Property that rendered such Mortgaged Property,
at the date of such Environmental Report, in material violation of any
applicable environmental laws or (y) if any such Environmental Report does
reveal any such circumstances or conditions with respect to the related
Mortgaged Property and the same have not been subsequently remediated in all
material respects, then either (i) the expenditure of funds necessary to effect
such remediation is not material in relation to the outstanding principal
balance of the related Mortgage Loan, or (ii) a sufficient escrow of funds
exists for purposes of effecting such remediation, or (iii) the related
Mortgagor or other responsible party is currently taking such actions, if any,
with respect to such circumstances or conditions as have been required by the
applicable governmental regulatory authority.
13. LOAN DOCUMENT STATUS. Each Mortgage Note, related
Mortgage, and each other agreement executed in connection therewith is the
legal, valid and binding obligation of the
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maker thereof (subject to any non-recourse provisions contained in any of the
foregoing agreements and any applicable state anti-deficiency or market value
limit deficiency legislation), enforceable in accordance with its terms, except
as such enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally, and
by general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), and there is no valid defense,
counterclaim or right of offset or rescission available to the related Mortgagor
with respect to such Mortgage Note, Mortgage or other agreements.
14. INSURANCE. All improvements upon each Mortgaged Property
are insured against loss by hazards of extended coverage in an amount equal to
or greater than the lesser of the outstanding principal balance of the related
Mortgage Loan and 100% of the full replacement cost of the improvements located
on the related Mortgaged Property. The Mortgaged Properties for all of the
Mortgage Loans are the subject of a business interruption insurance policy
providing coverage for at least six months. If any portion of a Mortgaged
Property was, at the time of the origination of the related Mortgage Loan, in an
area identified in the Federal Register by the Flood Emergency Management Agency
as having special flood hazards, and flood insurance was available, a flood
insurance policy meeting any requirements of the then current guidelines of the
Federal Insurance Administration is in effect with a generally acceptable
insurance carrier, in an amount representing coverage not less than the least of
(1) the outstanding principal balance of the related Mortgage Loan, and (2) the
full insurable value of such Mortgaged Property, and (3) the maximum amount of
insurance available under the National Flood Insurance Act of 1968, as amended.
All such hazard and flood insurance policies (collectively, the "hazard
insurance policy") contain a standard "New York" mortgagee clause for the
benefit of the holder of the related Mortgage, its successors and assigns, as
mortgagee, are not terminable and the amount of coverage provided thereunder may
not be reduced without ten (10) days prior written notice to the mortgagee, and
all premiums payable thereon, whether annual or otherwise, have been paid. No
notice of termination, cancellation or reduction has been received and is
currently outstanding with respect to any such hazard insurance policy.
15. TAXES AND ASSESSMENTS. There are no delinquent or unpaid
taxes or assessments (including assessments payable in future installments), or
other outstanding charges affecting any Mortgaged Property which are or may
become a lien of priority equal to or higher than the lien of the related
Mortgage. For purposes of this representation and warranty, real property taxes
and assessments shall not be considered unpaid until the Business Day
immediately preceding the date on which interest and/or penalties would be
payable thereon.
16. MORTGAGOR BANKRUPTCY. To the Seller's actual knowledge, no
Mortgagor is a debtor in any state or federal bankruptcy or insolvency
proceeding.
17. FEE SIMPLE INTEREST, LOCAL LAW COMPLIANCE. Each Mortgaged
Property consists of an estate in fee simple in real estate and each improvement
located on or forming part of a Mortgaged Property complies with applicable
zoning laws and ordinances, or constitutes a legal non-conforming use or
structure or, if such an improvement does not so comply, such non-compliance
does not materially and adversely affect the value of the related Mortgaged
Property; no Mortgage Loan is secured in any material part by the interest of
the related Mortgagor as a lessee under a ground lease of real property.
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18. ESCROW DEPOSITS. With respect to escrow deposits and
payments, all such payments are in the possession of, or under the control of,
the Seller and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made.
19. LTV RATIO. The gross proceeds of the Mortgage Loan to the
Mortgagor at origination did not exceed the non-contingent principal amount of
the Mortgage Loan and either (A) such Mortgage Loan is secured by an interest in
real property having a fair market value (i) at the date the Mortgage Loan was
originated at least equal to 80 percent of the original principal balance of the
Mortgage Loan or (ii) at the Closing Date at least equal to 80 percent of the
principal balance of the Mortgage Loan on such date; PROVIDED, that for purposes
hereof, the fair market value of the real property interest must first be
reduced by (a) the amount of any lien on the real property interest that is
senior to the Mortgage Loan and (b) a proportionate amount of any lien that is
in parity with the Mortgage Loan (unless such other lien secures a Mortgage Loan
that is crosscollateralized with such Mortgage Loan, in which event the
computation described in clauses (i) and (ii) of this paragraph 19 shall be made
on a pro rata basis in accordance with the fair market values of the Mortgaged
Properties securing such cross-collateralized Mortgage Loans), or (B)
substantially all the proceeds of such Mortgage Loan were used to acquire,
improve or protect the real property which served as the only security for such
Mortgage Loan (other than a recourse feature or other third party credit
enhancement within the meaning of Treasury Regulations Section 1.860G-
2(a)(1)(ii)).
20. MORTGAGE LOAN MODIFICATIONS. Any Mortgage Loan that was
"significantly modified" prior to the Closing Date so as to result in a taxable
exchange under Section 1001 of the Code either (A) was modified as a result of
the default or reasonably foreseeable default of such Mortgage Loan or (B)
satisfies the provisions of either clause (A)(i) of paragraph 19 (substituting
the date of the last such modification for the date the Mortgage Loan was
originated) or clause (A)(ii) of paragraph 19, including the proviso thereto.
21. ADVANCEMENT OF FUNDS BY THE SELLER. The Seller has not
advanced funds or induced, solicited or knowingly received any advance of funds
from a party other than the owner of the Mortgaged Property, directly or
indirectly, for the payment of any amount required by the Mortgage Loan, except
with respect to the Mortgage Loan identified on the Mortgage Loan Schedule as
Loan Number 25, with respect to which the Seller may have received Mortgage Loan
payments from the co-maker of the related Mortgage Note, which does not own the
related Mortgaged Property.
22. EQUITY INTEREST. With respect to each Mortgage Loan, the
indebtedness evidenced by such Mortgage Loan is not automatically convertible
into an equity ownership interest in the related Mortgaged Property or the
related Mortgagor.
23. LEGAL PROCEEDINGS. To the Seller's actual knowledge, there
are no pending or threatened actions, suits or proceedings by or before any
court or governmental authority against or affecting the related Mortgagor or
the related Mortgaged Property that, if determined adversely to such Mortgagor
or Mortgaged Property, would materially and adversely affect the value of the
Mortgaged Property or the ability of the Mortgagor to pay principal, interest or
any other amounts due under such Mortgage Loan.
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24. JUNIOR LIENS. None of the Mortgage Loans permit the
related Mortgaged Property to be encumbered by any lien junior to or of equal
priority with the lien of the related Mortgage without the prior written consent
of the holder thereof. With the exceptions of the Mortgage Loans identified on
the Mortgage Loan Schedule as Loan ID Number 5 (as to which there exists a lien
on the related Mortgaged Property junior to the lien of the related Mortgage in
the original principal amount of $700,000) and Loan ID Number 25 (as to which
there exists a "wrap" lien on the related Mortgaged Property junior to the lien
of the related Mortgage in the original principal amount of $14,897,013), to the
Seller's actual knowledge, the Mortgaged Properties are not encumbered by any
liens junior to, or of equal priority with, the liens of the related Mortgages.
25. COMMERCIAL LEASES. To the Seller's actual knowledge, (i)
all material commercial leases affecting the Mortgaged Properties are in full
force and effect and (ii) there exists no default under any such material
commercial lease either by the lessee thereunder or by the related Mortgagor
that could give rise to the termination of such lease.
26. NO MECHANICS' LIENS. The related Mortgaged Property is
free and clear of any and all mechanics' and materialmen's liens that are prior
or equal to the lien of the related Mortgage, and no rights are outstanding that
under law could give rise to any such lien that would be prior or equal to the
lien of the related Mortgage.
27. COMPLIANCE WITH UNDERWRITING POLICIES. Each Mortgage Loan
(other than the Mortgage Loans identified on the Mortgage Loan Schedule as Loan
ID Numbers 11, 42, 43, 5, 12, 32, 1, 9, 6, 13, 8, 4, 10, 7, 14, 2 and 3, which
are the Mortgage Loans purchased by the Seller from Greenwich Capital Financial
Products, Inc.) was originated either by or on behalf of the Seller and complied
with the Seller's commercial and multifamily mortgage loan underwriting policies
in effect as of the date such Mortgage Loan was originated.
28. COMPLIANCE WITH USURY LAWS. Each Mortgage Loan complied
with all applicable usury laws in effect at its date of origination.
29. LICENSES AND PERMITS. To the Seller's actual knowledge, as
of the date of origination of each Mortgage Loan, (i) the related Mortgagor was
in possession of all material licenses, permits and authorizations required by
applicable law for the ownership and operation of the related Mortgaged Property
and (ii) all such licenses, permits and authorizations were valid and in full
force and effect. , 30. SERVICING PRACTICES. The servicing and collection
practices used by or on behalf of the Seller with respect to the Mortgage Loans
have been in all material respects legal and prudent and have met customary
standards utilized by prudent institutional commercial and multifamily mortgage
loan servicers.
31. CROSS-COLLATERALIZATION. No Mortgage Loan is
cross-collateralized with any loan other than one or more other Mortgage Loans.
32. RELEASES OF MORTGAGED PROPERTY. Except as described in the
next sentence, no Mortgage Note or Mortgage requires the mortgagee to release
all or any portion of the related Mortgaged Property from the lien of the
related Mortgage except upon payment in full of all amounts
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due under the related Mortgage Loan. The Mortgage Notes and/or Mortgages
relating to the Mortgage Loans identified on the Mortgage Loan Schedule as Loan
ID Numbers 33, 34, 35, 36, 48 and 54 require the mortgagee to grant releases of
portions of the related Mortgaged Properties upon (a) the satisfaction of
certain legal and underwriting requirements and (b) in each such case except for
Loan ID Number 54, the payment of a release price and prepayment consideration
in connection therewith.
33. NO MATERIAL DEFAULT. There exists no material default,
breach, violation or event of acceleration under the related Mortgage Note or
Mortgage, and there exists no event which, with the passage of time or the
giving of notice, or both, would constitute any of the foregoing, in any such
case to the extent the same materially and adversely affects the value of the
Mortgage Loan and of the related Mortgaged Property. Notwithstanding the
foregoing, the Seller makes no representation or warranty with respect to any
default, breach, violation or event of acceleration (x) that may have occurred
as a result of any failure of the related Mortgagor to comply with any "due on
sale" or "due on encumbrance" provision contained in the related Mortgage Note
or Mortgage or (y) that specifically pertains to any matter otherwise covered by
any other representation and warranty made by the Seller in any of paragraphs 3,
7, 9, 12, 14, 15, 16, 17, 18, 24, 25, 26 and 29 of this Exhibit L.
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FORM OF LOST NOTE AFFIDAVIT EXHIBIT M
Salomon Brothers Realty Corp., a New York corporation (the
"Seller"), by its undersigned authorized representative, hereby certifies:
34. Pursuant to the Mortgage Loan Purchase Agreement, dated
February 27, 1996, between the Seller and Salomon Brothers Mortgage Securities
VII, Inc. (the "Depositor"), the Seller will grant all of its right, title and
interest in and to the Mortgage Loan identified below to the Depositor.
2. Pursuant to the Pooling and Servicing Agreement, dated as
of February 1, 1996 (the "Pooling Agreement"), among the Depositor, as
depositor, Midland Loan Services, L.P., as master servicer and special servicer,
LaSalle National Bank, as trustee (the "Trustee"), and ABN AMRO Bank N.V., as
fiscal agent, the Depositor will grant all of its right, title and interest in
and to such Mortgage Loan to the Trustee. Terms used but not defined herein have
the respective meanings assigned to them in the Pooling Agreement.
Mortgage Loan Number:
Maker:
Original Principal Amount:
Original Mortgage Note Date:
Maturity Date:
3. The Seller is the current owner and holder of the
indebtedness evidenced by the original Mortgage Note.
4. After diligent search, the Seller has been unable to locate
the original Mortgage Note and believes it to be lost or misplaced.
5. A true, complete and correct photocopy of the original
Mortgage Note is attached hereto.
6. If at any time the Seller locates the original Mortgage
Note, the Seller shall endorse such original Mortgage Note in blank for transfer
to the Trustee and shall promptly deliver the original Mortgage Note, so
endorsed, to the Trustee or its designee.
7. The Seller hereby indemnifies the Trustee and the
Certificateholders from and against any and all losses, liabilities, damages,
claims or expenses of whatever kind (including without limitation attorneys'
fees and disbursements) arising from or in connection with the Seller's failure
to have delivered or cause to be delivered the original Mortgage Note to the
Trustee or its designee, including without limitation any such losses,
liabilities, damages, claims or expenses arising from or in connection with any
action to enforce the indebtedness evidenced by such original Mortgage Note or
any claim by any third party who is the holder of such indebtedness by virtue of
its possession of such original Mortgage Note.
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8. This Lost Note Affidavit shall inure to the benefit of the
Trustee and the Certificateholders and their respective successors and permitted
assigns.
SALOMON BROTHERS REALTY CORP.
By:
Name:
Title:
Dated: February 29, 1996
