================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------
FORM 8-K
-------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): November 25, 1997
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
------------------------------------------------------------------
(Exact name of registrant as specified in its governing instruments)
DELAWARE 333-7854 56-1643598
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
One First Union Center
Charlotte, North Carolina 28228-0600
----------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (704) 374-6828
================================================================================
<PAGE>
Item 1. Items 3 through 6, and Items 8 and 9 are not included because they are
not applicable.
Item 2. Acquisition or Disposition of Assets.
On November 25, 1997, a single series of mortgage pass-through
certificates, entitled First Union - Lehman Brothers Commercial Mortgage Trust
II, Commercial Mortgage Pass-Through Certificates, Series 1997-C2 (the
"Certificates"), was issued pursuant to a pooling and servicing agreement (the
"Pooling Agreement") attached hereto as Exhibit 4.1 and dated as of November 1,
1997, among First Union Commercial Mortgage Securities, Inc. as depositor (the
"Registrant"), First Union National Bank as master servicer, CRIIMI MAE Services
Limited Partnership as special servicer, LaSalle National Bank as trustee and
ABN AMRO Bank N.V. as fiscal agent. The Certificates consist of eighteen classes
(each, a "Class") of Certificates, eight of which Classes are designated as the
"Class A-1 Certificates", the "Class A-2 Certificates", the "Class A-3
Certificates", the "Class B Certificates", the "Class C Certificates", the
"Class D Certificates", the "Class E Certificates" and the "Class IO
Certificates" (collectively, the "Offered Certificates"); and ten of which
Classes are designated as the "Class F Certificates", the "Class G
Certificates", the "Class H Certificates", the "Class J Certificates", the
"Class K Certificates", the "Class L Certificates", the "Class M Certificates",
the "Class R-I Certificates", the "Class R-II Certificates" and the "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 422 multifamily and commercial
mortgage loans (the "Mortgage Loans") having an aggregate principal balance as
of November 1, 1997 (the "Cut-off Date") of $2,203,502,325. Each Mortgage Loan
is secured by a first mortgage lien on a fee simple estate in an income
producing property, with the exception of two Mortgage Loans, which are each
secured by a mortgage that creates a second mortgage lien (with the related
first Mortgage lien securing a Mortgage Loan that is also in the Mortgage Pool),
and with the exception of fourteen Mortgage Loans, which are fully secured by a
leasehold estate in income-producing real property.
Two hundred eight (208) of the Mortgage Loans (the "Lehman Loans")
showing an aggregate principal balance of $1,097,817,189.31 (the "Lehman
Balance"), were acquired by the Registrant from an affiliate of Lehman Brothers
Inc. (the "Lehman Seller") and two hundred fourteen (214) of the Mortgage Loans
(the "FUNB Loans"), having an aggregate principal balance of $1,105,685,135.31
(the "FUNB Balance"), were acquired by the Registrant from First Union National
Bank ("FUNB," and together with the Lehman Seller, the "Sellers") pursuant to
two Mortgage Loan Purchase Agreements, each dated as of November 1, 1997 (the
"Purchase Agreements"), between the Registrant and each of the Sellers. The
purchase prices (collectively the "Purchase Price") for the Lehman Loans and the
FUNB Loans paid by the Registrant to the Sellers consisted of (i) a cash amount
equal to 100% of the Lehman Balance and 100% of the FUNB Balance plus (ii)
interest accrued on each of the Lehman Loans and the FUNB Loans at the related
Net Mortgage Rate, for the period from and including the Cut-off Date up to but
not including the Closing Date. The source of funds for payment of the Purchase
Price was the proceeds derived from the sale of the Certificates by the
Registrant to Lehman Brothers Inc. ("LBI") and First Union Capital Markets Corp.
("First Union") pursuant to an Underwriting Agreement, dated as of November
-2-
<PAGE>
19, 1997 (the "Underwriting Agreement"), among the Registrant, LBI and First
Union (pertaining to the Offered Certificates) and a Certificate Purchase
Agreement, dated as of November 25, 1997, among the Registrant, LBI and First
Union (pertaining to the Private Certificates). The Registrant is a wholly-owned
limited purpose finance subsidiary of First Union. On November 25, 1997, the
Registrant transferred the Mortgage Loans to the Trust Fund pursuant to the
Pooling Agreement. The consideration received by the Registrant in exchange for
such transfer consisted of the Certificates.
The Certificates have the following initial Certificate Balances and
Pass-Through Rates:
Pass-Through
Class Initial Certificate Balance Rate
----- --------------------------- ------------
A-1................................. $220,000,000 6.479%
A-2................................. $384,000,000 6.600%
A-3................................. $982,521,000 6.650%
B .................................. $110,175,000 6.790%
C .................................. $110,175,000 7.020%
D .................................. $121,194,000 7.120%
E .................................. $ 33,052,000 7.120%
IO ................................ (1) (1)
F ................................. $ 66,105,000 7.500%(2)
G ................................. $ 49,578,000 7.500%(2)
H ............................... $ 16,527,208 7.500%(2)
J................................... $ 44,070,046 6.000%(2)
K................................... $ 22,035,023 6.000%(2)
L................................... $ 27,543,779 6.000%(2)
M................................... $ 16,526,269 6.000%(2)
R-I................................. N/A(2) N/A(3)
R-II................................ N/A(2) N/A(3)
R-III............................... N/A(2) N/A(3)
- ---------------
(1) The Class IO Certificates will receive distributions of interest in an
amount equal to the aggregate interest accrued on the notional amount of
each of its Components.
(2) With respect to each Distribution Date, the Pass-Through Rate will equal
the lesser of the rate set forth above and the applicable Weighted Average
Net Mortgage Rate (as defined in the Prospectus Supplement).
(3) The Class R-1, Class R-11 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 October 29, 1997, and the Prospectus
Supplement, dated November 19,
-3-
<PAGE>
1997, as previously filed with the Securities and Exchange Commission pursuant
to Rule 424(b)(5). Capitalized terms used but not otherwise defined herein have
the meanings set forth in the Prospectus Supplement.
-4-
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements - Not Applicable
(b) Pro Forma Financial Information - Not Applicable
(c) Exhibits
1.1 Underwriting Agreement, dated as of November 19, 1997, among
First Union Commercial Mortgage Securities, Inc., Lehman Brothers
Inc. and First Union Capital Markets Corp.
4.1 Pooling and Servicing Agreement, dated as of November 1, 1997,
among First Union Commercial Mortgage Securities, Inc. as
depositor, First Union National Bank as master servicer, CRIIMI
MAE Services Limited Partnership as special servicer, LaSalle
National Bank as trustee and ABN AMRO Bank N.V. as fiscal agent.
99.1 Mortgage Loan Purchase Agreement, dated as of November 1, 1997,
between First Union Commercial Mortgage Securities, Inc. and
Lehman Brothers Holdings Inc.
99.2 Mortgage Loan Purchase Agreement, dated as of November 1, 1997,
between First Union Commercial Mortgage Securities, Inc. and
First Union National Bank.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST UNION COMMERCIAL MORTGAGE
SECURITIES, INC.
By: /s/ MICHAEL H. GRECO
-------------------------------------
Name: Michael H. Greco
Title: Senior Vice President
Dated: December 10, 1997
-6-
<PAGE>
EXHIBIT INDEX
The following exhibits are being filed herewith:
Exhibit No. Description
- ----------- -----------
1.1 Underwriting Agreement, dated as of November 19, 1997, among First
Union Commercial Mortgage Securities, Inc., Lehman Brothers Inc. and
First Union Capital Markets Corp.
4.1 Pooling and Servicing Agreement, dated as of November 1, 1997, among
First Union Commercial Mortgage Securities, Inc. as depositor, First
Union National Bank as master servicer, CRIIMI MAE Services Limited
Partnership as special servicer, LaSalle National Bank as trustee and
ABN AMRO Bank N.V. as fiscal agent.
99.1 Mortgage Loan Purchase Agreement, dated as of November 1, 1997,
between First Union Commercial Mortgage Securities, Inc. and Lehman
Brothers Holdings Inc.
99.2 Mortgage Loan Purchase Agreement, dated as of November 1, 1997,
between First Union Commercial Mortgage Securities, Inc. and First
Union National Bank.
EXECUTION COPY
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-C2
UNDERWRITING AGREEMENT
Charlotte, North Carolina
November 19, 1997
Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
As Representative of the several
Underwriters named in Schedule
II hereto
Dear Sirs:
First Union Commercial Mortgage Securities, Inc., a North Carolina
corporation (the "Company"), proposes to issue its Commercial Mortgage
Pass-Through Certificates, Series 1997-C2 (the "Certificates"), in 18 classes
(each, a "Class") as designated in the Prospectus Supplement (as defined below).
The Company further proposes to sell to the Underwriters named in Schedule II
hereto, for whom you are acting as Representative, the Certificates set forth in
Schedule I hereto (the "Underwritten Certificates") in the respective original
principal and notional amounts set forth in Schedule I. The Certificates will
represent in the aggregate the entire beneficial ownership interest in a trust
fund (the "Trust Fund") consisting primarily of a segregated pool (the "Mortgage
Pool") of mortgage loans (the "Mortgage Loans") secured by first liens on the
borrowers' fee or leasehold interests in multifamily and commercial properties
(the "Mortgaged Properties"). The Trust Fund will be created, the Certificates
will be issued and the Mortgage Pool will be serviced and administered pursuant
to a pooling and servicing agreement (the "Pooling and Servicing Agreement"), to
be dated as of November 1, 1997 (the "Cut-off Date"), among the Company, First
Union National Bank, as master servicer (the "Master Servicer"), CRIIMI MAE
Services Limited Partnership, as special servicer (the "Special Servicer"), ABN
AMRO Bank N.V., as fiscal agent and LaSalle National Bank as trustee (the
"Trustee"). Certain of the Mortgage Loans (the "LBHI Mortgage Loans") are owned,
as of the date hereof, by Lehman Brothers Holdings Inc. ("LBHI"), and the
remainder of the Mortgage Loans (the "First Union Mortgage Loans") are owned by
First Union National Bank ("First Union"; and together with LBHI, the "Mortgage
Loan Sellers"). The Mortgage Loans will be acquired by the Company, on or before
the Closing Date (as hereinafter defined), pursuant to (i) in the case of LBHI
Mortgage Loans, a mortgage loan purchase agreement (the "LBHI Mortgage Loan
Purchase Agreement"),
-1-
<PAGE>
dated as of November 1, 1997, between the Company and LBHI and (ii) in the case
of the First Union Mortgage Loans, a mortgage loan purchase agreement (the
"First Union Mortgage Loan Purchase Agreement"), dated as of November 1, 1997,
between First Union National Bank and the Company. The Underwritten Certificates
and the Mortgage Pool are described more fully in Schedule I hereto and in a
registration statement furnished to you by the Company.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings assigned to them in the Pooling and Servicing Agreement.
1. Representations and Warranties. (I) The Company represents and warrants
to, and agrees with, each Underwriter that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement (No. 333-7854) on Form S-3 for
the registration of Commercial Mortgage Pass-Through Certificates, issuable
in series, including the Underwritten Certificates, under the Securities
Act of 1933, as amended (the "1933 Act"), which registration statement has
become effective and a copy of which, as amended to the date hereof, has
heretofore been delivered to you. The Company meets the requirements for
use of Form S-3 under the 1933 Act, and such registration statement, as
amended at the date hereof, meets the requirements set forth in Rule
415(a)(1)(x) under the 1933 Act and complies in all other material respects
with the 1933 Act and the rules and regulations thereunder. The Company
proposes to file with the Commission, with your consent, pursuant to Rule
424 under the 1933 Act, a supplement dated November 19, 1997 (the
"Prospectus Supplement") to the prospectus dated October 29, 1997 (the
"Basic Prospectus"), relating to the Underwritten Certificates and the
method of distribution thereof, and has previously advised you of all
further information (financial and other) with respect to the Underwritten
Certificates and the Mortgage Pool to be set forth therein. Such
registration statement (No. 333-7854), including all exhibits thereto, is
referred to herein as the "Registration Statement"; and the Basic
Prospectus and the Prospectus Supplement, together with any amendment
thereof or supplement thereto authorized by the Company prior to the
Closing Date for use in connection with the offering of the Underwritten
Certificates, are hereinafter called the "Prospectus". Any preliminary form
of the Prospectus Supplement that has heretofore been filed pursuant to
Rule 424 or, prior to the effective date of the Registration Statement,
pursuant to Rule 402(a) or 424(a), is hereinafter called a "Preliminary
Prospectus Supplement". If so stated in the Prospectus Supplement, the
Company will file with the Commission within fifteen days of the issuance
of the Underwritten Certificates a report on Form 8-K ("8-K") setting forth
specific information concerning the Mortgage Pool and the Underwritten
Certificates to the extent that such information is not set forth in the
Prospectus Supplement.
(b) As of the date hereof, as of the date on which the Prospectus
Supplement is first filed pursuant to Rule 424 under the 1933 Act, as of
the date on which, prior to the Closing Date, any amendment to the
Registration Statement becomes effective, as
-2-
<PAGE>
of the date on which any supplement to the Prospectus Supplement is filed
with the Commission, and as of the Closing Date, (i) the Registration
Statement, as amended as of any such time, and the Prospectus, as amended
or supplemented as of any such time, complies and will comply in all
material respects with the applicable requirements of the 1933 Act and the
rules and regulations thereunder, (ii) the Registration Statement, as
amended as of any such time, does not contain and will not contain any
untrue statement of a material fact and does not omit and will not omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading, and (iii) the Prospectus, as
amended or supplemented as of any such time, does not contain and will not
contain any untrue statement of a material fact and does not omit and will
not omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to statements contained in or omitted from
the Registration Statement or the Prospectus or any amendment or supplement
thereto made in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Underwriter through you
specifically for use in the Registration Statement and the Prospectus (such
information being identified in Section 8(b)).
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of North
Carolina with corporate power and authority to own, lease or operate its
properties and to conduct its business as now conducted by it and to enter
into and perform its obligations under this Agreement and the Pooling and
Servicing Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business.
(d) As of the date hereof, as of the date on which the Prospectus
Supplement is first filed pursuant to Rule 424 under the 1933 Act, as of
the date on which, prior to the Closing Date, any amendment to the
Registration Statement becomes effective, as of the date on which any
supplement to the Prospectus Supplement is filed with the Commission, and
as of the Closing Date, there has not and will not have been (i) any
request by the Commission for any further amendment to the Registration
Statement or the Prospectus or for any additional information, (ii) any
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threat of any
proceeding for that purpose or (iii) any notification with respect to the
suspension of the qualification of the Underwritten Certificates for sale
in any jurisdiction or any initiation or threat of any proceeding for such
purpose.
(e) This Agreement has been duly authorized, executed and delivered by
the Company, and the Pooling and Servicing Agreement, when executed and
delivered as contemplated hereby and thereby, will have been duly
authorized, executed and delivered by the Company; and this Agreement
constitutes, and the Pooling and Servicing Agreement, when so executed and
delivered will constitute, legal, valid and
-3-
<PAGE>
binding agreements of the Company, enforceable against the Company in
accordance with their respective terms, except as enforceability may be
limited by (i) bankruptcy, insolvency, reorganization, receivership,
moratorium or other similar laws affecting the enforcement of the rights of
creditors generally, (ii) general principles of equity, whether enforcement
is sought in a proceeding in equity or at law, and (iii) public policy
considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of the provisions of
this Agreement or the Pooling and Servicing Agreement that purport to
provide indemnification from securities law liabilities.
(f) As of the Closing Date, the Underwritten Certificates and the
Pooling and Servicing Agreement will conform in all material respects to
the respective descriptions thereof contained in the Prospectus. As of the
Closing Date, the Underwritten Certificates will be duly and validly
authorized and, when duly and validly executed, authenticated and delivered
in accordance with the Pooling and Servicing Agreement to you against
payment therefor as provided herein, will be duly and validly issued and
outstanding and entitled to the benefits of the Pooling and Servicing
Agreement.
(g) As of the Closing Date, each of the Mortgage Loans will meet the
criteria for selection described in the Prospectus, and on the Closing Date
the representations and warranties of the Company with respect to the
Mortgage Loans contained in the Pooling and Servicing Agreement will be
true and correct in all material respects.
(h) The Company is not in violation of its certificate of
incorporation or by-laws or in default under any agreement, indenture or
instrument the effect of which violation or default would be material to
the Company or which violation or default would have a material adverse
affect on the performance of its obligations under this Agreement or the
Pooling and Servicing Agreement. Neither the issuance and sale of the
Underwritten Certificates, nor the execution and delivery by the Company of
this Agreement or the Pooling and Servicing Agreement, nor the consummation
by the Company of any of the transactions herein or therein contemplated,
nor compliance by the Company with the provisions hereof or thereof, does
or will conflict with or result in a breach of any term or provision of the
certificate of incorporation or by-laws of the Company or conflict with,
result in a breach, violation or acceleration of, or constitute a default
under, the terms of any indenture or other agreement or instrument to which
the Company is a party or by which it or any material asset is bound, or
any statute, order or regulation applicable to the Company of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company.
(i) There is no action, suit or proceeding against the Company
pending, or, to the knowledge of the Company, threatened, before any court,
arbitrator, administrative agency or other tribunal (i) asserting the
invalidity of this Agreement, the Pooling and Servicing Agreement or the
Underwritten Certificates, (ii) seeking to
-4-
<PAGE>
prevent the issuance of the Underwritten Certificates or the consummation
of any of the transactions contemplated by this Agreement or the Pooling
and Servicing Agreement, (iii) that might materially and adversely affect
the performance by the Company of its obligations under, or the validity or
enforceability of, this Agreement, the Pooling and Servicing Agreement or
the Underwritten Certificates or (iv) seeking to affect adversely the
federal income tax attributes of the Underwritten Certificates as described
in the Prospectus.
(j) There are no contracts, indentures or other documents of a
character required by the 1933 Act or by the rules and regulations
thereunder to be described or referred to in the Registration Statement or
the Prospectus or to be filed as exhibits to the Registration Statement
which have not been so described or referred to therein or so filed or
incorporated by reference as exhibits thereto.
(k) No authorization, approval or consent of any court or governmental
authority or agency is necessary in connection with the offering, issuance
or sale of the Underwritten Certificates pursuant to this Agreement and the
Pooling and Servicing Agreement, except such as have been, or as of the
Closing Date will have been, obtained or such as may otherwise be required
under applicable state securities laws in connection with the purchase and
offer and sale of the Underwritten Certificates by the Underwriters and any
recordation of the respective assignments of the Mortgage Loans to the
Trustee pursuant to the Pooling and Servicing Agreement that have not been
completed.
(l) The Company possesses all material licenses, certificates,
authorities or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct the business now
operated by it, and the Company has not received any notice of proceedings
relating to the revocation or modification of any such license,
certificate, authority or permit which, singly or in the aggregate, if the
subject of any unfavorable decision, ruling or finding, would materially
and adversely affect the condition, financial or otherwise, or the
earnings, business affairs or business prospects of the Company.
(m) Any taxes, fees and other governmental charges in connection with
the execution and delivery of this Agreement and the Pooling and Servicing
Agreement or the execution, delivery and sale of the Underwritten
Certificates (other than such federal, state and local taxes as may be
payable on the income or gain recognized therefrom) have been or will be
paid at or prior to the Closing Date.
(n) Immediately prior to the assignment of the Mortgage Loans to the
Trustee, the Company will have good title to, and will be the sole owner
of, each Mortgage Loan, free and clear of any pledge, mortgage, lien,
security interest or other encumbrance.
-5-
<PAGE>
(o) Neither the Company nor the Trust Fund is, and neither the
issuance and sale of the Underwritten Certificates in the manner
contemplated by the Prospectus nor the activities of the Trust Fund
pursuant to the Pooling and Servicing Agreement will cause the Company or
the Trust Fund to be, an "investment company" or under the control of an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company Act").
(p) Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, the Company will report the transfer of the
Mortgage Loans to the Trustee in exchange for the Underwritten Certificates
and the sale of the Underwritten Certificates to the Underwriters pursuant
to this Agreement as a sale of the interests in the Mortgage Loans
evidenced by the Underwritten Certificates. The consideration received by
the Company upon the sale of the Underwritten Certificates to the
Underwriters will constitute reasonably equivalent value and fair
consideration for the Underwritten Certificates. The Company will be
solvent at all relevant times prior to, and will not be rendered insolvent
by, the sale of the Underwritten Certificates to the Underwriters and the
transfer of the Mortgage Loans to the Trustee on behalf of the Trust Fund.
The Company is not selling the Underwritten Certificates to the
Underwriters or transferring the Mortgage Loans to the Trustee on behalf of
the Trust Fund with any intent to hinder, delay or defraud any of the
creditors of the Company.
(q) At the Closing Date, the respective classes of Underwritten
Certificates shall have been assigned ratings no lower than those set forth
in Schedule I hereto by the nationally recognized statistical rating
organizations identified in Schedule I hereto (individually and
collectively, the "Rating Agency").
(r) At the Closing Date, each of the representations and warranties of
the Company set forth in the Pooling and Servicing Agreement will be true
and correct in all material respects.
(II) Each Underwriter represents and warrants to the Company that, as
of the date hereof and as of the Closing Date, (i) such Underwriter has
complied in all material respects with all of its obligations under Section
4 hereof and (ii) with respect to all Computational Materials and ABS Term
Sheets, if any, provided by such Underwriter to the Company pursuant to
Section 4(b)(iv), such Computational Materials and ABS Term Sheets are
accurate in all material respects (taking into account the assumptions
explicitly set forth in or otherwise referred to the Computational
Materials or ABS Term Sheets or in the Prospectus Supplement or the
Preliminary Prospectus Supplement, and provided that the underlying data
regarding the Mortgage Loans, and the related Mortgagors and Mortgaged
Properties, provided to the Underwriters by the Mortgage Loan Sellers is
accurate and complete in all material respects) and constitute a complete
set of all Computational Materials and ABS Term Sheets that are required to
be filed with the Commission pursuant to Section 5(g).
-6-
<PAGE>
2. Purchase and Sale. Subject to the terms and conditions and in reliance
upon the representations and warranties set forth herein, the Company agrees to
sell to the Underwriters, and the Underwriters agree, severally and not jointly,
to purchase from the Company, at the applicable purchase prices set forth in
Schedule I hereto, the respective principal and notional amounts of the
Underwritten Certificates set forth opposite the name of each Underwriter set
forth in Schedule II hereto, and any additional portions of the Underwritten
Certificates that any such Underwriter may be obligated to purchase pursuant to
Section 10, in all cases plus accrued interest as set forth in Schedule I.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Certificates shall be made in the manner, at the location(s), on the date and at
the time specified in Schedule I hereto (or such later date not later than ten
business days after such specified date as you shall designate), which date and
time may be changed by agreement between you and the Company or as provided in
Section 10 hereof (such date and time of delivery and payment for the
Underwritten Certificates being herein called the "Closing Date"). Delivery of
the Underwritten Certificates shall be made either directly to you or through
the facilities of The Depository Trust Company ("DTC"), as specified in Schedule
I hereto, for the respective accounts of the Underwriters against payment by the
respective Underwriters through you of the purchase price therefor in
immediately available funds wired to such bank as may be designated by the
Company, or such other manner of payment as may be agreed upon by the Company
and you. Any Class of Underwritten Certificates to be delivered through the
facilities of DTC shall be represented by one or more global Certificates
registered in the name of Cede & Co., as nominee of DTC, which global
Certificate(s) shall be placed in the custody of DTC not later than 10:00 a.m.
(New York City time) on the Closing Date pursuant to a custodial arrangement to
be entered into between the Trustee or its agent and DTC. Unless delivered
through the facilities of DTC, the Underwritten Certificates shall be in fully
registered certificated form, in such denominations and registered in such names
as you may have requested in writing not less than one full business day in
advance of the Closing Date.
The Company agrees to have the Underwritten Certificates, including the
global Certificates representing the Underwritten Certificates to be delivered
through the facilities of DTC, available for inspection, checking and, if
applicable, packaging by you in New York, New York, not later than the close of
business (New York City time) on the business day preceding the Closing Date.
References herein, including, without limitation, in the Schedules hereto,
to actions taken or to be taken following the Closing Date with respect to any
Underwritten Certificates that are to be delivered through the facilities of DTC
shall include, if the context so permits, actions taken or to be taken with
respect to the interests in such Certificates as reflected on the books and
records of DTC.
-7-
<PAGE>
4. Offering by Underwriters.
(a) It is understood that the Underwriters propose to offer the
Underwritten Certificates for sale to the public, including, without limitation,
in and from the State of New York, as set forth in the Prospectus Supplement. It
is further understood that the Company, in reliance upon an exemption from the
Attorney General of the State of New York to be granted pursuant to Policy
Statement 104 and 105, has not and will not file the offering pursuant to
Section 352-e of the General Business Law of the State of New York with respect
to the Underwritten Certificates which are not "mortgage related securities" as
defined in the 1934 Act (as defined below). Each of the Underwriters therefore
covenants and agrees with the Company that sales of the Class C, D and E
Certificates made by such Underwriter in and from the State of New York will be
made only to institutional investors within the meaning of Policy Statement 105.
(b) Each Underwriter may prepare and provide to prospective investors
certain Computational Materials, Structural Term Sheets or Collateral Term
Sheets in connection with its offering of the Certificates, subject to the
following conditions:
(i) Such Underwriter shall comply with the requirements of the
no-action letter, dated May 20, 1994, issued by the Commission to Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated and
Kidder Structured Asset Corporation, as made applicable to other issuers
and underwriters by the Commission in response to the request of the Public
Securities Association, dated May 25, 1994 (collectively, the "Kidder/PSA
Letter"), and the requirements of the no-action letter, dated February 17,
1995, issued by the Commission to the Public Securities Association (the
"PSA Letter" and, together with the Kidder/PSA Letter, the "No-Action
Letters").
(ii) For purposes hereof, "Computational Materials" shall have the
meaning given such term in the No-Action Letters, but shall include only
those Computational Materials that have been prepared or delivered to
prospective investors by or at the direction of such Underwriter. For
purposes hereof, "ABS Term Sheets," "Structural Term Sheets" and
"Collateral Term Sheets" shall have the meanings given such terms in the
PSA Letter but shall include only those ABS Term Sheets, Structural Term
Sheets or Collateral Term Sheets that have been prepared for or delivered
to prospective investors by or at the direction of such Underwriter.
(iii) All Computational Materials and ABS Term Sheets provided to
prospective investors shall bear a legend in a form previously approved in
writing by the Company or its counsel.
(iv) Such Underwriter shall not distribute any such Computational
Materials or ABS Term Sheets unless the forms and methodology thereof are
in accordance with this Agreement. Such Underwriter shall provide to the
-8-
<PAGE>
Company, for filing on Form 8-K as provided in Section 5(g), copies (in
such format as required by the Company) of all Computational Materials and
ABS Term Sheets. The Underwriter may provide copies of the foregoing in a
consolidated or aggregated form including all information required to be
filed. All Computational Materials and ABS Term Sheets described in this
subsection (iv) must be provided to the Company (a) in paper or electronic
format suitable for filing with the Commission and (b) not later than 10:00
a.m. (New York City time) on a business day that is not less than one
business day before filing thereof is required pursuant to the terms of the
No-Action Letters.
(v) All information included in the Computational Materials and ABS
Term Sheets shall be generated based on substantially the same methodology
and assumptions as are used to generate the information in the Prospectus
Supplement as set forth therein; provided that the Computational Materials
and ABS Term Sheets may include information based on alternative
methodologies or assumptions if specified therein. If any Computational
Materials or ABS Term Sheets were based on assumptions with respect to the
Mortgage Pool that differ from the final Pool Information in any material
respect or on Underwritten Certificate structuring assumptions (except in
the case of Computational Materials when the different structuring terms
were hypothesized and so described) that were revised in any material
respect prior to the printing of the Prospectus, then to the extent that it
has not already done so, such Underwriter shall immediately inform the
Company and, upon the direction of the Company, and if not corrected by the
Prospectus, shall prepare revised Computational Materials and ABS Term
Sheets, as the case may be, based on the final Pool Information and
structuring assumptions, circulate such revised Computational Materials and
ABS Term Sheets to all recipients of the preliminary versions thereof, and
include such revised Computational Materials and ABS Term Sheets (marked,
"as revised") in the materials delivered to the Company pursuant to
subsection (iv) above.
(vi) The Company shall not be obligated to file any Computational
Materials or ABS Term Sheets that have been determined to contain any
material error or omission, provided that the Company will file
Computational Materials or ABS Term Sheets that contain a material error
or, when read together with the Prospectus, a material omission if clearly
marked (A) "superseded by materials dated ____________ __" and accompanied
by corrected Computational Materials or ABS Term Sheets that are marked
"material previously dated ___________ __, as corrected", or (B) if the
material error or omission is to be corrected in the Prospectus,
"superseded by materials contained in the Prospectus." If, within the
period during which the Prospectus relating to the Underwritten
Certificates is required to be delivered under the 1933 Act, any
Computational Materials or ABS Term Sheets are determined, in the
reasonable judgment of the Company or such Underwriter, to contain a
material error or, when read together with the Prospectus, a
-9-
<PAGE>
material omission, then (unless the material error or omission was
corrected in the Prospectus) the Underwriter shall prepare a corrected
version of such Computational Materials or ABS Term Sheets, shall circulate
such corrected Computational Materials or ABS Term Sheets to all recipients
of the prior versions thereof, and shall deliver copies of such corrected
Computational Materials or ABS Term Sheets (marked, "as corrected") to the
Company for filing with the Commission in a subsequent Form 8-K submission
(subject to the Company's obtaining an accountant's comfort letter in
respect of such corrected Computational Materials and ABS Term Sheets,
which shall be at the expense of such Underwriter).
(vii) Such Underwriter shall be deemed to have represented, as of the
Closing Date, that except for Computational Materials and/or ABS Term
Sheets provided to the Company pursuant to subsection (iv) above, such
Underwriter did not provide any prospective investors with any information
in written or electronic form in connection with the offering of the
Underwritten Certificates that is required to be filed with the Commission
in accordance with the No-Action Letters.
(viii) In the event of any delay in the delivery by such Underwriter
to the Company of all Computational Materials and ABS Term Sheets required
to be delivered in accordance with subsection (iv) above, the Company shall
have the right to delay the release of the Prospectus to investors or to
the Underwriter, to delay the Closing Date and to take other appropriate
actions in each case as necessary in order to allow the Company to comply
with its agreement set forth in Section 5(g) to file the Computational
Materials and ABS Term Sheets by the time specified therein.
(ix) Computational Materials and ABS Term Sheets may be distributed by
the Underwriter through electronic means in accordance with SEC Release No.
33-7233 (the "Release").
(c) Each Underwriter further agrees that it shall promptly provide the
Company with such information as to matters of fact as the Company may
reasonably request to enable it to comply with its reporting requirements with
respect to each class of Underwritten Certificates to the extent such
information can in the good faith judgment of the Underwriter be determined by
it.
5. Covenants of the Company. The Company covenants and agrees with the
Underwriters that:
(a) The Company will not file any amendment to the Registration
Statement or any supplement to the Basic Prospectus relating to or
affecting the Underwritten Certificates, unless the Company has furnished a
copy to you for your review prior to filing, and will not file any such
proposed amendment or supplement to which you reasonably object. Subject to
the foregoing sentence, the Company will cause the
-10-
<PAGE>
Prospectus Supplement to be transmitted to the Commission for filing
pursuant to Rule 424 under the 1933 Act or will cause the Prospectus
Supplement to be filed with the Commission pursuant to said Rule 424. The
Company promptly will advise you or counsel for the Underwriters (i) when
the Prospectus Supplement shall have been filed or transmitted to the
Commission for filing pursuant to Rule 424, (ii) when any amendment to the
Registration Statement shall have become effective, (iii) of any request by
the Commission to amend the Registration Statement or supplement the
Prospectus Supplement or for any additional information in respect of the
offering contemplated hereby, (iv) of the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto which shall have become effective on
or prior to the Closing Date or the institution or threatening of any
proceeding for that purpose, and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Underwritten Certificates for sale in any jurisdiction or the institution
or threatening of any proceeding for that purpose. The Company will use its
best efforts to prevent the issuance of any such stop order or suspension
and, if issued, to obtain as soon as possible the withdrawal thereof.
(b) If, at any time when a prospectus relating to the Underwritten
Certificates is required to be delivered under the 1933 Act, any event
occurs as a result of which the Prospectus, as then amended or
supplemented, would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading, or
if it shall be necessary to amend or supplement the Prospectus to comply
with the 1933 Act or the rules and regulations thereunder, the Company
promptly will prepare and file with the Commission, at the expense of the
Company, subject to paragraph (a) of this Section 5, an amendment or
supplement that will correct such statement or omission or an amendment
that will effect such compliance and, if such amendment or supplement is
required to be contained in a post-effective amendment to the Registration
Statement, the Company will use its best efforts to cause such amendment to
the Registration Statement to be made effective as soon as possible.
(c) The Company will furnish to you and to counsel for the
Underwriters, without charge, signed copies of the Registration Statement
(including exhibits thereto) and each amendment thereto which shall become
effective on or prior to the Closing Date, and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and each such
amendment and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the 1933 Act, as many copies of any Preliminary
Prospectus Supplement, the Prospectus Supplement and the Basic Prospectus
and any amendments and supplements thereto as you may reasonably request.
(d) The Company will furnish such information, execute such
instruments and take such action, if any, as may be required to qualify the
Underwritten Certificates for sale under the laws of such jurisdictions as
you may designate and will
-11-
<PAGE>
maintain such qualifications in effect so long as required for the
distribution of the Underwritten Certificates; provided, however, that the
Company shall not be required to qualify to do business in any jurisdiction
where it is not now qualified or to take any action that would subject it
to general or unlimited service of process in any jurisdiction where it is
not now subject to such service of process.
(e) The Company will pay, or cause to be paid, all costs and expenses
in connection with the transactions herein contemplated, including, but not
limited to, the fees and disbursements of its counsel; the costs and
expenses of printing (or otherwise reproducing) and delivering the Pooling
and Servicing Agreement and the Underwritten Certificates; the fees and
disbursements of accountants for the Company; the costs and expenses in
connection with the qualification or exemption of the Underwritten
Certificates under state securities or "blue sky" laws, including filing
fees and reasonable fees and disbursements of counsel in connection
therewith, in connection with the preparation of any blue sky survey and in
connection with any determination of the eligibility of the Underwritten
Certificates for investment by institutional investors and the preparation
of any legal investment survey; the expenses of printing any such blue sky
survey and legal investment survey; the cost and expenses in connection
with the preparation, printing and filing of the Registration Statement
(including exhibits thereto), the Basic Prospectus, the Preliminary
Prospectus Supplement, if any, and the Prospectus Supplement, the
preparation and printing of this Agreement and the delivery to the
Underwriters of such copies of the Basic Prospectus and each Preliminary
Prospectus Supplement, if any, and Prospectus Supplement as you may
reasonably request; and the fees of the Rating Agency that are rating the
Underwritten Certificates. Except as provided above or in Section 7, the
Underwriters shall be responsible for paying all costs and expenses
incurred by them in connection with the purchase and sale of the
Underwritten Certificates.
(f) The Company will enter into the Pooling and Servicing Agreement on
or prior to the Closing Date, will enforce the rights of the Underwriters
as third party beneficiaries thereunder as set forth in Section 11.09
thereof and will not consent to any amendment of the Pooling and Servicing
Agreement that would adversely affect such rights of the Underwriters.
(g) The Company shall, as to itself, and the Company, or pursuant to
the Pooling and Servicing Agreement the Trustee will be required to, as to
the Trust Fund, satisfy and comply with all reporting requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), and the rules
and regulations thereunder. The Company will also file with the Commission
a report on Form 8-K setting forth all Computational Materials and ABS Term
Sheets provided to the Company by an Underwriter and identified by it as
such within the time period allotted for such filing pursuant to the
No-Action Letters; provided, however, that prior to such filing of the
Computational Materials and ABS Term Sheets by the Company, each
Underwriter must comply with its obligations pursuant to Section 4(b). The
Company shall file any
-12-
<PAGE>
corrected Computational Materials described in Section 4(b)(vi) as soon as
practicable following receipt thereof.
6. Conditions to the Obligations of the Underwriters. The obligation of
each Underwriter hereunder to purchase the Underwritten Certificates shall be
subject to the accuracy of the representations and warranties on the part of the
Company contained herein as of the date hereof, as of the date of the
effectiveness of any amendment to the Registration Statement filed prior to the
Closing Date, as of the date the Prospectus Supplement or any supplement thereto
is filed with the Commission and as of the Closing Date, to the accuracy of the
statements of the Company made in any certificates delivered pursuant to the
provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) The Registration Statement shall have become effective and no stop
order suspending the effectiveness of the Registration Statement, as
amended from time to time, shall have been issued and not withdrawn and no
proceedings for that purpose shall have been instituted or, to the
Company's knowledge, threatened; and the Prospectus Supplement shall have
been filed or transmitted for filing with the Commission in accordance with
Rule 424 under the 1933 Act;
(b) You shall have received from Sidley & Austin, counsel for the
Underwriters, a favorable opinion, dated the Closing Date, as to such
matters regarding the Underwritten Certificates as you may reasonably
request;
(c) The Company shall have delivered to you a certificate of the
Company, signed by an authorized officer of the Company and dated the
Closing Date, to the effect that: (i) the representations and warranties of
the Company in this Agreement are true and correct in all material respects
at and as of the Closing Date with the same effect as if made on the
Closing Date; and (ii) the Company has in all material respects complied
with all the agreements and satisfied all the conditions on its part that
are required hereby to be performed or satisfied at or prior to the Closing
Date;
(d) You shall have received with respect to the Company a good
standing certificate from the Secretary of State of the State of North
Carolina, dated not earlier than 30 days prior to the Closing Date;
(e) You shall have received from the Secretary or an assistant
secretary of the Company, in his individual capacity, a certificate, dated
the Closing Date, to the effect that: (i) each individual who, as an
officer or representative of the Company, signed this Agreement, the
Pooling and Servicing Agreement or any other document or certificate
delivered on or before the Closing Date in connection with the transactions
contemplated herein or in the Pooling and Servicing Agreement, was at the
respective times of such signing and delivery, and is as of the Closing
Date, duly elected or appointed, qualified and acting as such officer or
representative, and the signatures of such persons appearing on such
documents and certificates are their genuine signatures;
-13-
<PAGE>
and (ii) no event (including, without limitation, any act or omission on
the part of the Company) has occurred since the date of the good standing
certificate referred to in paragraph 6(d) above which has affected the good
standing of the Company under the laws of the State of North Carolina. Such
certificate shall be accompanied by true and complete copies (certified as
such by the Secretary or an assistant secretary of the Company) of the
certificate of incorporation and by-laws of the Company, as in effect on
the Closing Date, and of the resolutions of the Company and any required
shareholder consent relating to the transactions contemplated in this
Agreement and the Pooling and Servicing Agreement;
(f) You shall have received from Willkie Farr & Gallagher, special
counsel for the Company, a favorable opinion, dated the Closing Date and
satisfactory in form and substance to you and counsel for the Underwriters,
to the effect that:
(i) The Registration Statement and any amendments thereto have
become effective under the 1933 Act; to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement, as amended, has been issued and not withdrawn,
no proceedings for that purpose have been instituted or threatened and
not terminated; and the Registration Statement, the Basic Prospectus,
the Prospectus Supplement and each amendment or supplement thereto, as
of their respective effective or issue dates (other than the financial
statements, schedules and other financial and statistical information
contained therein as to which such counsel need express no opinion),
complied as to form in all material respects with the applicable
requirements of the 1933 Act and the rules and regulations thereunder;
and such counsel has no reason to believe that (A) the Registration
Statement (which, for purposes of this clause, shall be deemed not to
include any exhibits filed therewith), or any amendment thereto, at
the time it became effective, contained or, as of the date of such
opinion, contains any untrue statement of a material fact or omitted
or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, or that (B)
the Prospectus, as amended or supplemented, contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (other than
the financial statements, schedules and other financial and
statistical information contained therein as to which such counsel
need express no opinion);
(ii) To the best knowledge of such counsel, there are no material
contracts, indentures or other documents of a character required to be
described or referred to in the Registration Statement, as amended, or
the Prospectus Supplement or to be filed as exhibits to the
Registration Statement, as amended, other than those described or
referred to therein or filed or incorporated by reference as exhibits
thereto;
-14-
<PAGE>
(iii) To the best knowledge of such counsel, there are no
actions, proceedings or investigations pending before or threatened by
any court, administrative agency or other tribunal to which the
Company is a party or of which any of its properties is the subject
(a) which if determined adversely to the Company would have a material
adverse effect on the business or financial condition of the Company,
(b) asserting the invalidity of this Agreement, the Pooling and
Servicing Agreement or the Underwritten Certificates, (c) seeking to
prevent the issuance of the Underwritten Certificates or the
consummation by the Company of any of the transactions contemplated by
the Pooling and Servicing Agreement or this Agreement, as the case may
be, or (d) which might materially and adversely affect the performance
by the Company of its obligations under, or the validity or
enforceability of, the Pooling and Servicing Agreement, this Agreement
or the Underwritten Certificates;
(iv) Each of this Agreement and the Pooling and Servicing
Agreement has been duly authorized, executed and delivered by the
Company, and the Pooling and Servicing Agreement constitutes a valid,
legal, binding and enforceable agreement of the Company, subject, as
to enforceability, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights
generally, to general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at law and public
policy considerations underlying the securities laws, to the extent
that such public policy considerations limit the enforceability of the
provisions of this Agreement or the Pooling and Servicing Agreement
that purport to provide indemnification from securities law
liabilities;
(v) The Underwritten Certificates, when duly and validly executed
and authenticated in the manner contemplated in the Pooling and
Servicing Agreement and delivered and paid for by the Underwriters as
provided herein, will be duly and validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement;
(vi) The statements set forth in the Prospectus Supplement under
the headings "Description of the Certificates" and "Servicing of the
Mortgage Loans" and in the Basic Prospectus under the headings
"Description of the Certificates" and "Description of the Pooling
Agreements", insofar as such statements purport to summarize certain
provisions of the Underwritten Certificates and the Pooling and
Servicing Agreement, are true and correct in all material respects;
(vii) The statements set forth in the Basic Prospectus and the
Prospectus Supplement under the headings "Certain Federal Income Tax
Consequences", "ERISA Considerations" and "Legal Investment", to the
extent that they constitute matters of federal law or legal
conclusions with respect
-15-
<PAGE>
thereto, are correct in all material respects with respect to those
consequences or aspects that are discussed;
(viii) Any Class of Underwritten Certificates will be "mortgage
related securities", as defined in Section 3(a)(41) of the 1934 Act,
so long as such Certificates are rated "AAA" or "AA" (or its
equivalent) by at least one nationally recognized statistical rating
organization;
(ix) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and
neither the Company nor the Trust Fund is required to be registered
under the Investment Company Act;
(x) No consent, approval, authorization or order of any State of
New York or federal court or governmental agency or body is required
for the consummation by the Company of the transactions contemplated
herein or in the Pooling and Servicing Agreement, except (A) such as
have been obtained under the 1933 Act, (B) such as may be required
under the blue sky laws of any jurisdiction in connection with the
offer and sale of the Underwritten Certificates by the Underwriters,
as to which such counsel need express no opinion; and (C) any
recordation of the assignments of the Mortgage Loans pursuant to the
Pooling and Servicing Agreement that has not yet been completed.
(xi) Assuming compliance with all provisions of the Pooling and
Servicing Agreement, for federal income tax purposes, REMIC I, REMIC
II and REMIC III will each qualify as a real estate mortgage
investment conduit (a "REMIC") under the Internal Revenue Code of 1986
(the "Code"), the Class R-I Certificates will be the sole class of
"residual interests" in REMIC I, the Class R-II Certificates will be
the sole class of "residual interests" in REMIC II, the Class A-1,
Class A-2, Class A-3, Class B, Class C, Class D, Class E, Class IO,
Class F, Class G, Class H, Class J, Class K, Class L and Class M
Certificates will be the "regular interests" in REMIC III, and the
Class R-III Certificates will be the sole class of "residual
interests" in the REMIC III; and
(xii) The Certificates conform in all material respects to the
description thereof contained in the Prospectus; and the Pooling and
Servicing Agreement conforms in all material respects to the
description thereof contained in the Prospectus.
With respect to such opinion, such counsel may express its reliance as to
factual matters on the representations and warranties made by, and on
certificates or other documents furnished by officers of, the parties to this
Agreement and the Pooling and Servicing Agreement; may assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the
-16-
<PAGE>
Company; may qualify such opinion only as to the federal laws of the United
States of America, the laws of the State of New York, the laws of the State of
North Carolina and the corporation law of the State of Delaware; and may, to the
extent deemed necessary by such counsel, rely on the opinion of counsel in the
regular employ of the Company or any affiliate of the Company or independent
North Carolina counsel. Such counsel shall also confirm that the Underwriters
may rely, on and as of the Closing Date, on any opinion or opinions of such
counsel submitted to any Rating Agency as if addressed to the Underwriters and
dated the Closing Date;
(g) You shall have received from Paul Hurdle, counsel for the Company, a
favorable opinion, dated the Closing Date and satisfactory in form and substance
to you and counsel for the Underwriters, to the effect that:
(i) The Company is a corporation in good standing under the laws
of the State of North Carolina and has the corporate power and
authority to enter into and perform its obligations under this
Agreement and the Pooling and Servicing Agreement;
(ii) No consent, approval, authorization or order of the State of
North Carolina is required for the consummation by the Company of the
transactions contemplated herein or in the Pooling and Servicing
Agreement; and
(iii) Neither the issuance and sale of the Underwritten
Certificates, nor the execution or delivery of or performance under
this Agreement or the Pooling and Servicing Agreement, nor the
consummation of any other of the transactions contemplated herein or
therein will conflict with or result in a breach or violation of any
term or provision of, or constitute a default (or an event which with
the passing of time or notification, or both, would constitute a
default) under, the certificate of incorporation or by-laws of the
Company, or, to the knowledge of such counsel, any indenture or other
agreement or instrument to which the Company is a party or by which it
is bound, or any State of North Carolina or federal statute or
regulation applicable to the Company, or, to the knowledge of such
counsel, any order of any State of North Carolina or federal court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company;
(h) You shall have received from Deloitte & Touche LLP, certified
public accountants, a letter dated the Closing Date and satisfactory
in form and substance to you and counsel for the Underwriters, to the
following effect:
(1) they have performed certain specified procedures as a
result of which they have determined that the information of an
accounting, financial or statistical nature set forth in the
Prospectus Supplement under the captions "Summary of the
Prospectus Supplement," "Description of the Mortgage Pool" and
"Yield and Maturity Considerations" and on Annex A agrees with
the data sheet or computer
-17-
<PAGE>
tape prepared by or on behalf of the Mortgage Loan Sellers,
unless non-material deviations are otherwise noted in such
letter; and
(2) they have compared the data contained in the data sheet
or computer tape referred to in the immediately preceding clause
(1) to information contained in an agreed upon sampling of the
Mortgage Loan files and in such other sources as shall be
specified by them, and found such data and information to be in
agreement in all material respects, unless non-material
deviations are otherwise noted in such letter;
(i) You shall have received written confirmation from the Rating
Agency that the Underwritten Certificates have been assigned the
rating or ratings specified in Schedule I hereto, which rating or
ratings shall not have been withdrawn;
(j) You shall have received (A) with respect to the Trustee a
good standing or similar certificate from the Secretary of State of
the state of its organization or, if not applicable, an appropriate
federal official, dated not earlier than 30 days prior to the Closing
Date; and (B) with respect to the Fiscal Agent, a photocopy of or good
standing certificates issued by each of the State of New York and the
State of Illinois as to the authority of the Fiscal Agent to conduct
banking business;
(k) You shall have received (A) from the Secretary or an
assistant secretary of the Trustee, in his individual capacity, a
certificate, dated the Closing Date, to the effect that: (i) each
individual who, as an officer or representative of the Trustee, signed
the Pooling and Servicing Agreement or any other document or
certificate delivered on or before the Closing Date in connection with
the transactions contemplated in the Pooling and Servicing Agreement
or this Agreement was at the respective times of such signing and
delivery, and is as of the Closing Date, duly elected or appointed,
qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents or certificates
are their genuine signatures; and (ii) no event (including, without
limitation, any act or omission on the part of the Trustee) has
occurred since the date of the good standing or similar certificate
referred to in paragraph 6(j) above which has affected the good
standing of the Trustee under laws of the United States; and (B) with
respect to the Fiscal Agent, a photocopy of a power of attorney
executed by the Fiscal Agent in favor of the individuals signing the
Pooling and Servicing Agreement on behalf of the Fiscal Agent and
granting such individuals the authority to so bind the Fiscal Agent.
(l) You shall have received from Kenedy Covington Lobdell &
Hickman LLP, counsel for the Trustee and the Fiscal Agent, a favorable
opinion, dated the Closing Date, in form and substance satisfactory to
you and counsel for the Underwriters, addressing such matters as you
and such counsel may reasonably require for the purpose of enabling
you and such counsel to pass upon the issuance and sale of the
Underwritten Certificates as herein contemplated and related
proceedings;
-18-
<PAGE>
(m) You shall have received with respect to the Master Servicer a
good standing or similar certificate from the Secretary of State of
the state of its organization or, if not applicable, an appropriate
federal official, dated not earlier than 30 days prior to the Closing
Date;
(n) You shall have received from the Secretary or an assistant
secretary of the Master Servicer, in his individual capacity, a
certificate, dated the Closing Date, to the effect that: (i) each
individual who, as an officer or representative of the Master
Servicer, signed the Pooling and Servicing Agreement or any other
document or certificate delivered on or before the Closing Date in
connection with the transactions contemplated in the Pooling and
Servicing Agreement and this Agreement was at the respective times of
such signing and delivery, and is as of the Closing Date, duly elected
or appointed, qualified and acting as such officer or representative,
and the signatures of such persons appearing on such documents are
their genuine signatures; and (ii) no event (including without
limitation, any act or omission on the part of the Master Servicer)
has occurred since the date of the good standing or similar
certificate referred to in paragraph 6(m) above which has affected the
good standing of the Master Servicer under the laws of the State of
North Carolina.
(o) You shall have received from Kilpatrick Stockton, LLP,
counsel for the Master Servicer, a favorable opinion, dated the
Closing Date, in form and substance satisfactory to you and counsel
for the Underwriters, addressing such matters as you and such counsel
may reasonably require for the purpose of enabling you and such
counsel to pass upon the issuance and sale of the Underwritten
Certificates as herein contemplated and related proceedings;
(p) You shall have received with respect to the Special Servicer
a good standing or similar certificate from the Secretary of State of
the state of its organization or, if not applicable, an appropriate
federal official, dated not earlier than 30 days prior to the Closing
Date;
(q) You shall have received from the Secretary or an assistant
secretary of the Special Servicer, in his individual capacity, a
certificate, dated the Closing Date, to the effect that: (i) each
individual who, as an officer or representative of the Special
Servicer, signed the Pooling and Servicing Agreement or any other
document or certificate delivered on or before the Closing Date in
connection with the transactions contemplated in the Pooling and
Servicing Agreement was at the respective times of such signing and
delivery, and is as of the Closing Date, duly elected or appointed,
qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents are their
genuine signatures; and (ii) no event (including without limitation,
any act or omission on the part of the Special Servicer) has occurred
since the date of the good standing or similar certificate referred to
in paragraph 6(p) above which has affected the good standing of the
Special Servicer under the laws of the State of Maryland.
-19-
<PAGE>
(r) You shall have received from Peabody & Brown, counsel for the
Special Servicer, a favorable opinion, dated the Closing Date, in form
and substance satisfactory to you and counsel for the Underwriters,
addressing such matters as you and such counsel may reasonably require
for the purpose of enabling you and such counsel to pass upon the
issuance and sale of the Underwritten Certificates as herein
contemplated and related proceedings;
(s) You shall have received from each Mortgage Loan Seller and
its officers all such certificates as may be required to be delivered
thereby under the related Mortgage Loan Purchase Agreement;
(t) You shall have received from Paul Hurdle and Christopher
Epes, counsel for First Union and LBHI, respectively, written
confirmation that the Underwriters may rely, as of the date rendered,
on any opinion or opinions of such counsel required to be delivered
under the Mortgage Loan Purchase Agreements or by or addressed to any
Rating Agency, in each case as if such opinion were addressed to the
Underwriters; and
(u) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto,
including, without limitation, the Pooling and Servicing Agreement and
the Mortgage Loan Purchase Agreement, shall be satisfactory in form
and substance to you and counsel for the Underwriters, and you and
such counsel shall have received such additional information,
certificates and documents as you or they may have reasonably
requested.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, if
the Company is in breach of any covenants or agreements contained herein or if
any of the opinions and certificates referred to above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to you and counsel for the Underwriters, this Agreement and all
obligations of the Underwriters hereunder may be cancelled at, or at any time
prior to, the Closing Date by you. Notice of such cancellation shall be given to
the Company in writing, or by telephone or telegraph confirmed in writing.
7. Reimbursement of Underwriters' Expenses. If the sale of the Underwritten
Certificates provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 is not satisfied or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof, other than by
reason of a default by any of the Underwriters, the Company will reimburse the
Underwriters severally, upon demand, for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Underwritten
Certificates.
-20-
<PAGE>
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
(or any amendment thereto), or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein not misleading or arising out of any untrue statement or
alleged untrue statement of a material fact contained in the Basic
Prospectus, any Preliminary Prospectus Supplement or the Prospectus
Supplement (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, that the foregoing indemnity with
respect to the Basic Prospectus or any Preliminary Prospectus Supplement
shall not inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) from whom the person asserting claims
giving rise to any such losses, claims, damages, expenses or liabilities
purchased Underwritten Certificates if such untrue statement or omission or
alleged untrue statement or omission made in the Basic Prospectus or such
Preliminary Prospectus Supplement is eliminated or remedied in the
Prospectus and, if required by law, a copy of the Prospectus shall not have
been furnished to such person at or prior to the written confirmation of
the sale of such Certificates to such person;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission, if such settlement is effected with
the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by such Underwriter or, if
more than one Underwriter is involved, by the Representative), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or omission, to
the extent that any such expense is not paid under (i) or (ii) above;
-21-
<PAGE>
provided, however, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information (as specified
in Section 8(b) below) furnished to the Company by any Underwriter
expressly for use in the Registration Statement (or any amendment thereto)
or in the Basic Prospectus, any Preliminary Prospectus Supplement or the
Prospectus Supplement (or any amendment or supplement thereto).
(b) Each Underwriter, severally but not jointly, agrees to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto) or in the Basic Prospectus, any Preliminary
Prospectus Supplement or the Prospectus Supplement (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such Underwriter expressly for use in the
Registration Statement (or any amendment thereto) or in the Basic Prospectus,
such Preliminary Prospectus Supplement or the Prospectus Supplement (or any
amendment or supplement thereto); provided that in no event shall either
Underwriter be liable for any such loss, liability, claim, damage or expense if
such untrue statement or omission or alleged untrue statement or omission
resulted from an untrue statement or omission in the underlying data regarding
the Mortgage Loans, or the related Mortgagors or Mortgaged Properties, provided
to the Underwriters by the Mortgage Loan Sellers. It is hereby acknowledged that
(i) the statements set forth in the first sentence of the penultimate paragraph
on the cover of the Prospectus Supplement, (ii) the statements in the third,
fourth and fifth paragraphs under the caption "Method of Distribution" in the
Prospectus Supplement and (iii) the statements in any Computational Materials
and ABS Term Sheets delivered by the Underwriters to the Company for filing with
the Commission pursuant to this Agreement and the No-Action Letters, constitute
the only written information furnished to the Company by such Underwriter
expressly for use in the Registration Statement (or any amendment thereto) or in
the Basic Prospectus, the Preliminary Prospectus Supplement or the Prospectus
Supplement (or any amendment or supplement thereto).
(c) Each indemnified party shall give notice as promptly as reasonably
practicable to each indemnifying party of any action commenced against it in
respect of which indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any liability
which it may have otherwise than on account of this indemnity agreement. An
indemnifying party may participate at its own expense in the defense of any such
action and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from the
indemnified party, to assume the defense thereof, with counsel satisfactory to
such indemnified party. In any such proceeding, any
-22-
<PAGE>
indemnified party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have agreed to
the retention of such counsel, or (ii) the indemnifying party shall not have
assumed the defense of such action, with counsel satisfactory to the indemnified
party, within a reasonable period following the indemnifying party's receiving
notice of such action, or (iii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. In
no event shall the indemnifying party or parties be liable for fees and expenses
of more than one counsel (or, in the event the Company is the indemnifying
party, one counsel for each Underwriter) (in addition to any local counsel)
separate from its or their own counsel for all indemnified parties in connection
with any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
Unless it shall assume the defense of any proceeding, an indemnifying party
shall not be liable for any settlement of any proceeding effected without its
written consent but, if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party shall indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. If an indemnifying party assumes the defense of any
proceeding, it shall be entitled to settle such proceeding with the consent of
the indemnified party or, if such settlement provides for release of the
indemnified party in connection with all matters relating to the proceeding that
have been asserted against the indemnified party in such proceeding by the other
parties to such settlement, without the consent of the indemnified party.
9. Contribution. In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in Section 8 hereof
is for any reason held to be unenforceable by the indemnified parties although
applicable in accordance with its terms, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriters, as incurred, in such proportions that each Underwriter is
responsible for that portion represented by the percentage that such
Underwriter's share of the underwriting discounts and commissions pertaining to
the Underwritten Certificates bears to the aggregate of the initial public
offering prices of the Underwritten Certificates and the Company is responsible
for the balance; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation; and provided, further, that in no event shall either
Underwriter be obligated to contribute more than its share of the underwriting
discounts and commissions pertaining to the Underwritten Certificates. It is
hereby acknowledged that the respective Underwriters' obligations under this
Section 9 shall be several and not joint. For purposes of this Section, each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the 1933 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement,
-23-
<PAGE>
and each person, if any, who controls the Company within the meaning of Section
15 of the 1933 Act shall have the same rights to contribution as the Company.
10. Default by an Underwriter. If any one or more Underwriters shall fail
to purchase and pay for any of the Underwritten Certificates agreed to be
purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally (in the respective proportions which the portion of the Underwritten
Certificates set forth opposite their names in Schedule II hereto bears to the
aggregate amount of Underwritten Certificates set forth opposite the names of
all the remaining Underwriters) to purchase the Underwritten Certificates that
the defaulting Underwriter or Underwriters agreed but failed to purchase;
provided, however, that in the event that the amount of Underwritten
Certificates that the defaulting Underwriter or Underwriters agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Underwritten
Certificates set forth in Schedule II hereto, the remaining Underwriters shall
have the right to purchase all, but shall not be under any obligation to
purchase any, of the Underwritten Certificates, and if such nondefaulting
Underwriters do not purchase all of the Underwritten Certificates, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company, except as provided in Section 11. In the event of a default by any
Underwriter as set forth in this Section 10, the Closing Date for the
Underwritten Certificates shall be postponed for such period, not exceeding ten
business days, as you shall determine in order that the required changes in the
Registration Statement and the Prospectus Supplement or in any other documents
or arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company and
any nondefaulting Underwriter for damages occasioned by its default hereunder.
11. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement, or
contained in certificates of officers of the Company submitted pursuant hereto,
shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter, or by or on behalf of the
Company, or by or on behalf of any of the controlling persons and officers and
directors referred to in Sections 8 and 9, and shall survive delivery of the
Underwritten Certificates to the Underwriters.
12. Termination of Agreement; Survival.
(a) The Underwriters may terminate this Agreement, by notice to the
Company, at any time at or prior to the Closing Date (i) if there has been,
since the date of this Agreement or since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any outbreak of
hostilities or escalation thereof or other calamity or crisis the effect of
which is such
-24-
<PAGE>
as to make it, in the reasonable judgment of the Representative,
impracticable to market the Underwritten Certificates or to enforce
contracts for the sale of the Underwritten Certificates, or (iii) if
trading generally on the New York Stock Exchange has been suspended, or if
a banking moratorium has been declared by either federal or New York
authorities.
(b) If this Agreement is terminated pursuant to this Section, such
termination shall be without liability of any party to any other party,
except as provided in Section 11.
(c) The provisions of Section 5(e) regarding the payment of costs and
expenses and the provisions of Sections 8 and 9 hereof shall survive the
termination of this Agreement.
13. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if mailed or transmitted by
any standard form of telecommunication. Notices to the Underwriters shall be
directed to you at Three World Financial Center, New York, New York 10285,
attention: James C. Blakemore; and notices to the Company shall be directed to
it at First Union Commercial Mortgage Securities, Inc., One First Union Center,
Charlotte, North Carolina 28288-0166, attention of President; or, in either
case, such other address as may hereafter be furnished by either the
Representative or the Company to the other such party in writing.
14. Parties. This Agreement shall inure to the benefit of and be binding
upon each of the Underwriters and the Company and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters
and the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 8 and 9 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriters and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Underwritten Certificates from any Underwriter
shall be deemed to be a successor by reason merely of such purchase.
15. Applicable Law; Counterparts. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in said State. This Agreement may be
executed in any number of counterparts, each of which shall for all purposes be
deemed to be an original and all of which shall together constitute but one and
the same instrument.
-25-
<PAGE>
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this letter and
your acceptance shall represent a binding agreement among the Company and the
several Underwriters.
Very truly yours,
FIRST UNION COMMERCIAL MORTGAGE
SECURITIES, INC.
By: /s/ MICHAEL H. GRECO
-----------------------------
Name: Michael H. Greco
Title: Senior Vice President
The foregoing Agreement is hereby confirmed and accepted as of the date
first above written.
LEHMAN BROTHERS INC.
By: /s/ MICHAEL MAZZEI
----------------------------
Name: Michael Mazzei
Title: Managing Director
For itself and the other Underwriters named in Schedule II to the foregoing
Agreement.
-26-
<PAGE>
SCHEDULE I
Underwriting Agreement dated November 19, 1997:
As used in this Schedule I, the term "Registration Statement" refers to
registration statement No. 333-7854 filed by the Company on Form S-3 and
declared effective on October 29, 1997. The term "Basic Prospectus" refers to
the form of prospectus in the Registration Statement or such later form as most
recently filed by the Company pursuant to Rule 424(b) under the Securities Act
of 1933, as amended. The term "Prospectus Supplement" refers to the supplement
dated November 19, 1997 to the Basic Prospectus, relating to the mortgage
pass-through certificates being sold pursuant to the Underwriting Agreement (the
"Underwritten Certificates").
Mortgage Pool:
Approximately 422 commercial mortgage loans, having an aggregate principal
balance, after giving effect to payments of principal due on or before November
1, 1997 (the "Cut-off Date"), of approximately $2,203,502,325 (the "Initial Pool
Balance"), and otherwise complying in all material respects with the description
thereof set forth in the Prospectus Supplement.
Title, Purchase Price and Description of Underwritten Certificates:
First Union-Lehman Brothers Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 1997-C1, Class A-1, Class A-2, Class A-3,
Class B, Class C, Class D, Class E and Class IO.
<TABLE>
<CAPTION>
Initial Pass Purchase
Aggregate Certificate Through Price
Designation Principal Balance Rate Rating Percentage
- ----------- --------------------- ------- ------ ----------
<S> <C> <C> <C> <C>
Class A-1 ....... $220,000,000 6.479% Aaa/AAA/AAA(1) 100.49693%(2)
Class A-2 ....... 384,000,000 6.600% Aaa/AAA/AAA(1) 100.48939%(2)
Class A-3 ....... 982,521,000 6.650% Aaa/AAA/AAA(1) 100.49703%(2)
Class B ......... 110,175,000 6.790% Aa2/AA/AA(1) 100.45746%(2)
Class C ......... 110,175,000 7.020% A2/A/A(1) 100.34044%(2)
Class D ......... 121,194,000 7.120% Baa2/BBB/BBB(1) 98.99917%(2)
Class E ......... 33,052,000 7.120% Baa3/BBB-/BBB-(1) 98.11290%(2)
Class IO ........ (3) Variable Aaa/NR/AAA(1) N/A
</TABLE>
- -----------
(1) By each of Moody's Investors Service, Inc., Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., and Duff & Phelps
Credit Rating Co.
<PAGE>
(2) There shall be added to the purchase price for each Class of Underwritten
Certificates accrued interest, if any, at the initial Pass-Through Rate for
such Class from the Cut-off Date up to, but not including, the Closing
Date.
(3) The Class IO Certificates will not have a Certificate Principal Balance nor
will they entitle the holders thereof to receive distributions of
principal.
Credit Support and Other Terms and Conditions of the Underwritten Certificates:
As described in the Prospectus Supplement.
Closing Time, Date and Location: 10:00 a.m. (New York City time) on November 25,
1997 at the offices of Willkie Farr & Gallagher, One Citicorp Center, 153 East
53rd Street, New York, New York 10022; except that delivery of the Underwritten
Certificates shall be made through the facilities of The Depository Trust
Company.
Initial Public Offering Price: The Underwritten Certificates will be offered to
the public in negotiated transactions or otherwise at varying prices to be
determined at the time of sale.
<PAGE>
SCHEDULE II
Underwriting Agreement dated November 19, 1997
Approximate Aggregate
Principal or Notional
Amount of Certificates to
Underwriters Class be Purchased
- ------------ ----- -------------------------
First Union Capital Markets Corp.
Class A-1 $ 110,000,000.00
Class A-2 $ 192,000,000.00
Class A-3 $ 491,260,500.00
Class B $ 55,087,500.00
Class C $ 55,087,500.00
Class D $ 60,597,000.00
Class E $ 16,626,000.00
Class IO $1,101,751,162.50
Lehman Brothers Inc.
Class A-1 $ 110,000,000.00
Class A-2 $ 192,000,000.00
Class A-3 $ 491,260,500.00
Class B $ 55,087,500.00
Class C $ 55,087,500.00
Class D $ 60,597,000.00
Class E $ 16,526,000.00
Class IO $1,101,751,162.50
Execution
================================================================================
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
Depositor
and
FIRST UNION NATIONAL BANK
Master Servicer
and
CRIIMI MAE SERVICES LIMITED PARTNERSHIP
Special Servicer
and
LASALLE NATIONAL BANK
Trustee
and
ABN AMRO BANK N.V.
Fiscal Agent
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1997
------------
$2,203,502,325
Commercial Mortgage Pass-Through Certificates
Series 1997-C2
================================================================================
<PAGE>
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS
<S> <C>
SECTION 1.01. Defined Terms.......................................................................................4
Accrued Certificate Interest................................................................................4
Accrued Component Interest..................................................................................4
Acquisition Date............................................................................................4
Actual-360 Mortgage Loan....................................................................................4
Additional Servicing Fee....................................................................................4
Additional Servicing Fee Rate...............................................................................4
Additional Trust Fund Expense...............................................................................5
Additional Yield Amount.....................................................................................5
Advance.....................................................................................................5
Adverse REMIC Event.........................................................................................5
Affiliate...................................................................................................5
Agreement...................................................................................................5
Appraisal Reduction Amount..................................................................................5
Appraised Value.............................................................................................6
Anticipated Repayment Date..................................................................................6
ARD Loan....................................................................................................6
Assignment of Leases........................................................................................6
Assumed Final Distribution Date.............................................................................6
Assumed Scheduled Payment...................................................................................6
Authenticating Agent........................................................................................7
Available Distribution Amount...............................................................................7
Balloon Mortgage Loan.......................................................................................7
Balloon Payment.............................................................................................7
Bankruptcy Code.............................................................................................7
Book-Entry Certificate......................................................................................7
Breach......................................................................................................7
Business Day................................................................................................8
CERCLA......................................................................................................8
Certificate.................................................................................................8
Certificate Account.........................................................................................8
Certificate Factor..........................................................................................8
Certificate Notional Amount.................................................................................8
Certificate Owner...........................................................................................8
Certificate Principal Balance...............................................................................8
Certificate Register........................................................................................8
Certificate Registrar.......................................................................................8
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Certificateholder...........................................................................................9
Class.......................................................................................................9
Class A Certificates........................................................................................9
Class A-1 Certificate.......................................................................................9
Class A-2 Certificate.......................................................................................9
Class A-3 Certificate.......................................................................................9
Class B Certificate........................................................................................10
Class C Certificate........................................................................................10
Class D Certificate........................................................................................10
Class E Certificate........................................................................................10
Class F Certificate........................................................................................10
Class G Certificate........................................................................................10
Class H Certificate........................................................................................10
Class IO Certificate.......................................................................................10
Class J Certificate........................................................................................10
Class K Certificate........................................................................................10
Class L Certificate........................................................................................10
Class M Certificate........................................................................................11
Class Notional Amount......................................................................................11
Class Principal Balance....................................................................................11
Class R-I Certificate......................................................................................11
Class R-II Certificate.....................................................................................11
Class R-III Certificate....................................................................................11
Closing Date...............................................................................................11
Code.......................................................................................................11
Collection Period..........................................................................................11
Comparative Financial Status Report........................................................................11
Component..................................................................................................12
Component IO-A-1...........................................................................................12
Component IO-A-2...........................................................................................12
Component IO-A-3...........................................................................................12
Component IO-B.............................................................................................12
Component IO-C.............................................................................................12
Component IO-D.............................................................................................12
Component IO-E.............................................................................................12
Component IO-F.............................................................................................12
Component IO-G.............................................................................................13
Component IO-H.............................................................................................13
Component IO-J.............................................................................................13
Component IO-K.............................................................................................13
Component IO-L.............................................................................................13
Component IO-M.............................................................................................13
Component Notional Amount..................................................................................13
Controlling Class..........................................................................................13
Controlling Class Representative...........................................................................13
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Corporate Trust Office.....................................................................................13
Corrected Mortgage Loan....................................................................................14
Credit Lease...............................................................................................14
Credit Lease Loan..........................................................................................14
CSSA Loan File Report......................................................................................14
CSSA Property File Report..................................................................................14
Custodian..................................................................................................14
Cut-off Date...............................................................................................14
Cut-off Date Balance.......................................................................................14
Debt Service Coverage Ratio................................................................................14
Defaulted Mortgage Loan....................................................................................15
Defeasance Collateral......................................................................................15
Defeasance Loan............................................................................................15
Definitive Certificate.....................................................................................15
Delinquent Loan Status Report..............................................................................15
Depositor..................................................................................................15
Depository.................................................................................................15
Depository Participant.....................................................................................15
Determination Date.........................................................................................16
Directly Operate...........................................................................................16
Discount Rate..............................................................................................16
Disqualified Organization..................................................................................16
Distributable Certificate Interest.........................................................................17
Distribution Account.......................................................................................17
Distribution Date..........................................................................................17
Distribution Date Statement................................................................................17
Document Defect............................................................................................17
Due Date...................................................................................................17
Effective REMIC I Remittance Rate..........................................................................17
Eligible Account...........................................................................................17
Environmental Assessment...................................................................................18
ERISA......................................................................................................18
Escrow Payment.............................................................................................18
Event of Default...........................................................................................18
Exchange Act...............................................................................................18
Excluded Class Certificates................................................................................18
FDIC.......................................................................................................18
FHLMC......................................................................................................18
Final Recovery Determination...............................................................................18
First Union Capital........................................................................................19
Fiscal Agent...............................................................................................19
FNMA.......................................................................................................19
Ground Lease...............................................................................................19
Hazardous Materials........................................................................................19
Historical Loan Modification Report........................................................................19
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Historical Loss Estimate Report............................................................................19
Holder.....................................................................................................20
HUD-Approved Servicer......................................................................................20
Impound Reserve............................................................................................20
Independent................................................................................................20
Independent Appraiser......................................................................................20
Independent Contractor.....................................................................................20
Insurance Policy...........................................................................................21
Insurance Proceeds.........................................................................................21
Interested Person..........................................................................................21
Investment Account.........................................................................................21
Issue Price................................................................................................21
Late Collections...........................................................................................21
Lease Enhancement Policy...................................................................................21
Lease Enhancement Policy Issuer............................................................................21
Lease Enhancement Policy Termination Event.................................................................21
Legal Final Distribution Date..............................................................................22
Liquidation Event..........................................................................................22
Liquidation Proceeds.......................................................................................22
Loan Payoff Notification Report............................................................................22
Loan-to-Value Ratio........................................................................................22
Lockout Period.............................................................................................23
Majority Subordinate Certificateholder.....................................................................23
Master Servicer............................................................................................23
Master Servicing Fee.......................................................................................23
Master Servicing Fee Rate..................................................................................23
Monthly Payment............................................................................................23
Moody's....................................................................................................23
Mortgage...................................................................................................23
Mortgage File..............................................................................................24
Mortgage Loan..............................................................................................25
Mortgage Loan Purchase Agreements..........................................................................25
Mortgage Loan Schedule.....................................................................................25
Mortgage Loan Seller.......................................................................................26
Mortgage Note..............................................................................................26
Mortgage Pool..............................................................................................26
Mortgage Rate..............................................................................................26
Mortgaged Property.........................................................................................27
Mortgagor..................................................................................................27
Net Aggregate Prepayment Interest Shortfall................................................................27
Net Investment Earnings....................................................................................27
Net Investment Loss........................................................................................27
Net Mortgage Rate..........................................................................................27
Net Operating Income.......................................................................................27
New Lease..................................................................................................27
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
NOI Adjustment Worksheet...................................................................................28
Nonrecoverable Advance.....................................................................................28
Nonrecoverable P&I Advance.................................................................................28
Nonrecoverable Servicing Advance...........................................................................28
Non-Registered Certificate.................................................................................28
Non-United States Person...................................................................................28
Officers' Certificate......................................................................................28
Operating Statement Analysis...............................................................................28
Opinion of Counsel.........................................................................................28
Original Class Notional Amount.............................................................................28
Original Class Principal Balance...........................................................................29
OTS........................................................................................................29
Ownership Interest.........................................................................................29
Pass-Through Rate..........................................................................................29
Paying Agent...............................................................................................30
Penalty Interest...........................................................................................30
Percentage Interest........................................................................................30
Permitted Investments......................................................................................30
Permitted Transferee.......................................................................................32
Person.....................................................................................................32
P&I Advance................................................................................................32
P&I Advance Date...........................................................................................32
Plurality Residual Certificateholder.......................................................................32
Prepayment Assumption......................................................................................32
Prepayment Interest Excess.................................................................................33
Prepayment Interest Shortfall..............................................................................33
Prepayment Premium.........................................................................................33
Prime Rate.................................................................................................33
Principal Distribution Amount..............................................................................33
Principal Prepayment.......................................................................................34
Principal Recovery Fee.....................................................................................35
Prospectus.................................................................................................35
Prospectus Supplement......................................................................................35
Purchase Price.............................................................................................35
Qualified Insurer..........................................................................................35
Rating Agency..............................................................................................35
Realized Loss..............................................................................................35
Record Date................................................................................................36
Registered Certificate.....................................................................................36
Regular Certificate........................................................................................36
Reimbursement Rate.........................................................................................36
REMIC......................................................................................................36
REMIC Administrator........................................................................................36
REMIC Provisions...........................................................................................36
REMIC I....................................................................................................36
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
REMIC I Regular Interest...................................................................................37
REMIC I Remittance Rate....................................................................................37
REMIC II...................................................................................................37
REMIC II Regular Interest..................................................................................37
REMIC II Remittance Rate...................................................................................37
REMIC III..................................................................................................37
REMIC III Certificate......................................................................................37
Rents from Real Property...................................................................................37
REO Account................................................................................................37
REO Acquisition............................................................................................38
REO Disposition............................................................................................38
REO Extension..............................................................................................38
REO Loan...................................................................................................38
REO Property...............................................................................................38
REO Revenues...............................................................................................39
REO Status Report..........................................................................................39
REO Tax....................................................................................................39
Request for Release........................................................................................39
Required Appraisal.........................................................................................39
Required Appraisal Mortgage Loan...........................................................................39
Required Appraisal Value...................................................................................39
Reserve Account............................................................................................40
Reserve Funds..............................................................................................40
Residual Certificate.......................................................................................40
Responsible Officer........................................................................................40
Scheduled Payment..........................................................................................40
Securities Act.............................................................................................40
Senior Certificate.........................................................................................40
Sequential Pay Certificates................................................................................40
Servicing Account..........................................................................................40
Servicing Advances.........................................................................................40
Servicing Fees.............................................................................................41
Servicing File.............................................................................................41
Servicing Officer..........................................................................................41
Servicing Standard.........................................................................................41
Servicing Transfer Event...................................................................................42
Single Certificate.........................................................................................42
Special Servicer...........................................................................................42
Special Servicing Fee......................................................................................42
Special Servicing Fee Rate.................................................................................42
Specially Serviced Mortgage Loan...........................................................................42
Standard & Poor's..........................................................................................44
Startup Day................................................................................................44
State and Local Taxes......................................................................................44
Stated Maturity Date.......................................................................................44
</TABLE>
vi
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Stated Principal Balance...................................................................................45
Subordinated Certificate...................................................................................45
Sub-Servicer...............................................................................................45
Sub-Servicing Agreement....................................................................................45
Tax Matters Person.........................................................................................45
Tax Returns................................................................................................45
Tenant.....................................................................................................45
Transaction Screen Process.................................................................................45
Transfer...................................................................................................45
Transferee.................................................................................................46
Transferor.................................................................................................46
Trust Fund.................................................................................................46
Trustee....................................................................................................46
Trustee Fee................................................................................................46
Trustee Fee Rate...........................................................................................46
Trustee Liability..........................................................................................46
UCC........................................................................................................46
UCC Financing Statement....................................................................................46
Uncertificated Accrued Interest............................................................................46
Uncertificated Distributable Interest......................................................................47
Uncertificated Principal Balance...........................................................................47
Underwriter................................................................................................47
United States Person.......................................................................................47
USAP.......................................................................................................48
Voting Rights..............................................................................................48
Watch List.................................................................................................48
Weighted Average Effective REMIC I Remittance Rate.........................................................48
Yield Maintenance Charge...................................................................................48
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS
AND WARRANTIES; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.......................................................................49
SECTION 2.02. Acceptance of Trust Fund by Trustee................................................................50
SECTION 2.03. Mortgage Loan Seller's Repurchase of Mortgage Loans for Document Defects and Breaches of
Representations and Warranties.................................................................51
SECTION 2.04. Representations and Warranties of Depositor........................................................53
SECTION 2.05. Execution, Authentication and Delivery of Class R-I Certificates; Creation of REMIC I
Regular Interests..............................................................................55
SECTION 2.06. Conveyance of REMIC I Regular Interests; Acceptance of REMIC II by Trustee.........................55
SECTION 2.07. Execution, Authentication and Delivery of Class R-II Certificates..................................55
SECTION 2.08. Conveyance of REMIC II Regular Interests; Acceptance of REMIC III by Trustee.......................55
</TABLE>
vii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 2.09. Execution, Authentication and Delivery of REMIC III Certificates...................................56
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
SECTION 3.01. Administration of the Mortgage Loans...............................................................57
SECTION 3.02. Collection of Mortgage Loan Payments...............................................................58
SECTION 3.03. Collection of Taxes, Assessments and Similar Items; Servicing Accounts; Reserve Accounts...........60
SECTION 3.04. Certificate Account and Distribution Account.......................................................62
SECTION 3.05. Permitted Withdrawals From the Certificate Account and the Distribution Account....................65
SECTION 3.06. Investment of Funds in the Servicing Accounts, the Reserve Accounts, the Certificate
Account, the Distribution Account and the REO Account..........................................69
SECTION 3.07. Maintenance of Insurance Policies; Errors and Omissions and Fidelity Coverage......................71
SECTION 3.08. Enforcement of Alienation Clauses..................................................................73
SECTION 3.09. Realization Upon Defaulted Mortgage Loans; Required Appraisals.....................................74
SECTION 3.10. Trustee and Custodian to Cooperate; Release of Mortgage Files......................................77
SECTION 3.11. Servicing Compensation.............................................................................78
SECTION 3.12. Property Inspections; Collection of Financial Statements; Delivery of Certain Reports..............81
SECTION 3.13. Annual Statement as to Compliance..................................................................84
SECTION 3.13. Annual Statement as to Compliance..................................................................84
SECTION 3.14. Reports by Independent Public Accountants..........................................................84
SECTION 3.15. Access to Certain Information......................................................................85
SECTION 3.16. Title to REO Property; REO Account.................................................................86
SECTION 3.17. Management of REO Property.........................................................................88
SECTION 3.18. Sale of Mortgage Loans and REO Properties..........................................................91
SECTION 3.19. Additional Obligations of Master Servicer..........................................................94
SECTION 3.20. Modifications, Waivers, Amendments and Consents....................................................94
SECTION 3.21. Transfer of Servicing Between Master Servicer and Special Servicer; Record Keeping.................98
SECTION 3.22. Sub-Servicing Agreements...........................................................................99
SECTION 3.23. Representations and Warranties of Master Servicer and Special Servicer............................102
SECTION 3.24. Sub-Servicing Agreement Representation and Warranty...............................................105
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.....................................................................................106
SECTION 4.02. Statements to Certificateholders; CSSA Loan File Report...........................................115
SECTION 4.03. P&I Advances......................................................................................122
</TABLE>
viii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 4.04. Allocation of Realized Losses and Additional Trust Fund Expenses..................................124
SECTION 4.05. Calculations......................................................................................127
SECTION 4.06. Use of Agents.....................................................................................127
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates..................................................................................128
SECTION 5.02. Registration of Transfer and Exchange of Certificates.............................................128
SECTION 5.03. Book-Entry Certificates...........................................................................134
SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates.................................................136
SECTION 5.05. Persons Deemed Owners.............................................................................136
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER, THE SPECIAL
SERVICER AND THE CONTROLLING CLASS REPRESENTATIVE
SECTION 6.01. Liability of Depositor, Master Servicer and Special Servicer......................................137
SECTION 6.02. Merger, Consolidation or Conversion of Depositor or Master Servicer or Special Servicer...........137
SECTION 6.03. Limitation on Liability of Depositor, Master Servicer and Special Servicer........................138
SECTION 6.04. Resignation of Master Servicer and the Special Servicer...........................................138
SECTION 6.05. Rights of Depositor and Trustee in Respect of Master Servicer and the Special Servicer............139
SECTION 6.06. Depositor, Master Servicer and Special Servicer to Cooperate with Trustee.........................140
SECTION 6.07. Depositor, Special Servicer and Trustee to Cooperate with Master Servicer.........................140
SECTION 6.08. Depositor, Master Servicer and Trustee to Cooperate with Special Servicer.........................140
SECTION 6.09. Designation of Special Servicer by the Controlling Class..........................................140
SECTION 6.10. Master Servicer or Special Servicer as Owner of a Certificate.....................................141
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.................................................................................144
SECTION 7.02. Trustee to Act; Appointment of Successor..........................................................147
SECTION 7.03. Notification to Certificateholders................................................................148
SECTION 7.04. Waiver of Events of Default.......................................................................148
SECTION 7.05. Additional Remedies of Trustee Upon Event of Default..............................................149
</TABLE>
ix
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE VIII
CONCERNING THE TRUSTEE AND FISCAL AGENT
SECTION 8.01. Duties of Trustee.................................................................................150
SECTION 8.02. Certain Matters Affecting Trustee.................................................................151
SECTION 8.03. Trustee and Fiscal Agent Not Liable for Validity or Sufficiency of Certificates or
Mortgage Loans................................................................................152
SECTION 8.04. Trustee and Fiscal Agent May Own Certificates.....................................................153
SECTION 8.05. Fees and Expenses of Trustee; Indemnification of Trustee..........................................153
SECTION 8.06. Eligibility Requirements for Trustee..............................................................154
SECTION 8.07. Resignation and Removal of Trustee................................................................154
SECTION 8.08. Successor Trustee.................................................................................156
SECTION 8.09. Merger or Consolidation of Trustee................................................................156
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.....................................................156
SECTION 8.11. Appointment of Custodians.........................................................................158
SECTION 8.12. Appointment of Authenticating Agents..............................................................158
SECTION 8.13. Appointment of Paying Agent.......................................................................159
SECTION 8.14. Appointment of REMIC Administrators...............................................................160
SECTION 8.15. Access to Certain Information.....................................................................161
SECTION 8.16. Representations and Warranties of Trustee.........................................................161
SECTION 8.17. Reports to the Securities and Exchange Commission; Available Information..........................162
SECTION 8.18. Representations and Warranties of Fiscal Agent....................................................163
SECTION 8.19. The Fiscal Agent..................................................................................165
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans..................................166
SECTION 9.02. Additional Termination Requirements...............................................................172
ARTICLE X
ADDITIONAL REMIC PROVISIONS
SECTION 10.01. REMIC Administration.............................................................................174
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment........................................................................................179
SECTION 11.02. Recordation of Agreement; Counterparts...........................................................181
SECTION 11.03. Limitation on Rights of Certificateholders.......................................................181
SECTION 11.04. Governing Law....................................................................................182
SECTION 11.05. Notices..........................................................................................182
</TABLE>
x
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
SECTION 11.06. Severability of Provisions.......................................................................183
SECTION 11.07. Grant of a Security Interest.....................................................................183
SECTION 11.08. Streit Act.......................................................................................184
SECTION 11.09. Successors and Assigns; Beneficiaries............................................................184
SECTION 11.10. Article and Section Headings.....................................................................184
SECTION 11.11. Notices to Rating Agencies.......................................................................185
SECTION 11.12. Complete Agreement...............................................................................186
</TABLE>
xi
<PAGE>
<TABLE>
<CAPTION>
EXHIBITS
Exhibit Description Exhibit No. Section 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 A-3 Certificate A-3 Section 1.01 Definition of "Class
A-3 Certificate"
Form of Class IO Certificate A-4 Section 1.01 Definition of "Class IO
Certificate"
Form of Class B Certificate A-5 Section 1.01 Definition of "Class B
Certificate"
Form of Class C Certificate A-6 Section 1.01 Definition of "Class C
Certificate"
Form of Class D Certificate A-7 Section 1.01 Definition of "Class D
Certificate"
Form of Class E Certificate A-8 Section 1.01 Definition of "Class E
Certificate"
Form of Class F Certificate A-9 Section 1.01 Definition of "Class F
Certificate"
Form of Class G Certificate A-10 Section 1.01 Definition of "Class G
Certificate"
Form of Class H Certificate A-11 Section 1.01 Definition of "Class H
Certificate"
Form of Class J Certificate A-12 Section 1.01 Definition of "Class J
Certificate"
Form of Class K Certificate A-13 Section 1.01 Definition of "Class K
Certificate"
Form of Class L Certificate A-14 Section 1.01 Definition of "Class L
Certificate"
</TABLE>
xii
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description Exhibit No. Section Reference
- ------------------- ----------- -----------------
<S> <C> <C>
Form of Class M Certificate A-15 Section 1.01 Definition of "Class M
Certificate"
Form of Class R-I Certificate A-16 Section 1.01 Definition of "Class
R-I Certificate"
Form of Class R-II Certificate A-17 Section 1.01 Definition of "Class
R-II Certificate"
Form of Class R-III Certificate A-18 Section 1.01 Definition of "Class
R-III Certificate"
Mortgage Loan Schedule B Section 1.01 Definition of "Mortgage
Loan Schedule"
Form of Schedule of Exceptions to Mortgage C Section 2.02(a)
File Delivery
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)
Calculation of NOI/Debt Service Coverage E Section 1.01 Definition of "Net
Ratios Operating Income"; Section 3.12(b)
[RESERVED] F
Form of Certificate from Holder G-1 Section 5.02(b)
(Transferor) of a Certificate to the
Certificate Registrar
Form of Certificate from Proposed G-2 Section 5.02(b)
Transferee of a Certificate to Certificate
Registrar
Form of Certificate from Proposed G-3 Section 5.02(b)
Transferee of a Certificate to Certificate
Registrar for non-QIBs
</TABLE>
xiii
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description Exhibit No. Section Reference
- ------------------- ----------- -----------------
<S> <C> <C>
Form of Certificate (to Certificate H Section 5.02(c)
Registrar) by Prospective Transferor that
it is not a Plan or certain other Persons
Form of Transfer Affidavit and Agreement I-1 Section 5.02(d)(i)(B)
regarding Class R-I Certificates
Form of Transferor Certificate regarding I-2 Section 5.02(d)(i)(D)
Class R-I, R-II and R-III Certificates
Form of Notice and Acknowledgment J-1 Section 6.09
Form of Acknowledgment of Proposed Special J-2 Section 6.09
Servicer
Form of UCC-1 financing statement K Section 11.07
Form of Schedule of Holders of each Class L Section 4.02(a)
of Regular Certificates
Form of CSSA Property File Report M Section 3.12(c)
Form of Comparative Financial Status Report N Section 3.12(b) and 3.12(c)
Form of REO Status Report O Section 3.12(b) and 3.12(c)
Form of Watch List P Section 3.12(b) and 3.12(c)
Form of Delinquent Loan Status Report Q Section 3.12(b) and 3.12(c)
Form of Historical Loan Modification Report R Section 3.12(b) and 3.12(c)
Form of Historical Loss Estimate Report S Section 3.12(b) and 3.12(c)
</TABLE>
xiv
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description Exhibit No. Section Reference
- ------------------- ----------- -----------------
<S> <C> <C>
Form of NOI Adjustment Worksheet T Section 3.12(b) and 3.12(c)
Form of Operating Statement Analysis U Section 3.12(b) and 3.12(c)
Form of Loan Payoff Notification Report V Section 3.12(b) and 3.12(c)
Form of CSSA Loan File Report W Section 4.02(b)
</TABLE>
XV
<PAGE>
This Pooling and Servicing Agreement (this "Agreement") is dated and
effective as of November 1, 1997, among FIRST UNION COMMERCIAL MORTGAGE
SECURITIES, INC., as Depositor, FIRST UNION NATIONAL BANK, as Master Servicer,
CRIIMI MAE SERVICES LIMITED PARTNERSHIP, as Special Servicer, LASALLE NATIONAL
BANK, as Trustee, and ABN AMRO BANK N.V., as Fiscal Agent.
PRELIMINARY STATEMENT:
The Depositor intends to sell mortgage pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes
(each, a "Class"), which in the aggregate will evidence the entire beneficial
ownership interest in a trust fund (the "Trust Fund") to be created hereunder.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the Mortgage Loans (as defined herein) and certain other
related assets subject to this Agreement as a real estate mortgage investment
conduit (a "REMIC") for federal income tax purposes, and such segregated pool of
assets will be designated as "REMIC I." The Class R-I Certificates will
represent the sole class of "residual interests" in REMIC I for purposes of the
REMIC Provisions (as defined herein) under the federal income tax law. Except as
provided below, each of the "regular interests" in REMIC I (each, a "REMIC I
Regular Interest") will relate to a specific Mortgage Loan. Each such REMIC I
Regular Interest will have a remittance rate equal to the unmodified Net
Mortgage Rate (as defined herein) as of the Closing Date of the Mortgage Loan to
which such REMIC I Regular Interest relates, and an initial uncertificated
stated principal amount (an initial "Uncertificated Principal Balance") equal to
the Cut-off Date Balance (as defined herein) of the Mortgage Loan to which such
REMIC I Regular Interest relates. The Legal Final Distribution Date of each of
the REMIC I Regular Interests is November 18, 2029. None of the REMIC I Regular
Interests will be certificated.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the REMIC I Regular Interests as a REMIC for federal income
tax purposes, and such segregated pool of assets will be designated as "REMIC
II." The Class R-II Certificates will represent the sole class of "residual
interests" in REMIC II for purposes of the REMIC Provisions under federal income
tax law. The following table sets forth the designation, remittance rate (the
"REMIC II Remittance Rate"), the initial Uncertificated Principal Balance and
Legal Final Distribution Date for each of the "regular interests" in REMIC II
(the "REMIC II Regular Interests"). None of the REMIC II Regular Interests will
be certificated.
<PAGE>
2
<TABLE>
<CAPTION>
Corresponding
Class of Initial
Class REMIC III REMIC II Uncertificated Legal Final
Designation Certificates Remittance Rate Principal Balance Distribution Date (2)
----------- --------------- ---------------- ----------------- ---------------------
<S> <C> <C> <C> <C>
M Class A-1 Variable (1) $220,000,000 November 18, 2029 (3)
N Class A-2 Variable (1) $384,000,000 November 18, 2029 (3)
O Class A-3 Variable (1) $982,521,000 November 18, 2029 (3)
P Class B Variable (1) $110,175,000 November 18, 2029 (3)
Q Class C Variable (1) $110,175,000 November 18, 2029 (3)
R Class D Variable (1) $121,194,000 November 18, 2029 (3)
S Class E Variable (1) $ 33,052,000 November 18, 2029 (3)
T Class F Variable (1) $ 66,105,000 November 18, 2029 (3)
U Class G Variable (1) $ 49,579,000 November 18, 2029 (3)
V Class H Variable (1) $ 16,527,208 November 18, 2029 (3)
W Class J Variable (1) $ 44,070,046 November 18, 2029 (3)
X Class K Variable (1) $ 22,035,023 November 18, 2029 (3)
Y Class L Variable (1) $ 27,543,779 November 18, 2029 (3)
Z Class M Variable (1) $ 16,526,268 November 18, 2029 (3)
</TABLE>
- -------------
(1) Calculated in accordance with the definition of "REMIC II Remittance Rate".
(2) Included solely for purposes of satisfying Treasury Regulations Section
1.860G-1(a)(4)(iii).
(3) Set to the date that is two years after the first Distribution Date that
follows the end of the amortization term for the Mortgage Loan that, as of
the Cut-off Date, has the longest amortization term.
As provided herein, the Trustee will elect to treat the segregated pool of
assets consisting of the REMIC II Regular Interests as a REMIC for federal
income tax purposes, and such segregated pool of assets will be designated as
"REMIC III". The Class R-III Certificates will evidence the sole class of
"residual interests" in REMIC III for purposes of the REMIC Provisions under
federal income tax law. The following table irrevocably sets forth the class
designation, pass-through rate (the "Pass-Through Rate"), initial aggregate
stated principal amount (the initial "Class Principal Balance") and Legal Final
Distribution Date for each Class of the Regular Certificates. For federal income
tax purposes, each Class of the Regular Certificates (other than the Class IO
Certificates) and each of the fourteen Components (as defined herein) of the
Class IO Certificates will be designated as a separate regular interest in REMIC
III.
<PAGE>
3
<TABLE>
<CAPTION>
Assumed Final
Class Pass-Through Initial Class Legal Final Distribution
Designation Rate Principal Balance Distribution Date (3) Date
----------- ------------ ----------------- --------------------- ------------------
<S> <C> <C> <C> <C>
Class A-1 6.479% $220,000,000 November 18, 2029 (4) March 18, 2004
Class A-2 6.600% $384,000,000 November 18, 2029 (4) May 18, 2007
Class A-3 6.650% $982,521,000 November 18, 2029 (4) December 18, 2007
Class B 6.790% $110,175,000 November 18, 2029 (4) October 18, 2011
Class C 7.020% $110,175,000 November 18, 2029 (4) September 18, 2012
Class D 7.120% $121,194,000 November 18, 2029 (4) November 18, 2012
Class E 7.120% $ 33,052,000 November 18, 2029 (4) November 18, 2012
Class IO Variable (1) (2) November 18, 2029 (4) November 18, 2027
Class F 7.500% (5) $ 66,105,000 November 18, 2029 (4) September 18, 2015
Class G 7.500% (5) $ 49,578,000 November 18, 2029 (4) June 18, 2017
Class H 7.500% (5) $ 16,527,208 November 18, 2029 (4) September 18, 2017
Class J 6.000% (5) $ 44,070,046 November 18, 2029 (4) January 18, 2020
Class K 6.000% (5) $ 22,035,023 November 18, 2029 (4) February 18, 2022
Class L 6.000% (5) $ 27,543,779 November 18, 2029 (4) April 18, 2023
Class M 6.000% (5) $ 16,526,268 November 18, 2029 (4) November 18, 2027
</TABLE>
- -------------------------
(1) Calculated in accordance with the definition of "Pass-Through Rate".
(2) The Class IO Certificates will not have specified Class Principal
Balances, and will not be entitled to receive distributions of principal,
but will be entitled to receive payments of interest in an amount equal to
the sum of the interest accrued on the Component Notional Amount of each
of its Components.
(3) Included solely for purposes of satisfying Treasury Regulations Section
1.860G-1(a)(4)(iii).
(4) Set to the date that is two years after the Distribution Date that follows
the end of the amortization term for the Mortgage Loan that, as of the
Cut-off Date, has the longest amortization term.
(5) With respect to each Distribution date, the Pass-Through Rate will equal
the lesser of the rate set forth above and the applicable Weighted Average
Effective REMIC I Remittance Rate.
The aggregate Cut-off Date Balance (as defined herein) of the Mortgage
Loans, the initial aggregate Uncertificated Principal Balance of the REMIC I
Regular Interests, the initial aggregate Uncertificated Principal Balance of the
REMIC II Regular Interests and the initial aggregate Class Principal Balance of
the respective Classes of Certificates (other than the Class IO Certificates)
evidencing "regular interests" in REMIC III will in each case be $2,203,502,325.
<PAGE>
4
In consideration of the mutual agreements herein contained, the Depositor,
the Master Servicer, the Special Servicer, the Trustee and the Fiscal Agent
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. 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 Regular
Certificates (other than the Class IO 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, the sum of Accrued
Component Interest for each of its Components for such Distribution Date.
Accrued Certificate Interest shall be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
"Accrued Component Interest": With respect to each Component of the Class
IO Certificates for any Distribution Date, one month's interest at the
Pass-Through Rate applicable to such Component for such Distribution Date,
accrued on the Component Notional Amount of such Component outstanding
immediately prior to such Distribution Date. Accrued Component Interest shall be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
"Acquisition Date": With respect to any REO Property, the first day on
which such REO Property is considered to be acquired by the Trust Fund within
the meaning of Treasury Regulations Section 1.856-6(b)(1), which is the first
day on which the Trust Fund is treated as the owner of such REO Property for
federal income tax purposes.
"Actual-360 Mortgage Loan": Each Mortgage Loan that accrues interest on the
basis of the actual number of days elapsed in a year consisting of 360 days,
identified as an Actual-360 Mortgage Loan on the Mortgage Loan Schedule.
"Additional Servicing Fee": With respect to each Mortgage Loan and REO
Loan, the fee designated as such and payable to the Special Servicer pursuant to
Section 3.11(c).
"Additional Servicing Fee Rate": With respect to any Distribution Date,
0.01% per annum.
<PAGE>
5
"Additional Trust Fund Expense": Any Special Servicing Fees, Principal
Recovery Fees and, in accordance with Sections 3.03(d) and 4.03(d), interest
payable to the Master Servicer, the Special Servicer, the Trustee and the Fiscal
Agent on Advances, as well as (without duplication) any of the expenses of the
Trust Fund that may be withdrawn (x) pursuant to any of clauses (viii), (ix),
(xi), (xii) and (xiii) of Section 3.05(a) out of general collections on the
Mortgage Loans and any REO Properties on deposit in the Certificate Account or
(y) pursuant to clause (ii) or any of clauses (iv) through (vi) of Section
3.05(b) out of general collections on the Mortgage Loans and any REO Properties
on deposit in the Distribution Account; provided that for purposes of the
allocations contemplated by Section 4.04 no such expense shall be deemed to have
been incurred by the Trust Fund until such time as the payment thereof is
actually made from the Certificate Account or the Distribution Account, as the
case may be.
"Additional Yield Amount": With respect to any Distribution Date and each
Class of Sequential Pay Certificates (other than any Excluded Class thereof),
entitled to distributions of principal pursuant to Section 4.01(a) on such
Distribution Date, provided that a Prepayment Premium or Yield Maintenance
Charge was actually collected on a Mortgage Loan or an REO Loan during the
related Collection Period, the product of (a) such Prepayment Premium or Yield
Maintenance Charge, as the case may be, multiplied by (b) a fraction, which in
no event will be greater than one, the numerator of which is equal to the
positive excess, if any, of (i) the Pass-Through Rate for such Class of
Sequential Pay Certificates over (ii) the related Discount Rate, and the
denominator of which is equal to the positive excess, if any, of (i) the
Mortgage Rate for such Mortgage Loan or REO Loan, as the case may be, over (ii)
the related Discount Rate, multiplied by (c) a fraction, the numerator of which
is equal to the amount of principal distributable on such Class of Sequential
Pay Certificates on such Distribution Date pursuant to Section 4.01(a), and the
denominator of which is equal to the Principal Distribution Amount for such
Distribution Date.
"Advance": Any P&I Advance or Servicing Advance.
"Adverse 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 Reduction Amount": The excess, if any, of (a) the sum of, as of
the Determination Date immediately succeeding the date on which a Required
Appraisal is obtained (without duplication), (i) the Stated Principal Balance of
the subject Required
<PAGE>
6
Appraisal Mortgage Loan, (ii) to the extent not previously advanced by or on
behalf of the Master Servicer, the Trustee or the Fiscal Agent, all unpaid
interest on the Required Appraisal Mortgage Loan through the most recent Due
Date prior to such Determination Date at a per annum rate equal to the related
Net Mortgage Rate, (iii) all accrued but unpaid Servicing Fees and Additional
Trust Fund Expenses in respect of such Required Appraisal Mortgage Loan, (iv)
all related unreimbursed Advances (plus accrued interest thereon) made by or on
behalf of the Master Servicer, the Special Servicer, the Trustee or the Fiscal
Agent with respect to such Required Appraisal Mortgage Loan and (v) all
currently due and unpaid real estate taxes and unfunded improvement reserves (in
each case net of any amounts escrowed therefor) and assessments, insurance
premiums, and, if applicable, ground rents in respect of the related Mortgaged
Property over (b) the Required Appraisal Value.
"Appraised Value": With respect to each Mortgaged Property, the appraised
value thereof based upon the most recent appraisal or update thereof that is
contained in the related Servicing File.
"Anticipated Repayment Date": For each ARD Loan, the date specified in the
related Mortgage Note after which the Mortgage Rate for such ARD Loan will
increase as specified in the related Mortgage Note.
"ARD Loan": Any Mortgage Loan that provides that if the unamortized
principal balance thereof is not repaid on its Anticipated Repayment Date, such
Mortgage Loan will accrue additional interest at the rate specified in the
related Mortgage Note and the Mortgagor is required to apply excess monthly cash
flow generated by the related Mortgaged Property to the repayment of the
outstanding principal balance on such Mortgage Loan.
"Assignment of Leases": With respect to any Mortgaged Property, any
assignment of leases, rents and profits or similar document or instrument
executed by the Mortgagor in connection with the origination of the related
Mortgage Loan.
"Assumed Final Distribution Date": For each Class of Regular Certificates,
the date so designated for such Class in the table in the Preliminary Statement.
"Assumed Scheduled Payment": With respect to any Balloon Mortgage Loan for
its Stated Maturity Date (provided that such Mortgage Loan has not been paid in
full on or before such date and no other Liquidation Event has occurred in
respect thereof) and for any subsequent Due Date therefor as of which such
Mortgage Loan remains outstanding and part of the Trust Fund, the scheduled
monthly payment of principal and/or interest deemed to be due in respect thereof
on such Due Date equal to the Scheduled Payment that would have been due in
respect of such Mortgage Loan on such Due Date if it had been required to
continue to pay in accordance with the amortization schedule in effect on the
Closing Date and without regard to the occurrence of its Stated Maturity Date.
With respect to any REO Loan, for any Due Date therefor as of which the related
REO Property remains part of the Trust Fund, the scheduled monthly payment of
principal and/or interest deemed to be due in respect thereof on such Due Date
equal to the Scheduled Payment that would have been due in respect of the
<PAGE>
7
predecessor Mortgage Loan on such Due Date had it remained outstanding (or, if
the predecessor Mortgage Loan was a Balloon Mortgage Loan and such Due Date
coincides with or follows what had been its Stated Maturity Date, the Assumed
Scheduled Payment that would have been deemed due in respect of the predecessor
Mortgage Loan on such Due Date had it remained outstanding).
"Authenticating Agent": Any authenticating agent appointed pursuant to
Section 8.12.
"Available Distribution Amount": With respect to any Distribution Date, an
amount equal to (a) the sum of, without duplication, (i) the aggregate of the
amounts on deposit in the Certificate Account and the Distribution Account as of
the close of business on the related Determination Date and the amounts
collected by or on behalf of the Master Servicer as of the close of business on
such Determination Date and required to be (but, as of such time, not yet)
deposited in the Certificate Account, (ii) the aggregate amount of any P&I
Advances made by the Master Servicer, the Trustee and the Fiscal Agent for
distribution on the Certificates on such Distribution Date pursuant to Section
4.03, (iii) the aggregate amount transferred from the REO Account (if
established) to the 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), and (iv) the aggregate amount deposited by the Master Servicer in the
Distribution Account for such Distribution Date pursuant to Section 3.19 in
connection with Prepayment Interest Shortfalls, net of (b) the portion of the
amount described in subclauses (a)(i) and (a)(iii) of this definition that
represents one or more of the following: (i) collected Monthly Payments that are
due on a Due Date following the end of the related Collection Period, (ii) any
amounts payable or reimbursable to any Person from the (A) Certificate Account
pursuant to clauses (ii) through (xiv) of Section 3.05(a) or (B) the
Distribution Account pursuant to clauses (ii) through (vii) of Section 3.05(b),
(iii) Prepayment Premiums and Yield Maintenance Charges, and (iv) any amounts
deposited in the Certificate Account or the Distribution Account in error.
"Balloon Mortgage Loan": Any Mortgage Loan that by its original terms or by
virtue of any modification entered into as of the Closing Date provides for an
amortization schedule extending beyond its Stated Maturity Date.
"Balloon Payment": With respect to any Balloon Mortgage Loan as of any date
of determination, the Scheduled Payment payable on the Stated Maturity Date of
such Mortgage Loan.
"Bankruptcy Code": The federal Bankruptcy Code, as amended from time to
time (Title 11 of the United States Code).
"Book-Entry Certificate": Any Certificate registered in the name of the
Depository or its nominee.
"Breach": As defined in Section 2.03(a).
<PAGE>
8
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York, New York or in each of the cities in which the
Corporate Trust Office of the Trustee or the offices of the Master Servicer (as
of the Closing Date, North Carolina) are located, are authorized or obligated by
law or executive order to remain closed.
"CERCLA": The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"Certificate": Any one of the First Union-Lehman Brothers Commercial
Mortgage Trust II, Commercial Mortgage Pass-Through Certificates, Series
1997-C2, as executed by the Certificate Registrar and authenticated and
delivered hereunder by the Authenticating Agent.
"Certificate Account": The segregated account or accounts created and
maintained by the Master Servicer pursuant to Section 3.04(a) on behalf of the
Trustee in trust for Certificateholders, which shall be entitled "First Union
National Bank, as Master Servicer for LaSalle National Bank, as Trustee, on
behalf of and in trust for the registered holders of First Union-Lehman Brothers
Commercial Mortgage Trust II, Commercial Mortgage Pass-Through Certificates,
Series 1997-C2".
"Certificate Factor": With respect to any Class of Regular Certificates
(other than the Class IO Certificates), as of any date of determination, a
fraction, expressed as a decimal carried to six places, the numerator of which
is the then current Class Principal Balance of such Class of Regular
Certificates, as the case may be, and the denominator of which is the related
Original Class Principal Balance.
"Certificate Notional Amount": With respect to any Class IO Certificate, as
of any date of determination, the then notional amount of such Certificate equal
to the product of (a) the Percentage Interest evidenced by such Certificate,
multiplied by (b) the then Class Notional Amount of the Class IO Certificates.
"Certificate Owner": With respect to a Book-Entry Certificate, the Person
who is the beneficial owner of such Certificate as reflected on the books of the
Depository or on the books of a Depository Participant or on the books of an
indirect participating brokerage firm for which a Depository Participant acts as
agent.
"Certificate Principal Balance": With respect to any Regular Certificate
(other than a Class IO 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.
<PAGE>
9
"Certificateholder": The Person in whose name a Certificate is registered
in the Certificate Register, except that (i) neither a Disqualified Organization
nor a Non-United States Person shall be Holder of a Residual 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,
either Mortgage Loan Seller, the Master Servicer, the Fiscal Agent, the Special
Servicer or the Trustee in its respective capacity as such (except with respect
to amendments referred to in Sections 3.20(d) and 11.01 hereof, any consent,
approval or waiver by, of or relating to the Majority Subordinate
Certificateholder and any election, removal or replacement of the Controlling
Class Representative), any Certificate registered in the name of the Depositor,
either Mortgage Loan Seller, the Master Servicer, the Special Servicer, the
Fiscal Agent or the Trustee, as the case may be, or any Certificate registered
in the name of any of its Affiliates, shall be deemed not to be outstanding, and
the Voting Rights to which it is entitled shall not be taken into account in
determining whether the requisite percentage of Voting Rights necessary to
effect any such consent, approval or waiver that relates to it has been
obtained. The Certificate Registrar shall be entitled to request and rely upon a
certificate of the Depositor, the Master Servicer or the Special Servicer in
determining whether a Certificate is registered in the name of an Affiliate of
such Person. All references herein to "Holders" or "Certificateholders" shall
reflect the rights of Certificate Owners as they may indirectly exercise such
rights through the Depository and the Depository Participants, except as
otherwise specified herein; provided, however, that the parties hereto shall be
required to recognize as a "Holder" or "Certificateholder" only the Person in
whose name a Certificate is registered in the Certificate Register.
"Class": Collectively, all of the Certificates bearing the same
alphabetical and, if applicable, numerical class designation.
"Class A Certificates": The Class A-1, Class A-2 and Class A-3
Certificates.
"Class A-1 Certificate": Any one of the Certificates with a "Class A-1"
designation on the face thereof, substantially in the form of Exhibit A-1
attached hereto, and evidencing a portion of a "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 portion of a "regular interest" in REMIC III
for purposes of the REMIC Provisions.
"Class A-3 Certificate": Any one of the Certificates with a "Class A-3"
designation on the face thereof, substantially in the form of Exhibit A-3
attached hereto, and evidencing a portion of a "regular interest" in REMIC III
for purposes of the REMIC Provisions.
<PAGE>
10
"Class B Certificate": Any one of the Certificates with a "Class B"
designation on the face thereof, substantially in the form of Exhibit A-5
attached hereto, and evidencing a portion of 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-6
attached hereto, and evidencing a portion of 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-7
attached hereto, and evidencing a portion of a "regular interest" in REMIC III
for purposes of the REMIC Provisions.
"Class E Certificate": Any one of the Certificates with a "Class E"
designation on the face thereof, substantially in the form of Exhibit A-8
attached hereto, and evidencing a portion of 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-9
attached hereto, and evidencing a portion of 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-10
attached hereto, and evidencing a portion of a "regular interest" in REMIC III
for purposes of the REMIC Provisions.
"Class H Certificate": Any of the Certificates with a "Class H" designation
on the face thereof, substantially in the form of Exhibit A-11 attached hereto,
and evidencing a portion of 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-4
attached hereto, and evidencing a portion of each of the Components, each of
which Components shall constitute a separate "regular interest" in REMIC III for
purposes of the REMIC Provisions.
"Class J Certificate": Any one of the Certificates with a "Class J"
designation on the face thereof, substantially in the form of Exhibit A-12
attached hereto, and evidencing a portion of a "regular interest" in REMIC III
for purposes of the REMIC Provisions.
"Class K Certificate": Any of the Certificates with a "Class K" designation
on the face thereof, substantially in the form of Exhibit A-13 attached hereto,
and evidencing a portion of a "regular interest" in REMIC III for purposes of
the REMIC Provisions.
"Class L Certificate": Any of the Certificates with a "Class L" designation
on the face thereof, substantially in the form of Exhibit A-14 attached hereto,
and evidencing a portion of a "regular interest" in REMIC III for purposes of
the REMIC Provisions.
<PAGE>
11
"Class M Certificate": Any of the Certificates with a "Class M"
designation on the face thereof, substantially in the form of Exhibit A-15
attached hereto, and evidencing a portion of a "regular interest" in REMIC III
for purposes of the REMIC Provisions.
"Class Notional Amount": The sum of the Component Notional Amounts of each
of the Components.
"Class Principal Balance": The aggregate principal amount of any Class of
Regular Certificates (other than the Class IO Certificates) outstanding as of
any date of determination. As of the Closing Date, the Class Principal Balance
of each such Class of Certificates shall equal the Original Class Principal
Balance thereof. On each Distribution Date, the Class Principal Balance of each
such Class of Certificates shall be reduced by the amount of any distributions
of principal made thereon on such Distribution Date pursuant to Section 4.01 or
9.01, as applicable, and shall be further reduced by the amount of any Realized
Losses and Additional Trust Fund Expenses allocated thereto on such Distribution
Date pursuant to Section 4.04(a).
"Class R-I Certificate": Any one of the Certificates with a "Class R-I"
designation on the face thereof, substantially in the form of Exhibit A-16
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-17
attached hereto, and evidencing the sole class of "residual interests" in REMIC
II for purposes of the REMIC Provisions.
"Class R-III Certificate": Any one of the Certificates with a "Class R-III"
designation on the face thereof, substantially in the form of Exhibit A-18
attached hereto, and evidencing the sole class of "residual interests" in REMIC
III for purposes of the REMIC Provisions.
"Closing Date": November 25, 1997.
"Code": The Internal Revenue Code of 1986.
"Collection Period": With respect to any Distribution Date, the period
commencing on the day 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.
"Comparative Financial Status Report": A report substantially containing
the content described in Exhibit N attached hereto, setting forth, among other
things, the occupancy, revenue, net operating income and Debt Service Coverage
Ratio for each Mortgage Loan or the related Mortgaged Property as of the last
day of the preceding calendar
<PAGE>
12
month immediately preceding the preparation of such report for each of three
periods (to the extent such information is available): (i) the most current
available year-to-date, (ii) the previous two full fiscal years, and (iii) the
"base year" (representing the original analysis of information used as of the
Cut-off Date). For the purposes of the Special Servicer's production of any such
report that is required to state information for any period prior to the Cut-off
Date, the Special Servicer may conclusively rely (without independent
verification), absent manifest error, on information provided to it by the
related Mortgage Loan Seller.
"Component": Each of Component IO-A-1, Component IO-A-2, Component IO-A-3,
Component IO-B, Component IO-C, Component IO-D, Component IO-E, Component IO-F,
Component IO-G, Component IO-H, Component IO-J, Component IO-K, Component IO-L,
Component IO-M and collectively, the "Components", each evidencing a separate
"regular interest" in REMIC III for purposes of the REMIC Provisions.
"Component IO-A-1": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest M as of any date of
determination.
"Component IO-A-2": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest N as of any date of
determination.
"Component IO-A-3": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest O as of any date of
determination.
"Component IO-B": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest P as of any date of
determination.
"Component IO-C": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest Q as of any date of
determination.
"Component IO-D": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest R as of any date of
determination.
"Component IO-E": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest S as of any date of
determination.
"Component IO-F": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest T as of any date of
determination.
<PAGE>
13
"Component IO-G": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest U as of any date of
determination.
"Component IO-H": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest V as of any date of
determination.
"Component IO-J": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest W as of any date of
determination.
"Component IO-K": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest X as of any date of
determination.
"Component IO-L": One of fourteen components of the Class IO Certificates
having a Component Notional Amount equal to the then current Uncertificated
Principal Balance of REMIC II Regular Interest Y as of any date of
determination.
"Component IO-M": One of the fourteen components of the Class IO
Certificates having a Component Notional Amount equal to the then current
Uncertificated Principal Balance of REMIC II Regular Interest Z as of any date
of determination.
"Component Notional Amount": The notional amount on which any of the
Components accrue interest.
"Controlling Class": As of any date of determination, the Class of
Certificates outstanding, other than the Residual Certificates or the Class IO
Certificates, (a) which bear the latest alphabetical Class designation and (b)
the Class Principal Balance of which is greater than 25% of the Original Class
Principal Balance thereof; provided, however, that if no such Class of
Certificates has a Class Principal Balance greater than 25% of its Original
Class Principal Balance, the Controlling Class shall be the outstanding Class of
Certificates (other than the Residual Certificates or the Class IO Certificates)
bearing the latest alphabetical Class designation. With respect to determining
the Controlling Class, the Class A-1, Class A-2 and Class A-3 Certificates shall
be deemed a single Class of Certificates.
"Controlling Class Representative": As defined in Section 6.09.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at 135 South LaSalle Street, Chicago,
Illinois 60603, Attention: Asset-Backed Securities Trust Services Group-First
Union-Lehman 1997-C2.
<PAGE>
14
"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".
"Credit Lease": With respect to each Credit Lease Loan, the lease agreement
between the Mortgagor as lessor and the Tenant as lessee of the related
Mortgaged Property.
"Credit Lease Loan": Each Mortgage Loan that is identified as a "Credit
Lease Loan" on the Mortgage Loan Schedule.
"CSSA Loan File Report": The monthly report in the "CSSA loan file" format
substantially containing the information called for therein for the Mortgage
Loans, a form of which is attached hereto as Exhibit W.
"CSSA Property File Report": The monthly report in the "CSSA property file"
format containing the information called for therein for each Mortgaged
Property, a form of which is attached hereto as Exhibit M, which for each
Distribution Date shall set forth certain information set forth therein as of
the end of the preceding calendar month.
"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. If no such
custodian has been appointed or if such custodian has been so appointed, but the
Trustee shall have terminated such appointment, then the Trustee shall be the
Custodian.
"Cut-off Date": November 1, 1997.
"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 unscheduled payments of principal received on or before such
date and the principal component of all Scheduled Payments due on or before such
date, whether or not received.
"DCR": Duff & Phelps Credit Rating Co. or its successor in interest. If
neither such rating agency nor any successor remains in existence, "DCR" shall
be deemed to refer to such other nationally recognized statistical rating agency
or other comparable Person designated by the Depositor, notice of which
designation shall be given to the Trustee, the Fiscal Agent, the Master Servicer
and the Special Servicer, and specific ratings of Duff & Phelps Credit Rating
Co. herein referenced shall be deemed to refer to the equivalent ratings of the
party so designated.
"Debt Service Coverage Ratio": With respect to any Mortgage Loan, as of any
date of determination, the ratio of (x) the annualized Net Operating Income
(before payment of any debt service on such Mortgage Loan) generated by the
related Mortgaged Property during the most recently ended period of not less
than six months and not more than twelve months for which financial statements,
if available (whether or not audited) have been received
<PAGE>
15
by or on behalf of the related Mortgage Loan Seller (prior to the Closing Date)
or the Master Servicer or the Special Servicer (following the Closing Date), to
(y) twelve times the amount of the Monthly Payment in effect for such Mortgage
Loan as of such date of determination.
"Defaulted Mortgage Loan": A Mortgage Loan (i) that is delinquent in an
amount equal to at least two Monthly Payments (not including the Balloon
Payment) or is delinquent thirty days or more in respect of its Balloon Payment,
in either case such delinquency to be determined without giving effect to any
grace period permitted by the related Mortgage or Mortgage Note and without
regard to any acceleration of payments under the related Mortgage and Mortgage
Note, or (ii) as to which the Master Servicer or the Special Servicer has, by
written notice to the related Mortgagor, accelerated the maturity of the
indebtedness evidenced by the related Mortgage Note.
"Defeasance Collateral": With respect to any Defeasance Loan, the United
States Treasury obligations required or permitted to be pledged in lieu of
prepayment pursuant to the terms thereof.
"Defeasance Loan": Any Mortgage Loan which requires the related Mortgagor
(or permits the holder of such Mortgage Loan to require the related Mortgagor)
to pledge Defeasance Collateral to such holder in lieu of prepayment.
"Definitive Certificate": As defined in Section 5.03(a).
"Delinquent Loan Status Report": A report substantially containing the
content described in Exhibit Q attached 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 were in foreclosure but were not REO
Property.
"Depositor": First Union Commercial Mortgage Securities, 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 Securities Exchange Act of 1934, as amended.
"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.
<PAGE>
16
"Determination Date": With respect to any Distribution Date, the 10th day
of the month in which such Distribution Date occurs, or if such 10th day is not
a Business Day, the Business Day immediately preceding.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale or lease,
the performance of any construction work thereon or any use of such REO Property
in a trade or business conducted by REMIC I other than through an Independent
Contractor; provided, however, that the Trustee (or the Special Servicer or any
Sub-Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Special Servicer or
any Sub-Servicer on behalf of the Trustee) establishes rental terms, chooses
tenants, enters into or renews leases, deals with taxes and insurance, or makes
decisions as to repairs or capital expenditures with respect to such REO
Property.
"Discount Rate": With respect to any prepaid Mortgage Loan or REO Loan for
purposes of allocating any Prepayment Premium or Yield Maintenance Charge
received thereon or with respect thereto among the respective Classes of the
Sequential Pay Certificates (other than any Excluded Class thereof), an amount
equal to the yield (when compounded monthly) on the U.S. Treasury issue (primary
issue) with a maturity date closest to the maturity date for such prepaid
Mortgage Loan or REO Loan. In the event there are two such U.S. Treasury issues
(a) with the same coupon, the issue with the lower yield shall apply, and (b)
with maturity dates equally close to the maturity date for the prepaid Mortgage
Loan or REO Loan, the issue with the earliest maturity date shall apply.
"Disqualified Organization": Any of the following: (i) the United States or
a possession thereof, any State or any political subdivision thereof, or any
agency or instrumentality of any of the foregoing (other than an instrumentality
which is a corporation if all of its activities are subject to tax and, except
for FHLMC, a majority of its board of directors is not selected by any such
governmental unit), (ii) a foreign government, international organization, or
any agency or instrumentality of either of the foregoing, (iii) any organization
(except certain farmers' cooperatives described in Section 521 of the Code)
which is exempt from the tax imposed by Chapter 1 of the Code (unless such
organization is subject to the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381 of the Code or (v) any other Person so
designated by the Trustee or the Certificate Registrar 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.
<PAGE>
17
"Distributable Certificate Interest": With respect to any Class of Regular
Certificates for any Distribution Date, the Accrued Certificate Interest in
respect of such Class of Certificates for such Distribution Date, reduced (to
not less than zero) by the product of (i) any Net Aggregate Prepayment Interest
Shortfall for such Distribution Date, multiplied by (ii) a fraction, expressed
as a decimal, the numerator of which is the Accrued Certificate Interest in
respect of such Class of Certificates for such Distribution Date, and the
denominator of which is the aggregate Accrued Certificate Interest in respect of
all the Classes of Regular Certificates for such Distribution Date.
"Distribution Account": The segregated account or accounts created and
maintained by the Paying Agent on behalf of the Trustee pursuant to Section
3.04(b) which shall be entitled "LaSalle National Bank, as Trustee, in trust for
the registered holders of First Union-Lehman Brothers Commercial Mortgage Trust
II, Commercial Mortgage Pass-Through Certificates, Series 1997-C2"
"Distribution Date": The 18th day of any month, or if such 18th day is not
a Business Day, the Business Day immediately following, commencing on December
18, 1997.
"Distribution Date Statement": As defined in Section 4.02(a).
"Document Defect": As defined in Section 2.03(a).
"Due Date": With respect to (i) any Mortgage Loan on or prior to its Stated
Maturity Date, the day of the month set forth in the related Mortgage Note on
which each Monthly Payment on such Mortgage Loan is scheduled to be first due;
(ii) any Mortgage Loan after its Stated Maturity Date, the day of the month set
forth in the related Mortgage Note on which each Monthly Payment on such
Mortgage Loan had been scheduled to be first due; and (iii) any REO Loan, the
day of the month set forth in the related Mortgage Note on which each Monthly
Payment on the related Mortgage Loan had been scheduled to be first due.
"Effective REMIC I Remittance Rate": With respect to any REMIC I Regular
Interest, for any Distribution Date, (a) if such REMIC I Regular Interest
accrues interest on the basis of a 360-day year consisting of twelve 30-day
months (a "30/360 basis"), the related REMIC I Remittance Rate for such REMIC I
Regular Interest; and (b) if such REMIC I Regular Interest accrues interest
other than on a 30/360 basis, the annualized rate at which interest would have
to accrue on the related Uncertificated Principal Balance immediately prior to
such Distribution Date on a 30/360 basis during the most recently ended calendar
month in order to produce the actual amount of Uncertificated Accrued Interest
in respect of such REMIC I Regular Interest for such Distribution Date.
"Eligible Account": Any of (i) an account maintained with a federal or
state chartered depository institution or trust company, and with respect to
deposits held for 30 days or more in such account the (a) long-term deposit or
unsecured debt obligations of (or of such institution's parent holding company)
which are rated "AA" by DCR (if then rated by DCR), "AA-" by Standard & Poor's,
and "A2" by Moody's (if then rated by Moody's) or such lower
<PAGE>
18
rating as will not result in qualification, downgrading or withdrawal of the
ratings then assigned to the Certificates, as evidenced in writing by the Rating
Agencies, at any time such funds are on deposit therein, or with respect to
deposits held for less than 30 days in such account the (b) short-term deposits
of which (or of such institution's parent holding company) are rated D-1+, P-1
and A-1 by DCR (if then rated by DCR), Moody's (if then rated by Moody's) and
Standard & Poor's, respectively, or such lower rating as will not result in
qualification, downgrading or withdrawal of the ratings then assigned to the
Certificates, as evidenced in writing by the Rating Agencies at any time such
funds are on deposit therein, or (ii) a segregated trust account or accounts
maintained with a federal or state chartered depository institution or trust
company acting in its fiduciary capacity, which, in the case of a state
chartered depository institution or trust company, is subject to regulations
regarding fiduciary funds on deposit therein substantially similar to 12 CFR ss.
9.10(b), having in either case a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority, or 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, as confirmed in writing by each Rating Agency.
"Environmental Assessment": A "Phase I assessment" as described in and
meeting the criteria of Chapter 5 of the FNMA Multifamily Guide and an ASTM
Standard for Environmental Site Assessments, each as amended from time to time.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"Escrow Payment": Any payment received by the Master Servicer or the
Special Servicer for the account of any Mortgagor for application toward the
payment of real estate taxes, assessments, insurance premiums, ground rents (if
applicable) and other items for which an escrow or reserve has been created in
respect of the related Mortgaged Property.
"Event of Default": One or more of the events described in Section 7.01(a).
"Exchange Act": Securities Exchange Act of 1934, as amended.
"Excluded Class": Any Class of Sequential Pay Certificates other than the
Class A-1 Certificates, Class A-2 Certificates, Class A-3 Certificates, Class B
Certificates, Class C Certificates, Class D Certificates, Class E Certificates,
Class F Certificates and Class G Certificates.
"FDIC": 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 either
Mortgage Loan Seller
<PAGE>
19
pursuant to the related Mortgage Loan Purchase Agreement, by the Majority
Subordinate Certificateholder pursuant to Section 3.18(b), by the Master
Servicer or the Special Servicer pursuant to Section 3.18(c) or by the
Depositor, the Master Servicer, the Special Servicer, an Underwriter or the
Majority Subordinate Certificateholder pursuant to Section 9.01) that there has
been a recovery of all Insurance Proceeds, Liquidation Proceeds and other
payments or recoveries that the Special Servicer has determined, in accordance
with the Servicing Standard, will be ultimately recoverable.
"First Union Capital": First Union Capital Markets Corp. or its successor
in interest.
"Fiscal Agent": ABN AMRO Bank N.V., a Netherlands banking corporation in
its capacity as fiscal agent of the Trustee, or its successor in interest, or
any successor fiscal agent appointed as herein provided.
"FNMA": Federal National Mortgage Association or any successor.
"Ground Lease": With respect to any Mortgage Loan for which the Mortgagor
has a leasehold interest in the related Mortgaged Property, the lease agreement
creating such leasehold interest.
"Guaranty": With respect to a Credit Lease Loan, a guaranty agreement
executed by an affiliate of the related Tenant that guarantees the Tenant's
obligations under the related Credit Lease.
"Hazardous Materials": Any dangerous, toxic or hazardous pollutants,
chemicals, wastes, or substances, including, without limitation, those so
identified pursuant to CERCLA or any other federal, state or local environmental
related laws and regulations now existing or hereafter enacted, and specifically
including, without limitation, asbestos and asbestos-containing materials,
polychlorinated biphenyls ("PCBs"), radon gas, petroleum and petroleum products
and urea formaldehyde.
"Historical Loan Modification Report": A report substantially containing
the content described in Exhibit R attached 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 related Collection
Period and (ii) since the Cut-off Date, showing the original and the revised
terms thereof.
"Historical Loss Estimate Report": A report substantially containing the
content described in Exhibit S attached 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 and expenses relating to each Final Recovery Determination
made, both during the related Collection Period and historically, and
<PAGE>
20
(ii) the amount of Realized Losses occurring during the related Collection
Period, set forth on a Mortgage Loan-by-Mortgage Loan basis.
"Holder": A Certificateholder.
"HUD-Approved Servicer": A servicer approved by the Secretary of Housing
and Urban Development pursuant to Section 207 of the National Housing Act.
"Impound Reserve": As defined in Section 3.16(c) hereof.
"Independent": When used with respect to any specified Person, any such
Person who (i) is in fact independent of the Depositor, the Mortgage Loan
Sellers, the Master Servicer, the Special Servicer and any and all Affiliates
thereof, (ii) does not have any direct financial interest in or any material
indirect financial interest in any of the Depositor, the Master Servicer, the
Special Servicer or any Affiliate thereof, and (iii) is not connected with the
Depositor, the Master Servicer, the Special Servicer or any Affiliate thereof as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions; provided, however, that a Person shall not
fail to be Independent of the Depositor, the Master Servicer, the Special
Servicer or any Affiliate thereof merely because such Person is the beneficial
owner of 1% or less of any class of securities issued by the Depositor, the
Master Servicer, the Special Servicer or any Affiliate thereof, as the case may
be.
"Independent Appraiser": An Independent professional real estate appraiser
who is a member in good standing of the Appraisal Institute, and, if the State
in which the subject Mortgaged Property is located certifies or licenses
appraisers, certified or licensed in such State, and in each such case, who has
a minimum of five years experience in the subject property type and market.
"Independent Contractor": Any Person that would be an "independent
contractor" with respect to REMIC I within the meaning of Section 856(d)(3) of
the Code if REMIC I were a real estate investment trust (except that the
ownership test set forth in that section shall be considered to be met by any
Person that owns, directly or indirectly, 35 percent or more of any Class of
Certificates, or such other interest in any Class of Certificates as is set
forth in an Opinion of Counsel, which shall be at no expense to the Master
Servicer, the Special Servicer, the Trustee or the Trust Fund, delivered to the
Trustee), so long as REMIC I does not receive or derive any income from such
Person and provided that the relationship between such Person and REMIC I is at
arm's length, all within the meaning of Treasury Regulations Section
1.856-4(b)(5), or any other Person upon receipt by the Trustee of an Opinion of
Counsel, which shall be at no expense to the Master Servicer, the Special
Servicer, the Trustee or the Trust Fund, to the effect that the taking of any
action in respect of any REO Property by such Person, subject to any conditions
therein specified, that is otherwise herein contemplated to be taken by an
Independent Contractor will not cause such REO Property to cease to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code, or
cause any income realized in respect of such REO Property to fail to qualify as
Rents from Real Property.
<PAGE>
21
"Insurance Policy": With respect to any Mortgage Loan, any hazard insurance
policy, flood insurance policy, title policy or other insurance policy that is
maintained from time to time in respect of such Mortgage Loan or the related
Mortgaged Property.
"Insurance Proceeds": Proceeds paid under any Insurance Policy, to the
extent such proceeds are not applied to the restoration of the related Mortgaged
Property, released to the Mortgagor, or any tenants or ground lessors, as the
case may be, pursuant to the terms of the related Mortgage or lease, in
accordance with the Servicing Standard.
"Interested Person": The Depositor, the Mortgage Loan Sellers, the Master
Servicer, the Special Servicer, any Holder of a Certificate, or any Affiliate of
any such Person.
"Investment Account": As defined in Section 3.06(a).
"Issue Price": With respect to each Class of Certificates, the "issue
price" as defined in the Code and Treasury regulations promulgated thereunder.
"Late Collections": With respect to any Mortgage Loan, all amounts received
thereon during any Collection Period, other than Penalty Interest, whether as
payments, Insurance Proceeds, Liquidation Proceeds or otherwise, which represent
late collections of the principal and/or interest portions of a Scheduled
Payment (other than a Balloon Payment) or an Assumed Scheduled Payment in
respect of such Mortgage Loan due or deemed due on a Due Date in a previous
Collection Period, or on a Due Date coinciding with or preceding the Cut-off
Date, and not previously recovered. With respect to any REO Loan, all amounts
received in connection with the related REO Property during any Collection
Period, whether as Insurance Proceeds, Liquidation Proceeds, REO Revenues or
otherwise, which represent late collections of the principal and/or interest
portions of a Scheduled Payment (other than a Balloon Payment) or an Assumed
Scheduled Payment in respect of the predecessor Mortgage Loan or of an Assumed
Scheduled Payment in respect of such REO Loan due or deemed due on a Due Date in
a previous Collection Period and not previously recovered.
"Lease Enhancement Policy": With respect to a Credit Lease Loan, any
non-cancelable residual value insurance policy or credit lease enhancement
insurance policy that insures against certain losses arising out of casualty
and/or condemnation of the related Mortgaged Property.
"Lease Enhancement Policy Issuer": With respect to any Lease Enhancement
Policy, Chubb Custom Insurance Company together with any assignee, successor or
subsequent insurer thereunder.
"Lease Enhancement Policy Termination Event": With respect to any Lease
Enhancement Policy, any abatement, rescission, cancellation, termination,
contest, legal process, arbitration or disavowal of liability.
<PAGE>
22
"Legal Final Distribution Date": With respect to (i) the REMIC I Regular
Interests, November 18, 2029, (ii) the REMIC II Regular Interests, November 18,
2029, and (iii) the Regular Certificates, November 18, 2029.
"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 a Mortgage Loan Seller pursuant to the related 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 Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder pursuant to Section 9.01. With
respect to any REO Property (and the related REO Loan), any of the following
events: (i) a Final Recovery Determination is made with respect to such REO
Property; or (ii) such REO Property is purchased by the Depositor or the Master
Servicer pursuant to Section 9.01.
"Liquidation Proceeds": All cash amounts (other than Insurance Proceeds and
REO Revenues) received by the Master Servicer or the Special Servicer in
connection with: (i) the taking of all or a part of a Mortgaged Property or REO
Property by exercise of the power of eminent domain or condemnation, subject,
however, to the rights of any tenants and ground lessors, as the case may be,
and the terms of the related Mortgage; (ii) the liquidation of a Mortgaged
Property or other collateral constituting security for a defaulted Mortgage
Loan, through trustee's sale, foreclosure sale, REO Disposition or otherwise,
exclusive of any portion thereof required to be released to the related
Mortgagor in accordance with applicable law and the terms and conditions of the
related Mortgage Note and Mortgage; (iii) the realization upon any deficiency
judgment obtained against a Mortgagor; (iv) the purchase of a Defaulted Mortgage
Loan by the Majority Subordinate Certificateholder pursuant to Section 3.18(b)
or by the Master Servicer or the Special Servicer pursuant to Section 3.18(c) or
any other sale thereof pursuant to Section 3.18(d); (v) the repurchase of a
Mortgage Loan by a Mortgage Loan Seller pursuant to the related Mortgage Loan
Purchase Agreement; or (vi) the purchase of a Mortgage Loan or REO Property by
the Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc.
or the Majority Subordinate Certificateholder pursuant to Section 9.01.
"Loan Payoff Notification Report": A report substantially containing the
content described in Exhibit V attached hereto setting forth among other things
for each Mortgage Loan where notice of anticipated payoff has been received as
of the Determination Date immediately preceding the preparation of such report
the control number, the property name, the amount of principal expected to be
paid, the expected date of payment and the estimated amount of Yield Maintenance
Charge or Prepayment Premium due.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, as of any date of
determination, a fraction, expressed as a percentage, the numerator of which is
the then current principal amount of such Mortgage Loan, and the denominator of
which is the Appraised Value of the related Mortgaged Property.
<PAGE>
23
"Lockout Period": With respect to any Mortgage Note that prohibits the
Mortgagor from prepaying such Mortgage Loan until a date specified in such
Mortgage Note, the period from the Closing Date until the such specified date.
"Majority Subordinate Certificateholder": As of any date of determination,
any single Holder of Certificates entitled to greater than 50% of the Voting
Rights allocated to the Class of Sequential Pay Certificates with the latest
alphabetical Class designation then outstanding; provided, however, that if
there is no Holder of Certificates entitled to greater than 50% of the Voting
Rights of such Class, the single Holder of Certificates with the largest
percentage of Voting Rights allocated to such Class. With respect to determining
the Majority Subordinate Certificateholder, the Class A-1, Class A-2 and Class
A-3 Certificates shall be deemed to be a single Class of Certificates, with such
Voting Rights allocated among the Holders of Certificates of such Classes in
proportion to the respective Certificate Principal Balances of such Certificates
as of such date of determination.
"Master Servicer": First Union National Bank, its successor in interest
(including the Trustee as successor pursuant to Section 7.02), or any successor
master servicer appointed as herein provided.
"Master Servicing Fee": With respect to each Mortgage Loan and REO Loan,
the fee payable to the Master Servicer pursuant to Section 3.11(a).
"Master Servicing Fee Rate": With respect to each Mortgage Loan, the
percentage set forth under the column "Master Servicing Fee Rate" on the
Mortgage Loan Schedule that corresponds to such Mortgage Loan.
"Monthly Payment": With respect to any Mortgage Loan as of any Due Date,
the scheduled monthly payment of principal and interest or interest only on such
Mortgage Loan, including any Balloon Payment, that is actually payable by the
related Mortgagor from time to time under the terms of the related Mortgage Note
(as such terms may be changed or modified in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or by reason of a
modification, waiver or amendment granted or agreed to by the Special Servicer
pursuant to Section 3.20).
"Moody's": Moody's Investors Service, Inc. or its successor in interest. If
neither such rating agency nor any successor remains in existence, "Moody's"
shall be deemed to refer to such other nationally recognized statistical rating
agency or other comparable Person designated by the Depositor, notice of which
designation shall be given to the Trustee, the Fiscal Agent, the Master Servicer
and the Special Servicer, and specific ratings of Moody's Investors Service,
Inc. herein referenced shall be deemed to refer to the equivalent ratings of the
party so designated.
"Mortgage": With respect to any Mortgage Loan, the mortgage, deed of trust,
deed to secure debt or similar instrument that secures the Mortgage Note and
creates a lien on the related Mortgaged Property.
<PAGE>
24
"Mortgage File": With respect to any Mortgage Loan, collectively the
following documents:
(i) the original executed Mortgage Note (or a lost note affidavit
and indemnity with a copy of such Mortgage Note atatched
thereto) together with any intervening endorsements thereon,
endorsed (without recourse, representation or warranty, express
or implied) to the order of LaSalle National Bank, as trustee
for the registered holders of First Union-Lehman Brothers
Commercial Mortgage Trust II, Commercial Mortgage Pass-Through
Certificates, Series 1997-C2 or in blank;
(ii) an original or copy of the Mortgage and any intervening
assignments thereof, in each case with evidence of recording
indicated thereon;
(iii) an original or copy of any related Assignment of Leases together
with any intervening assignments (with recording information
indicated thereon), if such item is a document separate from the
Mortgage;
(iv) an original executed assignment, in recordable form, of (a) the
Mortgage, (b) any related Assignment of Leases (if such item is
a document separate from the Mortgage) and (c) any other
recorded document relating to the Mortgage Loan otherwise
included in the Mortgage File, in favor of LaSalle National
Bank, as trustee for the registered holders of First
Union-Lehman Brothers Commercial Mortgage Trust II, Commercial
Mortgage Pass-Through Certificates, Series 1997-C2 in recordable
form;
(v) an original assignment of all unrecorded documents relating to
the Mortgage Loan, in favor of LaSalle National Bank, as trustee
for the registered holders of First Union-Lehman Brothers
Commercial Mortgage Trust II, Commercial Mortgage Pass-Through
Certificates, Series 1997-C2;
(vi) originals or copies of any written modification agreements in
those instances where the terms or provisions of the Mortgage or
Mortgage Note have been modified;
(vii) the original or a copy of the policy or certificate of lender's
title insurance issued on the date of the origination of such
Mortgage Loan, or, if such policy has not been issued, an
irrevocable, binding commitment to issue such title insurance
policy; and
(viii) any filed copies (with evidence of filing) of any prior UCC
Financing Statements in favor of the originator of such Mortgage
Loan or in favor of any assignee prior to the Trustee (but only
to the extent the related
<PAGE>
25
Mortgage Loan Seller had possession of such UCC Financing
Statements prior to the Closing Date) and, if there is an
effective UCC Financing Statement in favor of the Mortgage Loan
Seller on record with the applicable public office for UCC
Financing Statements, an original UCC-2 or UCC-3 assignment, in
form suitable for filing, as appropriate, in favor of LaSalle
National Bank, as trustee for the registered holders of First
Union-Lehman Brothers Commercial Mortgage Trust II, Commercial
Mortgage Pass-Through Certificates, Series 1997-C2; and
(ix) an original or copy of any Ground Lease, any Credit Lease and
any Lease Enhancement Policy or Guaranty.
provided that whenever the term "Mortgage File" is used to refer to documents
actually received by the Trustee or by a Custodian on its behalf, such term
shall not be deemed to include such documents required to be included therein
unless they are actually so received, and with respect to any receipt or
certification by the Trustee or the Custodian for documents described in clause
(vi) of this definition, shall be deemed to include only such documents to the
extent the Trustee or Custodian has actual knowledge of their existence.
"Mortgage Loan": Each of the mortgage loans listed on the Mortgage Loan
Schedule and from time to time held in the Trust Fund. As used herein, the term
"Mortgage Loan" includes the related Mortgage Note, Mortgage, any Lease
Enhancement Policy and other security documents contained in the related
Mortgage File.
"Mortgage Loan Purchase Agreements": Those certain Mortgage Loan Purchase
Agreements, each dated as of November 1, 1997, between the Depositor and the
respective Mortgage Loan Seller and relating to the transfer of the related
Mortgage Loans to the Depositor.
"Mortgage Loan Schedule": The list of Mortgage Loans transferred on the
Closing Date to the Trustee as part of REMIC I, attached hereto as Exhibit B and
in a computer readable format. Such list shall set forth the following
information with respect to each Mortgage Loan:
(i) the Mortgage Loan number;
(ii) the street address (including city, state and zip code) 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 original Mortgage Rate;
<PAGE>
26
(vi) the (A) remaining term to stated maturity and (B) the Stated
Maturity Date;
(vii) in the case of a Balloon Mortgage Loan, the remaining
amortization term;
(viii) whether the Mortgage Loan is secured by a Ground Lease;
(ix) the Master Servicing Fee Rate and Additional Servicing Fee Rate,
if any;
(x) whether such Mortgage Loan is an ARD Loan and if so the
Anticipated Repayment Date for such ARD Loan;
(xi) whether the Mortgage Loan is an Actual-360 Mortgage Loan; and
(xii) the related Mortgage Loan Seller.
(xiii) whether the Mortgage Loan is a Credit Lease Loan and if so, the
related Tenant or guarantor of such Credit Lease Loan;
(xiv) whether such Mortgage Loan is insured by a Lease Enhancement
Policy and if so whether such policy is a residual value
insurance policy; and
(xv) the debt service coverage ratio and loan to value ratio
(calculated in each case as set forth in the Prospectus
Supplement).
"Mortgage Loan Seller": Each of First Union National Bank or its successor
in interest and Lehman Brothers Holdings Inc., doing business as Lehman Capital,
a Division of Lehman Brothers Holdings Inc., or its successor in interest.
"Mortgage Note": The original executed note evidencing the indebtedness of
a Mortgagor under a Mortgage Loan, together with any rider, addendum or
amendment thereto, or any renewal, substitution or replacement of such note.
"Mortgage Pool": Collectively, all of the Mortgage Loans and any successor
REO Loans.
"Mortgage Rate": With respect to (i) any Mortgage Loan on or prior to its
Stated Maturity Date (or, in the case of an ARD Loan, on or prior to its
Anticipated Repayment Date), the annualized rate at which interest is scheduled
(in the absence of a default) to accrue on such Mortgage Loan from time to time
in accordance with the related Mortgage Note and applicable law; (ii) any
Mortgage Loan after its Stated Maturity Date or any ARD Loan after its
Anticipated Repayment Date, the annualized rate described in clause (i) above
determined without regard to the passage of such Maturity Date or Anticipated
Repayment Date, as the case may be, but giving effect to any modification
thereof as contemplated by Section 3.20; and (iii) any REO Loan, the
<PAGE>
27
annualized rate described in clause (i) or (ii), as applicable, above determined
as if the predecessor Mortgage Loan had remained outstanding; provided however
with respect to the Mountain View Apartments Mortgage Loan which accrues
interest at an adjustable interest rate the Mortgage Rate will be deemed to
equal 7.50% per annum.
"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.
"Mountain View Apartment Mortgage Loan" The Mortgage Loan secured by a
Mortgaged Property that is identified as "Mountain View Apartments" on the
Mortgage Loan Schedule.
"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
Certificate Account for such Distribution Date pursuant to Section 3.19 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 sum of the Trustee Fee Rate, the related Master Servicing Fee
Rate and the Additional Servicing Fee Rate, if any.
"Net Operating Income": As defined in and determined in accordance with the
provisions of Exhibit E attached hereto.
"New Lease": Any lease of REO Property entered into on behalf of REMIC I,
including any lease renewed, modified or extended on behalf of REMIC I if REMIC
I has the right to renegotiate the terms of such lease.
<PAGE>
28
"NOI Adjustment Worksheet": A report prepared by the Special Servicer,
substantially containing the content described in Exhibit T attached hereto,
presenting the computations made in accordance with the methodology described in
Exhibit T to "normalize" the full year net operating income and debt service
coverage numbers used in the other reports required by this Agreement, delivered
to the Master Servicer with each annual operating statement for a Mortgaged
Property pursuant to Section 3.12(b).
"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 REO Loan that, as determined in
accordance with the Servicing Standard by the Master Servicer, the Trustee or
the Fiscal Agent with respect to any P&I Advance it respectively has made or is
obligated to make, will not be ultimately recoverable from late payments,
Insurance Proceeds or Liquidation Proceeds, or any other recovery on or in
respect of such Mortgage Loan or REO Loan.
"Nonrecoverable Servicing Advance": Any Servicing Advance previously made
or proposed to be made in respect of a Mortgage Loan or REO Property that, as
determined in accordance with the Servicing Standard by the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent with respect to any Servicing
Advance it respectively has made or is obligated to make, will not be ultimately
recoverable from late payments, Insurance Proceeds, Liquidation Proceeds, or any
other recovery on or in respect of such Mortgage Loan or REO Property.
"Non-Registered Certificate": Unless and until registered under the
Securities Act, any Class F, Class G, Class H, Class J, Class K, Class L, Class
M, Class R-I, Class R-II or Class R-III Certificate.
"Non-United States Person": Any person other than a United States Person.
"Officers' Certificate": A certificate signed by a Servicing Officer of the
Master Servicer or the Special Servicer, as the case may be, or by a Responsible
Officer of the Trustee or the Fiscal Agent, as the case may be.
"Operating Statement Analysis": With respect to each Mortgage Loan and REO
Mortgaged Property, a report prepared by the Special Servicer substantially
containing the content described in Exhibit U attached hereto.
"Opinion of Counsel": A written opinion of counsel (which counsel shall be
Independent of the Depositor, the Master Servicer and the Special Servicer)
acceptable to and delivered to the Trustee or the Master Servicer, as the case
may be.
"Original Class Notional Amount": $2,203,502,325.
<PAGE>
29
"Original Class Principal Balance": With respect to any Class of Regular
Certificates (other than the Class IO Certificates), the initial Class Principal
Balance thereof as of the Closing Date, in each case as specified in the
Preliminary Statement.
"OTS": The Office of Thrift Supervision or any successor thereto.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate as the Holder thereof and any other interest
therein, whether direct or indirect, legal or beneficial, as owner or as
pledgee.
"Pass-Through Rate": With respect to:
(i) the Class A-1 Certificates for any Distribution Date, 6.479%;
(ii) the Class A-2 Certificates for any Distribution Date, 6.600%;
(iii) the Class A-3 Certificates for any Distribution Date, 6.650%;
(iv) the Class B Certificates for any Distribution Date, 6.790%;
(v) the Class C Certificates for any Distribution Date, 7.020%;
(vi) the Class D Certificates for any Distribution Date, 7.120%;
(vii) the Class E Certificates for any Distribution Date, 7.120%;
(viii) the Class F Certificates for any Distribution Date, the lesser of
7.500% and the Weighted Average Effective REMIC I Remittance Rate
for such Distribution Date;
(ix) the Class G Certificates for any Distribution Date, the lesser of
7.500% and the Weighted Average Effective REMIC I Remittance Rate
for such Distribution Date;
(x) the Class H Certificates for any Distribution Date, the lesser of
7.500% and the Weighted Average Effective REMIC I Remittance Rate
for such Distribution Date;
(xi) the Class J Certificates for any Distribution Date, the lesser of
6.000% and the Weighted Average Effective REMIC I Remittance Rate
for such Distribution Date;
(xii) the Class K Certificates for any Distribution Date, the lesser of
6.000% and the Weighted Average Effective REMIC I Remittance Rate
for such Distribution Date; and
<PAGE>
30
(xiii) the Class L Certificates for any Distribution Date, the lesser of
6.000% and the Weighted Average Effective REMIC I Remittance Rate
for such Distribution Date;
(xiv) the Class M Certificates for any Distribution Date, the lesser of
6.000% and the Weighted Average Effective REMIC I Remittance Rate
for such Distribution Date; and
(xv) each Component for any Distribution Date, the Weighted Average
Effective REMIC I Remittance Rate minus the Pass-Through Rate
applicable to the Class of Sequential Pay Certificates whose
alphabetical (and, if applicable, numerical) Class designation is
included in the designation of such Component.
"Paying Agent": The paying agent appointed pursuant to Section 8.13. If no
such paying agent has been appointed or if such paying agent has been so
appointed, but the Trustee shall have terminated such appointment, then the
Trustee shall be the Paying Agent.
"Penalty Interest": With respect to any Mortgage Loan (or successor REO
Loan), any amounts collected thereon, other than late payment charges, or
Prepayment Premiums or Yield Maintenance Charges, that represent penalty
interest (arising out of a default) in excess of interest on the Stated
Principal Balance of such Mortgage Loan (or successor REO Loan) accrued at the
related Mortgage Rate.
"Percentage Interest": With respect to any 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 of such Certificate as of the Closing Date, as specified on the
face thereof, and the denominator of which is the Original Class Principal
Balance or Original Class Notional Amount 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 (including obligations or securities of the Trustee if otherwise
qualifying hereunder):
(i) direct obligations of, or obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any
agency or instrumentality thereof (having original maturities of not
more than 365 days), provided such obligations are backed by the
full faith and credit of the United States. Such obligations must be
limited to those instruments that have a predetermined fixed dollar
amount of principal due at maturity that cannot vary or change. If
rated, such an obligation must not have an "r" highlighter affixed
to its rating by Standard & Poor's. Interest may either by fixed or
variable. If such interest is variable, interest must be tied to a
single interest rate index
<PAGE>
31
plus a single fixed spread (if any), and move proportionately with
that index;
(ii) repurchase obligations with respect to any security described in
clause (i) above (having original maturities of not more than 365
days), provided that the short-term deposit or debt obligations, of
the party agreeing to repurchase such obligations are rated in the
highest rating category of each of DCR, if rated by DCR, Moody's and
Standard & Poor's or such lower rating as will not result in
qualification, downgrading or withdrawal of the ratings then
assigned to the Certificates, as evidenced in writing by the Rating
Agencies. In addition, any such item must not have an "r"
highlighter affixed to its rating by Standard & Poor's, and its
terms must have a predetermined fixed dollar amount of principal due
at maturity that cannot very or change. Interest may either by fixed
or variable. If such interest is variable, interest must be tied to
a single interest rate index plus a single fixed spread (if any),
and move proportionately with that index.
(iii) certificates of deposit, time deposits, demand deposits and bankers'
acceptances of any bank or trust company organized under the laws of
the United States or any state thereof (having original maturities
of not more than 365 days), the short term obligations of which are
rated in the highest rating category of each of DCR, if rated by
DCR, Moody's and Standard & Poor's or such lower rating as will not
result in qualification, downgrading or withdrawal of the ratings
then assigned to the Certificates, as evidenced in writing by the
Rating Agencies. In addition, any such item must not have an "r"
highlighter affixed to its rating by Standard & Poor's, and its
terms should have a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change. Interest may either be
fixed or variable. If such interest is variable, interest must be
tied to a single interest rate index plus a single fixed spread (if
any), and move proportionately with that index.
(iv) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United
States or any state thereof (or if not so incorporated, the
commercial paper is United States Dollar denominated and amounts
payable thereunder are not subject to any withholding imposed by any
non-United States jurisdiction) which is rated in the highest rating
category of each of DCR, if rated by DCR, Moody's and Standard &
Poor's or such lower rating as will not result in qualification,
downgrading or withdrawal of the ratings then assigned to the
Certificates, as evidenced in writing by the Rating Agencies. The
commercial paper should not have an "r" highlighter affixed to its
rating by Standard & Poor's and by its terms must have a
predetermined fixed dollar amount of principal due at maturity that
<PAGE>
32
cannot vary or change. Interest may either be fixed or variable. If
such interest is variable, interest must be tied to a single
interest rate index plus a single fixed spread (if any), and move
proportionately with that index.
(v) units of money market funds rated in the highest rating category of
DCR and Moody's and AAAm or AAAm-G by Standard & Poor's (or such
lower rating as will not result in qualification, downgrading or
withdrawal of the ratings then assigned to the Certificates, as
evidenced in writing by the Rating Agencies) and which seeks to
maintain a constant net asset value;
(vi) any other obligation or security acceptable to each Rating Agency,
evidence of which acceptability shall be provided in writing by each
Rating Agency to the Master Servicer, the Special Servicer and the
Trustee;
provided that (1) no investment described hereunder shall evidence either the
right to receive (x) only interest with respect to such investment or (y) a
yield to maturity greater than 120% of the yield to maturity at par of the
underlying obligations; and (2) 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.
"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.
"P&I Advance": As to any Mortgage Loan or REO Loan, any advance made by the
Master Servicer, the Trustee or the Fiscal Agent pursuant to Section 4.03(a) and
(b).
"P&I Advance Date": The Business Day immediately preceding each
Distribution Date.
"Plurality Residual Certificateholder": As to any taxable year of REMIC I,
REMIC II or REMIC III, the Holder of Certificates entitled to the largest
percentage of the Voting Rights allocated to the related Class of Residual
Certificates.
"Prepayment Assumption": For purposes of determining the accrual of
original issue discount, market discount and premium, if any, on the
Certificates for federal income tax purposes, 0% CPR (within the meaning of the
Prospectus), except that it is assumed that each ARD Loan is repaid on its
Anticipated Repayment Date.
<PAGE>
33
"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, 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 the related Master Servicing Fee, Additional Servicing Fee and Trustee
Fee) accrued on the amount of such Principal Prepayment during the period from
and after such Due Date, to the extent collected (exclusive of any related
Prepayment Premium or Yield Maintenance Charge actually 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, 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
Prepayment Premium or Yield Maintenance Charge actually collected), that would
have accrued at a rate per annum equal to the sum of (x) Net Mortgage Rate for
such Mortgage Loan and (y) the Trustee Fee Rate on the amount of such Principal
Prepayment during the period commencing on the date as of which such Principal
Prepayment was applied to such Mortgage Loan and ending on the day immediately
preceding such Due Date, inclusive.
"Prepayment Premium": Any premium, penalty or fee (other than a Yield
Maintenance Charge) paid or payable, as the context requires, by a Mortgagor in
connection with a Principal Prepayment.
"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 Master
Servicer 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
Master Servicer shall select a comparable interest rate index. In either case,
such selection shall be made by the Master Servicer in its sole discretion and
the Master Servicer shall notify the Trustee, the Fiscal Agent and the Special
Servicer in writing of its selection.
"Principal Distribution Amount": With respect to any Distribution Date, the
aggregate of the following:
(a) the aggregate of the principal portions of all Scheduled Payments
(other than Balloon Payments) and any Assumed Scheduled Payments in respect
of the Mortgage Loans for their respective Due Dates occurring during the
related Collection Period;
(b) the aggregate of all Principal Prepayments received on the
Mortgage Loans during the related Collection Period;
(c) with respect to any Mortgage Loan as to which the related Stated
Maturity Date occurred during or prior to the related Collection Period,
any payment of principal (exclusive of any amounts described in clause (b)
above or
<PAGE>
34
clause (d) below) made by or on behalf of the related Mortgagor during the
related Collection Period (including any Balloon Payment), net of any
portion of such payment that represents a recovery of the principal portion
of any Scheduled Payment (other than a Balloon Payment) due, or the
principal portion of any Assumed Scheduled Payment deemed due, in respect
of such Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered;
(d) the aggregate of all Liquidation Proceeds and Insurance Proceeds
that were received on the Mortgage Loans during the related Collection
Period and that were identified and applied by the Master Servicer as
recoveries of principal of such Mortgage Loans, in each case net of any
portion of such amounts that represents a recovery of the principal portion
of any Scheduled Payment (other than a Balloon Payment) due, or of the
principal portion of any Assumed Scheduled Payment deemed due, in respect
of the related Mortgage Loan on a Due Date during or prior to the related
Collection Period and not previously recovered;
(e) with respect to any REO Properties, the aggregate of the principal
portions of all Assumed Scheduled Payments in respect of the related REO
Loans for their respective Due Dates occurring during the related
Collection Period;
(f) with respect to any REO Properties, the aggregate of all
Liquidation Proceeds, Insurance Proceeds and REO Revenues that were
received during the related Collection Period on such REO Properties and
that were identified and applied by the Master Servicer and/or Special
Servicer as recoveries of principal of the related REO Loans, in each case
net of any portion of such amounts that represents a recovery of the
principal portion of any Scheduled Payment (other than a Balloon Payment)
due, or of the principal portion of any Assumed Scheduled Payment deemed
due, in respect of the related REO Loan or the predecessor Mortgage Loan on
a Due Date during or prior to the related Collection Period and not
previously recovered; and
(g) if such Distribution Date is subsequent to the initial
Distribution Date, the excess, if any, of the Principal Distribution Amount
for the immediately preceding Distribution Date, over the aggregate
distributions of principal made on the Certificates on such immediately
preceding Distribution Date pursuant to Section 4.01.
"Principal Prepayment": Any payment of principal made by the Mortgagor on a
Mortgage Loan that is received in advance of its scheduled Due Date; and
provided that it shall not include a payment of principal that is 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.
<PAGE>
35
"Principal Recovery Fee": With respect to each Specially Serviced Mortgage
Loan, Corrected Mortgage Loan and REO Loan, the fee payable to the Special
Servicer out of certain related principal recoveries pursuant to the second
paragraph of Section 3.11(c).
"Prospectus": The prospectus dated October 29, 1997, as supplemented by the
Prospectus Supplement, relating to the Registered Certificates.
"Prospectus Supplement": The prospectus supplement dated November 19, 1997
relating to the Registered Certificates.
"Purchase Price": With respect to any Mortgage Loan to be purchased by a
Mortgage Loan Seller pursuant to the related 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 or the Master Servicer pursuant to 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 to but not including the Due Date in the Collection Period of
purchase plus any accrued interest on P&I Advances, and (b) all related and
unreimbursed Servicing Advances plus any accrued interest thereon; provided that
the Purchase Price shall not be reduced by any outstanding P&I Advance.
"Qualified Insurer": An insurance company or security or bonding company
qualified to write the related Insurance Policy in the relevant jurisdiction.
"Rating Agency": Each of DCR, Moody's 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 such REO Loan, as the case may be, at the
related Mortgage Rate to but not including the Due Date in the Collection Period
in which the Final Recovery Determination was made, plus (c) any related
unreimbursed Servicing Advances as of the commencement of the Collection Period
in which the Final Recovery Determination was made, together with any new
related Servicing Advances made during such Collection Period, minus (d) all
payments and proceeds, if any, received in respect of such Mortgage Loan or the
REO Property that relates to such REO Loan, as the case may be, during the
Collection Period in which such Final Recovery Determination was made; (2) each
Defaulted Mortgage Loan as to which any portion of the principal or previously
accrued interest payable thereunder was canceled in connection with a bankruptcy
or similar proceeding involving the related Mortgagor or a modification, waiver
or amendment of such Mortgage Loan granted or agreed to by the Special Servicer
pursuant to Section 3.20, the amount of such principal and/or interest so
canceled; and (3) each Mortgage Loan as to which the Mortgage Rate thereon has
been
<PAGE>
36
permanently reduced and not recaptured for any period in connection with a
bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Special Servicer pursuant to Section 3.20, the amount of the consequent
reduction in the interest portion of each successive Monthly Payment due thereon
(each such Realized Loss shall be deemed to have been incurred on the Due Date
for each affected Monthly Payment).
"Record Date": With respect to any Distribution Date, 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 A-3, Class B,
Class C, Class D, Class E or Class IO Certificate.
"Regular Certificate": Any REMIC III Certificate other than a Class R-III
Certificate.
"Reimbursement Rate": The rate per annum applicable to the accrual of
interest on Servicing Advances in accordance with Section 3.03(d) and on P&I
Advances in accordance with Section 4.03(d), which rate per annum is equal to
the Prime Rate.
"REMIC": A "real estate mortgage investment conduit" as defined in Section
860D of the Code.
"REMIC Administrator": The Trustee or any REMIC administrator appointed
pursuant to Section 8.14.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final Treasury regulations and any published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
"REMIC I": The segregated pool of assets subject hereto, constituting the
primary trust created hereby and to be administered hereunder with respect to
which a separate REMIC election is to be made and, consisting of: (i) the
Mortgage Loans as from time to time are subject to this Agreement and all
payments under and proceeds of such Mortgage Loans received after the Closing
Date (excluding all interest (other than Penalty Interest) payable on the
Mountain View Apartments Mortgage Loan that is in excess of 7.50% per annum and
any interest or principal payable on the Mortgage Loans which is attributable to
any portion of a Servicing Fee or Principal Recovery Fee that is deemed to be in
excess of the amount of such Servicing Fee or Principal Recovery Fee that
constitutes reasonable servicing compensation within the meaning of the REMIC
Provisions), together with all documents included in the related Mortgage Files
and any Escrow Payments and Reserve Funds; (ii) any REO Property acquired in
respect of a Mortgage Loan; (iii) such funds or assets as from time to time are
deposited in the Certificate Account, the Distribution
<PAGE>
37
Account and, if established, the REO Account; and (iv) the rights of the
Depositor under Sections 2, 3, 10, 12, 13, 14, 15, 16 and 17 of each of the
Mortgage Loan Purchase Agreements.
"REMIC I Regular Interest": Any of the separate non-certificated beneficial
ownership interests in REMIC I issued hereunder and designated as a "regular
interest" in REMIC I, as described in the Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to any REMIC I Regular Interest for
any Distribution Date, the Net Mortgage Rate in effect for the related Mortgage
Loan as of the Closing 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 fourteen separate non-certificated
beneficial ownership interests in REMIC II issued hereunder and designated as a
"regular interest" in REMIC II. Each REMIC II Regular Interest shall accrue
interest at the REMIC II Remittance Rate in effect from time to time, and shall
be entitled to distributions of principal, subject to the terms and conditions
hereof, in an aggregate amount equal to its initial Uncertificated Principal
Balance as set forth in the Preliminary Statement hereto. The designations for
the respective REMIC II Regular Interests are set forth in the Preliminary
Statement hereto.
"REMIC II Remittance Rate": With respect to each REMIC II Regular Interest
for any Distribution Date, the Weighted Average Effective REMIC I Remittance
Rate for such Distribution Date.
"REMIC III": The segregated pool of assets consisting of all of the REMIC
II Regular Interests conveyed in trust to the Trustee for the benefit of the
Holders of the REMIC III Certificates pursuant to Section 2.08, with respect to
which a separate REMIC election is to be made.
"REMIC III Certificate": Any Class A-1, Class A-2, Class A-3, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class IO, Class J, Class
K, Class L, Class M or Class R-III Certificate.
"Rents from Real Property": With respect to any REO Property, gross income
of the character described in Section 856(d) of the Code.
"REO Account": A segregated account or accounts created and maintained by
the Special Servicer pursuant to Section 3.16 on behalf of the Trustee in trust
for the Certificateholders, which shall be entitled "CRIIMI MAE Services Limited
Partnership, as
<PAGE>
38
Special Servicer, in trust for registered holders of First Union-Lehman Brothers
Commercial Mortgage Trust II, Commercial Mortgage Pass-Through Certificates,
Series 1997-C2".
"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 Balloon Mortgage Loan delinquent in respect of its Balloon
Payment) and other amounts due and owing, or deemed to be due and owing, in
respect of the predecessor Mortgage Loan as of the date of the related REO
Acquisition, shall be deemed to continue to be due and owing in respect of an
REO Loan. Collections in respect of each REO Loan (after provision for amounts
to be applied to the payment of, or to be reimbursed to the Master Servicer or
the Special Servicer for the payment of, the costs of operating, managing and
maintaining the related REO Property or for the reimbursement of the Master
Servicer or the Special Servicer for other related Servicing Advances) shall be
treated: first, as a recovery of accrued and unpaid interest on such REO Loan at
the related Mortgage Rate to but not including the Due Date in the Collection
Period of receipt; second, as a recovery of principal of such REO Loan to the
extent of its entire unpaid principal balance; and third, in accordance with the
normal servicing practices of the Master Servicer, as a recovery of any other
amounts due and owing in respect of such REO Loan. Notwithstanding the
foregoing, all amounts payable or reimbursable to the Master Servicer, the
Special Servicer, the Trustee or the Fiscal Agent in respect of the predecessor
Mortgage Loan as of the date of the related REO Acquisition, including, without
limitation, any unpaid Servicing Fees and any unreimbursed Servicing Advances
and P&I Advances, together with any interest accrued and payable to the Master
Servicer, the Special Servicer, the Trustee or the Fiscal Agent in respect of
such Servicing Advances and P&I Advances in accordance with Sections 3.03(d) and
4.03(d), shall continue to be payable or reimbursable to the Master Servicer,
the Special Servicer, the Trustee or the Fiscal Agent, as the case may be, in
respect of an REO Loan pursuant to Section 3.05(a).
"REO Property": A Mortgaged Property acquired on behalf and in the name of
the Trustee for the benefit of the Certificateholders through foreclosure,
acceptance of a deed-
<PAGE>
39
in-lieu of foreclosure or otherwise in accordance with applicable law in
connection with the default or imminent default of a Mortgage Loan.
"REO Revenues": All income, rents, profits and proceeds derived from the
ownership, operation or leasing of any REO Property.
"REO Status Report": A report substantially containing the content
described in Exhibit O attached 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 related
Collection Period and (iii) the value of the REO Property based on the most
recent appraisal or other valuation thereof available to the Special Servicer as
of such Determination Date (including any prepared internally by the Special
Servicer).
"REO Tax": As defined in Section 3.17(a).
"Request for Release": A request signed by a Servicing Officer, as
applicable, of the Master Servicer in the form of Exhibit D-1 attached hereto or
of the Special Servicer in the form of Exhibit D-2 attached hereto.
"Required Appraisal": With respect to each Required Appraisal Mortgage
Loan, an appraisal, prepared in accordance with 12 CFR ss.225.62 and conducted
in accordance with the standards of the Appraisal Institute of the related
Mortgaged Property from an Independent Appraiser selected by the Special
Servicer.
"Required Appraisal Mortgage Loan": Each Mortgage Loan (i) that is sixty
(60) days or more delinquent in respect of any Monthly Payments, (ii) that
becomes an REO Loan, (iii) that has been modified by the Special Servicer to
reduce the amount of any Monthly Payment (other than a Balloon Payment), (iv)
with respect to which a receiver in bankruptcy is appointed and continues in
such capacity in respect of the related Mortgaged Property, (v) with respect to
which the related Mortgagor is subject to a bankruptcy proceeding or (vi) with
respect to which any Balloon Payment on such Mortgage Loan has not been paid by
its scheduled maturity date.
"Required Appraisal Value": An amount equal to 90% of the Appraised Value
(net of any prior liens and estimated liquidation expenses) of the Mortgaged
Property related to the subject Required Appraisal Mortgage Loan as determined
by a Required Appraisal or any letter update of such Required Appraisal; and
provided further that for purposes of determining any Appraisal Reduction Amount
in respect of such Required Appraisal Mortgage Loan, such Appraisal Reduction
Amount shall be amended annually to reflect the Required Appraisal Value
determined pursuant to any Required Appraisal or letter update of a Required
Appraisal conducted subsequent to the original Required Appraisal performed
pursuant to Section 3.09(a).
<PAGE>
40
"Reserve Account": The account or accounts created and maintained pursuant
to Section 3.03(f).
"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.
"Responsible Officer": When used with respect to (i) the initial Trustee or
the initial Fiscal Agent, any officer or assistant officer in the Asset-Backed
Securities Trust Services Group of the initial Trustee and (ii) any successor
Trustee or Fiscal Agent, any officer or assistant officer in the Corporate Trust
Department of the Trustee or Fiscal Agent, respectively, or any other officer or
assistant officer of the Trustee or Fiscal Agent customarily performing
functions similar to those performed by any of the above designated officers to
whom a particular matter is referred by the Trustee or Fiscal Agent because of
such officer's knowledge of and familiarity with the particular subject.
"Scheduled Payment": With respect to any Mortgage Loan, for any Due Date
following the Cut-off Date as of which it is outstanding, the scheduled monthly
payment of principal and interest on such Mortgage Loan that is or would be, as
the case may be, payable by the related Mortgagor on such Due Date under the
terms of the related Mortgage Note as in effect on the Closing Date, without
regard to any subsequent change in or modification of such terms in connection
with a bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Special Servicer pursuant to Section 3.20, and assuming that each prior
Scheduled Payment has been made in a timely manner; provided however, in the
case of the Mountain View Apartment Mortgage Loan, the scheduled monthly payment
of interest shall be deemed to be exclusive of amounts of interest accrued
thereon at a rate in excess of 7.50% per annum.
"Securities Act": The Securities Act of 1933, as amended.
"Senior Certificate": Any Class A-1, Class A-2, Class A-3 or Class IO
Certificate.
"Sequential Pay Certificates": Any of the Regular Certificates other than
the Class IO Certificates.
"Servicing Account": The account or accounts created and maintained
pursuant to Section 3.03(a).
"Servicing Advances": All customary, reasonable and necessary "out of
pocket" costs and expenses incurred by the Master Servicer, the Special
Servicer, the Fiscal Agent or the Trustee in connection with the servicing of a
Mortgage Loan, or in connection with the administration of any REO Property,
including, but not limited to, the cost of (a)
<PAGE>
41
compliance with the obligations of the Master Servicer, the Special Servicer,
the Fiscal Agent or the Trustee, if any, set forth in Section 3.03(c), (b) the
preservation, insurance, restoration, protection and management of a
Mortgaged Property, including the cost of any "forced placed" insurance policy
purchased by the Master Servicer to the extent such cost is allocable to a
particular Mortgaged Property that the Master Servicer or the Special Servicer
is required to cause to be insured pursuant to Section 3.07(a), (c) obtaining
any Insurance Proceeds or, except where the Master Servicer or Special Servicer,
as the case may be, is the purchaser of any Defaulted Mortgage Loan, obtaining
any Liquidation Proceeds of the nature described in clauses (i)-(v) of the
definition of "Liquidation Proceeds," (d) any enforcement or judicial
proceedings with respect to a Mortgaged Property, including, without limitation,
foreclosures, (e) any Required Appraisal or other appraisal and (f) the
operation, management, maintenance and liquidation of any REO Property,
including appraisals. Notwithstanding anything to the contrary, "Servicing
Advances" shall not include allocable overhead of the Master Servicer or 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.
"Servicing Fees": With respect to each Mortgage Loan and REO Loan, the
Master Servicing Fee, the Special Servicing Fee and Additional Servicing Fee.
"Servicing File": Any documents (other than documents required to be part
of the related Mortgage File) in the possession of the Depositor and relating to
the origination and servicing of any Mortgage Loan, including appraisals,
surveys, engineering reports and environmental reports.
"Servicing Officer": Any officer or employee of the Master Servicer or the
Special Servicer involved in, or responsible for, the administration and
servicing of the Mortgage Loans, whose name and specimen signature appear on a
list of servicing officers furnished by such party to the Trustee and the
Depositor on the Closing Date, as such list may be amended from time to time.
"Servicing Standard": With respect to the Master Servicer or the Special
Servicer, to service and administer the Mortgage Loans in the same manner in
which, and with the same care, skill, prudence and diligence with which, the
Master Servicer or the Special Servicer, as the case may be, generally services
and administers similar mortgage loans (a) that are part of other third-party
portfolios, giving due consideration to customary and usual standards of
practice of prudent institutional commercial mortgage lenders servicing their
own loans and to the maximization of the recovery on such Mortgage Loan on a net
present value basis, or (b) held in its own portfolio, whichever servicing
procedure is of a higher standard, 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 right of the Master Servicer or the
Special Servicer, as the case may be, to receive compensation or other fees for
its services rendered pursuant to this Agreement; (iv) the obligations of the
Master Servicer or
<PAGE>
42
the Special Servicer, as the case may be, to make Advances; (v) the ownership,
servicing or management for others of any other mortgage loans or real
properties; and (vi) any obligation of the Master Servicer as a Mortgage Loan
Seller or as an Affiliate thereof, to pay any indemnity with respect to or
repurchase any Mortgage Loan.
"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 Regular Certificates evidencing a $1,000
denomination.
"Special Servicer": CRIIMI MAE Services Limited Partnership, its successor
in interest, or any successor special servicer appointed as herein provided.
"Special Servicing Fee": With respect to each Specially Serviced Mortgage
Loan and each REO Loan, the fee designated as such and payable to the Special
Servicer pursuant to the first paragraph of Section 3.11(c).
"Special Servicing Fee Rate": With respect to each Specially Serviced
Mortgage Loan and each REO Loan, 0.25% per annum.
"Specially Serviced Mortgage Loan": Any Mortgage Loan as to which any of
the following events have occurred:
(a) the related Mortgagor shall have failed to make any Monthly Payment,
and such failure has continued unremedied for 45 days (or, in the case
of a Balloon Payment, if the Master Servicer receives written evidence
from an institutional lender of such lender's binding commitment to
refinance such Mortgage Loan 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, such longer period (not to exceed 120
days) within which such refinancing is expected to occur); or
(b) the Master Servicer shall have determined, in its good faith
reasonable judgment, based on communications with the related
Mortgagor, that a default in making a Monthly Payment is likely to
occur within 30 days and is likely to remain unremedied for at least
60 days (or, in the case of a Balloon Payment, if the Master Servicer
has received written evidence from an institutional lender of such
lender's binding commitment to refinance such Mortgage Loan and if 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
<PAGE>
43
maturity date, such longer period (not to exceed 120 days) within
which such refinancing is expected to occur); or
(c) there shall have occurred a default (other than as described in clause
(a) above) that materially impairs the value of the Mortgaged Property
as security for the Mortgage Loan or otherwise materially adversely
affects the interests of Certificateholders and that continues
unremedied for the applicable grace period under the terms of the
Mortgage Loan (or, if no grace period is specified, for 30 days); or
(d) a decree or order of a court or agency or supervisory authority having
jurisdiction in the premises in an involuntary case under any present
or future federal or state bankruptcy, insolvency or similar law or
the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its
affairs, shall have been entered against the related Mortgagor and
such decree or order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(e) the related Mortgagor shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings
of or relating to such Mortgagor or of or relating to all or
substantially all of its property; or
(f) the related Mortgagor shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage
of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(g) the Master Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related
Mortgaged Property;
provided, however, that a Mortgage Loan will cease to be a Specially Serviced
Mortgage Loan:
(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
<PAGE>
44
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 reasonable judgment of the Special Servicer, but, with respect
to any bankruptcy or insolvency proceedings described in clauses (d),
(e) and (f), no later than the entry of an order or decree dismissing
such proceeding;
(y) with respect to the circumstances described in clause (c) above, when
such default is cured; and
(z) with respect to the circumstances described in clause (g) above, when
such proceedings are terminated;
so long as at that time no circumstance identified in clauses (a) through (g)
above exists that would cause the Mortgage Loan to continue to be characterized
as a Specially Serviced Mortgage Loan.
"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 Fiscal Agent, the Master Servicer
and the Special Servicer, and specific ratings of Standard & Poor's Ratings
Services 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).
"State and Local Taxes": Taxes imposed by the states of New York, Illinois,
Delaware, Maryland and North Carolina and by any other state or local taxing
authorities as may, by notice to the Trustee, assert jurisdiction over the trust
fund or any portion thereof, or which, according to an Opinion of Counsel
addressed to the Trustee, have such jurisdiction.
"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.
<PAGE>
45
"Stated Principal Balance": With respect to any Mortgage Loan (and any
successor REO Loan), the Cut-off Date Balance of such Mortgage Loan, as
permanently reduced on each Distribution Date (to not less than zero) by (i) all
payments (or advances in lieu thereof) and other collections of principal of
such Mortgage Loan (or successor REO Loan) that are distributed to
Certificateholders on such Distribution Date, and (ii) the principal portion of
any Realized Loss incurred in respect of such Mortgage Loan (or successor or REO
Loan) during the related Collection Period. Notwithstanding the foregoing, if a
Liquidation Event occurs in respect of any Mortgage Loan or REO Property, then
the "Stated Principal Balance" of such Mortgage Loan or of the related REO Loan,
as the case may be, shall be zero commencing as of the Distribution Date in the
Collection Period next following the Collection Period in which such Liquidation
Event occurred.
"Subordinated Certificate": Any Class B, Class C, Class D, Class E, Class
F, Class G, Class H, Class J, Class K, Class L, Class M, Class R-I, Class R-II
or Class R-III Certificate.
"Sub-Servicer": Any Person with which the Master Servicer or the Special
Servicer has entered into a Sub-Servicing Agreement.
"Sub-Servicer 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 and Local Tax laws.
"Tenant": With respect to each Credit Lease, the lessee thereunder.
"Transaction Screen Process": An environmental assessment conducted in
accordance with the Standard Practice for Environmental Site Assessments:
Transaction Screen Process E 1528-93 (American Society for Testing and Materials
1993).
<PAGE>
46
"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, (i) all of the assets of REMIC I, REMIC II and
REMIC III and (ii) any interest payable on the Mortgage Loans (exclusive of all
interest payable on the Mountain View Apartment Mortgage Loan that is in excess
of 7.50% per annum) which is attributable to any portion of a Servicing Fee or
Principal Recovery Fee that is deemed to be in excess of the amount of such
Servicing Fee or Principal Recovery Fee that constitutes reasonable servicing
compensation within the meaning of the REMIC Provisions.
"Trustee": LaSalle National Bank, its successor in interest, or any
successor trustee appointed as herein provided.
"Trustee Fee" means, with respect to each Mortgage Loan and REO Loan for
any Distribution Date, an amount equal to one month's interest for the most
recently ended calendar month (calculated on the basis of a 360-day year
consisting of twelve 30-day months), accrued at the Trustee Fee Rate on the
Stated Principal Balance of such Mortgage Loan or REO Loan, as the case may be,
outstanding immediately following the prior Distribution Date (or, in the case
of the initial Distribution Date, as of the Closing Date).
"Trustee Fee Rate": 0.0025% per annum.
"Trustee Liability": As defined in Section 8.05(b).
"UCC": The Uniform Commercial Code in effect in the applicable
jurisdiction.
"UCC Financing Statement": A financing statement executed and filed
pursuant to the Uniform Commercial Code, as in effect in any relevant
jurisdiction.
"Uncertificated Accrued Interest": 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 Accrued
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, 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
any REMIC II Regular Interest shall accrue on the
<PAGE>
47
basis of a 360-day year consisting of twelve 30-day months (or, in the case of a
REMIC I Regular Interest that relates to an Actual-360 Mortgage Loan or any
successor REO Loan, on the basis of actual number of days elapsed during a
360-day year).
"Uncertificated Distributable Interest": With respect to any REMIC I
Regular Interest for any Distribution Date, the Uncertificated Accrued Interest
in respect of such REMIC I Regular Interest for such Distribution Date, reduced
(to not less than zero) by the product of (i) any Net Aggregate Prepayment
Interest Shortfall for such Distribution Date, multiplied by (ii) a fraction,
the numerator of which is the Uncertificated Accrued Interest in respect of such
REMIC I Regular Interest for such Distribution Date, and the denominator of
which is the aggregate Uncertificated Accrued Interest in respect of all the
REMIC I Regular Interest for such Distribution Date. With respect to any REMIC
II Regular Interest for any Distribution Date, the Uncertificated Accrued
Interest in respect of such REMIC II Regular Interest for such Distribution
Date, reduced (to not less than zero) by the product of (i) any Net Aggregate
Prepayment Interest Shortfall for such Distribution Date, multiplied by (ii) a
fraction, expressed as a percentage, the numerator of which is the
Uncertificated Accrued Interest in respect of such REMIC II Regular Interest for
such Distribution Date, and the denominator of which is the aggregate
Uncertificated Accrued Interest in respect of all the REMIC II Regular Interests
for such Distribution Date.
"Uncertificated Principal Balance": The principal amount of any REMIC I
Regular Interest or REMIC II Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Principal Balance of
each REMIC I Regular Interest shall equal the Cut-off Date Balance of the
related Mortgage Loan, and the Uncertificated Principal Balance of each REMIC II
Regular Interest shall equal the amount set forth in the Preliminary Statement
hereto as its initial stated principal amount. On each Distribution Date, the
Uncertificated Principal Balance of each REMIC II Regular Interest shall be
reduced by all distributions of principal deemed to have been made thereon on
such Distribution Date pursuant to Section 4.01(h), and shall be further reduced
on such Distribution Date by all Realized Losses and Additional Trust Fund
Expenses deemed to have been allocated thereto on such Distribution Date
pursuant to Section 4.04(b). On each Distribution Date, the Uncertificated
Principal Balance of each REMIC I Regular Interest shall be reduced by all
distributions of principal deemed to have been made in respect of such REMIC I
Regular Interest on such Distribution Date pursuant to Section 4.01(i), and
shall be further reduced on such Distribution Date by all Realized Losses and
Additional Trust Fund Expenses deemed to have been allocated thereto on such
Distribution Date pursuant to Section 4.04(c).
"Underwriter": Each of First Union Capital and Lehman Brothers Inc.
"United States Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate
whose income from sources without the United States is includible in gross
income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States, or
a trust if a court within the United States is able to exercise primary
supervision
<PAGE>
48
over the administration of the trust and one or more United States persons have
the authority to control all substantial decisions of the trust, all within the
meaning of Section 7701(a) (30) of the Code.
"USAP": The Uniform Single Attestation Program for Mortgage Bankers.
"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, 100% of the Voting Rights shall be allocated among the
Holders of the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D, Class
E, Class F, Class G, Class H, Class J, Class K, Class L and Class M Certificates
in proportion to the respective Class Principal Balances of their Certificates.
Voting Rights allocated to a Class of Certificateholders shall be allocated
among such Certificateholders in standard proportion to the Percentage Interests
evidenced by their respective Certificates. Solely for the purpose of
determining the Voting Rights of the Classes of Sequential Pay Certificates, the
aggregate Appraisal Reduction Amount (determined as set forth herein) shall be
treated as Realized Losses with respect to the calculation of the Certificate
Principal Balances thereof. In addition, if either the Master Servicer or the
Special Servicer is the holder of any Certificate, neither of the Master
Servicer or Special Servicer, in its capacity as a Certificateholder, shall have
Voting Rights with respect to matters concerning compensation affecting the
Master Servicer or the Special Servicer.
"Watch List": A report substantially containing the content described in
Exhibit P attached hereto, setting forth, among other things, any Mortgage Loan
with a Debt Service Coverage Ratio of less than 1.0 and that is in jeopardy of
becoming a Specially Serviced Mortgage Loan.
"Weighted Average Effective REMIC I Remittance Rate": With respect to any
Distribution Date, the rate per annum equal to the weighted average, expressed
as a percentage and rounded to six decimal places, of the respective Effective
REMIC I Remittance Rates in respect of the REMIC I Regular Interests for such
Distribution Date, weighted on the basis of the respective Uncertificated
Principal Balances of such REMIC I Regular Interests outstanding immediately
prior to such Distribution Date.
"Yield Maintanance Charge": Payments paid or payable, as the context
requires, on a Mortgage Loan as the result of a Principal Prepayment thereon,
not otherwise due thereon in respect of principal or interest, which have been
calculated (based on Scheduled Payments on such Mortgage Loan) to compensate the
holder for reinvestment losses based on the value of an interest rate index at
or near the time of prepayment. Any other prepayment premiums, penalties and
fees not so calculated will not be considered "Yield Maintenance Charges."
<PAGE>
49
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, sell, transfer, set over and otherwise convey to the Trustee
in trust, without recourse, for the benefit of the Certificateholders all the
right, title and interest of the Depositor, in, to and under (i) the Mortgage
Loans (exclusive of all interest (other than Penalty Interest) payable on the
Mountain View Apartments Mortgage Loan that is in excess of 7.50% per annum),
(ii) Sections 2, 3, 10, 12, 13, 14, 15, 16 and 17 of each of the Mortgage Loan
Purchase Agreements and (iii) all other assets included or to be included in the
Trust Fund. Such assignment includes all interest and principal received or
receivable on or with respect to the Mortgage Loans and due after the Cut-off
Date. The transfer of the Mortgage Loans and the related rights and property
accomplished hereby is absolute and, notwithstanding Section 11.07, is intended
by the parties to constitute a sale.
(b) In connection with the Depositor's assignment pursuant to Section
2.01(a) above, the Depositor shall direct, and hereby represents and warrants
that it has directed, the Mortgage Loan Sellers, in each case pursuant to the
applicable 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 and the Special 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 either Mortgage Loan Seller or the
Depositor to comply with the document delivery requirements of the respective
Mortgage Loan Purchase Agreement and this Section 2.01 (b).
(c) The Trustee shall, at the Depositor's expense and direction, as to each
Mortgage Loan, promptly (and in any event within 60 days following the later of
Closing Date and the date on which the complete Mortgage File for such Mortgage
Loan (including all necessary recording and filing information) has been
delivered to the Trustee or its agent) cause the Master Servicer to (and the
Master Servicer hereby agrees to, within 60 days following the later of the
Closing Date and the date on which the complete assignments described below are
delivered to the Master Servicer in recordable form) submit for recording or
filing, as the case may be, in the appropriate public office for real property
records or UCC Financing Statements, as appropriate and to the extent delivered
to the Master Servicer, each assignment of Mortgage, assignment of Assignment of
Leases and any other recordable documents relating to the Mortgage Loan, in
favor of the Trustee referred to in clause (iv) of the definition of "Mortgage
File" and each UCC-2
<PAGE>
50
and UCC-3 assignment in favor of the Trustee and delivered to the Master
Servicer and referred to in clause (viii) of the definition of "Mortgage File."
Each such assignment shall reflect that it should be returned by the public
recording office to the Master Servicer or its agent following recording, and
each such UCC-2 and UCC-3 assignment shall reflect that the file copy thereof
should be returned to the Master Servicer or its agent following filing;
provided that in those instances where the public recording office retains the
original assignment of Mortgage or assignment of Assignment of Leases the Master
Servicer shall obtain therefrom a certified copy of the recorded original. The
Master Servicer will forward each of the aforementioned assignments to the
Trustee promptly following the Master Servicer's receipt thereof. If any such
document or instrument is lost or returned unrecorded or unfiled, as the case
may be, because of a defect therein, the Master Servicer shall direct the
appropriate Mortgage Loan Seller pursuant to the applicable Mortgage Loan
Purchase Agreement promptly to prepare or cause to be prepared a substitute
therefor or cure such defect, as the case may be, and thereafter the Master
Servicer shall upon receipt thereof cause the same to be duly recorded or filed,
as appropriate.
(d) All documents and records in the possession of the Depositor or the
Mortgage Loan Sellers 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 or such other Person as may be
directed by the Master Servicer (at the expense of the Depositor or the
applicable Mortgage Loan Seller) on or before the Closing Date and shall be held
by the Master Servicer on behalf of the Trustee in trust for the benefit of the
Certificateholders; provided, however, the Master Servicer shall have no
responsibility for holding documents created or maintained by the Special
Servicer hereunder and not required to be delivered to the Master Servicer.
(e) In connection with the Depositor's assignment pursuant to Section
2.01(a) above, the Depositor shall deliver to the Custodian and the Special
Servicer on or before the Closing Date a copy of a fully executed counterpart of
each Mortgage Loan Purchase Agreement, as in full force and effect on the
Closing Date.
SECTION 2.02. Acceptance of Trust Fund by Trustee.
(a) The Trustee, by its execution and delivery of this Agreement,
acknowledges receipt of the Depositor's assignment to it of its right, title and
interest in the Mortgage Loans and other assets constituting the Trust Fund, and
further 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 delivered to it for each Mortgage Loan and (ii) a copy of a fully
executed counterpart of each Mortgage Loan Purchase Agreement, all 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 the Mortgage Loans and other assets included in the Trust Fund, in trust
for the exclusive use and benefit of all present and future Certificateholders.
The Trustee hereby certifies to each of the Depositor, the Master Servicer, the
Special Servicer and the Mortgage Loan Sellers, that except as identified in a
written notice, a copy of which shall have been delivered by the Trustee or a
Custodian on its behalf on or prior to the Closing Date to each of the
Depositor, the Master Servicer, the Special Servicer and the Mortgage Loan
Sellers, without regard to the proviso in the definition
<PAGE>
51
of "Mortgage File," each of the documents specified in clause (i) of the
definition of Mortgage File or a certified copy thereof are in its possession or
the possession of a Custodian on its behalf.
(b) Within 90 days after the Closing Date, the Trustee shall review the
Mortgage Files and certify in writing to each of the Depositor, the Master
Servicer, the Special Servicer, the Majority Subordinate Certificateholder and
each Mortgage Loan Seller that, as to each Mortgage Loan listed on the Mortgage
Loan Schedule (other than any Mortgage Loan as to which a Liquidation Event has
occurred or any Mortgage Loan specifically identified in any exception report
annexed thereto as not being covered by such certification): (i) documents
specified in clauses (i) through (v), clause (vii) and, to the extent provided
in the Mortgage File, clauses (vi) and (viii) of the definition of "Mortgage
File" are in its possession or the possession of a Custodian on its behalf, (ii)
all documents received by it in respect of such Mortgage Loan have been reviewed
by it or a Custodian on its behalf and appear regular on their face and purport
to relate to such Mortgage Loan, and (iii) based on the examinations referred to
in Section 2.02(a) above and this Section 2.02(b) and only as to the foregoing
documents, the information set forth in the Mortgage Loan Schedule with respect
to the items specified in clauses (ii), (v) and (vi)(B) of the definition of
"Mortgage Loan Schedule" is correct. In the event any exceptions are noted to
the matters specified in this subsection (b)(i), the Trustee shall issue and
deliver to each of the parties receiving the initial exception report, an
updated exception report as to such matters every 90 days until there are no
remaining exceptions noted or the second anniversary of the Closing Date. If
upon the second anniversary of the Closing Date any exceptions remain
outstanding, the related Mortgage Loan Seller shall, within 90 days of such
anniversary: (i) cure such exception, (ii) repurchase the affected Mortgage
Loan, or (iii) deliver to the Trustee an Opinion of Counsel to the effect that
such defect does not materially and adversely affect the Certificateholders.
(c) None of the Trustee, the Master Servicer, the Special Servicer or any
Custodian is under any duty or obligation to inspect, review or examine any of
the documents, instruments, certificates or other papers relating to the
Mortgage Loans delivered to it to determine that the same are valid, legal,
effective, genuine, enforceable, in recordable form, sufficient or appropriate
for the represented purpose or that they are other than what they purport to be
on their face.
SECTION 2.03. Mortgage Loan Seller's Repurchase of Mortgage Loans for
Document Defects and Breaches of Representations and
Warranties.
(a) If any party hereto discovers that any document or documents
constituting a part of a Mortgage File has not been properly executed, is
missing, contains information that does not conform in any 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 a
Mortgage Loan set forth in Section 3 of the
<PAGE>
52
applicable Mortgage Loan Purchase Agreement (a "Breach"), and such Document
Defect or Breach, as the case may be, materially and adversely affects the
interests of the Certificateholders, such party shall give prompt written notice
to each of the Rating Agencies and the other parties hereto. Promptly upon
becoming aware of any such Document Defect or Breach (including through such
written notice provided by any party hereto, as provided above), the Master
Servicer shall request that the related Mortgage Loan Seller, not later than 90
days from such Mortgage Loan Seller's receipt of such notice (or in the case of
a Document Defect or Breach relating to a Mortgage Loan not being a "qualified
mortgage" within the meaning of the REMIC Provisions, not later than 90 days of
any party discovering such Document Defect or Breach), cure such Document Defect
or Breach, as the case may be, in all material respects, which shall include
payment of losses and any Additional Trust Fund Expenses associated therewith
or, if such Document Defect or Breach cannot be cured within such 90-day period,
repurchase the affected Mortgage Loan at the applicable Purchase Price in
accordance with the Mortgage Loan Purchase Agreement; provided, however, that if
such Document Defect or Breach is capable of being cured but not within such
90-day period, such Document Defect does not relate to any Mortgage Loan not
being treated as a "qualified mortgage" within the meaning of the REMIC
Provisions and such Mortgage Loan Seller has commenced and is diligently
proceeding with the cure of such Document Defect or Breach within such 90-day
period, such Mortgage Loan Seller shall have an additional 90 days to complete
such cure (or, in the event of a failure to so cure, to complete such
repurchase); and provided, further, that with respect to such additional 90-day
period such Mortgage Loan Seller shall have delivered an Officer's Certificate
to the Trustee setting forth the reason such Document Defect or Breach is not
capable of being cured within the initial 90-day period and what actions such
Mortgage Loan Seller is pursuing in connection with the cure thereof and stating
that such Mortgage Loan Seller anticipates that such Document Defect or Breach
will be cured within the additional 90-day period. If the Document Defect is
still not cured after the initial 90 days and thereafter the additional 90 day
period solely due to the failure of a recording office to have returned the
recorded document, then the Mortgage Loan Seller shall certify to the Trustee
every 30 days thereafter that the Document Defect is still in effect solely
because of the failure of a recording office to have returned the recorded
document and that the Mortgage Loan Seller is diligently pursuing the cure of
such defect, specifying the actions being taken, and the repurchase obligation
will be deferred, but no such deferral of repurchase or cure may continue beyond
the time specified in Section 2.02. If the affected Mortgage Loan is to be
repurchased, the Master Servicer shall designate the Certificate Account as the
account to which funds in the amount of the Purchase Price are to be wired. Any
such repurchase 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
<PAGE>
53
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 Custodian, the Master Servicer and the
Special Servicer shall each tender to the appropriate Mortgage Loan Seller, upon
delivery to each of them of a receipt executed by such 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
such Mortgage Loan Seller or its designee in the same manner, and pursuant to
appropriate forms of assignment, substantially similar to the manner and forms
pursuant to which documents were previously assigned to the Trustee; provided
that such tender by the Trustee shall be conditioned upon its receipt from the
Master Servicer of a Request for Release. The Master Servicer shall, and is
hereby authorized and empowered by the Trustee to, prepare, execute and deliver
in its own name, on behalf of the Certificateholders and the Trustee or any of
them, the endorsements and assignments contemplated by this Section 2.03, and
the Trustee shall execute and deliver any powers of attorney necessary to permit
the Master Servicer to do so.
(c) Each Mortgage Loan Purchase Agreement provides the sole remedies
available to the Certificateholders, or the Trustee on behalf of the
Certificateholders, respecting any Document Defect or Breach with respect to the
Mortgage Loans purchased by the Depositor thereunder.
SECTION 2.04. Representations and Warranties of Depositor.
(a) The Depositor hereby represents and warrants to the Trustee, for its
own benefit and the benefit of the Certificateholders, and to the Fiscal Agent,
the Master Servicer and the Special Servicer, as of the Closing Date, that:
(i) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of North Carolina.
(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.
<PAGE>
54
(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 had good and
marketable title to, and was the sole owner and holder of, each Mortgage
Loan; and (B) the Depositor has full right and authority to sell, assign
and transfer the Mortgage Loans and all servicing rights pertaining
thereto.
(ix) The Depositor is transferring the Mortgage Loans to the Trust
Fund free and clear of any liens, pledges, charges and security interests.
(b) The representations and warranties of the Depositor set forth in
Section 2.04(a) shall survive the execution and delivery of this Agreement and
shall inure to the benefit of the Persons for whose benefit they were made for
so long as the Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the other
parties.
<PAGE>
55
SECTION 2.05. Execution, Authentication and Delivery of Class R-I
Certificates; Creation of REMIC I Regular Interests.
The Trustee hereby acknowledges the assignment to it of the assets included
in the Trust Fund. Concurrently with such assignment and in exchange therefor,
(a) the Trustee agrees to hold a portion of each of the Mortgage Loans included
in REMIC I, and (b) the Certificate Registrar, pursuant to the written request
of the Depositor executed by an officer of the Depositor, has executed, and the
Authenticating Agent has authenticated and delivered to or upon the order of the
Depositor, the Class R-I Certificates in authorized denominations. The interests
evidenced by the Class R-I Certificates, together with the REMIC I Regular
Interests, constitute the entire beneficial ownership of REMIC I. The rights of
the Class R-I Certificateholders and REMIC II (as holder of the REMIC I Regular
Interests) to receive distributions from the proceeds of REMIC I in respect of
the Class R-I Certificates and the REMIC I Regular Interests, respectively, and
all ownership interests evidenced or constituted by the Class R-I Certificates
and the REMIC I Regular Interests, shall be as set forth in this Agreement.
SECTION 2.06. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by Trustee.
The Depositor, as of the Closing Date, and concurrently with the execution
and delivery of this Agreement, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC I Regular
Interests to the Trustee for the benefit of the Holders of the Class R-II
Certificates and REMIC III as the holder of the REMIC II Regular Interests. The
Trustee acknowledges the assignment to it of the right, title and interest of
the Depositor in the REMIC I Regular Interests and declares that it holds and
will hold the same in trust for the exclusive use and benefit of all present and
future Holders of the Class R-II Certificates and REMIC III as the holder of the
REMIC II Regular Interests.
SECTION 2.07. Execution, Authentication and Delivery of Class R-II
Certificates.
The Trustee pursuant to the written request of the Depositor executed by an
officer of the Depositor, has executed, as the Certificate Registrar,
authenticated, as the Authenticating Agent, and delivered to or upon the order
of the Depositor, the Class R-II Certificates in authorized denominations.
SECTION 2.08. Conveyance of REMIC II Regular Interests; Acceptance of
REMIC III by Trustee.
The Depositor, as of the Closing Date, and concurrently with the execution
and delivery of this Agreement, does hereby assign without recourse all the
right, title and interest of the Depositor in and to the REMIC II Regular
Interests to the Trustee for the benefit of the Holders of the REMIC III
Certificates. The Trustee acknowledges the assignment to it of the
<PAGE>
56
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
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, as the Certificate Registrar, has
executed, and the Trustee, as the Authenticating Agent, has authenticated and
delivered to or upon the order of the Depositor, the REMIC III Certificates in
authorized denominations evidencing the entire beneficial ownership of REMIC
III. The rights of the holders of the respective Classes of REMIC III
Certificates to receive distributions from the proceeds of REMIC III in respect
of their REMIC III Certificates, and all ownership interests evidenced or
constituted by the respective Classes of REMIC III Certificates in such
distributions, shall be as set forth in this Agreement.
<PAGE>
57
ARTICLE III
ADMINISTRATION AND SERVICING OF THE TRUST FUND
SECTION 3.01. Administration of the Mortgage Loans.
(a) Each of the Master Servicer and the Special Servicer shall service and
administer the Mortgage Loans that each is obligated to service and administer
pursuant to this Agreement on behalf of the Trustee, for the benefit of the
Certificateholders, in accordance with any and all applicable laws, the terms of
this Agreement and the terms of the respective Mortgage Loans and, to the extent
consistent with the foregoing, in accordance with the Servicing Standard.
Without limiting the foregoing, and subject to Section 3.21, (i) the Master
Servicer shall service and administer all Mortgage Loans that are not Specially
Serviced Mortgage Loans, and (ii) the Special Servicer shall service and
administer each Specially Serviced Mortgage Loan and REO Property and shall
render such services with respect to all Mortgage Loans and REO Properties as
are specifically provided for herein. All references herein to the respective
duties of the Master Servicer and the Special Servicer, and to the areas in
which they may exercise discretion, shall be subject to Section 3.21.
(b) Subject to Section 3.01(a), the Master Servicer and the Special
Servicer, subject to Section 6.11, each shall have full power and authority,
acting alone, to do or cause to be done any and all things in connection with
such servicing and administration which it may deem necessary or desirable.
Without limiting the generality of the foregoing, each of the Master Servicer
and the Special Servicer, in its own name, with respect to each of the Mortgage
Loans it is obligated to service hereunder, is hereby authorized and empowered
by the Trustee to execute and deliver, on behalf of the Certificateholders and
the Trustee or any of them, (i) any and all financing statements, continuation
statements and other documents or instruments necessary to maintain the lien
created by any Mortgage or other security document in the related Mortgage File
on the related Mortgaged Property and related collateral; (ii) in accordance
with the Servicing Standard and subject to Section 3.20, any and all
modifications, waivers, amendments or consents to or with respect to any
documents contained in the related Mortgage File; and (iii) any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments. Subject to Section 3.10, the
Trustee shall, at the written request of the Master Servicer or the Special
Servicer, promptly execute any limited powers of attorney and other documents
furnished by the Master Servicer or the Special Servicer that are necessary or
appropriate to enable them to carry out their servicing and administrative
duties hereunder; provided, however, that the Trustee shall not be held liable
for any misuse of any such power of attorney by the Master Servicer or the
Special Servicer.
(c) The relationship of each of the Master Servicer and the Special
Servicer to the Trustee under this Agreement is intended by the parties to be
that of an independent contractor and not that of a joint venture, partner or
agent.
<PAGE>
58
SECTION 3.02. Collection of Mortgage Loan Payments.
(a) Each of the Master Servicer or the Special Servicer shall undertake
reasonable efforts to collect all payments required under the terms and
provisions of the Mortgage Loans it is obligated to service hereunder and shall,
to the extent such procedures shall be consistent with this Agreement, follow
such collection procedures in accordance with the Servicing Standard. Consistent
with the foregoing, the Special Servicer, with regard to a Specially Serviced
Mortgage Loan, or the Master Servicer, with regard to a Mortgage Loan that is
not a Specially Serviced Mortgage Loan, may waive any Penalty Interest or late
payment charge in connection with any payment on a Mortgage Loan.
(b) All amounts collected in respect of any Mortgage Loan in the form of
payments from Mortgagors, Liquidation Proceeds (insofar as such Liquidation
Proceeds are of the nature described in clauses (i) through (iii) of the
definition thereof) or Insurance Proceeds shall be applied to either amounts due
and owing under the related Mortgage Note and Mortgage (including, without
limitation, for principal and accrued and unpaid interest) in accordance with
the express provisions of the related Mortgage Note and Mortgage or, if required
pursuant to the express provisions of the related Mortgage, or as determined by
the Master Servicer or Special Servicer in accordance with the Servicing
Standard, to the repair or restoration of the related Mortgaged Property, and,
in the absence of such express provisions, shall be applied for purposes of this
Agreement: first, as a recovery of any related and unreimbursed Advances plus
interest accrued thereon; second, as a recovery of accrued and unpaid interest,
to the extent such amounts have not been previously advanced, at the related
Mortgage Rate on such Mortgage Loan; third, as a recovery of principal of such
Mortgage Loan then due and owing, to the extent such amounts have not been
previously advanced, including, without limitation, by reason of acceleration of
the Mortgage Loan following a default thereunder; fourth, 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, Prepayment Premiums, Yield Maintenance Charges and Penalty Interest;
fifth, as a recovery of any remaining principal of such Mortgage Loan to the
extent of its entire remaining unpaid principal balance; and sixth, with respect
to any ARD Loan after its Anticipated Repayment Date, as a recovery of any
interest to accrue on such ARD Loan at a rate in excess of the related Mortgage
Rate. All amounts collected on any Mortgage Loan in the form of Liquidation
Proceeds of the nature described in clauses (iv) through (vi) of the definition
thereof shall be deemed to be applied: first, as a recovery of any related and
unreimbursed Advances plus interest accrued thereon; second, as a recovery of
accrued and unpaid interest, to the extent such amounts have not been previously
advanced, at the related Mortgage Rate on such Mortgage Loan to but not
including the Due Date in the Collection Period of receipt; third, as a recovery
of principal, to the extent such amounts have not been previously advanced, of
such Mortgage Loan to the extent of its entire unpaid principal balance; and
fourth, with respect to any ARD Loan after its Anticipated Repayment Date, as a
recovery of any interest to accrue on such ARD Loan at a rate in excess of the
related Mortgage Rate. No such amounts shall be applied to the items
constituting additional servicing compensation as described in the first
sentence of Section 3.11(b) or 3.11(d) unless
<PAGE>
59
and until all principal and interest then due and payable on such Mortgage Loan
has been collected. Amounts collected on any REO Loan shall be deemed to be
applied in accordance with the definition thereof. The provisions of this
paragraph with respect to the application of amounts collected on any Mortgage
Loan shall not alter in any way the right of the Master Servicer, the Special
Servicer or any other Person to receive payments from the Certificate Account as
set forth in clauses (ii) through (xiv) of Section 3.05(a) from amounts so
applied.
(c) The Master Servicer will remit to Lehman Brothers Holdings Inc. or its
designee on each P&I Advance Date all interest (other than Penalty Interest) to
accrue at a rate in excess of 7.5% per annum on the Mountain View Apartments
Mortgage Loan to the extent such amount of interest is collected by the Master
Servicer on such Mortgage Loan.
(d) Within 10 days after the Closing Date, the Master Servicer shall notify
the Lease Enhancement Policy Issuer that (i) both the Master Servicer and the
Special Servicer shall be sent notices under each Lease Enhancement Policy and
(ii) the Trustee for the benefit of the Certificateholders shall be the loss
payee under each Lease Enhancement Policy. In the event that the Master Servicer
has actual knowledge of any event (an "Insured Event") giving rise to a claim
under any Lease Enhancement Policy, the Master Servicer shall notify the Special
Servicer thereof within three Business Days after learning of such event. The
Special Servicer shall prepare and file a "proof of loss" form with the Lease
Enhancement Policy Issuer within five Business Days after receiving notice of
any Insured Event under the related policy and shall diligently process any
claims under such policy in accordance with the Servicing Standard. The Special
Servicer shall give notice to the Master Servicer of any claim made under any
Lease Enhancement Policy and of any Lease Enhancement Policy Termination Event
of which the Master Servicer does not already have notice. Notwithstanding the
forgoing, with respect to each Lease Enhancement Policy that is a residual value
insurance policy, the Master Servicer will monitor the dates by which any claim
or action must be taken under such Lease Enhancement Policy to realize the full
value of such Lease Enhancement Policy for the benefit of the Certificateholders
and at least ten Business Days prior to any date on which any action must be
taken under the Lease Enhancement Policy to realize the full value of such Lease
Enhancement Policy for the benefit of the Certificateholders, the Master
Servicer shall notify the Special Servicer to take such action and upon such
notice the Special Servicer shall take such action, consistent with the
Servicing Standard.
In the event that the Master Servicer receives notice of any Lease
Enhancement Policy Termination Event, the Master Servicer shall, within three
Business Days after receipt of such notice, notify the Special Servicer of such
Lease Enhancement Policy Termination Event in writing. Upon receipt of such
notice, the Special Servicer shall, notwithstanding that the servicing of the
related Mortgage Loan may not have been transferred to the Special Servicer in
accordance with Section 3.21 hereof, address such Lease Enhancement Policy
Termination Event in accordance with the Servicing Standard. Any legal fees
incurred in connection with a resolution of a Lease Enhancement Policy
Termination Event shall be paid by the Special Servicer and shall be
reimbursable to it as a Trust Fund expense.
<PAGE>
60
SECTION 3.03. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts; Reserve Accounts.
(a) The Master Servicer shall, as to all Mortgage Loans, establish and
maintain one or more accounts (the "Servicing Accounts"), into which all Escrow
Payments shall be deposited and retained. Each Servicing Account shall be an
Eligible Account. Withdrawals of amounts so collected from a Servicing Account
may be made (to the extent amounts have been escrowed for such purpose) only to:
(i) effect payment of Escrow Payments and comparable items; (ii) reimburse the
Master Servicer or the Special Servicer for any Servicing Advances; (iii) refund
to Mortgagors any sums as may be determined to be overages; (iv) pay interest,
if required and as described below, to Mortgagors on balances in the Servicing
Account; (v) pay itself interest and investment income on balances in the
Servicing Account as described in Section 3.06(b), if and to the extent not
required by law or the terms of Mortgage Loan to be paid to the Mortgagor; or
(vi) clear and terminate the Servicing Account at the termination of this
Agreement in accordance with Section 9.01. To the extent permitted by law or the
applicable Mortgage Loan, funds in the Servicing Accounts may be invested only
in Permitted Investments in accordance with the provisions of Section 3.06. The
Master Servicer shall pay or cause to be paid to the Mortgagors interest, if
any, earned on the investment of funds in Servicing Accounts maintained thereby,
if required by law or the terms of the related Mortgage Loan. If the Master
Servicer shall deposit in a Servicing Account any amount not required to be
deposited therein, it may at any time withdraw such amount from such Servicing
Account, any provision herein to the contrary notwithstanding. The Servicing
Accounts shall not be considered part of the segregated pool of assets
constituting REMIC I.
(b) The Master Servicer shall, as to all Mortgage Loans, (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, as to all Mortgage Loans, enforce the requirement of the related Mortgage
that the Mortgagor make payments in respect of such items at the time they first
become due.
(c) The Master Servicer shall, as to all Mortgage Loans, make a Servicing
Advance with respect to the related Mortgaged Property in an amount equal to all
such funds as are necessary for the purpose of effecting the payment of (i) real
estate taxes, assessments and other similar items, (ii) ground rents (if
applicable), and (iii) premiums on Insurance Policies, in each instance if and
to the extent Escrow Payments (if any) collected from the related Mortgagor are
insufficient to pay such item when due and the related Mortgagor has
<PAGE>
61
failed to pay such item on a timely basis, and provided that the particular
Servicing Advance would not, if made, constitute a Nonrecoverable Servicing
Advance. All such Servicing Advances shall be reimbursable in the first instance
from related collections from the Mortgagors, and further as provided in Section
3.05(a). No costs incurred by the Master Servicer in effecting the payment of
real estate taxes, assessments and, if applicable, ground rents on or in respect
of such Mortgaged Properties shall, for purposes of this Agreement, including,
without limitation, the Paying Agent's calculation of monthly distributions to
Certificateholders, be added to the unpaid Stated Principal Balances of the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so
permit. The foregoing shall in no way limit the Master Servicer's ability to
charge and collect from the Mortgagor such costs together with interest thereon.
If the Master Servicer or Special Servicer is required under any provision
of this Agreement (including, but not limited to, this Section 3.03(c)) to make
a Servicing Advance, but neither does so within 15 days after such Advance is
required to be made, the Trustee shall, if it has actual knowledge of such
failure on the part of the Master Servicer or Special Servicer, as the case may
be, give written notice of such failure, as applicable, to the Master Servicer
or the Special Servicer. If such Servicing Advance is not made by the Master
Servicer or the Special Servicer within three Business Days after such notice
then (subject to a determination that such Servicing Advance would be a
Nonrecoverable Servicing Advance) the Trustee shall make such Servicing Advance.
If the Trustee fails to make any Servicing Advance required to be made under
this Section 3.03(c), then (subject to a determination that such Servicing
Advance would be a Nonrecoverable Servicing Advance) the Fiscal Agent shall make
such Servicing Advance within three Business Days of such failure by the Trustee
and, thereby, the Trustee shall be deemed not to be in default under this
Agreement. Any failure by the Master Servicer or the Special Servicer to make a
Servicing Advance hereunder shall constitute an Event of Default by the Master
Servicer or the Special Servicer, as the case may be, subject to and as provided
in Section 7.01.
(d) In connection with its recovery of any Servicing Advance from the
Certificate Account pursuant to Section 3.05(a), each of the Master Servicer,
the Special Servicer, the Trustee and the Fiscal Agent shall be entitled to
receive, out of any amounts then on deposit in the Certificate Account, any
unpaid interest at the Reimbursement Rate in effect from time to time,
compounded annually, accrued on the amount of such Servicing Advance from the
date made to but not including the date of reimbursement. The Master Servicer
shall reimburse itself, the Special Servicer, the Trustee or the Fiscal Agent,
as appropriate and in accordance with Section 3.05(a), for any Servicing Advance
as soon as practicable after funds available for such purpose are deposited in
the Certificate Account.
(e) The determination by either the Master Servicer or the Special Servicer
that it has made a Nonrecoverable Servicing Advance or that any proposed
Servicing Advance, if made, would constitute a Nonrecoverable Servicing Advance,
shall be made in accordance with the Servicing Standard and shall be evidenced
by an Officers' Certificate delivered promptly to the Trustee and the Depositor,
setting forth the basis for such determination, together with a copy of any
appraisal of the related Mortgaged Property or
<PAGE>
62
REO Property, as the case may be; which appraisal shall take into account the
factors specified in Section 3.18(e), including without limitation, any
environmental, engineering or other third party reports available, and other
factors that a prudent real estate appraiser would consider and conducted in
accordance with the standards of the Appraisal Institute performed pursuant to
Section 3.09(a) by the Master Servicer or by the Special Servicer if the
Mortgage Loan is a Defaulted Mortgage Loan or, if no such appraisal has been
performed, a copy of an appraisal of the related Mortgaged Property or REO
Property performed within the twelve months preceding such determination by an
Independent Appraiser or other expert in real estate matters, and further
accompanied by related Mortgagor operating statements and financial statements,
budgets and rent rolls of the related Mortgaged Property and any engineers'
reports, environmental surveys or similar reports that the Master Servicer or
the Special Servicer may have obtained and that support such determination. The
Trustee and the Fiscal Agent shall be entitled to rely, conclusively, on any
determination by the Master Servicer or the Special Servicer that a Servicing
Advance, if made, would be a Nonrecoverable Advance; provided, however, that if
the Master Servicer or the Special Servicer has failed to make a Servicing
Advance for reasons other than a determination by the Master Servicer or the
Special Servicer, as applicable, that such Servicing Advance would be a
Nonrecoverable Advance, the Trustee or the Fiscal Agent, as applicable, shall
make such Servicing Advance within the time periods required by Section 3.03(c)
unless the Trustee or the Fiscal Agent, in good faith, makes a determination
that such Servicing Advance would be a Nonrecoverable Advance.
(f) The Master Servicer shall, as to all Mortgage Loans, establish and
maintain, as applicable, one or more accounts (the "Reserve Accounts"), into
which all Reserve Funds, if any, shall be deposited and retained. Withdrawals of
amounts so deposited may be made (i) to pay for, or to reimburse the related
Mortgagor in connection with, the related repairs 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 and (ii) to pay the
Master Servicer interest and investment income earned on amounts in the Reserve
Accounts as described below. To the extent permitted in the applicable Mortgage,
funds in the Reserve Accounts may be invested in Permitted Investments in
accordance with the provisions of Section 3.06. All Reserve Accounts shall be
Eligible Accounts. The Reserve Accounts shall not be considered part of the
segregated pool of assets comprising REMIC I. Consistent with the Servicing
Standard, the Master Servicer may waive or extend the date set forth in any
agreement governing such Reserve Funds by which the required repairs and/or
capital improvements at the related Mortgaged Property must be completed.
SECTION 3.04. Certificate Account and Distribution Account.
(a) The Master Servicer shall establish and maintain one or more accounts
(collectively, the "Certificate Account"), held on behalf of the Trustee in
trust for the benefit of the Certificateholders. The Certificate Account shall
be an Eligible Account. The Master Servicer shall deposit or cause to be
deposited in the Certificate Account, within one Business
<PAGE>
63
Day of receipt of available funds (in the case of payments by Mortgagors or
other collections on the Mortgage Loans) or as otherwise required hereunder, the
following payments and collections received or made by the Master Servicer or on
its behalf subsequent to the Cut-off Date (other than in respect of principal
and interest on the Mortgage Loans due and payable on or before the Cut-off
Date, which payments shall be delivered promptly to the appropriate Mortgage
Loan Seller or its designee, with negotiable instruments endorsed as necessary
and appropriate without recourse), or payments (other than Principal
Prepayments) received by it on or prior to the Cut-off Date but allocable to a
period subsequent thereto:
(i) all payments on account of principal of the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
including Penalty Interest;
(iii) all Prepayment Premiums and Yield Maintenance Charges;
(iv) all Insurance Proceeds and Liquidation Proceeds (other than
Liquidation Proceeds described in clause (vi) of the definition thereof
that are required to be deposited in the Distribution Account pursuant to
Section 9.01) received in respect of any Mortgage Loan;
(v) any amounts required to be deposited by the Master Servicer
pursuant to Section 3.06 in connection with losses incurred with respect to
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 hazard policy; and
(vii) any amounts required to be transferred from an REO Account
pursuant to Section 3.16(c).
The foregoing requirements for deposit in the Certificate Account shall be
exclusive. Notwithstanding the foregoing, actual payments from Mortgagors in the
nature of Escrow Payments, amounts to be deposited in Reserve Accounts, and
amounts that the Master Servicer and the Special Servicer are entitled to retain
as additional servicing compensation pursuant to Sections 3.11(b) and (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 Sections 3.11(b) and (d) assumption
fees, late charges and other transaction fees received by the Master Servicer to
which the Special Servicer is entitled pursuant to either of such Sections upon
receipt of a certificate of a Servicing Officer of the Special Servicer
describing the item and amount. The Certificate Account shall be maintained as a
segregated
<PAGE>
64
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)
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 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 Paying Agent shall establish and maintain one or more trust
accounts (collectively, the "Distribution Account") to be held in trust for the
benefit of the Certificateholders. The Distribution Account shall be an Eligible
Account. The Master Servicer shall deliver to the Paying Agent each month on or
before the P&I Advance Date therein, 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 clauses (b)(ii)(B)
of the definition thereof) for the related Distribution Date then on deposit in
the Certificate Account, together with (i) any Prepayment Premiums or Yield
Maintenance Charges 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 Paying Agent 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 in connection with Prepayment Interest Shortfalls;
and
<PAGE>
65
(iv) the Purchase Price paid in connection with the purchase by the
Master Servicer of all of the Mortgage Loans and any REO Properties
pursuant to Section 9.01, exclusive of the portion of such amounts required
to be deposited in the Certificate Account pursuant to Section 9.01.
The Paying Agent shall, upon receipt, deposit in the Distribution Account
any and all amounts received by the Paying Agent 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 only in Permitted Investments in accordance with the provisions of
Section 3.06. The Master Servicer shall give notice to the Trustee, the Special
Servicer and the Rating Agencies of the location of the Certificate Account as
of the Closing Date and of the new location of the Certificate Account prior to
any change thereof. The Paying Agent shall give notice to the Trustee, the
Master Servicer, the Special Servicer and the Rating Agencies 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 Paying Agent for deposit in the Distribution
Account the amounts required to be so deposited pursuant to the first
paragraph of Section 3.04(b);
(ii) to reimburse the Fiscal Agent, the Trustee and itself, in that
order, for unreimbursed P&I Advances, the Fiscal Agent's, the Trustee's and
Master Servicer's right to reimbursement pursuant to this clause (ii) with
respect to any P&I Advance (other than Nonrecoverable Advances, which are
reimbursable pursuant to clause (vii) below) being limited to amounts that
represent Late Collections of interest (net of the related Servicing Fees)
and principal (net of any related Principal Recovery Fee) received in
respect of the particular Mortgage Loan or REO Loan as to which such P&I
Advance was made;
(iii) to pay to itself earned and unpaid Master Servicing Fees and to
pay to the Special Servicer earned and unpaid Additional Servicing Fees, in
each case in respect of each Mortgage Loan and REO Loan, the Master
Servicer's and the Special Servicer's 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
<PAGE>
66
payments, Liquidation Proceeds or Insurance Proceeds) or such REO Loan
(whether in the form of REO Revenues, Liquidation Proceeds or Insurance
Proceeds) that are allocable as a recovery of interest thereon;
(iv) to pay to the Special Servicer earned and unpaid Special
Servicing Fees in respect of each Specially Serviced Mortgage Loan and REO
Loan;
(v) to pay the Special Servicer (or, if applicable, a predecessor
Special Servicer) earned and unpaid Principal Recovery Fees in respect of
each Specially Serviced Mortgage Loan, Corrected Mortgage Loan and REO
Loan, the Special Servicer's (or, if applicable, any predecessor Special
Servicer's) right to payment pursuant to this clause (v) with respect to
any such Mortgage Loan or REO Loan being limited to amounts received on or
in respect of such Mortgage Loan (whether in the form of payments,
Liquidation Proceeds or Insurance Proceeds) or such REO Loan (whether in
the form of REO Revenues, Liquidation Proceeds or Insurance Proceeds) that
are allocable as a recovery of principal thereon (provided that no
Principal Recovery Fee shall be payable out of any Liquidation Proceeds
received in connection with the purchase of any Mortgage Loan or REO
Property by the applicable Mortgage Loan Seller pursuant to the respective
Mortgage Loan Purchase Agreement, by the Majority Subordinate
Certificateholder pursuant to Section 3.18(b), by the Master Servicer or
Special Servicer pursuant to Section 3.18(c) or by the Depositor, the
Master Servicer, Lehman Brothers Inc., the Special Servicer or the Majority
Subordinate Certificateholder pursuant to Section 9.01);
(vi) to reimburse the Fiscal Agent, the Trustee, itself or the Special
Servicer, in that order, for any unreimbursed Servicing Advances, the
Fiscal Agent's, the Trustee's, the Master Servicer's and the Special
Servicer's respective rights to reimbursement pursuant to this clause (vi)
with respect to any Servicing Advance being limited to payments made by the
related Mortgagor that are allocable to such Servicing Advance, or to
Liquidation Proceeds, Insurance Proceeds and, if applicable, REO Revenues
received in respect of the particular Mortgage Loan or REO Property as to
which such Servicing Advance was made;
(vii) to reimburse the Fiscal Agent, the Trustee, itself or the
Special Servicer, in that order, for any unreimbursed Advances that have
been or are determined to be Nonrecoverable Advances or to pay itself, with
respect to any Mortgage Loan or REO Property, any related earned Servicing
Fee that remained unpaid in accordance with clause (iii) above following a
Final Recovery Determination made with respect to such Mortgage Loan or REO
Property and the deposit into the Certificate Account of all amounts
received in connection therewith;
<PAGE>
67
(viii) at such time as it reimburses the Fiscal Agent, the Trustee,
itself or the Special Servicer, in that order, for any unreimbursed Advance
pursuant to clause (ii), (vi) or (vii) above, to pay the Trustee, the
Fiscal Agent, itself or the Special Servicer, as the case may be, in that
order, any interest accrued and payable thereon in accordance with Section
3.03(d) or 4.03(d), as applicable;
(ix) to pay for costs and expenses incurred by the Trust Fund pursuant
to Section 3.09(c);
(x) to pay itself, as additional servicing compensation in accordance
with Section 3.11(b), 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;
(xi) to pay for the cost of an independent appraiser or other expert
in real estate matters retained pursuant to Section 3.03(e), 3.09(a),
3.18(e) or 4.03(c);
(xii) to pay itself, the Special Servicer, the Depositor, or any of
their respective directors, officers, employees and agents, as the case may
be, any amounts payable to any such Person pursuant to Section 6.03;
(xiii) to pay for (A) the advice of counsel and tax accountants
contemplated by Section 3.17(a)(iii), (B) the cost of the Opinions of
Counsel contemplated by Sections 3.09(b)(ii), 3.09(c), 3.16(a) and
11.02(a), (C) the cost of an Opinion of Counsel contemplated by Section
11.01(a) or 11.01(c) in connection with any amendment to this Agreement
requested by the Master Servicer or the Special Servicer that protects or
is in furtherance of the rights and interests of Certificateholders, (D)
the cost of obtaining any REO Extension sought by the Special Servicer as
contemplated by Section 3.16(a), and (E) the cost of recording this
Agreement in accordance with Section 11.02(a);
(xiv) to pay itself, the Special Servicer, the appropriate 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; and
(xv) 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 clauses (ii) - (xv)
above.
<PAGE>
68
The Master Servicer shall pay to the Special Servicer (or to third party
contractors at the direction of the Special Servicer), the Trustee or the Fiscal
Agent from the Certificate Account amounts permitted to be paid to the Special
Servicer (or to such third party contractors), the Trustee or the Fiscal Agent
therefrom promptly upon receipt of a certificate of a Servicing Officer of the
Special Servicer or of a Responsible Officer of the Trustee or Fiscal Agent, as
the case may be, describing the item and amount to which the Special Servicer
(or such third party contractors), the Trustee or the Fiscal Agent, as
applicable, is entitled. The Master Servicer may rely conclusively on any such
certificate and shall have no duty to re-calculate the amounts stated therein.
The Special 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. With respect to each Mortgage Loan for
which it makes an Advance, each of the Trustee and Fiscal Agent shall similarly
keep and maintain separate accounting for each Mortgage Loan, on a loan-by-loan
and property-by-property basis, for the purpose of justifying any request for
withdrawal from the Certificate Account for reimbursements of Advances or
interest thereon.
(b) The Paying Agent may, from time to time, make withdrawals from the
Distribution Account for any of the following purposes (in no particular order
of priority):
(i) to make distributions to Certificateholders on each Distribution
Date pursuant to Section 4.01 or 9.01, as applicable;
(ii) to pay the Trustee, the Fiscal Agent or any of their respective
directors, officers, employees and agents, as the case may be, any amounts
payable or reimbursable to any such Person pursuant to Section 8.05 and/or
Section 8.19(a), as applicable;
(iii) to pay the Master Servicer, as additional servicing compensation
in accordance with Section 3.11(b), interest and investment income earned
in respect of amounts held in the 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 (A) as provided in clause (v) of the definition of "Disqualified
Organization", (B) as contemplated by Sections 9.02(a)(i) and 10.01(i), or
(C) as contemplated by Section 11.01(a) or 11.01(c) in connection with any
amendment to this Agreement requested by the Trustee which amendment is in
furtherance of the rights and interests of Certificateholders;
(v) to pay any and all federal, state and local taxes imposed on any
of the REMICs created hereunder or on the assets or transactions of any
such REMIC, together with all incidental costs and expenses, to the extent
none of
<PAGE>
69
the Trustee, the REMIC Administrator, the Master Servicer or the
Special Servicer is liable therefor pursuant to Section 10.01(j);
(vi) to pay the REMIC Administrator any amounts reimbursable to it
pursuant to Section 10.01(f);
(vii) to pay to the Master Servicer any amounts deposited by the
Master Servicer in the Distribution Account not required to be deposited
therein; and
(viii) to clear and terminate the Distribution Account at the
termination of this Agreement pursuant to Section 9.01.
SECTION 3.06. Investment of Funds in the Servicing Accounts, the Reserve
Accounts, the Certificate Account, the Distribution
Account and the REO Account.
(a) The Master Servicer may direct in writing any depository institution
maintaining a Servicing Account, a Reserve Account or the Certificate Account
and may direct in writing the Paying Agent 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, unless payable on demand,
no later than the Business Day immediately preceding the next succeeding date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement. In the event that the Master Servicer shall have failed to give
investment directions for any Servicing Account, any Reserve Account, the
Certificate Account or the Distribution Account (exclusive of any accounts as
are held by the Master Servicer) or the Special Servicer shall have failed to
give investment directions for the REO Account by 11:00 A.M. New York time on
any Business Day on which there may be uninvested cash, such funds held in the
REO account shall be invested in securities described in clause (i) of the
definition of the term "Permitted Investments"; and such funds held in such
other accounts shall be invested in securities described in clause (v) of such
definition. The Paying Agent agrees that funds in the Distribution Account will
be invested in accordance herewith on the day of receipt if received by 5:00
P.M. New York time. All such Permitted Investments shall be held to maturity,
unless payable on demand. Any investment of funds in an Investment Account shall
be made in the name of the Trustee (in its capacity as such). The Master
Servicer (with respect to Permitted Investments of amounts in the Servicing
Accounts, the Reserve Accounts, the Certificate Account and the Distribution
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
<PAGE>
70
which a secured party may perfect its security interest by possession under the
UCC or any other applicable law. Possession of any such Permitted Investment by
the Master Servicer or the Special Servicer shall constitute possession by a
Person designated by the Trustee for purposes of Section 8-313 of the UCC and
possession by the Trustee, as secured party, for purposes of Section 9-305 of
the UCC and any other applicable law. If amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Master Servicer (in the case of the Certificate Account, Servicing Accounts
and Reserve Accounts), the Paying Agent (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
any of the Servicing Accounts, the Reserve Accounts, 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
each Collection Period, shall be for the sole and exclusive benefit of the
Master Servicer and shall be subject to its withdrawal in accordance with
Section 3.03(a), 3.03(f) or 3.05(a) or withdrawal by the Paying Agent at its
direction in accordance with Sections 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 each Collection Period, shall be for the
sole and exclusive benefit of the Special Servicer and shall be subject to its
withdrawal in accordance with Section 3.16(b). If any loss shall be incurred in
respect of any Permitted Investment on deposit in any Investment Account, the
Master Servicer (in the case of the Servicing Accounts, the Reserve Accounts,
the 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, no later than the end of the Collection
Period during which such loss was incurred, the amount of the Net Investment
Loss, if any, for such Collection Period.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment and the Special Servicer or the Master Servicer fails to deposit any
losses with respect to such Permitted Investment pursuant to Section 3.06(b),
the Trustee may and, subject to Section 8.02, upon the request of Holders of
Certificates entitled to not less than 25% of the Voting Rights allocated to any
<PAGE>
71
Class, shall take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings.
(d) Notwithstanding the investment of funds held in any Investment Account,
for purposes of the calculations hereunder, including, without limitation, the
calculation of the Available Distribution Amount, the amounts so invested shall
be deemed to remain on deposit in such Investment Account.
SECTION 3.07. Maintenance of Insurance Policies; Errors and Omissions
and Fidelity Coverage.
(a) The Master Servicer (with respect to Mortgage Loans other than
Specially Serviced Mortgaged Loans) and the Special Servicer (with respect to
Specially Serviced Mortgage Loans) shall, consistent with the Servicing
Standard, cause to be maintained for each Mortgaged Property all insurance
coverage as is required under the related Mortgage; provided that if and to the
extent that any such Mortgage permits the holder thereof any discretion (by way
of consent, approval or otherwise) as to the insurance coverage that the related
Mortgagor is required to maintain, the Master Servicer shall exercise such
discretion in a manner consistent with the Servicing Standard; and provided
further that, if and to the extent that a Mortgage so permits, the related
Mortgagor shall be required to exercise its reasonable best efforts to obtain
the required insurance coverage from Qualified Insurers that have a "claims
paying ability" rating of at least "A" from Standard & Poor's and a comparable
rating from at least one other nationally recognized statistical rating agency.
The Majority Subordinate Certificateholder may request that earthquake insurance
be secured for one or more Mortgaged Properties at the expense of the Majority
Subordinate Certificateholder. Subject to Section 3.17(a), the Special Servicer
shall also cause to be maintained for each REO Property no less insurance
coverage than was previously required of the Mortgagor under the related
Mortgage; provided that all such insurance shall be obtained from Qualified
Insurers that, if they are providing casualty insurance, shall have a claims
paying ability rating of at least "A," "A2" and "A" from Standard & Poor's,
Moody's (if then rated by Moody's) and DCR (if then rated by DCR), respectively
(or Standard & Poor's and a comparable rating from one other nationally
recognized statistical rating agency, if such insurer is not rated by Moody's
and DCR) or such lower rating as will not result in qualification, downgrading
or withdrawal of the ratings then assigned to the Certificates, as evidenced in
writing by the Rating Agencies. All such insurance policies shall contain (if
they insure against loss to property and do not relate to an REO Property) a
"standard" mortgagee clause, with loss payable to the Master Servicer (in the
case of insurance maintained in respect of Mortgage Loans), and shall be in the
name of the Special Servicer (in the case of insurance maintained in respect of
REO Properties), on behalf of the Trustee; in each case such insurance 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 subject to the rights of any tenants and ground
lessors, as the case may be, and in each case in accordance with the terms of
the related Mortgage and the Servicing Standard) shall be deposited in the
Certificate
<PAGE>
72
Account, subject to withdrawal pursuant to Section 3.05(a), in the case of
amounts received in respect of a Mortgage Loan, or in the REO Account, subject
to withdrawal pursuant to Section 3.16(c), in the case of amounts received in
respect of an REO Property. Any cost incurred by the Master Servicer or the
Special Servicer in maintaining any such insurance shall not, for purposes
hereof, including, without limitation, calculating monthly distributions to
Certificateholders, be added to unpaid principal balance of the related Mortgage
Loan, notwithstanding that the terms of such Mortgage Loan so permit.
(b) If the Master Servicer or the Special Servicer shall obtain and
maintain, or cause to be obtained and maintained, a blanket policy insuring
against hazard losses on all of the Mortgage Loans and/or REO Properties that it
is required to service and administer, then, to the extent such policy (i) is
obtained from a Qualified Insurer having a claims-paying rating of "A," "A2" and
"A" or better from Standard & Poor's, Moody's and DCR, respectively (or Standard
& Poor's and a comparable rating from one other nationally recognized
statistical rating agency, if such insurer is not rated by Moody's and DCR) or
such lower rating of any Rating Agency or rating from any other nationally
recognized statistical rating agency as will not result in qualification,
downgrading or withdrawal of the ratings then assigned to the Certificates, as
evidenced in writing by the Rating Agencies, and (ii) provides protection
equivalent to the individual policies otherwise required, the Master Servicer or
the Special Servicer, as the case may be, shall conclusively be deemed to have
satisfied its obligation to cause hazard insurance to be maintained on the
related Mortgaged Properties and/or REO Properties. Such blanket policy may
contain a deductible clause (not in excess of a customary amount), in which case
the Master Servicer or the Special Servicer, as appropriate, shall, if there
shall not have been maintained on the related Mortgaged Property or REO Property
a hazard insurance policy complying with the requirements of Section 3.07(a),
and there shall have been one or more losses that would have been covered by
such policy, promptly deposit into the Certificate Account from its own funds
the amount not otherwise payable under the blanket policy because of such
deductible clause. The Master Servicer or the Special Servicer, as appropriate,
shall prepare and present, on behalf of itself, the Trustee and
Certificateholders, claims under any such blanket policy in a timely fashion in
accordance with the terms of such policy.
(c) Each of the Master Servicer and the Special Servicer shall at all times
during the term of this Agreement (or, in the case of the Special Servicer, at
all times during the term of this Agreement in which Specially Serviced Mortgage
Loans or REO Properties are part of the Trust Fund) keep in force with Qualified
Insurers a fidelity bond issued by an insurer having a claims-paying rating of
"A," "Baa3" and "A" or better from Standard & Poor's, Moody's (if then rated by
Moody's) and DCR (if then rated by DCR), respectively, or such lower rating of
any Rating Agency or rating from any other nationally recognized statistical
rating agency as will not result in qualification, downgrading or withdrawal of
the ratings then assigned to the Certificates, as evidenced in writing by the
Rating Agencies, such fidelity bond to be in such form and amount as would
permit it to be a qualified FNMA seller-servicer of multifamily mortgage loans,
or in such other form and amount as would not cause the qualification,
downgrading or withdrawal of any rating assigned by any Rating Agency to
<PAGE>
73
the Certificates (as evidenced in writing from each Rating Agency); and provided
that the Master Servicer's current fidelity insurer, Travellers Insurance
Company, shall be deemed to satisfy the requirements of this section so long as
it has a claims-paying rating of "A" or better from Standard & Poor's and Baa3
or higher by Moody's. Each of the Master Servicer and the Special Servicer shall
be deemed to have complied with the foregoing provision if an Affiliate thereof
has such fidelity bond coverage and, by the terms of such fidelity bond, the
coverage afforded thereunder extends to the Master Servicer or the Special
Servicer, as the case may be. Such fidelity bond shall provide for ten days'
written notice to the Trustee prior to any cancellation.
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 having a claims-paying rating of "A," "Baa3" and "A" or
better from Standard & Poor's, Moody's (if then rated by Moody's) and DCR (if
then rated by DCR), or such lower rating as will not result in qualification,
downgrading or withdrawal of the ratings then assigned to the Certificates, as
evidenced in writing by the Rating Agencies, respectively, a policy or policies
of insurance covering loss occasioned by the errors and omissions of its
officers, employees and agents in connection with its servicing obligations
hereunder, which policy or policies shall be in such form and amount as would
permit it to be a qualified FNMA seller-servicer of multifamily mortgage loans,
or in such other form and amount as would not adversely affect any rating
assigned by any Rating Agency to the Certificates (as evidenced in writing from
each Rating Agency). Each of the Master Servicer and the Special Servicer shall
be deemed to have complied with the foregoing provisions if an Affiliate thereof
has such insurance and, by the terms of such policy or policies, the coverage
afforded thereunder extends to the Master Servicer or the Special Servicer, as
the case may be. Any such errors and omissions policy shall provide for ten
days' written notice to the Trustee prior to cancellation. The Master Servicer
and the Special Servicer shall each cause the Trustee to be an additional loss
payee on any policy currently in place or procured pursuant to the requirements
of this Section 3.07(c).
For so long as the long-term debt obligations of the Master Servicer or
Special Servicer, as the case may be (or in the case of the initial Master
Servicer and Special Servicer, their respective direct or indirect parent), are
rated at least "A" or the equivalent by all of the Rating Agencies (or such
lower rating as will not result in qualification, downgrading or withdrawal of
the ratings then assigned to the Certificates, as evidenced in writing by the
Rating Agencies), such Person may self-insure with respect to the risks
described in this subsection.
SECTION 3.08. Enforcement of Alienation Clauses.
With respect to all Mortgage Loans, the Special Servicer, on behalf of the
Trustee as the mortgagee of record, shall, to the extent permitted by applicable
law, enforce the restrictions contained in the related Mortgage on transfers or
further encumbrances of the related Mortgaged Property and on transfers of
interests in the related Mortgagor, unless the Special
<PAGE>
74
Servicer has determined, consistent with the Servicing Standard, that waiver of
such restrictions would be in accordance with the Servicing Standard. Promptly
after the Special Servicer has made any such determination, the Special Servicer
shall deliver to the Trustee, the Rating Agencies and the Master Servicer an
Officers' Certificate setting forth the basis for such determination. The
Special Servicer shall not exercise any such waiver in respect of a
due-on-encumbrance provision without receiving the prior written confirmation
from the Rating Agencies that such action would not result in a downgrading,
qualification or withdrawal of the ratings then assigned to the Certificates;
provided that, in the event that the principal balance of the related Mortgage
Loan is less than 2% of the aggregate principal balance of all of the Mortgage
Loans as of the date of such waiver, no prior written consent will be required
from DCR, but the Special Servicer will deliver notice of such waiver to DCR.
SECTION 3.09. Realization Upon Defaulted Mortgage Loans; Required
Appraisals.
(a) The Special Servicer shall, subject to Sections 3.09(b) through
3.09(d), exercise reasonable efforts, consistent with the Servicing Standard, to
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent
payments, including, without limitation, pursuant to Section 3.20. The Special
Servicer shall advance all costs and expenses (other than costs or expenses that
would, if incurred, constitute a Nonrecoverable Servicing Advance) incurred by
it in any such proceedings, and shall be entitled to reimbursement therefor as
provided in Section 3.05(a). Nothing contained in this Section 3.09 shall be
construed so as to require the Special Servicer, on behalf of the Trust Fund, to
make a bid on any Mortgaged Property at a foreclosure sale or similar proceeding
that is in excess of the fair market value of such property, as determined by
the Special Servicer in its reasonable and good faith judgment taking into
account the factors described in Section 3.18(e) and the results of any
appraisal obtained 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 securing a
defaulted Mortgage Loan, whether for purposes of bidding at foreclosure or
otherwise, it may, at the expense of the Trust Fund, have an appraisal performed
with respect to such property by an Independent Appraiser or other expert in
real estate matters; which appraisal shall take into account the factors
specified in Section 3.18(e), including without limitation, any environmental,
engineering or other third party reports available, and other factors that a
prudent real estate appraiser would consider. With respect to each Required
Appraisal Mortgage Loan, the Special Servicer will be required to obtain a
Required Appraisal within 60 days of a Mortgage Loan becoming a Required
Appraisal Mortgage Loan (unless an appraisal meeting the requirements of a
Required Appraisal was obtained for such Required Appraisal Mortgage Loan within
the prior 3 months in which case such appraisal shall be the Required Appraisal)
and thereafter shall obtain a letter update of such Required Appraisal once
every 12 months if
<PAGE>
75
such Mortgage Loan remains a Required Appraisal Mortgage Loan. The Special
Servicer shall advance the cost of such Required Appraisal; provided, however,
that such expense will be subject to reimbursement to the Special Servicer as a
Servicing Advance out of the Certificate Account pursuant to Section 3.05(a).
(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 (as
evidenced by an Officers' 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 Environmental Assessment of such Mortgaged Property performed by an
Independent Person who regularly conducts Environmental Assessments and
performed within six months prior to any such acquisition of title or other
action (a copy of which Environmental Assessment shall be delivered to the
Trustee and the Master Servicer), that:
(i) the Mortgaged Property is in compliance with applicable
environmental laws and regulations or, if not, that it would maximize the
recovery to the Certificateholders on a present value basis (the relevant
discounting of anticipated collections that will be distributable to
Certificateholders to be performed at the related 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
<PAGE>
76
(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 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 with respect to the affected Mortgaged Property.
The Special Servicer shall undertake, in good faith, reasonable efforts to
make the determination referred to in the preceding paragraph and may
conclusively rely on the Environmental Assessment referred to above in making
such determination. The cost of any such Environmental Assessment, as well as
the cost of any remedial, corrective or other further action contemplated by
clause (i) and/or clause (ii) of the preceding paragraph, may be reimbursed to
the Special Servicer from the Certificate Account as a Servicing Advance; and if
any such Environmental Assessment so warrants, the Special Servicer shall, as a
Servicing Advance, perform such additional environmental testing as it deems
necessary and prudent to determine whether the conditions described in clauses
(i) and (ii) of the preceding paragraph have been satisfied.
(d) If the environmental testing contemplated by Section 3.09(c) above
establishes that any of the conditions set forth in clauses (i) and (ii) of the
first sentence thereof has not been satisfied with respect to any Mortgaged
Property securing a defaulted Mortgage Loan, the Special Servicer shall take
such action as is in accordance with the Servicing Standard (other than
proceeding against the Mortgaged Property) and, at such time as it deems
appropriate, may, on behalf of the Trustee, release all or a portion of such
Mortgaged Property from the lien of the related Mortgage; provided that if such
Mortgage Loan has a then outstanding principal balance of greater than $1
million, prior to the release of all or a portion of the related Mortgaged
Property from the lien of the related Mortgage, (i) the Special Servicer shall
have notified the Rating Agencies, Trustee and the Master Servicer in writing of
its intention to so release all or a portion of such Mortgaged Property and the
bases for such intention, (ii) the Trustee shall have notified the
Certificateholders in writing of the Special Servicer's intention to so release
all or a portion of such Mortgaged Property and (iii) the Holders of
Certificates entitled to a majority of the Voting Rights shall 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 Master Servicer, Lehman
Brothers Inc. and the Trustee monthly in writing as to any actions taken by the
Special Servicer with respect to any Mortgaged Property that represents security
for a defaulted Mortgage Loan as to which the environmental testing contemplated
in Section 3.09(c) above has revealed that any of the conditions set forth in
clauses (i) and (ii) of the first sentence
<PAGE>
77
thereof has not been satisfied, in each case until the earlier to occur of
satisfaction of all such conditions and release of the lien of the related
Mortgage on such Mortgaged Property.
(f) The Special Servicer shall have the right to determine, in accordance
with the Servicing Standard, the advisability of seeking to obtain a deficiency
judgment if the state in which the Mortgaged Property is located and the terms
of the Mortgage Loan permit such an action and shall, in accordance with the
Servicing Standard, seek such deficiency judgment if it deems advisable.
(g) The Special Servicer shall prepare and file information returns with
respect to the receipt of mortgage interest received in a trade or business, the
reports of foreclosures and abandonments of any Mortgaged Property and the
information returns relating to cancellation of indebtedness income with respect
to any Mortgaged Property required by Sections 6050H, 6050J and 6050P of the
Code and each year deliver to the Trustee and the Master Servicer an Officers'
Certificate stating that such reports have been filed. Such reports shall be in
form and substance sufficient to meet the reporting requirements imposed by
Sections 6050H, 6050J and 6050P of the Code.
(h) The Special Servicer shall maintain accurate records, prepared by a
Servicing Officer, of each Final Recovery Determination in respect of any
Mortgage Loan or REO Property and the basis thereof. Each Final Recovery
Determination shall be evidenced by an Officers' Certificate delivered to the
Trustee and the Master Servicer no later than the third Business Day following
such Final Recovery Determination.
(i) Upon reasonable request of the Master Servicer, the Special Servicer
shall deliver to it and the related Sub-Servicer any other information and
copies of any other documents in its possession with respect to a Specially
Serviced Mortgage Loan or the related Mortgaged Property.
SECTION 3.10. Trustee and Custodian to Cooperate; Release of
Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by the
Master Servicer of a notification that payment in full shall be escrowed in a
manner customary for such purposes, the Master Servicer shall promptly notify
the Trustee, who shall release or cause the related Custodian to release, by a
certification (which certification shall be in the form of a Request for Release
in the form of Exhibit D-1 attached hereto and shall be accompanied by the form
of a release or discharge and shall include a statement to the effect that all
amounts received or to be received in connection with such payment which are
required to be deposited in the 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 release, or cause any related Custodian to
release, the related Mortgage File to the Master Servicer and shall deliver to
the Master Servicer such release or discharge, duly executed. No expenses
incurred in connection
<PAGE>
78
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, shall release, or cause any related Custodian to release, such Mortgage
File (or portion thereof) to the Master Servicer or the Special Servicer, as the
case may be. Upon return of such Mortgage File (or portion thereof) to the
Trustee or related Custodian, or the delivery to the Trustee of a certificate of
a Servicing Officer of the Special Servicer stating that such Mortgage Loan was
liquidated and that all amounts received 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 or related Custodian to the Master Servicer or
the Special Servicer, as applicable.
(c) Within seven Business Days (or within such shorter period (but no less
than three Business Days) as execution and delivery can reasonably be
accomplished if the Special Servicer notifies the Trustee of an exigency) of the
Special Servicer's request therefor, the Trustee shall execute and deliver to
the Special Servicer (or the Special Servicer may execute and deliver in the
name of the Trustee based on a limited power of attorney issued in favor of the
Special Servicer pursuant to Section 3.01(b)), in the form supplied to the
Trustee, any court pleadings, requests for trustee's sale or other documents
stated by the Special Servicer to be reasonably necessary to the foreclosure or
trustee's sale in respect of a Mortgaged Property or REO Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity or to defend any legal action or counterclaim
filed against the Trust Fund, the Master Servicer or the Special Servicer.
Together with such documents or pleadings, the Special Servicer shall deliver to
the Trustee a certificate of a Servicing Officer requesting that such pleadings
or documents be executed by the Trustee and certifying as to the reason such
documents or pleadings are required and that the execution and delivery thereof
by the Trustee will not invalidate or otherwise affect the lien of the Mortgage,
except for the termination of such a lien upon completion of the foreclosure or
trustee's sale.
SECTION 3.11. Servicing Compensation.
(a) As compensation for its activities hereunder, the Master Servicer shall
be entitled to receive the Master Servicing Fee with respect to each Mortgage
Loan (including 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 and on the same principal amount respecting
which the related interest payment due on such
<PAGE>
79
Mortgage Loan or deemed to be due on such REO Loan is computed and calculated on
the basis of a 360-day year consisting of twelve 30-day months (or, in the event
of a Principal Prepayment in full or other Liquidation Event with respect to a
Mortgage Loan or REO Loan, on the basis of the actual number of days to elapse
from and including the related Due Date to but excluding the date of such
Principal Prepayment or Liquidation Event in a month consisting of 30 days). The
Master Servicing Fee with respect to any Mortgage Loan or REO Loan shall cease
to accrue if a Liquidation Event occurs in respect thereof. Earned but unpaid
Master Servicing Fees shall be payable monthly, on a loan-by-loan basis, from
payments of interest on each Mortgage Loan and REO Revenues allocable as
interest on each REO Loan. The Master Servicer shall be entitled to recover
unpaid Master Servicing Fees in respect of any Mortgage Loan or REO Loan out of
that portion of related Insurance Proceeds or Liquidation Proceeds allocable as
recoveries of interest, to the extent permitted by Section 3.05(a)(iii). The
right to receive the Master Servicing Fee may not be transferred in whole or in
part except in connection with the transfer of all of the Master Servicer's
responsibilities and obligations under this Agreement.
(b) Additional servicing compensation in the form of (i) late charges,
Penalty Interest, charges for beneficiary statements or demands, amounts
collected for checks returned for insufficient funds and any similar fees
(excluding Prepayment Premiums or Yield Maintenance Charges), in each case to
the extent actually paid by a Mortgagor with respect to a Mortgage Loan that is
not a Specially Serviced Mortgage Loan, and (ii) fifty percent (50%) of any
assumption fee to the extent actually paid by a Mortgagor with respect to any
Mortgage Loan, may be retained by the Master Servicer and are not required to be
deposited in the Certificate Account. The Master Servicer shall also be entitled
to additional servicing compensation in the form of (i) Prepayment Interest
Excesses (but only insofar as the aggregate of such Prepayment Interest Excesses
collected during any Collection Period exceeds the aggregate amount of
Prepayment Interest Shortfalls incurred during such Collection Period); (ii)
interest or other income earned on deposits in the Reserve Accounts, the
Servicing Accounts, 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 the Servicing
Accounts maintained thereby. The Master Servicer shall be required to pay out of
its own funds all expenses incurred by it in connection with its servicing
activities hereunder (including, without limitation, payment of any amounts due
and owing to any of its Sub-Servicers and the premiums for any blanket policy
insuring against hazard losses pursuant to Section 3.07(b)), if and to the
extent such expenses are not payable directly out of the 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 Special Servicing Fee
<PAGE>
80
Rate on the same principal amount respecting which the related interest payment
due on such Mortgage Loan or deemed to be due on such REO Loan is computed and
calculated on the basis of a 360-day year consisting of twelve 30-day months
(or, in the event of a Principal Prepayment in full or other Liquidation Event
with respect to a Mortgage Loan or REO Loan, on the basis of the actual number
of days to elapse from and including the related Due Date to but excluding the
date of such Principal Prepayment or Liquidation Event in a month consisting of
30 days). The Special Servicing Fee with respect to any Specially Serviced
Mortgage Loan or REO Loan shall cease to accrue as of the date a Liquidation
Event occurs in respect thereof or it becomes a Corrected Mortgage Loan. Earned
but unpaid Special Servicing Fees shall be payable monthly out of general
collections on the Mortgage Loans and any REO Properties on deposit in the
Certificate Account pursuant to Section 3.05(a).
In addition, with respect to each Specially Serviced Mortgage Loan,
Corrected Mortgage Loan and REO Loan, the Special Servicer shall be entitled to
the Principal Recovery Fee payable out of, and equal to 0.25% of, all amounts
(whether in the form of payments, Insurance Proceeds, Liquidation Proceeds or
REO Revenues) received in respect of such Mortgage Loan (or, in the case of an
REO Loan, in respect of the related REO Property) and allocable as a recovery of
principal in accordance with Section 3.02(b) or the definition of "REO Loan", as
applicable; provided that no Principal Recovery Fee shall be payable in
connection with, or out of Liquidation Proceeds resulting from, the purchase of
any Mortgage Loan or REO Property by the applicable Mortgage Loan Seller
pursuant to the respective Mortgage Loan Purchase Agreement, by the Majority
Subordinate Certificateholder pursuant to Section 3.18(b), by the Master
Servicer or the Special Servicer pursuant to Section 3.18(c) or by the
Depositor, the Master Servicer, Lehman Brothers Inc., the Special Servicer or
the Majority Subordinate Certificateholder pursuant to Section 9.01; provided
further that if any Person is acting as Special Servicer at such time as any
Specially Serviced Mortgage Loan became a Corrected Mortgage Loan and such
Person is subsequently terminated as Special Servicer hereunder, and if such
Corrected Mortgage Loan was still a Corrected Mortgage Loan at the time of such
termination, then such Person shall, following such termination, continue to be
entitled to all Principal Recovery Fees payable in respect to such Corrected
Mortgage Loan, and no successor Special Servicer shall be entitled to any
Principal Recovery Fees payable in respect thereof, in either case unless and
until such Corrected Mortgage Loan again becomes a Specially Serviced Mortgage
Loan or becomes an REO Loan; and provided further that if any Person is
terminated as Special Servicer hereunder while the sale of any Specially
Serviced Mortgage Loan or REO Property is pending, then (subject to the second
preceding proviso) such Person shall be entitled to all, and the successor
Special Servicer shall be entitled to none, of the Principal Recovery Fee
payable in connection with the receipt of the Liquidation Proceeds derived from
such sale.
As compensation for its activities set forth in Section 3.12, the Special
Servicer shall be entitled to receive the Additional Servicing Fee with respect
to each Mortgage Loan and REO Loan. As to each such Mortgage Loan and REO Loan,
the Additional Servicing Fee, shall accrue at the Additional Servicing Fee Rate
on the same principal amount respecting which the related interest payment due
on such Mortgage Loan or deemed to be due on such
<PAGE>
81
REO Loan is computed and calculated on the basis of a 360-day year consisting of
twelve 30-day months (or, in the event of a Principal Prepayment in full or
other Liquidation Event with respect to a Mortgage Loan or REO Loan, on the
basis of the actual number of days to elapse from and including the related Due
Date to but excluding the date of such Principal Prepayment or Liquidation Event
in a month consisting of 30 days). The Additional 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 Additional Servicing Fees shall be
payable monthly, on a loan-by-loan basis, from payments of interest on each
Mortgage Loan and REO Revenues allocable as interest on each REO Loan. The
Special Servicer shall be entitled to recover unpaid Additional Servicing Fees,
in respect of any Mortgage Loan or REO Loan out of that portion of related
Insurance Proceeds or Liquidation Proceeds allocable as recoveries of interest,
to the extent permitted by Section 3.05(a)(iv).
The Special Servicer's right to receive the Special Servicing Fee, the
Additional Servicing Fee and the Principal Recovery Fee may not be transferred
in whole or in part except in connection with the transfer of all of the Special
Servicer's responsibilities and obligations under Sections 6.02, 6.04 and 6.09.
(d) Additional servicing compensation in the form of (i) late charges
received on or with respect to Specially Serviced Mortgage Loans, (ii) fifty
percent (50%) of assumption fees collected on all Mortgage Loans and (iii) one
hundred percent (100%) of modification fees collected on all Mortgage Loans, in
each case to the extent actually paid by the related Mortgagor, shall be
retained by the Special Servicer or promptly paid to the Special Servicer by the
Master Servicer and shall not be required to be deposited in the Certificate
Account pursuant to Section 3.04(a). The Special Servicer shall also be entitled
to additional servicing compensation in the form of: (i) interest or other
income earned on deposits in the REO Account, if established, in accordance with
Section 3.06(b) (but only to the extent of the Net Investment Earnings, if any,
with respect to the REO Account for each Collection Period); and (ii) to the
extent not required to be paid to any Mortgagor under applicable law, any
interest or other income earned on deposits in the Servicing Accounts maintained
by the Special Servicer. The Special Servicer shall be required to pay out of
its own funds all expenses incurred by it in connection with its servicing
activities hereunder (including, without limitation, payment of any amounts due
and owing to any of its Sub-Servicers and the premiums for any blanket policy
obtained by it insuring against hazard losses pursuant to Section 3.07(b)), and
the Special Servicer shall be entitled to reimbursement therefor as expressly
provided in Section 3.05(a) if and to the extent such expenses are not payable
directly out of the Certificate Account or the REO Account.
SECTION 3.12. Property Inspections; Collection of Financial Statements;
Delivery of Certain Reports.
(a) The Special Servicer shall at its expense perform or cause to be
performed a physical inspection of a Mortgaged Property as soon as practicable
after a related Mortgage Loan becomes a Specially Serviced Mortgage Loan and, in
any event, shall at its expense perform or cause to be performed an inspection
of all the Mortgaged Properties at
<PAGE>
82
least once per calendar year. The Special Servicer shall prepare a written
report of each such inspection performed by it that sets forth in detail the
condition of the Mortgaged Property and that specifies the existence of: (i) any
sale, transfer or abandonment of the Mortgaged Property of which the Special
Servicer is aware, (ii) any change in the condition or value of the Mortgaged
Property that it, in its reasonable judgment, considers material, or (iii) any
waste committed on the Mortgaged Property. The Special Servicer shall make
copies of all such inspection reports available for review by Certificateholders
and Certificate Owners during normal business hours at the offices of the
Special Servicer at all times after a date no later than 30 days of the related
inspection. The Special Servicer shall forward copies of any such inspection
reports to the Master Servicer and Lehman Brothers Inc. upon request.
The Special Servicer will, promptly after a Mortgage Loan becomes a
Specially Serviced Mortgage Loan, give written notice to the Master Servicer and
the Trustee which will include an explanation as to the reasons such Mortgage
Loan became a Specially Serviced Mortgage Loan and the Special Servicer's plan
for servicing such Mortgage Loan, a copy of which notice will be provided by the
Trustee to each Certificateholder, each Rating Agency, the Depositor and Lehman
Brothers Inc.
(b) Not later than 2:00 P.M. on the second Business Day prior to each
Determination Date, the Special Servicer shall deliver or cause to be delivered
to the Master Servicer the following reports with respect to the Mortgage Loans
(and, if applicable, the related REO Properties) providing the required
information as of the end of the preceding calendar month: (i) a CSSA Property
File Report; (ii) a Comparative Financial Status Report; (iii) a NOI Adjustment
Worksheet and (iv) an Operating Statement Analysis. Not later than 2:00 P.M. on
the second Business Day following each Determination Date, the Special Servicer
shall deliver or cause to be delivered to the Master Servicer the following
reports with respect to the Mortgage Loans (and, if applicable, the related REO
Properties) providing the required information as of such Determination Date:
(i) a Delinquent Loan Status Report; (ii) an Historical Loss Estimate Report;
(iii) an Historical Loan Modification Report; (iv) an REO Status Report; (v) a
Watch List Report; and (vi) a Loan Payoff Notification Report.
(c) Not later than 2:00 P.M. on the third Business Day after each
Determination Date, the Master Servicer shall deliver or cause to be delivered
to the Trustee (A) the following reports with respect to the Mortgage Loans
(and, if applicable, the related REO Properties) providing the required
information as of the end of the preceding calendar month: (i) the CSSA Property
File Report received from the Special Servicer pursuant to Section 3.12(b); (ii)
the Comparative Financial Status Report received from the Special Servicer
pursuant to Section 3.12(b); (iii) the NOI Adjustment Worksheet received from
the Special Servicer pursuant to Section 3.12(b) and (iv) the Operating
Statement Analysis received from the Special Servicer pursuant to Section
3.12(b) and (B) the following reports with respect thereto providing the
required information as of such Determination Date: (i) the Delinquent Loan
Status Report received from the Special Servicer pursuant to Section 3.12(b);
(ii) the Historical Loss Estimate Report received from the Special Servicer
pursuant to Section 3.12(b); (iii) the Historical Loan Modification Report
received from the Special Servicer pursuant to Section 3.12(b); (iv) the REO
Status Report received from the Special Servicer
<PAGE>
83
pursuant to Section 3.12(b); (v) a Watch List Report; and (vi) a Loan Payoff
Notification Report. On the third Business Day after each Determination Date,
the Master Servicer will deliver a notice to each Rating Agency, if during the
preceding calendar month the rating then assigned to any Tenant or guarantor
under a Guaranty is reduced or withdrawn.
(d) The Special Servicer will deliver to the Master Servicer the reports
set forth in Section 3.12(b) and the Master Servicer shall deliver to the
Trustee the reports set forth in Section 3.12(c) in an electronic format
reasonably acceptable to the Special Servicer and the Master Servicer with
respect to the reports set forth in Section 3.12(b), and the Master Servicer and
the Trustee with respect to the reports set forth in Section 3.12(c). The Master
Servicer may, absent manifest error, conclusively rely on the reports to be
provided by the Special Servicer pursuant to Section 3.12(b). The Trustee may,
absent manifest error, conclusively rely on the reports to be provided by the
Master Servicer pursuant to Section 3.12(c) to the extent that the underlying
information is solely within the control of the Master Servicer or the Special
Servicer. In the case of information or reports to be furnished by the Master
Servicer to the Trustee pursuant to Section 3.12(c), to the extent that such
information is based on reports to be provided by the Special Servicer pursuant
to Section 3.12(b) and to the extent that such reports are to be prepared and
delivered by the Special Servicer pursuant to Section 3.12(b), the Master
Servicer shall have no obligation to provide such information or reports until
it has received such information or reports from the Special Servicer and the
Master Servicer shall not be in default hereunder due to a delay in providing
the reports required by Section 3.12(c) caused by the Special Servicer's failure
to timely provide any report required under Section 3.12(b) of this Agreement.
The Special Servicer shall, consistent with accepted servicing practices,
endeavor to obtain quarterly and annual operating statements and rent rolls with
respect to each of the Mortgage Loans and REO Properties, which efforts shall
include in the case of Mortgage Loans, a letter sent to the related Mortgagor
each quarter (followed up with telephone calls) requesting such quarterly and
annual operating statements and rent rolls until they are received to the extent
such action is consistent with applicable law. With respect to each Mortgaged
Property and REO Property the Special Servicer will prepare and deliver an
Operating Statement Analysis as set forth in Section 3.12(b) for the related
Mortgaged Property or REO Property for or as of the end the prior calendar month
together with copies of the operating statements and rent rolls for the related
Mortgaged Property or REO Property.
Within ten days after receipt by the Special Servicer of any annual
operating statements with respect to any Mortgaged Property or REO Property, the
Special Servicer shall prepare or update an NOI Adjustment Worksheet for such
Mortgaged Property or REO Property (with the annual operating statements
attached thereto as an exhibit).
The Special Servicer shall maintain one Operating Statement Analysis report
for each Mortgaged Property and REO Property. The Operating Statement Analysis
report for each Mortgaged Property is to be updated by the Special Servicer and
such updated report made available to the Trustee within thirty days after
receipt by the Special Servicer of
<PAGE>
84
updated operating statements for such Mortgaged Property. The Special Servicer
will use the "Normalized" column from the NOI Adjustment Worksheet to update the
Operating Statement Analysis report and will use any operating statements
received with respect to any Mortgaged Property to update the Operating
Statement Analysis report for such Mortgaged Property, such updates to be
completed and copies thereof sent to the Trustee within thirty days after
receipt of the necessary information.
SECTION 3.13. Annual Statement as to Compliance
Each of the Master Servicer and the Special Servicer shall deliver to the
Trustee, the Underwriters, and the Rating Agencies, and, in the case of the
Special Servicer, to the Master Servicer, on or before April 30 of each year,
beginning April 30, 1998, an Officers' Certificate stating, as to each 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 qualification, or challenging the
status, of any portion of the Trust Fund as a REMIC from the Internal Revenue
Service or any other governmental agency or body or, if it has received any such
notice, specifying the details thereof. The Master Servicer and Special Servicer
shall deliver a copy of such Officer's Certificate to the Depositor.
SECTION 3.14. Reports by Independent Public Accountants.
On or before April 30 of each year, beginning April 30, 1998 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) that is a member of the American
Institute of Certified Public Accountants to furnish a statement to the Trustee,
Underwriters, Rating Agencies, Depositor and, in the case of the Special
Servicer, to the Master Servicer to the effect that such firm has examined the
servicing operations of the Master Servicer or the Special Servicer, as the case
may be, for the previous calendar year (except that the first such report shall
cover the period from the Closing Date through December 31, 1998) and that, on
the basis of such examination, conducted substantially in compliance with USAP,
such firm confirms that the Master Servicer or the Special Servicer, as the case
may be, complied with the minimum servicing standards identified in USAP, in all
material respects, except for such significant exceptions or errors in records
that, in the opinion of such firm, the USAP requires it to report. In rendering
such statement, such firm may rely, as to matters relating to direct servicing
of mortgage loans by Sub-Servicers, upon comparable statements for examinations
conducted substantially in compliance with the Uniform Single Audit Program for
Mortgage Bankers (rendered within
<PAGE>
85
one year of such statement) of independent public accountants with respect to
the related Sub-Servicer.
SECTION 3.15. Access to Certain Information.
Upon ten days prior written notice, the Master Servicer (with respect to
the items in clauses (a), (b), (c), (d) and (h) below), the Special Servicer
(with respect to the items in clauses (e), (f), (g), (h) and (i) below) and the
Trustee to the extent any such items are in its possession, shall make available
at their respective offices primarily responsible for administration of the
Mortgage Loans, during normal business hours, for review by any
Certificateholder or any person identified by a Holder or its designated agent
to the Trustee, the Master Servicer or the Special Servicer, as the case may be,
as a prospective transferee of such an interest, the Trustee, the Rating
Agencies, the Underwriters and anyone specified thereby and the Depositor
originals or copies of the following items: (a) this Agreement and any
amendments thereto, (b) all Distribution Date Statements delivered to holders of
the relevant Class of Certificates since the Closing Date and all reports,
statements and analyses delivered by the Master Servicer since the Closing Date
pursuant to Section 3.12(c), (c) all Officer's Certificates delivered by the
Master Servicer since the Closing Date pursuant to Section 3.13, (d) all
accountants' reports delivered to the Master Servicer since the Closing Date as
described in Section 3.14, (e) the most recent property inspection report
prepared by or on behalf of the Special Servicer in respect of each Mortgaged
Property and delivered to the Master Servicer, (f) the most recent Mortgaged
Property annual operating statements and rent roll, if any, collected by or on
behalf of the Special Servicer and delivered to the Master Servicer, (g) any and
all modifications, waivers and amendments of the terms of a Mortgage Loan
entered into by the Special Servicer, (h) any and all Officers' Certificates and
other evidence delivered by 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, and (i) any operating statements, budgets,
rent rolls or financial statements. Copies of any and all of the foregoing items
will be available from the Master Servicer or the Special Servicer, as the case
may be, upon request and shall be provided to any of the Rating Agencies and
Lehman Brothers Inc. at no cost pursuant to any of their requests.
Each of the Master Servicer and the Special Servicer shall afford to the
Trustee, Lehman Brothers Inc., the Rating Agencies and the Depositor, and to the
OTS, the FDIC and any other banking or insurance regulatory authority that may
exercise authority over any Certificateholder, access to any records regarding
the Mortgage Loans and the servicing thereof within its control, except to the
extent it is prohibited from doing so by applicable law or contract or to the
extent such information is subject to a privilege under applicable law to be
asserted on behalf of the Certificateholders. Such access shall be afforded only
upon reasonable prior written request and during normal business hours at the
offices of the Master Servicer or the Special Servicer, as the case may be,
designated by it.
The Trustee, the Master Servicer, the Special Servicer and the Underwriters
may require payment from the Certificateholder of a sum sufficient to cover the
reasonable costs and expenses of providing any such information or access
pursuant to this Section 3.15
<PAGE>
86
to, or at the request of, the Certificateholders or prospective transferees,
including, without limitation, copy charges and reasonable fees for employee
time and for space.
A Certificateholder or Certificate Owner may obtain certain information
contained in each Distribution Date Statement by calling the Trustee's ASAP
System at (312) 904-2200 and requesting statement number 295, or such other
mechanism as the Trustee may have in place from time to time. Account numbers on
the Trustee's ASAP System may be obtained by calling (312) 904-2200 and
following the voice prompts for obtaining account numbers. Certificate Factor
information may be obtained by potential purchasers of the Certificates or
interests therein, by calling (800) 246-5761. In addition, if the Depositor or
either of the Underwriters so directs the Trustee, the Trustee will make
available the Distribution Date Statement via automated medium to any Person who
places a telephone call to (312) 904-2200 and requests access to ASAP, the
Trustee's automated fax back system. Additionally, the Trustee shall make
available to the Master Servicer, the Special Servicer, the Certificateholders,
Certificate Owners identified to the Trustee in writing, the Depositor, the
Underwriters, each Rating Agency, and Bloomberg, L.P. (and may in its discretion
and upon receipt of written consent of the Underwriters publish on the internet)
by means of electronic access to a datafile in the "CSSA Loan periodic update
file" and the "CSSA Property File" with the Delinquent Loss Status Report,
Historical Loan Modification Report, Historical Loss Estimate Report, REO Status
Report, Loan Payoff Notification Report and the Watch List Report attached
(provided such reports have been delivered to the Trustee pursuant to Section
3.12(c) in an electronic format acceptable to the Trustee) via the Trustee's
bulletin board, (accessible by dialing (714) 282-3990). The Trustee may disclaim
responsibility for any information therein for which it is not the original
source. The Master Servicer, upon receipt of written consent of the
Underwriters, may publish on the internet any information that Trustee is
obligated to provide to Bloomberg, L.P. provided that any expenses or liability
arising therefrom shall not be an Additional Trust Fund Expense and shall be the
sole responsibility of the Master Servicer.
If three or more Holders (hereinafter referred to as "Applicants" with a
single Person which (together with its Affiliates) is the Holder of more than
one Class of Certificates being viewed as a single Applicant for these purposes)
apply in writing to the Trustee, and such application states that the
Applicants' desire to communicate with other Holders with respect to their
rights under this Agreement or under the Certificates and is accompanied by a
copy of the communication which such Applicants propose to transmit, then the
Trustee shall, within five Business Days after the receipt of such application,
send, at the Applicants' expense, the written communication proffered by the
Applicants to all Certificateholders at their addresses as they appear in the
Certificate Register.
SECTION 3.16. Title to REO Property; REO Account.
(a) If title to any REO Property is acquired, the deed or certificate of
sale shall be issued to the Trustee on behalf of the Certificateholders. The
Special Servicer, on behalf of the Trust Fund, shall sell any REO Property by
the end of the third year following the calendar year in which REMIC I acquires
ownership of such REO Property for purposes
<PAGE>
87
of Section 860G(a)(8) of the Code, unless the Special Servicer either (i)
applies, more than sixty days prior to the end of such third succeeding year,
and is granted an extension of time (an "REO Extension") by the Internal Revenue
Service to sell such REO Property or (ii) obtains for the Trustee an Opinion of
Counsel, addressed to the Trustee, the Special Servicer and the Master Servicer,
to the effect that the holding by REMIC I of such REO Property subsequent to the
end of such third succeeding year will not result in the imposition of taxes on
"prohibited transactions" (as defined in Section 860F of the Code) of any of
REMIC I, REMIC II or REMIC III or cause any of REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC at any time that any Certificates are outstanding. If
the Special Servicer is granted the REO Extension contemplated by clause (i) of
the immediately preceding sentence or obtains the Opinion of Counsel
contemplated by clause (ii) of the immediately preceding sentence, the Special
Servicer shall sell such REO Property within such extended period as is
permitted by such REO Extension or such Opinion of Counsel, as the case may be.
Any expense incurred by the Special Servicer in connection with its obtaining
the REO Extension contemplated by clause (i) of the second preceding sentence or
its obtaining the Opinion of Counsel contemplated by clause (ii) of the second
preceding sentence, shall be an expense of the Trust Fund payable out of the
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"), held on behalf of the Trustee in trust for the benefit of the
Certificateholders, for the retention of revenues and other proceeds derived
from each REO Property. The REO Account shall be an Eligible Account. The
Special Servicer shall deposit, or cause to be deposited, in the REO Account,
upon receipt, all REO Revenues, Insurance Proceeds and Liquidation Proceeds
received in respect of an REO Property. Funds in the REO Account may be invested
in Permitted Investments in accordance with Section 3.06. The Special Servicer
shall be entitled to make withdrawals from the REO Account to pay itself, as
additional servicing compensation in accordance with Section 3.11(d), interest
and investment income earned in respect of amounts held in the REO Account as
provided in Section 3.06(b) (but only to the extent of the Net Investment
Earnings with respect to the REO Account for any Collection Period). The Special
Servicer shall give notice to the 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 (including any monthly reserve or escrow
amounts necessary to accumulate sufficient funds for taxes, insurance and
anticipated capital expenditures (the "Impound Reserve")). On each Determination
Date, the Special Servicer shall withdraw from the REO Account and deposit into
the Certificate Account or deliver to the Master Servicer or such other Person
as may be directed by the Master Servicer (which shall deposit such amounts into
<PAGE>
88
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 in addition to the Impound Reserve 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 other related
expenses), such reserve not to exceed $10,000 with respect to each such REO
Property or to cover a period of more than twelve 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). The
Special Servicer shall provide the Master Servicer any information with respect
to the REO Account as is reasonably requested by the Master Servicer.
SECTION 3.17. Management of REO Property.
(a) Prior to the acquisition of title to a Mortgaged Property, the Special
Servicer shall review the operation of such Mortgaged Property and determine the
nature of the income that would be derived from such property if it were
acquired by the Trust Fund. If the Special Servicer determines from such review
that:
(i) None of the income from Directly Operating such Mortgaged Property
would be subject to tax as "net income from foreclosure property" within
the meaning of the REMIC Provisions or would be subject to the tax imposed
on "prohibited transactions" under Section 860F of the Code (either such
tax referred to herein as an "REO Tax"), such Mortgaged Property may be
Directly Operated by the Special Servicer as REO Property;
(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
REMIC
<PAGE>
89
Administrator, in writing, a proposed plan (the "Proposed Plan") to
manage such property as REO Property. Such plan shall include potential
sources of income, and to the extent commercially feasible, estimates of
the amount of income from each such source. Within a reasonable period of
time after receipt of such plan, the REMIC Administrator shall consult with
the Special Servicer and shall advise the Special Servicer of the REMIC
Administrator's federal income tax reporting position with respect to the
various sources of income that the Trust Fund would derive under the
Proposed Plan. In addition, the REMIC Administrator shall (to the maximum
extent possible) advise the Special Servicer of the estimated amount of
taxes that the Trust Fund would be required to pay with respect to each
such source of income. After receiving the information described in the two
preceding sentences from the REMIC Administrator, the Special Servicer
shall either (A) implement the Proposed Plan (after acquiring the
respective Mortgaged Property as REO Property) or (B) manage and operate
such property in a manner that would not result in the imposition of an REO
Tax on the income derived from such property. All of the REMIC
Administrator's expenses (including any fees and expenses of counsel or
other experts reasonably retained by it) incurred pursuant to this section
shall be reimbursed to it from the Trust Fund in accordance with Section
10.01(f).
The Special Servicer's decision as to how each REO Property shall be
managed and operated shall be based on the Servicing Standard and in any case on
the good faith and reasonable judgment of the Special Servicer as to which means
would be in the best interest of the Certificateholders by maximizing (to the
extent commercially 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 REMIC Administrator may,
at the expense of the Trust Fund payable pursuant to Section 3.05(a)(xiii)
consult with counsel.
(b) Subject to Section 3.17(a)(iii), if title to any REO Property is
acquired, the Special Servicer shall manage, conserve, protect and operate such
REO Property for the benefit of the Certificateholders solely for the purpose of
its prompt disposition and sale in a manner that does not and will not cause
such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or, except as contemplated by Section
3.17(a), either result in the receipt by REMIC I, REMIC II or REMIC III of any
"income from non-permitted assets" within the meaning of Section 860F(a)(2)(B)
of the Code or result in an Adverse REMIC Event. Subject to the foregoing,
however, the Special Servicer shall have full power and authority to do any and
all things in connection therewith as are consistent with the Servicing Standard
and, consistent therewith, shall withdraw from the REO Account, to the extent of
amounts on deposit therein with respect to any REO Property, funds necessary for
the proper operation, management, maintenance and disposition of such REO
Property, including without limitation:
<PAGE>
90
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon;
(iii) any ground rents in respect of such REO Property; and
(iv) all costs and expenses necessary to maintain, lease, sell,
protect, manage, operate and restore such REO Property.
To the extent that amounts on deposit in the REO Account in respect of any REO
Property are insufficient for the purposes set forth in clauses (i) - (iv) above
with respect to such REO Property, the Special Servicer shall make Servicing
Advances in such amounts as are necessary for such purposes unless (as evidenced
by an Officers' Certificate delivered to the Trustee and the Master Servicer)
the Special Servicer would not make such advances if the Special Servicer owned
such REO Property or the Special Servicer determines, in accordance with the
Servicing Standard, that such payment would be a Nonrecoverable Advance;
provided, however, that the Special Servicer may make any such Servicing Advance
without regard to recoverability if it is a necessary fee or expense incurred in
connection with the defense or prosecution of legal proceedings.
(c) The Special Servicer may contract with any Independent Contractor for
the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract may not be
inconsistent herewith and shall reflect an agreement reached at arm's
length;
(ii) the fees of such Independent Contractor (which shall be expenses
of the Trust Fund) shall be reasonable and customary in consideration of
the nature and locality of the REO Property;
(iii) except as permitted under Section 3.17(a), any such contract
shall require, or shall be administered to require, that the Independent
Contractor, in a timely manner, (A) pay all costs and expenses incurred in
connection with the operation and management of such REO Property,
including, without limitation, those listed in Section 3.17(b) above, and
(B) except to the extent that such revenues are derived from any services
rendered by the Independent Contractor to tenants of the REO Property that
are not customarily furnished or rendered in connection with the rental of
real property (within the meaning of Section 1.856-4(b)(5) of the Treasury
Regulations or any successor provision), remit all related revenues
collected (net of its fees and such costs and expenses) to the Special
Servicer upon receipt;
<PAGE>
91
(iv) none of the provisions of this Section 3.17(c) relating to any
such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Special Servicer of any of its duties and
obligations hereunder with respect to the operation and management of any
such REO Property; and
(v) the Special Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and obligations
in connection with the operation and management of such REO Property.
The Special Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Special Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. No agreement entered into pursuant to this
Section 3.17(c) shall be deemed a Sub-Servicing Agreement for purposes of
Section 3.22.
SECTION 3.18. Sale of Mortgage Loans and REO Properties.
(a) The Master Servicer, the Special Servicer or the Trustee may sell or
purchase, or permit the sale or purchase of, a Mortgage Loan or REO Property
only on the terms and subject to the conditions set forth in this Section 3.18
or as otherwise expressly provided in or contemplated by Sections 2.03(a),
2.02(b) and 9.01.
(b) Subject to Sections 2.03(a) and 2.02(b), if the Special Servicer has
determined in good faith that any Defaulted Mortgage Loan will become subject to
foreclosure proceedings, the Special Servicer shall promptly so notify in
writing the Trustee and the Master Servicer, and the Trustee, following its
receipt of such notice, shall, within 10 days after receipt of such notice,
notify the Majority Subordinate Certificateholder. The Majority Subordinate
Certificateholder may at its option purchase from the Trust Fund, at a price
equal to the Purchase Price, any such Mortgage Loan. The Purchase Price for any
Mortgage Loan purchased under this paragraph (b) shall be deposited into the
Certificate Account, and the Custodian, upon receipt of an Officers' Certificate
from the Master Servicer to the effect that such deposit has been made, shall
release or cause to be released to the Majority Subordinate Certificateholder
the related Mortgage File, and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be provided to
it and are reasonably necessary to vest in the Majority Subordinate
Certificateholder ownership of such Mortgage Loan. In connection with any such
purchase, the Special Servicer shall deliver the related Servicing File to the
Majority Subordinate Certificateholder.
(c) If the Majority Subordinate Certificateholder has not purchased any
Defaulted Mortgage Loan within 30 days of its having received notice in respect
thereof pursuant to Section 3.18(b) above, either the Master Servicer or the
Special Servicer (with preference given to the Special Servicer) may at its
option purchase such Mortgage Loan from the Trust Fund, at a price equal to the
Purchase Price. The Purchase Price for any such
<PAGE>
92
Mortgage Loan purchased under this paragraph (c) shall be deposited into the
Certificate Account, and the Custodian, upon receipt of an Officers' Certificate
from the Master Servicer to the effect that such deposit has been made, shall
release or cause to be released to the Master Servicer or the Special Servicer,
as applicable, the related Mortgage File, and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be provided to it and are reasonably necessary to vest in the Master Servicer or
the Special Servicer, as applicable, the ownership of such Mortgage Loan. In
connection with any such purchase by the Master Servicer, the Special Servicer
shall deliver the related Servicing File to the Master Servicer.
(d) The Special Servicer may offer to sell any Defaulted Mortgage Loan not
otherwise purchased pursuant to Sections 3.18(b) and 3.18(c) above, if and when
the Special Servicer determines, consistent with the Servicing Standard, that
such a sale would be in the best economic interests of the Trust Fund. Such
offer shall be made in a commercially reasonable manner (which, for purposes
hereof, includes an offer to sell without representation or warranty other than
customary warranties of title and condition, if liability for breach thereof is
limited to recourse against the Trust Fund) for a period of not less than 10
days. Unless the Special Servicer determines that acceptance of any bid would
not be in the best economic interests of the Trust Fund, the Special Servicer
shall accept the highest cash bid received from any Person that constitutes a
fair price for such Mortgage Loan. In the absence of any bid determined as
provided below to be fair, the Special Servicer shall proceed with respect to
such Defaulted Mortgage Loan in accordance with Section 3.09.
The Special Servicer shall use its best efforts to solicit bids for each
REO Property in such manner as will be reasonably likely to realize a fair price
within the time period provided for by Section 3.16(a). The Special Servicer
shall accept the first (and, if multiple bids are received contemporaneously or
subsequently, the highest, provided that the Special Servicer is not obligated
to the first bidder) cash bid received from any Person that constitutes a fair
price for such REO Property. If the Special Servicer reasonably believes that it
will be unable to realize a fair price for any REO Property within the time
constraints imposed by Section 3.16(a), 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
<PAGE>
93
3.18(e)). In determining whether any bid received from an Interested Person
represents a fair price for any such Mortgage Loan or REO Property, the Special
Servicer shall be supplied with and may rely on a narrative appraisal prepared
at the expense of the Trust Fund by an Independent Appraiser, retained by the
Special Servicer. (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
Master Servicer shall not bid with respect to a Defaulted Mortgage Loan or REO
Property if the Special Servicer has informed it that the Special 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 Mortgage Loan or REO Property, the Special Servicer shall take into
account (in addition to the results of any appraisal described above and any
appraisal that it may have obtained pursuant to Section 3.09(a)), and any
appraiser or other expert in real estate matters shall be instructed to take
into account, as applicable, among other factors, the period and amount of any
delinquency on the affected Mortgage Loan, the occupancy level and physical
condition of the Mortgaged Property or REO Property, the state of the local
economy and the obligation to dispose of any REO Property within the time period
specified in Section 3.16(a). The Purchase Price for any such Mortgage Loan or
REO Property shall in all cases be deemed a fair price. Notwithstanding the
other provisions of this Section 3.18 (but excluding a purchase pursuant to
Section 3.18(c)), no cash bid from the Master Servicer, Special Servicer or any
of their Affiliates thereof shall constitute a fair price for any Defaulted
Mortgage Loan or REO Property unless such bid is the highest bid received and at
least two independent bids (not including the bid of the Master Servicer,
Special Servicer or any Affiliate) have been received. In the event the bid of
the Special Servicer or any Affiliate is the only bid received or is the higher
of only two bids received, then additional bids shall be solicited. If an
additional bid or bids are received and the original bid of the Special Servicer
or any Affiliate is the highest of all bids received, then the bid of the
Special Servicer or such Affiliate shall be deemed to constitute a fair price.
(f) Subject to Sections 3.18(a) through 3.18(e) above, the Special Servicer
shall act on behalf of the Trustee in negotiating and taking any other action
necessary or appropriate in connection with the sale of any Defaulted Mortgage
Loan or REO Property, and the collection of all amounts payable in connection
therewith. In connection therewith, the Special Servicer may charge prospective
bidders, and may retain, fees that approximate the Special Servicer's actual
costs in the preparation and delivery of information pertaining to such sales or
evaluating bids without obligation to deposit such amounts into the Certificate
Account. Any sale of a Defaulted Mortgage Loan or any REO Property shall be
final, without recourse to the Trustee or the Trust Fund and without
representations and warranties of title and condition, unless liability for
breach thereof is limited to recourse against the Trust Fund, and if such sale
is consummated in accordance with the terms of this Agreement, neither the
<PAGE>
94
Special Servicer nor the Trustee shall have any liability to any
Certificateholder with respect to the purchase price therefor accepted by the
Special Servicer or the Trustee.
(g) Any sale of a Defaulted Mortgage Loan or any REO Property shall be for
cash only (unless changes in the REMIC Provisions or authoritative
interpretations thereof made or issued subsequent to the Startup Day allow a
sale for other consideration).
(h) The Special Servicer shall not be obligated by any of the foregoing
paragraphs of this Section 3.18 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, 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).
SECTION 3.19. Additional Obligations of Master Servicer.
The Master Servicer shall deliver to the Paying Agent 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 excess, if any,
of (A) aggregate amount of Prepayment Interest Shortfalls incurred in connection
with Principal Prepayments received during the most recently ended Collection
Period over (B) the aggregate amount of Prepayment Interest Excesses collected
in connection with Principal Prepayments received during such Collection Period,
and (ii) the total amount of all servicing compensation received by the Master
Servicer during such Collection Period.
SECTION 3.20. Modifications, Waivers, Amendments and Consents.
(a) Subject to Sections 3.20(b) through 3.20(g) below, the Special Servicer
may, on behalf of the Trustee, agree to any modification, waiver or amendment of
any term of any Mortgage Loan (including the lease reviews and lease consents
related thereto) without the consent of the Trustee or any Certificateholder.
(b) All modifications, waivers or amendments of any Mortgage Loan
(including the lease reviews and lease consents related thereto) shall be in
writing and shall be considered and effected in accordance with the Servicing
Standard.
(c) Except as provided in 3.20(d) and the last sentence of Section 3.02(a),
the Special Servicer, on behalf of the Trustee, shall not agree or consent to
any modification, waiver or amendment of any term of any Mortgage Loan that
would:
(i) affect the amount or timing of any related payment of principal,
interest or other amount (including Prepayment Premiums or Yield
Maintenance
<PAGE>
95
Charges, but excluding Penalty Interest and amounts payable as additional
servicing compensation) payable thereunder;
(ii) affect the obligation of the related Mortgagor to pay a
Prepayment Premium or Yield Maintenance Charge or permit a Principal
Prepayment during any period in which the related Mortgage Note prohibits
Principal Prepayments;
(iii) except as expressly contemplated by the related Mortgage or
pursuant to Section 3.09(d), result in a release of the lien of the
Mortgage on any material portion of the related Mortgaged Property without
a corresponding Principal Prepayment in an amount not less than the fair
market value (as determined by an appraisal by an Independent Appraiser
delivered to the Special Servicer at the expense of the related Mortgagor
and upon which the Special Servicer may conclusively rely) of the property
to be released; or
(iv) in the judgment of the Special Servicer, otherwise materially
impair the security for such Mortgage Loan or reduce the likelihood of
timely payment of amounts due thereon.
(d) Notwithstanding Section 3.20(c), but subject to the third paragraph of
this Section 3.20(d), the Special Servicer may (i) reduce the amounts owing
under any Specially Serviced Mortgage Loan by forgiving principal, accrued
interest or any Prepayment Premium or Yield Maintenance Charges, (ii) reduce the
amount of the monthly payment on any Specially Serviced Mortgage Loan, including
by way of a reduction in the related Mortgage Rate, (iii) forbear in the
enforcement of any right granted under any Mortgage Note or Mortgage relating to
a Specially Serviced Mortgage Loan or (iv) accept a principal prepayment on any
Specially Serviced Mortgage Loan during any Lockout Period; provided that (A)
the related Mortgagor is in default with respect to the Specially Serviced
Mortgage Loan or, in the judgment of the Special Servicer, such default is
reasonably foreseeable, (B) in the sole, good faith judgment of the Special
Servicer, such modification would increase the recovery on the Mortgage Loan to
Certificateholders on a net present value basis (the relevant discounting of
amounts that will be distributable to Certificateholders to be performed at the
related Mortgage Rate) and (C) such modification, waiver or amendment would not
both (1) effect an exchange or reissuance of the Mortgage Loan under Section
1001 of the Code (and the Treasury regulations promulgated thereunder) and (2)
cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC under the
Code or result in the imposition of any tax on "prohibited transactions" or
"contributions" after the Startup Day under the REMIC Provisions.
In addition, notwithstanding Section 3.20(c), but subject to the third
paragraph of this Section 3.20(d), the Special Servicer may extend the date on
which any Balloon Payment is scheduled to be due in respect of a Specially
Serviced Mortgage Loan if the conditions set forth in the proviso to the prior
paragraph are satisfied and the Special Servicer has obtained an appraisal in
accordance with the Standards of the Appraisal Institute of the
<PAGE>
96
related Mortgaged Property, performed by an Independent Appraiser, in connection
with such extension, which appraisal supports the determination of the Special
Servicer contemplated by clause (B) of the proviso to the immediately preceding
paragraph.
In no event will the Special Servicer (i) extend the maturity date of a
Mortgage Loan beyond a date that is two years prior to the Legal Final
Distribution Date, (ii) extend the maturity date of any Mortgage Loan which has
a Mortgage Rate below the prevailing interest rate for comparable loans at the
time of such modification as determined by the Special Servicer, unless (A) such
Mortgage Loan is a Balloon Loan, (B) the related Mortgagor has failed to make
the Balloon Payment at its scheduled maturity and (C) such Balloon Loan is not a
Specially Serviced Mortgage Loan (other than by reason of the failure to make
its Balloon Payment) and has not been delinquent with respect to a Monthly
Payment (other than the Balloon Payment) in the preceding twelve months, in
which case the Special Servicer may permit up to three one-year extensions at
the existing Mortgage Rate for such Mortgage Loan (provided that such limitation
of extensions made at below market rate shall not limit the ability of the
Special Servicer to extend the maturity date of any Mortgage Loan at an interest
rate at or in excess to the prevailing rate for comparable loans at the time of
such modification), (iii) if the Mortgage Loan is secured by a Ground Lease,
extend the maturity date of such Mortgage Loan beyond a date which is less than
10 years prior to the expiration of the term of such Ground Lease; (iv) reduce
the Mortgage Rate to a rate below the prevailing interest rate for comparable
loans at the time of such modification, as determined by the Special Servicer;
or (v) defer interest due on any Mortgage Loan in excess of 10% of the Stated
Principal Balance of such Mortgage Loan or defer the collection of interest on
any Mortgage Loan without accruing interest on such deferred interest at a rate
at least equal to the Mortgage Rate of such Mortgage Loan.
The determination of the Special Servicer contemplated by clause (B) of the
proviso to the first paragraph, and clause (ii) of the third paragraph, of this
Section 3.20(d) shall be evidenced by an Officer's Certificate to such effect
delivered to the Trustee and the Master Servicer and describing in reasonable
detail the basis for the Special Servicer's determination. The Special Servicer
shall append to such Officer's Certificate any information including but not
limited to income and expense statements, rent rolls, property inspection
reports and appraisals that support such determination.
(e) Any payment of interest that is deferred pursuant to any modification,
waiver or amendment permitted hereunder, shall not, for purposes hereof,
including, without limitation, calculating monthly distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such modification, waiver or
amendment so permit. The foregoing shall in no way limit the Special Servicer's
ability to charge and collect from the Mortgagor costs otherwise collectible
under the terms of the related Mortgage Note and this Agreement together with
interest thereon.
(f) The Special Servicer may, as a condition to granting any request by a
Mortgagor for consent, modification, waiver or indulgence or any other matter or
thing, the granting of which is within its discretion pursuant to the terms of
the instruments evidencing
<PAGE>
97
or securing the related Mortgage Loan and is permitted by the terms of this
Agreement, require that such Mortgagor pay to it (i) as additional servicing
compensation, a reasonable or customary fee for the additional services
performed in connection with such request, and (ii) any related costs and
expenses incurred by it. In no event shall the Special Servicer be entitled to
payment for such fees or expenses unless such payment is collected from the
related Mortgagor.
(g) The Special Servicer shall notify the Master Servicer, any related
Sub-Servicers and the Trustee, in writing, of any modification, waiver or
amendment of any term of any Mortgage Loan (including fees charged the
Mortgagor) and the date thereof, and shall deliver to the 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. Copies of each agreement whereby
any such modification, waiver or amendment of any term of any Mortgage Loan is
effected shall be made available for review upon prior request during normal
business hours at the offices of the Special Servicer pursuant to Section
3.15(g) hereof.
(h) If, with respect to any Defeasance Loan, the Master Servicer shall
receive a notice from the related Mortgagor that it intends to prepay the
related Defeasance Loan in accordance with the terms thereof, except as set
forth below, the Master Servicer shall (a) promptly respond to such notice in a
manner which would require that the Mortgagor pledge Defeasance Collateral in
lieu of such prepayment pursuant to the terms of the related Mortgage Note, (b)
notify each Rating Agency, the Trustee and the Underwriters of the request to
defease a Mortgage Loan and (c) upon the written confirmation from each Rating
Agency described in the next paragraph, take such further action as provided in
such Mortgage Note to effectuate such pledge, including the purchase and
perfection of the Defeasance Collateral in the name of the Trustee, as trustee
for the registered holders of First Union-Lehman Brothers Commercial Mortgage
Trust II, Commercial Mortgage Pass-Through Certificates, Series 1997-C2.
Notwithstanding the above, the Master Servicer shall not permit a pledge of
Defeasance Collateral in lieu of prepayment under a Defeasance Loan if (i) such
defeasance would occur within two years of the Startup Day, (ii) such Defeasance
Loan (or any applicable agreement executed in connection with the related
defeasance) provides that the Mortgagor will be liable for any shortfalls from
the Defeasance Collateral or otherwise become subjected to recourse liability
with respect to the Defeasance Loan, (iii) such defeasance would result in a new
Mortgagor on the Defeasance Loan (unless such new Mortgagor is acquiring the
Mortgaged Property that was the initial security for the Defeasance Loan), or
(iv) any Rating Agency does not confirm in writing to the Master Servicer that
the acceptance of a pledge of the Defeasance Collateral in lieu of a full
prepayment will not result in a downgrade, withdrawal or qualification of the
ratings then assigned by it to any Class of Certificates.
<PAGE>
98
SECTION 3.21. Transfer of Servicing Between Master Servicer and Special
Servicer; Record Keeping.
(a) Upon determining that a Servicing Transfer Event has occurred with
respect to any Mortgage Loan and if the Master Servicer is not also the Special
Servicer, the Master Servicer shall immediately give notice thereof, and shall
deliver a copy of the related Servicing File, to the Special Servicer and shall
use reasonable efforts to provide the Special Servicer with all information,
documents (or copies thereof) and records (including records stored
electronically on computer tapes, magnetic discs and the like) relating to the
Mortgage Loan either in the Master Servicer's or any of its directors',
officers', employees', affiliates' or agents' possession or control or otherwise
available to the Master Servicer without undue burden or expense, and reasonably
requested by the Special Servicer to enable it to assume its functions hereunder
with respect thereto without acting through a Sub-Servicer. The Master Servicer
shall use reasonable efforts to comply with the preceding sentence within five
Business Days of the occurrence of each related Servicing Transfer Event;
provided, however, if the information, documents and records requested by the
Special Servicer are not contained in the Servicing File, the Master Servicer
shall have such period of time as reasonably necessary to make such delivery.
Upon determining that a Specially Serviced Mortgage Loan has become a
Corrected Mortgage Loan and if the Master Servicer is not also the Special
Servicer, the Special Servicer shall immediately give notice thereof, and shall
return the related Servicing File and all other information, documents and
records that were not part of the Servicing File when it was delivered to the
Special Servicer within five Business Days of the occurrence, to the Master
Servicer (or such other Person as may be directed by the Master Servicer) and
upon giving such notice, and returning such Servicing File, to the Master
Servicer (or such other Person as may be directed by the Master Servicer), the
Special Servicer's obligation to service such Mortgage Loan, and the Special
Servicer's right to receive the Special Servicing Fee with respect to such
Mortgage Loan, shall terminate, and the obligations of the Master Servicer to
service and administer such Mortgage Loan shall resume.
(b) In servicing any Specially Serviced Mortgage Loans, the Special
Servicer shall provide to the Custodian originals of documents included within
the definition of "Mortgage File" for inclusion in the related Mortgage File
(with a copy of each such original to the Master Servicer), and copies of any
additional related Mortgage Loan information, including correspondence with the
related Mortgagor.
(c) On or before each Determination Date, the Special Servicer shall
deliver to the Master Servicer and each Rating Agency (or such other Person as
may be directed by the Master Servicer) a statement in writing and in computer
readable format (the form of such statement to be agreed upon by the Master
Servicer) describing, on a loan-by-loan and property-by-property basis, (1)
insofar as it relates to Specially Serviced Mortgage Loans and REO Properties,
the information described in clauses (x) through (xiii) of Section 4.02(a) and,
insofar as it relates to the Special Servicer, the information described in
clauses (xxiii) and (xxiv) of Section 4.02(a), (2) the amount of all payments,
Insurance Proceeds and Liquidation
<PAGE>
99
Proceeds received, and the amount of any Realized Loss incurred, with respect to
each Specially Serviced Mortgage Loan during the related Collection Period, and
the amount of all REO Revenues, Insurance Proceeds and Liquidation Proceeds
received, and the amount of any Realized Loss incurred, with respect to each REO
Property during the related Collection Period, (3) the amount, purpose and date
of all Servicing Advances made by the Special Servicer with respect to each
Specially Serviced Mortgage Loan and REO Property during the related Collection
Period and (4) such additional information relating to the Specially Serviced
Mortgage Loans and REO Properties as the Master Servicer reasonably requests to
enable it to perform its responsibilities under this Agreement. Notwithstanding
the foregoing provisions of this subsection (c), the Master Servicer shall
maintain ongoing payment records with respect to each of the Specially Serviced
Mortgage Loans and REO Properties and shall provide the Special Servicer with
any information reasonably available to the Master Servicer required by the
Special Servicer to perform its duties under this Agreement.
SECTION 3.22. Sub-Servicing Agreements.
(a) The Master Servicer and the Special Servicer may enter into
Sub-Servicing Agreements to provide for the performance by third parties of any
or all of their respective obligations hereunder, provided that, in each case,
the Sub-Servicing Agreement: (i) is consistent with this Agreement in all
material respects and requires the Sub-Servicer to comply with all of the
applicable conditions of this Agreement; (ii) provides that if the Master
Servicer or the Special Servicer, as the case may be, shall for any reason no
longer act in such capacity hereunder (including, without limitation, by reason
of an Event of Default), the Trustee or its designee may thereupon assume all of
the rights and, except to the extent they arose prior to the date of assumption,
obligations of the Master Servicer or the Special Servicer, as the case may be,
under such agreement or may terminate such subservicing agreement (except with
respect only to those Sub-Servicing Agreements in effect as of the Closing Date
subject to the provisions of Section 3.22(d)) without cause and without payment
of any penalty or termination fee (except with respect only to those
Sub-Servicing Agreements in effect as of the Closing Date as set forth in
Section 3.22(d)); (iii) provides that the Trustee, for the benefit of the
Certificateholders, shall be a third party beneficiary under such agreement, but
that (except to the extent the Trustee or its designee assumes the obligations
of the Master Servicer or the Special Servicer, as the case may be, thereunder
as contemplated by the immediately preceding clause (ii)) none of the Trustee,
the Trust Fund, any successor Master Servicer or Special Servicer, as the case
may be, or any Certificateholder shall have any duties under such agreement or
any liabilities arising therefrom; (iv) permits any purchaser of a Mortgage Loan
pursuant to this Agreement to terminate such agreement with respect to such
purchased Mortgage Loan at its option and without penalty, (v) does not permit
the Sub-Servicer to enter into or consent to any modification, waiver or
amendment or otherwise take any action on behalf of the Special Servicer
contemplated by Section 3.20 hereof without the consent of such Special
Servicer, and (vi) does not permit the Sub-Servicer any rights of
indemnification that may be satisfied out of assets of the Trust Fund. In
addition, each Sub-Servicing Agreement entered into by the Master Servicer shall
provide that such agreement shall be subject to Section 3.21 hereof with respect
to any Mortgage Loan that
<PAGE>
100
becomes a Specially Serviced Mortgage Loan. The Master Servicer and the Special
Servicer each shall deliver to the Trustee and to each other copies of all
Sub-Servicing Agreements, and any amendments thereto and modifications thereof,
entered into by it promptly upon its execution and delivery of such documents.
References in this Agreement to actions taken or to be taken by the Master
Servicer or the Special Servicer include actions taken or to be taken by a
Sub-Servicer on behalf of the Master Servicer or the Special Servicer, as the
case may be; and, in connection therewith, all amounts advanced by any
Sub-Servicer to satisfy the obligations of the Master Servicer or the Special
Servicer hereunder to make P&I Advances or Servicing Advances shall be deemed to
have been advanced by the Master Servicer or the Special Servicer, as the case
may be, out of its own funds and, accordingly, such P&I Advances or Servicing
Advances shall be recoverable by such Sub-Servicer in the same manner and out of
the same funds as if such Sub-Servicer were the Master Servicer or the Special
Servicer, as the case may be. For so long as they are outstanding, Advances
shall accrue interest in accordance with Sections 3.03(d) and 4.03(d), such
interest to be allocable between the Master Servicer or the Special Servicer, as
the case may be, and such Sub-Servicer as they may agree. For purposes of this
Agreement, the Master Servicer and the Special Servicer each shall be deemed to
have received any payment when a Sub-Servicer retained by it receives such
payment. The Master Servicer and the Special Servicer each shall notify the
other, the Trustee and the Depositor in writing promptly of the appointment by
it of any Sub-Servicer.
(b) Each Sub-Servicer (i) shall be authorized to transact business in the
state or states in which the related Mortgaged Properties it is to service are
situated, if and to the extent required by applicable law, and (ii) shall be an
approved conventional seller/servicer of mortgage loans for FHLMC or FNMA or a
HUD-Approved Servicer.
(c) The Master Servicer and the Special Servicer, for the benefit of the
Trustee and the Certificateholders, shall (at no expense to the Trustee, the
Certificateholders or the Trust Fund) monitor the performance and enforce the
obligations of their respective Sub-Servicers under the related Sub-Servicing
Agreements. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements in accordance
with their respective terms and the pursuit of other appropriate remedies, shall
be in such form and carried out to such an extent and at such time as the Master
Servicer or the Special Servicer, as applicable, in its good faith business
judgment, would require were it the owner of the Mortgage Loans. Subject to the
terms of the related Sub-Servicing Agreement, the Master Servicer and the
Special Servicer may each have the right to remove a Sub-Servicer at any time it
considers such removal to be in the best interests of Certificateholders.
(d) In the event of the resignation, removal or other termination of First
Union National Bank or any successor Master Servicer hereunder for any reason,
the Trustee or other Person succeeding such resigning, removed or terminated
party as Master Servicer, shall elect, with respect to any Sub-Servicing
Agreement existing at the time of such termination: (i) to assume the rights and
obligations of the Master Servicer under such Sub-Servicing Agreement and
continue the sub-servicing arrangements thereunder on the same
<PAGE>
101
terms (including without limitation the obligation to pay the same sub-servicing
fee); (ii) to enter into a new Sub-Servicing Agreement with such Sub-Servicer on
such terms as the Trustee or other successor Master Servicer and such
Sub-Servicer shall mutually agree (it being understood that such Sub-Servicer is
under no obligation to accept any such new Sub-Servicing Agreement or to enter
into or continue negotiations with the Trustee or other successor Master
Servicer), provided that neither the Trustee nor any successor Master Servicer
shall enter into a new Sub-Servicing Agreement with a Sub-Servicer that was a
party to a Sub-Servicing Agreement as of the Closing Date, if such new
Sub-Servicing Agreement amends, alters or fails to restate the rights of Lehman
Brothers Inc., if any, under the existing Sub-Servicing Agreement with respect
to the termination of the Sub-Servicer and the appointment of a successor
thereto or the rights of Lehman Brothers Inc., if any, as a third party
beneficiary under such Sub-Servicing Agreement, unless the successor Master
Servicer has obtained the prior written consent to the terms of such new
Sub-Servicing Agreement from Lehman Brothers Inc.; (iii) subject to the terms of
the next paragraph, to terminate such Sub-Servicing Agreement without cause,
provided that no Sub-Servicer under a Sub-Servicing Agreement that was in effect
as of the Closing Date may be terminated without cause unless it receives
Sub-Servicer Termination Compensation, if any, as defined in the Sub-Servicing
Agreement for such Sub-Servicer; or (iv) to terminate the Sub-Servicing
Agreement if an Event of Default (as defined in such Sub-Servicing Agreement)
has occurred and is continuing or either of the events set forth in clauses (i)
or (ii) of the following paragraph has occurred and is continuing, in each case
without paying any sub-servicer termination fee. It shall be the corporate
obligation (not reimbursable by the Trust Fund or any of the other parties to
this Agreement) of the Person, who as successor Master Servicer, terminates any
Sub-Servicer without cause, and of its successors and assigns in such capacity
(to the extent contemplated by clause (iii) of the preceding sentence), to pay
Sub-Servicer Termination Compensation to such terminated Sub-Servicer.
Each Sub-Servicing Agreement in effect on the Closing Date provides, among
other things, that the Master Servicer may at its sole option, terminate any
rights the Sub-Servicer may have thereunder with respect to any or all Mortgage
Loans if any of the Rating Agencies (i) reduces the rating assigned to one or
more Classes of the respective Certificates as a result of the sub-servicing of
the Mortgage Loans by the Sub-Servicer, or (ii) advise the Master Servicer or
the Trustee that it will cause a qualification, downgrade or withdrawal of such
rating due to the continued servicing by the Sub-Servicer.
(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.
<PAGE>
102
SECTION 3.23. Representations and Warranties of Master Servicer and
Special Servicer.
(a) The Master Servicer, in such capacity, hereby represents and warrants
to the Trustee, for its own benefit and the benefit of the Certificateholders,
and to the Depositor and the Special Servicer, as of the Closing Date, that:
(i) The Master Servicer is a national banking association, duly
organized and in good standing under the laws of the United States of
America, and the Master Servicer is in compliance with the laws of each
State in which any Mortgaged Property is located to the extent necessary to
perform its obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the Master
Servicer, and the performance and compliance with the terms of this
Agreement by the Master Servicer, will not violate the Master Servicer's
articles of association or by-laws or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any material agreement or other
instrument to which it is a party or which is applicable to it or any of
its assets.
(iii) The 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 receivership, 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
<PAGE>
103
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,
calculated on a consolidated basis.
(vii) Each officer, director, employee, consultant or advisor of the
Master Servicer with responsibilities concerning the servicing and
administration of Mortgage Loans is covered by errors and omissions
insurance in the amounts and with the coverage as, and to the extent,
required by Section 3.07(c).
(viii) The net worth of the Master Servicer (or, in the case of the
initial Master Servicer, the consolidated net worth thereof and of its
direct or indirect parent), determined in accordance with generally
accepted accounting principles, is not less than $15,000,000.
(ix) Any consent, approval, authorization or order of any court or
governmental agency or body required for the execution, delivery and
performance by the Master Servicer of or compliance by the Master Servicer
with this Agreement or the consummation of the transactions contemplated by
this Agreement has been obtained and is effective.
(x) The Master Servicer possesses all insurance required pursuant to
Section 3.07(c) of this Agreement.
(b) The Special Servicer, in such capacity, hereby represents and warrants
to the Trustee, for its own benefit and the benefit of the Certificateholders,
and to the Depositor and the Master Servicer, as of the Closing Date, that:
(i) The Special Servicer is a Maryland limited partnership, validly
existing and in good standing under the laws of the State of Maryland, and
the Special Servicer is in compliance with the laws of each State in which
any Mortgaged Property is located to the extent necessary to perform its
obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the Special
Servicer, and the performance and compliance with the terms of this
Agreement by the Special Servicer, will not violate the Special Servicer's
certificate of incorporation or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under,
or result in the breach of, any material agreement or other instrument to
which it is a party or which is applicable to it or any of its assets.
(iii) The Special Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has
duly
<PAGE>
104
authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Special Servicer, enforceable against the
Special Servicer in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally, and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(v) The Special Servicer is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority, which
violation, in the Special Servicer's good faith and reasonable judgment, is
likely to affect materially and adversely either the ability of the Special
Servicer to perform its obligations under this Agreement or the financial
condition of the Special Servicer.
(vi) No litigation is pending or, to the best of the Special
Servicer's knowledge, threatened, against the Special Servicer that would
prohibit the Special Servicer from entering into this Agreement or, in the
Special Servicer's good faith and reasonable judgment, is likely to
materially and adversely affect either the ability of the Special Servicer
to perform its obligations under this Agreement or the financial condition
of the Special Servicer.
(vii) Each officer, director and employee of the Special Servicer and
each consultant or advisor of the Special Servicer with responsibilities
concerning the servicing and administration of Mortgage Loans is covered by
errors and omissions insurance in the amounts and with the coverage
required by Section 3.07(c).
(viii) Any consent, approval, authorization or order of any court or
governmental agency or body required for the execution, delivery and
performance by the Special Servicer of or compliance by the Special
Servicer with this Agreement or the consummation of the transactions
contemplated by this Agreement has been obtained and is effective.
(ix) The Special Servicer possesses all insurance required pursuant to
Section 3.07(c) of this Agreement.
(c) The representations and warranties of the Master Servicer and the
Special Servicer, set forth in Sections 3.23(a) and (b), respectively, 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
<PAGE>
105
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. Sub-Servicing Agreement Representation and Warranty
(a) The Master Servicer, in such capacity, hereby represents and warrants
to the Trustee, for its own benefit and the benefit of the Certificateholders,
and to the Depositor and the Special Servicer, as of the Closing Date, that each
Sub-Servicing Agreement satisfies the requirements for such Sub-Servicing
Agreements set forth in Sections 3.22(a) and the second paragraph of 3.22(d) in
all material respects.
<PAGE>
106
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) On each Distribution Date, the Paying Agent shall (except as otherwise
provided in Section 9.01), based on information provided by the Master Servicer
and the Special Servicer, apply amounts on deposit in the Distribution Account,
after payment of amounts payable from the Distribution Account in accordance
with Section 3.05(b)(ii) through (vii), in each case to the extent of the
remaining portion of the Available Distribution Amount, in the following order
of priority:
(i) to distributions of interest to the Holders of the Senior
Certificates in an amount equal to, and pro rata in accordance with, all
Distributable Certificate Interest in respect of each Class of Senior
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(ii) to distributions of principal to the Holders of the Class A-1
Certificates, in an amount (not to exceed the Class Principal Balance of
the Class A-1 Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date;
(iii) after the Class Principal Balance of the Class A-1 Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class A-2 Certificates, in an amount (not to exceed the Class Principal
Balance of the Class A-2 Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of the Class A-1 Certificates pursuant to
clause (ii) above);
(iv) after the Class Principal Balances of the Class A-1 Certificates
and Class A-2 Certificates have been reduced to zero, to distributions of
principal to the Holders of the Class A-3 Certificates, in an amount (not
to exceed the Class Principal Balance of the Class A-3 Certificates
outstanding immediately prior to such Distribution Date) equal to the
entire Principal Distribution Amount for such Distribution Date (net of any
portion thereof distributed on such Distribution Date to the Holders of the
Class A-1 Certificates pursuant to clause (ii) above or the Holders of the
Class A-2 Certificates pursuant to clause (iii) above);
(v) to distributions to the Holders of the Class A-1 Certificates, the
Class A-2 Certificates and the Class A-3 Certificates, pro rata in
accordance with, in an amount equal to, and in reimbursement of, all
Realized Losses and
<PAGE>
107
Additional Trust Fund Expenses, if any, previously allocated to each such
Class of Certificates and not previously reimbursed;
(vi) to distributions of interest to the Holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(vii) after the Class Principal Balances of the Class A-1
Certificates, the Class A-2 Certificates and the Class A-3 Certificates
have been reduced to zero, to distributions of principal to the Holders of
the Class B Certificates, in an amount (not to exceed the Class Principal
Balance of the Class B Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a)).
(viii) to distributions to the Holders of the Class B Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class B
Certificates and not previously reimbursed;
(ix) to distributions of interest to the Holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date, and,
to the extent not previously paid, for all prior Distribution Dates;
(x) after the Class Principal Balance of the Class B Certificates has
been reduced to zero, to distributions of principal to the Holders of the
Class C Certificates, in an amount (not to exceed the Class Principal
Balance of the Class C Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xi) to distributions to the Holders of the Class C Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class C
Certificates and not previously reimbursed;
(xii) to distributions of interest to the Holders of the Class D
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class D Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
<PAGE>
108
(xiii) after the Class Principal Balance of the Class C Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class D Certificates, in an amount (not to exceed the Class Principal
Balance of the Class D Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xiv) to distributions to the Holders of the Class D Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class D
Certificates and not previously reimbursed;
(xv) to distributions of interest to the Holders of the Class E
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class E Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xvi) after the Class Principal Balance of the Class D Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class E Certificates, in an amount (not to exceed the Class Principal
Balance of the Class E Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xvii) to distributions to the Holders of the Class E Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class E
Certificates and not previously reimbursed;
(xviii) to distributions of interest to the Holders of the Class F
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class F Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xix) after the Class Principal Balance of the Class E Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class F Certificates, in an amount (not to exceed the Class Principal
Balance of the Class F Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders
<PAGE>
109
of any other Class of Certificates pursuant to any prior clause of this
Section 4.01(a));
(xx) to distributions to the Holders of the Class F Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class F
Certificates and not previously reimbursed;
(xxi) to distributions of interest to the Holders of the Class G
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class G Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxii) after the Class Principal Balance of the Class F Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class G Certificates, in an amount (not to exceed the Class Principal
Balance of the Class G Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxiii) to distributions to the Holders of the Class G Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class G
Certificates and not previously reimbursed;
(xxiv) to distributions of interest to the Holders of Class H
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class H Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxv) after the Class Principal Balance of the Class G Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class H Certificates, in an amount (not to exceed the Class Principal
Balance of the Class H Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxvi) to distributions to the Holders of the Class H Certificates in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to such Class
of Certificates and not previously reimbursed;
<PAGE>
110
(xxvii) to distributions of interest to the Holders of the Class J
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class J Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxviii) after the Class Principal Balance of the Class H Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class J Certificates, in an amount (not to exceed the Class Principal
Balance of the Class J Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxix) to distributions to the Holders of the Class J Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class J
Certificates and not previously reimbursed;
(xxx) to distributions of interest to the Holders of the Class K
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class K Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxi) after the Class Principal Balance of the Class J Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class K Certificates, in an amount (not to exceed the Class Principal
Balance of the Class K Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxxii) to distributions to the Holders of the Class K Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class K
Certificates and not previously reimbursed;
(xxxiii) to distributions of interest to the Holders of the Class L
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class L Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxiv) after the Class Principal Balance of the Class K Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class L
<PAGE>
111
Certificates, in an amount (not to exceed the Class Principal Balance of
the Class L Certificates outstanding immediately prior to such Distribution
Date) equal to the entire Principal Distribution Amount for such
Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxxv) to distributions to the Holders of the Class L Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class L
Certificates and not previously reimbursed; and
(xxxvi) to distributions of interest to the Holders of the Class M
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class M Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxvii) after the Class Principal Balance of the Class L Certificates
has been reduced to zero, to distributions of principal to the Holders of
the Class M Certificates, in an amount (not to exceed the Class Principal
Balance of the Class M Certificates outstanding immediately prior to such
Distribution Date) equal to the entire Principal Distribution Amount for
such Distribution Date (net of any portion thereof distributed on such
Distribution Date to the Holders of any other Class of Certificates
pursuant to any prior clause of this Section 4.01(a));
(xxxviii) to distributions to the Holders of the Class M Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class M
Certificates and not previously reimbursed; and
(xxxix) to distributions to the Holders of the Class R-I Certificates,
in an amount equal to the balance, if any, of the Available Distribution
Amount for such Distribution Date remaining after the distributions to be
made on such Distribution Date pursuant to clauses (i) through (xxxviii)
above;
provided that on each Distribution Date after the aggregate of Class Principal
Balances of each Class of Subordinated Certificates has been reduced to zero,
the payments of principal to be made as contemplated by clauses (ii), (iii) and
(iv) above with respect to the Class A Certificates will be made to the Holders
of the respective Classes of such Class A Certificates up to an amount equal to,
and pro rata as among such Classes in accordance with, the respective then
outstanding Class Principal Balances of such Classes of Certificates and without
regard to the Principal Distribution Amount for such Distribution Date.
Distributions in reimbursement of Realized Losses and Additional Trust Fund
Expenses previously allocated
<PAGE>
112
to a Class of Certificates shall not constitute distributions of principal and
shall not result in reduction of the related Class Principal Balance.
(b) On each Distribution Date, the Paying Agent shall apply any amounts
that represent Prepayment Premiums and/or Yield Maintenance Charges actually
collected on the Mortgage Loans and any REO Loans during the related Collection
Period and shall distribute each such Prepayment Premium and/or Yield
Maintenance Premium, as additional interest, as follows:
(i) first, to the Holders of the respective Classes of Sequential
Pay Certificates (other than any Excluded Class thereof) entitled to
distributions of principal pursuant to Section 4.01(a) on such
Distribution Date, up to an amount equal to, and pro rata based on,
the Additional Yield Amounts for each such Class of Certificates for
such Distribution Date; and
(ii) second, to the Holders of the Class IO Certificates, any
remaining portion of such Prepayment Premium and/or Yield Maintenance
Charge.
(c) All distributions made with respect to each Class on each Distribution
Date shall be allocated pro rata among the outstanding Certificates in such
Class based on their respective Percentage Interests. Except as otherwise
provided below, all such distributions with respect to each Class on each
Distribution Date shall be made to the Certificateholders of the respective
Class of record at the close of business on the related Record Date and shall be
made by wire transfer of immediately available funds to the account of any such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided the Paying Agent with
wiring instructions no less than five Business Days prior to the related Record
Date (which wiring instructions may be in the form of a standing order
applicable to all subsequent Distribution Dates), or otherwise by check mailed
to the address of such Certificateholder as it appears in the Certificate
Register. The final distribution on each Certificate (determined without regard
to any possible future reimbursement of any Realized Loss or Additional Trust
Fund Expense previously allocated to such Certificate) will be made in a like
manner, but only upon presentation and surrender of such Certificate at the
offices of the Certificate Registrar or such other location specified in the
notice to Certificateholders of such final distribution. Prior to any
termination of the Trust Fund pursuant to Section 9.01, any distribution that is
to be made with respect to a Certificate in reimbursement of a Realized Loss or
Additional Trust Fund Expense previously allocated thereto, which reimbursement
is to occur after the date on which such Certificate is surrendered as
contemplated by the preceding sentence, will be made by check mailed to the
address of the Certificateholder that surrendered such Certificate as such
address last appeared in the Certificate Register or to any other address of
which the Paying Agent was subsequently notified in writing. If such check is
returned to the Paying Agent, the Paying Agent, 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 Paying Agent shall be set aside by the Paying Agent and held uninvested in
trust and credited
<PAGE>
113
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 Paying Agent has not, after having taken such reasonable
steps, located the related Holder by the second anniversary of the initial
sending of a check, the Paying Agent shall distribute the unclaimed funds to the
Class R-III Certificateholder.
(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 Paying Agent, the Certificate Registrar, the Depositor or the
Master Servicer shall have any responsibility therefor except as otherwise
provided by this Agreement or applicable law. The Trustee and the Depositor
shall perform their respective obligations under a Letter of Representations
among the Depositor, the Trustee and the initial Depository dated as of the
Closing Date.
(e) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund in respect of the Certificates, and all rights and
interests of the Certificateholders in and to such distributions, shall be as
set forth in this Agreement. Neither the Holders of any Class of Certificates
nor any party hereto shall in any way be responsible or liable to the Holders of
any other Class of Certificates in respect of amounts properly previously
distributed on the Certificates.
(f) Except as otherwise provided in Section 9.01, whenever the Paying Agent
receives written notification of or expects that the final distribution with
respect to any Class of Certificates (determined without regard to any possible
future reimbursement of any Realized Loss or Additional Trust Fund Expense
previously allocated to such Class of Certificates) will be made on the next
Distribution Date, the Paying Agent 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 Paying Agent expects that the final distribution with
respect to such Class of Certificates will be made on such
Distribution Date but only upon presentation and surrender of such
Certificates at the office of the Certificate Registrar or at such
other location therein specified, and
(ii) no interest shall accrue on such Certificates from and after
such Distribution Date.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates
<PAGE>
114
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 Paying Agent 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 Paying Agent,
directly or through an agent, shall take such steps to contact the remaining
non-tendering Certificateholders concerning the surrender of their Certificates
as it shall deem appropriate. The costs and expenses of holding such funds in
trust and of contacting such Certificateholders following the first anniversary
of the delivery of such second notice to the non-tendering Certificateholders
shall be paid out of such funds. No interest shall accrue or be payable to any
former Holder on any amount held in trust pursuant to this paragraph. If all of
the Certificates shall not have been surrendered for cancellation by the second
anniversary of the delivery of the second notice, the Paying Agent shall
distribute to the Class R-III Certificateholder all unclaimed funds and other
assets which remain subject thereto.
(g) Notwithstanding any other provision of this Agreement, the Paying Agent
shall comply with all federal withholding requirements respecting payments to
Certificateholders of interest or original issue discount that the Paying Agent
reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. If the Paying
Agent does withhold any amount from interest or original issue discount payments
or advances thereof to any Certificateholder pursuant to federal withholding
requirements, the Paying Agent shall indicate the amount withheld to such
Certificateholders.
(h) All distributions made in respect of any Class of REMIC III
Certificates (other than the Class IO 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 its corresponding REMIC II
Regular Interest set forth in the Preliminary Statement hereto; all interest
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 shall be deemed to have first
been distributed from REMIC II to REMIC III in respect of REMIC II Regular
Interests M, N, O, P, Q, R, S, T, U, V, W, X, Y and Z, pro rata in accordance
with, and in each case up to an amount equal to, one month's interest in respect
of each such REMIC II Regular Interest accrued at a rate equal to the REMIC II
Remittance Rate minus the Pass-Through Rate applicable to the related Class of
Sequential Pay Certificates (as set forth in the Preliminary Statement hereto)
on the Uncertificated Principal Balance of the particular REMIC II Regular
Interest outstanding immediately prior to such Distribution Date (which interest
shall be calculated on the basis of a 360-day year consisting of twelve 30-day
months), together with any such amounts from prior Distribution Dates not
previously deemed paid. In each case, if such distribution on any such Class of
Certificates was a distribution of interest, of principal, of Prepayment
Premiums, Yield Maintenance Charges or in reimbursement of previously
<PAGE>
115
allocated Realized Losses and Additional Trust Fund Expenses in respect of such
Class of Certificates, then the corresponding distribution deemed to be made on
the related REMIC II Regular Interest pursuant to the preceding sentence shall
be deemed to also be a distribution of interest, of principal, of Prepayment
Premiums, of Yield Maintenance Charges or in reimbursement of previously
allocated Realized Losses and Additional Trust Fund Expenses, as the case may
be, in respect of such REMIC II Regular Interest.
(i) On each Distribution Date, including, without limitation, the final
Distribution Date in connection with a termination of the Trust Fund, the
Available Distribution Amount for such date shall be deemed to have first been
distributed from REMIC I to REMIC II in respect of the REMIC I Regular
Interests, in each case to the extent of the remaining portions of such funds,
for the following purposes and in the following order of priority:
(i) as deemed distributions of interest in respect of the REMIC I
Regular Interests, in an amount equal to, and pro rata in accordance
with, all Uncertificated Distributable Interest in respect of each
such REMIC I Regular Interest for such Distribution Date and, to the
extent not previously deemed distributed, for all prior Distribution
Dates;
(ii) as deemed distributions of principal in respect of the REMIC
I Regular Interests, in an amount equal to, and pro rata in accordance
with, as to each such REMIC I Regular Interest, the excess, if any, of
the Uncertificated Principal Balance of such REMIC I Regular Interest
outstanding immediately prior to such Distribution Date, over the
Stated Principal Balance of the related Mortgage Loan (or successor
REO Loan) that will be outstanding immediately following such
Distribution Date; and
(iii) as deemed distributions in respect of the REMIC I Regular
Interests, in an amount equal to, pro rata in accordance with, and in
reimbursement of, any Realized Losses and Additional Trust Fund
Expenses (with compounded interest), previously allocated to each such
REMIC I Regular Interest.
Any Prepayment Premiums or Yield Maintenance Charges distributed to any
Class of Certificates on any Distribution Date shall, in each case, be deemed to
have been distributed from REMIC I to REMIC II in respect of the REMIC I Regular
Interest corresponding to the prepaid Mortgage Loan or REO Loan, as the case may
be, in respect of which such premium or charge was received.
SECTION 4.02. Statements to Certificateholders; CSSA Loan File Report.
(a) On each Distribution Date, the Trustee shall forward by mail (or, in
the case of each Rating Agency and any of the other Persons who so request, by
electronic medium) to the Depositor, the Underwriters, the Master Servicer, the
Special Servicer, the
<PAGE>
116
Controlling Class Representative and each Rating Agency, all of the Holders of
each Class of Regular Certificates, all of the initial beneficial owners of each
Class of Registered Certificates (a list of which shall be provided to the
Trustee on the Closing Date substantially in the form set forth on Exhibit L
hereto) and, upon their written request to the Trustee, any subsequent
beneficial owners of the Registered Certificates as may be identified to the
reasonable satisfaction of the Trustee, a statement (a "Distribution Date
Statement") as to the distributions made on such Distribution Date, based on
information provided to it by the Master Servicer and the Special Servicer,
setting forth:
(i) the amount of the distribution on such Distribution Date to
the Holders of each Class of 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 Regular Certificates allocable to
Distributable Certificate Interest;
(iii) the amount of the distribution on such Distribution Date to
the Holders of each Class of Regular Certificates allocable to
Prepayment Premiums and Yield Maintenance Charges;
(iv) the amount of the distribution on such Distribution Date to
the Holders of each Class of Regular Certificates in reimbursement of
previously allocated Realized Losses and Additional Trust Fund
Expenses;
(v) the Available Distribution Amount for such Distribution Date;
(vi) (a) the aggregate amount of P&I Advances made in respect of
such Distribution Date pursuant to Section 4.03(a), including, without
limitation, any amounts applied pursuant to Section 4.03(a)(ii), and
the aggregate amount of unreimbursed P&I Advances that had been
outstanding at the close of business on the related Determination Date
and the aggregate amount of interest accrued and payable to the Master
Servicer, the Trustee or the Fiscal Agent in respect of such
unreimbursed P&I Advances in accordance with Section 4.03(d) as of the
close of business on the related Determination Date and (b) the
aggregate amount of Servicing Advances and Nonrecoverable Advances 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 of the Mortgage
Pool outstanding immediately before and immediately after such
Distribution Date;
<PAGE>
117
(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) delinquent two months,
(C) delinquent three or more months, and (D) as to which foreclosure
proceedings have been commenced;
(xi) as to each Mortgage Loan referred to in the preceding clause
(x) above, (A) the loan number thereof, (B) the Stated Principal
Balance thereof immediately following such Distribution Date, (C)
whether the delinquency is in respect of its Balloon Payment, (D)
whether a notice of acceleration has been sent to the Mortgagor and,
if so, the date of such notice, (E) whether an Environmental
Assessment of the related Mortgaged Property has been performed as
contemplated by Section 3.09(c) and, if the assessment is such that
the Special Servicer cannot make the determination set forth in
clauses (i) and (ii) of the first sentence of Section 3.09(c), a brief
description of the results of such Environmental Assessment, and (F) a
brief description of the status of any foreclosure proceedings or any
workout or loan modification negotiations with the related Mortgagor;
(xii) with respect to any Mortgage Loan as to which a Liquidation
Event occurred during the related Collection Period (other than a
payment in full), (A) the loan number thereof, (B) the nature of the
Liquidation Event and, in the case of a Final Recovery Determination,
a brief description of the basis for such Final Recovery
Determination, (C) the aggregate of all Liquidation Proceeds and other
amounts received in connection with such Liquidation Event (separately
identifying the portion thereof allocable to distributions on the
Certificates), and (D) the amount of any Realized Loss in connection
with such Liquidation Event;
(xiii) with respect to any REO Property included in the Trust
Fund as to which a Final Recovery Determination was made during the
related Collection Period, (A) the loan number of the related Mortgage
Loan, (B) a brief description of the basis for the Final Recovery
Determination, (C) the aggregate of all Liquidation Proceeds and other
amounts received in connection with such Final Recovery Determination
(separately identifying the portion thereof allocable to distributions
on the Certificates), and (D) the amount of any Realized Loss in
respect of the related REO Loan in connection with such Final Recovery
Determination;
<PAGE>
118
(xiv) the Accrued Certificate Interest and Distributable
Certificate Interest in respect of each Class of Regular Certificates
for such Distribution Date;
(xv) any unpaid Distributable Certificate Interest in respect of
each Class of Regular Certificates after giving effect to the
distributions made on such Distribution Date;
(xvi) the Pass-Through Rate for each Class of Regular
Certificates for such Distribution Date;
(xvii) 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);
(xviii) the aggregate of all Realized Losses incurred during the
related Collection Period and, aggregated by type, all Additional
Trust Fund Expenses incurred during the related Collection Period;
(xix) the aggregate of all Realized Losses and Additional Trust
Fund Expenses that remain unallocated immediately following such
Distribution Date;
(xx) the Class Principal Balance of each Class of Regular
Certificates (other than the Class IO Certificates) and the Component
Notional Amount of each Component outstanding immediately before and
immediately after such Distribution Date, separately identifying any
reduction therein due to the allocation of Realized Losses and
Additional Trust Fund Expenses on such Distribution Date;
(xxi) the Certificate Factor for each Class of Regular
Certificates immediately following such Distribution Date;
(xxii) the aggregate amount of interest on P&I Advances paid to
the Master Servicer, the Trustee and the Fiscal Agent during the
related Collection Period in accordance with Section 4.03(d);
(xxiii)the aggregate amount of interest on Servicing Advances
paid to the Master Servicer, the Special Servicer during the related
Collection Period in accordance with Section 3.03(d); and
(xxiv) (A) the aggregate amount of servicing compensation
(separately identifying the amount of each category of compensation)
paid to the Master Servicer, the Special Servicer and, if payable
directly out of the Trust Fund without a reduction in the servicing
compensation otherwise payable to the
<PAGE>
119
Master Servicer or the Special Servicer, to each Sub-Servicer, during the
related Collection Period, and (B) such other information as the Trustee is
required by the Code or other applicable law to furnish to enable
Certificateholders to prepare their tax returns.
In the case of information to be furnished pursuant to clauses (i) through
(iv) above, the amounts shall be expressed as a dollar amount in the aggregate
for all Certificates of each applicable Class and per Single Certificate. In the
case of information provided to the Trustee as a basis for information to be
furnished pursuant to clauses (x) through (xiii), and (xxiv) above, insofar as
the underlying information is solely within the control of the Special Servicer,
the Trustee and the Master Servicer may, absent manifest error, conclusively
rely on the reports to be provided by the Special Servicer.
The Trustee shall deliver or shall cause to be delivered on each
Distribution Date by first class mail to each Certificateholder, the Depositor,
the Underwriters and each Rating Agency (on diskette or via such other
electronic medium as is mutually acceptable to the Trustee and the recipient) a
copy of the following nine reports delivered to it by the Master Servicer
pursuant to Section 3.12(c): (i) the Delinquent Loan Status Report, (ii) the
Historical Loss Estimate Report, (iii) the Historical Loan Modification Report,
(iv) the REO Status Report, (v) the Watch List, (vi) a Loan Payoff Notification
Report and (vii) a Comparative Financial Status Report, (viii) an Operating
Statement Analysis and (ix) an NOI Adjustment Worksheet. The Trustee shall
prepare and deliver or shall cause to be delivered on each Distribution Date by
first class mail to each Certificateholder, the Underwriters, the Depositor,
each Rating Agency and each other Person that received a Distribution Date
Statement on such Distribution Date a copy of the CSSA Loan File Report and the
CSSA Property File Report containing information regarding each Mortgaged
Property as of the end of the preceding calendar month. The Trustee also shall
deliver the CSSA Loan File Report and CSSA Property File Report relating to any
Distribution Date by electronic medium (including computer diskette) to each
Rating Agency and, upon written request, to either Underwriter and to any
Certificateholder or Certificate Owner entitled to receive a hard copy thereof.
Absent manifest error, none of the Master Servicer, the Special Servicer or the
Trustee shall be responsible for the accuracy or completeness of any information
supplied to it by a borrower or third party that is included in any reports,
statements, materials or information prepared or provided by the Master
Servicer, the Special Servicer or the Trustee, as applicable. Neither the
Trustee, the Master Servicer nor the Special Servicer shall have any obligation
to verify the accuracy or completeness of any information provided by a
Mortgagor or third party.
The Trustee shall deliver a copy of each "Comparative Financial Status
Report" that it receives from the Master Servicer to the Depositor, the
Underwriters (in the case of Lehman Brothers Inc., via overnight courier), and
each Rating Agency promptly after its receipt thereof pursuant to Section
3.12(c). Any Certificateholder may obtain a copy of each Comparative Financial
Status Report upon written request to the Trustee. Upon specific written
request, the Trustee shall deliver a copy of each NOI Adjustment Worksheet that
it receives from the Master Servicer pursuant to Section 3.12(c) to the
Depositor and each
<PAGE>
120
Rating Agency. The Trustee shall automatically deliver a copy of each annual
Operating Statement Analysis that it receives from the Master Servicer pursuant
to Section 3.12(c) to each Rating Agency and the Underwriters on April 30th of
such year. The Trustee shall deliver a copy of each annual Operating Statement
Analysis that it receives from the Master Servicer pursuant to Section 3.12(c)
to the Depositor. Any Certificateholder may obtain a copy of any NOI Adjustment
Worksheet or Operating Statement Analysis in the possession of the Trustee upon
written request and at the expense of such Certificateholder.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall send to each Person who at any time during the calendar year was a
Certificateholder of record, a report summarizing on an annual basis (if
appropriate) the items provided to Certificateholders pursuant to Section
4.02(a)(i), (ii), (iii) and (iv) above and such other information as may be
required to enable such Certificateholders to prepare their federal income tax
returns. Such information shall include the amount of original issue discount
accrued on each Class of Certificates and information regarding the expenses of
the Trust. Such requirement shall be deemed to be satisfied to the extent such
information is provided pursuant to applicable requirements of the Code from
time to time in force.
On each Distribution Date, the Trustee shall forward to the Depositor, to
each Rating Agency, to each Holder of a Residual Certificate, to Lehman Brothers
Inc. (at Three World Financial Center, New York, New York 10285, Attention:
Trish Hall, or such other address as Lehman Brothers Inc. may designate), to
First Union Capital (at One First Union Center, 301 South College Street,
Charlotte, North Carolina 28200, Attention: P&I/Servicing Dept., or such other
address as First Union may hereafter designate) and, in the case of reports
regarding the respective Classes of Book-Entry Certificates, if any, to The
Trepp Group (at 477 Madison Avenue, 18th Floor, New York, New York 10022, or
such other address as The Trepp Group may hereafter designate), a copy of the
reports forwarded to the Holders of the Regular Certificates on such
Distribution Date and a statement setting forth the amounts, if any, actually
distributed with respect to the Class R-I and Class R-II Certificates on such
Distribution Date.
Upon written request of the Depositor or either Underwriter, without
payment of any fee, and upon written request of any Certificateholders or any
other Person, together with payment of a reasonable fee specified by the
Trustee, the Trustee shall provide any statements, reports and/or information
contemplated by this Section 4.02(a) on computer diskette to such party (such
computer diskette and such statements, reports, and/or information thereon to
bear such appropriate disclaimers and qualifications as the Depositor and the
Trustee shall determine in their reasonable discretion).
If any Certificate Owner does not receive through the Depository or any of
its Depository Participants any of the statements, reports and/or other written
information described above in this Section 4.02(a) that it would otherwise be
entitled to receive if it were the Holder of a Definitive Certificate evidencing
its ownership interest in the related Class of Book Entry Certificates, then the
Trustee shall mail or cause the mailing of such statements, reports and/or other
written information to such Certificate Owner upon the request of such
<PAGE>
121
Certificate Owner made in writing to the Corporate Trust Office (accompanied by
current verification of such Certificate Owner's ownership interest). Such
portion of such information as may be agreed upon by the Depositor and the
Trustee shall be furnished to any such Person via overnight courier delivery or
telecopy from the Trustee; provided that the cost of such overnight courier
delivery or telecopy shall be an expense of the party requesting such
information.
The Trustee shall only be obligated to deliver the statements, reports and
information contemplated by this Section 4.02(a) to the extent it receives the
necessary underlying information from the Master Servicer and shall not be
liable for any failure to deliver any thereof on the prescribed due dates, to
the extent caused by failure to receive timely such underlying information.
Nothing herein shall obligate the Trustee or the Master Servicer to violate any
applicable law prohibiting disclosure of information with respect to any
Mortgagor and the failure of the Trustee, Master Servicer or the Special
Servicer to disseminate information for such reason shall not be a breach
hereof.
The information to be furnished by the Trustee to the Certificateholders
pursuant to Sections 4.02(a) and (b) shall not limit the Trustee in furnishing
any such information to other Persons to whom it determines such disclosure to
be appropriate and shall not limit the Trustee in furnishing to
Certificateholders or to any person any other information with respect to the
Mortgage Loans, the Mortgaged Properties or the Trust as may be provided to it
by the Depositor, the Master Servicer or the Special Servicer or gathered by it
in any investigation or other manner from time to time (such information, other
than as described in Sections 4.02(a) and (b), is referred to herein as
"Additional Information") as it may reasonably deem necessary or appropriate
from time to time, provided that (A) the Trustee shall give the Depositor three
business days' advance notice before doing so, (B) any such Additional
Information shall only be furnished with the consent or at the request of the
Depositor (except pursuant to clause (E) below), (C) the Trustee shall be
entitled to indicate the source of all information furnished by it, and the
Trustee may affix thereto any disclaimer it deems appropriate in its discretion,
(D) the Trustee shall notify Certificateholders of the availability of any such
information in any manner as it, in its sole discretion, may determine and (E)
this provision shall not prevent the Trustee, whether with or without the
consent of the Depositor, from furnishing information with respect to the Trust
Fund and its administration thereof to any Person, if it reasonably determines
that the furnishing of such information is required by applicable law. The
Trustee shall forward to the Depositor any requests for Additional Information
which, for their fulfillment, require the consent of the Depositor. Nothing
herein shall be construed to impose upon the Trustee any obligation or duty to
furnish or distribute any Additional Information to any Person in any instance.
(b) Not later than 2:00 P.M. on the third Business Day following each
Determination Date or, if in any month the Distribution Date is the fifth
Business Day following the related Determination Date, then not later than the
second Business Day following such Determination Date, the Master Servicer shall
furnish to the Trustee, the Depositor and the Underwriters (for receipt by each
not later than the fourth Business Day following each Determination Date), by
electronic transmission (or in such other form to
<PAGE>
122
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 fifth Business Day following such Determination Date, an accurate and
complete CSSA Loan File Report providing the required information for the
Mortgage Loans as of such Determination Date.
In the performance of its obligations set forth in Section 4.05 and its
other duties hereunder, the Trustee may conclusively rely on the CSSA Loan File
Report provided to it by the Master Servicer, and the Trustee shall not be
responsible to recompute, recalculate or verify the information provided to it
by the Master Servicer. In the case of information to be furnished by the Master
Servicer to the Trustee pursuant to this Section 4.02(b), insofar as such
information is solely within the control of the Special Servicer, the Master
Servicer shall have no obligation to provide such information until it has
received such information from the Special Servicer, shall not be in default
hereunder due to a delay in providing the CSSA Loan File Report caused by the
Special Servicer's failure to timely provide any report required under this
Agreement and may, absent manifest error, conclusively rely on the reports to be
provided by the Special Servicer.
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 either (i), subject to Section 4.03(c) below, remit
from its own funds to the Paying Agent 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, as of 3:00 p.m., New York City time,
on any P&I Advance Date, the Master Servicer shall not have made any P&I Advance
required to be made on such date pursuant to this Section 4.03(a) (and shall not
have delivered to the Trustee the requisite Officer's Certificate and
documentation related to a determination of nonrecoverability of a P&I Advance),
then the Trustee shall provide notice of such failure to a Servicing Officer of
the Master Servicer by facsimile transmission sent to telecopy no. (704)
383-9356 (or such alternative number provided by the Master Servicer to the
Trustee in writing) and by telephone at telephone no. (704) 383-5136 (or such
alternative number provided by the Master Servicer to the Trustee in writing) as
soon as possible, but in any event before 10:00 a.m., New York City time, on the
next Business Day. If after such notice by facsimile, the Trustee does not
receive the full amount of such P&I Advances by 11:00 a.m., New York City time,
on the Business Day immediately following such P&I Advance Date, then (i) the
Trustee (or the Fiscal Agent on its behalf) shall make the portion of such P&I
Advances that was required to be, but was not, made by the
<PAGE>
123
Master Servicer on such P&I Advance Date and (ii) the provisions of Sections
7.01 and 7.02 shall apply. If the Trustee fails to make any such P&I Advance on
the related Distribution Date, but the Fiscal Agent shall make such P&I Advance
on such date, then the Trustee shall be deemed not to be in default hereunder.
(b) The aggregate amount of P&I Advances to be made by the Master Servicer,
the Trustee or the Fiscal Agent, as the case may be, in respect of any
Distribution Date shall, subject to Section 4.03(c) below, equal the aggregate
of all Scheduled Payments (other than Balloon Payments) and any Assumed
Scheduled Payments, in each case net of related Master Servicing Fees, Special
Servicing Fees, Additional Servicing Fees and any related Principal Recovery
Fees, due or deemed due, as the case may be, in respect of the Mortgage Loans
(including, without limitation, Balloon Mortgage Loans delinquent as to their
respective Balloon Payments) and any REO Loans on their respective Due Dates
during the related Collection Period, in each case to the extent such amount was
not paid by or on behalf of the related Mortgagor or otherwise collected
(including received as net income from REO Properties) as of the close of
business on the related Determination Date; provided that, (i) if the Monthly
Payment on any Mortgage Loan has been reduced in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or a modification, waiver or
amendment granted or agreed to by the Special Servicer pursuant to Section 3.20,
or if the final maturity on any Mortgage Loan shall be extended in connection
with a bankruptcy or similar proceeding involving the related Mortgagor or a
modification, waiver or amendment granted or agreed to by the Special Servicer
pursuant to Section 3.20, and the Monthly Payment due and owing during the
extension period is less than the related Assumed Scheduled Payment, then the
Master Servicer, the Trustee or the Fiscal Agent, as the case may be, shall, as
to such Mortgage Loan only, advance only the amount of the Monthly Payment due
and owing after taking into account such reduction (net of related Master
Servicing Fees, Special Servicing Fees, Additional Servicing Fees and any
related Principal Recovery Fees) in the event of subsequent delinquencies
thereon; and (ii) if it is determined that an Appraisal Reduction Amount exists
with respect to any Required Appraisal Loan, then, with respect to the
Distribution Date immediately following the date of such determination and with
respect to each subsequent Distribution Date for so long as such Appraisal
Reduction Amount exists with respect to such Required Appraisal Loan, the Master
Servicer, the Trustee or the Fiscal Agent, as the case may be, will be required
in the event of subsequent delinquencies to advance in respect of such Mortgage
Loan only an amount equal to the product of (x) the amount of the P&I Advance
that would otherwise be required without regard to this clause (ii), multiplied
by (y) a fraction, the numerator of which is equal to the Stated Principal
Balance of such Mortgage Loan, net of such Appraisal Reduction Amount, and the
denominator of which is equal to the Stated Principal Balance of such Mortgage
Loan.
(c) Notwithstanding anything herein to the contrary, no P&I Advance shall
be required to be made hereunder if such P&I Advance would, if made, constitute
a Nonrecoverable P&I Advance. The determination by the Master Servicer that it
has made a Nonrecoverable P&I Advance or that any proposed P&I Advance, if made,
would constitute a Nonrecoverable P&I Advance, shall be evidenced by an
Officers' Certificate delivered to the
<PAGE>
124
Trustee and the Depositor on or before the related P&I Advance Date, setting
forth the basis for such determination, together with any other information that
support such determination, including appraisals (which appraisal shall be
conducted in accordance with the standards of the Appraisal Institute taking
into account the factors specified in Section 3.18(e), including without
limitation, any environmental, engineering or other third party reports
available, and other factors that a prudent real estate appraiser would consider
(or, if no such appraisal has been performed pursuant to this Section 4.03(c), a
copy of an appraisal of the related Mortgaged Property performed within the
twelve months preceding such determination by an Independent Appraiser or other
expert in real estate matters)), related Mortgagor operating statements and
financial statements, budgets and rent rolls of the related Mortgaged
Properties, engineers' reports, environmental surveys and any similar reports
that the Master Servicer may have obtained consistent with the Servicing
Standard and at the expense of the Trust Fund, that support such determination
by the Master Servicer. The Trustee and the Fiscal Agent shall be entitled to
rely, conclusively, on any determination by the Master Servicer that a P&I
Advance, if made, would be a Nonrecoverable Advance; provided, however, that if
the Master Servicer has failed to make a P&I Advance for reasons other than a
determination by the Master Servicer that such P&I Advance would be
Nonrecoverable Advance, the Trustee or Fiscal Agent, as applicable, shall make
such Advance within the time periods required by Section 4.03(a) unless the
Trustee or the Fiscal Agent, in good faith, makes a determination prior to the
times specified in Section 4.03(a) that such P&I Advance would be a
Nonrecoverable Advance. The Trustee and the Fiscal Agent, in determining whether
or not a P&I Advance previously made is, or a proposed P&I Advance, if made,
would be, a Nonrecoverable Advance shall be subject to the standards applicable
to the Master Servicer hereunder.
(d) In connection with the recovery by the Master Servicer, the Trustee or
the Fiscal Agent of any P&I Advance made thereby out of the Certificate Account
pursuant to Section 3.05(a), the Master Servicer shall be entitled to pay
itself, the Trustee or the Fiscal Agent, as the case may be, out of any amounts
then on deposit in the Certificate Account, interest at the Reimbursement Rate
in effect from time to time, compounded annually, accrued on the amount of such
P&I Advance from the date made to but not including the date of reimbursement.
The Master Servicer shall, in accordance with Section 3.05(a), reimburse itself,
the Trustee or the Fiscal Agent, as applicable, for any outstanding P&I Advance
made thereby as soon as practicable after funds available for such purpose are
deposited in the Certificate Account.
SECTION 4.04. Allocation of Realized Losses and Additional Trust Fund
Expenses.
(a) On each Distribution Date, following all distributions to be made on
such date pursuant to Section 4.01, the Paying Agent shall allocate to the
respective Classes of Sequential Pay Certificates as follows the aggregate of
all Realized Losses and Additional Trust Fund Expenses that were incurred at any
time following the Cut-off Date through the end of the related Collection
Period, and in any event that were not previously allocated pursuant to this
Section 4.04(a) on any prior Distribution Date, but only to the extent that (i)
<PAGE>
125
the aggregate Certificate Principal Balance of the Sequential Pay Certificates
as of such Distribution Date (after taking into account all of the distributions
made on such Distribution Date pursuant to Section 4.01), exceeds (ii) the
aggregate Stated Principal Balance of the Mortgage Pool to be outstanding
immediately following such Distribution Date: first, to the Class M
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; second, to the Class L Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; third, to the Class K
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; fourth, to the Class J Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; fifth, to the Class H
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; sixth, to the Class G Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; seventh, to the Class F
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; eighth, to the Class E Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; ninth, to the Class D
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; tenth, to the Class C Certificates, until the remaining Class
Principal Balance thereof has been reduced to zero; eleventh, to the Class B
Certificates, until the remaining Class Principal Balance thereof has been
reduced to zero; and twelfth, pro rata (based on remaining Class Principal
Balances) to the Class A-1 Certificates, Class A-2 Certificates and Class A-3
Certificates, until the Class Principal Balances thereof are reduced to zero.
Any allocation of Realized Losses and Additional Trust Fund Expenses to a Class
of Regular Certificates shall be made by reducing the Class Principal Balance
thereof by the amount so allocated. All Realized Losses and Additional Trust
Fund Expenses, if any, allocated to a Class of Regular Certificates shall be
allocated among the respective Certificates of such Class in proportion to the
Percentage Interests evidenced thereby. All Realized Losses and Additional Trust
Fund Expenses, if any, that have not been allocated to the Regular Certificates
as of the Distribution Date on which the aggregate Certificate Principal Balance
of such Certificates has been reduced to zero, shall be deemed allocated to the
Residual Certificates.
(b) Each Realized Loss and Additional Trust Fund Expense, if any, allocated
to the Class A-1 Certificates on any Distribution Date shall be deemed to have
first been allocated to REMIC II Regular Interest M with a corresponding
reduction in the Uncertificated Principal Balance of such REMIC II Regular
Interest; each Realized Loss and Additional Trust Fund Expense, if any,
allocated to the Class A-2 Certificates on any Distribution Date shall be deemed
to have first been allocated to REMIC II Regular Interest N with a corresponding
reduction in the Uncertificated Principal Balance of such REMIC II Regular
Interest; each Realized Loss and Additional Trust Fund Expense, if any,
allocated to the Class A-3 Certificates on any Distribution Date shall be deemed
to have first been allocated to REMIC II Regular Interest O with a corresponding
reduction in the Uncertificated Principal Balance of such REMIC II Regular
Interest; each Realized Loss and Additional Trust Fund Expense, if any,
allocated to the Class B Certificates on any Distribution Date shall be deemed
to have first been allocated to REMIC II Regular Interest P with a corresponding
reduction in the Uncertificated Principal Balance of such REMIC II Regular
Interest; each Realized Loss and Additional Trust Fund Expense, if any,
allocated to the Class C Certificates
<PAGE>
126
on any Distribution Date shall be deemed to have first been allocated to REMIC
II Regular Interest Q with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class D Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest R with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class E Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest S with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class F Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest T with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class G Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest U with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class H Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest V with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class J Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest W with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class K Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest X with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class L Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest Y with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest; and each Realized Loss and
Additional Trust Fund Expense, if any, allocated to the Class M Certificates on
any Distribution Date shall be deemed to have first been allocated to REMIC II
Regular Interest Z with a corresponding reduction in the Uncertificated
Principal Balance of such REMIC II Regular Interest.
(c) On each Distribution Date, following the deemed distributions to be
made in respect of the REMIC I Regular Interests pursuant to Section 4.01(i),
the Uncertified Principal Balance of each REMIC I Regular Interest (after taking
account of such deemed distributions) shall be reduced to equal the Stated
Principal Balance of the related Mortgage Loan or REO Loan, as the case may be,
that will be outstanding immediately following such Distribution Date. Such
reductions shall be deemed to be an allocation of Realized Losses and Additional
Trust Fund Expenses.
<PAGE>
127
SECTION 4.05. Calculations.
The Paying Agent shall, provided it receives the necessary information from
the Master Servicer and the Special Servicer, be responsible for performing all
calculations necessary in connection with the actual and deemed distributions
and allocations to be made pursuant to Section 4.01, Section 5.02(d) and Article
IX and the actual and deemed allocations of Realized Losses and Additional Trust
Fund Expenses to be made pursuant to Section 4.04. The Paying Agent shall
calculate the Available Distribution Amount for each Distribution Date and shall
allocate such amount among Certificateholders in accordance with this Agreement,
and the Paying Agent shall have no obligation to recompute, recalculate or
verify any information provided to it by the Special Servicer or Master
Servicer. The calculations by the Paying Agent of such amounts shall, in the
absence of manifest error, be presumptively deemed to be correct for all
purposes hereunder.
SECTION 4.06. Use of Agents.
The Master Servicer or the Trustee may at its own expense utilize agents or
attorneys-in-fact in performing any of its obligations under this Article IV
(except the obligation to make P&I Advances), but no such utilization shall
relieve the Master Servicer or the Trustee from any of such obligations, and the
Master Servicer or the Trustee, as applicable, shall remain responsible for all
acts and omissions of any such agent or attorney-in-fact.
<PAGE>
128
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,
A-12, A-13, A-14, A-15, A-16, A-17 and A-18; provided that any of the
Certificates may be issued with appropriate insertions, omissions, substitutions
and variations, and may have imprinted or otherwise reproduced thereon such
legend or legends, not inconsistent with the provisions of this Agreement, as
may be required to comply with any law or with rules or regulations pursuant
thereto, or with the rules of any securities market in which the Certificates
are admitted to trading, or to conform to general usage. The Certificates will
be issuable in registered form only; provided, however, that in accordance with
Section 5.03 beneficial ownership interests in the Registered Certificates and
the Class F Certificates shall initially be held and transferred through the
book-entry facilities of the Depository. The Regular Certificates will be
issuable only in denominations corresponding to initial Certificate Principal
Balances or initial Certificate Notional Amounts, as the case may be, as of the
Closing Date of not less than $10,000 in the case of the Registered Certificates
(other than the Class IO Certificates), $100,000 in the case of the Class IO
Certificates, and $250,000 in the case of Non-Registered Certificates, and in
each such case in integral multiples of $1 in excess thereof. The Class R-I
Certificates, the Class R-II Certificates and the Class R-III Certificates shall
have no minimum denomination and shall each be represented by a single
definitive certificate.
(b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by the Certificate Registrar hereunder by an authorized
signatory. Certificates bearing the manual or facsimile signatures of
individuals who were at any time the authorized officers of the Certificate
Registrar shall be entitled to all benefits under this Agreement, subject to the
following sentence, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the authentication and delivery of such
Certificates or did not hold such offices at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, however, unless there appears on such Certificate a certificate
of authentication substantially in the form provided for herein executed by the
Authenticating Agent by manual signature, and such certificate of authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) At all times during the term of this Agreement, there shall be
maintained at the office of the Certificate Registrar a Certificate Register in
which, subject to such reasonable regulations as the Certificate Registrar may
prescribe, the Certificate Registrar
<PAGE>
129
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 Trustee, the
Special Servicer and (if the Trustee is not the Certificate Registrar) the
Master Servicer, any other bank or trust company to act as Certificate Registrar
under such conditions as the predecessor Certificate Registrar may prescribe,
provided that the predecessor Certificate Registrar shall not be relieved of any
of its duties or responsibilities hereunder by reason of such appointment. If
the Trustee resigns or is removed in accordance with the terms hereof, the
successor trustee shall immediately succeed to its duties as Certificate
Registrar. The Depositor, the Trustee (if it is no longer the Certificate
Registrar), the Master Servicer and the Special Servicer shall have the right to
inspect the Certificate Register or to obtain a copy thereof at all reasonable
times, and to rely conclusively upon a certificate of the Certificate Registrar
as to the information set forth in the Certificate Register. Upon written
request of any Certificateholder made for purposes of communicating with other
Certificateholders with respect to their rights under this Agreement, the
Certificate Registrar shall promptly furnish such Certificateholder with a list
of the other Certificateholders of record identified in the Certificate Register
at the time of the request.
(b) No transfer of any Non-Registered 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 that does not require such
registration or qualification. If such a transfer 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, the
Underwriters or their respective Affiliates), then the Certificate Registrar
shall refuse to register such transfer unless it receives (and upon receipt, may
conclusively rely upon) either: (i) a certificate from the Certificateholder
desiring to effect such transfer substantially in the form attached as Exhibit
G-1 hereto, and a certificate from such 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 reasonably 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 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 without registration or
qualification. Any Holder of a Non-Registered Certificate desiring to effect
such a transfer shall, and upon acquisition of such a Certificate shall be
deemed to have agreed to, indemnify the Trustee, the Certificate Registrar and
the Depositor
<PAGE>
130
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.
In connection with transfer of the Non-Registered Certificates, the
Depositor shall furnish upon request of a Certificateholder or Certificate Owner
to such Holder or Certificate Owner and any prospective purchaser designated by
such Certificateholder or Certificate Owner the information required to be
delivered under paragraph (d)(4) of Rule 144A of the Securities Act.
Notwithstanding the foregoing, for so long as any Non-Registered
Certificate is a Book-Entry Certificate, (a) each prospective transferor of such
Certificate shall be deemed to have represented to the Trustee, the Depositor
and the transferee of such Certificate the information set forth on Exhibit G-1
upon or prior to such transfer and (b) each prospective transferee of such
Certificate shall be deemed to have represented to the Trustee, the Depositor
and the transferor of such Certificate the information set forth on Exhibit G-2
upon or prior to such transfer.
(c) No transfer of a Subordinated Certificate or any interest therein shall
be made (A) to any employee benefit plan or other retirement arrangement,
including individual retirement accounts and annuities, Keogh plans and
collective investment funds and separate accounts in which such plans, accounts
or arrangements are invested, that is subject to ERISA or the Code (each, a
"Plan"), or (B) to any Person who is directly or indirectly purchasing such
Subordinated Certificate or 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); provided that (i) such a transfer may be
made to an insurance company general account with respect to any Class of
Subordinated Certificates which is eligible for exemptive relief under Section
III of Prohibited Transaction Class Exemption 95-60 ("PTE 95-60"), provided that
the proposed transferee certifies to the Trustee that the conditions of Sections
I, III and IV of PTE 95-60 are satisfied with respect to such transfer, and (ii)
such a transfer may be made with respect to a Class H, Class J, Class K, Class L
or Class M Certificate if the prospective transferee provides the Certificate
Registrar with a certification of facts and an Opinion of Counsel (upon which
the Certificate Registrar may conclusively rely) which establish to the
reasonable satisfaction of the Certificate Registrar 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. As a
condition to its registration of the transfer of a Subordinated Certificate, the
Certificate Registrar shall have the right to require the prospective transferee
of such Certificate, if it is not a Plan or Person described in clause (B) of
the preceding sentence, to execute a certification affidavit to that effect in
the form attached as Exhibit H hereto. Notwithstanding the foregoing, for so
long as any Class of Certificate constitutes a Class of Book-Entry Certificates,
each prospective transferee of such Certificate or any interest therein shall be
deemed to have represented to the Trustee, the Depositor and the transferor of
such Certificate (i) the information set forth on Exhibit H, (ii) that it is an
insurance company general account which is eligible for exemptive relief under
Section III of PTE 95-60 and the conditions of Section I, III and IV of PTE
95-60 are satisfied with respect
<PAGE>
131
to such transfer or (iii) that the purchase, continued holding and transfer of
such Certificate or interest therein will not violate 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.
(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 Paying Agent under clause (ii)(A) below to
deliver payments to a Person other than such Person and to have irrevocably
authorized the Certificate Registrar 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, the Paying Agent and the Certificate Registrar
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 I-1 (in any case, a "Transfer Affidavit and
Agreement"), from the proposed Transferee, in form and substance
satisfactory to the Certificate Registrar, 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 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.
<PAGE>
132
(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 I-2 stating that, among other things, it
has no actual knowledge that such prospective Transferee is not a Permitted
Transferee.
(E) Each Person holding or acquiring an Ownership Interest in a
Residual Certificate, by purchasing 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 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 Certificate Registrar shall have the right,
without notice to the Holder or any prior Holder of such Residual Certificate,
to sell such Residual Certificate to a purchaser selected by the REMIC
Administrator on such terms as the Certificate Registrar may choose. Such
purported Transferee shall promptly endorse and deliver such Residual
Certificate in accordance with the instructions of the Certificate Registrar.
Such purchaser may be the Certificate Registrar itself or any Affiliate of the
Certificate Registrar. The proceeds of such sale, net of the commissions (which
may include commissions payable to the Certificate Registrar or its Affiliates),
expenses and taxes due, if any, will be remitted by the Paying Agent to such
<PAGE>
133
purported Transferee. The terms and conditions of any sale under this clause
(ii)(B) shall be determined in the sole discretion of the Certificate Registrar,
and the Certificate Registrar 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 Certificate Registrar shall make available to the Internal
Revenue Service and to those Persons specified by the REMIC Provisions any
information available to it which is necessary to compute any tax imposed (A) as
a result of the Transfer of an Ownership Interest in a Residual Certificate to
any Person who is a Disqualified Organization, including the information
described in Treasury regulations sections 1.860D-1(b)(5) and 1.860E-2(a)(5)
with respect to the "excess inclusions" of such Residual Certificate and (B) as
a result of any regulated investment company, real estate investment trust,
common trust fund, partnership, trust, estate or organization described in
Section 1381 of the Code that holds an Ownership Interest in a Residual
Certificate having as among its record holders at any time any Person which is a
Disqualified Organization, and the Master Servicer and the Special Servicer
shall furnish to the Certificate Registrar all information in its possession
necessary for the Certificate Registrar to discharge such obligation. The Person
holding such Ownership Interest shall be responsible for the reasonable
compensation of the Certificate Registrar, the Master Servicer and the Special
Servicer for providing such information.
(iv) The provisions of this Section 5.02(d) set forth prior to this clause
(iv) may be modified, added to or eliminated, provided that there shall have
been delivered to the Certificate Registrar 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 rating of any Class
of Certificates; and
(B) an Opinion of Counsel, in form and substance satisfactory to the
Certificate Registrar 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 or the Trust Fund),
to the effect that doing so will not cause either 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.
<PAGE>
134
(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 Certificate Registrar
shall execute and the Authenticating Agent shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of the same Class of a like aggregate Percentage Interest.
(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
Certificate Registrar shall execute and the Authenticating Agent 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 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 and exchange shall be
physically canceled by the Certificate Registrar, and the Certificate Registrar
shall dispose of such canceled Certificates in accordance with its standard
procedures.
(j) Upon request, the Certificate Registrar shall provide to the Master
Servicer, the Special Servicer and the Depositor notice of each transfer of a
Certificate and shall provide to each such Person with an updated copy of the
Certificate Register.
SECTION 5.03. Book-Entry Certificates.
(a) Each Class of Registered Certificates and the Class F and Class G
Certificates shall initially be issued as one or more Certificates registered in
the name of the Depository or its nominee and, except as provided in Section
5.03(c) below, 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
<PAGE>
135
Depository Participant or brokerage firm representing each such Certificate
Owner. Each Depository Participant shall only transfer the Ownership Interests
in the Book-Entry Certificates of Certificate Owners it represents or of
brokerage firms for which it acts as agent in accordance with the Depository's
normal procedures.
(b) The Trustee, the Master Servicer, the Special Servicer, the Depositor
and the Certificate Registrar may for all purposes, including the making of
payments due on the Book-Entry Certificates, deal with the Depository as the
authorized representative of the Certificate Owners with respect to such
Certificates for the purposes of exercising the rights of Certificateholders
hereunder. The rights of Certificate Owners with respect to the Book-Entry
Certificates shall be limited to those established by law and agreements between
such Certificate Owners and the Depository Participants and brokerage firms
representing such Certificate Owners. Multiple requests and directions from, and
votes of, the Depository as Holder of the Book-Entry Certificates with respect
to any particular matter shall not be deemed inconsistent if they are made with
respect to different Certificate Owners. The Trustee may establish a reasonable
record date in connection with solicitations of consents from or voting by
Certificateholders and shall give notice to the Depository of such record date.
(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 transfer, the Certificate
Registrar shall execute, at the Depositor's expense, and the Authenticating
Agent shall authenticate and deliver, the Definitive Certificates in respect of
such Class to the Certificate Owners identified in such instructions. The
Depositor shall provide the Certificate Registrar with an adequate inventory of
Definitive Certificates. None of the Depositor, the Master Servicer, the Special
Servicer, the Trustee or the Certificate Registrar shall be liable for any delay
in delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Certificates for purposes of evidencing ownership of any Class of Registered
Certificates, the registered holders of such Definitive Certificates shall be
recognized as Certificateholders hereunder and, accordingly, shall be entitled
directly to receive payments on, to exercise Voting Rights with respect to, and
to transfer and exchange such Definitive Certificates.
(d) Notwithstanding any other provisions contained herein, neither the
Trustee nor the Certificate Registrar shall have any responsibility whatsoever
to monitor or restrict the transfer of ownership interests in any Certificate
(including but not limited to any
<PAGE>
136
Non-Registered Certificate or any Subordinated Certificate) which interests are
transferable through the book-entry facilities of the Depository.
SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Certificate, and (ii) there is delivered
to the Trustee and the Certificate Registrar such security or indemnity as may
be required by them to save each of them harmless, then, in the absence of
actual notice to the Trustee or the Certificate Registrar that such Certificate
has been acquired by a bona fide purchaser, the Certificate Registrar shall
execute and the Authenticating Agent shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of the same Class and like Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trustee and the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) connected therewith. Any replacement Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership in the applicable REMIC created hereunder, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time.
SECTION 5.05. Persons Deemed Owners.
Prior to due presentment for registration of transfer, the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Certificate Registrar
and any agent of any of them may treat the Person in whose name any Certificate
is registered as the owner of such Certificate for the purpose of receiving
distributions pursuant to Section 4.01 and for all other purposes whatsoever and
none of the Depositor, the Master Servicer, the Special Servicer, the Trustee,
the Certificate Registrar or any agent of any of them shall be affected by
notice to the contrary.
<PAGE>
137
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER, THE SPECIAL SERVICER
AND THE CONTROLLING CLASS REPRESENTATIVE
SECTION 6.01. Liability of Depositor, Master Servicer and Special Servicer.
The Depositor, the Master Servicer and the Special Servicer shall be liable
in accordance herewith only to the extent of the respective obligations
specifically imposed upon and undertaken by the Depositor, the Master Servicer
and the Special Servicer herein.
SECTION 6.02. Merger, Consolidation or Conversion of Depositor or Master
Servicer or Special Servicer.
Subject to the following paragraph, the Depositor and the Special Servicer
shall each keep in full effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its incorporation or
organization, and each will obtain and preserve its qualification to do business
as a foreign corporation 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, and the Master Servicer shall keep in full effect
its existence and rights as a national banking association under the laws of the
United States.
The Depositor, the Master Servicer or the Special Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor, the Master Servicer or the Special
Servicer shall be a party, or any Person succeeding to the business of the
Depositor, the Master Servicer or the Special Servicer, shall be the successor
of the Depositor, the Master Servicer or the Special Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that no successor or surviving Person shall
succeed to the rights of the Master Servicer or the Special Servicer unless (i)
as evidenced in writing by the Rating Agencies, such succession will not result
in qualification, downgrading or withdrawal of the ratings then assigned by the
Rating Agencies to any Class of Certificates; (ii) such successor or surviving
Person makes the applicable representations and warranties set forth in Section
3.23; (iii) in the case of a successor or surviving Person to the Master
Servicer, such successor or surviving Person shall have a net worth (or, in the
case of the initial Master Servicer, such successor or surviving Person and its
immediate parent shall have a consolidated net worth) of not less than
$15,000,000; and (iv) in the case of a successor or surviving Person to the
Master Servicer, it is determined by the Trustee in its reasonable judgment to
have, after the merger, consolidation or transfer, as the case may be, financial
and servicing capabilities comparable to that of the Master Servicer.
<PAGE>
138
SECTION 6.03. Limitation on Liability of Depositor, Master Servicer and
Special Servicer.
None of the Depositor, the Master Servicer or the Special Servicer shall be
under any liability to the Trust Fund, the Trustee or the Certificateholders for
any action taken, or not taken, in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect the
Depositor, the Master Servicer or the Special Servicer against any liability to
the Trust Fund, the Trustee or the Certificateholders for the breach of a
representation, warranty or covenant made herein by such party, or against any
expense or liability specifically required to be borne by such party without
right of reimbursement pursuant to the terms hereof, or against any liability
which would otherwise be imposed by reason of misfeasance, bad faith or
negligence in the performance of obligations or duties hereunder. The Depositor,
the Master Servicer, the Special Servicer and any director, officer, employee or
agent of the Depositor, the Master Servicer or the Special Servicer may rely in
good faith on any document of any kind which, prima facie, is properly executed
and submitted by any Person respecting any matters arising hereunder. The
Depositor, the Master Servicer, the Special Servicer and any director, officer,
employee or agent of the Depositor, the Master Servicer or the Special Servicer
shall be indemnified and held harmless by the Trust Fund against any loss,
liability or reasonable expense incurred in connection with this Agreement or
the Certificates, other than any loss, liability or expense: (i) incidental to
its duties and obligations hereunder; (ii) specifically required to be borne by
such party without right of reimbursement pursuant to the terms hereof; (iii)
incurred in connection with any breach of a representation, warranty or covenant
made herein; or (iv) incurred by reason of willful misfeasance, bad faith or
negligence in the performance of obligations or duties hereunder; or (v)
incurred in connection with any violation of any state or federal securities
law. None of the Depositor, the Master Servicer or the Special Servicer shall be
under any obligation to appear in, prosecute or defend any legal action unless
such action is related to its respective duties under this Agreement and, unless
it is specifically required hereunder to bear the costs of such legal action, in
its opinion does not involve it in any ultimate expense or liability; provided,
however, that the Depositor, the Master Servicer or the Special Servicer may in
its discretion undertake any such action which it may deem necessary or
desirable with respect to the enforcement and/or protection of the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such action, and any
liability resulting therefrom, shall be expenses, costs and liabilities of the
Trust Fund, and the Depositor, the Master Servicer and the Special Servicer
shall be entitled to be reimbursed therefor from the 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 or any Certificateholder,
subject to the provisions of the last paragraph of Section 8.05.
SECTION 6.04. Resignation of Master Servicer and the Special Servicer.
The Master Servicer and, subject to Section 6.09, the Special Servicer may
resign from the obligations and duties hereby imposed on it, upon a
determination that its
<PAGE>
139
duties hereunder are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it (the other activities of the Master Servicer or the Special Servicer,
as the case may be, so causing such a conflict being of a type and nature
carried on by the Master Servicer or the Special Servicer, as the case may be,
at the date of this Agreement). Any such determination requiring the resignation
of the Master Servicer or the Special Servicer, as applicable, shall be
evidenced by an Opinion of Counsel to such effect which shall be delivered to
the Trustee. Unless applicable law requires the Master Servicer's or Special
Servicer's resignation to be effective immediately, and the Opinion of Counsel
delivered pursuant to the prior sentence so states, no such resignation shall
become effective until the Trustee or other successor shall have assumed the
responsibilities and obligations of the resigning party in accordance with
Section 7.02 hereof. The Master Servicer and the Special Servicer shall have the
right to resign at any other time provided that (i) a willing successor thereto
has been found, (ii) each of the Rating Agencies confirms in writing that the
successor's appointment will not result in a withdrawal, qualification or
downgrade of any rating or ratings assigned to any Class of Certificates, (iii)
the resigning party pays all costs and expenses in connection with such
transfer, and (iv) the successor accepts appointment prior to the effectiveness
of such resignation. Neither the Master Servicer nor the Special Servicer shall
be permitted to resign except as contemplated above in this Section 6.04.
Consistent with the foregoing, neither the Master Servicer nor the Special
Servicer shall, except as expressly provided herein, assign or transfer any of
its rights, benefits or privileges hereunder to any other Person, or, except as
provided in Sections 3.22 and 4.06, delegate to or subcontract with, or
authorize or appoint any other Person to perform any of the duties, covenants or
obligations to be performed by it hereunder. If, pursuant to any provision
hereof, the duties of the Master Servicer or the Special Servicer are
transferred to a successor thereto, the Master Servicing Fee, the Additional
Servicing Fee or the Special Servicing Fee, as the case may be, that accrues
pursuant hereto from and after the date of such transfer shall be payable to
such successor.
SECTION 6.05. Rights of Depositor and Trustee in Respect of Master Servicer
and the Special Servicer.
The Master Servicer and the Special Servicer shall each afford the
Depositor, the Underwriters and the Trustee, upon reasonable notice, during
normal business hours access to all records maintained thereby in respect of its
rights and obligations hereunder and access to officers thereof responsible for
such obligations. Upon reasonable request, the Master Servicer and the Special
Servicer shall each furnish the Depositor, the Underwriters and the Trustee with
its most recent financial statements and such other information as it possesses,
and which it is not prohibited by applicable law or contract from disclosing,
regarding its business, affairs, property and condition, financial or otherwise,
except to the extent such information constitutes proprietary information or is
subject to a privilege under applicable law. The Depositor may, but is not
obligated to, enforce the obligations of the Master Servicer and the Special
Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer or Special
<PAGE>
140
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. The
Depositor shall not have any responsibility or liability for any action or
failure to act by the Master Servicer or the Special Servicer and is not
obligated to supervise the performance of the Master Servicer or the Special
Servicer under this Agreement or otherwise.
SECTION 6.06. Depositor, Master Servicer and Special Servicer to Cooperate
with Trustee.
The Depositor, the Master Servicer and the Special Servicer shall each
furnish such reports, certifications and information as are reasonably requested
by the Trustee in order to enable it to perform its duties hereunder.
SECTION 6.07. Depositor, Special Servicer and Trustee to Cooperate with
Master Servicer.
The Depositor, the Special Servicer and the Trustee shall each furnish such
reports, certifications and information as are reasonably requested by the
Master Servicer in order to enable it to perform its duties hereunder.
SECTION 6.08. Depositor, Master Servicer and Trustee to Cooperate with
Special Servicer.
The Depositor, the Master Servicer and the Trustee shall each furnish such
reports, certifications and information as are reasonably requested by the
Special Servicer in order to enable it to perform its duties hereunder.
SECTION 6.09. Designation of Special Servicer by the Controlling Class.
The Holder or Holders of the Certificates evidencing a majority of the
Voting Rights allocated to the Controlling Class may at any time and from time
to time designate a Person meeting the requirements set forth in Section 6.02 to
serve as Special Servicer hereunder and to replace any existing Special Servicer
or any Special Servicer that has resigned or otherwise ceased to serve as
Special Servicer. Such Holder or Holders may also select a representative (the
"Controlling Class Representative") from whom the Special Servicer will seek
advice and approval and take direction under certain circumstances, as described
herein. Such Holder or Holders shall so designate a Person to serve as
replacement Special Servicer by the delivery to the Trustee, the Master Servicer
and the existing Special Servicer of a written notice stating such designation.
The Trustee shall, promptly after receiving any such notice, deliver to the
Rating Agencies an executed Notice and Acknowledgment in the form attached
hereto as Exhibit J-1. If such Holders have not
<PAGE>
141
replaced the Special Servicer within 30 days of such Special Servicer's
resignation or the date such Special Servicer has ceased to serve in such
capacity, the Trustee shall designate a successor Special Servicer meeting the
requirements set forth in Section 6.02. Any designated Person shall become the
Special Servicer, subject to satisfaction of the other conditions set forth
below, on the date that the Trustee shall have received written confirmation
from all of the Rating Agencies that the appointment of such Person will not
result in the qualification, downgrading or withdrawal of the rating or ratings
assigned to one or more Classes of the Certificates. The appointment of such
designated Person as Special Servicer shall also be subject to receipt by the
Trustee of (1) an Acknowledgment of Proposed Special Servicer in the form
attached hereto as Exhibit J-2, executed by the designated Person, and (2) an
Opinion of Counsel (at the expense of the Person designated to become the
Special Servicer) to the effect that the designation of such Person to serve as
Special Servicer is in compliance with this Section 6.09 and all other
applicable provisions of this Agreement, that upon the execution and delivery of
the Acknowledgment of Proposed Special Servicer the designated Person shall be
bound by the terms of this Agreement and that this Agreement shall be
enforceable against the designated Person in accordance with its terms. Any
existing Special Servicer shall be deemed to have resigned simultaneously with
such designated Person's becoming the Special Servicer hereunder; provided,
however, that the resigning Special Servicer shall continue to be entitled to
receive all amounts accrued or owing to it under this Agreement on or prior to
the effective date of such resignation, whether in respect of Servicing Advances
or otherwise, and it shall continue to be entitled to the benefits of Section
6.03 notwithstanding any such resignation. Such resigning Special Servicer shall
cooperate with the Trustee and the replacement Special Servicer in effecting the
termination of the resigning Special Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer within two Business Days
to the replacement Special Servicer for administration by it of all cash amounts
that shall at the time be or should have been credited by the Special Servicer
to the Certificate Account or the REO Account or delivered to the Master
Servicer or that are thereafter received with respect to Specially Serviced
Mortgage Loans and REO Properties.
SECTION 6.10. Master Servicer or Special Servicer as Owner of a
Certificate.
The Master Servicer or an Affiliate of the Master Servicer or the Special
Servicer or an Affiliate of the Special Servicer may become the Holder of (or,
in the case of a Book-Entry Certificate, Certificate Owner with respect to) any
Certificate with (except as set forth in the definition of "Certificateholder")
the same rights it would have if it were not the Master Servicer or the Special
Servicer or an Affiliate thereof. If, at any time during which the Master
Servicer or the Special Servicer or an Affiliate of the Master Servicer or the
Special Servicer is the Holder of (or, in the case of a Book-Entry Certificate,
Certificate Owner with respect to) any Certificate, the Master Servicer or the
Special Servicer proposes to take action (including for this purpose, omitting
to take action) that (i) is not expressly prohibited by the terms hereof and
would not, in the Master Servicer's or the Special Servicer's good faith
judgment, violate the Servicing Standard, and (ii) if taken, might nonetheless,
in the Master Servicer's or the Special Servicer's good faith judgment, be
<PAGE>
142
considered by other Persons to violate the Servicing Standard, the Master
Servicer or the Special Servicer may (but need not) seek the approval of the
Certificateholders to such action by delivering to the Trustee a written notice
that (a) states that it is delivered pursuant to this Section 6.10, (b)
identifies the Percentage Interest in each Class of Certificates beneficially
owned by the Master Servicer or the Special Servicer or an Affiliate of the
Master Servicer or the Special Servicer, and (c) describes in reasonable detail
the action that the Master Servicer or the Special Servicer proposes to take.
The Trustee, upon receipt of such notice, shall forward it to the
Certificateholders (other than the Master Servicer and its Affiliates or the
Special Servicer and its Affiliates, as appropriate), together with such
instructions for response as the Trustee shall reasonably determine. If at any
time Certificateholders holding greater than 25% of the Voting Rights of all
Certificateholders (calculated without regard to the Certificates beneficially
owned by the Master Servicer or its Affiliates or the Special Servicer or its
Affiliates) shall have failed to object in writing to the proposal described in
the written notice, and if the Master Servicer or the Special Servicer shall act
as proposed in the written notice within thirty (30) days, such action shall be
deemed to comply with, but not modify, the Servicing Standard. The Trustee shall
be entitled to reimbursement from the Master Servicer or the Special Servicer,
as applicable, for the reasonable expenses of the Trustee incurred pursuant to
this paragraph. It is not the intent of the foregoing provision that the Master
Servicer or the Special Servicer be permitted to invoke the procedure set forth
herein with respect to routine servicing matters arising hereunder, but rather
in the case of unusual circumstances.
SECTION 6.11. The Controlling Class Representative.
The Controlling Class Representative will be entitled to advise the Special
Servicer with respect to the following actions of the Special Servicer, and
notwithstanding anything herein to the contrary except as set forth in, and in
any event subject to, the second paragraph of this Section 6.11, the Special
Servicer will not be permitted to take any of the following actions as to which
the Controlling Class Representative has objected in writing within ten Business
Days of being notified thereof (provided that if such written objection has not
been received by the Special Servicer within such ten Business Day period, then
the Controlling Class Representative's approval will be deemed to have been
given):
(i) any foreclosure upon or comparable conversion (which may include
acquisitions of an REO Property) of the ownership of properties securing
such of the Specially Serviced Mortgage Loans as come into and continue in
default;
(ii) any modification of a monetary term of a Mortgage Loan other than
a modification consisting of the extension of the maturity date of a
Mortgage Loan for one year or less;
(iii) any proposed sale of a defaulted Mortgage Loan or REO Property
(other than in connection with the termination of the Trust Fund);
<PAGE>
143
(iv) any determination to bring an REO Property into compliance with
applicable environmental laws or to otherwise address Hazardous Materials
located at an REO Property;
(v) any acceptance of substitute or additional collateral for a
Mortgage Loan;
(vi) any waiver of a "due-on-sale" or "due-on-encumbrance" clause; and
(vii) any acceptance of an assumption agreement releasing a borrower
from liability under a Mortgage Loan.
In addition, the Controlling Class Representative may direct the Special
Servicer to take, or to refrain from taking, such other actions as the
Controlling Class Representative may deem advisable or as to which provision is
otherwise made herein; provided that notwithstanding anything herein to the
contrary no such direction, and no objection contemplated by the preceding
paragraph, may require or cause the Special Servicer to violate any provision of
this Agreement or the REMIC Provisions, including without limitation the Special
Servicer's obligation to act in accordance with the Servicing Standard, or
expose the Master Servicer, the Special Servicer, the Trust Fund or the Trustee
to liability, or materially expand the scope of the Special Servicer's
responsibilities hereunder or cause the Special Servicer to act, or fail to act,
in a manner which in the reasonable judgment of the Special Servicer is not in
the best interests of the Certificateholders.
The Controlling Class Representative will have no liability to the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that the Controlling Class Representative will not be
protected against any liability which would otherwise be imposed by reason of
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 the
Controlling Class Representative may take actions that favor the interests of
one or more Classes of the Certificates over other Classes of the Certificates,
and that the Controlling Class Representative may have special relationships and
interests that conflict with those of Holders of some Classes of the
Certificates; and, absent willful misfeasance, bad faith or negligence on the
part of the Controlling Class Representative, agrees to take no action against
the Controlling Class Representative or any of its officers, directors,
employees, principals or agents as a result of such a special relationship or
conflict.
<PAGE>
144
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
(a) "Event of Default", wherever used herein, means any one of the
following events:
(i) any failure by the Master Servicer to deposit into the Certificate
Account, or to deposit into, or remit to the Paying Agent for deposit into,
the Distribution Account, any amount (other than a P&I Advance) required to
be so deposited or remitted by it under this Agreement; or
(ii) any failure by the Special Servicer to deposit into the REO
Account or to deposit into, or to remit to the Master Servicer for deposit
into, the 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 and the Special Servicer, as the
case may be, by any other party hereto or to the Master Servicer or the
Special Servicer, as the case may be (with a copy to each other party
hereto), by the Holders of Certificates entitled to at least 25% of the
Voting Rights, provided, however, that with respect to any such failure
which is not curable within such 30-day period, the Master Servicer or the
Special Servicer, as the case may be, shall have an additional cure period
of thirty (30) days to effect such cure so long as the Master Servicer or
the Special Servicer, as the case may be, has commenced to cure such
failure within the initial 30-day period and has, as determined by the
Trustee in its reasonable discretion, diligently pursued, and is continuing
to pursue, a full cure; 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
<PAGE>
145
entitled to at least 25% of the Voting Rights, provided, however, that
with respect to any failure which is not curable within such 30-day period,
the Master Servicer or the Special Servicer, as the case may be, shall have
an additional cure period of thirty (30) days so long as the Master
Servicer or the Special Servicer, as the case may be, has commenced to cure
within the initial 30-day period and, as determined by the Trustee in its
reasonable discretion, has diligently pursued, and is continuing to pursue,
a full cure; 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,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
the Master Servicer or the Special Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days; or
(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, marshaling of
assets and liabilities or similar proceedings of or relating to it or of or
relating to all or substantially all of its property; or
(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
corporate action in furtherance of the foregoing; or
(viii) the consolidated net worth of the Master Servicer and of its
direct or indirect parent, determined in accordance with generally accepted
accounting principles, shall decline to less than $15,000,000; or
(ix) the Trustee shall have received a written notice from a Rating
Agency to the effect that if the Master Servicer or Special Servicer
continues to act in such capacity, the rating or ratings on one or more
Classes of Certificates will be qualified, downgraded or withdrawn; or
(x) the Master Servicer shall fail to remit to the Paying Agent 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 11:00 a.m. New York City time on the next
Business Day succeeding such P&I Advance Date.
<PAGE>
146
When a single entity acts as the Master Servicer and the Special Servicer, an
Event of Default in one capacity shall constitute an Event of Default in the
other capacity.
(b) If any Event of Default described in clauses (i) - (viii) of subsection
(a) above shall occur with respect to the Master Servicer or the Special
Servicer (in either case, for purposes of this Section 7.01(b), the "Defaulting
Party") and shall be continuing, then, and in each and every such case, so long
as such Event of Default shall not have been remedied, the Trustee may, and at
the written direction of the Holders of Certificates entitled to at least 25% of
the Voting Rights, the Trustee shall, by notice in writing to the Defaulting
Party (with a copy of such notice to each other party hereto and the Rating
Agencies) terminate all of the rights and obligations (but not the liabilities
for actions and omissions occurring prior thereto) of the Defaulting Party under
this Agreement and in and to the Trust Fund, other than its rights as a
Certificateholder hereunder. If an Event of Default described in clause (ix) or
(x) of subsection (a) above shall occur with respect to the Master Servicer or,
if applicable, the Special Servicer (in either case, under such circumstances,
for purposes of this Section 7.01(b), the "Defaulting Party"), the Trustee
shall, by notice in writing (to be sent immediately by facsimile transmission)
to the Defaulting Party (with a copy of such notice to each other party hereto
and the Rating Agencies), terminate all of the rights and obligations (but not
the liabilities for actions and omissions occurring prior thereto) of the
Defaulting Party under this Agreement and in and to the Trust Fund, other than
its rights, if any, as a Certificateholder hereunder. From and after the receipt
by the Defaulting Party of such written notice of termination, all authority and
power of the Defaulting Party under this Agreement, whether with respect to the
Certificates (other than as a holder of any Certificate) or the Mortgage Loans
or otherwise, shall pass to and be vested in the Trustee pursuant to and under
this Section, and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of and at the expense of the
Defaulting Party, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer and the Special Servicer
each agree that, if it is terminated pursuant to this Section 7.01(b), it shall
promptly (and in any event no later than ten Business Days subsequent to its
receipt of the notice of termination) provide the Trustee with all documents and
records, including those in electronic form, requested thereby to enable the
Trustee to assume the Master Servicer's or Special Servicer's, as the case may
be, functions hereunder, and shall cooperate with the Trustee in effecting the
termination of the Master Servicer's or Special Servicer's, as the case may be,
responsibilities and rights hereunder, including, without limitation, (i) the
immediate transfer to the Trustee or a successor Master or Special 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, a Servicing Account or a Reserve Account (if the Master
Servicer is the Defaulting Party) or that are thereafter received by or on
behalf of it with respect to any Mortgage Loan or (ii) the transfer within two
Business Days to the Trustee or a successor Special Servicer for administration
by it of all cash amounts that shall at the time be or should have been credited
by the Special Servicer to the REO Account, the Certificate Account, a
<PAGE>
147
Servicing Account or a Reserve Account or delivered to the Master Servicer (if
the Special Servicer is the Defaulting Party) or that are thereafter received by
or on behalf of it with respect to any Mortgage Loan or REO Property (provided,
however, that the Master Servicer and the Special Servicer each shall, if
terminated pursuant to this Section 7.01(b), continue to be entitled to receive
all amounts accrued or owing to it under this Agreement on or prior to the date
of such termination, whether in respect of Advances or otherwise, and it shall
continue to be entitled to the benefits of Section 6.03 notwithstanding any such
termination). Any cost or expenses in connection with any actions to be taken by
the Master Servicer or Special Servicer pursuant to this paragraph shall be
borne by the Defaulting Party and if not paid by the Defaulting Party within 90
days after the presentation of reasonable documentation of such costs and
expenses, such expense shall be reimbursed by the Trust Fund; provided, however,
that the Defaulting Party shall not thereby be relieved of its liability for
such expenses. If and to the extent that the Defaulting Party has not reimbursed
such costs and expenses, the Trustee shall have an affirmative obligation to
take all reasonable actions to collect such expenses on behalf of and at the
expense of the Trust Fund. For purposes of this Section 7.01 and of Section
7.03(b), the Trustee shall not be deemed to have knowledge of an event which
constitutes, or which with the passage of time or notice, or both, would
constitute an Event of Default described in clauses (i)-(viii) of subsection (a)
above unless a Responsible Officer of the Trustee assigned to and working in the
Trustee's Corporate Trust Division has actual knowledge thereof or unless notice
of any event which is in fact such an Event of Default is received by the
Trustee and such notice references the Certificates, the Trust Fund or this
Agreement.
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 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)(x), the unmade P&I
Advances that gave rise to such Event of Default; provided that any failure to
perform such duties or responsibilities caused by the Master Servicer's or the
Special Servicer's, as the case may be, failure to provide information or monies
required by Section 7.01 shall not be considered a default by the Trustee
hereunder. The Trustee shall not be liable for any of the representations and
warranties of the resigning or terminated party or for any losses incurred by
the resigning or terminated party pursuant to Section 3.06 hereunder nor shall
the Trustee be required to purchase any Mortgage Loan hereunder. As compensation
therefor, the Trustee shall be entitled to all fees and other compensation which
the resigning or terminated party would have been entitled to if the resigning
or terminated party had continued
<PAGE>
148
to act hereunder. Notwithstanding the above, the Trustee may, if it shall be
unwilling to so act as either Master Servicer or Special Servicer, as the case
may be, or shall, if it is unable to so act as either Master Servicer or Special
Servicer, as the case may be, or if the Trustee is not approved as a Master
Servicer or a Special Servicer, as the case may be, by any of the Rating
Agencies or if the Holders of Certificates entitled to at least 51% of the
Voting Rights so request in writing to the Trustee, promptly appoint, or
petition a court of competent jurisdiction to appoint, any established mortgage
loan servicing institution that meets the requirements of Section 6.02, as the
successor to the Master Servicer or the Special Servicer, as the case may be,
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer or the Special Servicer, as the case may
be, hereunder; provided, however, that in the case of a resigning or terminated
Special Servicer, such appointment shall be subject to the rights of the Holders
of Certificates evidencing a majority of the Voting Rights allocated to the
Controlling Class to designate a successor pursuant to Section 6.09. No
appointment of a successor to the Master Servicer or the Special Servicer
hereunder shall be effective until the assumption of the successor to such party
of all its responsibilities, duties and liabilities under this Agreement.
Pending appointment of a successor to the Master Servicer or the Special
Servicer hereunder, the Trustee shall act in such capacity as hereinabove
provided. In connection with any such appointment and assumption described
herein, the Trustee may make such arrangements for the compensation of such
successor out of payments on the Mortgage Loans as it and such successor shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the resigning or terminated party hereunder. Such successor and the
other parties hereto shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any resignation of the Master Servicer or the Special Servicer
pursuant to Section 6.04, any termination of the Master Servicer or the Special
Servicer pursuant to Section 7.01, any appointment of a successor to the Master
Servicer or the Special Servicer pursuant to Section 7.02 or the effectiveness
of any designation of a new Special Servicer pursuant to Section 6.09, the
Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register.
(b) Not later than the later of (i) 60 days after the occurrence of any
event which constitutes or, with notice or lapse of time or both, would
constitute an Event of Default and (ii) five days after a Responsible Officer of
the Trustee has notice of the occurrence of such an event, the Trustee shall
transmit by mail to the Depositor and all Certificateholders and the Rating
Agencies notice of such occurrence, unless such default shall have been cured.
SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 66-2/3% of the Voting Rights allocated to
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 clauses
(i), (ii), (ix) or (x) of
<PAGE>
149
Section 7.01(a) may be waived only by all of the Certificateholders of the
affected Classes. Upon any such waiver of an Event of Default, such Event of
Default shall cease to exist and shall be deemed to have been remedied for every
purpose hereunder. No such waiver shall extend to any subsequent or other Event
of Default or impair any right consequent thereon except to the extent expressly
so waived. Notwithstanding any other provisions of this Agreement, for purposes
of waiving any Event of Default pursuant to this Section 7.04, Certificates
registered in the name of the Depositor or any Affiliate of the Depositor shall
be entitled to Voting Rights with respect to the matters described above.
SECTION 7.05. Additional Remedies of Trustee Upon Event of Default.
During the continuance of any Event of Default, so long as such Event of
Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 7.01, shall have the right, in its own name and as trustee
of an express trust, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.
<PAGE>
150
ARTICLE VIII
CONCERNING THE TRUSTEE
AND FISCAL AGENT
SECTION 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and after
the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default occurs and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. Any permissive right of the Trustee contained in this Agreement
shall not be construed as a duty.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement (other than the Mortgage Files, the review of which
is specifically governed by the terms of Article II), shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee shall take such action as it deems appropriate to
have the instrument corrected. The Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Depositor 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;
<PAGE>
151
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of Certificates entitled to at
least 25% of the Voting Rights relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement; and
(iv) The protections, immunities and indemnities afforded to the
Trustee hereunder shall also be available to it in its capacity as Paying
Agent, Certificate Registrar, REMIC Administrator and Custodian.
SECTION 8.02. Certain Matters Affecting Trustee.
Except as otherwise provided in Section 8.01 and Article X:
(i) the Trustee may rely upon and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate, certificate
of auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or document
reasonably believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(ii) the Trustee may consult with counsel and the written advice of such
counsel or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it hereunder
in good faith and in accordance therewith;
(iii) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Agreement or to make any investigation of
matters arising hereunder or, except as provided in Section 10.01, 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 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
<PAGE>
152
use the same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs;
(iv) the Trustee shall not be personally liable for any action reasonably
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by
this Agreement;
(v) prior to the occurrence of an Event of Default 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 document, unless
requested in writing to do so by Holders of Certificates entitled to at least
25% of the Voting Rights; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require reasonable indemnity
against such expense or liability as a condition to taking any such action;
(vi) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys; provided, however, that the Trustee shall remain responsible for all
acts and omissions of such agents or attorneys within the scope of their
employment to the same extent as it is responsible for its own actions and
omissions hereunder; and
(vii) the Trustee shall not be responsible for any act or omission of the
Master Servicer or the Special Servicer (unless the Trustee is acting as Master
Servicer or the Special Servicer) or the Depositor.
SECTION 8.03. Trustee and Fiscal Agent Not Liable for Validity or
Sufficiency of Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates, other than the
statements attributed to the Trustee in Article II, Section 8.13, Section 8.16
and Section 8.18 and the signature of the Certificate Registrar and the
Authenticating Agent set forth on each outstanding Certificate, shall be taken
as the statements of the Depositor or the Master Servicer or the Special
Servicer, as the case may be, and the Trustee and Fiscal Agent assume no
responsibility for their correctness. Except as expressly set forth in Sections
8.16 and 8.18, the Trustee and the Fiscal Agent make no representations as to
the validity or sufficiency of this Agreement or of any Certificate (other than
as to the signature of the Trustee set forth thereon) or of any Mortgage Loan or
related document. The Trustee and the Fiscal Agent shall not be accountable for
the use or application by the Depositor of any of the Certificates issued to it
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Depositor in respect of the assignment of the Mortgage Loans
to the Trust Fund, 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. The Trustee and the
<PAGE>
153
Fiscal Agent shall not be responsible for the accuracy or content of any
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Depositor, the Master Servicer or the Special
Servicer, and accepted by the Trustee in good faith, pursuant to this Agreement.
SECTION 8.04. Trustee and Fiscal Agent May Own Certificates.
The Trustee, the Fiscal Agent or any agent of the Trustee and the Fiscal
Agent, in its individual or any other capacity, may become the owner or pledgee
of Certificates with (except as otherwise provided in the definition of
"Certificateholder") the same rights it would have if it were not the Trustee,
the Fiscal Agent or such agent.
SECTION 8.05. Fees and Expenses of Trustee; Indemnification of Trustee.
(a) On each Distribution Date, the Trustee shall withdraw from the general
funds on deposit in the Distribution Account, prior to any distributions to be
made therefrom on such date, and pay to itself all earned but unpaid Trustee's
Fees, as compensation for all services rendered by the Trustee in the execution
of the trusts hereby created and in the exercise and performance of any of the
powers and duties of the Trustee hereunder. The Trustee's Fees (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) shall constitute the Trustee's sole compensation for such
services to be rendered by it.
(b) The Trustee and any director, officer, employee or agent of the Trustee
shall be entitled to be indemnified for and held harmless by the Trust Fund
against any loss, liability or reasonable "out-of-pocket" expense (including,
without limitation, costs and expenses incurred in connection with removal of
the Special Servicer and Master Servicer pursuant to Sections 7.01 and 7.02,
costs and expenses of litigation, and of investigation, counsel fees, damages,
judgments and amounts paid in settlement) arising out of, or incurred in
connection with this Agreement or the Certificates ("Trustee Liability");
provided that neither the Trustee nor any of the other above specified Persons
shall be entitled to indemnification pursuant to this Section 8.05(b) for (1)
any liability specifically required to be borne thereby pursuant to the terms
hereof, or (2) any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Trustee's
obligations and duties hereunder, or as may arise from a breach of any
representation, warranty or covenant of the Trustee made herein. The provisions
of this Section 8.05(b) and of Section 8.05(c) shall survive any resignation or
removal of the Trustee and appointment of a successor trustee.
(c) If the Trustee Liability arises from the issuance or sale of the
Certificates and the indemnification provided for in Section 8.05(b) is invalid
or unenforceable, then the Trust Fund shall contribute to the amount paid or
payable by the Trustee as a result of such Trustee Liability in such proportion
as is appropriate to reflect the relative fault of any other parties on the one
hand and the Trustee on the other in connection
<PAGE>
154
with the actions or omissions which resulted in such Trustee Liability, as well
as any other relevant equitable considerations.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be an association or a corporation
organized and doing business under the laws of the United States of America or
any State thereof or the District of Columbia, authorized under such laws to
exercise trust powers, having a combined capital and surplus of at least
$100,000,000 and subject to supervision or examination by federal or state
banking authority. If such association or corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section the combined capital and surplus of such association or corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. The Trustee or the Fiscal Agent shall
at all times maintain a long-term unsecured debt rating of at least "AA" or the
equivalent by each Rating Agency or such other rating that shall not result in
the qualification, downgrading or withdrawal of the rating or ratings assigned
to one or more Classes of the Certificates by any Rating Agency. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07; provided that if the Trustee shall cease to be
so eligible because its combined capital and surplus is no longer at least
$100,000,000 or its long-term unsecured debt rating no longer conforms to the
requirements of the immediately preceding sentence, and if the Trustee proposes
to the other parties hereto to enter into an agreement with (and reasonably
acceptable to) each of them, and if in light of such agreement the Trustee's
continuing to act in such capacity would not (as evidenced in writing by each
Rating Agency) cause any Rating Agency to qualify, downgrade or withdraw any
rating assigned thereby to any Class of Certificates, then upon the execution
and delivery of such agreement the Trustee shall not be required to resign, and
may continue in such capacity, for so long as none of the ratings assigned by
the Rating Agencies to the Certificates is adversely affected thereby. The
corporation or association serving as Trustee may have normal banking and trust
relationships with the Depositor, the Master Servicer, the Special Servicer and
their respective Affiliates.
SECTION 8.07. Resignation and Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Master
Servicer, the Special Servicer and to all Certificateholders. Upon any such
notice of resignation, the corresponding Fiscal Agent shall also be deemed to
have resigned. Upon receiving such notice of resignation, the Master Servicer
shall promptly appoint a successor trustee and successor fiscal agent acceptable
to the Depositor by written instrument, in duplicate, which instrument shall be
delivered to the resigning Trustee and to the successor trustee. A copy of such
instrument shall be delivered to the Depositor, the Special Servicer and the
Certificateholders by the Master Servicer. If no successor trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation,
<PAGE>
155
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor trustee.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 and shall fail to resign after written
request therefor by the Depositor or the Master Servicer, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, or if the Trustee shall fail, if the Trustee is the Paying Agent
(other than by reason of the failure of either the Master Servicer or the
Special Servicer to timely perform its obligations hereunder or as a result of
other circumstances beyond the Trustee's reasonable control), to timely deliver
any current or revised Distribution Date Statement, CSSA Loan File Report, CSSA
Property File Report or other report or statement required by Section 4.02 and
such failure shall continue unremedied for a period of five days, or if the
Paying Agent (if different from the Trustee) fails to make distributions
required pursuant to Sections 3.05(b) or 4.01), then the Depositor may remove
the Trustee and Fiscal Agent and appoint a successor trustee and successor
fiscal agent, if necessary, 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. Any resignation or termination of the
Trustee shall result in the simultaneous resignation or termination, as
applicable, of the Fiscal Agent.
(c) The Holders of Certificates entitled to at least 51% of the Voting
Rights may at any time remove the Trustee and Fiscal Agent and appoint a
successor trustee and successor fiscal agent, if necessary, by written
instrument or instruments, signed by such Holders or their attorneys-in-fact
duly authorized, one complete set of which instruments shall be delivered to the
Master Servicer, one complete set to the Trustee so removed, one complete set to
the Fiscal Agent so removed, one complete set to the successor trustee so
appointed and one complete set to the successor fiscal agent so appointed. A
copy of such instrument shall be delivered to the Depositor, the Special
Servicer and the remaining Certificateholders by the successor so appointed. In
the event that the Trustee or Fiscal Agent is terminated or removed pursuant to
this Section 8.07, all of its rights and obligations under this Agreement and in
and to the Mortgage Loans shall be terminated, other than any rights or
obligations that accrued prior to the date of such termination or removal
(including the right to receive all fees, expenses and other amounts (including,
without limitation, P&I Advances and accrued interest thereon) accrued or owing
to it under this Agreement, with respect to periods prior to the date of such
termination or removal, and no termination without cause shall be effective
until the payment of such amounts to the Trustee and the Fiscal Agent).
(d) Any resignation or removal of the Trustee and Fiscal Agent and
appointment of a successor trustee and successor fiscal agent pursuant to any of
the provisions of this Section 8.07 shall not become effective until acceptance
of appointment by the successor trustee and, if necessary, successor fiscal
agent as provided in Section 8.08.
<PAGE>
156
SECTION 8.08. Successor Trustee.
(a) Any successor trustee and successor fiscal agent 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 and
predecessor fiscal agent, as the case may be, an instrument accepting such
appointment hereunder and thereupon the resignation or removal of the
predecessor trustee and predecessor fiscal agent shall become effective and such
successor trustee and successor fiscal agent, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder (other than any Mortgage Files at the time held on its behalf by a
Custodian, which Custodian shall become the agent of the successor trustee), and
the Depositor, the Master Servicer, the Special Servicer and the predecessor
trustee shall execute and deliver such instruments and do such other things as
may reasonably 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 and/or successor
fiscal agent as provided in this Section 8.08, such successor trustee shall mail
notice of the succession of such trustee hereunder to the Depositor and the
Certificateholders.
SECTION 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee or the Fiscal Agent 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 or the Fiscal Agent
shall be a party, or any entity succeeding to the corporate trust business of
the Trustee, shall be the successor of the Trustee or the Fiscal Agent
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
<PAGE>
157
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.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts 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.
<PAGE>
158
SECTION 8.11. Appointment of Custodians.
The Trustee may appoint at the Trustee's expense one or more Custodians to
hold all or a portion of the Mortgage Files as agent for the Trustee. Each
Custodian shall be a depository institution supervised and regulated by a
federal or state banking authority, shall have combined 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. The Trustee may enter into agreements to
appoint a Custodian which is not the Trustee, provided that, such agreement: (i)
is consistent with this Agreement in all material respects and requires the
Custodian to comply with this Agreement in all material respects and requires
the Custodian to comply with all of the applicable conditions of this Agreement;
(ii) provides that if the Trustee shall for any reason no longer act in the
capacity of Trustee hereunder (including, without limitation, by reason of an
Event of Default), the successor Trustee or its designee may thereupon assume
all of the rights and, except to the extent they arose prior to the date of
assumption, obligations of the Custodian under such agreement or alternatively,
may terminate such agreement without cause and without payment of any penalty or
termination fee; and (iii) does not permit the Custodian any rights of
indemnification that may be satisfied out of assets of the Trust Fund. The
appointment of one or more Custodians shall not relieve the Trustee from any of
its obligations hereunder, and the Trustee shall remain responsible for all acts
and omissions of any Custodian. The initial Custodian shall be the Trustee, and
the Trustee agrees to act in such capacity in accordance with the terms hereof.
Notwithstanding anything herein to the contrary, if the Trustee is no longer the
Custodian, any provision or requirement herein requiring notice or any
information or documentation to be provided to the Custodian shall be construed
to require that such notice, information or documents also be provided to the
Trustee. Any Custodian hereunder shall at all times maintain a fidelity bond and
errors and omissions policy in amounts customary for custodians performing
duties similar to those set forth in this Agreement.
SECTION 8.12. Appointment of Authenticating Agents.
(a) The Trustee may appoint one or more Authenticating Agents, which shall
be authorized to act on behalf of the Trustee in authenticating Certificates.
Each Authenticating Agent must be organized and doing business under the laws of
the United States of America or of any State, authorized under such laws to do a
trust business, have a combined capital and surplus of at least $15,000,000, and
be subject to supervision or examination by federal or state authorities. Each
Authenticating Agent shall be subject to the same obligations, standard of care,
protection and indemnities as would be imposed on, or would protect, the Trustee
hereunder. The initial Authenticating Agent shall be the Trustee, and the
Trustee hereby agrees to act in such capacity in accordance with the terms
hereof. Notwithstanding anything herein to the contrary, if the Trustee is no
longer the Authenticating Agent, any provision or requirement herein requiring
notice or any information or documentation to be provided to the Authenticating
Agent shall be construed to require that such notice, information or
documentation also be provided to the Trustee.
<PAGE>
159
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion, or consolidation to which any Authenticating Agent shall be
a party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee, the Certificate
Registrar, the Master Servicer, the Special Servicer and the Depositor. The
Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent, the Master
Servicer, the Certificate Registrar and the Depositor. Upon receiving a notice
of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 8.12, the Trustee may appoint a successor
Authenticating Agent, in which case the Trustee shall given written notice of
such appointment to the Master Servicer, the Certificate Registrar and the
Depositor and shall mail notice of such appointment to all Holders of
Certificates; provided, however, that no successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section 8.12. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers, duties and responsibilities of
its predecessor hereunder, with like effect as if originally named as
Authenticating Agent. No Authenticating Agent shall have responsibility or
liability for any action taken by it as such at the direction of the Trustee.
SECTION 8.13. Appointment of Paying Agent.
The Trustee may appoint a Paying Agent for the purpose of making
distributions to Certificateholders hereunder. The Trustee shall cause such
Paying Agent to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent will hold all
sums held by it for the payment to Certificateholders in an Eligible Account in
trust for the benefit of the Certificateholders entitled thereto until such sums
shall be paid to the Certificateholders. All funds remitted by the Trustee or
the Master Servicer to any such Paying Agent for the purpose of making
distributions shall be paid to Certificateholders on each Distribution Date and
any amounts not so paid shall be returned on such Distribution Date to the
Trustee or the Master Servicer, as applicable. If the Paying Agent is not the
Trustee or the Master Servicer, the Trustee or the Master Servicer shall remit
to the Paying Agent on the Business Day prior to each Distribution Date, by wire
transfer in immediately available funds, the funds to be distributed on such
Distribution Date. Any Paying Agent shall be either a bank or trust company or
otherwise authorized under law to exercise corporate trust powers and shall have
a rating of at least "A" by each of DCR, Standard & Poor's and Moody's, or such
lower rating as will not result in qualification, downgrading or withdrawal of
the ratings then assigned to the Certificates, as evidenced in writing by the
Rating Agencies. The Trustee may enter into agreements to appoint a Paying Agent
which is not the Trustee, provided that, such agreement: (i) is consistent with
this Agreement in all material respects and requires the Paying Agent to comply
with this Agreement in all material respects and requires the Paying Agent to
<PAGE>
160
comply with all of the applicable conditions of this Agreement; (ii) provides
that if the Trustee shall for any reason no longer act in the capacity of
Trustee hereunder (including, without limitation, by reason of an Event of
Default), the successor Trustee or its designee may thereupon assume all of the
rights and, except to the extent they arose prior to the date of assumption,
obligations of the Paying Agent under such agreement or alternatively, may
terminate such agreement without cause and without payment of any penalty or
termination fee; and (iii) does not permit the Paying Agent any rights of
indemnification that may be satisfied out of assets of the Trust Fund. The
appointment of any Paying Agent shall not relieve the Trustee from any of its
obligations hereunder, and the Trustee shall remain responsible for all acts and
omissions of any Paying Agent. The initial Paying Agent shall be the Trustee,
and the Trustee agrees to act in such capacity in accordance with the terms
hereof. Notwithstanding anything herein to the contrary, if the Trustee is no
longer the Paying Agent, any provision or requirement herein requiring notice or
any information to be provided to the Paying Agent shall be construed to require
that such notice, information or documentation also be provided to the Trustee.
SECTION 8.14. Appointment of REMIC Administrators.
(a) The Trustee may appoint one or more REMIC Administrators, which shall
be authorized to act on behalf of the Trustee in performing the functions set
forth in Sections 3.17 and 10.01 herein. Each REMIC Administrator must be
acceptable to the Trustee and must be organized and doing business under the
laws of the United States of America or of any State and be subject to
supervision or examination by federal or state authorities.
(b) Any Person into which any REMIC Administrator may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion, or consolidation to which any REMIC Administrator shall be a
party, or any Person succeeding to the corporate agency business of any REMIC
Administrator, shall continue to be the REMIC Administrator without the
execution or filing of any paper or any further act on the part of the Trustee
or the REMIC Administrator.
(c) Any REMIC Administrator may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee, the Certificate
Registrar, the Paying Agent, the Master Servicer, the Special Servicer and the
Depositor. The Trustee may at any time terminate the agency of any REMIC
Administrator by giving written notice of termination to such REMIC
Administrator , the Master Servicer, the Certificate Registrar and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any REMIC Administrator shall cease to be eligible in
accordance with the provisions of this Section 8.14, the Trustee may appoint a
successor REMIC Administrator, in which case the Trustee shall given written
notice of such appointment to the Master Servicer, the Special Servicer and the
Depositor and shall mail notice of such appointment to all Holders of
Certificates; provided, however, that no successor REMIC Administrator shall be
appointed unless eligible under the provisions of this Section 8.14. Any
successor REMIC
<PAGE>
161
Administrator upon acceptance of its appointment hereunder shall become vested
with all the rights, powers, duties and responsibilities of its predecessor
hereunder, with like effect as if originally named as REMIC Administrator. No
REMIC Administrator shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee. The Trustee shall be responsible
for acts and omissions of the REMIC Administrator.
SECTION 8.15. Access to Certain Information.
The Trustee shall afford to the Master Servicer, the Special Servicer and
the Depositor, any Certificateholder 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.
SECTION 8.16. Representations and Warranties of Trustee.
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 national banking association duly organized, validly
existing and in good standing under the laws of the United States.
(ii) The execution and delivery of this Agreement by the Trustee, and the
performance and compliance with the terms of this Agreement by the Trustee, will
not violate the Trustee's articles of incorporation and by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material agreement
or other instrument to which it is a party or which is applicable to it or any
of its assets.
(iii) Except to the extent that the laws of certain jurisdictions in which
any part of the Trust Fund may be located require that a co-trustee or separate
trustee be appointed to act with respect to such property as contemplated by
Section 8.10, the Trustee has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement, and has duly executed
and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and delivery by
the other parties hereto, constitutes a valid, legal and binding obligation of
the Trustee, enforceable against the Trustee in accordance with the terms
hereof, subject to (A) applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors' rights
generally, and (B) general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law.
<PAGE>
162
(v) The Trustee is not in violation of, and its execution and delivery of
this Agreement and its performance and compliance with the terms of this
Agreement, including, but not limited to, its responsibility to make P&I
Advances if the Master Servicer fails to make a P&I Advance pursuant to Section
7.02, will not constitute a violation of, any law, any order or decree of any
court or arbiter, or any order, regulation or demand of any federal, state or
local governmental or regulatory authority, which violation, in the Trustee's
good faith and reasonable judgment, is likely to affect materially and adversely
either the ability of the Trustee to perform its obligations under this
Agreement or the financial condition of the Trustee.
(vi) No litigation is pending or, to the best of the Trustee's knowledge,
threatened against the Trustee that, if determined adversely to the Trustee,
would prohibit the Trustee from entering into this Agreement or, in the
Trustee's good faith and reasonable judgment, is likely to materially and
adversely affect either the ability of the Trustee to perform its obligations
under this Agreement or the financial condition of the Trustee.
(vii) Any consent, approval, authorization or order of any court or
governmental agency or body required for the execution, delivery and performance
by the Trustee of or compliance by the Trustee with this Agreement or the
consummation of the transactions contemplated by this Agreement has been
obtained and is effective.
SECTION 8.17. Reports to the Securities and Exchange Commission; Available
Information.
(a) The Depositor shall prepare for filing, and the Trustee shall execute,
on behalf of the Trust Fund, and file with the Securities and Exchange
Commission, any and all reports, statements and information respecting the Trust
Fund and/or the Certificates required to be filed on behalf of the Trust Fund
under the Exchange Act. The Depositor shall promptly file, and exercise its
reasonable best efforts to obtain a favorable response to, no-action requests
to, or requests for other appropriate exemptive relief from, the Securities and
Exchange Commission regarding the usual and customary exemption from certain
reporting requirements granted to issuers of securities similar to the
Certificates. The Depositor agrees to indemnify and hold harmless the Trustee
with respect to any liability, cost or expenses, including reasonable attorneys'
fees, arising from the Trustee's execution of such reports, statements and
information that contain errors or omissions or is otherwise misleading,
provided, however, that if the indemnification provided for herein is invalid or
unenforceable, then the Depositor shall contribute to the amount paid by the
Trustee as a result of such liability in such amount as is necessary to limit
the Trustee's responsibility for any such payment to any amount resulting from
its own fault.
(b) The Master Servicer 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, each
Underwriter, any Holder of a Certificate or any Person identified to the Master
Servicer as a prospective transferee of a Certificate, originals or copies of
the following items: (i) in the case of a Holder or
<PAGE>
163
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 Master Servicer 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 delivered to Certificateholders of the relevant Class
pursuant to Section 4.02(a) since the Closing Date, (C) all Officers'
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 Special Servicer or the Master Servicer
and delivered to the Master Servicer in respect of each Mortgaged Property
pursuant to Section 3.12(a), (F) the most recent 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 Master
Servicer 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 (i) and (ii) of the first sentence thereof was not satisfied,
(H) all reports delivered by the Master Servicer to the Trustee since the
Closing Date pursuant to Sections 3.12(c) and 4.02(b), respectively, (I) 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 Officers'
Certificates and other evidence delivered to the Trustee to support the Master
Servicer's or the Special Servicer's, as the case may be, determination that any
Advance was or, if made, would be, a Nonrecoverable Advance. The Master Servicer
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 Master
Servicer shall be permitted to require payment of a sum sufficient to cover the
reasonable costs and expenses of providing such copies.
SECTION 8.18. Representations and Warranties of Fiscal Agent
(a) The Fiscal Agent hereby represents and warrants to each of the other
parties hereto and for the benefit of the Certificateholders, as the Closing
Date, that:
(i) The Fiscal Agent is a foreign banking corporation duly organized,
validly existing and in good standing under the laws governing its
creation.
(ii) The execution and delivery of this Agreement by the Fiscal Agent,
and the performance and compliance with the terms of this Agreement by the
Fiscal Agent, will not violate the Fiscal Agent's organizational documents
or constitute a default (or an event which, with notice or lapse of time,
or both, would constitute a default) under, or result in a material breach
of, any material agreement or other instrument to which it is a party or by
which it is bound.
<PAGE>
164
(iii) The Fiscal Agent has the full power and authority to enter into
and consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid, legal and
binding obligation of the Fiscal Agent, enforceable against the Fiscal
Agent in accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
the enforcement of creditors' rights generally, and (B) general principles
of equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(v) The Fiscal Agent is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court or arbiter, or any order, regulation or demand
of any federal, state or local governmental or regulatory authority, which
violation, in the Fiscal Agent's good faith and reasonable judgment, is
likely to affect materially and adversely either the ability of the Fiscal
Agent to perform its obligations under this Agreement or the financial
condition of the Fiscal Agent.
(vi) No litigation is pending or, to the best of the Fiscal Agent's
knowledge, threatened against the Fiscal Agent that, if determined
adversely to the Fiscal Agent, would prohibit the Fiscal Agent from
entering into this Agreement or, in the Fiscal Agent's good faith and
reasonable judgment, is likely to materially and adversely affect either
the ability of the Fiscal Agent to perform its obligations under this
Agreement or the financial condition of the Fiscal Agent.
(b) The representations and warranties of the Fiscal Agent set forth in
Section 8.18(a) shall survive the execution and delivery of this Agreement and
shall inure to the benefit of the Persons for whose benefit they were made for
so long as the Trust Fund remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations and warranties, the
party discovering such breach shall given prompt written notice to the other
parties hereto.
(c) Any successor Fiscal Agent shall be deemed to have made, as of the date
of its succession, each of the representations and warranties set forth in
Section 8.18(a) subject to such appropriate modifications to the representations
and warranties set forth in Section 8.18(a)(i) to accurately reflect such
successor's jurisdiction of organization and whether it is a corporation,
partnership, bank, association or other type of organization.
<PAGE>
165
SECTION 8.19. 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 8.19 or otherwise pursuant to the Agreement, the obligations of the
Trustee under this Agreement in respect of such Advance shall be satisfied.
Notwithstanding anything contained in this Agreement to the contrary, the Fiscal
Agent shall be entitled to all limitations on liability, rights of reimbursement
and indemnities that the Trustee is entitled to hereunder as if it were the
Trustee.
(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 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.
(c) The obligations of the initial Fiscal Agent set forth in this Section
8.19 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
8.19 or otherwise pursuant to the Agreement 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. Any successor
fiscal agent so appointed or appointed as provided in Section 8.07 and/or
Section 8.08 shall be required to execute and deliver to the other parties
hereto a written agreement to assume and perform the duties of the Fiscal Agent
set forth in this Agreement; provided that no such successor shall become Fiscal
Agent hereunder unless the successor trustee shall have received written
confirmation from each Rating Agency that this succession of such proposed
successor fiscal agent would not, in and of itself, result in a qualification,
downgrading or withdrawal of the then current ratings on the Certificates.
<PAGE>
166
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All Mortgage
Loans.
Subject to Section 9.02, the Trust Fund and the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer, the
Special Servicer, the Fiscal Agent and the Trustee (other than the obligations
of the Paying Agent on behalf 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, Lehman Brothers Inc., the Special Servicer or
the Majority Subordinate Certificateholder of all Mortgage Loans and each REO
Property remaining in REMIC I at a price equal to (1) the 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, such appraisal to be
conducted by an Independent 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
unreimbursed Advances in accordance with Sections 3.03(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 and the officers, directors, employees and agents of each of them of
all amounts which may have become due and owing to any of them hereunder;
provided, however, that in no event shall the trust created hereby continue
beyond the earlier of (i) 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 and (ii) the
Legal Final Distribution Date.
The Depositor, Lehman Brothers Inc., the Master Servicer, the Special
Servicer or the Majority Subordinate Certificateholder may at its option elect
to purchase all of the Mortgage Loans and each REO Property remaining in REMIC I
as contemplated by clause (i) of the preceding paragraph by giving written
notice to the other parties hereto no later than 60 days prior to the
anticipated date of purchase; provided, however, that (i) the aggregate Stated
Principal Balance of the Mortgage Pool at the time of such election is less than
1% of the aggregate Cut-off Date Balance of the Mortgage Pool set forth in the
Preliminary Statement, and (ii) the Master Servicer shall not have the right to
effect such a purchase if, within 30 days following the Master Servicer's
delivery of a notice of election pursuant to this paragraph, the Depositor, the
Special Servicer, Lehman Brothers Inc. or the Majority Subordinate
<PAGE>
167
Certificateholder 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. The Master Servicer,
the Depositor, Lehman Brothers Inc. or the Majority Subordinate
Certificateholder shall not have the right to effect such a purchase if, within
30 days following the Special Servicer's delivery of a notice of election
pursuant to this paragraph, the Special Servicer 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. If the Trust Fund is to be terminated in connection with the
Master Servicer's, the Special Servicer's, the Majority Subordinate
Certificateholder's, Lehman Brothers Inc.'s or the Depositor's purchase of all
of the Mortgage Loans and each REO Property remaining in REMIC I, the Master
Servicer, the Special Servicer, the Majority Subordinate Certificateholder,
Lehman Brothers Inc. or the Depositor, as applicable, shall deliver to the
Paying Agent 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. 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 Master Servicer, the Special Servicer,
the Majority Subordinate Certificateholder, Lehman Brothers Inc. or the
Depositor, as applicable, the Mortgage Files for the remaining Mortgage Loans
and shall execute all assignments, endorsements and other instruments furnished
to it by the Master Servicer, the Special Servicer, the Majority Subordinate
Certificateholder, Lehman Brothers Inc. or the Depositor, as applicable, as
shall be necessary to effectuate transfer of the Mortgage Loans and REO
Properties to the Depositor, the Master Servicer, the Special Servicer, Lehman
Brothers Inc. or the Majority Subordinate Certificateholder (or their respective
designees), as applicable. Any transfer of Mortgage Loans to the Depositor
pursuant to this paragraph shall be on a servicing-released basis.
Notice of any termination shall be given promptly by the Trustee by letter
to Certificateholders mailed (a) if such notice is given in connection with the
Depositor's, the Master Servicer's, the Special Servicer's, Lehman Brothers
Inc.'s or the Majority Subordinate Certificateholder's purchase of the Mortgage
Loans and each REO Property remaining in REMIC I, not earlier than the 15th day
and not later than the 25th day of the month next preceding the month of the
final distribution on the Certificates or (b) otherwise during the month of such
final distribution on or before the Determination Date in such month, in each
case specifying (i) the Distribution Date upon which the Trust Fund will
terminate and final payment of the Certificates will be made, (ii) the amount of
any such final payment and (iii) that the Record Date otherwise applicable to
such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the offices of the Certificate
Registrar or such other location therein designated. The Trustee shall give such
<PAGE>
168
notice to the Master Servicer, the Special Servicer and the Depositor at the
time such notice is given to Certificateholders.
Upon presentation and surrender of the Certificates by the
Certificateholders on the final Distribution Date, the Paying Agent 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 Class of Certificates so presented and surrendered. 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 Yield Maintenance
Charges, shall be allocated in the following order of priority, in each case to
the extent of remaining available funds:
(i) to distributions of interest to the Holders of the Senior
Certificates, in an amount equal to, and pro rata in accordance with, all
Distributable Certificate Interest in respect of each Class of Senior
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(ii) to distributions of principal to the Holders of the Class A-1,
Class A-2 and Class A-3 Certificates, in an amount equal to, and pro rata
in accordance with, the respective Class Principal Balances thereof
outstanding immediately prior to such Distribution Date;
(iii) to distributions to the Holders of the Class A-1, Class A-2 and
Class A-3 Certificates, in an amount equal to, pro rata in accordance with,
and in reimbursement of, all Realized Losses and Additional Trust Fund
Expenses, if any, previously allocated to each such Class of Certificates
and not previously reimbursed;
(iv) to distributions of interest to the Holders of the Class B
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(v) to distributions of principal to the Holders of the Class B
Certificates, in an amount equal to the Class Principal Balance of the
Class B Certificates outstanding immediately prior to such Distribution
Date;
(vi) to distributions to the Holders of the Class B Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class B
Certificates and not previously reimbursed;
(vii) to distributions of interest to the Holders of the Class C
Certificates in an amount equal to all Distributable Certificate Interest
in respect of such Class of
<PAGE>
169
Certificates for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(viii) to distributions of principal to the Holders of the Class C
Certificates, in an amount equal to the Class Principal Balance of the
Class C Certificates outstanding immediately prior to such Distribution
Date;
(ix) to distributions to the Holders of the Class C Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class C
Certificates and not previously reimbursed;
(x) to distributions of interest to the Holders of the Class D
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class D Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xi) to distributions of principal to the Holders of the Class D
Certificates, in an amount equal to the Class Principal Balance of the
Class D Certificates outstanding immediately prior to such Distribution
Date;
(xii) to distributions to the Holders of the Class D Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class D
Certificates and not previously reimbursed;
(xiii) to distributions of interest to the Holders of the Class E
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class E Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xiv) to distributions of principal to the Holders of the Class E
Certificates, in an amount equal to the Class Principal Balance of the
Class E Certificates outstanding immediately prior to such Distribution
Date;
(xv) to distributions to the Holders of the Class E Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class E
Certificates and not previously reimbursed;
(xvi) to distributions of interest to the Holders of the Class F
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class F Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
<PAGE>
170
(xvii) to distributions of principal to the Holders of the Class F
Certificates, in an amount equal to the Class Principal Balance of the
Class F Certificates outstanding immediately prior to such Distribution
Date;
(xviii) to distributions to the Holders of the Class F Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses if any, previously allocated to the Class F
Certificates and not previously reimbursed;
(xix) to distributions of interest to the Holders of the Class G
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class G Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xx) to distributions of principal to the Holders of the Class G
Certificates, in an amount equal to the Class Principal Balance of the
Class G Certificates outstanding immediately prior to such Distribution
Date;
(xxi) to distributions to the Holders of the Class G Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class G
Certificates and not previously reimbursed;
(xxii) to distributions of interest to the Holders of the Class H
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class H Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxiii) to distributions of principal to the Holders of the Class H
Certificates, in an amount equal to the Class Principal Balance of the
Class H Certificates outstanding immediately prior to such Distribution
Date;
(xxiv) to distributions to the Holders of the Class H in an amount
equal to, and in reimbursement of, all Realized Losses and Additional Trust
Fund Expenses, if any, previously allocated to the Class H Certificates and
not previously reimbursed;
(xxv) to distributions of interest to the Holders of the Class J
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class J Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxvi) to distributions of principal to the Holders of the Class J
Certificates, in an amount equal to the Class Principal Balance of the
Class J Certificates outstanding immediately prior to such Distribution
Date;
<PAGE>
171
(xxvii) to distributions to the Holders of the Class J Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class J
Certificates and not previously reimbursed;
(xxviii) to distributions of interest to the Holders of the Class K
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class K Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxix) to distributions of principal to the Holders of the Class K
Certificates, in an amount equal to the Class Principal Balance of the
Class K Certificates outstanding immediately prior to such Distribution
Date;
(xxx) to distributions to the Holders of the Class K Certificates, in
an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class K
Certificates and not previously reimbursed;
(xxxi) to distributions of interest to the Holders of the Class L
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class L Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxii) to distributions of principal to the Holders of the Class L
Certificates, in an amount equal to the Class Principal Balance of the
Class L Certificates outstanding immediately prior to such Distribution
Date;
(xxxiii) to distributions to the Holders of the Class L Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust Fund Expenses, if any, previously allocated to the Class L
Certificates and not previously reimbursed; and
(xxxiv) to distributions of interest to the Holders of the Class M
Certificates, in an amount equal to all Distributable Certificate Interest
in respect of the Class M Certificates for such Distribution Date and, to
the extent not previously paid, for all prior Distribution Dates;
(xxxv) to distributions of principal to the Holders of the Class M
Certificates, in an amount equal to the Class Principal Balance of the
Class M Certificates outstanding immediately prior to such Distribution
Date;
(xxxvi) to distributions to the Holders of the Class M Certificates,
in an amount equal to, and in reimbursement of, all Realized Losses and
Additional Trust
<PAGE>
172
Fund Expenses, if any, previously allocated to the Class M Certificates
and not previously reimbursed; and
(xxxvii) 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 (xxxvi) above.
Any Prepayment Premiums and Yield Maintenance Charges on deposit in the
Certificate Account as of the final Distribution Date shall be distributed among
the Holders of the Class A-1, Class A-2, Class A-3, Class B, Class C, Class D,
Class E, Class F and Class G Certificates in accordance with Section 4.01(b).
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held uninvested
in trust and credited to the account or accounts of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 9.01 shall not have been surrendered for
cancellation within six months after the time specified in such notice, the
Paying Agent 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 Paying Agent, 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, and
shall deal with all such unclaimed amounts in accordance with applicable law.
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.
All actual distributions on the respective Classes of REMIC III
Certificates on the final Distribution Date in accordance with foregoing
provisions of this Section 9.01 shall be deemed to first have been distributed
from REMIC I to REMIC II on the various REMIC I Regular Interests in accordance
with Section 4.01(h).
SECTION 9.02. Additional Termination Requirements.
(a) If the Depositor 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
Master Servicer or the Depositor, as applicable, obtains at its own expense and
delivers to the Trustee and, in the case of the Depositor, 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 and REMIC III as defined in
<PAGE>
173
Section 860F of the Code or cause REMIC I, REMIC II and REMIC III to fail to
qualify as a REMIC at any time that any Certificates are outstanding:
(i) the 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 and
shall satisfy all requirements of a qualified liquidation under Section
860F of the Code and any regulations thereunder as set forth in an Opinion
of Counsel obtained at the expense of the Trust Fund;
(ii) during such 90-day liquidation period and at or prior to the time
of making of the final payment on the Certificates, the Trustee shall sell
all of the assets of REMIC I to the Master Servicer or the Depositor, as
applicable, for cash; and
(iii) at the time of the making of the final payment on the
Certificates, the Paying Agent 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.
<PAGE>
174
ARTICLE X
ADDITIONAL REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The REMIC Administrator shall elect to treat each of REMIC I, REMIC II
and REMIC III as a REMIC under the Code and, if necessary, under applicable
state law. Such election will be made on Form 1066 or other appropriate federal
or state Tax Returns for the taxable year ending on the last day of the calendar
year in which the Certificates are issued.
(b) The REMIC I Regular Interests, the REMIC II Regular Interests and the
Regular Certificates (or, in the case of the IO Certificates, each of its
Components) are hereby designated as "regular interests" (within the meaning of
Section 860G(a)(1) of the Code) in REMIC I, REMIC II and REMIC III,
respectively. The Class R-I Certificates, the Class R-II Certificates and the
Class R-III Certificates are hereby designated as the single class of "residual
interests" (within the meaning of Section 860G(a)(2) of the Code) in REMIC I,
REMIC II and REMIC III, respectively. None of the Master Servicer, the Special
Servicer or the Trustee shall (to the extent within its control) permit the
creation of any other "interests" in REMIC I, REMIC II or REMIC III (within the
meaning of Treasury regulation Section 1.860D-1(b)(1)).
(c) The Closing Date is hereby designated as the "startup day" of REMIC I,
REMIC II and REMIC III within the meaning of Section 860G(a)(9) of the Code.
(d) The related Plurality Residual Certificateholder as to the applicable
taxable year is hereby designated as the Tax Matters Person of each of REMIC I,
REMIC II and REMIC III, and shall act on behalf of the related REMIC in relation
to any tax matter or controversy and shall represent the related REMIC in any
administrative or judicial proceeding relating to an examination or audit by any
governmental taxing authority; provided that the REMIC Administrator is hereby
irrevocably appointed to act and shall act (in consultation with the Tax Matters
Person for each of REMIC I, REMIC II and REMIC III) as agent and
attorney-in-fact for the Tax Matters Person for each of REMIC I, REMIC II and
REMIC III in the performance of its duties as such.
(e) For purposes of Treasury regulation Section 1.860G-1(a)(4)(iii), the
Legal Final Distribution Date has been designated the "latest possible maturity
date" of each REMIC I Regular Interest, each REMIC II Regular Interest and each
Class of Regular Certificates.
(f) Except as otherwise provided in Section 3.17(a)(iii) and subsections
(i) and (j) below, the REMIC Administrator shall pay out of its own funds any
and all routine tax administration expenses of the Trust Fund (but not including
any professional fees or expenses
<PAGE>
175
related to audits or any administrative or judicial proceedings with respect to
the Trust Fund that involve the Internal Revenue Service or state tax
authorities which extraordinary expenses shall be payable or reimbursable to the
Trustee from the Trust Fund unless otherwise provided in Section 10.01(i) or
10.01(j)).
(g) Within 30 days after the Closing Date, the REMIC Administrator shall
prepare and file with the Internal Revenue Service Form 8811, "Information
Return for Real Estate Mortgage Investment Conduits (REMIC) and Issuers of
Collateralized Debt Obligations" for the Trust Fund. In addition, the REMIC
Administrator shall prepare, sign and file all of the other Tax Returns in
respect of REMIC I, REMIC II and REMIC III. The expenses of preparing and filing
such returns shall be borne by the REMIC Administrator without any right of
reimbursement therefor. The other parties hereto shall provide on a timely basis
to the REMIC Administrator or its designee such information with respect to each
of REMIC I, REMIC II and REMIC III as is in its possession and reasonably
requested by the REMIC Administrator to enable it to perform its obligations
under this Article. Without limiting the generality of the foregoing, the
Depositor, within ten days following the REMIC Administrator's request therefor,
shall provide in writing to the REMIC Administrator such information as is
reasonably requested by the REMIC Administrator for tax purposes, as to the
valuations and issue prices of the Certificates, and the REMIC Administrator's
duty to perform its reporting and other tax compliance obligations under this
Article X shall be subject to the condition that it receives from the Depositor
such information possessed by the Depositor that is necessary to permit the
Trustee to perform such obligations.
(h) The REMIC Administrator shall perform on behalf of each of REMIC I,
REMIC II and REMIC III all reporting and other tax compliance duties that are
the responsibility of each such REMIC under the Code, the REMIC Provisions or
other compliance guidance issued by the Internal Revenue Service or, with
respect to State and Local Taxes, any state or local taxing authority. Included
among such duties, the REMIC Administrator shall provide to: (i) any Transferor
of a Residual Certificate, such information as is necessary for the application
of any tax relating to the transfer of a Residual Certificate to any Person who
is not a Permitted Transferee; (ii) the Certificateholders, such information or
reports as are required by the Code or the REMIC Provisions, including, without
limitation, reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption as required hereunder); and
(iii) the Internal Revenue Service, the name, title, address and telephone
number of the Person who will serve as the representative of each of REMIC I,
REMIC II and REMIC III.
(i) The REMIC Administrator shall perform its duties hereunder so as to
maintain the status of each of REMIC I, REMIC II and REMIC III as a REMIC under
the REMIC Provisions (and the Trustee, the Master Servicer and the Special
Servicer shall assist the REMIC Administrator to the extent reasonably requested
by the REMIC Administrator and to the extent of information within the
Trustee's, the Master Servicer's or the Special Servicer's possession or
control). None of the REMIC Administrator, Master Servicer, the Special
Servicer, or the Trustee shall knowingly take (or cause any of REMIC I, REMIC II
or REMIC III to take) any action or fail to take (or fail to cause to be taken)
any action that,
<PAGE>
176
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)
except as provided in Section 3.17(a), result in the imposition of a tax upon
any of REMIC I, REMIC II or REMIC III (including, but not limited to, the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code, the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code or the result
in the imposition of a tax on "net income from foreclosure property" as defined
in Section 860G(c) of the Code) (any such endangerment or imposition, except as
provided in Section 3.17(a)(iii), an "Adverse REMIC Event"), unless the REMIC
Administrator has obtained or received an Opinion of Counsel (at the expense of
the party requesting such action or at the expense of the Trust Fund if the
REMIC Administrator seeks to take such action or to refrain from acting for the
benefit of the Certificateholders) to the effect that the contemplated action
will not result in an Adverse REMIC Event. The REMIC Administrator 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 to the effect that an Adverse REMIC Event could
occur with respect to such action. In addition, prior to taking any action with
respect to REMIC I, REMIC II or REMIC III, or causing any of REMIC I, REMIC II
or REMIC III to take any action, that is not expressly permitted under the terms
of this Agreement, the Master Servicer and the Special Servicer shall consult
with the REMIC Administrator or its designee, in writing, with respect to
whether such action could cause an Adverse REMIC Event to occur. 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 REMIC
Administrator 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 REMIC Administrator. The REMIC Administrator may consult with
counsel to make such written advice, and the cost of same shall be borne by the
party seeking to take the action not permitted by this Agreement, but in no
event at the cost or expense of the Trust Fund or the Trustee. At all times as
may be required by the Code, the REMIC Administrator shall make reasonable
efforts to ensure that substantially all of the assets of REMIC I, REMIC II and
REMIC III will consist of "qualified mortgages" as defined in Section 860G(a)(3)
of the Code and "permitted investments" as defined in Section 860G(a)(5) of the
Code.
(j) If any tax is imposed on any of REMIC I, REMIC II or REMIC III,
including, without limitation, "prohibited transactions" taxes as defined in
Section 860F(a)(2) of the Code, any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code, any taxes on contributions
to REMIC I, REMIC II or REMIC III after the Startup Day pursuant to Section
860G(d) of the Code, and any other tax imposed by the Code or any applicable
provisions of State or Local Tax laws (other than any tax permitted to be
incurred by the Special Servicer pursuant to Section 3.17(a)), such tax,
together with all incidental costs and expenses (including, without limitation,
penalties and reasonable attorneys' fees), shall be charged to and paid by: (i)
the REMIC Administrator, if such tax arises out of or results from a breach by
the REMIC Administrator of any of its obligations
<PAGE>
177
under this Article X provided that no liability shall be imposed upon the REMIC
Administrator under this Clause if another party has responsibility for payment
of such tax under Clauses (iii) or (v) of this Section; (ii) the Special
Servicer, if such tax arises out of or results from a breach by the Special
Servicer of any of its obligations under Article III or this Article X; (iii)
the Master Servicer, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under Article III or this Article X;
(iv) the Trustee, if such tax arises out of or results from a breach by the
Trustee of any of its obligations under this Article X; (v) the Depositor, if
such tax was imposed due to the fact that any of the Mortgage Loans did not, at
the time of their transfer to the REMIC I, constitute a "qualified mortgage" as
defined in Section 860G(a)(3) of the Code; or (vi) the Trust Fund in all other
instances. Any tax permitted to be incurred by the Special Servicer pursuant to
Section 3.17(a) shall be charged to and paid by the Trust Fund. Any such amounts
payable by the Trust Fund shall be paid by the Paying Agent upon the written
direction of the REMIC Administrator out of amounts on deposit in the
Distribution Account in reduction of the Available Distribution Amount pursuant
to Section 3.05(b).
(k) The REMIC Administrator shall, for federal income tax purposes,
maintain books and records with respect to each of REMIC I, REMIC II and REMIC
III on a calendar year and on an accrual basis.
(l) Following the Startup Day, none of the Trustee, the Master Servicer and
the Special Servicer shall accept any contributions of assets to REMIC I, REMIC
II or REMIC III unless it shall have received an Opinion of Counsel (at the
expense of the party seeking to cause such contribution and in no event at the
expense of the Trust Fund or the Trustee) to the effect that the inclusion of
such assets in such REMIC will not cause: (i) such REMIC to fail to qualify as a
REMIC at any time that any Certificates are outstanding; or (ii) the imposition
of any tax on such REMIC under the REMIC Provisions or other applicable
provisions of federal, state and local law or ordinances.
(m) None of the Trustee, the Master Servicer and the Special Servicer shall
consent to or, to the extent it is within the control of such Person, permit:
(i) the sale or disposition of any of the Mortgage Loans (except in connection
with (A) the 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, the 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)
<PAGE>
178
REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time that
any Certificates are outstanding; or (y) the imposition of any tax on REMIC I,
REMIC II or REMIC III under the REMIC Provisions or other applicable provisions
of federal, state and local law or ordinances.
(n) Except in connection with 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.
<PAGE>
179
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
(a) This Agreement may be amended from time to time by the mutual agreement
of the Depositor, the Master Servicer, the Special Servicer, the Fiscal Agent
and the Trustee, without the consent of any of the Certificateholders, (i) to
cure any ambiguity, (ii) to correct, modify or supplement any provision herein
which may be inconsistent with any other provision herein, (iii) to add any
other provisions with respect to matters or questions arising hereunder which
shall not be inconsistent with the provisions hereof, (iv) to relax or eliminate
any requirement hereunder imposed by the REMIC Provisions if the REMIC
Provisions are amended or clarified such that any such requirement may be
relaxed or eliminated, or (v) 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 either 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 either such REMIC; provided that such action (except any
amendment described in clause (v) above) shall not, as evidenced by an Opinion
of Counsel obtained by or delivered to the Master Servicer, the Special Servicer
and the Trustee, 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 does not adversely affect in any material
respect the rating on 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, 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 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) as
evidenced by an Opinion of Counsel obtained by or delivered to the Master
Servicer, the Special Servicer and the Trustee, adversely affect in any material
respect the interests of the Holders of any Class of Certificates in a manner
other than as described in (i) without the consent of the Holders of all
Certificates of such Class, (iii) modify the provisions of this Section 11.01
without the consent of the Holders of all Certificates then outstanding, (iv)
modify the provisions of
<PAGE>
180
Section 3.20 without the consent of the Holders of Certificates entitled to all
of the Voting Rights or (v) 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), (b) 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.
<PAGE>
181
SECTION 11.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Master Servicer at the expense of the Trust Fund, but only upon direction
accompanied by an Opinion of Counsel (the cost of which may be paid out of the
Certificate Account pursuant to Section 3.05(a)) to the effect that such
recordation materially and beneficially affects the interests of the
Certificateholders; provided, however, that the Trustee shall have no obligation
or responsibility to determine whether any such recordation of this Agreement is
required.
(b) For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or the Trust Fund, nor entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
(b) No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement or any Mortgage Loan, unless,
with respect to any suit, action or proceeding upon or under or with respect to
this Agreement, such Holder previously shall have given to the Trustee a written
notice of default hereunder, and of the continuance thereof, as hereinbefore
provided, and unless also 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,
<PAGE>
182
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. For the protection
and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 11.04. Governing Law.
This Agreement and the Certificates shall be construed in accordance with
the internal laws of the State of New York applicable to agreements made and to
be performed in said State, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.05. Notices.
Any communications provided for or permitted hereunder shall be in writing
and, unless otherwise expressly provided herein, shall be deemed to have been
duly given when delivered to: (i) in the case of the Depositor, First Union
Commercial Mortgage Securities, Inc., One First Union Center, Charlotte, North
Carolina 28228, Attention: Michael Greco, facsimile number: 704-383-1356; (ii)
in the case of the Master Servicer, First Union National Bank, First Union
Capital Markets Group, One First Union Center, TW9, 301 South College Street,
Charlotte, North Carolina 28288-1075, Attention: First Union-Lehman Brothers
Commercial Mortgage Trust II, Commercial Mortgage Pass-Through Certificates,
Series 1997-C2, facsimile number: 704-383-9356; (iii) in the case of the Special
Servicer, CRIIMI MAE Services Limited Partnership, 11200 Rockville Pike,
Rockville, Maryland 20852, Attention: Legal Department - First Union-Lehman
Brothers Commercial Mortgage Trust II, Commercial Mortgage Pass-Through
Certificates, Series 1997-C2, facsimile number: 301-231-0334; (iv) in the case
of the Trustee, LaSalle National Bank, 135 South LaSalle Street, Chicago,
Illinois 60603, Attention: Asset-Backed Securities Trust Services Group, First
Union-Lehman Brothers Commercial Mortgage Trust II, Commercial Mortgage
Pass-Through Certificates, Series 1997-C2, facsimile number: (312) 904-2084; (v)
in the case of the Underwriters to each of First Union Capital Markets Group,
One First Union Center, DC6, Charlotte, North Carolina 28288-1075, Attention:
First Union-Lehman Brothers Commercial Mortgage Trust II, Commercial Mortgage
Pass-Through Certificates, Series 1997-C2, facsimile number: 704-374-6435 and
Lehman Brothers Inc., Three World Financial Center, New York, New York 10285,
Attention: First Union-Lehman Brothers Commercial Mortgage Trust II, Commercial
Mortgage Pass-Through Certificates, Series 1997-C2, facsimile number:
212-526-3746; (vi) in the case of the Rating Agencies, (A) Duff & Phelps Credit
Rating Co., 55 Monroe Street, Chicago, Illinois 60603, Attention: Structured
Finance Commercial Mortgage Real Estate Group Monitoring, facsimile number:
(312) 263-2852;
<PAGE>
183
(B) Moody's Investors Service, Inc., 99 Church Street, New York, New York,
Attention: CMBS-Monitoring, facsimile number (212) 553-1350; and (C) Standard &
Poor's Ratings Group, 25 Broadway, New York, New York 10004, Attention: Real
Estate Ratings Group, Surveillance Manager, facsimile number: 212-412-0597; and
(vii) in the case of the Fiscal Agent, ABN AMRO Bank N.V., 135 South LaSalle
Street, Chicago, Illinois 60603, Attention: Asset-Backed Securities Trust
Services Group, First Union-Lehman Brothers Commercial Mortgage Trust II,
Commercial Mortgage Pass-Through Certificates, Series 1997-C2, facsimile number:
(312) 904-2084; 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 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, and
(ii) this Agreement shall constitute a security agreement under applicable law.
The Depositor shall file or cause to be filed, as a precautionary filing, a Form
UCC-1 substantially in the form attached as Exhibit K hereto in all appropriate
locations in the State of North Carolina promptly following the initial issuance
of the Certificates, and the Master Servicer shall prepare and file at each such
office, and the Trustee shall execute, continuation statements with respect
thereto, in each case within six months prior to the fifth anniversary of the
immediately preceding filing. The Depositor shall cooperate in a
<PAGE>
184
reasonable manner with the Trustee and the Master Servicer in preparing and
filing such continuation statements. This Section 11.07 shall constitute notice
to the Trustee pursuant to any of the requirements of the North Carolina UCC.
SECTION 11.08. Streit Act.
Any provisions required to be contained in this Agreement by Section 126 of
Article 4-A of the New York Real Property Law are hereby incorporated herein,
and such provisions shall be in addition to those conferred or imposed by this
Agreement; provided, however, that to the extent that such Section 126 shall not
have any effect, and if said Section 126 should at any time be repealed or cease
to apply to this Agreement or be construed by judicial decision to be
inapplicable, said Section 126 shall cease to have any further effect upon the
provisions of this Agreement. In case of a conflict between the provisions of
this Agreement and any mandatory provisions of Article 4-A of the New York Real
Property Law, such mandatory provisions of said Article 4-A shall prevail,
provided that if said Article 4-A shall not apply to this Agreement, should at
any time be repealed, or cease to apply to this Agreement or be construed by
judicial decision to be inapplicable, such mandatory provisions of such Article
4-A shall cease to have any further effect upon the provisions of this
Agreement.
SECTION 11.09. Successors and Assigns; Beneficiaries.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the parties hereto, and all
such provisions shall inure to the benefit of the Certificateholders. Lehman
Brothers Inc. shall be a third party beneficiary to this Agreement with respect
to its rights under Section 3.02(c) and its rights to receive the reports,
statements and other information to which it is entitled hereunder, to preserve
its rights under Sub-Servicing Agreements as contemplated by Section 3.22(d) and
to terminate the Trust Fund pursuant to Section 9.01. Each of the Sub-Servicers
that is a party to a Sub-Servicing Agreement on the Closing Date shall be a
third party beneficiary to obligations of a successor Master Servicer under
Section 3.22(d), provided that the sole remedy for any claim by a Sub-Servicer
as a third party beneficiary pursuant to this Section 11.09 shall be against a
successor Master Servicer solely in its corporate capacity and no Sub-Servicer
shall have any rights or claims against the Trust Fund or any party hereto
(other than a successor Master Servicer in its corporate capacity as set forth
in this Section 11.09) as a result of any rights conferred on such Sub-Servicer
as a third party beneficiary pursuant to this Section 11.09. This Agreement may
not be amended in any manner that would adversely affect its rights as a third
party beneficiary without its consent. No other person, including, without
limitation, any Mortgagor, shall be entitled to any benefit or equitable right,
remedy or claim under this Agreement.
SECTION 11.10. Article and Section Headings.
The article and section headings herein are for convenience of reference
only, and shall not limit or otherwise affect the meaning hereof.
<PAGE>
185
SECTION 11.11. Notices to Rating Agencies.
(a) The Trustee shall promptly provide notice to each Rating Agency with
respect to each of the following of which it has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default that has not been cured;
(iii) the resignation or termination of the Trustee, the Master
Servicer or the Special Servicer;
(iv) the repurchase of Mortgage Loans by either of the Mortgage Loan
Sellers pursuant to either of the Mortgage Loan Purchase Agreements;
(v) any change in the location of the Distribution Account;
(vi) the final payment to any Class of Certificateholders; and
(vii) any sale or disposition of any Mortgage Loan or REO Property.
(b) The Master Servicer shall promptly provide notice to each Rating Agency
with respect to each of the following of which it has actual knowledge:
(i) the resignation or removal of the Trustee; and
(ii) any change in the location of the Certificate Account.
(c) The Special Servicer shall furnish each Rating Agency with respect to a
non-performing or defaulted Mortgage Loan such information as the Rating Agency
shall reasonably request and which the Special Servicer can reasonably provide
in accordance with applicable law.
(d) To the extent applicable, each of the Master Servicer and the Special
Servicer shall promptly furnish to each Rating Agency copies of the following
items:
(i) each of its annual statements as to compliance described in
Section 3.13;
(ii) each of its annual independent public accountants' servicing
reports described in Section 3.14;
(iii) any Officers' Certificate delivered to the Trustee pursuant to
Section 4.03(c) or 3.08; and
(iv) each of the reports described in Section 3.12(a) and the
statements and reports described in Sections 3.12(b), 3.12(c) and 3.12(d).
<PAGE>
186
(e) The Trustee shall (i) make available to each Rating Agency, upon
reasonable notice, the items described in Section 8.14(b) and (ii) promptly
deliver to each Rating Agency a copy of any notices given pursuant to Section
7.03(a) or Section 7.03(b).
(f) The Trustee shall promptly deliver to each Rating Agency a copy of each
statement or report described in Section 4.02.
(g) Each of the Trustee, the Master Servicer and the Special Servicer shall
provide to each Rating Agency such other information with respect to the
Mortgage Loans and the Certificates, to the extent such party possesses such
information, as such Rating Agency shall reasonably request.
SECTION 11.12. Complete Agreement.
This Agreement embodies the complete agreement among the parties and may
not be varied or terminated except by a written agreement conforming to the
provisions of Section 11.01. All prior negotiations or representations of the
parties are merged into this Agreement and shall have no force or effect unless
expressly stated herein.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto by their respective officers thereunto duly authorized, in each case as
of the day and year first above written.
FIRST UNION COMMERCIAL MORTGAGE
SECURITIES, INC.
Depositor
By: /s/ MICHAEL H. GRECO
------------------------------
Name: Michael H. Greco
Title: Senior Vice President
FIRST UNION NATIONAL BANK
Master Servicer
By: /s/ TIMOTHY S. RYAN
------------------------------
Name: Timothy S. Ryan
Title: Vice President
CRIIMI MAE SERVICES LIMITED PARTNERSHIP
Special Servicer
By: CRIIMI MAE MANAGEMENT, INC., a
Maryland corporation, its general partner
By: /s/ H. WILLIAM WILLOUGHBY
------------------------------
Name: H. William Willoughby
Title: President
LASALLE NATIONAL BANK
Trustee
By: /s/ BRIAN D. AMES
------------------------------
Name: Brian D. Ames
Title: Trust Officer
<PAGE>
2
ABN AMRO BANK N.V.
Fiscal Agent
By: /s/ IRENE PAZIK
------------------------------
Name: Irene Pazik
Title: Vice President
By: /s/ ROBERT C. SMOLKA
------------------------------
Name: Robert C. Smolka
Title: Group Vice President
<PAGE>
EXHIBIT A
Forms of Certificates
<PAGE>
EXHIBIT A-1
Form of Class A-1 Certificate
<PAGE>
CLASS A-1 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class A-1
Rate: 6.479% per annum Certificates as of the Closing Date: $220,000,000
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 A-1 Certificate as of the Closing Date: $200,000,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AP 0
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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, CLASS G,
CLASS H, CLASS J, CLASS K, CLASS L AND CLASS M CERTIFICATES OF THE SAME SERIES
IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE, THE
CLASS A-2 CERTIFICATES AND THE CLASS A-3 CERTIFICATES 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 First Union
Commercial
-2-
<PAGE>
Mortgage Securities, Inc. (hereinafter called the "Depositor", which term
includes any successor entity under the Agreement), First Union National Bank
(in such capacity, hereinafter called the "Master Servicer", which term includes
any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, 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
18th day of each month or, if such 18th 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 the Class A-1
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 allocated to
-3-
<PAGE>
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 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 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.
-4-
<PAGE>
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 A-1 Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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
-5-
<PAGE>
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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-6-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By:______________________________________
Authorized Officer
-7-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
-1-
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-2
Form of Class A-2 Certificate
<PAGE>
CLASS A-2 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class A-2
Rate: 6.600% per annum Certificates as of the Closing Date: $384,000,000
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 A-2 Certificate as of the Closing Date: $200,000,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AQ 8
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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, CLASS G,
CLASS H, CLASS J, CLASS K, CLASS L AND CLASS M CERTIFICATES OF THE SAME SERIES
IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE, THE
CLASS A-1 CERTIFICATES AND THE CLASS A-3 CERTIFICATES 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 First Union
Commercial
-2-
<PAGE>
Mortgage Securities, Inc. (hereinafter called the "Depositor", which term
includes any successor entity under the Agreement), First Union National Bank
(in such capacity, hereinafter called the "Master Servicer", which term includes
any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, 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
18th day of each month or, if such 18th 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 the Class A-2
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 allocated to
-3-
<PAGE>
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 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 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.
-4-
<PAGE>
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 A-2 Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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
-5-
<PAGE>
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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-6-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By:_____________________________________
Authorized Officer
-7-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
-1-
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-3
Form of Class A-3 Certificate
<PAGE>
CLASS A-3 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class A-3
Rate: 6.650% per annum Certificates as of the Closing Date: $982,521,000
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 A-3 Certificate as of the Closing Date: $200,000,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AR 6
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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, CLASS G,
CLASS H, CLASS J, CLASS K, CLASS L AND CLASS M CERTIFICATES OF THE SAME SERIES
IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE, THE
CLASS A-1 CERTIFICATES AND THE CLASS A-2 CERTIFICATES MAY BE REDUCED BY CERTAIN
LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING
AND SERVICING AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING
CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT
SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class A-3 Certificate (obtained by dividing the
principal amount of this Class A-3 Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class A-3 Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class A-3
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial
-2-
<PAGE>
Mortgage Securities, Inc. (hereinafter called the "Depositor", which term
includes any successor entity under the Agreement), First Union National Bank
(in such capacity, hereinafter called the "Master Servicer", which term includes
any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, 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
18th day of each month or, if such 18th 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-3 Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class A-3
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 allocated to
-3-
<PAGE>
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 A-3 Certificates are issuable in fully registered form only
without coupons in minimum denominations specified in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, Class A-3
Certificates are exchangeable for new Class A-3 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices of the Certificate Registrar, duly endorsed by, or accompanied by a
written instrument of transfer in the form satisfactory to the Certificate
Registrar duly executed by, the Holder hereof or his attorney duly authorized in
writing, and thereupon one or more new Class A-3 Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No service charge will be imposed for any registration of transfer or
exchange of Class A-3 Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any transfer or exchange of Class A-3
Certificates.
-4-
<PAGE>
Notwithstanding the foregoing, for so long as this Certificate is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC, transfers of interests in this Certificate
shall be made through the book-entry facilities of DTC.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 A-3 Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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
-5-
<PAGE>
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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-6-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
By:_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3 Certificates referred to in the
within-mentioned Agreement.
LASALLE NATIONAL BANK,
as Authenticating Agent
By:_____________________________________
Authorized Officer
-7-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
-1-
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-4
Form of Class B Certificate
<PAGE>
CLASS B COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class B Certificates
Rate: 6.790% per annum as of the Closing Date: $110,175,000
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 B Certificate as of the Closing Date: $110,175,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AS 4
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES AND THE 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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY GENERAL
ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER SECTION
III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND (ii) THE
CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH RESPECT TO
SUCH TRANSFER. AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE,
THE CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE
TRANSFEREE OF THIS CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN
CLAUSE (B) OF THE PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT
SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. IF THIS CERTIFICATE IS IN BOOK-ENTRY FORM, ANY TRANSFEREE OF
THIS
-2-
<PAGE>
CERTIFICATE SHALL BE DEEMED TO HAVE REPRESENTED TO THE TRUSTEE, THE DEPOSITOR
AND THE TRANSFEROR TO THE EFFECT (X) THAT IT IS NOT A PERSON DESCRIBED IN CLAUSE
(A) OR CLAUSE (B) OR (Y) AS DESCRIBED IN CLAUSE (i) AND CLAUSE (ii).
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").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES AND THE CLASS A-3 CERTIFICATES OF THE SAME SERIES ARE
REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE
OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE
CERTIFICATE PRINCIPAL BALANCE OF THE CLASS C, CLASS D, CLASS E, CLASS F, CLASS
G, CLASS H, CLASS J, CLASS K, CLASS L AND CLASS M CERTIFICATES OF THE SAME
SERIES IS REDUCED TO ZERO, THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE
MAY BE REDUCED BY CERTAIN LOSSES AND EXPENSES EXPERIENCED BY THE TRUST FUND AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class B 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 First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the
-3-
<PAGE>
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
18th day of each month or, if such 18th 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 the Class B
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 service charge will be imposed for any registration of transfer or
exchange of Class B Certificates, but 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
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes
-5-
<PAGE>
whatsoever and none of the Depositor, the Master Servicer, the Special Servicer,
the Trustee, the Paying 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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.
-6-
<PAGE>
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By:_____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
-1-
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-5
Form of Class C Certificate
<PAGE>
CLASS C COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class C Certificates
Rate: 7.020% per annum as of the Closing Date: $110,175,000
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 C Certificate as of the Closing Date: $110,175,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AT 2
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES AND THE
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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY GENERAL
ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER SECTION
III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND (ii) THE
CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH RESPECT TO
SUCH TRANSFER. AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE,
THE CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE
TRANSFEREE OF THIS CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN
CLAUSE (B) OF THE PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT
SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. IF
-2-
<PAGE>
THIS CERTIFICATE IS IN BOOK-ENTRY FORM, ANY TRANSFEREE OF THIS CERTIFICATE SHALL
BE DEEMED TO HAVE REPRESENTED TO THE TRUSTEE, THE DEPOSITOR AND THE TRANSFEROR
TO THE EFFECT (X) THAT IT IS NOT A PERSON DESCRIBED IN CLAUSE (A) OR CLAUSE (B)
OR (Y) AS DESCRIBED IN CLAUSE (i) AND CLAUSE (ii).
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").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES AND THE CLASS B
CERTIFICATES OF THE SAME SERIES ARE REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION
OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN
ADDITION, IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS D, CLASS
E, CLASS F, CLASS G, CLASS H, CLASS J, CLASS K, CLASS L AND CLASS M 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 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 First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of
-3-
<PAGE>
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
18th day of each month or, if such 18th 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 the Class C
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 service charge will be imposed for any registration of transfer or
exchange of Class C Certificates, but 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
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this
-5-
<PAGE>
Certificate is registered as the owner hereof for all purposes whatsoever and
none of the Depositor, the Master Servicer, the Special Servicer, the Trustee,
the Paying 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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.
-6-
<PAGE>
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By:_____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
-1-
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-6
Form of Class D Certificate
<PAGE>
CLASS D COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class D Certificates
Rate: 7.120% per annum as of the Closing Date: $121,194,000
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 D Certificate as of the Closing Date: $121,194,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AU 9
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES AND THE 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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY GENERAL
ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER SECTION
III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND (ii) THE
CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH RESPECT TO
SUCH TRANSFER. AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE,
THE CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE
TRANSFEREE OF THIS CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN
CLAUSE (B) OF THE PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT
SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. IF
-2-
<PAGE>
THIS CERTIFICATE IS IN BOOK-ENTRY FORM, ANY TRANSFEREE OF THIS CERTIFICATE SHALL
BE DEEMED TO HAVE REPRESENTED TO THE TRUSTEE, THE DEPOSITOR AND THE TRANSFEROR
TO THE EFFECT (X) THAT IT IS NOT A PERSON DESCRIBED IN CLAUSE (A) OR CLAUSE (B)
OR (Y) AS DESCRIBED IN CLAUSE (i) AND CLAUSE (ii).
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").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B CERTIFICATES
AND THE CLASS C CERTIFICATES OF THE SAME SERIES ARE REDUCED TO ZERO,
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE CERTIFICATE
PRINCIPAL BALANCE OF THE CLASS E, CLASS F, CLASS G, CLASS H, CLASS J, CLASS K,
CLASS L AND CLASS M 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 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 First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the
-3-
<PAGE>
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
18th day of each month or, if such 18th 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 the Class D
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 service charge will be imposed for any registration of transfer or
exchange of Class D Certificates, but 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
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes
-5-
<PAGE>
whatsoever and none of the Depositor, the Master Servicer, the Special Servicer,
the Trustee, the Paying 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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.
-6-
<PAGE>
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By: ____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
-1-
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-7
Form of Class E Certificate
<PAGE>
CLASS E COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class E Certificates
Rate: 7.120% per annum as of the Closing Date: $33,052,000
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 E Certificate as of the Closing Date: $33,052,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AV 7
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES AND THE CLASS D CERTIFICATES OF THE SAME
SERIES TO THE EXTENT DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED
TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY BE MADE (A) TO ANY
EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY GENERAL
ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER SECTION
III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND (ii) THE
CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH RESPECT TO
SUCH TRANSFER. AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE,
THE CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE
TRANSFEREE OF THIS CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN
CLAUSE (B) OF THE PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT
SUBSTANTIALLY IN THE FORM OF EXHIBIT
-2-
<PAGE>
H TO THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IF THIS CERTIFICATE
IS IN BOOK-ENTRY FORM, ANY TRANSFEREE OF THIS CERTIFICATE SHALL BE DEEMED TO
HAVE REPRESENTED TO THE TRUSTEE, THE DEPOSITOR AND THE TRANSFEROR TO THE EFFECT
(X) THAT IT IS NOT A PERSON DESCRIBED IN CLAUSE (A) OR CLAUSE (B) OR (Y) AS
DESCRIBED IN CLAUSE (i) AND CLAUSE (ii).
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").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES AND THE CLASS D CERTIFICATES OF THE SAME
SERIES ARE REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE
AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS F, CLASS G, CLASS H, CLASS
J, CLASS K, CLASS L AND CLASS M 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 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 First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National
-3-
<PAGE>
Bank (hereinafter called the "Trustee", which term includes any successor entity
under the Agreement), a summary of certain of the pertinent provisions of which
is set forth hereafter. To the extent not defined herein, 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
18th day of each month or, if such 18th 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 the Class E
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 service charge will be imposed for any registration of transfer or
exchange of Class E Certificates, but 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 E
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
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer,
-5-
<PAGE>
the Special Servicer, the Trustee, the Paying Agent or the Certificate Registrar
may treat the Person in whose name this Certificate is registered as the owner
hereof for all purposes whatsoever and none of the Depositor, the Master
Servicer, the Special Servicer, the Trustee, the Paying 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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,
-6-
<PAGE>
this Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By: ____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
-1-
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-8
Form of Class F Certificate
<PAGE>
CLASS F COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class F Certificates
Rate: The lesser of 7.500% per as of the Closing Date: $66,105,000
annum and the Weighted Average
Effective REMIC I Remittance Rate
for such Distribution Date.
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 F Certificate as of the Closing Date: $66,105,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AX 3
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES AND THE 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 (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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY GENERAL
ACCOUNT IF
-2-
<PAGE>
(i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER SECTION
III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND (ii) THE
CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH RESPECT TO
SUCH TRANSFER. AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE,
THE CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE
TRANSFEREE OF THIS CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN
CLAUSE (B) OF THE PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT
SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN. IF THIS CERTIFICATE IS IN BOOK-ENTRY FORM, ANY TRANSFEREE OF
THIS CERTIFICATE SHALL BE DEEMED TO HAVE REPRESENTED TO THE TRUSTEE, THE
DEPOSITOR AND THE TRANSFEROR TO THE EFFECT (X) THAT IT IS NOT A PERSON DESCRIBED
IN CLAUSE (A) OR CLAUSE (B) OR (Y) AS DESCRIBED IN CLAUSE (i) AND CLAUSE (ii).
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").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES AND THE CLASS E
CERTIFICATES OF THE SAME SERIES ARE REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION
OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN
ADDITION, IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS G, CLASS
H, CLASS J, CLASS K, CLASS L AND CLASS M 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 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 First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union
-3-
<PAGE>
National Bank (in such capacity, hereinafter called the "Master Servicer", which
term includes any successor entity under the Agreement), CRIIMI MAE Services
Limited Partnership (in such capacity, hereinafter called the "Special
Servicer", which term includes any successor entity under the Agreement), ABN
AMRO Bank N.V., (hereinafter called the "Fiscal Agent", which term includes any
successor entity under the Agreement) and LaSalle National Bank (hereinafter
called the "Trustee", which term includes any successor entity under the
Agreement), a summary of certain of the pertinent provisions of which is set
forth hereafter. To the extent not defined herein, 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
18th day of each month or, if such 18th 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 the Class F
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 allocated to this Certificate, which reimbursement is to
occur after the date on which this Certificate is surrendered as contemplated by
the
-4-
<PAGE>
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 qualification under applicable state
securities laws, or is made in a transaction which does not require such
registration or qualification. If such a transfer is to be made without
registration under the Securities Act (other than in connection with the initial
issuance thereof or the initial
-5-
<PAGE>
transfer thereof by the Depositor, the Underwriters or their respective
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 reasonably
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.
Any transferee of this Certificate, if this Certificate is in book-entry
form, shall be deemed to represent to the transferor, the Trustee and the
Depositor that it is a QIB within the meaning of Rule 144A.
No service charge will be imposed for any registration of transfer or
exchange of Class F Certificates, but 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 F
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
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this
-6-
<PAGE>
Certificate is registered as the owner hereof for all purposes whatsoever and
none of the Depositor, the Master Servicer, the Special Servicer, the Trustee,
the Paying 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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.
-7-
<PAGE>
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-8-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By: ____________________________________
Authorized Officer
-9-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
__________________________________________
Signature by or on behalf of Assignor
__________________________________________
Signature Guaranteed
-1-
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-9
Form of Class G Certificate
<PAGE>
CLASS G COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class G Certificates
Rate: The lesser of 7.500% per as of the Closing Date: $49,578,000
annum and the Weighted Average
Effective REMIC I Remittance Rate
for such Distribution Date.
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 G Certificate as of the Closing Date: $49,578,000
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AY 1
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES AND THE 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 (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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT SUCH
-2-
<PAGE>
A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY GENERAL ACCOUNT IF (i) THIS
CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER SECTION III OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND (ii) THE CONDITIONS OF
SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH RESPECT TO SUCH TRANSFER.
AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE, THE CERTIFICATE
REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE TRANSFEREE OF THIS
CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN CLAUSE (B) OF THE
PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT SUBSTANTIALLY IN
THE FORM OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
IF THIS CERTIFICATE IS IN BOOK-ENTRY FORM, ANY TRANSFEREE OF THIS CERTIFICATE
SHALL BE DEEMED TO HAVE REPRESENTED TO THE TRUSTEE, THE DEPOSITOR AND THE
TRANSFEROR TO THE EFFECT (X) THAT IT IS NOT A PERSON DESCRIBED IN CLAUSE (A) OR
CLAUSE (B) OR (Y) AS DESCRIBED IN CLAUSE (i) AND CLAUSE (ii).
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").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES AND THE CLASS F CERTIFICATES OF THE SAME SERIES ARE REDUCED TO
ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE CERTIFICATE
PRINCIPAL BALANCE OF THE CLASS H, CLASS J, CLASS K, CLASS L AND CLASS M
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 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 First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term
-3-
<PAGE>
includes any successor entity under the Agreement), First Union National Bank
(in such capacity, hereinafter called the "Master Servicer", which term includes
any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, 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
18th day of each month or, if such 18th 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 the Class G
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 allocated to this Certificate, which reimbursement is to
occur after the date on
-4-
<PAGE>
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 such a transfer is to be made without
registration under the Securities Act (other than in
-5-
<PAGE>
connection with the initial issuance thereof or the initial transfer thereof by
the Depositor, the Underwriters or their respective 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 reasonably 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.
Any transferee of this Certificate, if this Certificate is in book-entry
form, shall be deemed to represent to the transferor, the Trustee and the
Depositor that it is a QIB within the meaning of Rule 144A.
No service charge will be imposed for any registration of transfer or
exchange of Class G Certificates, but 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 F
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
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
-6-
<PAGE>
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 G Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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,
-7-
<PAGE>
this Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-8-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By: ____________________________________
Authorized Officer
-9-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
______________________________________
Signature by or on behalf of Assignor
______________________________________
Signature Guaranteed
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-10
Form of Class H Certificate
<PAGE>
CLASS H COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class H Certificates
Rate: The lesser of 7.500% per as of the Closing Date: $16,527,208
annum and the Weighted Average
Effective REMIC I Remittance
Rate for such Distribution Date.
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 H Certificate as of the Closing Date: $16,527,208
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AZ 8
</TABLE>
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES AND THE 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 (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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT (A) SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY
GENERAL ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND
(ii) THE CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH
RESPECT TO SUCH TRANSFER AND (B) SUCH A TRANSFER MAY BE MADE IF THE PROSPECTIVE
TRANSFEREE PROVIDES THE CERTIFICATE REGISTRAR WITH A CERTIFICATION OF FACTS AND
AN OPINION OF COUNSEL THAT ESTABLISH TO THE REASONABLE SATISFACTION OF THE
CERTIFICATE REGISTRAR 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. AS A CONDITION TO REGISTRATION OF
TRANSFER OF THIS CERTIFICATE, THE CERTIFICATE REGISTRAR SHALL
-2-
<PAGE>
HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE TRANSFEREE OF THIS CERTIFICATE, IF IT
IS NOT A PLAN OR PERSON DESCRIBED IN CLAUSE (B) OF THE PRECEDING SENTENCE, TO
EXECUTE A CERTIFICATION TO THAT EFFECT SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO
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 INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES AND THE CLASS G CERTIFICATES OF THE SAME
SERIES ARE REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE
AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS J, CLASS K, CLASS L AND
CLASS M 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 TFINN & Co. is the registered owner of the Percentage
Interest evidenced by this Class H Certificate (obtained by dividing the
principal amount of this Class H Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class H Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class H
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth
-3-
<PAGE>
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
18th day of each month or, if such 18th 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 H Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class H
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 H 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 H
Certificates are exchangeable for new Class H 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 H Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No transfer of any Class H 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 such a transfer 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, the
Underwriters or their respective 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 reasonably satisfactory to the Certificate Registrar
to the effect that such transfer may be made without
-5-
<PAGE>
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 H
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 H Certificate without registration or qualification. Any Class H
Certificateholder desiring to effect such a transfer shall, and by the
acceptance of its Class H 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 service charge will be imposed for any registration of transfer or
exchange of Class H Certificates, but 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 H
Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder or the Depositor to purchase from the Trust Fund all Mortgage
-6-
<PAGE>
Loans and each REO Property remaining therein. The exercise of such right will
effect early retirement of the Class H Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
By: ____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class H Certificates referred to in the within-mentioned
Agreement.
LASALLE NATIONAL BANK,
as Authenticating Agent
By: ____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-11
Form of Class J Certificate
<PAGE>
CLASS J COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class J Certificates
Rate: The lesser of 6.000% per as of the Closing Date: $44,070,046
annum and the Weighted Average
Effective REMIC I Remittance Rate
for such Distribution Date.
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 J Certificate as of the Closing Date: $44,070,046
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L BA 2
</TABLE>
-1-
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES, THE CLASS G CERTIFICATES AND THE CLASS H
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 (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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT (A) SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY
GENERAL ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND
(ii) THE CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH
RESPECT TO SUCH TRANSFER AND (B) SUCH A TRANSFER MAY BE MADE IF THE PROSPECTIVE
TRANSFEREE PROVIDES THE CERTIFICATE REGISTRAR WITH A CERTIFICATION OF FACTS AND
AN OPINION OF COUNSEL THAT ESTABLISH TO THE REASONABLE SATISFACTION OF THE
CERTIFICATE REGISTRAR 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. AS A CONDITION TO REGISTRATION OF
TRANSFER OF THIS CERTIFICATE, THE CERTIFICATE REGISTRAR SHALL
-2-
<PAGE>
HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE TRANSFEREE OF SUCH CERTIFICATE, IF IT
IS NOT A PLAN OR PERSON DESCRIBED IN CLAUSE (B) OF THE PRECEDING SENTENCE, TO
EXECUTE A CERTIFICATION TO THAT EFFECT SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO
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 INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES, THE CLASS G CERTIFICATES AND THE CLASS H
CERTIFICATES OF THE SAME SERIES ARE REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION
OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS
SET FORTH IN THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN
ADDITION, IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS K, CLASS L
AND CLASS M 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 TFINN & Co. is the registered owner of the Percentage
Interest evidenced by this Class J Certificate (obtained by dividing the
principal amount of this Class J Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class J Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class J
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of
-3-
<PAGE>
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
18th day of each month or, if such 18th 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 J Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class J
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 J 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 J
Certificates are exchangeable for new Class J 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 J Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No transfer of any Class J 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 such a transfer 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, the
Underwriters or their respective 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 reasonably satisfactory to the Certificate
-5-
<PAGE>
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 J 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 J Certificate without
registration or qualification. Any Class J Certificateholder desiring to effect
such a transfer shall, and by the acceptance of its Class J 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 service charge will be imposed for any registration of transfer or
exchange of Class J Certificates, but 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 J
Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder
-6-
<PAGE>
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 J Certificates; however, such right to purchase is
subject to the aggregate Stated Principal Balance of the Mortgage Pool at the
time of purchase being less than 1% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class J Certificates referred to in the within-mentioned
Agreement.
LASALLE NATIONAL BANK,
as Authenticating Agent
By: _____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-12
Form of Class K Certificate
<PAGE>
CLASS K COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Class Principal Balance of the Class K Certificates
Rate: The lesser of 6.000% per as of the Closing Date: $22,035,023
annum and the Weighted Average
Effective REMIC I Remittance Rate
for such Distribution Date.
Date of Pooling and Servicing Initial Certificate Principal Balance of this Class
Agreement: as of November 1, 1997 K Certificate as of the Closing Date: $22,035,023
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L BB 0
</TABLE>
-1-
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES, THE CLASS G CERTIFICATES, THE CLASS H
CERTIFICATES AND THE CLASS J 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 (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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT (A) SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY
GENERAL ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND
(ii) THE CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH
RESPECT TO SUCH TRANSFER AND (B) SUCH A TRANSFER MAY BE MADE IF THE PROSPECTIVE
TRANSFEREE PROVIDES THE CERTIFICATE REGISTRAR WITH A CERTIFICATION OF FACTS AND
AN OPINION OF COUNSEL THAT ESTABLISH TO THE REASONABLE SATISFACTION OF THE
CERTIFICATE REGISTRAR 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. AS A CONDITION TO REGISTRATION OF
-2-
<PAGE>
TRANSFER OF THIS CERTIFICATE, THE CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO
REQUIRE ANY PROSPECTIVE TRANSFEREE OF SUCH CERTIFICATE, IF IT IS NOT A PLAN OR
PERSON DESCRIBED IN CLAUSE (B) OF THE PRECEDING SENTENCE, TO EXECUTE A
CERTIFICATION TO THAT EFFECT SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO 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 INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES, THE CLASS G CERTIFICATES, THE CLASS H
CERTIFICATES AND THE CLASS J CERTIFICATES OF THE SAME SERIES ARE REDUCED TO
ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE AGGREGATE PRINCIPAL BALANCE OF
THE CLASS L AND CLASS M 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 TFINN & Co. is the registered owner of the Percentage
Interest evidenced by this Class K Certificate (obtained by dividing the
principal amount of this Class K Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class K Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class K
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term
-3-
<PAGE>
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
18th day of each month or, if such 18th 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 K Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class K
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 K 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 K
Certificates are exchangeable for new Class K 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 K Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No transfer of any Class K 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 such a transfer 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, the
Underwriters or their respective 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
-5-
<PAGE>
Opinion of Counsel reasonably 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 K 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 K Certificate without
registration or qualification. Any Class K Certificateholder desiring to effect
such a transfer shall, and by the acceptance of its Class K 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 service charge will be imposed for any registration of transfer or
exchange of Class K Certificates, but 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 K
Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer,
-6-
<PAGE>
Lehman Brothers Inc., the Majority Subordinate Certificateholder 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 K Certificates; however, such right to purchase is
subject to the aggregate Stated Principal Balance of the Mortgage Pool at the
time of purchase being less than 1% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class K Certificates referred to in the within-mentioned
Agreement.
LASALLE NATIONAL BANK,
as Authenticating Agent
By: _____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-13
Form of Class L Certificate
<PAGE>
CLASS L COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class L Certificates
The lesser of 6.000% per as of the Closing Date: $27,543,779
annum and the Weighted Average
Effective REMIC I Remittance Rate
for such Distribution Date.
Date of Pooling and Servicing Agreement: Initial Certificate Principal Balance of this Class
as of November 1, 1997 L Certificate as of the Closing Date: $27,543,779
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L BC 8
</TABLE>
-1-
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES, THE CLASS G CERTIFICATES, THE CLASS H
CERTIFICATES, THE CLASS J CERTIFICATES, THE CLASS K AND THE CLASS L 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 (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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT (A) SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY
GENERAL ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND
(ii) THE CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH
RESPECT TO SUCH TRANSFER AND (B) SUCH A TRANSFER MAY BE MADE IF THE PROSPECTIVE
TRANSFEREE PROVIDES THE CERTIFICATE REGISTRAR WITH A CERTIFICATION OF FACTS AND
AN OPINION OF COUNSEL THAT ESTABLISH TO THE REASONABLE SATISFACTION OF THE
CERTIFICATE REGISTRAR 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. AS A CONDITION TO REGISTRATION OF
-2-
<PAGE>
TRANSFER OF THIS CERTIFICATE, THE CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO
REQUIRE ANY PROSPECTIVE TRANSFEREE OF SUCH CERTIFICATE, IF IT IS NOT A PLAN OR
PERSON DESCRIBED IN CLAUSE (B) OF THE PRECEDING SENTENCE, TO EXECUTE A
CERTIFICATION TO THAT EFFECT SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO 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 OF THE INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES, THE CLASS G CERTIFICATES, THE CLASS H
CERTIFICATES, THE CLASS J CERTIFICATES AND THE CLASS K CERTIFICATES OF THE SAME
SERIES ARE REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION, IF THE
AGGREGATE CERTIFICATE PRINCIPAL BALANCE OF THE CLASS M 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 CRIIMI MAE, Inc. is the registered owner of the
Percentage Interest evidenced by this Class L Certificate (obtained by dividing
the principal amount of this Class L Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class L Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class L
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term
-3-
<PAGE>
includes any successor entity under the Agreement) and LaSalle National Bank
(hereinafter called the "Trustee", which term includes any successor entity
under the Agreement), a summary of certain of the pertinent provisions of which
is set forth hereafter. To the extent not defined herein, 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
18th day of each month or, if such 18th 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 L Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class L
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 L 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 L
Certificates are exchangeable for new Class L 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 L Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No transfer of any Class L 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 such a transfer 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, the
Underwriters or their respective 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
-5-
<PAGE>
Opinion of Counsel reasonably 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 L 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 L Certificate without
registration or qualification. Any Class L Certificateholder desiring to effect
such a transfer shall, and by the acceptance of its Class L 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 service charge will be imposed for any registration of transfer or
exchange of Class L Certificates, but 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 L
Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer,
-6-
<PAGE>
Lehman Brothers Inc., the Majority Subordinate Certificateholder 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 L Certificates; however, such right to purchase is
subject to the aggregate Stated Principal Balance of the Mortgage Pool at the
time of purchase being less than 1% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class L Certificates referred to in the within-mentioned
Agreement.
LASALLE NATIONAL BANK,
as Authenticating Agent
By: _____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-14
Form of Class M Certificate
<PAGE>
CLASS M COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Pass-Through Rate: Class Principal Balance of the Class M Certificates
The lesser of 6.000% per as of the Closing Date: $16,526,269
annum and the Weighted Average
Effective REMIC I Remittance Rate
for such Distribution Date.
Date of Pooling and Servicing Agreement: Initial Certificate Principal Balance of this Class
as of November 1, 1997 M Certificate as of the Closing Date: $16,526,269
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L BE 4
</TABLE>
-1-
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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 CERTIFICATES, THE CLASS A-2
CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS IO CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES, THE CLASS G CERTIFICATES, THE CLASS H
CERTIFICATES, THE CLASS J CERTIFICATES, THE CLASS K AND THE CLASS L 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 (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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN") OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN), PROVIDED THAT (A) SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY
GENERAL ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND
(ii) THE CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH
RESPECT TO SUCH TRANSFER AND (B) SUCH A TRANSFER MAY BE MADE IF THE PROSPECTIVE
TRANSFEREE PROVIDES THE CERTIFICATE REGISTRAR WITH A CERTIFICATION OF FACTS AND
AN OPINION OF COUNSEL THAT ESTABLISH TO THE REASONABLE SATISFACTION OF THE
CERTIFICATE REGISTRAR 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. AS A CONDITION TO REGISTRATION OF
-2-
<PAGE>
TRANSFER OF THIS CERTIFICATE, THE CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO
REQUIRE ANY PROSPECTIVE TRANSFEREE OF SUCH CERTIFICATE, IF IT IS NOT A PLAN OR
PERSON DESCRIBED IN CLAUSE (B) OF THE PRECEDING SENTENCE, TO EXECUTE A
CERTIFICATION TO THAT EFFECT SUBSTANTIALLY IN THE FORM OF EXHIBIT H TO 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 INTERNAL
REVENUE CODE OF 1986 (THE "CODE").
IF THE AGGREGATE CERTIFICATE PRINCIPAL BALANCES OF THE CLASS A-1 CERTIFICATES,
THE CLASS A-2 CERTIFICATES, THE CLASS A-3 CERTIFICATES, THE CLASS B
CERTIFICATES, THE CLASS C CERTIFICATES, THE CLASS D CERTIFICATES, THE CLASS E
CERTIFICATES, THE CLASS F CERTIFICATES, THE CLASS G CERTIFICATES, THE CLASS H
CERTIFICATES, THE CLASS J CERTIFICATES AND THE CLASS K CERTIFICATES OF THE SAME
SERIES ARE REDUCED TO ZERO, DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN. IN ADDITION, THE CERTIFICATE
PRINCIPAL BALANCE OF THIS CERTIFICATE MAY BE REDUCED BY CERTAIN LOSSES AND
EXPENSES EXPERIENCED BY THE TRUST FUND AS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL
BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.
This certifies that CRIIMI MAE, Inc. is the registered owner of the
Percentage Interest evidenced by this Class M Certificate (obtained by dividing
the principal amount of this Class M Certificate (its "Certificate Principal
Balance") as of the Closing Date by the aggregate principal amount of all the
Class M Certificates (their "Class Principal Balance") as of the Closing Date)
in that certain beneficial ownership interest evidenced by all the Class M
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership (in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth
-3-
<PAGE>
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
18th day of each month or, if such 18th 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 M Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class M
Certificates will be made by LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Paying Agent 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), or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register.
Notwithstanding the foregoing, the final distribution on this Certificate
(determined without regard to any possible future reimbursement of any Realized
Loss or Additional Trust Fund Expense previously allocated to this Certificate)
will be made in like manner, but only upon presentation and surrender of this
Certificate at the offices of the Trustee 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 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
-4-
<PAGE>
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 M 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 M
Certificates are exchangeable for new Class M 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 M Certificates in authorized
denominations evidencing the same aggregate Percentage Interest will be issued
to the designated transferee or transferees.
No transfer of any Class M 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 such a transfer 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, the
Underwriters or their respective 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 reasonably satisfactory to the Certificate Registrar
to the effect that such transfer may be made without
-5-
<PAGE>
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 M
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 M Certificate without registration or qualification. Any Class M
Certificateholder desiring to effect such a transfer shall, and by the
acceptance of its Class M 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 service charge will be imposed for any registration of transfer or
exchange of Class M Certificates, but 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 M
Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder or the Depositor to purchase from the Trust Fund all Mortgage
-6-
<PAGE>
Loans and each REO Property remaining therein. The exercise of such right will
effect early retirement of the Class M Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-7-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
By: _____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class M Certificates referred to in the within-mentioned
Agreement.
LASALLE NATIONAL BANK,
as Authenticating Agent
By: _____________________________________
Authorized Officer
-8-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-15
Form of Class IO Certificate
<PAGE>
CLASS IO MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Date of Pooling and Servicing Agreement: Aggregate Certificate Notional Amount of all Class
as of November 1, 1997 IO Certificates as of the Closing Date:
$2,203,502,325
Closing Date: November 25, 1997 Certificate Notional Amount of this Class IO
Certificate as of the Closing Date: $200,000,000
First Distribution Date: Aggregate Stated Principal Balance of the Mortgage
December 18, 1997 Loans as of the Closing Date: $2,203,502,325
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1 CUSIP No. 33736L AW 5
THIS CERTIFICATE IS NOT ENTITLED TO INTEREST ON THE CERTIFICATE NOTIONAL AMOUNT,
BUT IS ENTITLED TO RECEIVE INTEREST ON ITS COMPONENTS AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT.
</TABLE>
<PAGE>
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 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 FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK, CRIIMI MAE SERVICES LIMITED PARTNERSHIP 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
NOVEMBER 25, 1997. 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 OCTOBER 29, 1997
AND THE PROSPECTUS SUPPLEMENT DATED NOVEMBER 19, 1997 RELATING TO THIS
CERTIFICATE) OF 0% (THE "PREPAYMENT ASSUMPTION"), EXCEPT THAT EACH ARD LOAN IS
REPAID ON ITS ANTICIPATED REPAYMENT DATE, THIS CERTFICATE 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
$1,000 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 DOES NOT HAVE A CERTIFICATE PRINCIPAL BALANCE AND WILL NOT
ENTITLE THE HOLDER HEREOF TO DISTRIBUTIONS OF PRINCIPAL.
-2-
<PAGE>
This certifies that Cede & Co. is the registered owner of the Percentage
Interest evidenced by this Class IO Certificate 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 First Union Commercial Mortgage Securities, Inc.
(hereinafter called the "Depositor", which term includes any successor entity
under the Agreement), First Union National Bank (in such capacity, hereinafter
called the "Master Servicer", which term includes any successor entity under the
Agreement), CRIIMI MAE Services Limited Partnership (in such capacity,
hereinafter called the "Special Servicer", which term includes any successor
entity under the Agreement), ABN AMRO Bank N.V., (hereinafter called the "Fiscal
Agent", which term includes any successor entity under the Agreement) and
LaSalle National Bank (hereinafter called the "Trustee", which term includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined herein,
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
18th day of each month or, if such 18th 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 IO Certificates on the applicable Distribution Date pursuant to the
Agreement. All distributions made under the Agreement on the Class IO
Certificates will be made by LaSalle National Bank as paying agent (the "Paying
Agent"), 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 Paying Agent 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), 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 Trustee or such other
-3-
<PAGE>
location specified in the notice to Holder hereof of such final distribution.
The Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the 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.
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 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 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
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying Agent or the
-4-
<PAGE>
Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes whatsoever and none of the
Depositor, the Master Servicer, the Special Servicer, the Trustee, the Paying
Agent, 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc., the Majority Subordinate
Certificateholder 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 IO Certificates; however, such right to
purchase is subject to the aggregate Stated Principal Balance of the Mortgage
Pool at the time of purchase being less than 1% of the aggregate Stated
Principal Balance of the Mortgage Loans as of the Closing Date specified on the
face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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,
-5-
<PAGE>
this Certificate shall not be entitled to any benefit under the Agreement or be
valid for any purpose.
The registered Holder hereof, by its acceptance hereof, agrees that it will
look solely to the Trust Fund (to the extent of its rights therein) for
distributions hereunder.
This Certificate shall be construed in accordance with the internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-6-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By: _____________________________________
Authorized Officer
-7-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
<PAGE>
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.
-2-
<PAGE>
EXHIBIT A-16
Form of Class R-I Certificate
<PAGE>
CLASS R-I MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Date of Pooling and Servicing Agreement: Percentage Interest evidenced by this Class R-I
as of November 1, 1997 Certificate: 100%
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1
</TABLE>
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK 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 A-3, CLASS
IO, CLASS B, CLASS C, CLASS D, CLASS E, CLASS F, CLASS G, CLASS H, CLASS J,
CLASS K, CLASS L AND CLASS M 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 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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN"), OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN). AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE, THE
CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE TRANSFEREE
OF THIS CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN CLAUSE (B) OF
THE PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT SUBSTANTIALLY
IN THE FORM OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
-2-
<PAGE>
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 First Union National Bank is the registered owner of
the Percentage Interest evidenced by this Class R-I Certificate (as specified
above) in that certain beneficial ownership interest evidenced by all the Class
R-I Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, 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
18th day of each month or, if such 18th 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 Trustee or such other location specified in
the notice to Certificateholders of such final distribution.
-3-
<PAGE>
The Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the 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 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 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, the Underwriters or their 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
-4-
<PAGE>
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 this Class R-I Certificate or any interest therein shall be
made to (A) a Plan or (B) any Person who is directly or indirectly purchasing
the Class R-I Certificate or 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 assets of a Plan). As a condition to its registration of transfer of
this Class R-I Certificate, the Certificate Registrar shall have the right to
require the prospective transferee of such Certificate, if it is not a Plan or
Person described in clause (B) of the preceding sentence, to execute a
certification to that effect substantially in the form of Exhibit H to 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 LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Certificate
Registrar 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, the Paying Agent and
the Certificate Registrar of any change or impending change in its status as a
Permitted Transferee. In connection with any
-5-
<PAGE>
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 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
Certificate Registrar 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 Certificate
Registrar and the Master Servicer, to the effect that such modification of,
addition to or elimination of such provisions will not cause the Trust Fund to
(x) cease to qualify as a REMIC or (y) be subject to an entity-level tax caused
by the transfer of this Class R-I Certificate to a Person which is not a
Permitted Transferee, or
-6-
<PAGE>
cause a Person other than the prospective Transferee to be subject to a
REMIC-related tax caused by the transfer of this Class R-I 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 I of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381 of the Code and (v) any other
Person so designated by the 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, an estate whose
income from sources without the United States is income for United States
federal income tax purposes regardless of its connection of a trade or business
within the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust, all within the meaning of Section 7701(a)(30) of the
Code.
No service charge will be imposed for any registration of transfer or
exchange of Class R-I Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in
-7-
<PAGE>
connection with any transfer or exchange of Class R-I Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying 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 Paying 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc. or the Majority Subordinate
Certificateholder 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 Stated Principal Balance of the Mortgage Pool at the
time of purchase being less than 1% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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
-8-
<PAGE>
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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-9-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By: _____________________________________
Authorized Officer
-10-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
-1-
<PAGE>
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be made by check 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.
-2-
<PAGE>
EXHIBIT A-17
Form of Class R-II Certificate
<PAGE>
CLASS R-II MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Date of Pooling and Servicing Agreement: Percentage Interest evidenced by this Class R-II
as of November 1, 1997 Certificate: 100%
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1
</TABLE>
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK 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 A-3, CLASS
IO, CLASS B, CLASS C, CLASS D, CLASS E, CLASS F, CLASS G, CLASS H, CLASS J,
CLASS K, CLASS L AND CLASS M 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 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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN"), OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN). AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE, THE
CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE TRANSFEREE
OF THIS CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN CLAUSE (B) OF
THE PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT SUBSTANTIALLY
IN THE FORM OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
-2-
<PAGE>
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 First Union National Bank is the registered owner of
the Percentage Interest evidenced by this Class R-II Certificate (as specified
above) in that certain beneficial ownership interest evidenced by all the Class
R-II Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, 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
18th day of each month or, if such 18th 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 Trustee or such other location specified in
the notice to Certificateholders of such final distribution.
-3-
<PAGE>
The Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the 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 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 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, the Underwriters or their 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
-4-
<PAGE>
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 this Class R-II Certificate or any interest therein shall be
made to (A) a Plan or (B) any Person who is directly or indirectly purchasing
the Class R-II Certificate or interest therein on behalf of, as named fiduciary
of, as trustee of, or with a ssets of a Plan (including, without limitation, any
insurance company using assets in its general or separate account that may
constitute assets of a Plan). As a condition to its registration of transfer of
this Class R-II Certificate, the Certificate Registrar shall have the right to
require the prospective transferee of such Certificate, if it is not a Plan or
Person described in clause (B) of the preceding sentence, to execute a
certification to that effect substantially in the form of Exhibit H to 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 LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Certificate
Registrar 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, the Paying Agent and
the Certificate Registrar of any change or impending change in its status as a
Permitted Transferee. In connection with any
-5-
<PAGE>
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 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
Certificate Registrar 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 Certificate
Registrar and the Master Servicer, to the effect that such modification of,
addition to or elimination of such provisions will not cause the Trust Fund to
(x) cease to qualify as a REMIC or (y) be subject to an entity-level tax caused
by the Transfer of any Class R-II Certificate to a Person which is not a
Permitted Transferee, or
-6-
<PAGE>
cause a Person other than the prospective Transferee to be subject to a
REMIC-related tax caused by the transfer of this Class R-II 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 I of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381 of the Code and (v) any other
Person so designated by the 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, an estate whose
income from sources without the United States is income for United States
federal income tax purposes regardless of its connection of a trade or business
within the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust, all within the meaning of Section 7701(a)(30) of the
Code.
No service charge will be imposed for any registration of transfer or
exchange of Class R-II Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in
-7-
<PAGE>
connection with any transfer or exchange of Class R-II Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying 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 Paying 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc. or the Majority Subordinate
Certificateholder 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 Stated Principal Balance of the Mortgage Pool at the
time of purchase being less than 1% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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
-8-
<PAGE>
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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-9-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By: _____________________________________
Authorized Officer
-10-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
-1-
<PAGE>
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be made by check 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.
-2-
<PAGE>
EXHIBIT A-18
Form of Class R-III Certificate
<PAGE>
CLASS R-III MORTGAGE PASS-THROUGH CERTIFICATE,
SERIES 1997-C2
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
FIRST UNION COMMERCIAL MORTGAGE SECURITIES, INC.
<TABLE>
<CAPTION>
<S> <C>
Date of Pooling and Servicing Agreement: Percentage Interest evidenced by this Class R-III
as of November 1, 1997 Certificate: 100%
Closing Date: November 25, 1997 Aggregate Stated Principal Balance of the Mortgage
Loans as of the Closing Date: $2,203,502,325
First Distribution Date:
December 18, 1997
Master Servicer: Trustee:
First Union National Bank LaSalle National Bank
Special Servicer: Fiscal Agent:
CRIIMI MAE Services Limited Partnership ABN AMRO Bank N.V.
Certificate No. 1
</TABLE>
<PAGE>
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FIRST UNION
COMMERCIAL MORTGAGE SECURITIES, INC., LASALLE NATIONAL BANK, ABN AMRO BANK N.V.,
FIRST UNION NATIONAL BANK 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 A-3, CLASS
IO, CLASS B, CLASS C, CLASS D, CLASS E, CLASS F, CLASS G, CLASS H, CLASS J,
CLASS K, CLASS L AND CLASS M 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 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 OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN"), OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN). AS A CONDITION TO REGISTRATION OF TRANSFER OF THIS CERTIFICATE, THE
CERTIFICATE REGISTRAR SHALL HAVE THE RIGHT TO REQUIRE ANY PROSPECTIVE TRANSFEREE
OF SUCH CERTIFICATE, IF IT IS NOT A PLAN OR PERSON DESCRIBED IN CLAUSE (B) OF
THE PRECEDING SENTENCE, TO EXECUTE A CERTIFICATION TO THAT EFFECT SUBSTANTIALLY
IN THE FORM OF EXHIBIT H TO THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" (A "REMIC") AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE CODE.
CONSEQUENTLY, TRANSFER OF THIS CERTIFICATE IS ALSO SUBJECT TO THE ADDITIONAL TAX
RELATED TRANSFER RESTRICTIONS DESCRIBED HEREIN. IF ANY PERSON BECOMES THE
REGISTERED HOLDER OF THIS CERTIFICATE IN VIOLATION OF SUCH TRANSFER
RESTRICTIONS, SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR
EFFECT WHATSOEVER AND SUCH PERSON SHALL NOT BE
-2-
<PAGE>
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 First Union National Bank is the registered owner of
the Percentage Interest evidenced by this Class R-III Certificate (as specified
above) in that certain beneficial ownership interest evidenced by all the Class
R-III Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among First Union
Commercial Mortgage Securities, Inc. (hereinafter called the "Depositor", which
term includes any successor entity under the Agreement), First Union National
Bank (in such capacity, hereinafter called the "Master Servicer", which term
includes any successor entity under the Agreement), CRIIMI MAE Services Limited
Partnership in such capacity, hereinafter called the "Special Servicer", which
term includes any successor entity under the Agreement), ABN AMRO Bank N.V.,
(hereinafter called the "Fiscal Agent", which term includes any successor entity
under the Agreement) and LaSalle National Bank (hereinafter called the
"Trustee", which term includes any successor entity under the Agreement), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, 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
18th day of each month or, if such 18th 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 Trustee or such other location specified in
the notice to Certificateholders of such final distribution.
-3-
<PAGE>
The Certificates are limited in right of distribution to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the 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 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 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, the Underwriters or their 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
-4-
<PAGE>
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 this Class R-III Certificate or any interest therein shall
be made to (A) a Plan or (B) any Person who is directly or indirectly purchasing
the Class R-III Certificate or 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 assets of a Plan). As a condition to its registration of transfer of
this Class R-III Certificate, the Certificate Registrar shall have the right to
require the prospective transferee of such Certificate, if it is not a Plan or
Person described in clause (B) of the preceding sentence, to execute a
certification to that effect substantially in the form of Exhibit H to 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 LaSalle National Bank, as paying agent (the "Paying
Agent"), 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 Certificate
Registrar 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, the Paying Agent and
the Certificate Registrar of any change or impending change in its status as a
Permitted Transferee. In connection with any
-5-
<PAGE>
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 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
Certificate Registrar 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 Certificate
Registrar and the Master Servicer, to the effect that such modification of,
addition to or elimination of such provisions will not cause the Trust Fund to
(x) cease to qualify as a REMIC or (y) be subject to an entity-level tax caused
by the transfer of this Class R-III Certificate to a Person which is not a
Permitted Transferee, or
-6-
<PAGE>
cause a Person other than the prospective Transferee to be subject to a
REMIC-related tax caused by the transfer of this Class R-III 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 I of the Code (including the tax imposed by Section 511 of
the Code on unrelated business taxable income), (iv) rural electric and
telephone cooperatives described in Section 1381 of the Code and (v) any other
Person so designated by the 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, an estate whose
income from sources without the United States is income for United States
federal income tax purposes regardless of its connection of a trade or business
within the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more United States persons have the authority to control all substantial
decisions of the trust, all within the meaning of Section 7701(a)(30) of the
Code.
No service charge will be imposed for any registration of transfer or
exchange of Class R-III Certificates, but the Certificate Registrar may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in
-7-
<PAGE>
connection with any transfer or exchange of Class R-III Certificates.
The Depositor, the Master Servicer, the Special Servicer, the Trustee, the
Paying Agent and the Certificate Registrar and any agent of the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Paying 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 Paying 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
Depositor, the Master Servicer, the Special Servicer, Lehman Brothers Inc. or
the Majority Subordinate Certificateholder 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
Special Servicer, Lehman Brothers Inc. or the Majority Subordinate
Certificateholder 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 Stated Principal Balance of the Mortgage Pool at the
time of purchase being less than 1% of the aggregate Stated Principal Balance of
the Mortgage Loans as of the Closing Date specified on the face hereof.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Special Servicer, the 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
-8-
<PAGE>
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 internal laws of
the State of New York applicable to agreements made and to be performed in said
State, and the obligations, rights and remedies of the Holder hereof shall be
determined in accordance with such laws.
-9-
<PAGE>
IN WITNESS WHEREOF, the Certificate Registrar has caused this Certificate
to be duly executed.
Dated: November 25, 1997
LASALLE NATIONAL BANK,
as Certificate Registrar
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 Authenticating Agent
By: _____________________________________
Authorized Officer
-10-
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(please print or typewrite name and address including postal zip code of
assignee)
the beneficial ownership interest in the Trust Fund evidenced by the within
Commercial 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 Commercial
Mortgage Pass-Through Certificate of a like Percentage Interest and Class to the
above named assignee and deliver such Commercial Mortgage Pass-Through
Certificate to the following address:
________________________________________________________________________________
________________________________________________________________________________
Dated:
_____________________________________
Signature by or on behalf of Assignor
_____________________________________
Signature Guaranteed
-1-
<PAGE>
DISTRIBUTION INSTRUCTIONS
The Assignee should include the following for purposes of distribution:
Distributions shall be made by check 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.
-2-
<PAGE>
EXHIBIT B
Mortgage Loan Schedule
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
1 RA35 Rentar 66-26 Metropolitan Avenue Middle Village
2 253 Plainview Shopping Center South Oyster Bay Road & Woodbury Road Plainview
3 278 Centreville Square 5900 Centreville Crest Lane Centreville
4 RB05 Soho Court 299-307 Elizabeth Street New York
5 RD79 Blue Cross Blue Shield 2800 East 6500 South Salt Lake City
6 2 Fountainhead Apartments 293-297 Turnpike Road Westborough
7 282 Drury Portfolio #1 Various Various
8 3 Sutton Place 23275 Riverside Drive Southfield
9 4 Town Square Wheaton 199 Town Square Wheaton
10 RD24 San Pedro Plaza N. Side of Loop 410 E. of San Pedro Blvd. San Antonio
11 5 Office Depot - Delray Beach 2300 So. Congress St. Delray Beach
12 RA63 Cypress Palms & Sabal Palms (Roll-up) 400 Lake Ave. & 499 Alternate Keene Rd. Largo
13 RB69 Pinole Vista Crossing IH-80 & Fitzgerald Drive Pinole
14 QZ41 675 Sixth Avenue 675 Sixth Ave. New York
15 RA73 Citrus Center Office Building 255 S. Orange Avenue Orlando
16 7 Hartford Fire - Farmington 8 Farm Springs Road Farmington
17 272 Campus Club 4000 Southwest 37th Boulevard Gainesville
18 RB58 Park Esplanade Apartments 3443 Esplanade Ave. New Orleans
19 QZ04 Glazer Portfolio (Roll-up) Various Various
20 RA90 Cross Island Plaza 133-33 Brookville Boulevard Rosedale
21 8 The Hamptons 3070 South Nellis Boulevard Las Vegas
22 RA21 Noland Fashion Square US 40 Highway and Nolan Road Independence
23 RB66 Sheraton Orlando North 600 North Lake Destiny Drive Maitland
24 10 Olive Tree 6201 West Olive Avenue Glendale
25 11 Saddleback Apts. 4722 East Bell Road Phoenix
26 281 Drury Portfolio #2 Various Various
27 259 Hylan Commons Hylan Boulevard Staten Island
28 12 Eatoncrest 3300 Eaton Crest Drive Eatontown
29 QZ40 625 Sixth Avenue 625 Sixth Ave. New York
30 13 375 and 377 Ghent Road 375 and 377 Ghent Road Akron
31 14 Chapel Hill Apartments 1500 Worcester Road Framingham
32 RA64 Royal Palms Senior Residence 200 Lake Ave, N.E. Largo
33 RB97 Abrams Run Apartments 232 Long Road King of Prussia
34 15 Brandon Crossings Shopping Center SW Corner of SR 60 & I75 Brandon
35 RD48 Trexlertown Shopping Center 7150 Hamilton Blvd. Upper and Lower Macungie
36 17 Renaissance Parc 5151 Verde Valley Lane Dallas
37 RB67 Berkley Square 4701 Park Boulevard Plano
39 18 NorthPark Executive Suites Hotel 7685 Northcross Drive Austin
40 RA22 Serramonte Plaza 329-391 Gellert Boulevard Daly City
41 RA12 Palm Court Apartments 3995 Overland Avenue Culver City
42 19 K Mart - San Antonio 12300 San Pedro Ave. San Antonio
43 RC09 Yaohan Plaza Torrance 21515 Western Avenue Torrence
44 QY58 Irondequoit Shopping Plaza Hudson & Titus Aves. Irondequiot
45 RB07 The Deauville 8665 Burton Way Los Angeles
46 RA53 The NorthCorp Center 3910 RCA Blvd. Palm Beach Gardens
47 20 Garden Ridge - Kennesaw 2875 George Busbee Parkway Marietta City Limits(Kennesaw
48 QT78 Holiday Inn Select (Appleton) 150 Nicolet Road Appleton
49 21 Perwinkle Place Shopping Center 2075 Periwinkle Place Sanibel Island
50 23 Garden Ridge - Norcross 1887 Willow Trail Parkway Norcross
51 24 Willow Bend Town Centre 22928-23048 S. R. 54 Lutz
52 25 Coachman Manor 401 Gibbsboro Road Lindenwold
55 QM24 Mountain View Apartments 22700 Lake Forest Drive El Toro
56 RD64 FEL Facility Lakewood Farmingdale Road Farmingdale
57 26 Castle Way 5955 Weiss Road Saginaw
59 RA81 2011 North Soto Street 2011 North Soto St. Los Angeles
60 275 Herndon Centre III 358 - 434 Elden Street Herdon
61 RC10 Yaohan Plaza Costa Mesa 665 Paularino Avenue Costa Mesa
62 RC19 Brainerd Village Brainerd Road Chattanooga
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
1 NY 45,500,000 45,416,841 8.3400 7/1/07 Act/360
2 NY 38,206,000 38,206,000 7.4700 11/1/12 30/360
3 VA 35,250,000 35,250,000 7.6250 11/1/07 30/360
4 NY 33,500,000 33,449,419 7.4300 9/1/12 30/360
5 UT 30,000,000 30,000,000 7.1850 10/1/22 30/360
6 MA 29,200,000 29,121,268 8.5500 5/1/07 Act/360
7 MO 29,000,000 29,000,000 7.9600 11/1/12 Act/360
8 MI 29,000,000 28,887,122 8.2500 5/1/07 30/360
9 IL 28,850,000 28,773,665 8.1200 7/1/12 30/360
10 TX 28,687,500 28,670,846 7.2400 10/1/02 Act/360
11 FL 24,146,602 24,140,144 8.4100 6/1/17 30/360
12 FL 23,400,000 23,372,304 8.6310 9/1/22 30/360
13 CA 23,000,000 22,988,718 7.7500 10/1/12 Act/360
14 NY 23,000,000 22,901,796 8.4200 6/1/22 Act/360
15 FL 21,375,000 21,315,575 7.9100 8/1/07 Act/360
16 CT 20,142,693 20,078,226 7.0650 8/1/12 30/360
17 FL 20,000,000 20,000,000 7.4500 11/1/07 Act/360
18 LA 20,000,000 19,977,150 7.9400 9/1/07 Act/360
19 PA 20,000,000 19,958,798 8.9300 6/1/07 Act/360
20 NY 19,125,000 19,093,718 7.8800 8/1/07 Act/360
21 NV 18,700,000 18,665,259 8.2900 7/1/07 Act/360
22 MO 18,525,000 18,489,317 8.2500 8/1/12 30/360
23 FL 18,000,000 17,970,413 8.6900 9/1/04 Act/360
24 AZ 17,360,000 17,360,000 8.1400 7/1/07 30/360
25 AZ 17,342,000 17,342,000 8.1400 7/1/07 30/360
26 TX 16,965,000 16,965,000 7.9200 11/1/12 Act/360
27 NY 16,560,000 16,560,000 7.4700 11/1/12 30/360
28 NJ 16,500,000 16,491,481 7.6000 10/1/27 Act/360
29 NY 16,500,000 16,460,174 8.4200 6/1/12 Act/360
30 OH 16,300,000 16,276,911 8.2500 10/1/17 Act/360
31 MA 14,900,000 14,859,825 8.5500 5/1/07 Act/360
32 FL 14,800,000 14,780,274 8.0500 9/1/22 30/360
33 PA 14,000,000 14,000,000 7.5100 11/1/27 30/360
34 FL 13,500,000 13,482,188 8.1000 9/1/07 30/360
35 PA 13,100,000 13,093,282 7.6200 10/1/07 Act/360
36 TX 12,520,000 12,497,380 8.3750 7/1/07 Act/360
37 TX 12,500,000 12,488,265 8.6500 9/1/07 Act/360
39 TX 12,250,000 12,250,000 7.6700 11/1/07 Act/360
40 CA 12,000,000 11,954,284 8.6700 7/1/04 30/360
41 CA 11,790,000 11,773,564 8.4100 8/1/07 Act/360
42 TX 11,704,599 11,673,663 8.8400 2/1/19 30/360
43 CA 10,500,000 10,495,288 8.0000 10/1/12 Act/360
44 NY 10,300,000 10,269,569 8.6910 6/1/07 30/360
45 CA 10,000,000 9,986,732 7.3600 9/1/07 Act/360
46 FL 10,000,000 9,985,351 8.2500 8/1/07 Act/360
47 GA 9,763,565 9,763,390 10.1250 7/1/19 30/360
48 WI 9,800,000 9,749,977 9.4000 5/1/07 30/360
49 FL 9,675,000 9,667,450 8.2500 10/1/07 Act/360
50 GA 9,460,142 9,459,973 10.1250 7/1/19 30/360
51 FL 9,400,000 9,387,597 8.1000 9/1/07 30/360
52 NJ 9,400,000 9,382,540 8.4500 8/1/12 Act/360
55 CA 10,000,000 9,061,380 7.5000 8/1/01 30/360
56 NJ 9,000,000 9,000,000 8.3800 11/1/12 30/360
57 MI 8,900,000 8,900,000 7.6500 9/1/04 30/360
59 CA 8,800,000 8,783,677 8.0900 9/1/04 Act/360
60 VA 8,500,000 8,500,000 7.5000 11/1/07 30/360
61 CA 8,500,000 8,496,186 8.0000 10/1/12 Act/360
62 TN 8,500,000 8,494,274 7.9800 10/1/07 30/360
</TABLE>
Page 1 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
63 28 Chatsworth Gardens 20801 Devonshire Street Chatsworth
64 29 Sierra Creek 501 Central Texas Expressway Killeen
65 QZ72 Shirley Shopping Center Montauk Highway & William Floyd Parkway Shirley
66 30 One Price Distribution Center 1875 East Main Street Duncan
67 31 Quail Lakes Center 4700-4755 Quail Lakes Drive Stockton
68 32 Cedar Run 816 South Oneida Denver
69 RD42 Woodmeade South Apartments 200 Lowwood Drive Knoxville
70 RA20 Park Tower 200 W. Santa Ana Boulevard Santa Ana
71 QY68 Brampton Moors 101 Brampton Lane Cary
72 35 Country Place I 3900 Blackburn Lane Burtonsville
73 36 Walmart - Boone 1812 Blowing Rock Boone
74 RC50 Premier Place Shopping Center NWC of Cobb's Ford & McQueen Smith Roads Prattville
75 37 Concordia Shopping Center 1600 Perrineville Road Monroe
76 RD37 Ten Quivira Plaza Shopping Center NWQ Shawnee Mission Pkwy & Quivira Rd. Shawnee
77 RA88 Grandin Ridge Apartments 2400 Windsor Woods Lane Norcross
78 38 Willowick 5120 North 16th Street Phoenix
79 QY56 Buccaneer Trace Apartments 55 E. Deerwood Rd. Savannah
80 QZ10 Euclid Shopping Center 1315 Euclid Ave. Bristol
81 QY51 Overlook Rim Apartments 3202 South Mason Avenue Tacoma
82 39 Drury Inn - St. Louis Airport 10490 Natural Bridge Road Edmundson
83 43 Farmington 2013 Fry Road Katy
86 41 Scottsdale Park Terrace 1075 North Miller Road Scottsdale
84 RC39 Key Biscayne Galeria 328 Crandon Blvd. Key Biscayne
85 42 The Crossings Shopping Center 2260-2336 Lebanon Pike Nashville
87 48 Falls Village 6200 A Green Meadow Parkway Baltimore
88 45 Holiday Inn - Catalina Centre 1601 North Congress Avenue Boynton Beach
89 46 Dam Neck Crossings 1630 and 1650 General Booth Boulevard Virginia Beach
90 40 Roger Smith Hotel 501 Lexington Avenue@47th Street New York
91 RA70 Main Street Village Apartments 6400 Main St. Columbus
92 50 DFW Air Cargo Complex 2963,2967, & 3015 N. Airfield Dr. Irving
93 RB11 Bayview Apartments 4315 W. 182nd Street Torrance
94 51 Whiting Shopping Center 108 Lacey Road Whiting
95 49 Circuit City - Poughkeepsie 837 South Rd. Poughkeepsie
96 QZ56 Reisterstown Business Center 100-322 Business Center Way Reisterstown
97 RB96 Nob Hill Apartments - Madison 1108 Moorland Road Madison
98 53 Atrium Executive Plaza 499 Northwest 70th Avenue Plantation
99 54 Gardens Park Plaza 8940 North Military Trail Palm Beach Gardens
100 55 Plaza Healthcare 1475 North Granite Reef Road Scottsdale
101 56 Leisure Living Properties - 3 Assets Various Portage, Fremont, Lowell
102 57 Victoria Village shopping center 1401 - 1463 Victoria Avenue Ventura
103 58 Terraces @ Windy Hill 3000 Windy Hill Road Marietta
104 QT33 Ralphs 67th Street Montezuma & 67th Street San Diego
105 RD38 Brywood Shopping Center 8600-8760 E. 63rd Street Kansas City
106 59 Clarington 3767 Clarington Avenue Los Angeles
107 47 Tallahasse Residence Inn 1880 Raymond Diehl Road Tallahasee
108 QT21E Bradford Place Apartments 325 Percival Road Columbia
109 61 Bellevue Valley Plaza 7401 - 7091 Highway 70 South Nashville
110 RA65 Tri State Plaza NE Route 23 and Route 84 Montague
111 RB12 Chimney Sweep Apartments 775 Camino Del Sur Isla Vista
112 62 Forest Brook Apartments 2921 Forestbrook Drive Charlotte
113 RA25 Holiday Inn-Oceanfront 2605 North A1A Melbourne
114 RC38 Nob Hill Apartments - Birmingham 800 Valley Ave. Birmingham
115 64 Carriage Way Shopping Center 201-235 South Waukegan Road Lake Bluff
116 QZ34 The Benchmark 170 Old Country Road Mineola
117 66 Bally Total Fitness - Bloomington 4901 West 80th Street Bloomington
118 277 Hampton Inn - Daytona 1715 W. International Speedway Daytona
119 RB41 The Bradley Building 1220 West 6th Street Cleveland
120 QZ69 Lincoln Plaza 4545 North Lincoln Rd. Oklahoma
122 67 215 Coles Street 215 Coles Street Jersey City
123 70 Westpark Walk 100 - 481 Commerce Drive Peachtree City
124 71 Albertson's, Inc. - Pharr-McAllen 401 North Jackson Road Pharr-McAllen
125 QY67 The 535 Plaza 12444 Highway 535 Orlando
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
63 CA 8,500,000 8,491,163 8.0700 10/1/07 30/360
64 TX 8,400,000 8,400,000 8.1400 7/1/07 30/360
65 NY 8,250,000 8,234,773 8.3100 7/1/07 Act/360
66 SC 8,125,000 8,082,804 9.1250 7/1/17 Act/360
67 CA 8,000,000 7,991,880 8.3750 9/1/07 Act/360
68 CO 8,000,000 7,986,834 8.6500 7/1/07 Act/360
69 TN 7,500,000 7,495,930 7.4500 10/1/07 Act/360
70 CA 7,500,000 7,487,785 8.6800 7/1/04 Act/360
71 NC 7,500,000 7,476,817 8.4700 6/1/04 30/360
72 MD 7,425,000 7,408,285 7.6800 8/1/07 Act/360
73 NC 7,458,022 7,341,749 7.3125 11/1/16 30/360
74 AL 7,230,000 7,230,000 7.9500 11/1/07 30/360
75 NJ 7,200,000 7,170,968 8.6900 6/1/07 Act/360
76 KS 7,160,000 7,155,350 8.1600 10/1/07 30/360
77 GA 7,140,000 7,127,772 7.7200 8/1/07 Act/360
78 AZ 7,100,000 7,088,580 7.9375 8/1/07 Act/360
79 GA 7,040,000 7,016,198 8.9400 5/1/04 30/360
80 VA 7,031,000 7,014,233 8.6300 7/1/07 30/360
81 WA 7,040,000 7,014,139 8.5350 5/1/04 30/360
82 MO 7,000,000 7,000,000 7.9600 11/1/12 Act/360
83 TX 7,000,000 7,000,000 7.5000 11/1/07 30/360
86 AZ 7,000,000 7,000,000 7.5000 9/1/07 30/360
84 FL 7,000,000 6,996,673 7.8400 10/1/07 Act/360
85 TN 7,000,000 6,989,789 8.0000 9/1/07 Act/360
87 MD 6,900,000 6,900,000 7.5000 11/1/07 30/360
88 FL 6,746,000 6,729,457 8.5000 8/1/07 Act/360
89 VA 6,725,000 6,725,000 7.7500 11/1/07 Act/360
90 NY 6,700,000 6,700,000 9.0000 11/1/12 Act/360
91 GA 6,600,000 6,592,053 7.7400 9/1/12 Act/360
92 TX 6,551,000 6,528,304 9.3750 6/1/22 Act/360
93 CA 6,500,000 6,488,356 7.5600 8/1/07 Act/360
94 NJ 6,500,000 6,473,791 8.6900 6/1/07 Act/360
95 NY 6,589,015 6,428,181 8.1875 6/1/18 30/360
96 MD 6,400,000 6,389,097 8.5500 7/1/07 Act/360
97 WI 6,350,000 6,342,551 7.8400 9/1/12 Act/360
98 FL 6,300,000 6,284,126 8.3750 8/1/07 Act/360
99 FL 6,300,000 6,274,923 8.7500 6/1/12 Act/360
100 AZ 6,250,000 6,234,626 8.7500 10/1/12 Act/360
101 MI 6,250,000 6,217,295 9.2500 5/1/07 30/360
102 CA 6,200,000 6,179,213 8.8750 5/1/07 Act/360
103 GA 6,185,000 6,176,283 8.3750 8/1/07 Act/360
104 CA 6,150,000 6,122,436 8.7200 5/1/17 30/360
105 MO 6,110,000 6,106,032 8.1600 10/1/07 30/360
106 CA 6,075,000 6,065,121 7.9000 8/1/07 Act/360
107 FL 5,917,000 5,912,058 7.9700 10/1/07 Act/360
108 SC 5,885,771 5,853,430 8.0000 3/1/04 30/360
109 TN 5,813,000 5,801,266 8.1250 8/1/07 Act/360
110 NJ 5,800,000 5,788,599 8.1500 8/1/07 30/360
111 CA 5,750,000 5,739,700 7.5600 8/1/07 Act/360
112 NC 5,750,000 5,735,276 8.3000 8/1/07 Act/360
113 FL 5,600,000 5,579,458 8.9000 7/1/04 30/360
114 AL 5,500,000 5,497,367 7.8200 10/1/07 Act/360
115 IL 5,500,000 5,489,244 8.2500 8/1/07 Act/360
116 NY 5,500,000 5,488,961 9.0100 6/1/07 Act/360
117 MN 5,471,920 5,415,475 10.1250 4/1/09 30/360
118 FL 5,400,000 5,400,000 8.0400 11/1/07 Act/360
119 OH 5,400,000 5,391,697 8.0900 8/1/04 Act/360
120 OK 5,300,000 5,280,462 8.8700 7/1/07 30/360
122 NJ 5,250,000 5,250,000 8.2500 11/1/07 Act/360
123 GA 5,200,000 5,189,301 9.0000 7/1/07 Act/360
124 TX 5,158,009 5,158,009 7.4375 9/1/17 30/360
125 FL 5,125,000 5,108,096 9.0600 5/1/04 30/360
</TABLE>
Page 2 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
126 RD50 Vanguard Distribution Building 13900 South Broadway Los Angeles
127 69 Saratoga Holiday Inn 232 Broadway at Circular Street Saratoga Springs
128 79 Courtyard Sarasota 850 University Parkway Sarasota
129 73 Barnes & Noble, Inc. - Rockleigh 1 Pond Road Rockleigh
130 QZ49 Best Western Pensacola 16 Via De Luna Drive Pensacola
131 QT63 Royal Garden Apartments 9352-9372 Holder Street Cypress
132 78 CVS Plaza 213, 214 & 218 Northern Blvd. Bayside
133 80 Gainesville Courtyard by Marriott 3510 SW 40th Blvd. Gainesville
134 QY76 The Shores Apartments 1100 Lamar Blvd. East Arlington
135 77 Williamsburg Villas 3211 S.W. Govenor John Sevier Highway Knoxville
136 RA68 Dayton's Bluff Community Care Center 324 Johnson Parkway St. Paul
137 QY26 Kings Plaza Shopping Center 1000 & 1080 Kings Highway New Bedford
138 75 Circuit City - Cincinnati 5455 Glenway Ave Cincinnati
139 76 Circuit City - Wilkes Barre 500 Kidder St. Wilkes Barre
140 RC25 College Village Shopping Center SEC College Blvd. & Quivira Road Overland Park
141 RB99 Berwyn House 4800 Berwyn House Road College Park
142 83 Shawnee Village 12821 126th Way NE Kirkland
143 QZ14 Sierra Vista Apartments 710 South Hardy Drive Tempe
145 QZ28 Cedars Executive Center 2939 North Monroe St. Tallahassee
146 QY05 Midwest Warehouse 6634 W. 68th Street Bedford Park
147 RB08 Southington Queen Plaza 825-875 Queen Street Southington
53 QY84 Avalon Manor Note A 14014 Marsh Pike Hagerstown
148 72 Best Western - Mystic 9 Whitehall Avenue Mystic
149 85 Plaza 50 Shopping Center 1936-2270 E. Williams Street Carson City
150 84 Wendover Plaza Shopping Center 931 Wendover Rd. Charlotte
151 RB80 University Roost Apartments 700 S. Blackbird Road Flagstaff
54 QY86 Avalon Manor Note B 14014 Marsh Pike Hagerstown
152 QY50 Olympic Ridge Apartments 4302 Center Street Tacoma
153 QZ97 Mountain Creek Park 4235 Highway 78 Lilburn
154 QZ91 2600 Post Road 2600 Southport Post Road Southport
155 RA98 Westgate Plaza SEC US 64/Roller Mill Road Franklin
156 88 Country Place II 3918-3930 Blackburn Lane Burtonsville
157 86 Circuit City - Florence 2400 David McLeod Blvd. Florence
158 RB50 Eagle Crest Apartments 1601 Regency Court Arlington
159 90 Edgewater Trace 10714 Abercorn Extension Savannah
160 QZ81 Lafayette Green Apartments 8327 West Tidwell Houston
161 QY98 Zinfandel Ranch Apartments 10833 Folsom Boulevard Rancho Cordova
162 89 Cove Village Townhouses 2 Driftwood Court Baltimore
163 82 Mobile Residence Inn 950 S Beltline Highway Mobile
164 98 Village Shopping Center 3020 N. Main Street Hope Mills
165 RC01 Thompson Creek Shopping Center Thompson Creek Road Stevensville
166 91 Bally Total Fitness - Cincinnati 3694 Werk Rd. Cincinnati
167 254 Watchung Commons Route 22 East & Terrill Road Watchung
168 92 Giant Eagle Plaza 4400 Buffalo Road (US 20) Erie
169 93 Courtyard by Marriott - Mobile 1000 South Beltline Hwy. Mobile
170 RB57 National Hills Shopping Center 2701 Washington Rd. Augusta
171 QY77 International Outlet Center 5532 International Drive Orlando
172 QY38 Wymberly Pointe Apartments 702 West Warrior Grand Prairie
173 94 Indian Run Casarow Drive Bridgeton
174 96 Oak Creek Apartments 8460 Hospital Drive Atlanta
175 95 South Coast Center 16261 Highway 101 Harbor
176 RB46 The Hampton Inn 2311 North Shadeland Avenue Indianapolis
177 97 Best Western Airport East 301 North Central Avenue Hapeville
178 QY15 Evergreen Office Center 200 East Del Mar Blvd. Pasadena
180 QT21B Auburn Chase Apartments 401 Turlington Drive Newport News
181 QT21I Foxwood I & II Apartments 19920 Foxwood Forest Humble
182 99 Radisson Suite Hotel 1808 Australian Avenue West Palm Beach
183 100 Hunters Glen 1201 Bacon Ranch Road Killeen
184 QZ05 Sunset International 7000 SW 97th Ave. Miami
185 102 Bally Total Fitness - Greenwood 517 US Highway 31 Greenwood
186 101 Fort Myers Residence Inn by Marriott 2960 Colonial Boulevard Ft. Myers
187 RC55 Moberly Manor Phyllis Drive Bentonville
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
126 CA 5,100,000 5,096,859 7.7930 10/1/07 Act/360
127 NY 5,000,000 5,000,000 8.0000 11/1/07 Act/360
128 FL 5,003,000 4,998,821 7.9700 10/1/07 Act/360
129 NJ 5,000,000 4,989,871 8.2500 9/1/22 30/360
130 FL 5,000,000 4,978,679 9.2400 7/1/20 30/360
131 CA 4,863,000 4,842,232 8.5700 4/1/07 30/360
132 NY 4,841,680 4,833,642 8.6250 7/1/07 Act/360
133 FL 4,802,000 4,797,989 7.9700 10/1/07 Act/360
134 TX 4,815,000 4,797,258 8.5200 5/1/07 30/360
135 TN 4,800,000 4,797,046 8.0000 10/1/07 Act/360
136 MN 4,800,000 4,789,403 8.9700 8/1/07 Act/360
137 MA 4,800,000 4,784,004 9.0100 5/1/07 30/360
138 OH 4,903,453 4,783,763 8.1875 6/1/18 30/360
139 PA 4,903,453 4,776,282 8.1875 5/1/18 30/360
140 KS 4,750,000 4,748,045 8.2300 10/1/07 Act/360
141 MD 4,750,000 4,743,859 8.2000 9/1/04 30/360
142 WA 4,750,000 4,742,388 7.9500 8/1/07 Act/360
143 AZ 4,750,000 4,741,261 8.3200 7/1/07 Act/360
145 FL 4,750,000 4,729,022 9.1500 6/1/07 30/360
146 IL 4,749,750 4,699,778 9.1500 5/1/04 30/360
147 CT 4,700,000 4,692,155 7.8100 8/1/07 Act/360
53 MD 4,700,000 4,683,455 10.5000 6/1/07 30/360
148 CT 4,683,000 4,683,000 8.2500 11/1/19 Act/360
149 NV 4,600,000 4,600,000 7.8750 11/1/07 30/360
150 NC 4,600,000 4,597,936 8.0000 10/1/07 Act/360
151 AZ 4,600,000 4,597,585 7.5500 10/1/07 Act/360
54 MD 4,580,000 4,553,995 7.6025 6/1/07 30/360
152 WA 4,560,000 4,543,249 8.5350 5/1/04 30/360
153 GA 4,550,000 4,538,834 8.4900 7/1/17 30/360
154 CT 4,510,000 4,501,095 8.1000 7/1/07 Act/360
155 NC 4,500,000 4,495,259 8.2400 9/1/07 Act/360
156 MD 4,500,000 4,489,869 7.6800 8/1/07 Act/360
157 SC 4,596,987 4,484,777 8.1875 6/1/18 30/360
158 TX 4,475,000 4,465,732 7.5200 9/1/04 Act/360
159 GA 4,463,500 4,461,018 7.3750 10/1/07 Act/360
160 TX 4,450,000 4,440,878 7.9800 7/1/07 Act/360
161 CA 4,450,000 4,438,772 8.2700 6/1/07 Act/360
162 MD 4,425,000 4,423,108 8.1300 10/1/07 Act/360
163 AL 4,410,000 4,410,000 8.1500 11/1/07 Act/360
164 NC 4,400,000 4,394,466 7.6250 10/1/07 Act/360
165 MD 4,350,000 4,345,341 8.1800 9/1/07 Act/360
166 OH 4,368,323 4,344,815 9.8750 4/1/09 30/360
167 NJ 4,323,000 4,323,000 7.4700 11/1/12 30/360
168 PA 4,300,000 4,297,799 7.6250 10/1/07 Act/360
169 AL 4,293,000 4,274,173 9.0500 4/1/07 Act/360
170 GA 4,100,000 4,095,982 8.5000 9/1/07 Act/360
171 FL 4,100,000 4,089,140 9.2200 6/1/07 30/360
172 TX 4,100,000 4,086,023 8.9000 5/1/07 30/360
173 NJ 4,075,000 4,067,080 8.1500 7/1/07 Act/360
174 GA 4,000,000 4,000,000 8.3200 7/1/07 Act/360
175 OR 4,000,000 3,997,673 8.1880 10/1/07 Act/360
176 IN 4,000,000 3,993,109 8.4600 9/1/07 Act/360
177 GA 4,000,000 3,984,774 9.3500 8/1/07 Act/360
178 CA 3,990,000 3,977,324 9.2410 5/1/07 30/360
180 VA 3,920,000 3,898,460 8.0000 3/1/04 30/360
181 TX 3,920,000 3,898,460 8.0000 3/1/04 30/360
182 FL 3,900,000 3,897,050 8.3750 10/1/12 Act/360
183 TX 3,880,000 3,880,000 8.1400 7/1/07 30/360
184 FL 3,850,000 3,838,693 8.7200 6/1/07 30/360
185 IN 3,857,440 3,816,269 10.1250 1/1/09 30/360
186 FL 3,803,000 3,799,824 7.9700 10/1/07 Act/360
187 AR 3,800,000 3,795,978 7.9600 10/1/22 30/360
</TABLE>
Page 3 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
190 RB72 Custer Park Shopping Center 2929 Custer Road Plano
191 107 Sovereign 4829 Sheboygan Avene Madison
192 RB68 Corporate Park at Kendall 12415 SW 136th Avenue Miami
193 QZ46 Canwood Business Park 5126-5137-5142 Clareton Drive Aurora Hills
194 QZ50 Preston Luther Center 6131 Luther Lane Dallas
195 RB73 Huntington Circle 409 W. Highway 304 Lewisville
196 108 Bally Total Fitness - Indianapolis 5435 Pike Plaza Dr. Indianapolis
197 QZ92 Planters Walk Shopping Center 6570 Tara Blvd. Jonesboro
198 QY29 Market Square Shopping Center WS Gray Highway, N of Shurling Drive Macon
199 QY14 812 San Antonio Street 812 San Antonio Street Austin
200 109 Colombus West Park Nursing & Rehabilitation
Cente 1700 Heinzerling Drive Columbus
201 RC42 Nassau Eden Club Apartments 2100 Sinton, 925-963 Auburnview, Cincinnati
202 112 Texas Melody 5929-5921 Melody Place Dallas
203 RB51 Willow Garden Apartments 635 Willow Street Highspire
204 118 Best Western Crabtree 6619 Glenwood Avenue Raleigh
205 QT44 3720-3740 Main Street 3720-3740 Main Street Philadelphia
206 RB48 Two Edison Lakes 4101 Edison Lakes Parkway Mishawaka
207 RC37 Ocean State Plaza 361 Reservoir Avenue Cranston
208 RB93 Meadows at Central 2816 Central Drive Bedford
209 116 Belmont Plaza Retirement Center 1710 Magnolia Boulevard Nashville
210 115 1227 Commonwealth Avenue 1227-1245 Commonwealth Avenue Boston
211 QY99 Loehmann's Plaza 2701 North Federal Hwy. Fort Lauderdale
212 RC58 Hopkins Tech Center 1600 South Second Street Hopkins
213 QZ79 Mariner's Point 15922 Pacific Coast Highway Huntington Beach
214 122 4401 Barclay Downs 4401 Barclay Downs Drive Charlotte
215 117 Lake Hickory Plaza Shopping Center 1366 Highway 321 North Hickory
188 QZ86 Lakeway Plaza I 1310 Ranch Road 620 Lakeway
216 119 15625 Kendall Drive 15625 Kendall Drive Kendall
217 120 Holiday Inn - Dalton 515 Holiday Drive Dalton
218 121 Chase Ridge 8050 103rd Street Jacksonville
219 QY37 Wymberly Crossing Apartments 3001 South Carrier Parkway Grand Prairie
220 QY46 Harwood Village North 601-735 Harwood Rd. & 2908-2928 Brown Trai Bedford
221 QZ30 Town & Country Villas 3662-3798 Mill Lake Circle Greenacres City
222 RA83 The Shops at Washington Point SWC of 120th Avenue & Washington St Northglenn
223 123 Danville Plaza 2855 Riverside Drive Danville
224 RB02 Tarmac-Sentara Building 1151 Azalea Garden Road Norfolk
225 RB90 Four Seasons Apartments 4443 Ocean Drive Corpus Christi
226 124 Countrywood East 5700 Mack Road Sacramento
227 125 Sierra Vista Business Park 100-140 Chaparral Court Anaheim
228 126 Walgreen Company - San Francisco 42nd Avenue and Point Lobos Avenue San Francisco
229 127 Misty Ridge Apartments 301 West Hawkins Parkway Longview
230 RC82 Woodward Bluffs Mobile Home Park 9360 North Blackstone Fresno
231 RC69 Mallards Landing Apartments 3260 Justina Road Jacksonville
232 RB55 Huntington Oaks Plaza Fred George Road at US Highway 27 Tallahassee
233 QT21G Colony Apartments 300 Champions Drive Lufkin
234 RB21 Essex Shopping Center 435 Hialeah Drive Hialeah
235 128 3400 West 86th Street 3400 West 86th Street Indianapolis
237 279 CH2M Hill 2567 Fairlane Drive Montgomery
238 130 Best Western - Keene 401 Winchester Street Keene
239 131 Marriott Fairfield Inn 2437 South Wildcat Way Wood Cross
240 RB52 Tysons Plaza Retail Center 8032 Leesburg Pike Tysons Corner
241 132 Holiday Inn College Station 1503 Texas Avenue College Station
242 129 Circuit City - Muncy Lycoming Mall Ring Rd. Muncy
243 QT21R Porterwood Apartments 24270 FM 1314 Porter
244 QZ19 Designer Shoe Warehouse Northwest Corner Yosemite and Chester Stre Littleton
245 269 Eastgate Shopping Center 578-680 East Boise Avenue Boise
246 QY31 8180 NW 36th Street 8180 NW 36th Street Miami
247 RC03 3300 Holcomb Bridge Road 3300 Holcomb Bridge Road Norcross
248 RD05 84 Business Park 84 Business Park Drive Armonk
249 137 Apple Creek 9905 Locust Street Kansas City
250 QZ64 Day Hill Village Shoppes 555 Day Hill Road Windsor
251 QZ08 Cedar Pointe Apartments 7610 Fallbrook Drive Houston
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
190 TX 3,775,000 3,771,311 8.5100 9/1/07 Act/360
191 WI 3,768,000 3,763,729 7.9700 9/1/07 Act/360
192 FL 3,720,000 3,718,625 8.5000 10/1/07 Act/360
193 CA 3,720,000 3,711,291 8.7200 7/1/07 30/360
194 TX 3,700,000 3,688,712 8.7100 7/1/22 Act/360
195 TX 3,670,000 3,668,187 7.7300 10/1/07 Act/360
196 IN 3,687,350 3,648,000 10.1250 1/1/09 30/360
197 GA 3,620,000 3,614,084 8.6700 7/1/07 Act/360
198 GA 3,600,000 3,588,345 9.1500 5/1/07 30/360
199 TX 3,600,000 3,588,272 9.1200 5/1/04 30/360
200 OH 3,600,000 3,584,657 8.6250 8/1/17 Act/360
201 OH 3,550,000 3,548,384 7.9600 10/1/12 Act/360
202 TX 3,520,000 3,511,325 8.3500 6/1/22 Act/360
203 PA 3,500,000 3,495,840 7.7900 9/1/07 Act/360
204 NC 3,500,000 3,495,344 8.6250 10/1/17 Act/360
205 PA 3,500,000 3,486,313 9.0000 4/1/07 30/360
206 IN 3,450,000 3,445,183 7.8200 9/1/07 30/360
207 RI 3,400,000 3,398,622 8.2700 10/1/04 Act/360
208 TX 3,400,000 3,396,659 8.4900 9/1/07 Act/360
209 TN 3,400,000 3,391,662 8.5000 8/1/07 Act/360
210 MA 3,400,000 3,390,047 8.5000 8/1/04 30/360
211 FL 3,400,000 3,384,300 8.8800 6/1/07 30/360
212 MN 3,375,000 3,373,768 8.5300 10/1/07 Act/360
213 CA 3,400,000 3,373,703 8.6800 8/1/12 Act/360
214 NC 3,362,000 3,356,836 7.7500 10/1/07 Act/360
215 NC 3,354,000 3,351,936 8.0000 10/1/07 Act/360
188 TX 3,350,000 3,342,286 8.8000 7/1/04 30/360
216 FL 3,300,000 3,297,420 8.3750 4/1/08 30/360
217 GA 3,300,000 3,290,597 9.0000 7/1/07 Act/360
218 FL 3,300,000 3,289,627 8.5800 7/1/07 Act/360
219 TX 3,300,000 3,288,751 8.9000 5/1/07 30/360
220 TX 3,300,000 3,281,916 8.9700 5/1/04 30/360
221 FL 3,250,000 3,234,030 8.5000 6/1/07 30/360
222 CO 3,250,000 3,230,658 7.7050 9/1/12 30/360
223 VA 3,100,000 3,100,000 7.8750 11/1/12 Act/360
224 VA 3,100,000 3,096,954 8.4900 9/1/07 Act/360
225 TX 3,100,000 3,096,346 7.8220 9/1/07 Act/360
226 CA 3,075,000 3,070,666 8.3750 8/1/04 Act/360
227 CA 3,050,000 3,041,128 9.3750 5/1/07 Act/360
228 CA 3,026,068 3,019,414 7.6600 8/1/15 30/360
229 TX 3,000,000 3,000,000 8.1400 7/1/07 30/360
230 CA 3,000,000 2,998,549 7.7900 10/1/07 Act/360
231 FL 3,000,000 2,998,544 7.7800 10/1/07 Act/360
232 FL 3,000,000 2,996,822 8.2200 9/1/07 Act/360
233 TX 2,960,000 2,943,735 8.0000 3/1/04 30/360
234 FL 2,935,500 2,929,205 7.9000 9/1/07 30/360
235 IN 2,925,000 2,919,341 7.8750 9/1/10 Act/360
237 AL 2,850,000 2,850,000 8.1250 11/1/17 Act/360
238 NH 2,848,000 2,848,000 8.2500 11/1/19 Act/360
239 UT 2,810,000 2,805,319 8.6250 9/1/07 Act/360
240 VA 2,800,000 2,796,539 8.4200 9/1/07 30/360
241 TX 2,800,000 2,792,139 8.8750 9/1/07 Act/360
242 PA 2,860,347 2,790,528 8.1875 6/1/18 30/360
243 TX 2,800,000 2,784,614 8.0000 3/1/04 30/360
244 CO 2,790,000 2,775,546 9.1400 7/1/17 Act/360
245 ID 2,763,000 2,760,569 7.7500 10/1/07 Act/360
246 FL 2,750,000 2,736,203 9.5040 5/1/07 30/360
247 GA 2,700,000 2,699,026 8.5600 10/1/07 Act/360
248 NY 2,700,000 2,697,652 7.8000 10/1/07 Act/360
249 MO 2,700,000 2,696,480 8.6200 8/1/07 Act/360
250 CT 2,700,000 2,695,400 8.5500 7/1/07 Act/360
251 TX 2,700,000 2,695,146 8.3900 7/1/04 Act/360
</TABLE>
Page 4 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
252 QZ89 Lockworks Square Shopping Center 1208-1236 Main St. Branford
253 RC46 Coliseum Self Storage 5200 Coliseum Way Oakland
254 QY27 Mission Center 4460 Lincoln Avenue Cypress
255 148 Ramada Inn - Bedford 340 Great Road Bedford
256 RC11 Clearlake Shopping Center 1068 Clearlake Boulevard Cocoa
257 138 Westgate Hills 3175 Robinson Road Jackson
258 RB98 Wheaton Square Apartments 10866 Bucknell Drive Wheaton
259 139 Ridgeview 710 North Washington Boulevard Ogden
260 QY75 North Park Plaza NW Corner Arizona Ave. & Ray Rd. Chandler
261 143 South Oak SC 809 Arrowood Road Charlotte
262 145 Homelife Center 8780 Central Avenue Montclair
263 QZ85 Highpoint Village Shopping Center 12101 North Greenville Ave. Dallas
264 RA30 Wexford Square Apartments 208 W. 62nd St. Minneapolis
265 QY45 Shoppes of Cooper City 12125-12397 Sheridan St. Cooper City
266 133 Pep Boys - Miami 10660 SW 40TH Street Miami
267 RB31 Willow Glenn Apartments 7474 La Mancha Way Sacramento
268 144 Hempstead Road Apartments 5615-5645 Hempstead Road Pittsburgh
269 QT21H Confederate Ridge Apartments 780 Highway 61 North Bypass Vicksburg
270 RD65 Auto/Retail (2450 S. Military Trail) 2450 S. Military Trail West Palm Beach
271 RA99 Wood Creek Apartments 202 North Garnett Road Tulsa
272 QZ90 Latimer Brook Commons S.C. 339 Flanders Rd. East Lyme
273 QY49 Nob Hill Apartments 3502 South Mason Avenue Tacoma
275 149 Capital Plaza 545,551 & 555 Washington Street Weymouth
276 150 Mountain Park Square 4206 East Chandler Blvd. Phoenix
277 RA69 St. Mary's 551 4th St. North Winsted
278 QY12 Tuscany Apartments 1221 North Orange Ave. Los Angeles
279 RD78 Lakeview Apartments 2610 West Erie Avenue Lorain
280 RD39 Devonshire Shopping Center SEC 127th St. & Mur-Len Rd. Olathe
281 RB84 Georgetown Apartments 751 E. Northside Drive Greenwood
282 RB49 Shamrock Park Apartments 1440 College Way Olathe
283 152 Thrifty-Payless - Corona del Mar 3141 East Pacific Coast Highway Corona del Mar
284 141 Walgreen - Weston 1751 Bonaventure Blvd Weston
285 QZ96 Summit at Woodhaven Apartments 6100 Oakland Hills Drive Fort Worth
286 153 MCL Center 1331-1337 West Fullerton Ave. Chicago
287 RD20 Hibiscus Center 2950 Tamiami Trail Naples
288 RB15 Towers Garden Apartments 4015 Covington Highway Decatur
289 RB03 Greenbriar Plaza Shopping Center 7041-7181 North Pecos Street Denver
290 QZ70 Point Place II 443 Donelson Pike Nashville
291 154 Babcock 222-230 Babcock Street Brookline
292 158 Stoneridge Apartments 1000 South Danville Road Kilgore
293 155 Rivers Edge Business Park 19017, 19039, 19201 62nd Avenue South Kent
294 156 Summit 1700 Enterprise Drive Wichita Falls
295 RC36 2105-2109 First Avenue 2102-2109 First Avenue New York
296 RB87 North Pointe Plaza Shopping Center 5420-5430 North Tryon Street Charlotte
297 RB10 French Quarter Apartments 6643 Abrego Road Isla Vista
298 161 Rite-Aid - Bay City 3880 E. Wilder Road Bay City
299 159 Coral Gardens 3230 East Roosevelt Street Phoenix
300 RA82 Sherwood Arms Apartments 3909 Baker Plaza Columbus
301 QZ18 Irongate Village Shopping Center 6401-25 Iron Bridge Road Richmond
302 QY97 Conway Club Apartments 1900 South Conway Rd. Orlando
303 164 Rite-Aid - Essexville 1490 W. Center Avenue Essexville
304 270 Golden Age Four and Taylor South Broad Street and 99 Overby Drive Butler and Richland
305 RB34 Mission Station 4400 Bluemel Rd. San Antonio
306 RB36 El Mercado Apartments 10480 El Mercado Drive Rancho Cordova
307 163 Greentree 6103 Manor Road Austin
308 QT89 Santa Rosa Plaza Shopping Center 2800 Gulf Breeze Parkway Gulf Breeze
309 RB91 The Hermitage 219 Monastery Court Valrico
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo
311 166 Fowler Plaza 2540 East Fowler Plaza Tampa
312 167 Countrywood Village 5500 Mack Road Sacramento
313 168 Sun Club Apartments 1701 North Central Avenue Kissimmee
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
252 CT 2,700,000 2,694,669 8.1000 7/1/07 Act/360
253 CA 2,700,000 2,692,537 8.5000 10/1/12 30/360
254 CA 2,700,000 2,691,259 9.1500 5/1/07 30/360
255 MA 2,669,000 2,669,000 8.2500 11/1/19 Act/360
256 FL 2,600,000 2,600,000 7.9900 11/1/07 Act/360
257 MS 2,600,000 2,598,995 8.3900 10/1/27 Act/360
258 MD 2,600,000 2,596,570 8.1000 9/1/04 30/360
259 UT 2,595,000 2,593,835 8.0000 10/1/27 Act/360
260 AZ 2,600,000 2,592,807 9.0100 6/1/07 30/360
261 NC 2,500,000 2,500,000 7.7500 11/1/12 30/360
262 CA 2,494,000 2,494,000 7.6200 11/1/07 Act/360
263 SC 2,500,000 2,492,741 8.5500 8/1/07 30/360
264 MN 2,500,000 2,491,906 8.4500 7/1/22 Act/360
265 FL 2,500,000 2,491,161 8.7220 5/1/04 30/360
266 FL 2,447,077 2,447,077 7.9600 5/1/17 30/360
267 CA 2,445,000 2,441,908 7.5500 9/1/07 Act/360
268 PA 2,445,000 2,437,864 8.7500 6/1/07 30/360
269 MS 2,425,750 2,412,421 8.0000 3/1/04 30/360
270 FL 2,400,000 2,400,000 8.0800 11/1/12 Act/360
271 OK 2,400,000 2,396,142 7.9400 8/1/07 Act/360
272 CT 2,400,000 2,395,261 8.1000 7/1/07 Act/360
273 WA 2,400,000 2,391,184 8.5350 5/1/04 30/360
275 MA 2,350,000 2,329,478 9.3750 5/1/07 30/360
276 AZ 2,325,000 2,319,928 8.7500 6/1/17 Act/360
277 MN 2,325,000 2,319,749 8.8700 8/1/07 Act/360
278 CA 2,320,000 2,313,214 8.7400 6/1/07 30/360
279 OH 2,300,000 2,300,000 7.5100 11/1/07 Act/360
280 KS 2,295,000 2,293,509 8.1600 10/1/07 30/360
281 SC 2,275,000 2,272,933 7.6100 10/1/07 Act/360
282 KS 2,275,000 2,272,469 8.0400 9/1/07 Act/360
283 CA 2,270,098 2,262,166 7.9300 7/1/17 30/360
284 FL 2,257,604 2,257,604 7.3750 6/1/17 30/360
285 TX 2,260,000 2,254,104 8.1900 7/1/07 30/360
286 IL 2,250,000 2,250,000 7.6300 11/1/07 Act/360
287 FL 2,250,000 2,248,944 7.8760 10/1/04 Act/360
288 GA 2,250,000 2,245,357 7.9100 8/1/07 30/360
289 CO 2,250,000 2,244,275 8.3300 8/1/07 Act/360
290 TN 2,240,000 2,234,690 8.7300 7/1/07 Act/360
291 MA 2,225,000 2,215,083 8.7500 5/1/07 30/360
292 TX 2,200,000 2,200,000 8.1400 7/1/07 30/360
293 WA 2,200,000 2,199,079 8.1875 10/1/07 Act/360
294 TX 2,200,000 2,197,608 8.1250 9/1/07 Act/360
295 NY 2,200,000 2,197,179 8.8400 10/1/07 Act/360
296 NC 2,175,000 2,171,313 8.5400 9/1/07 Act/360
297 CA 2,169,000 2,165,115 7.5600 8/1/07 Act/360
298 MI 2,159,314 2,159,314 7.5000 11/1/17 30/360
299 AZ 2,160,000 2,156,589 8.0000 8/1/25 Act/360
300 GA 2,160,000 2,155,702 8.0900 8/1/07 30/360
301 VA 2,128,000 2,121,737 8.7100 6/1/07 30/360
302 FL 2,125,000 2,118,577 8.5800 6/1/07 30/360
303 MI 2,114,985 2,114,985 7.5000 11/1/17 30/360
304 GA 2,100,000 2,100,000 8.1500 11/1/07 Act/360
305 TX 2,100,000 2,097,344 7.5500 9/1/07 Act/360
306 CA 2,100,000 2,097,344 7.5500 9/1/07 Act/360
307 TX 2,100,000 2,094,179 9.0000 6/1/27 30/360
308 FL 2,100,000 2,091,703 8.9500 4/1/04 30/360
309 FL 2,050,000 2,047,557 7.7800 9/1/07 Act/360
310 OH 2,044,000 2,039,470 7.7900 7/1/17 30/360
311 FL 2,025,000 2,022,355 8.1500 9/1/07 30/360
312 CA 2,025,000 2,022,146 8.3750 8/1/04 Act/360
313 FL 2,025,000 2,017,331 8.6250 6/1/07 30/360
314 OH 2,008,000 2,003,550 7.7900 7/1/17 30/360
</TABLE>
Page 5 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
315 169 Queensbury 220 S. Home Ave. Avalon
316 170 Colonial Village 9500 103rd Street Jacksonville
317 RD06 54 South Commerce Way 54 South Commerce Way Hanover Township
318 RB53 Mac Frugal's Plaza 303 E Southern Avenue Mesa
319 QZ25 1250 South Vermont Avenue 1250 South Vermont Avenue Los Angeles
320 171 Hilltop Manor 5200 Annapolis Road Bladensburg
321 QZ12 Commerce Center 1975 E. Sunrise Blvd. Ft. Lauderdale
322 172 Lakecrest Shopping Center 28855 Military Road South Federal Way
323 RC56 Bridgestone Apartments 1272 Bridgestone Avenue Springdale
324 182 Rite-Aid - Jenison 2739 Port Sheldon Road Jenison
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo
326 174 First Union National Bank Building 205 Front Street Wilmington
327 RD63 Auto/Retail (2501 Sample Road) 2501-2525 W. Sample Road Pompano Beach
328 180 Rite-Aid - Wilkes-Barre Wilkes-Barre Blvd & East Northampton Stree Wilkes-Barre
329 QZ44 Villa Gardens Apartments 3734 West El Segundo Blvd. Hawthorne
330 181 Rite-Aid - Cleveland 15105 St Clair Ave & 152nd St. Cleveland
331 RA26 Holiday Inn & Suites 300 East Washington Blvd. Fort Wayne
332 RB74 Rancho San Manuel Mobile Home Park 402 San Carlos Street San Manuel
333 184 Moonlight Townhomes 211 North Evergreen Gardner
334 187 Rite-Aid - Saginaw 812 Williams Street Saginaw
335 RA72 Willow Park Apartments 1466 Rock Cut Road Forest Park
336 186 Rite-Aid - Cartersville 954 Joe Frank Harris Pkwy Cartersville
337 RD27 Crestwood Apartments 2100 North 57th Street Kansas City
338 RB19 French Embassy Apartments 9920 Quail Boulevard Austin
339 188 Beehive Retirement Center 401 Maple Street McCleary
340 191 Rite-Aid - West Branch 501 E. Houghton West Branch
341 QY35 Dairy Ashford Village 1570 Dairy Ashford Road Houston
342 189 Rite-Aid - Liberty Township 2704 Belmont Ave Liberty Township
343 190 Eckerd - Stockton 441 Country Club Drive Stockton
344 RB01 Englewood Apartments 5432 N.W. Waukomis Drive Kansas City
345 QZ93 The Meadows 4300 Meyers Lane Waco
346 192 Rite-Aid - Ashtabula (2) 1127 West Prospect Ave Ashtabula
347 193 Revco - Norfolk (2) 3214-3216 Tidewater Drive Norfolk
348 194 Rite-Aid - Jefferson 224 N Chesnut St Jefferson
349 195 Rite-Aid - Ashtabula (1) 2120 Lake Ave Ashtabula
350 QZ87 Gardens of Victoria Apartments 413 Williamsburg Avenue Victoria
351 QY87 Woodland Terrace Apartments Armstrong Street Auburn
352 196 Eckerd - Oneco 1505 Oneco Boulevard Oneco
353 262 Franklin Row 32-40 North Dean Street Englewood
430 273 Park Terrace / Abbington Apartments (Roll-up) Various Kalamazoo
354 RC00 Southwood Village Shopping Center Northwest Side of Timberlake Road Lynchburg
355 197 Super Crown Bookstore 1633 Chicago Avenue Evanston
356 QY80 Su Casa 109 & 203 W. 39th Street Austin
357 RC44 Buckner Square Office Park 3650 North Buckner Blvd. Dallas
358 198 Allen's Creek Center 17900-17964 U.S. Highway 19 North Tampa
359 199 Revco - Norfolk (1) 2330 Azalea Garden Road Norfolk
360 200 River Village Shopping Center 5004 - 5068 N. Oracle Road Tucson
361 202 Eckerd - Monroe 703 West Spring Street Monroe
362 201 Revco - Dundalk 7845 Wise Avenue Dundalk
363 RA16 Northridge & Quail Hollow Apartments 640 Taylor Road & 901-907 Liberty Manor Hinesville
364 207 Eckerd - Sharpsburg 3055 Highway 34 East Sharpsburg
365 203 Rite-Aid - Barnegat Twp., Ocean County, Barnegat Blvd and West Bay Ave. Barnegat Twp., Ocean County,
366 204 Comfort Inn - Elkton 2625 State Road 207 St. Augustine
367 RC83 McKellips Shopping Center NEC of McKellips Rd & Center Street Mesa
368 RB40 Trinity Oaks Shopping Center 821-829 NE Green Oaks Boulevard Arlington
369 205 Holbrook Plaza Shopping Center 1501 - 1613 Navajo Boulevard Holbrook
370 QY88 Carob Tree Apartments 9202 North 19th Ave. Phoenix
371 QZ17 Sentinel Square 70-76 Main Street Lake Placid
372 206 Eckerd - Lady Lake 860 Avenida Central Lady Lake
373 210 Oakwood Homes 3802 Damon Street Eau Claire
374 RA28 Southwest Oaks Apartments 4651 Oakwood Dr. Odessa
375 208 Crystal Glen 2800 Crystal Street Anderson
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
315 PA 2,006,000 2,000,084 8.7000 6/1/07 30/360
316 FL 2,000,000 2,000,000 7.8750 11/1/07 Act/360
317 PA 2,000,000 1,998,995 7.6800 10/1/07 Act/360
318 AZ 2,000,000 1,998,732 8.2800 10/1/07 30/360
319 CA 2,000,000 1,997,260 9.1500 7/1/07 Act/360
320 MD 2,000,000 1,995,287 8.5000 6/1/07 Act/360
321 FL 2,000,000 1,994,444 8.9900 6/1/04 30/360
322 WA 2,000,000 1,989,549 9.1250 4/1/07 Act/360
323 AR 1,990,000 1,987,894 7.9600 10/1/22 30/360
324 MI 1,974,110 1,974,110 7.5000 11/1/17 30/360
325 OH 1,956,000 1,953,856 7.7900 9/1/17 30/360
326 NC 1,960,000 1,951,883 8.8125 8/1/12 Act/360
327 FL 1,950,000 1,950,000 8.0800 11/1/12 Act/360
328 PA 1,948,066 1,940,888 7.7650 3/1/17 30/360
329 CA 1,950,000 1,938,977 8.5900 7/1/17 Act/360
330 OH 1,961,817 1,925,202 8.1700 3/1/16 30/360
331 IN 1,900,000 1,893,030 8.9000 7/1/04 30/360
332 AZ 1,900,000 1,892,273 8.2500 9/1/15 Act/360
333 KS 1,850,000 1,847,592 8.6250 8/1/27 Act/360
334 MI 1,839,795 1,839,795 7.5000 11/1/17 30/360
335 GA 1,830,000 1,826,425 8.1800 8/1/07 30/360
336 GA 1,835,631 1,807,387 8.3750 11/1/16 30/360
337 KS 1,800,000 1,798,719 7.7100 10/1/06 30/360
338 TX 1,800,000 1,796,233 7.8400 8/1/04 30/360
339 WA 1,800,000 1,784,056 9.2500 1/1/07 30/360
340 MI 1,754,680 1,754,680 7.5000 11/1/17 30/360
341 TX 1,730,000 1,724,585 9.3130 5/1/07 30/360
342 OH 1,748,804 1,713,889 7.9300 9/1/16 30/360
343 GA 1,723,331 1,710,960 8.5000 12/1/16 30/360
344 MO 1,700,000 1,696,548 7.9900 8/1/04 30/360
345 TX 1,700,000 1,693,198 8.3700 7/1/04 30/360
346 OH 1,707,479 1,673,378 8.0700 7/1/16 30/360
347 VA 1,695,212 1,673,105 8.8125 11/1/16 30/360
348 OH 1,702,049 1,668,057 8.0700 7/1/16 30/360
349 OH 1,676,936 1,641,993 8.0700 2/1/16 30/360
350 TX 1,640,000 1,637,406 7.9950 8/1/04 Act/360
351 AL 1,625,000 1,620,382 8.8800 6/1/07 30/360
352 FL 1,622,868 1,617,476 7.5900 2/1/17 30/360
353 NJ 1,610,000 1,610,000 7.4700 11/1/12 30/360
430 MI 1,600,000 1,600,000 8.1600 11/1/07 Act/360
354 VA 1,600,000 1,599,330 8.0300 10/1/07 Act/360
355 IL 1,600,000 1,597,872 8.0600 9/1/07 30/360
356 TX 1,600,000 1,587,810 8.9800 6/1/17 30/360
357 TX 1,575,000 1,574,401 8.4300 10/1/07 Act/360
358 FL 1,575,000 1,571,263 8.5000 7/1/07 Act/360
359 VA 1,597,003 1,564,682 9.1250 9/1/16 30/360
360 AZ 1,540,000 1,538,798 8.2500 10/1/07 Act/360
361 GA 1,533,030 1,522,289 8.5000 12/1/16 30/360
362 MD 1,531,796 1,521,433 8.2500 5/1/17 30/360
363 GA 1,520,000 1,517,357 8.4900 7/1/07 Act/360
364 GA 1,513,702 1,513,702 7.5000 10/1/16 30/360
365 NJ 1,543,168 1,512,548 8.8750 8/1/16 30/360
366 FL 1,505,000 1,502,493 8.6250 9/1/07 Act/360
367 AZ 1,500,000 1,498,832 8.2600 10/1/04 Act/360
368 TX 1,500,000 1,497,796 8.2400 8/1/07 Act/360
369 AZ 1,500,000 1,496,101 9.3750 7/1/07 Act/360
370 AZ 1,500,000 1,492,533 8.4200 6/1/07 30/360
371 NY 1,500,000 1,485,209 9.0700 7/1/07 Act/360
372 FL 1,486,408 1,481,593 7.6250 1/1/17 30/360
373 WI 1,472,000 1,471,674 9.5500 10/1/22 Act/360
374 TX 1,450,000 1,448,165 8.7100 8/1/07 Act/360
375 IN 1,450,000 1,447,916 8.3125 8/1/07 Act/360
</TABLE>
Page 6 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
376 209 Ocean Mews 31 Cedar Avenue Long Branch
377 211 Rite-Aid - Newton Falls 325 West Broad St Newton Falls
378 RD14 Camden Corners Shopping Center GA Highway 40 & Haddock Road Kingsland
379 213 Silverfield Condominiums 6001 Reims Road Houston
380 RC18 901 Alton Road 901 Alton Road Miami Beach
381 RB00 Alfa-Laval Separators, Inc. 3944 Holland Boulevard Chesapeake
382 214 Revco - Portsmouth (2) 2004 Victory Boulevard Portsmouth
383 216 151-169 Nagle Avenue 151-169 Nagle Avenue New York
384 215 Rite-Aid - Perry 102 North Main Street Perry
385 217 Revco - Virginia Beach 5015 Virginia Beach Blvd. Virginia Beach
386 220 Revco - Akron 1140 Portage Trail Rd Akron
387 218 Revco - Portsmouth (1) 3531 Airline Boulevard Portsmouth
388 219 Revco - Newport News 10453 Jefferson Avenue Newport News
389 RB14 12701 Executive Drive 12071 Executive Drive Stafford
390 229 Nicholas Venture 1102-1121 North 48th Street Omaha
391 221 Sunset Court 4415 S. 28th St. Phoenix
392 222 Royal Manor 3900 Memorial Drive Decatur
393 QY24 Parkway Square 4111 Fairmont Parkway Pasadena
394 223 Rite-Aid - Portage 614 Main Street Portage
395 RA84 Twenty Mile Mini-Storage 18601 Longs Way Parker
396 RC35 4840-4860 Northfield Road 4840-4860 Northfield Rd. Northfield
397 225 Rite-Aid - New Bethlehem 610 Broad St New Bethlehem
398 226 Rite-Aid - Folkston 200 N 2nd St. Folkston
400 QY25 Fairmont Central Shopping Center 4118-4130 Fairmont Parkway Pasadena
401 RA13 Flagler Inn 3700 Poinsettia Avenue West Palm Beach
402 227 Rite-Aid - Craigville Route 55 & Route 20 Craigville
403 228 Orleans CVS, Inc. - Orleans 108-122 Cranberry Highway Orleans
404 230 Rite-Aid - Latrobe NEC Depot St & Ligonier St Latrobe
405 231 Rite-Aid - Homerville 400 N Church Street Homerville
406 RA17 Berkshire Terrace Apartments 900-909, 911-913 Berkshire Terrace Hinesville
407 RD51 Shops at Merchants Walk 4235 Merchants Walk Drive Marietta
408 RD36 Ten Quivira Outparcel Building NWQ Shawnee Mission Pkwy & Quivira Rd. Shawnee
409 232 Rite-Aid - Glenville 902 North Lewis St. Glenville
410 RA78 Casa Grande 1150-1156 East Florence Boulevard Casa Grande
411 234 Braesforest 8100 Creekbend Houston
412 233 Sunbelt Rentals - Savannah Bourne Aveand State Road 21 Savannah
413 QY60 Fountain Court Plaza 1001 Tower Way Bakersfield
414 236 Tower Gardens 4707 West Alabama Houston
415 237 Revco - Chase City 610 North Main Street Chase City
416 235 Sunbelt Rentals - Kennesaw 2750 McCollum Parkway Kennesaw
417 238 Revco - Holly Hill 8517 Old State Road Holly Hill
418 239 Country Hearth Inn Columbus 2436 Highway 71 South Columbus
419 240 Davie Village Assisted Living Facility 191 Crestview Drive Mocksville
420 RD69 Auto/Retail (2530 W. Commercial) 2530 West Commercial Boulevard Tamarac
421 RC20 1500 Alton Road 1500 Alton Road Miami Beach
422 242 2800 University Avenue 2800 University Avenue Bronx
423 243 Country Hearth West Columbia 714 Columbia Drive West Columbia
424 244 530 West 136th Street 530 West 136th Street New York
425 245 Country Hearth Inn Alvin 1588 Highway 35 Alvin
426 246 Towering Pines 1200-1222 Towering Pines Lane & 2119-2123 Albany
427 RD68 Auto/Retail (1000-1050 Commercial) 1000-1050 Commercial Boulevard Fort Lauderdale
428 250 Benson Terrace 5127 Maple Street Omaha
429 249 1225 Morris Avenue 1225 Morris Avenue Bronx
189 RC87 Lakeway Plaza II 1310 Ranch Road 620 Lakeway
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
376 NJ 1,450,000 1,445,334 9.1800 5/1/07 30/360
377 OH 1,454,665 1,425,623 7.9300 9/1/16 30/360
378 GA 1,425,000 1,424,361 8.0000 10/1/07 Act/360
379 TX 1,400,000 1,400,000 7.9000 11/1/07 Act/360
380 FL 1,400,000 1,398,924 8.3100 10/1/07 Act/360
381 VA 1,400,000 1,398,463 8.0900 9/1/07 Act/360
382 VA 1,418,084 1,389,123 9.1250 8/1/16 30/360
383 NY 1,370,000 1,364,049 9.2500 6/1/07 30/360
384 MI 1,364,026 1,361,668 7.9200 9/1/17 30/360
385 VA 1,373,132 1,358,280 9.0000 3/1/17 30/360
386 OH 1,352,498 1,350,090 7.7500 8/1/17 30/360
387 VA 1,352,057 1,341,130 8.7910 2/1/17 30/360
388 VA 1,348,886 1,334,164 9.0000 2/1/17 30/360
389 TX 1,325,000 1,321,379 7.9830 8/1/07 Act/360
390 NE 1,300,000 1,299,431 8.0700 10/1/07 Act/360
391 AZ 1,300,000 1,299,194 9.1250 10/1/07 Act/360
392 GA 1,300,000 1,297,521 7.9500 9/1/22 Act/360
393 TX 1,300,000 1,292,923 9.0100 5/1/07 30/360
394 PA 1,291,741 1,264,848 8.3400 8/1/16 30/360
395 CO 1,250,000 1,248,118 8.1600 8/1/07 Act/360
396 OH 1,235,000 1,234,127 8.6400 10/1/07 Act/360
397 PA 1,240,338 1,214,515 8.3400 8/1/16 30/360
398 GA 1,233,982 1,214,497 8.3750 8/1/16 30/360
400 TX 1,200,000 1,193,467 9.0100 5/1/07 30/360
401 FL 1,173,000 1,168,597 8.7600 7/1/07 30/360
402 WV 1,181,635 1,156,200 8.5000 2/1/16 30/360
403 MA 1,160,219 1,153,040 8.7500 1/1/18 30/360
404 PA 1,160,344 1,136,187 8.3400 8/1/16 30/360
405 GA 1,147,105 1,128,992 8.3750 8/1/16 30/360
406 GA 1,100,000 1,098,088 8.4900 7/1/07 Act/360
407 GA 1,035,000 1,035,000 8.0100 11/1/07 Act/360
408 KS 1,030,000 1,029,331 8.1600 10/1/07 30/360
409 WV 1,043,258 1,019,996 8.5000 10/1/15 30/360
410 AZ 1,010,000 1,008,078 8.3100 8/1/04 30/360
411 TX 1,000,000 997,986 9.0000 6/1/07 Act/360
412 GA 975,307 974,025 8.1250 8/1/17 30/360
413 CA 950,000 945,897 9.1900 5/1/07 30/360
414 TX 930,000 929,642 8.4000 10/1/27 Act/360
415 VA 933,486 920,048 9.0000 10/1/16 30/360
416 GA 918,245 917,220 8.1250 3/1/17 30/360
417 SC 923,436 916,074 8.8300 3/1/17 30/360
418 TX 917,000 915,881 9.1250 10/1/07 Act/360
419 NC 900,000 897,379 8.6250 9/1/07 Act/360
420 FL 850,000 850,000 8.0800 11/1/12 Act/360
421 FL 850,000 849,347 8.3100 10/1/07 Act/360
422 NY 760,000 757,893 9.0000 6/1/07 30/360
423 TX 758,000 757,075 9.1250 10/1/07 Act/360
424 NY 750,000 745,994 9.1250 5/1/07 30/360
425 TX 725,000 724,115 9.1250 10/1/07 Act/360
426 GA 706,000 705,142 8.5000 9/1/27 30/360
427 FL 700,000 700,000 8.0800 11/1/12 Act/360
428 NE 684,000 683,649 7.6200 10/1/07 Act/360
429 NY 600,000 597,500 9.5000 6/1/07 30/360
189 TX 450,000 449,722 8.5200 7/1/04 30/360
Totals: 2,203,502,325
</TABLE>
Page 7 of 7
<PAGE>
EXHIBIT C
FUCMSI 1997-C2
Form of Schedule of Exceptions to Mortgage File Delivery
Control Borrower Document Document Exception
No. Name ID Status Description
- ------- -------- -------- -------- -----------
C-1
<PAGE>
EXHIBIT D-1
FORM OF MASTER SERVICER REQUEST FOR RELEASE
_________________, 199_
LaSalle National Bank
Asset-Backed Securities Trust Services
135 S. LaSalle Street
Chicago, IL 60603
Attn: First Union - Lehman, Series 1997-C2
Ladies and Gentlemen:
In connection with the administration of the Mortgage Files held by you as
Trustee under a certain Pooling and Servicing Agreement dated as of November 1,
1997 (the "Pooling and Servicing Agreement"), by and among First Union
Commercial Mortgage Securities, Inc., as Depositor, First Union National Bank,
as Master Servicer, CRIIMI MAE Services Limited Partnership as 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 you 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):
D-2-1
<PAGE>
__________ 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 permanently.
D-2-2
<PAGE>
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement.
First Union National Bank,
as Master Servicer
By: _______________________________
Name:
Title:
D-2-3
<PAGE>
EXHIBIT D-2
FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
_________________, 199_
LaSalle National Bank
Asset-Backed Securities Trust Services
135 S. LaSalle Street
Chicago, IL 60603
Attn: First Union - Lehman, Series 1997-C2
Ladies and Gentlemen:
In connection with the administration of the Mortgage Files held by you as
Trustee under a certain Pooling and Servicing Agreement dated as of November 1,
1997 (the "Pooling and Servicing Agreement"), by and among First Union
Commercial Mortgage Securities, Inc., as depositor, First Union National Bank,
as Master Servicer, CRIIMI MAE Services Limited Partnership, as 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 you 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:
D-2-4
<PAGE>
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.
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Pooling and Servicing Agreement.
CRIIMI MAE Services
Limited Partnership,
as Special Servicer
By: _______________________________
Name:
Title:
D-2-5
<PAGE>
EXHIBIT E-1
CALCULATION OF NOI/DEBT SERVICE COVERAGE RATIOS
E-1
<PAGE>
METHODOLOGY TO NORMALIZE NOI & DEBT SERVICE COVERAGE
One of the primary purposes of applying the methodology described below is to
arrive at a servicer adjusted or "Normalized" NOI. This will help to facilitate
a meaningful comparison of the property's ongoing performance to its performance
at the time of the original underwriting. The items below highlight some major
categories requiring adjustment. There may however be others and the servicer
will be expected to use its discretion in making the necessary adjustments.
o Always assume a property management fee of at least 3-5%. Usually 5% is an
accurate estimate but on larger properties 3% or 4% may be sufficient. (For
"Normalized" NOI do not use a management fee less than what was used for
the underwriting NOI).
o Remove any capital expenses from any above the line categories (such as
extraordinary repairs and maintenance) and put them below the line in
capital expenses.
o Property Taxes should be the annual amount due, excluding any delinquent
taxes or credits from prior years (which would cause the number to be
higher or lower).
o Non-recurring extraordinary Income should be excluded.
-A tax refund, a lease buyout or income received for a period other than
the year in question should be adjusted. If past due rent for a prior year
was paid and recorded in the current year the servicer should back it out
and footnote it.
-Care should be used when reflecting percentage/overage rents to ensure
that it relates to the appropriate period and that the numbers are
supported by tenant sales information.
o Remove any legal fees or consulting fees not pertaining to the operation of
the property.
-Fees for closing the loan restructure.
o Analyze the income and expenses by looking at variances by category. For
significant variances inquire with the borrower and make appropriate
adjustments and/or footnote the reason for the difference.
-i.e., electricity goes down because a major tenant vacates.
o The debt service should be an actual amount the borrower paid as per the
servicer. If the servicer does not have a full year of payments the
servicer should estimate a full year amount with the information they do
have.
The servicer should use the attached NOI Adjustment Worksheets to document the
adjustments made to arrive at Normalized NOI. Footnotes should be used wherever
necessary to guide the reader through the analysis. These Adjustment Worksheets
will then represent the backup for the property's Operating Statement Analysis
(attached), which will contain a historical record of the previous three years'
normalized financial statements and a comparison to the base year results.
APPENDIX
<PAGE>
EXHIBIT F
[RESERVED]
F-1
<PAGE>
EXHIBIT G-1
FORM OF TRANSFEROR CERTIFICATE
______________ __, 199_
LaSalle National Bank
Asset-Backed Securities Trust Services
135 S. LaSalle Street
Chicago, IL 60603
Attn: First Union - Lehman, Series 1997-C2
Re: First Union-Lehman Brothers Commercial Mortgage Trust II,
Commercial Mortgage Pass-Through Certificates, Series 1997-C2,
Class (the "Certificates")
_________________________________________________________________
Ladies and Gentlemen:
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 as of November 25, 1997 (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 (the
"Pooling and Servicing Agreement"), dated as of November 1, 1997, among First
Union Commercial Mortgage Securities, Inc., as depositor, First Union National
Bank, as master servicer, CRIIMI MAE Services Limited Partnership, as special
servicer, LaSalle National Bank, as trustee, and ABN AMRO Bank N.V., as fiscal
agent. 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 accepted a
G-1-1
<PAGE>
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 (the "Securities Act"), or would render
the disposition of any Certificate a violation of Section 5 of the
Securities Act 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:________________________
G-1-2
<PAGE>
EXHIBIT G-2
FORM OF TRANSFEREE CERTIFICATE
FOR QIBs
______ __, 199_
LaSalle National Bank
Asset-Backed Securities Trust Services
135 S. LaSalle Street
Chicago, IL 60603
Attn: First Union - Lehman, Series 1997-C2
Re: First Union-Lehman Brothers Commercial Mortgage Trust II,
Commercial Mortgage Pass-Through Certificates, Series 1997-C2,
Class (the "Certificates")
_________________________________________________________________
Ladies and Gentlemen:
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 as of November 25, 1997 (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 (the
"Pooling and Servicing Agreement"), dated as of November 1, 1997, among First
Union Commercial Mortgage Securities, Inc., as depositor, First Union National
Bank, as master servicer, CRIIMI MAE Services Limited Partnership, as special
servicer, LaSalle National Bank, as trustee, and ABN AMRO Bank N.V., as fiscal
agent. 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 (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
G-2-1
<PAGE>
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.
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:
THE 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.]
- OR -
[NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE
CODE OF 1986 (THE "CODE") (ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT, A "PLAN"), OR (B) TO ANY PERSON WHO IS DIRECTLY
G-2-2
<PAGE>
OR INDIRECTLY PURCHASING THIS CERTIFICATE OR SUCH INTEREST HEREIN ON BEHALF
OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH ASSETS OF A PLAN
(INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING ASSETS IN ITS
GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A PLAN)
PROVIDED THAT (I) SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY
GENERAL ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF
UNDER SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE
95-60"), AND (ii) THE CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE
SATISFIED WITH RESPECT TO SUCH TRANSFER, AND (II) SUCH A TRANSFER MAY BE
MADE WITH RESPECT TO A CLASS H, CLASS J, CLASS K, CLASS L OR CLASS M
CERTIFICATE IF THE TRANSFEREE PROVIDES THE CERTIFICATE REGISTRAR WITH A
CERTIFICATION OF FACTS AND AN OPINION THAT ESTABLISH TO THE REASONABLE
SATISFACTION OF THE CERTIFICATE REGISTRAR 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.]
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.
G-2-3
<PAGE>
Very truly yours,
______________________________
(Transferee)
By:___________________________
Name:_________________________
Title:________________________
G-2-4
<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 LaSalle National Bank, 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 ("Rule 144A") because (i)
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 rcent fiscal year (such amount
being calculated in accordance with Rule 144A) [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.] and (ii) the
Transferee satisfies the criteria in the category marked below.
o Corporation, etc. The Transferee is a corporation (other than a bank,
savings and loan association or similar institution), business trust,
partnership, or any organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986.
o 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.
G-2-5
<PAGE>
o Savings and Loan. The Transferee (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is supervised and
examined by a State or Federal authority having supervision over any
such institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial statements,
a copy of which is attached hereto, as of a date not more than 16
months preceding the date of sale of the 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.
o Broker-dealer. The Transferee is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934.
o 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.
o 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.
o ERISA Plan. The Transferee is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security Act of
1974.
o Investment Advisor. The Transferee is an investment advisor registered
under the Investment Advisers Act of 1940.
o 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
G-2-6
<PAGE>
Transferee, (ii) securities that are part of an unsold allotment to or
subscription by the Transferee, if the Transferee is a dealer, (iii) bank
deposit notes and certificates of deposit, (iv) loan participations, (v)
repurchase agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps. For purposes of
determining the aggregate amount of securities owned and/or invested on a
discretionary basis by the Transferee, the Transferee did not include any of the
securities referred to in this paragraph.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Transferee, the Transferee used
the cost of such securities to the Transferee, unless the Transferee reports its
securities holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of those securities
has been published, in which case the securities were valued at market. Further,
in determining such aggregate amount, the Transferee may have included
securities owned by subsidiaries of the Transferee, but only if such
subsidiaries are consolidated with the Transferee in its financial statements
prepared in accordance with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the Transferee's direction.
However, such securities were not included if the Transferee is a
majority-owned, consolidated subsidiary of another enterprise and the Transferee
is not itself a reporting company under the Securities Exchange Act of 1934.
5. The Transferee acknowledges that it 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 may be in reliance on Rule 144A.
--- --- Will the Transferee be purchasing the Transferred
Yes No 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
G-2-7
<PAGE>
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:____________________________________
G-2-8
<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 LaSalle National Bank, 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 ("Rule 144A") because the Transferee is
part of a Family of Investment Companies (as defined below), is an executive
officer of the investment adviser (the "Adviser").
2. The Transferee is a "qualified institutional buyer" as defined in Rule
144A because (i) the Transferee is an investment company registered under the
Investment Company Act of 1940, and (ii) as marked below, the Transferee alone
owned and/or invested on a discretionary basis, or the Transferee's Family of
Investment Companies owned, at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Transferee's most
recent fiscal year. For purposes of determining the amount of securities owned
by the Transferee or the Transferee's Family of Investment Companies, the cost
of such securities was used, unless the Transferee or any member of the
Transferee's Family of Investment Companies, as the case may be, reports its
securities holdings in its financial statements on the basis of their market
value, and no current information with respect to the cost of those securities
has been published, in which case the securities of such entity were valued at
market.
o 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).
o 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).
G-2-9
<PAGE>
3. The term "Family of Investment Companies" as used herein means two or
more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i) securities of
issuers that are affiliated with the Transferee or are part of the Transferee's
Family of Investment Companies, (ii) bank deposit notes and certificates of
deposit, (iii) loan participations, (iv) repurchase agreements, (v) securities
owned but subject to a repurchase agreement and (vi) currency, interest rate and
commodity swaps. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Transferee, or owned by
the Transferee's Family of Investment Companies, the securities referred to in
this paragraph were excluded.
5. The Transferee is familiar with Rule 144A and understands that the
parties to which this certification is being made are relying and will continue
to rely on the statements made herein because one or more sales to the
Transferee will be in reliance on Rule 144A.
--- --- Will the Transferee be purchasing the Transferred
Yes No 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
G-2-10
<PAGE>
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:______________________________
G-2-11
<PAGE>
EXHIBIT G-3
FORM OF TRANSFEREE CERTIFICATE
FOR NON-QIBs
__________ __, 199_
LaSalle National Bank
Asset-Backed Securities Trust Services
135 S. LaSalle Street
Chicago, IL 60603
Attn: First Union - Lehman, Series 1997-C2
Re: First Union-Lehman Brothers Commercial Mortgage Trust II,
Commercial Mortgage Pass-Through Certificates, Series 1997-C2,
Class (the "Certificates")
_________________________________________________________________
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
____________________ by (the "Transferor") to _______________________ (the
"Transferee") of a Certificate (the "Transferred Certificate") having an initial
principal balance as of November 25, 1997 (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 (the
"Pooling and Servicing Agreement"), dated as of November 1, 1997, among First
Union Commercial Mortgage Securities, Inc., as depositor (the "Depositor"),
First Union National Bank, as master servicer, CRIIMI MAE Services Limited
Partnership, as special servicer, LaSalle National Bank, as trustee, and ABN
AMRO Bank N.V., as fiscal agent. 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
or the Certificate Registrar is obligated so to register or
G-3-1
<PAGE>
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 and the transferee (substantially in the
forms attached to the Pooling and Servicing Agreement) 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 (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
copies of the certification(s) from the Transferor and/or Transferee setting
forth the facts surrounding the transfer upon which such opinion is based. Any
holder of a Certificate desiring to effect such a transfer shall, and upon
acquisition of such Certificate 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.
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:
THE 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.]
- OR -
G-3-2
<PAGE>
[NO TRANSFER OF THIS CERTIFICATE OR ANY INTEREST HEREIN MAY 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 THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED ("ERISA"), OR THE INTERNAL REVENUE CODE OF 1986 (THE "CODE")
(ANY SUCH EMPLOYEE BENEFIT PLAN OR OTHER RETIREMENT ARRANGEMENT, A "PLAN"), OR
(B) TO ANY PERSON WHO IS DIRECTLY OR INDIRECTLY PURCHASING THIS CERTIFICATE OR
SUCH INTEREST HEREIN ON BEHALF OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF, OR WITH
ASSETS OF A PLAN (INCLUDING, WITHOUT LIMITATION, ANY INSURANCE COMPANY USING
ASSETS IN ITS GENERAL OR SEPARATE ACCOUNT THAT MAY CONSTITUTE "PLAN ASSETS" OF A
PLAN) PROVIDED THAT (I) SUCH A TRANSFER MAY BE MADE TO AN INSURANCE COMPANY
GENERAL ACCOUNT IF (i) THIS CERTIFICATE IS ELIGIBLE FOR EXEMPTIVE RELIEF UNDER
SECTION III OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTE 95-60"), AND
(ii) THE CONDITIONS OF SECTIONS I, III AND IV OF PTE 95-60 ARE SATISFIED WITH
RESPECT TO SUCH TRANSFER, AND (II) SUCH A TRANSFER MAY BE MADE WITH RESPECT TO A
CLASS H, CLASS J, CLASS K, CLASS L OR CLASS M CERTIFICATE IF THE TRANSFEREE
PROVIDES THE CERTIFICATE REGISTRAR WITH A CERTIFICATION OF FACTS AND AN OPINION
THAT ESTABLISH TO THE REASONABLE SATISFACTION OF THE CERTIFICATE REGISTRAR 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.]
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.
G-3-3
<PAGE>
5. The Transferee has been furnished with all information regarding (a) the
Depositor, (b) the Certificates and distributions thereon, (c) the Pooling and
Servicing Agreement, and (d) all related matters, that it has requested.
6. The Transferee is an "accredited investor" as defined in Rule 501(a)(1),
(2), (3) or (7) 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:________________________
G-3-4
<PAGE>
EXHIBIT H
FORM OF TRANSFEREE LETTER
___________ __, 199_
LaSalle National Bank
Asset-Backed Securities Trust Services
135 S. LaSalle Street
Chicago, IL 60603
Attn: First Union - Lehman, Series 1997-C2
Re: First Union Commercial Mortgage Securities, Inc., Commercial
Mortgage Pass-Through Certificates, Series 1997-C2, Classes (the
"Certificates")
_________________________________________________________________
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
____________________ (the "Transferor") to _______________________ (the
"Transferee") of the Class ______________ Certificates (the "Transferred
Certificate") (having principal balances as of November 25, 1997 (the "Closing
Date") of $_____________ evidencing a __% interest in the Classes to which they
belong]. The Certificates were issued pursuant to a Pooling and Servicing
Agreement, dated as of November 1, 1997 (the "Pooling and Servicing Agreement"),
among First Union Commercial Mortgage Securities, Inc., as depositor, First
Union National Bank, as master servicer, CRIIMI MAE Services Limited
Partnership, as special servicer, LaSalle National Bank, as trustee (the
"Trustee"), and ABN AMRO Bank N.V., as fiscal agent. Capitalized terms used but
not defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement. The Transferee hereby certifies, represents and warrants to
you that:
Either: (1) the Transferee is not an employee benefit plan within the
meaning of section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (a "Plan"), or a plan within the meaning of section
4975(e)(1) of the Internal Revenue Code of 1986, as amended (the "Code") (also,
a "Plan"), and the Transferee is not directly or indirectly purchasing the
Transferred Certificate on behalf of, as investment manager of, as named
fiduciary of, as trustee of, or with assets of a Plan (including any insurance
company using assets in its general or separate account that may constitute
assets of a Plan); or (2) the Transferee's purchase of the Transferred
Certificate will not result in a prohibited transaction under section 406 of
ERISA or section 4975 of the
H-1
<PAGE>
Code or subject the Master Servicer, the Special Servicer or the Trustee to any
obligation in addition to those undertaken in the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the
date first written above.
[Name of Transferee]
By:___________________________
Name:_________________________
Title:________________________
H-2
<PAGE>
EXHIBIT I-1
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
PURSUANT TO SECTION 5.02(d)(i)(B)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
[NAME OF OFFICER], being first duly sworn, deposes, and represents and
warrants:
1. That he is a [Title of Officer] of [Name of Owner] (the "Owner"), a
corporation duly organized and existing under the laws of the [State of
___________] [the United States], and the owner of the First Union
Commercial Mortgage Securities, Inc., Commercial Mortgage Pass-Through
Certificates, Series 1997-C2, Class [R-I, R-II, R-III] evidencing a ___%
Percentage Interest (the "Class [R-I, R-II, 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 November 1,
1997, among First Union Commercial Mortgage Securities, Inc., as Depositor,
First Union National Bank as Master Servicer, CRIIMI MAE Services Limited
Partnership, as Special Servicer, LaSalle National Bank, as Trustee, and
ABN AMRO Bank N.V., as Fiscal Agent.
2. That the Owner (i) is and will be a "Permitted Transferee" as of
_____ _, 199_ and (ii) is acquiring the Class [R-I, R-II, 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 of 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
I-1-1
<PAGE>
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, R-II, 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-I, R-II, 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, an estate whose income from sources without the United States is
includible in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within
the United States, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all
substantial decisions of the trust, all within the meaning of Section 7701
of the Code.
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of the Class [R-I, R-II, R-III] Certificates to disqualified
organizations under the Code that applies to all transfers of the Class
[R-I, R-II, 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 Transferee, on the agent; (iii) that the person otherwise
liable for the tax shall be relieved of liability for the tax if the
transferee furnishes to such person an affidavit that the transferee is 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, R-II, 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-I, R-II, R-III]
I-1-2
<PAGE>
Certificates if at any time during the taxable year of the pass-through
entity a non-Permitted Transferee is the record holder of an interest in
such entity. For this purpose, a "pass through entity" includes a regulated
investment company, a real estate investment trust or common trust fund, a
partnership, trust or estate, and certain cooperatives.
5. That the Owner is aware that the Certificate Registrar will not
register the transfer of any Class [R-I, R-II, 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-I, R-II,
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-I, R-II, R-III] Certificates and the provisions of Section
5.02 of the Pooling and Servicing Agreement under which the Class [R-I,
R-II, 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); 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, R-II, R-III] 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, R-II, R-III] Certificates, have sufficient assets to pay
any taxes owed by the holder of such Class [R-I, R-II, 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-I, R-II, R-III] Certificates.
I-1-3
<PAGE>
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, R-II, R-III] Certificates that the Owner intends to pay taxes
associated with holding the Class [R-I, R-II, R-III] 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, R-II, R-III] Certificates.
13. That the Owner is not acquiring the Class [R-I, R-II, R-III]
Certificates with the intent to transfer any of the Class [R-I, R-II,
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-I, R-II, R-III]
Certificates, or that may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class [R-I, R-II, R-III] Certificates remain
outstanding.
14. That Owner will, in connection with any transfer that it makes of
the Class [R-I, R-II, R-III] Certificates, obtain from its transferee the
representations required by Section 5.02(d) of the Pooling and Servicing
Agreement under which the Class [R-I, R-II, 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-I, R-II, R-III] Certificate, deliver to the Certificate
Registrar an affidavit, which represents and warrants that it is not
transferring such Class [R-I, R-II, 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-I, R-II, R-III]
Certificate; (ii) may become insolvent or subject to a bankruptcy
proceeding, for so long as the Class [R-I, R-II, R-III] Certificates remain
outstanding; and (iii) is not a "Permitted Transferee".
I-1-4
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed on
its behalf, by its [Title of Officer] and Authorized Signatory, attested by its
Assistant Secretary, this ____ day of _______________, 199_.
[NAME OF OWNER]
By:________________________________
[Name of Officer]
[Title of Officer]
__________________________________
[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], and acknowledged to me that he executed the same as his
free act and deed and the free act and deed of the Owner.
Subscribed and sworn before me this _____________ day of _____ 199_.
/s/
____________________________________
NOTARY PUBLIC
COUNTY OF __________________________
STATE OF ___________________________
My Commission expires the
____ day of ________________, 19__.
I-1-5
<PAGE>
EXHIBIT I-2
FORM OF TRANSFEROR CERTIFICATE
PURSUANT TO SECTION 5.02(d)(i)(D)
____________ , 199_
LaSalle National Bank
Asset-Backed Securities Trust Services
135 S. LaSalle Street
Chicago, IL 60603
Attn: First Union - Lehman, Series 1997-C2
Re: First Union Commercial Mortgage Securities, Inc., Commercial
Mortgage Pass-Through Certificates, Series 1997-C2, Class [R-I, R-II,
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-I, R-II, R-III] Certificates (the "Class [R-I, R-II, R-III]
Certificates"), pursuant to Section 5.02 of the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of November 1, 1997, among
First Union Commercial Mortgage Securities, Inc., as depositor, First Union
National Bank, as master servicer, CRIIMI MAE Services Limited Partnership, as
special servicer, LaSalle National Bank, as trustee, and ABN AMRO Bank N.V., as
fiscal agent. 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:
I-2-1
<PAGE>
1. No purpose of the Transferor relating to the transfer of the Class
[R-I, R-II, 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 I-1. The Transferor does not know or believe
that any representation contained therein is false.
3. The Transferor has at the time of this transfer conducted a
reasonable investigation of the financial condition of the Transferee as
contemplated by Treasury regulation section 1.860E-1(c)(4)(i) and, as a
result of that investigation, the Transferor has determined that the
Transferee has historically paid its debts as they became due and has found
no significant evidence to indicate that the Transferee will not continue
to pay its debts as they become due in the future. The Transferor
understands that the transfer of the Class [R-I, R-II, 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,
By:______________________________
Name:
Title:
I-2-2
<PAGE>
Exhibit J-1
FORM OF NOTICE AND ACKNOWLEDGMENT
____________ , 199_
Moody's Investors Service, Inc.
99 Church Street
New York, New York
Standard & Poor's Ratings Services,
a division of the McGraw Hill
Companies, Inc.
25 Broadway
New York, New York 10004
Duff & Phelps Credit Rating Co.
17 State Street, 2nd Floor
New York, New York 10004
Ladies and Gentlemen:
This notice is being delivered pursuant to Section 6.09 of the Pooling
and Servicing Agreement dated as of November 1, 1997 relating to First Union
Commercial Mortgage Securities, Inc., Commercial Mortgage Pass-Through
Certificates, Series 1997-C2 (the "Agreement"). Any term with initial capital
letters not otherwise defined in this notice has the meaning given such term in
the Agreement.
Notice is hereby given that the Holders of Certificates evidencing a
majority of the Voting Rights allocated to the Controlling Class have designated
___________________ to serve as the Special Servicer under the Agreement.
The designation of ____________________ as Special Servicer will become
final if certain conditions are met and on the date you will deliver to LaSalle
National Bank, the trustee under the Agreement (the "Trustee"), a written
confirmation stating that the appointment of the person designated to become the
Special Servicer will not result in the qualification, downgrading or withdrawal
of the rating or ratings assigned to one or more Classes of the Certificates.
J-1-1
<PAGE>
Please acknowledge receipt of this notice by signing the enclosed copy
of this notice where indicated below and returning it to the Trustee, in the
enclosed stamped self-addressed envelope.
Very truly yours,
LaSalle National Bank
By: _______________________________
Title: ____________________________
J-1-2
<PAGE>
<TABLE>
<CAPTION>
Receipt acknowledged:
Moody's Investor Service, Inc. Standard & Poor's Ratings Services, Duff & Phelps Credit Rating Co.
a division of the McGraw Hill
Companies, Inc.
<S> <C> <C>
By:_________________________ By:_________________________ By:__________________________
Title:______________________ Title:______________________ Title:_______________________
Date:_______________________ Date:_______________________ Date:________________________
</TABLE>
J-1-3
<PAGE>
EXHIBIT J-2
FORM OF ACKNOWLEDGMENT OF PROPOSED SPECIAL SERVICE
____________ , 199_
LaSalle National Bank
Asset-Backed Securities Trust Services
135 S. LaSalle Street
Chicago, IL 60603
Attention: FUCMSI Series 1997-C2
Ladies & Gentlemen:
Pursuant to Section 6.09 of the Pooling and Servicing Agreement dated
as of November 1, 1997 relating to First Union Commercial Mortgage Securities,
Inc., Commercial Mortgage Pass-Through Certificates, Series 1997-C2 (the
"Agreement"), the undersigned hereby agrees with all the other parties to the
Agreement that the undersigned shall serve as Special Servicer under, and as
defined in, the Agreement. The undersigned hereby acknowledges that, as of the
date hereof, it is and shall be a party to the Agreement and bound thereby to
the full extent indicated therein in the capacity of Special Servicer. The
undersigned hereby makes, as of the date hereof, the representations and
warranties set forth in Section 3.23(b) as if it were the Special Servicer
thereunder.
______________________________
By: __________________________
Name: ________________________
Title: _______________________
J-2-1
<PAGE>
0359434.05
EXHIBIT K
Uniform Commercial Code - FINANCING STATEMENT - Form UCC-1
TO BE FILED IN NORTH CAROLINA
K-1
<PAGE>
EXHIBIT A
TO FINANCING STATEMENT
This Exhibit A is attached to financing statement and incorporated in a
financing statement pertaining to FIRST UNION COMMERCIAL MORTGAGE SECURITIES,
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 1997-C2 Certificates (referred to as the "Secured Party" for
purposes of this financing statement only), under that certain Pooling and
Servicing Agreement dated as of November 1, 1997 (the "Pooling and Servicing
Agreement"), among the Debtor, First Union National Bank, as master servicer (in
such capacity, the "Master Servicer"), CRIIMI MAE Services Limited Partnership,
as special servicer (in such capacity, the "Special Servicer"), ABN AMRO Bank
N.V., as 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 A-3,
Class IO, Class B, Class C, Class D, Class E, Class F, Class G, Class H, Class
J, Class K, Class L, Class M, Class R-I, Class R-II and Class R-III Series
1997-C2 (collectively, the "Series 1997-C2 Certificates"). Capitalized terms
used herein and not defined shall have the respective meanings given to them in
the Pooling and Servicing Agreement. The attached financial 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 Exhibit C;
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 Exhibit B 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;
K-2
<PAGE>
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 Exhibit B 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;
7. (a) the Reserve Account(s) and the Servicing Accounts maintained by
the Master Servicer or Special Servicer pursuant to the Pooling and
Servicing Agreement, (b) all funds from time to time on deposit in the
Reserve Account(s) or the Servicing Accounts, (c) the investments of any
such funds consisting of securities, instruments or other obligations
(including the Permitted Investments described on Exhibit B 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;
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 Exhibit B 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 Agreements, 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 1997-C2 CERTIFICATES, AND THIS FILING
K-3
<PAGE>
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 FINANCIAL 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.
K-4
<PAGE>
EXHIBIT B
"Permitted Investments": Any one or more of the following obligations or
securities (including obligations or securities of the Trustee if otherwise
qualifying hereunder):
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or
any agency or instrumentality thereof (having original maturities
of not more than 365 days), provided such obligations are backed
by the full faith and credit of the United States. Such
obligations must be limited to those instruments that have a
predetermined fixed dollar amount of principal due at maturity
that cannot vary or change. If rated, such an obligation must not
have an "r" highlighter affixed to its rating by Standard &
Poor's. Interest may either by fixed or variable. If such interest
is variable, interest must be tied to a single interest rate index
plus a single fixed spread (if any), and move proportionately with
that index;
(ii) repurchase obligations with respect to any security described in
clause (i) above (having original maturities of not more than 365
days), provided that the short-term deposit or debt obligations,
of the party agreeing to repurchase such obligations are rated in
the highest rating category of each of DCR, if rated by DCR,
Moody's and Standard & Poor's or such lower rating as will not
result in qualification, downgrading or withdrawal of the ratings
then assigned to the Certificates, as evidenced in writing by the
Rating Agencies. In addition, any such item must not have an "r"
highlighter affixed to its rating by Standard & Poor's, and its
terms must have a predetermined fixed dollar amount of principal
due at maturity that cannot very or change. Interest may either by
fixed or variable. If such interest is variable, interest must be
tied to a single interest rate index plus a single fixed spread
(if any), and move proportionately with that index.
(iii) certificates of deposit, time deposits, demand deposits and
bankers' acceptances of any bank or trust company organized under
the laws of the United States or any state thereof (having
original maturities of not more than 365 days), the short term
obligations of which are rated in the highest rating category of
each of DCR, if rated by DCR, Moody's and Standard & Poor's or
K-5
<PAGE>
such lower rating as will not result in qualification, downgrading
or withdrawal of the ratings then assigned to the Certificates, as
evidenced in writing by the Rating Agencies. In addition, any such
item must not have an "r" highlighter affixed to its rating by
Standard & Poor's, and its terms should have a predetermined fixed
dollar amount of principal due at maturity that cannot vary or
change. Interest may either be fixed or variable. If such interest
is variable, interest must be tied to a single interest rate index
plus a single fixed spread (if any), and move proportionately with
that index.
(iv) commercial paper (having original maturities of not more than 365
days) of any corporation incorporated under the laws of the United
States or any state thereof (or if not so incorporated, the
commercial paper is United States Dollar denominated and amounts
payable thereunder are not subject to any withholding imposed by
any non-United States jurisdiction) which is rated in the highest
rating category of each of DCR, if rated by DCR, Moody's and
Standard & Poor's or such lower rating as will not result in
qualification, downgrading or withdrawal of the ratings then
assigned to the Certificates, as evidenced in writing by the
Rating Agencies. The commercial paper should not have an "r"
highlighter affixed to its rating by Standard & Poor's and by its
terms must have a predetermined fixed dollar amount of principal
due at maturity that cannot vary or change. Interest may either by
fixed or variable. If such interest is variable, interest must be
tied to a single interest rate index plus a single fixed spread
(if any), and move proportionately with that index.
(v) units of money market funds rated in the highest rating category
of DCR and Moody's and AAAm or AAAm-G by Standard & Poor's (or
such lower rating as will not result in qualification, downgrading
or withdrawal of the ratings then assigned to the Certificates, as
evidenced in writing by the Rating Agencies) and which seeks to
maintain a constant net asset value;
(vi) any other obligation or security acceptable to each Rating Agency,
evidence of which acceptability shall be provided in writing by
each Rating Agency to the Master Servicer, the Special Servicer
and the Trustee;
K-6
<PAGE>
provided that (1) no investment described hereunder shall evidence
either the right to receive (x) only interest with respect to such
investment or (y) a yield to maturity greater than 120% of the
yield to maturity at par of the underlying obligations; and (2)
that no investment described hereunder may be purchased at a price
greater than par if such investment may be prepaid or called at a
price less than its purchase price prior to stated maturity.
K-7
<PAGE>
EXHIBIT L
Form of Schedule of Certificateholders
Initial
Class Certificate Balance Name of Holder Address
- ----- ------------------- -------------- -------
L-1
<PAGE>
EXHIBIT M
Form of CSSA Property File Report
M-1
<PAGE>
<TABLE>
<CAPTION>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- -------------------------------------------------------------- ----------------------------------------------------
FIELD FORMAT
FIELD NAME NUMBER TYPE EXAMPLE
- -------------------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C>
Transaction Id 1 AN XXX97001
Loan ID 2 AN XXX9701A
Prospectus Loan ID 3 AN 00000000012345
Property ID 4 AN 1001-001
Distribution Date 5 AN YYYYMMDD
Cross-Collateralized Loan Grouping 6 Numeric 9(3)
Property Name 7 AN Text
Property Address 8 AN Text
Property City 9 AN Text
Property State 10 AN FL
Property Zip Code 11 AN 30303
Property County 12 AN Text
Property Type Code 13 AN MF
Year Built 14 AN YYYY
Year Last Renovated 15 AN YYYY
Net Square Feet At Securitization 16 Numeric 25000
# Of Units/Beds/Rooms At Securitization 17 Numeric 75
Property Status 18 AN 1
Allocated Percentage of Loan at Securitization 19 Numeric 0.75
Current Allocated Percentage 20 Numeric 0.75
Current Allocated Loan Amount 21 Numeric 5900900
Ground Lease (Y/S/N) 22 AN N
Other Escrow / Reserve Balances 23 Numeric 25000
Most Recent Appraisal Date 24 AN YYYYMMDD
Most Recent Appraisal Value 25 Numeric 1000000
Date Asset is Expected to Be Resolved 26 AN YYYYMMDD
Foreclosure Date 27 AN YYYYMMDD
- -------------------------------------------------------------- ----------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FIELD CSSA
NUMBER DESCRIPTION/COMMENTS LOAN
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 S1,P1
2 S3,P3
3 From Offering Document S4,P4
4 Should contain Prospectus ID and propety identifier, e.g., 1001-001, 1000-002
5 P5
6 All Loans With The Same Numeric Value Are Crossed S75
7 S55
8 S56
9 S57
10 S58
11 S59
12 S60
13 S61
14 S64
15 P80
16 RT, IN, WH, OF, MU, SS,OT = SF S62
17 MF, MHP, LO, HC = Units S63
18 1=FCL, 2=REO, 3=Defeased, 4=Partial Release, 5= Released, 6= Same as at securitization
19 Issuer to allocate loan % attributable to property for multi-property loans
20 Calculation based on Current Allocated Loan Amount and Current SPB for associated loan.
21 Maintained by servicer. P7
22 Either Y=Yes, S=Subordinate, N= No ground lease S74
23 S77
24 P74
25 P75
26 Could be different dates for different properties if foreclosing P79
27 P42
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 1 of 9
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- -------------------------------------------------------------- ----------------------------------------------------
FIELD FORMAT
FIELD NAME NUMBER TYPE EXAMPLE
- -------------------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C>
REO Date 28 AN YYYYMMDD
Occupancy % 29 Numeric 0.75
Occupancy Date 30 Numeric YYYYMMDD
Date Lease Rollover Review 31 AN YYYYMMDD
% Sq. Feet expiring 1-12 months 32 Numeric 0.20
% Sq. Feet expiring 13-24 months 33 Numeric 0.20
% Sq. Feet expiring 25-36 months 34 Numeric 0.20
% Sq. Feet expiring 37-48 months 35 Numeric 0.20
% Sq. Feet expiring 49-60 months 36 Numeric 0.20
Largest Tenant 37 AN Text
Square Feet of Largest Tenant 38 Numeric 15000
2nd Largest Tenant 39 AN Text
Square Feet of 2nd Largest Tenant 40 Numeric 15000
3rd Largest Tenant 41 AN Text
Square Feet of 3rd Largest Tenant 42 Numeric 15000
Fiscal Year End Month 43 Numeric 12
Securitization Financials As Of Date 44 AN YYYYMMDD
Revenue At Securitization 45 Numeric 1000000
Operating Expenses At Securitization 46 Numeric 1000000
NOI At Securitization 47 Numeric 1000000
DSCR At Securitization 48 Numeric 1.5
Appraisal Value At Securitization 49 Numeric 1000000
Appraisal Date At Securitization 50 AN YYYYMMDD
Physical Occupancy At Securitization 51 Numeric
Date of Last Inspection 52 AN YYYYMMDD
- -------------------------------------------------------------- ----------------------------------------------------
<CAPTION>
- --------------- --------------------------------------------------------------------------------- -------------------
FIELD CSSA
NUMBER DESCRIPTION/COMMENTS LOAN
- --------------- --------------------------------------------------------------------------------- -------------------
<S> <C> <C>
28 P43
29 Map to "Most Recent Fiscal YTD Phys. Occ." in CSSA P71
30 Add a new field to the CSSA Loan file. P71
31 Roll over review to be completed every 12 months
32
33
34
35
36
37 For Office, WH, Retail, Industrial *Only if disclosed in the offering document
38
39 For Office, WH, Retail, Industrial *Only if disclosed in the offering document
40
41 For Office, WH, Retail, Industrial *Only if disclosed in the offering document
42
43 Needed to indicate month ending for borrower's Fiscal Year
44 S72
45 S70
46 S71
47 S65
48 S66
49 S67
50 S68
51 S69
52
- --------------- --------------------------------------------------------------------------------- -------------------
</TABLE>
Page 2 of 9
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- --------------------------------------------- --------------------------------------------- --------------------- ----------
FIELD FORMAT CSSA
FIELD NAME NUMBER TYPE EXAMPLE DESCRIPTION/COMMENTS LOAN
- --------------------------------------------- --------------------------------------------- --------------------- ----------
<S> <C> <C> <C> <C>
Preceding FY Financial As of Date 53 AN YYYYMMDD P58
Preceding Fiscal Year Revenue 54 Numeric 1,000,000 P52
Preceding Fiscal Year Expenses 55 Numeric 1,000,000 P53
Preceding Fiscal Year NOI 56 Numeric 1,000,000 P54
Preceding Fiscal Year Debt Service Amt. 57 Numeric 1,000,000 P55
Preceding Fiscal Year DSCR 58 Numeric 1.30 P56
Preceding Fiscal Year Physical Occupancy 59 Numeric 0.90 P57
Sec Preceding FY Financial As of Date 60 AN YYYYMMDD P65
Second Preceding FY Revenue 61 Numeric 1,000,000 P59
Second Preceding FY Expenses 62 Numeric 1,000,000 P60
Second Preceding FY NOI 63 Numeric 1,000,000 P61
Second Preceding FY Debt Service 64 Numeric 1,000,000 P62
Second Preceding FY DSCR 65 Numeric 1.30 P63
Sec Preceding FY Physical Occupancy 66 Numeric 0.90 P64
- --------------------------------------------- --------------------------------------------- --------------------- ----------
</TABLE>
Page 3 of 9
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- ------------------------------------------------------------------------------------------------------------------------------------
FIELD NAME RELATIONSHIP TO CORRESPONDING CSSA 100.1 FIELD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Transaction Id Same as CSSA Loan File
Loan ID Same as CSSA Loan File
Prospectus Loan ID Same as CSSA Loan File
Property ID
Distribution Date Same as CSSA Loan File
Cross-Collateralized Loan Grouping
Property Name If Multi-Prop, no rollup to CSSA Loan File. Populate S55 with"Various."
Property Address If Multi-Prop, no rollup to CSSA Loan File. Populate S56 with"Various."
Property City If Multi-Prop, and all same then populate S57 with City, otherwise,
"Various". Missing info= "incomplete"
Property State If Multi-Prop, and all same then populate S58 with State, otherwise,
"Various". Missing info= "incomplete"
Property Zip Code If Multi-Prop, and all same then populate S59 with Zip, otherwise, "Various".
Missing info= "incomplete"
Property County If Multi-Prop, and all same then populate S60 with County, otherwise, "Various".
Missing info= "incomplete"
Property Type Code If Multi-Prop and all same then populate S61 with property type otherwise
"Various". Missing Info ="incomplete"
Year Built If Multi-Prop, and all same then populate S64 with year otherwise, "000000".
Year Last Renovated If Multi-Prop, and all same then populate P80 with year otherwise, "000000".
Net Square Feet At Securitization Roll-up to loan file if populated. If missing one or more than populate
with "00000"
# Of Units/Beds/Rooms At Securitization Roll-up to loan file if populated. If missing one or more than populate
with "00000"
Property Status If multi-prop and all same than populate CSSA Loan file with property, status,
otherwise various.
Allocated Percentage of Loan at Securitization No field needed in Cssa Loan file
Current Allocated Percentage No field needed in Cssa Loan file
Current Allocated Loan Amount Roll-up to Current Ending SPB (P7)
Ground Lease (Y/S/N) If any property is Y, or S then S74=Y
Other Escrow / Reserve Balances If any property populated, then S77=Y
Most Recent Appraisal Date If Multi-Prop, and all same then populate P74 with date, otherwise, "000000".
Most Recent Appraisal Value Roll-up to CSSA Loan File if populated. If missing any appraisal value, than
populate P75 with "000000)
Date Asset is Expected to Be Resolved If Multi-Prop, latest date from affiliated properties for P79.
Foreclosure Date If Multi-Prop, and all same then populate P42 with date, otherwise, "000000".
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 4 of 9
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- ------------------------------------------------------------------------------------------------------------------------------------
FIELD NAME RELATIONSHIP TO CORRESPONDING CSSA 100.1 FIELD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
REO Date If Multi-Prop, and all same then populate P43 with date, otherwise, "000000".
Occupancy % [Weighted Average] For P71=Sum((Curr. Allocated % Prop A) *(Occupancy Prop A)...
(Curr. Allocated % Prop Z) * (Occupancy Prop Z)). If missing one, then, "00000"
Occupancy Date If Multi-Prop, and all same then populate with date, otherwise, "various+K62".
Date Lease Rollover Review No Roll up to the CSSA loan format.
% Sq. Feet expiring 1-12 months No Roll up to the CSSA loan format.
% Sq. Feet expiring 13-24 months No Roll up to the CSSA loan format.
% Sq. Feet expiring 25-36 months No Roll up to the CSSA loan format.
% Sq. Feet expiring 37-48 months No Roll up to the CSSA loan format.
% Sq. Feet expiring 49-60 months No Roll up to the CSSA loan format.
Largest Tenant No Roll up to the CSSA loan format.
Square Feet of Largest Tenant No Roll up to the CSSA loan format.
2nd Largest Tenant No Roll up to the CSSA loan format.
Square Feet of 2nd Largest Tenant No Roll up to the CSSA loan format.
3rd Largest Tenant No Roll up to the CSSA loan format.
Square Feet of 3rd Largest Tenant No Roll up to the CSSA loan format.
Fiscal Year End Month No Roll up to the CSSA loan format.
Securitization Financials As Of Date If Multi-Prop, and all same then populate S72 with date, otherwise, "000000".
Revenue At Securitization Roll up to the CSSA Loan Format, if missing any properties populate S70 with "0000"
Operating Expenses At Securitization Roll up to the CSSA Loan Format, if missing any properties populate S71 with "0000"
NOI At Securitization Roll up to the CSSA Loan Format, if missing any properties populate S85 with "0000"
DSCR At Securitization [Weighted Average] S66=Sum((Allocated % at Sec. Prop A) *(DSCR Prop A)...
((Allocated % at Sec. Prop Z) * (DSCR Prop Z). If missing one, "00000"
Appraisal Value At Securitization Roll up to the CSSA Loan Format, if missing any properties populate S70 with "0000"
Appraisal Date At Securitization If Multi-Prop, and all same then populate S68 with date, otherwise, "000000".
Physical Occupancy At Securitization Weighted Average
Date of Last Inspection
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 5 of 9
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- ------------------------------------------------------------------------------------------------------------------------------------
FIELD NAME RELATIONSHIP TO CORRESPONDING CSSA 100.1 FIELD
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Preceding FY Financial As of Date If Multi-Prop, and all same then populate P58 with date, otherwise, "000000+K23K46".K1
Preceding Fiscal Year Revenue No Roll up to the CSSA loan format.
Preceding Fiscal Year Expenses No Roll up to the CSSA loan format.
Preceding Fiscal Year NOI No Roll up to the CSSA loan format.
Preceding Fiscal Year Debt Service Amt. No Roll up to the CSSA loan format.
Preceding Fiscal Year DSCR No Roll up to the CSSA loan format.
Preceding Fiscal Year Physical Occupancy No Roll up to the CSSA loan format.
Sec Preceding FY Financial As of Date No Roll up to the CSSA loan format.
Second Preceding FY Revenue No Roll up to the CSSA loan format.
Second Preceding FY Expenses No Roll up to the CSSA loan format.
Second Preceding FY NOI No Roll up to the CSSA loan format.
Second Preceding FY Debt Service No Roll up to the CSSA loan format.
Second Preceding FY DSCR No Roll up to the CSSA loan format.
Sec Preceding FY Physical Occupancy No Roll up to the CSSA loan format.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 6 of 9
<PAGE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- --------------------------------------------------
FIELD NAME
- --------------------------------------------------
Transaction Id
Loan ID
Prospectus Loan ID
Property ID
Distribution Date
Cross-Collateralized Loan Grouping
Property Name
Property Address
Property City
Property State
Property Zip Code
Property County
Property Type Code
Year Built
Year Last Renovated
Net Square Feet At Securitization
# Of Units/Beds/Rooms At Securitization
Property Status
Allocated Percentage of Loan at Securitization
Current Allocated Percentage
Current Allocated Loan Amount
Ground Lease (Y/S/N)
Other Escrow / Reserve Balances
Most Recent Appraisal Date
Most Recent Appraisal Value
Date Asset is Expected to Be Resolved
Foreclosure Date
- --------------------------------------------------
Page 7 of 9
<PAGE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- ----------------------------------------
FIELD NAME
- ----------------------------------------
REO Date
Occupancy % "00000"
Occupancy Date
Date Lease Rollover Review
% Sq. Feet expiring 1-12 months
% Sq. Feet expiring 13-24 months
% Sq. Feet expiring 25-36 months
% Sq. Feet expiring 37-48 months
% Sq. Feet expiring 49-60 months
Largest Tenant
Square Feet of Largest Tenant
2nd Largest Tenant
Square Feet of 2nd Largest Tenant
3rd Largest Tenant
Square Feet of 3rd Largest Tenant
Fiscal Year End Month
Securitization Financials As Of Date
Revenue At Securitization
Operating Expenses At Securitization
NOI At Securitization
DSCR At Securitization
Appraisal Value At Securitization
Appraisal Date At Securitization
Physical Occupancy At Securitization
Date of Last Inspection
- ----------------------------------------
Page 8 of 9
<PAGE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "PROPERTY" FILE
(DATA RECORD LAYOUT)
- ----------------------------------------------
FIELD NAME
- ----------------------------------------------
Preceding FY Financial As of Date
Preceding Fiscal Year Revenue
Preceding Fiscal Year Expenses
Preceding Fiscal Year NOI
Preceding Fiscal Year Debt Service Amt.
Preceding Fiscal Year DSCR
Preceding Fiscal Year Physical Occupancy
Sec Preceding FY Financial As of Date
Second Preceding FY Revenue
Second Preceding FY Expenses
Second Preceding FY NOI
Second Preceding FY Debt Service
Second Preceding FY DSCR
Sec Preceding FY Physical Occupancy
- ----------------------------------------------
Page 9 of 9
<PAGE>
EXHIBIT N
Form of
Comparative Financial Status Report
N-1
<PAGE>
EXHIBIT N
COMPARATIVE FINANCIAL STATUS REPORT
as of _______________
<TABLE>
<CAPTION>
S4 S57 S58 P7 P8 S72 S69 S70 S65 S66
Original Underwriting
Information
Basis Year
Property Paid Annual Financial
Prospectus Inspect Scheduled Thru Debt Info as of % Total $ (1)
ID City State Date Loan Balance Date Service Date Occ Revenue NOI DSCR
yy/mm yy/mm
List all loans currently in deal with or without information largest to smallest loan
<S> <C> <C> <C> <C> <C> <C>
Total $ $ WA $ $ WA
Received
Financial Information: Loans Balance
# % $ %
Current Full Year:
Current Full Yr. received with DSC <1:
Prior Full Year:
Prior Full Yr. received with DSC <1:
<CAPTION>
S4 P65 P64 P59 P61 P63 P58 P57 P52 P54 P56
2nd Preceding Annual Operating Preceding Annual Operating
Information Information
as of ____ Normalized as of ____ Normalized
Financial Financial
Prospectus Info as of % Total $ (1) Info as of % Total $ (1)
ID Date Occ Revenue NOI DSCR Date Occ Revenue NOI DSCR
yy/mm yy/mm
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total WA $ $ WA WA $ $ WA
Required
Loans Balance
# % $ %
<CAPTION>
S4 P72 P73 P66 P68 P70 (2)
Trailing Financial Net Change
Information
Month Reported Actual Preceding & Basis
%
Prospectus FS Start FS End Total $ % % Total (1)
ID Date Date Revenue NOI DSC Occ Revenue DSC
yy/mm yy/mm
<S> <C> <C> <C> <C> <C> <C> <C>
Total WA $ $ WA WA $ WA
(1) DSCR should match to Operating Statement and is normally calculated using NOI/Debt Service.
(2) Net change should compare the latest year to the underwriting year
</TABLE>
<PAGE>
EXHIBIT O
Form of REO Status Report
O-1
<PAGE>
EXHIBIT O
REO STATUS REPORT
as of ____________
<TABLE>
<CAPTION>
S4 S55 S61 S57 S58 S62 or P6 P7 P37 P39
S63 (a) (b) (c)
Pro- Short Name Paid Scheduled Total P&I Total
spectus (When Property Sq Ft or Thru Loan Advances Expenses
ID Appropriate) Type City State Units Date Balance To Date To Date
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
S4 P38 P25 P11 P58 P54 P81 P74
(d) (e)=a+b+c+d (k) (j)
Other
Pro- Advances Current LTM LTM Cap
spectus (Taxes & Total Monthly Maturity NOI NOI/ Rate Valuation
ID Escow) Exposure P&I Date Date DSC Assign Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
S4 P75 P35 P77 P82
(f)=(k/j) (g) (h)=(.92*g)-e (i)=(g/e)
Value Appraisal Loss using Total
Pro- using NOI BPO or 92% Appraisal REO
spectus & Cap Internal Appr. or Estimated Reduction Transfer Acquisition
ID Rate Value** BPO(f) Recovery % Realized Date Date
<S> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
S4 P79
Pro- Pending
spectus Resolution
ID Date Comments
<S> <C> <C>
<FN>
(1) Use the following codes; App. - Appraisal, BPO Brokers Opinion, Int - Internal Value
</FN>
</TABLE>
<PAGE>
EXHIBIT P
Form of Watch List
P-1
<PAGE>
EXHIBIT P
SERVICER WATCH LIST
as of ________
<TABLE>
<CAPTION>
S4 S55 S61 S57 S58 P7 P8 P11
Short Name Scheduled Paid Thru Maturity
Prospectus ID (When Appropriate) Property Type City State Loan Balance Date Date
<S> <C> <C> <C> <C> <C> <C> <C>
List all loans on watch list and reason sorted in decending balance order.
Total: $
<CAPTION>
S4 P54
Prospectus ID LTM* DSCR Comment / Reason on Watch List
<S> <C> <C>
*LTM - Last 12 months either trailing or last annual
</TABLE>
<PAGE>
EXHIBIT Q
Form of Delinquent Loan Status Report
Q-1
<PAGE>
<TABLE>
<CAPTION>
CSSA
COMMERICAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1997-C1
DELINQUENT LOAN STATUS REPORT
as of______________________
====================================================================================================================================
S4 S55 S61 S57 S58 S62 or S63 P8 P7 P37
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b)
- ------------------------------------------------------------------------------------------------------------------------------------
Short Name (When Property Sq Ft or Paid Thru Scheduled Total P&I
Prospectus ID Appropriate) Type City State Units Date Loan Balance Advances To Date
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
===================================================================================================================================
<CAPTION>
====================================================================================================================================
P39 P38 P25 P10 P11
- -----------------------------------------------------------------------------------------------------------------------------------
(c) (d) (e)=a+b+c+d
- -----------------------------------------------------------------------------------------------------------------------------------
Total Expenses Other Advances Total Current Current Maturity
To Date (Taxes & Escrow) Exposure Monthly P&I Interest Rate Date
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
===================================================================================================================================
FCL - Foreclosure
LTM - Latest 12 Months either Last Annual or Trailing 12 months
* Workout Strategy should match the CSSA Loan file using abreviated words in place of a code number such as (FCL - In
Foreclosure, MOD - Modification, DPO - Discount Payoff, NS - Note Sale, BK - Bankrupcy, PP - Payment Plan, TBD - To Be
It is possible to combine the status codes if the loan is going in more than one direction. (i.e. FCL/Mod, BK/Mod, BK/FCL/DPO)
** App - Appraisal, BPO - Broker opinion, Int. - Internal Value
*** How to determine the cap rate is agreed upon by Underwriter and servicers - to be provided by a third party.
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CSSA
COMMERICAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1997-C1
DELINQUENT LOAN STATUS REPORT
as of______________________
====================================================================================================================================
S4 S55 S61 S57 S58 P58 P54 P55 P81
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Short Name (When Property LTM NOI ***Cap Rate
Prospectus ID Appropriate) Type City State Date LTM NOI LTM DSCR Assigned
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
===================================================================================================================================
<CAPTION>
====================================================================================================================================
P74 P75 P35
- -----------------------------------------------------------------------------------------------------------------------------------
(f)=P38/P8 (g)=(.92*f)-e (h=(g/e)
- -----------------------------------------------------------------------------------------------------------------------------------
Value using Appraisal Loss using 90%
NOI & Cap Valuation BPO or Appr. or BPO Estimated Total Appraisal
Rate Date Internal Value** (f) Recovery % Reduction Realized
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
===================================================================================================================================
FCL - Foreclosure
LTM - Latest 12 Months either Last Annual or Trailing 12 months
* Workout Strategy should match the CSSA Loan file using abreviated words in place of a code number such as (FCL - In
Foreclosure, MOD - Modification, DPO - Discount Payoff, NS - Note Sale, BK - Bankrupcy, PP - Payment Plan, TBD - To Be
It is possible to combine the status codes if the loan is going in more than one direction. (i.e. FCL/Mod, BK/Mod, BK/FCL/DPO)
** App - Appraisal, BPO - Broker opinion, Int. - Internal Value
*** How to determine the cap rate is agreed upon by Underwriter and servicers - to be provided by a third party.
====================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CSSA
COMMERICAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1997-C1
DELINQUENT LOAN STATUS REPORT
as of______________________
====================================================================================================================================
S4 S55 S61 S57 S58 P77 P79 P42
- ------------------------------------------------------------------------------------------------------------------------------------
Short Name (When Property Transfer Resolution FCL Start
Prospectus ID Appropriate) Type City State Date Date Date
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
===================================================================================================================================
<CAPTION>
====================================================================================================================================
P82 P76
- -----------------------------------------------------------------------------------------------------------------------------------
Expected FCL Workout
Sale Date Stategy Comments
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
90 + DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
60 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
30 DAYS DELINQUENT
- ------------------------------------------------------------------------------------------------------------------------------------
Current & at Special Servicer
===================================================================================================================================
FCL - Foreclosure
LTM - Latest 12 Months either Last Annual or Trailing 12 months
* Workout Strategy should match the CSSA Loan file using abreviated words in place of a code number such as (FCL - In
Foreclosure, MOD - Modification, DPO - Discount Payoff, NS - Note Sale, BK - Bankrupcy, PP - Payment Plan, TBD - To Be
It is possible to combine the status codes if the loan is going in more than one direction. (i.e. FCL/Mod, BK/Mod, BK/FCL/DPO)
** App - Appraisal, BPO - Broker opinion, Int. - Internal Value
*** How to determine the cap rate is agreed upon by Underwriter and servicers - to be provided by a third party.
====================================================================================================================================
</TABLE>
<PAGE>
EXHIBIT R
Form of Historical Loan Modification Report
R-1
<PAGE>
EXHIBIT R
HISTORICAL LOAN MODIFICATION REPORT
as of _______________
<TABLE>
<CAPTION>
S4 S57 S58 P49 P48 P7* P7* P50*
Balance
Mod/ When Sent Balance at the
Extension Effect to Special Effective Date of
Prospectus ID City State Flag Date Servicer Rehabilitation Old Rate
<S> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
Information is as of modification. Each line
it should not change in the future. Only
new modifications should be added.
Total For All Loans:
Total For Loans in Current Month:
# of Loans $ Balance
Modifications:
Maturity Date Extentions:
Total:
<CAPTION>
S4 S57 S58 P50* P25* P25* P11* P11*
# Mths for
Rate New Old New
Prospectus ID City State Change Rate Old P&I New P&I Maturity Maturity
<S> <C> <C> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
Information is as of modification. Each line
it should not change in the future. Only
new modifications should be added.
Total For All Loans:
Total For Loans in Current Month:
Modifications:
Maturity Date Extentions:
Total:
<CAPTION>
S4 S57 S58 P47
(2) Est.
Future
Total # Interest Loss
Mths for (1) Realized to Trust $
Change of Loss to (Rate
Prospectus ID City State Mod Trust $ Reduction) COMMENT
<S> <C> <C> <C> <C>
THIS REPORT IS HISTORICAL
Information is as of modification. Each line
it should not change in the future. Only
new modifications should be added.
Total For All Loans:
Total For Loans in Current Month:
Modifications:
Maturity Date Extentions:
Total:
<FN>
* The information in these columns is from a particular point in time and should not change on this report once assigned.
(1) Actual principal loss taken by bonds
(2) Expected future loss due to a rate reduction. This is just an estimate calculated at the time of the modification.
</FN>
</TABLE>
<PAGE>
EXHIBIT S
Form of Historical Loss Estimate Report
S-1
<PAGE>
EXHIBIT S
HISTORICAL LOSS ESTIMATE REPORT (REO-SOLD or DISCOUNTED PAYOFF)
as of___________________
<TABLE>
<CAPTION>
S4 S55 S61 S57 S58 P45/P7 P75 P45
(c)=b/a (a) (b) (d)
Latest
Short Name % Appraisal or Effect Net Amt
Prospectus (When Property Received Brokers Date of Received
ID Appropriate) Type City State From Sale Opinion Sale Sales Price from Sale
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
S4 P7 P37 P39+P38
(e) (f) (g) (h) (i)=d-(f+g+h) (k)=i-e (m)
Date Loss
Prospectus Scheduled Total P&I Total Servicing Fees Actual Losses Passed Minor Adj to
ID Balance Advanced Expenses Expense Net Proceeds Passed thru thru Trust
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<CAPTION>
S4
(n)=k+m (o)=n/e
Minor
Adj Loss % of
Prospectus Passed Total Loss with Scheduled
ID thru Adjustment Balance
<S> <C> <C> <C>
</TABLE>
THIS REPORT IS HISTORICAL
All information is from the liquidation date and does not need to be updated.
Total all Loans:
Current Month Only:
<PAGE>
EXHIBIT T
Form of NOI Adjustment Worksheet
T-1
<PAGE>
Form of NOI ADJUSTMENT WORKSHEET for "year"
as of _______________
PROPERTY OVERVIEW
LB Conrol Number
Current Balance/Paid to Date
Property Name
Property Type
Property Address, City, State
Net Rentable Square Feet
Year Built/Year Renovated
Year of Operations Borrower Adjustment Normalized
Occupancy Rate *
Average Rental Rate
* Occupancy rates are year end or the
ending date of the financial statement
for the period.
INCOME:
Number of Mos.Annualized "Year"
Period Ended Borrower
Statement Classification Actual Adjustment Normalized
Rental Income (Category 1)
Rental Income (Category 2)
Rental Income (Category 3)
Pass Throughs/Escalations
Other Income
Effective Gross Income $0.00 $0.00 $0.00
Normalized - Full year financial statements
that have been reviewed by the Servicer.
OPERATING EXPENSES:
Real Estate Taxes
Property Insurance
Utilities
General & Administration
Repairs and Maintenance
Management Fees
Payroll & Benefits Expense
Advertising & Marketing
Professional Fees
Other Expenses
Ground Rent
Total Operating Expenses $0.00 $0.00 $0.00
Operating Expense Ratio
Net Operating Income $0.00 $0.00 $0.00
Leasing Commissions
Tenant Improvements
Replacement Reserve
Total Capital Items $0.00 $0.00 $0.00
N.O.I. After Capital Items $0.00 $0.00 $0.00
Debt Service (per Servicer) $0.00 $0.00 $0.00
Cash Flow after debt service $0.00 $0.00 $0.00
(1)DSCR: (NOI/Debt Service)
DSCR: (after reserves\Cap exp.)
Source of Financial Data:
(ie. operating statements, financial
statements, tax return, other)
Notes and Assumptions:
This report should be completed by the Servicer for any "Normalization" of the
Borrower's numbers.
The "Normalized" column is used in the Operating Statement Analysis Report.
This report may vary depending on the property type and because of the way
information may vary in each borrower's statement.
Income: Comments
Expense: Comments
Capital Items: Comments
(1) Used in the Comparative Financial Status Report
<PAGE>
EXHIBIT U
Form of Operating Statement Analysis
U-1
<PAGE>
EXHIBIT U
Form of OPERATING STATEMENT ANALYSIS REPORT
as of ___________________
<TABLE>
<S> <C> <C> <C> <C> <C>
PROPERTY OVERVIEW
LB Control Number
Current Balance/Paid to Date
Property Name
Property Type
Property Address, City, State
Net Rentable Square Feet
Year Built/Year Renovated
Year of Operations Underwriting 1994 1995 1996 Trailing
Occupancy Rate *
Average Rental Rate
* Occupancy rates are year end or the ending date of the financial statement for the period.
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME: No. of Mos.
Number of Mos. Prior Year Current Yr.
Period Ended Underwriting 1994 1995 1996 97 Trailing** 1996-Base 1996-1995
Statement Classification Base Line Normalized Normalized Normalized as of / /97 Variance Variance
Rental Income (Category 1)
Rental Income (Category 2)
Rental Income (Category 3)
Pass Through/Escalations
Other Income
Effective Gross Income $0.00 $0.00 $0.00 $0.00 $0.00 % %
Normalized - Full year Financial statements that have been reviewed by the underwriter or
Servicer
** Servicer will not be expected to "Normalize" these YTD numbers.
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING EXPENSES:
Real Estate Taxes
Property Insurance
Utilities
General & Administration
Repairs and Maintenance
Management Fees
Payroll & Benefits Expense
Advertising & Marketing
Professional Fees
Other Expenses
Ground Rent
Total Operating Expenses $0.00 $0.00 $0.00 $0.00 $0.00 % %
Operating Expense Ratio
Net Operating Income $0.00 $0.00 $0.00 $0.00 $0.00
Leasing Commissions
Tenant Improvements
Replacement Reserve
Total Capital Items $0.00 $0.00 $0.00 $0.00 $0.00 $0.00
N.O.I. After Capital Items $0.00 $0.00 $0.00 $0.00 $0.00
Debt Service (per Servicer) $0.00 $0.00 $0.00 $0.00 $0.00
Cash Flow after debt service $0.00 $0.00 $0.00 $0.00 $0.00
(1) DSCR: (NOI/Debt Service)
DSCR: (after reserves\Cap exp.)
Source of Financial Data:
(ie. operating statements, financial statements, tax return, other)
<FN>
Notes and Assumptions:
- ------------------------------------------------------------------------------------------------------------------------------------
The years shown above will roll always showing a three year history. 1996 is the current year financials; 1995 is the prior year
financials.
This report may vary depending on the property type and because of the way information may vary in each borrowers statement.
Rental Income needs to be broken down, differently whenever possible for each property type as follows: Retail:
1)Base Rent 2)Percentage rents on cashflow
Hotel: 1)Room Revenue 2)Food/Beverage Nursing Home: 1)Private 2) Medicaid 3) Medicare
Income: Comment
Expense: Comment
Capital Items: Comment
(1) Used in the Comparative Financial Status Report
</FN>
</TABLE>
<PAGE>
EXHIBIT V
Form of Loan Payoff Notification Report
V-1
<PAGE>
<TABLE>
<CAPTION>
LOAN PAYMENT NOTIFICATION REPORT
as of_____________
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------|----------------------------------------
S4 S55 S61 S58 P7 P8 P10 P11 P54 | SERVICER ESTIMATED INFORMATION
- -------------------------------------------------------------------------------------------|----------------------------------------
PROSPECTUS SHORT NAME PROPERTY SCHEDULED PAID CURRENT MATURITY LTM | YIELD EXPECTED EXPECTED
ID (WHEN TYPE STATE LOAN THRU INTEREST DATE DSCR | MAINTENANCE PAYMENT DISTRIBUTION
APPROPRIATE) BALANCE DATE RATE | DATE DATE
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
Scheduled Payments |
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
Unscheduled Payments |
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
Total: $ |
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
- -------------------------------------------------------------------------------------------|----------------------------------------
THE BORROWER HAS ONLY REQUESTED THE INFORMATION TO PAY-OFF. THIS DOES NOT INDICATE A DEFINITE PAYMENT.
</TABLE>
V-2
<PAGE>
EXHIBIT W
Form of CSSA Loan File Report
W-1
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "LOAN PERIODIC" UPDATE FILE
(Data Record Layout)
<CAPTION>
====================================================================================================================================
Specification | Description/Comments
- ---------------------------------------|--------------------------------------------------------------------------------------------
<S> <C>
Acceptable Media Types | Magnetic Tape, Diskette, Electronic Transfer
Character Set | ASCII
Field Delineation | Comma
Density (Bytes-Per-Inch) | 1600 or 6250
Magnetic Tape Label | None (unlabeled)
Magnetic Tape Blocking Factor | 10285 (17 records per block)
Physical Media Label | Servicer Name; Data Type (Collection Period Data); Density (Bytes-Per-Inch);
| Blocking Factor; Record Length
Return Address Label | Required for return of physical media (magnetic tape or diskette)
====================================================================================================================================
<CAPTION>
====================================================================================================================================
| Field Format |
Field Name | Number Type Example | Description/Comments
- ---------------------------------------|--------------------------------------|-----------------------------------------------------
<S> <C> <C> <C> <C>
Transaction Id | 1 AN XXX97001 | Unique Issue Identification Mnemonic
Group Id | 2 AN XXX9701A | Unique Identification Number Assigned To Each
| | Loan Group Within An Issue
Loan Id | 3 AN 00000000012345 | Unique Identification Number Assigned To Each
| | Collateral Item In A Pool
Prospectus Id | 4 AN 123 | Unique Identification Number Assigned To Each
| | Collateral Item In The Prospectus
Distribution Date | 5 AN YYYYMMDD | Date Payments Made To Certificateholders
Current Beginning Sched Balance | 6 Numeric 100000.00 | Outstanding Scheduled Principal Balance At The
| | Beginning Of The Current Period
Current Ending Scheduled Balance | 7 Numeric 100000.00 | Outstanding Scheduled Principal Balance At The
| | End Of The Current Period
Paid To Date | 8 AN YYYYMMDD | Due Date Of The Last Interest Payment Received
Current Index Rate | 9 Numeric 0.09 | Index Rate Used In The Determination Of The
| | Current Period Gross Interest Rate
Current Note Rate | 10 Numeric 0.09 | Annualized Gross Rate Applicable To Calculate
| | The Current Period Scheduled Interest
Maturity Date | 11 AN YYYYMMDD | Date Collateral Is Scheduled To Make Its
| | Final Payment
Servicer and Trustee Fee Rate | 12 Numeric 0.00025 | Annualized Fee Paid To The Servicer And Trustee
Fee Rate/Strip Rate 1 | 13 Numeric 0.00001 | Annualized Fee/Strip Netted Against Current
| | Note Rate = Net Pass-Through Rate
Fee Rate/Strip Rate 2 | 14 Numeric 0.00001 | Annualized Fee/Strip Netted Against Current
| | Note Rate = Net Pass-Through Rate
Fee Rate/Strip Rate 3 | 15 Numeric 0.00001 | Annualized Fee/Strip Netted Against Current
| | Note Rate = Net Pass-Through Rate
Fee Rate/Strip Rate 4 | 16 Numeric 0.00001 | Annualized Fee/Strip Netted Against Current
| | Note Rate = Net Pass-Through Rate
Fee Rate/Strip Rate 5 | 17 Numeric 0.00001 | Annualized Fee/Strip Netted Against Current
| | Note Rate = Net Pass-Through Rate
Net Pass-Through Rate | 18 Numeric 0.0897 | Annualized Interest Rate Applicable To
| | Calculate The Current Period Remittance Int.
Next Index Rate | 19 Numeric 0.09 | Index Rate Used In The Determination Of The
| | Next Period Gross Interest Rate
Next Note Rate | 20 Numeric 0.09 | Annualized Gross Interest Rate Applicable
| | To Calc Of The Next Period Sch. Interest
Next Rate Adjustment Date | 21 AN YYYYMMDD | Date Note Rate Is Next Scheduled To Change
Next Payment Adjustment Date | 22 AN YYYYMMDD | Date Scheduled P&I Amount Is Next Scheduled
| | To Change
====================================================================================================================================
</TABLE>
Page 1 of 6
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "LOAN PERIODIC" UPDATE FILE
(Data Record Layout)
<CAPTION>
====================================================================================================================================
| Field Format |
Field Name | Number Type Example | Description/Comments
- ---------------------------------------|--------------------------------------|-----------------------------------------------------
<S> <C> <C> <C> <C>
Scheduled Interest Amount | 23 Numeric 1000.00 | Scheduled Gross Interest Payment Due For The
| | Current Period
Scheduled Principal Amount | 24 Numeric 1000.00 | Scheduled Principal Payment Due For The
| | Current Period
Total Scheduled P&I Due | 25 Numeric 1000.00 | Scheduled Principal And Interest Payment Due
| | For The Current Period
Neg am/Deferred Interest Amount | 26 Numeric 1000.00 | Negative Amortization/Deferred Interest Amount
| | Due For The Current Period
Unscheduled Principal Collections | 27 Numeric 1000.00 | Unscheduled Payments Of Principal Received
| | During The Related Collection Period
Other Principal Adjustments | 28 Numeric 1000.00 | Unscheduled Principal Adjustments For
| | The Related Collection Period
Liquidation/Prepayment Date | 29 AN YYYYMMDD | Date Unscheduled Payment Of Principal Received
Prepayment Penalty/Yld Maint Rec'd | 30 Numeric 1000.00 | Additional Payment Req'd From Borrower Due
| | To Prepayment Of Loan Prior To Maturity
Prepayment Interest Excess (Shortfall) | 31 Numeric 1000.00 | Scheduled Gross Interest Applicable To The
| | Prepayment Amount
Liquidation/Prepayment Code | 32 Numeric 1 | See Liquidation/Prepayment Codes Legend
Most Recent ASER $ | 33 Numeric 1000.00 | Excess Of The Principal Balance Over The
| | Defined Appraisal Percentage
Most Recent ASER Date | 34 AN YYYYMMDD | Date ASER Amount Applied To Loan
Cumulative ASER $ | 35 Numeric 1000.00 | Cumulative ASER Amount
Actual Balance | 36 Numeric 100000.00 | Outstanding Actual Principal Balance At The
| | End Of The Current Period
Total P&I Advance Outstanding | 37 Numeric 1000.00 | Outstanding P&I Advances At The End Of The
| | Current Period
Total T&I Advance Outstanding | 38 Numeric 1000.00 | Outstanding Taxes & Insurance Advances At
| | The End Of The Current Period
Other Expense Advance Outstanding | 39 Numeric 1000.00 | Other Outstanding Advances At The End Of
| | The Current Period
Status of Loan | 40 AN 1 | See Status Of Loan Legend
In Bankruptcy | 41 AN Y | Bankruptcy Status Of Loan (If In Bankruptcy
| | "Y", Else "N")
Foreclosure Date | 42 AN YYYYMMDD | Date Of Foreclosure
REO Date | 43 AN YYYYMMDD | Date Of REO
Bankruptcy Date | 44 AN YYYYMMDD | Date Of Bankruptcy
Net Proceeds Received on Liquidation | 45 Numeric 100000.00 | Net Proceeds Rec'd On Liquidation To Be
| | Remitted To The Tr Per The Tr Doc'n
Liquidation Expense | 46 Numeric 100000.00 | Expenses Associated With The Liq'n To Be
| | Netted From The Tr Per The Tr Doc'n
Realized Loss to Trust | 47 Numeric 10000.00 | Liquidation Balance Less Net Liquidation
| | Proceeds Received
Date of Last Modification | 48 AN YYYYMMDD | Date Loan Was Modified
Modification Code | 49 Numeric 1 | See Modification Codes Legend
Modified Note Rate | 50 Numeric 0.09 | Note Rate Loan Modified To
Modified Payment Rate | 51 Numeric 0.09 | Payment Rate Loan Modified To
Preceding Fiscal Year Revenue | 52 Numeric 1000.00 | Preceding Fiscal Year Revenue
Preceding Fiscal Year Expenses | 53 Numeric 1000.00 | Preceding Fiscal Year Expenses
Preceding Fiscal Year NOI | 54 Numeric 1000.00 | Preceding Fiscal Year Net Op Income
Preceding Fiscal Year Debt Svc Amt. | 55 Numeric 1000.00 | Preceding Fiscal Year Debt Svc Amount
Preceding Fiscal Year DSCR | 56 Numeric 2.55 | Preceding Fiscal Yr Debt Svc Cvrge Ratio
====================================================================================================================================
-----------------------------------
| All Financial Update Fields Are |
| Calculated and/or Presented In |
| The Manner Described In The |
| Associated Trust Documentation. |
-----------------------------------
</TABLE>
Page 2 of 6
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "LOAN PERIODIC" UPDATE FILE
(Data Record Layout)
<CAPTION>
====================================================================================================================================
| Field Format |
Field Name | Number Type Example | Description/Comments
- ---------------------------------------|--------------------------------------|-----------------------------------------------------
<S> <C> <C> <C> <C>
Preceding Fiscal Yr Physical Occ'y | 57 Numeric 0.85 | Preceding Fiscal Year Physical Occupancy
Preceding FY Financial As of Date | 58 AN YYYYMMDD | Preceding Fiscal Year Financial As Of Date
Second Preceding FY Revenue | 59 Numeric 1000.00 | Second Preceding Fiscal Year Revenue
Second Preceding FY Expenses | 60 Numeric 1000.00 | Second Preceding Fiscal Year Expenses
Second Preceding FY NOI | 61 Numeric 1000.00 | Second Preceding Fiscal Year Net Operating
| | Income
Second Preceding FY Debt Service | 62 Numeric 1000.00 | Second Preceding Fiscal Year Debt Service
Second Preceding FY DSCR | 63 Numeric 2.55 | Second Preceding Fiscal Year Debt Svc
| | Cvrge Ratio
Sec Preceding FY Physical Occ'y | 64 Numeric 0.85 | Second Preceding Fiscal Year Physical
| | Occupancy
Sec Preceding FY Fin'l As of Date | 65 AN YYYYMMDD | Second Preceding Fiscal Year Financial
| | As Of Date
Most Recent Fiscal YTD Revenue | 66 Numeric 1000.00 | Most Recent Fiscal Year To Date Revenue
Most Recent Fiscal YTD Expenses | 67 Numeric 1000.00 | Most Recent Fiscal Year To Date Expenses
Most Recent Fiscal YTD NOI | 68 Numeric 1000.00 | Most Recent Fiscal Year To Date Net
| | Operating Income
Most Recent Fiscal YTD Debt Service | 69 Numeric 1000.00 | Most Recent Fiscal Year To Date Debt Service
Most Recent Fiscal YTD DSCR | 70 Numeric 2.55 | Most Recent Fiscal Year To Date Debt Service
| | Coverage Ratio
Most Recent Fiscal YTD Phys. Occ. | 71 Numeric 0.85 | Most Recent Fiscal Year To Date Physical
| | Occupancy
Most Recent Fiscal YTD Start Date | 72 AN YYYYMMDD | Most Recent Fiscal Year To Date Start Date
Most Recent Fiscal YTD End Date | 73 AN YYYYMMDD | Most Recent Fiscal Year To Date End Date
Most Recent Appraisal Date | 74 AN YYYYMMDD | The Date Of The Latest Available Appraisal
| | For The Property
Most Recent Appraisal Value | 75 Numeric 100000.00 | The Latest Available Appraisal Value For
| | The Property
Workout Strategy Code | 76 Numeric 1 | See Workout Strategy Codes Legend
Most Recent Spec Svc Transfer Date | 77 AN YYYYMMDD | Date Transferred To The Special Servicer
Most Recent Master Svc Return Date | 78 AN YYYYMMDD | Date Returned To The Master Servicer
Date Asset Expected to Be Resolved | 79 AN YYYYMMDD | Date Asset Is Expected To Be Resolved
Year Last Renovated | 80 AN 1997 | Year Property Last Renovated
- ------------------------------------------------------------------------------------------------------------------------------------
----------------------------------
| Most Recent Fiscal YTD Figures |
| Are From The Last Financials |
| Processed By The Servicer |
| Pursuant To The Terms Of The |
| Trust Document, And Cover The |
| Period From The Start Date To |
| The End Date. |
----------------------------------
NEW FIELDS ADDED:
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cap Rate Assigned | 81 Numeric 10 | Cap Rate Assigned
FCL Sale Date (Expected or Actual) | 82 AN YYYYMMDD | FCL Sale Date Expected or Actual
====================================================================================================================================
</TABLE>
Page 3 of 6
<PAGE>
<TABLE>
COMMERCIAL REAL ESTATE SECONDARY MARKET SECURITIZATION ASSOCIATION
CSSA "LOAN PERIODIC" UPDATE FILE
(Data Record Layout)
<CAPTION>
====================================================================================================================================
Liquidation/Prepayment Code | Status of Mortgage Loan | Modification Code
Legend | Legend | Legend
- ----------------------------------|--------------------------------------------------------------|----------------------------------
<S> <C> <C>
1 Partial Liq'n (Curtailment) | A Payment Not Received But Still In Grace Period | 1 Maturity Date Extension
2 Payoff Prior To Maturity | B Late Payment But Less Than 1 Month Delinquent | 2 Amortization Change
3 Disposition | 0 Current | 3 Principal Write-Off
4 Repurchase | 1 One Month Delinquent | 4 Combination
5 Full Payoff At Maturity | 2 Two Months Delinquent |
6 DPO | 3 Three Or More Months Delinquent |
7 Liquidation | 4 Assumed Sched Payment (Performing Matured Ball'n) |
| 7 Foreclosure |
| 9 REO |
====================================================================================================================================
<CAPTION>
================================================================
| Workout Strategy Code |
| Legend |
|---------------------------------------------------------------
<S> <C>
| 1 Modification |
| 2 Foreclosure |
| 3 Bankruptcy |
| 4 Extension |
| 5 Note Sale |
| 6 DPO |
| 7 REO |
| 8 Resolved |
| 9 Pending Return to Master Servicer |
| 10 Deed In Lieu Of Foreclosure |
================================================================
</TABLE>
Page 4 of 6
EXECUTION COPY
MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement, dated as of November 1, 1997 (the
"Agreement"), between Lehman Brothers Holdings Inc. (the "Seller") and First
Union Commercial Mortgage Securities, Inc. (the "Purchaser").
The Seller intends to sell and the Purchaser intends to purchase certain
multifamily and commercial mortgage loans (the "LBHI Mortgage Loans") as
provided herein. The Purchaser intends to deposit them, together with the First
Union Mortgage Loans (as defined below), into a trust fund (the "Trust Fund"),
the beneficial ownership of which will be evidenced by multiple classes (each, a
"Class") of mortgage pass-through certificates (the "Certificates"). One or more
"real estate mortgage investment conduit" ("REMIC") elections will be made with
respect to the Trust Fund. The Trust Fund will be created and the Certificates
will be issued pursuant to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of November 1, 1997 (the "Cut-off Date"), among
the Purchaser as depositor, First Union National Bank as master servicer (in
such capacity, the "Master Servicer"), CRIIMI MAE Services Limited Partnership
as special servicer (in such capacity, the "Special Servicer"), LASALLE NATIONAL
BANK as trustee (the "Trustee") and ABN AMRO Bank N.V. as fiscal agent (the
"Fiscal Agent"). Concurrently with the purchase of Mortgage Loans pursuant to
this Agreement, the Purchaser will also purchase multifamily and commercial
mortgage loans pursuant to a Mortgage Loan Purchase Agreement, dated as of
November 1, 1997, between First Union National Bank and the Purchaser (the
"First Union Agreement"). Such mortgage loans (the "First Union Mortgage Loans")
will likewise be deposited into the Trust Fund. Capitalized terms used but not
defined herein have the respective meanings set forth in the Pooling and
Servicing Agreement.
Now, therefore, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
SECTION 1. Agreement to Purchase.
(a) The Seller agrees to sell, and the Purchaser agrees to purchase, the
LBHI Mortgage Loans identified on the schedule (the "Mortgage Loan Schedule")
annexed hereto as Exhibit A. The Mortgage Loan Schedule may be amended to
reflect the actual Mortgage Loans accepted by the Purchaser pursuant to the
terms hereof. The LBHI Mortgage Loans will have an aggregate principal balance
of $1,097,817,189.31 (the "LBHI Balance") as of the close of business on the
Cut-off Date, after giving effect to any payments due on or before such date
whether or not received. The LBHI Balance and the First Union Balance (as
defined in the First Union Agreement) together equal an aggregate principal
<PAGE>
balance (the "Initial Pool Balance") of $2,203,502,325. The purchase and sale of
the LBHI Mortgage Loans shall take place on November 25, 1997 or such other date
as shall be mutually acceptable to the parties hereto (the "Closing Date"). The
consideration for the LBHI Mortgage Loans shall consist of (A) a cash amount
equal to 100% of the LBHI Balance, plus (B) interest accrued on each LBHI
Mortgage Loan at the related Net Mortgage Rate, for the period from and
including the Cut-off Date up to but not including the Closing Date, which cash
amount shall be paid to the Seller or its designee by wire transfer in
immediately available funds on the Closing Date.
The Purchaser will assign to the Trustee, all of its right, title and
interest in and to the LBHI Mortgage Loans.
SECTION 2. Conveyance of Mortgage Loans.
(a) Effective as of the Closing Date, subject only to receipt of the
purchase price referred to in Section 1 hereof, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Purchaser, without
recourse, all the right, title and interest of the Seller in and to the LBHI
Mortgage Loans identified on the Mortgage Loan Schedule as of such date other
than (i) the primary servicing rights, and (ii) with respect to the Mortgage
Loan bearing loan number 55, all payments with respect to the interest to accrue
in excess of 7.50%. The Mortgage Loan Schedule, as it may be amended, shall
conform to the requirements set forth in this Agreement and the Pooling and
Servicing Agreement.
(b) The Purchaser or its assignee shall be entitled to receive all
scheduled payments of principal and interest due after the Cut-off Date, and all
other recoveries of principal and interest collected after the Cut-off Date
(other than in respect of principal and interest on the LBHI Mortgage Loans due
on or before the Cut-off Date). All scheduled payments of principal and interest
due on or before the Cut-off Date but collected after the Cut-off Date, and
recoveries of principal and interest collected on or before the Cut-off Date
(only in respect of principal and interest on the LBHI Mortgage Loans due on or
before the Cut-off Date), shall belong to, and be promptly remitted to, the
Seller.
(c) The Seller hereby represents and warrants that it has, on behalf of the
Purchaser, delivered to the Trustee, the documents and instruments specified
below with respect to each LBHI Mortgage Loan (each a "Mortgage File"). All
Mortgage Files so delivered will be held by the Trustee in escrow at all times
prior to the Closing Date. Each Mortgage File shall, except as otherwise
disclosed on Exhibit B hereto, contain the following documents:
(i) the original executed Mortgage Note, endorsed (without recourse,
representation or warranty,
2
<PAGE>
express or implied) to the order of LASALLE NATIONAL BANK, as
trustee for the registered holders of the First Union-Lehman
Brothers Commercial Mortgage Trust II, Commercial Mortgage
Pass-Through Certificates, Series 1997-C2;
(ii) an original or copy of the Mortgage and of any intervening
assignments thereof, in each case with evidence of recording
indicated thereon;
(iii) an original or copy of any related Assignment of Leases and of
any intervening assignments thereof (with recording information
indicated thereon), if such item is a document separate from the
Mortgage;
(iv) an original executed assignment of the Mortgage, any related
Assignment of Leases (if such item is a document separate from
the Mortgage), and any other recorded document relating to the
Mortgage Loan otherwise included in the Mortgage File, in favor
of LASALLE NATIONAL BANK, as trustee for the registered holders
of the First Union-Lehman Brothers Commercial Mortgage Trust II,
Commercial Mortgage Pass-Through Certificates, Series 1997-C2, in
recordable form;
(v) an original assignment of all unrecorded documents relating to
the Mortgage Loan in favor of LASALLE NATIONAL BANK, as trustee
for the registered holders of the First Union-Lehman Brothers
Commercial Mortgage Trust II, Commercial Mortgage Pass-Through
Certificates, Series 1997-C2;
(vi) originals or copies of any written modification agreements in
those instances where the terms or provisions of the Mortgage or
Mortgage Note have been modified;
(vii) the original or a copy of the policy or certificate of lender's
title insurance issued on the date of the origination of such
Mortgage Loan, or, if such policy has not been issued, an
irrevocable, binding commitment to issue such title insurance
policy; and
(viii) filed copies (with evidence of filing) of any prior UCC
Financing Statements in favor of the originator of such Mortgage
Loan or in favor of any assignee prior to the Trustee (but only
to the extent the Seller had possession of such
3
<PAGE>
UCC Financing Statements prior to the Closing Date) and, if there
is an effective UCC Financing Statement in favor of the Seller on
record with the applicable public office for UCC Financing
Statements, an original UCC-2 or UCC-3, as appropriate, in favor
of LASALLE NATIONAL BANK, as trustee for the registered holders
of the First Union-Lehman Brothers Commercial Mortgage Trust II,
Commercial Mortgage Pass-Through Certificates, Series 1997-C2.
(d) Within 30 days following the Closing Date, the Purchaser shall
submit or cause to be submitted for recordation or filing, as the case may
be, in the appropriate public office for real property records or Uniform
Commercial Code financing statements, as appropriate, each assignment of
Mortgage and each assignment of Assignment of Leases referred to in clauses
(iv) and (v) of subsection (c) above and each UCC-2 and UCC-3 in favor of
and delivered to the Trustee constituting part of the Mortgage File. If any
such document or instrument is lost or returned unrecorded or unfiled, as
the case may be, because of a defect therein, then the Seller shall prepare
a substitute therefor or cure such defect or cause such to be done, as the
case may be, and the Seller shall deliver such substitute or corrected
document or instrument to the Purchaser or its designee.
(e) All documents and records relating to the LBHI Mortgage Loans and
in the Seller's possession (the "Additional Mortgage Loan Documents") that
are not required to be delivered to the Trustee shall be delivered or
caused to be delivered by the Seller to the Master Servicer or at the
direction of the Master Servicer to the appropriate sub-servicer, together
with any related escrow amounts and reserve amounts.
SECTION 3. Representations, Warranties and Covenants of Seller.
(a) The Seller hereby represents and warrants to and covenants with the
Purchaser, as of the date hereof, that:
(i) The Seller is a corporation validly existing under the laws of the
State of Delaware and possesses all requisite authority, power, licenses,
permits and franchises to carry on its business as currently conducted by
it and to execute, deliver and comply with its obligations under the terms
of this Agreement.
(ii) This Agreement has been duly and validly authorized, executed and
delivered by the Seller and, assuming due authorization, execution and
delivery hereof by the Purchaser, constitutes a legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with
its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization,
4
<PAGE>
moratorium and other laws affecting the enforcement of creditors' rights in
general, and by general equity principles (regardless of whether such
enforcement is considered in a proceeding in equity or at law), or by
public policy considerations underlying the securities laws, to the extent
that such public policy considerations limit the enforceability of the
provisions of this Agreement which purport to provide indemnification from
liabilities under applicable securities laws.
(iii) The execution and delivery of this Agreement by the Seller and
the Seller's performance and compliance with the terms of this Agreement
will not (A) violate the Seller's Certificate of Incorporation or By-Laws,
(B) violate any law or regulation or any administrative decree or order to
which it is subject or (C) constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, agreement or other
instrument to which the Seller is a party or by which the Seller is bound.
(iv) The Seller 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 or body, which default might have
consequences that would, in the Seller's reasonable and good faith
judgment, materially and adversely affect the condition (financial or
other) or operations of the Seller or its properties or have consequences
that would materially and adversely affect its performance hereunder.
(v) The Seller is not a party to or bound by any agreement or
instrument or subject to any articles of incorporation, bylaws or any other
corporate restriction or any judgment, order, writ, injunction, decree, law
or regulation that would, in the Seller's reasonable and good faith
judgment, materially and adversely affect the ability of the Seller to
perform its obligations under this Agreement or that requires the consent
of any third person to the execution of this Agreement or the performance
by the Seller of its obligations under this Agreement.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this
Agreement or the consummation of the transactions contemplated by this
Agreement and no bulk sale law applies to such transactions.
(vi) No litigation is pending or, to the best of the Seller's
knowledge, threatened against the Seller that would, in the Seller's good
faith and reasonable judgment, prohibit its entering into this Agreement or
materially and
5
<PAGE>
adversely affect the performance by the Seller of its obligations under
this Agreement.
(viii) Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, the Seller will report the transfer of the
LBHI Mortgage Loans to the Purchaser as a sale of the LBHI Mortgage Loans
to the Purchaser in exchange for consideration consisting of (A) a cash
amount equal to 100% of the LBHI Balance, plus (B) interest accrued on each
LBHI Mortgage Loan at the related Net Mortgage Rate, for the period from
and including the Cut-off Date up to but not including the Closing Date.
The consideration received by the Seller upon the sale of the LBHI Mortgage
Loans to the Purchaser will constitute reasonably equivalent value and fair
consideration for the LBHI Mortgage Loans. The Seller will be solvent at
all relevant times prior to, and will not be rendered insolvent by, the
sale of the LBHI Mortgage Loans to the Purchaser. The Seller is not selling
the LBHI Mortgage Loans to the Purchaser with any intent to hinder, delay
or defraud any of the creditors of the Seller.
(b) The Seller hereby makes the representations and warranties contained in
Schedule I hereto for the benefit of the Purchaser and the Trustee for the
benefit of the Certificateholders as of the Closing Date, with respect to (and
solely with respect to) each LBHI Mortgage Loan. References in such
representations and warranties to "Mortgage Loan" and "Mortgage Loans" shall be
deemed to mean "LBHI Mortgage Loan" and "LBHI Mortgage Loans," respectively.
(c) If the Seller receives notice of a Document Defect or a Breach relating
to an LBHI Mortgage Loan (the "Defect/Breach Notice"), then the Seller shall
within 90 days after its receipt of the Defect/Breach Notice (or in the case of
a Document Defect or Breach relating to a Mortgage Loan not being a "qualified
mortgage" within the meaning of the REMIC Provisions, not later than 90 days of
any party discovering such Document Defect or Breach) (i) cure such Document
Defect or Breach, as the case may be, in all material respects, which shall
include payment of any Additional Trust Fund Expenses associated therewith, or
(ii) repurchase the affected LBHI Mortgage Loan (or the related Mortgaged
Property) from the Trustee pursuant to the Pooling and Servicing Agreement, at a
price equal to the Purchase Price; provided, however, that if such Document
Defect or Breach is capable of being cured but not within such 90-day period,
such Document Defect would not prevent the Mortgage Loan from being treated as a
"qualified mortgage" within the meaning of the REMIC Provisions and the Seller
has commenced and is diligently proceeding with the cure of such Document Defect
or Breach within such 90-day period, the Seller shall have an additional 90 days
to complete such cure (or, in the event of a failure to so cure, to complete
such repurchase); and provided, further, that with respect to such additional
90-day period the Seller shall have
6
<PAGE>
delivered an Officer's Certificate to the Trustee setting forth the reason such
Document Defect or Breach is not capable of being cured within the initial
90-day period and what actions the Seller is pursuing in connection with the
cure thereof and stating that the Seller anticipates that such breach will be
cured within the additional 90-day period. Notwithstanding the foregoing, the
delivery of a commitment to issue a policy of lender's title insurance as
described in clause (xii) of Schedule I hereof 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.
(d) If upon the second anniversary of the Closing Date the Seller receives
notice that exceptions remain outstanding with respect to any Mortgage Loan,
pursuant to Section 2.02(b) of the Pooling and Servicing Agreement, the Seller
shall, within 90 days of such anniversary: (i) cure such exception, (ii)
repurchase the affected Mortgage Loan, or (iii) deliver to the Trustee an
Opinion of Counsel to the effect that such defect does not materially and
adversely affect the Certificateholders.
SECTION 4. Representations and Warranties of the Purchaser. In order to induce
the Seller to enter into this Agreement, the Purchaser hereby represents and
warrants for the benefit of the Seller as of the date hereof that:
(a) The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina. The Purchaser has
the full corporate power and authority and legal right to acquire the LBHI
Mortgage Loans from the Seller and to transfer the LBHI Mortgage Loans to the
Trustee.
(b) This Agreement has been duly and validly authorized, executed and
delivered by the Purchaser, all requisite action by the Purchaser's directors
and officers has been taken in connection therewith, and (assuming the due
authorization, execution and delivery hereof by the Seller) this Agreement
constitutes the valid, legal and binding agreement of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such enforcement
may be limited by (A) laws relating to bankruptcy, insolvency, reorganization,
receivership or moratorium, (B) other laws relating to or affecting the rights
of creditors generally, or (C) general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law).
(c) Except as may be required under federal or state securities laws (and
which will be obtained on a timely basis), no consent, approval, authorization
or order of, registration or filing with, or notice to, any governmental
authority or court, is required, under federal or state law, for the execution,
7
<PAGE>
delivery and performance by the Purchaser of or compliance by the Purchaser with
this Agreement, or the consummation by the Purchaser of any transaction
described in this Agreement.
(d) None of the acquisition of the LBHI Mortgage Loans by the Purchaser,
the transfer of the LBHI Mortgage Loans to the Trustee, and the execution,
delivery or performance of this Agreement by the Purchaser, conflicts or will
conflict with, results or will result in a breach of, or constitutes or will
constitute a default under (A) any term or provision of the Purchaser's Articles
of Incorporation or Bylaws, (B) any term or provision of any material agreement,
contract, instrument or indenture, to which the Purchaser is a party or by which
the Purchaser is bound, or (C) any law, rule, regulation, order, judgment, writ,
injunction or decree of any court or governmental authority having jurisdiction
over the Purchaser or its assets.
(e) Under GAAP and for federal income tax purposes, the Purchaser will
report the transfer of the LBHI Mortgage Loans by the Seller to the Purchaser as
a sale of the LBHI Mortgage Loans to the Purchaser in exchange for consideration
consisting of (A) a cash amount equal to 100% of the LBHI Balance, plus (B)
interest accrued on each LBHI Mortgage Loan at the related Net Mortgage Rate,
for the period from and including the Cut-off Date up to but not including the
Closing Date.
SECTION Closing. The closing of the sale of the LBHI Mortgage Loans (the
"Closing") shall be held at the offices of Willkie Farr & Gallagher, One
Citicorp Center, 153 East 53rd Street, New York, New York 10022 at 10:00 A.M.,
New York time, on the Closing Date.
The Closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller set forth
in or made pursuant to Sections 3(a) and 3(b) of this Agreement and all of
the representations and warranties of the Purchaser set forth in Section 4
of this Agreement shall be true and correct in all material respects as of
the Closing Date; provided, however, that any material inaccuracy in any
representation and warranty set forth in or made pursuant to Section 3(b)
shall not affect the Purchaser's obligation to purchase the Mortgage Loans
not affected by such inaccuracy;
(b) All documents specified in Section 6 of this Agreement (the
"Closing Documents"), in such forms as are agreed upon and acceptable to
the Purchaser in its reasonable discretion, shall be duly executed and
delivered by all signatories as required pursuant to the respective terms
thereof;
(c) The Seller shall have delivered and released to the Trustee (or a
Custodian on its behalf) and the Master Servicer, respectively, all
documents represented to have been or
8
<PAGE>
required to be delivered to the Trustee and the Master Servicer pursuant to
Section 2 of this Agreement;
(d) All other terms and conditions of this Agreement required to be
complied with on or before the Closing Date shall have been complied with
in all material respects and the Seller shall have the ability to comply
with all terms and conditions and perform all duties and obligations
required to be complied with or performed after the Closing Date; and
(e) The Seller shall have paid all fees and expenses payable by it to
the Purchaser or otherwise pursuant to this Agreement.
Both parties agree to use their best efforts to perform their respective
obligations hereunder in a manner that will enable the Purchaser to purchase the
LBHI Mortgage Loans on the Closing Date.
SECTION 6. Closing Documents. The Closing Documents shall consist of the
following:
(a) This Agreement duly executed by the Purchaser and the Seller;
(b) A Certificate of the Seller, executed by a duly authorized officer of
the Seller and dated the Closing Date, and upon which the Purchaser and the
Underwriters may rely, to the effect that: (i) the representations and
warranties of the Seller in this Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made on such
date; and (ii) the Seller has, in all material respects, complied with all the
agreements and satisfied all the conditions on its part that are required under
this Agreement to be performed or satisfied at or prior to the date hereof;
(c) An Officer's Certificate from an officer of the Seller, in his or her
individual capacity, dated the Closing Date, and upon which the Purchaser may
rely, to the effect that each individual who, as an officer or representative of
the Seller, signed this Agreement or any other document or certificate delivered
on or before the Closing Date in connection with the transactions contemplated
herein, was at the respective times of such signing and delivery, and is as of
the Closing Date, duly elected or appointed, qualified and acting as such
officer or representative, and the signatures of such persons appearing on such
documents and certificates are their genuine signatures;
(d) An Officer's Certificate from an officer of the Seller, in his or her
individual capacity, dated the Closing Date, and upon which the Purchaser and
the Underwriters may rely, to the effect that (i) such officer has carefully
examined the Prospectus and nothing has come to his attention that would lead
9
<PAGE>
him to believe that the Prospectus, as of the date of the Prospectus Supplement
or as of the Closing Date, included or includes any untrue statement of a
material fact relating to the LBHI Mortgage Loans or omitted or omits to state
therein a material fact necessary in order to make the statements therein
relating to the LBHI Mortgage Loans, in light of the circumstances under which
they were made, not misleading, and (ii) such officer has examined the
Memorandum and nothing has come to his attention that would lead him to believe
that the Memorandum, as of the date thereof or as of the Closing Date, included
or includes any untrue statement of a material fact relating to the LBHI
Mortgage Loans or omitted or omits to state therein a material fact necessary in
order to make the statements therein related to the LBHI Mortgage Loans, in the
light of the circumstances under which they were made, not misleading.
(e) The resolutions of the board of directors authorizing the Seller's
entering into the transactions contemplated by this Agreement, the certificate
of incorporation and by-laws of the Seller, and a certificate of good standing
of the Seller issued by the Secretary of State of the State of Delaware not
earlier than sixty (60) days prior to the Closing Date;
(f) A written opinion of counsel for the Seller, in form and substance
acceptable to the Purchaser and its counsel, with any modifications required by
the rating agencies identified in the Prospectus Supplement (the "Rating
Agencies"), dated the Closing Date and addressed to the Purchaser, the
Underwriters and each of the Rating Agencies, together with such other written
opinions as may be required by the Rating Agencies; and
(g) Such further certificates, opinions and documents as the Purchaser may
reasonably request.
SECTION 7. Indemnification.
(a) The Seller shall indemnify and hold harmless the Purchaser, the
Underwriters, their respective officers and directors, and each person, if any,
who controls the Purchaser or any Underwriter within the meaning of either
Section 15 of the Securities Act of 1933, as amended (the "1933 Act") or Section
20 of the Securities Exchange Act of 1934, as amended (the "1934 Act"), against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the 1933 Act, the 1934 Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) (i) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in (A) the Prospectus Supplement,
the Memorandum, the Diskette or, insofar as they are required to be filed as
part of the Registration Statement pursuant to the No-Action Letters, any
Computational Materials or ABS Term Sheets with respect to
10
<PAGE>
the Registered Certificates, or in any revision or amendment of or supplement to
any of the foregoing or (B) any items similar to Computational Materials and ABS
Term Sheets forwarded to prospective investors in the Non-Registered
Certificates, or (ii) arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; but only if and to the extent that
(I) any such untrue statement or alleged untrue statement or omission or alleged
omission arises out of or is based upon an untrue statement or omission with
respect to the LBHI Mortgage Loans, the related Mortgagors and/or the related
Mortgaged Properties contained in the Master Tape (it being herein acknowledged
that the Master Tape was used to prepare the Prospectus Supplement including
without limitation Annex A thereto, the Memorandum, the Diskette, the
Computational Materials and ABS Term Sheets with respect to the Registered
Certificates and any items similar to Computational Materials and ABS Term
Sheets forwarded to prospective investors in the Non-Registered Certificates),
(II) any such untrue statement or alleged untrue statement or omission or
alleged omission is with respect to, or arises out of or is based upon an untrue
statement or omission with respect to, the information regarding the LBHI
Mortgage Loans, the related Mortgagors, the related Mortgaged Properties and/or
the Seller set forth (X) in the Prospectus Supplement and the Memorandum under
the headings "Summary of the Prospectus Supplement(The Mortgage Pool" or
"Summary of the Memorandum(The Mortgage Pool", as applicable, "Risk Factors(The
Mortgage Loans" and "Description of the Mortgage Pool" and (Y) on Annex A to the
Prospectus Supplement and, to the extent consistent therewith, on the Diskette,
or (III) any such untrue statement or alleged untrue statement or omission or
alleged omission arises out of or is based upon a breach of the representations
and warranties of the Seller set forth in or made pursuant to Section 3;
provided that the indemnification provided by this Section 7 shall not apply to
the extent that such untrue statement or omission was made as a result of an
error in the manipulation of, or in any calculations based upon, or in any
aggregation of the information regarding the LBHI Mortgage Loans, the related
Mortgagors and/or the related Mortgaged Properties set forth in the Master Tape
and Annex A to the Prospectus Supplement, including without limitation the
aggregation of such information with comparable information relating to the
First Union Mortgage Loans in the Trust Fund. This indemnity agreement will be
in addition to any liability which the Seller may otherwise have.
For purposes of this Agreement, "Registration Statement" shall mean the
registration statement No. 333-07854 filed by the Purchaser on Form S-3,
including without limitation exhibits thereto and information incorporated
therein by reference; "Prospectus" shall mean the prospectus dated October 29,
1997, as supplemented by the prospectus supplement dated
11
<PAGE>
November 19, 1997 (the "Prospectus Supplement"), relating to the Registered
Certificates including all annexes thereto; "Memorandum" shall mean the private
placement memorandum dated November 25, 1997, relating to the Non-Registered
Certificates; "Registered Certificates" shall mean the Class A-1, Class A-2,
Class A-3, Class B, Class C, Class D, Class E and Class IO Certificates;
"Non-Registered Certificates" shall mean the Certificates other than the
Registered Certificates; "Computational Materials" shall have the meaning
assigned thereto in the no-action letter dated May 20, 1994 issued by the
Division of Corporation Finance of the Securities and Exchange Commission (the
"Commission") to Kidder, Peabody Acceptance Corporation I, Kidder, Peabody & Co.
Incorporated, and Kidder Structured Asset Corporation and the no-action letter
dated May 27, 1994 issued by the Division of Corporation Finance of the
Commission to the Public Securities Association (together, the "Kidder
Letters"); "ABS Term Sheets" shall have the meaning assigned thereto in the
no-action letter dated February 17, 1995 issued by the Division of Corporation
Finance of the Commission to the Public Securities Association (the "PSA Letter"
and, together with the Kidder letters, the "No-Action Letters"); "Diskette"
shall mean the diskette attached to each of the Prospectus and the Memorandum;
and "Master Tape" shall mean the compilation of information and data regarding
the LBHI Mortgage Loans and the First Union Mortgage Loans covered by the Agreed
Upon Procedures Letter dated November 19, 1997 and rendered by Deloitte & Touche
LLP (a "hard copy" of which Master Tape was initiated on behalf of the Seller
and the Purchaser).
(b) Promptly after receipt by any person entitled to indemnification under
this Section 7 (an "indemnified party") of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against the Seller (the "indemnifying party") under this Section 7, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability that it
may have to any indemnified party otherwise than under this Section 7. In case
any such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have reasonably
concluded that there may be legal defenses available to it or them and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
12
<PAGE>
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Purchaser, representing all the
indemnified parties under Section 7(a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall only be in respect of the counsel referred to in such
clause (i) or (iii).
(c) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party under Section 7(a) hereof or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnified and indemnifying
parties in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the indemnified and indemnifying parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such parties.
(d) The Purchaser and the Seller agree that it would not be just and
equitable if contribution pursuant to Section 7(c) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the considerations referred to in Section 7(c) above. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages and
liabilities referred to in this Section 7 shall be deemed to include, subject to
the limitations set forth above, any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim, except where the indemnified party is required to bear such
expenses pursuant to this Section 7, which expenses the indemnifying party shall
pay as and when incurred, at the request of the indemnified party, to the extent
13
<PAGE>
that the indemnifying party will be ultimately obligated to pay such expenses.
If any expenses so paid by the indemnifying party are subsequently determined to
not be required to be borne by the indemnifying party hereunder, the party that
received such payment shall promptly refund the amount so paid to the party
which made such payment. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnity and contribution agreements contained in this Section 7
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by the Purchaser, the
Underwriters, any of their respective directors or officers, or any person
controlling the Purchaser or the Underwriters, and (iii) acceptance of and
payment for any of the Certificates.
(f) Without limiting the generality or applicability of any other provision
of this Agreement, the Underwriters shall be third-party beneficiaries of the
provisions of this Section 7.
SECTION 8. Costs. The Seller shall pay (or shall reimburse the Purchaser to the
extent that the Purchaser has paid) the Seller's pro rata portion of the
aggregate of the following amounts (the Seller's pro rata portion to be
determined according to the percentage that the LBHI Balance represents of the
Initial Pool Balance): (i) the costs and expenses of printing (or otherwise
reproducing) and delivering a preliminary and final Prospectus and Memorandum
relating to the Certificates; (ii) the initial fees, costs, and expenses of the
Trustee (including reasonable attorneys' fees); (iii) the filing fee charged by
the Securities and Exchange Commission for registration of the Certificates so
registered; (iv) the fees charged by the Rating Agencies to rate the
Certificates so rated; (v) the expense of recording any assignment of Mortgage
or assignment of Assignment of Leases as contemplated by Section 2 hereof; and
(vi) the cost of obtaining a "comfort letter" from a firm of certified public
accountants selected by the Purchaser and the Seller with respect to numerical
information in respect of the LBHI Mortgage Loans included in the Prospectus and
Memorandum. All other costs and expenses in connection with the transactions
contemplated hereunder shall be borne by the party incurring such expense.
SECTION 9. Grant of a Security Interest. It is the express intent of the parties
hereto that the conveyance of the LBHI Mortgage Loans by the Seller to the
Purchaser as provided in Section 2 hereof be, and be construed as, a sale of the
LBHI Mortgage Loans by the Seller to the Purchaser and not as a pledge of the
LBHI Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. However, if, notwithstanding the aforementioned intent
of the parties, the LBHI Mortgage Loans are held to be property of the Seller,
then, (a) it is the express intent of the parties that such conveyance
14
<PAGE>
be deemed a pledge of the LBHI Mortgage Loans by the Seller to the Purchaser to
secure a debt or other obligation of the Seller, and (b) (i) this Agreement
shall also be deemed to be a security agreement within the meaning of Articles 8
and 9 of the New York Uniform Commercial Code; (ii) the conveyance provided for
in Section 2 hereof shall be deemed to be a grant by the Seller to the Purchaser
of a security interest in all of the Seller's right, title and interest in and
to the LBHI Mortgage Loans, and all amounts payable to the holder of the LBHI
Mortgage Loans in accordance with the terms thereof, and all proceeds of the
conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property, including without limitation all amounts, other
than investment earnings, from time to time held or invested in the Certificate
Account, the Distribution Account or, if established, the REO Account (each as
defined in the Pooling and Servicing Agreement) whether in the form of cash,
instruments, securities or other property; (iii) the assignment to the Trustee
of the interest of the Purchaser as contemplated by Section 1 hereof shall be
deemed to be an assignment of any security interest created hereunder; (iv) the
possession by the Trustee or any of its agents, including, without limitation,
the Custodian, of the Mortgage Notes, and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be "possession by the secured party" for purposes of perfecting the
security interest pursuant to Section 9-305 of the New York Uniform Commercial
Code; and (v) notifications to persons (other than the Trustee) holding such
property, and acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the secured party for the purpose of perfecting such security interest under
applicable law. The Seller and the Purchaser shall, to the extent consistent
with this Agreement, take such actions as may be necessary to ensure that, if
this Agreement were deemed to create a security interest in the LBHI Mortgage
Loans, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of this Agreement and the Pooling and Servicing Agreement.
SECTION 10. Notices. All notices, copies, requests, consents, demands and other
communications required hereunder shall be in writing and telecopied or
delivered to the intended recipient at the "Address for Notices" specified
beneath its name on the signature pages hereof or, as to either party, at such
other address as shall be designated by such party in a notice hereunder to the
other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
15
<PAGE>
SECTION 11. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement,
incorporated herein by reference or contained in the certificates of officers of
the Seller submitted pursuant hereto, shall remain operative and in full force
and effect and shall survive delivery of LBHI Mortgage Loans by the Seller to
the Purchaser (and by the Purchaser to the Trustee).
SECTION 12. Severability of Provisions. Any part, provision, representation,
warranty or covenant of this Agreement that is prohibited or which is held to be
void or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation, warranty or covenant of this Agreement that is
prohibited or unenforceable or is held to be void or unenforceable in any
particular jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law,
the parties hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
SECTION 13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but which together shall
constitute one and the same agreement.
SECTION 14. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES, OBLIGATIONS
AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED IN ACCORDANCE WITH
THE INTERNAL LAWS AND DECISIONS OF NEW YORK. THE PARTIES HERETO INTEND THAT THE
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.
SECTION 15. Further Assurances. The Seller and the Purchaser agree to execute
and deliver such instruments and take such further actions as the other party
may, from time to time, reasonably request in order to effectuate the purposes
and to carry out the terms of this Agreement.
SECTION 16. Successors and Assigns. The rights and obligations of the Seller
under this Agreement shall not be assigned by the Seller without the prior
written consent of the Purchaser, except that any person into which the Seller
may be merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Seller is a party, or any person
succeeding to all or substantially all of the business of the Seller, shall be
the successor to the Seller hereunder. The Purchaser has the right to assign its
interest under this Agreement, in whole or in part, as may be required to effect
the purposes of the Pooling and Servicing Agreement, and the assignee shall, to
the extent of such assignment, succeed to the rights
16
<PAGE>
and obligations hereunder of the Purchaser. Subject to the foregoing, this
Agreement shall bind and inure to the benefit of and be enforceable by the
Seller, the Purchaser, the Underwriters (as intended third party beneficiaries
hereof) and their permitted successors and assigns, and the officers, directors
and controlling persons referred to in Section 7.
SECTION 17. Amendments. No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and signed by a duly
authorized officer of the party, or third party beneficiary, against whom such
waiver or modification is sought to be enforced.
17
<PAGE>
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their
names to be signed hereto by their respective duly authorized officers as of the
date first above written.
SELLER
------
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ MICHAEL MAZZEI
----------------------------------------
Name: Michael Mazzei
Title: Managing Director
Address for Notices:
Lehman Brothers Inc.
3 World Financial Center
New York, NY 10285
Attention: Michael Mazzei
Telecopier No.: (212) 526-3768
Telephone No.: (212) 526-7000
PURCHASER
---------
FIRST UNION COMMERCIAL
MORTGAGE SECURITIES, INC.
By: /s/ MICHAEL H. GRECO
----------------------------------------
Name: Michael H. Greco
Title Senior Vice President
Address for Notices:
One First Union Center
301 South College Street
Charlotte, North Carolina 28288-0600
Attention: Michael H. Greco
Telecopier No.: (704) 374-6435
Telephone No.: (704) 383-9691
18
<PAGE>
SCHEDULE I
(i) The information pertaining to each Mortgage Loan set forth in the
Mortgage Loan Schedule was true and correct in all material respects as of the
Cut-Off Date;
(ii) If such Mortgage Loan was originated by the Seller or an affiliate
thereof, then, as of the date of its origination, such Mortgage Loan complied in
all material respects with, or was exempt from, all requirements of federal,
state or local law relating to the origination of such Mortgage Loan; and, if
such Mortgage Loan was not originated by the Seller or an affiliate thereof,
then, to the best of the Seller's knowledge after having performed the type of
due diligence customarily performed by prudent institutional commercial and
multifamily mortgage lenders, as of the date of its origination, such Mortgage
Loan complied in all material respects with, or was exempt from, all
requirements of federal, state or local law relating to the origination of such
Mortgage Loan;
(iii) The Seller owns the Mortgage Loan, has good and marketable title
thereto, has full right and authority to sell, assign and transfer the Mortgage
Loan and is transferring the Mortgage Loan free and clear of any and all liens,
pledges, charges or security interests of any nature encumbering such Mortgage
Loan, and no provision of the Mortgage Note, Mortgage or other loan document
relating to such Mortgage Loan prohibits or restricts the Seller's right to
assign or transfer such Mortgage Loan;
(iv) The proceeds of such Mortgage Loan have been fully disbursed and there
is no requirement for future advances thereunder;
(v) Each of the related Mortgage Note, Mortgage(s), Assignment of Leases,
if any, and other agreements executed in connection therewith is the legal,
valid and binding obligation of the maker thereof (subject to any non-recourse
provisions therein and any state anti-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 a legal opinion to such effect was obtained by the originator of
such Mortgage Loan at the time of origination;
(vi) As of the date of its origination, there was no valid offset, defense,
counterclaim or right to rescission with respect to any of the related Mortgage
Note,
I-1
<PAGE>
Mortgage(s) or other agreements executed in connection therewith, and, as of the
Cut-off Date, to the best knowledge of the Seller, there is no valid offset,
defense, counterclaim or right to rescission with respect to such Mortgage Note,
Mortgage(s) or other agreements;
(vii) The assignment of the related Mortgage and assignment of leases to
the Trustee constitutes the legal, valid, binding and enforceable assignment of
such Mortgage 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);
(viii) Except with respect to the Mortgage Loans listed in Exhibit C
hereto, each related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property, which Mortgaged Property is free and clear of all
encumbrances and liens having priority over or on a parity with the first lien
of such Mortgage, except for (a) liens for real estate taxes and special
assessments not yet due and payable, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions appearing of record being
customarily acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal of such Mortgaged Property made in
connection with the origination of such Mortgage Loan, (c) other matters to
which like properties are commonly subject and which do not, individually or in
the aggregate, materially interfere with the benefits of the security intended
to be provided by such Mortgage or materially affect the value or marketability
of such Mortgaged Property, and such encumbrances do not materially interfere
with the current use or operation of the related Mortgaged Property or the
ability of the related Mortgagor to timely pay in full the principal and
interest on the related Mortgage Note; there exists with respect to such
Mortgaged Property an assignment of leases and rents provision, whether as part
of the related Mortgage or as a separate document or instrument, which
establishes and creates a first priority security interest in and to leases and
rents arising in respect of the related Mortgaged Property, subject only to
encumbrances described in subsections (a), (b) and (c) of this subparagraph
(viii);
(ix) The Seller has filed and/or recorded in all appropriate public filing
and recording offices all UCC-1 financing statements necessary to create and
perfect a security interest in and lien on the items of personal property
described therein (or, if not filed and/or recorded, has submitted such UCC-1
financing statements for
I-2
<PAGE>
filing and/or recording and such UCC-1 financing statements are in form and
substance acceptable for filing and/or recording), to the extent perfection may
be effected pursuant to applicable law by recording or filing;
(x) All taxes and governmental assessments that prior to the Cut-off Date
became due and owing in respect of, and affect, each related Mortgaged Property
have been paid, or an escrow of funds in an amount sufficient to cover such
payments has been established;
(xi) As of the date of its origination, there was no proceeding pending for
the total or partial condemnation of each related Mortgaged Property that
materially affects the value thereof, and such Mortgaged Property was free of
material damage; and, as of the Cut-off Date, the Seller has not received any
notice of the commencement of any proceeding for the total or partial
condemnation of any related Mortgaged Property that materially affects the value
thereof, and such Mortgaged Property is free of material damage;
(xii) Each related Mortgaged Property is covered by an ALTA (or its
equivalent) lender's title insurance policy insuring that each related Mortgage
is a valid first lien on such Mortgaged Property in the original principal
amount of the Mortgage Loan after all advances of principal, or there is a
binding commitment from a title insurer qualified and licensed in the applicable
jurisdiction, as required, to issue such policy; such title insurance policy, if
issued, is in full force and effect, is freely assignable and will inure solely
to the benefit of the Trustee as mortgagee of record, or any such commitment is
a legal, valid and binding obligation of such insurer; no claims have been made
under such title insurance policy, if issued; and to the best knowledge of the
Seller, no prior mortgagee has done, by act or omission, anything which would
materially impair the coverage of any such title insurance policy;
(xiii) As of the date of its origination, all insurance required under each
related Mortgage, which insurance covered such risks as were customarily
acceptable to prudent commercial and multifamily mortgage lending institutions
lending on the security of property comparable to the related Mortgaged Property
in the jurisdiction in which such Mortgaged Property is located, and with
respect to a fire and extended perils insurance policy, was in an amount
(subject to a customary deductible) at least equal to 100% of the full insurable
replacement cost of the improvements located on such Mortgaged Property, was in
full force and effect with respect to each related Mortgaged Property; and, as
of the Cut-off Date, to the best knowledge of the Seller, all insurance required
under each Mortgage,
I-3
<PAGE>
which insurance covers such risks and is in such amounts as are customarily
acceptable to prudent commercial and multifamily mortgage lending institutions
lending on the security of property comparable to the related Mortgaged Property
in the jurisdiction in which such Mortgaged Property is located, is in full
force and effect with respect to each related Mortgaged Property; and no notice
of termination or cancellation with respect to any such insurance policy has
been received by the Seller; except for certain amounts not greater than amounts
which would be considered prudent by an institutional commercial mortgage lender
with respect to a similar mortgage loan and which are set forth in the related
Mortgage, any insurance proceeds in respect of a casualty loss or taking, will
be applied either to the repair or restoration of all or part of the related
Mortgaged Property or the reduction of the outstanding principal balance of the
Mortgage Loan;
(xiv) Other than payments due but not yet 30 days or more delinquent, (A)
there is no material default, breach, violation or event of acceleration, and
there is no other material default, breach, violation or event of acceleration,
existing under the related Mortgage Note or each related Mortgage, and (B) to
the best of the Seller's knowledge, after due inquiry, there is no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a material default, breach, violation or event of
acceleration under any of the documents referred to in clause (A), and, to the
knowledge of the Seller, there is no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute any
other material default, breach, violation or event of acceleration under any of
the documents referred to in clause (A); the Seller has not waived any material
default, breach, violation or event of acceleration under any of the documents
referred to in clause (A), and the Seller has not waived any other material
default, breach, violation or event of acceleration under such documents; and
under the terms of each Mortgage Loan, each related Mortgage Note, each related
Mortgage and the other loan documents in the related Mortgage File, no person or
party other than the mortgagee may declare an event of default or accelerate the
related indebtedness under such Mortgage Loan, Mortgage Note or Mortgage;
(xv) As of the Cut-off Date, the Mortgage Loan is not, and in the prior 12
months (or since the date of origination if such Mortgage Loan has been
originated within the past 12 months), has not been, 30 days or more past due in
respect of any Scheduled Payment;
(xvi) Except with respect to the Mortgage Loans listed in Exhibit D hereto
which accrue interest on the basis of the actual number of days elapsed over a
360 day
I-4
<PAGE>
year, the Mortgage Loan accrues interest (payable monthly in arrears) at a fixed
rate of interest (except with respect to ARD Loans, with respect to which the
rate at which interest accrues thereon increases after the Anticipated Repayment
Date, except with respect to the Mortgage Loan listed in Exhibit E hereto that
accrues interest at an adjustable rate, and except in connection with the
occurrence of a default and the accrual of default interest) on the basis of a
360-day year consisting of twelve 30-day months;
(xvii) Each related Mortgage does not provide for or permit, without the
prior written consent of the holder of the Mortgage Note, each related Mortgaged
Property to secure any other promissory note or obligation, except as expressly
described in such Mortgage and other than another Mortgage Loan in the Trust
Fund;
(xviii) Such Mortgage Loan is or constitutes part of a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code. Accordingly, either as of
the date of origination or the Closing Date, the fair market value of the real
property securing the Mortgage Loan was not less than 80% of the "adjusted issue
price" (within the meaning of the REMIC Provisions) of such Mortgage Loan. For
purposes of the preceding sentence, the fair market value of the real property
securing the Mortgage Loan was first reduced by the amount of any lien on such
real property that is senior to the lien that secures such Mortgage Loan, and
was further reduced by a proportionate amount of any lien that is on a parity
with the lien that secures such Mortgage Loan;
(xix) Prepayment Premiums and Yield Maintenance Charges payable with
respect to the Mortgage Loan, if any, constitute "customary prepayment
penalties" within the meaning of Treasury Regulation Section 1.860G-1(b)(2);
(xx) One or more environmental site assessments were performed by an
environmental consulting firm independent of the Seller and the Seller's
affiliates with respect to each related Mortgaged Property during the 18-month
period preceding the Cut-off Date, and the Seller, having made no independent
inquiry other than to review the report(s) prepared in connection with the
assessment(s) referenced herein, has no knowledge of any material and adverse
environmental condition or circumstance affecting such Mortgaged Property that
was not disclosed in such report(s);
(xxi) The related Mortgage Note, Mortgage(s) and Assignment of Leases, if
any, contain customary and enforceable provisions such as to render the rights
and remedies of the holder thereof adequate for the realization against the
related Mortgaged Property or properties of the
I-5
<PAGE>
benefits of the security, including realization by judicial or, if applicable,
non-judicial foreclosure, subject to applicable 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);
(xxii) To the best of the Seller's knowledge, after due inquiry, the
related Mortgagor is not a debtor in any bankruptcy, reorganization, insolvency
or comparable proceeding;
(xxiii) Such Mortgage Loan is secured by either a mortgage on a fee simple
interest or a leasehold estate in a commercial property or multifamily property
owned by the related Mortgagor, including all of the related Mortgagor's
interest in all improvements on the related Mortgaged Property;
(xxiv) Except with respect to the Mortgage Loans listed in Exhibit F
hereto, which are ARD Loans, such Mortgage Loan does not provide for negative
amortization;
(xxv) Such Mortgage Loan is a whole loan, contains no equity participation
by the lender or shared appreciation feature and does not provide for any
contingent or additional interest in the form of participation in the cash flow
of the related Mortgaged Property;
(xxvi) The related Mortgage contains provisions for the acceleration of the
payment of the unpaid principal balance of such Mortgage Loan if, without the
prior written consent of the mortgagee, each related Mortgaged Property or any
interest therein, is directly or indirectly encumbered in connection with
subordinate financing; provided, however, the Mortgage Loans listed in Exhibit G
hereto, are encumbered by subordinated debt;
(xxvii) Except with respect to (W) transfers of certain non-controlling
interests in the Mortgagors as specified in the related Mortgage, (X) the
Mortgage Loans listed in Exhibit H hereto, which permit a transfer of the
related Mortgaged Property to a person that satisfies certain criteria
(including criteria related to bankruptcy remoteness and property management
experience) specified in the related Mortgage, (Y) the Mortgage Loans listed in
Exhibit I hereto, which permit a one-time transfer of the Mortgaged Property,
subject to payment of an assumption fee and certain other conditions, and (Z)
the Mortgage Loans listed in Exhibit J hereto, which permit two or more separate
transfers of the related Mortgaged Property, subject to payment of an assumption
fee and certain other conditions, the related Mortgage contains either (A)
I-6
<PAGE>
provisions for the acceleration of the payment of the unpaid principal balance
of such Mortgage Loan if each related Mortgaged Property, or any interest
therein, is directly or indirectly transferred or sold without the prior written
consent of the mortgagee, or (B) provisions for the acceleration of the payment
of the unpaid principal balance of such Mortgage Loan if each related Mortgaged
Property, or any interest therein, is directly or indirectly transferred or sold
without the related Mortgagor having satisfied certain conditions specified in
the related Mortgage with respect to permitted transfers;
(xxviii) The Mortgage Loan, together with any other Mortgage Loan made to
the same Mortgagor or to an affiliate of such Mortgagor, does not represent more
than 5% of the aggregate Initial Pool Balance;
(xxix) Except as set forth in the related Mortgage File, the terms of the
related Mortgage Note and Mortgage(s) have not been waived, modified, altered,
satisfied, impaired, canceled, subordinated or rescinded in any manner which
materially interferes with the security intended to be provided by such
Mortgage;
(xxx) Each related Mortgaged Property was inspected by or on behalf of the
related originator during the 12 month period prior to the related origination
date;
(xxxi) Except for the Mortgage Loans listed in Exhibit K hereto, the terms
of the related Mortgage Note or Mortgage do not provide for the release of any
material portion of the related Mortgaged Property from the lien of such
Mortgage without payment in full of the Mortgage Loan;
(xxxii) The related Mortgagor has covenanted in the Mortgage Loan documents
to maintain the related Mortgaged Property in compliance with all applicable
laws, zoning ordinances, rules, covenants and restrictions affecting the
construction, occupancy, use and operation of such Mortgaged Property, and the
related originator performed the type of due diligence in connection with the
origination of such Mortgage Loan customarily performed by prudent institutional
commercial and multifamily mortgage lenders with respect to the foregoing
matters; the Seller has received no notice of any material violation of any
applicable laws, zoning ordinances, rules, covenants or restrictions affecting
the construction, occupancy, use or operation of such Mortgaged Property; to the
Seller's knowledge (based on surveys and/or title insurance obtained in
connection with the origination of such Mortgage Loan), as of the date of such
origination, no improvement that was included for the purpose of determining the
appraised value of the related Mortgaged Property at the time of origination of
such Mortgage Loan lay outside the boundaries and
II-7
<PAGE>
building restriction lines of such property to an extent which would have a
material adverse affect on the related Mortgagor's use and operation of such
Mortgaged Property (unless affirmatively covered by the title insurance referred
to in paragraph (xii) above), and no improvements on adjoining properties
encroached upon such Mortgaged Property to any material extent;
(xxxiii) Except with respect to Credit Lease Loans, the related Mortgagor
has covenanted in the Mortgage Loan documents to deliver each year to the
mortgagee an operating statement of each related Mortgaged Property covering the
twelve-month period identified therein;
(xxxiv) With respect to at least 95% of the Mortgage Loans, the related
Mortgagor has covenanted in its organizational documents and/or the Mortgage
Loan documents to own no significant asset other than the related Mortgaged
Property or Mortgaged Properties, as applicable, and assets incidental to its
ownership and operation of such Mortgaged Property;
(xxxv) With respect to any Mortgage Loan that is secured in whole or in
material part by the interest of a Mortgagor as a lessee under a Ground Lease
but not by the related fee interest:
(A) Such Ground Lease or a memorandum thereof has been or will be duly
recorded (other than the Ground Lease related to the Mortgage Loan listed in
Exhibit L hereto) and such Ground Lease permits the interest of the lessee
thereunder to be encumbered by the related Mortgage or, if consent of the lessor
thereunder is required, it has been obtained prior to the Closing Date;
(B) Upon the foreclosure of the Mortgage Loan (or acceptance of a deed in
lieu thereof), the Mortgagor's interest in such Ground Lease is assignable to
the Trustee without the consent of the lessor thereunder (or, if any such
consent is required, it has been obtained prior to the Closing Date) and, in the
event that it is so assigned, is further assignable by the Trustee and its
successors without a need to obtain the consent of such lessor; provided, that
the lessor's consent to a subsequent sale is required under the Ground Lease
related to the Mortgage Loans listed in Exhibit M hereto;
(C) Such Ground Lease may not be amended, modified, canceled or terminated
without the prior written consent of the mortgagee thereunder and that any such
action without such consent is not binding on such mortgagee, its successors or
assigns;
I-8
<PAGE>
(D) Unless otherwise set forth in the Ground Lease, the Ground Lease does
not permit any increase in the amount of rent payable by the ground lessee
thereunder during the term of the Mortgage Loan;
(E) Such Ground Lease was in full force and effect as of the date of
origination, and to the actual knowledge of the Seller, at the Closing Date,
such Ground Lease is in full force and effect and other than payments due but
not yet 30 days or more delinquent, (1) there is no material default, and (2)
there is no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a material default
under such Ground Lease;
(F) Such Ground Lease or an estoppel or consent letter received by the
mortgagee from the lessor, requires the lessor thereunder to give notice of any
default by the lessee to the mortgagee; and such Ground Lease, or an estoppel or
consent letter received by the mortgagee from the lessor, further provides that
no notice of termination given under such Ground Lease is effective against the
mortgagee unless a copy has been delivered to the mortgagee in the manner
described in such Ground Lease, estoppel or consent letter;
(G) The ground lessee's interest in the Ground Lease is not subject to any
liens or encumbrances superior to, or of equal priority with, the related
Mortgage, other than the related ground lessor's related fee interest and any
exceptions stated in the related title insurance policy or opinion of title,
which exceptions do not and will not materially and adversely interfere with (1)
the ability of the related Mortgagor timely to pay in full the principal and
interest on the related Mortgage Note, (2) the use of such Mortgaged Property
for the use currently being made thereof, or (3) the value of the Mortgaged
Property;
(H) A mortgagee is permitted a reasonable opportunity to cure any curable
default under such Ground Lease before the lessor thereunder may terminate such
Ground Lease;
(I) Such Ground Lease has an original term (including any extension options
set forth therein) that extends not less than 10 years beyond the Stated
Maturity Date of the related Mortgage Loan;
(J) Except with respect to the Ground Lease related to each of the Mortgage
Loans listed in Exhibit N hereto, under the terms of such Ground Lease, any
estoppel or consent letter received by the mortgagee from the lessor, and the
related Mortgage, taken together, any related insurance proceeds or condemnation
proceeds will be applied
I-9
<PAGE>
either to the repair or restoration of all or part of the related Mortgaged
Property, with the mortgagee or a trustee appointed by it having the right to
hold and disburse such proceeds as the repair or restoration progresses, or to
the payment of the outstanding principal balance of the Mortgage Loan together
with any accrued interest thereon;
(K) Such Ground Lease does not impose any restrictions on subletting which
would be viewed as commercially unreasonable by a prudent commercial mortgage
lender;
(L) Except with respect to Mortgage Loans listed on Exhibit O hereto, the
ground lessor under such Ground Lease is required to enter into a new lease upon
termination of the Ground Lease for any reason, including the rejection of the
Ground Lease in bankruptcy, and for any reason, upon the request of the lender;
(M) The terms of the related Ground Lease have not been waived, modified,
altered, satisfied, impaired, canceled, subordinated or rescinded in any manner
which materially interferes with the security intended to be provided by such
Mortgage.
(xxxvi) No advance of funds has been made, directly or indirectly, by the
Seller to the Mortgagor other than pursuant to the Mortgage Note and no funds
have been received from any person other than such Mortgagor for or on account
of payments due on the Mortgage Note;
(xxxvii) To the Seller's actual knowledge, there are no pending 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;
(xxxviii) Such Mortgage Loan complied with all applicable usury laws in
effect at its date of origination;
(xxxix) To the extent required under applicable law as of the Closing Date,
the originator of such Mortgage Loan was authorized to do business in the
jurisdiction in which the related Mortgaged Property is located at all times
when it held the Mortgage Loan to the extent necessary to ensure the
enforceability of such Mortgage Loan;
(xl) If the related Mortgage is a deed of trust, a trustee, duly qualified
under applicable law to
I-10
<PAGE>
serve as such, is properly designated and serving under such Mortgage;
(xli) The related Mortgage Note is not secured by any collateral that
secures a mortgage loan that is not in the Trust Fund (except with respect to
the Mortgage Loans listed in Exhibit G hereto), and each Mortgage Loan that is
cross-collateralized is cross-collateralized only with other Mortgage Loans sold
pursuant to this Agreement;
(xlii) The related Mortgaged Property is not located in a flood hazard area
as defined by the Federal Insurance Administration or is covered by flood hazard
insurance;
(xliii) Except with respect to the Mortgage Loans listed on Exhibit P
hereto, one or more engineering assessments were performed by an engineering
consulting firm independent of the Seller and the Seller's affiliates with
respect to each related Mortgaged Property during the 18-month period preceding
the Cut-off Date, and the Seller, having made no independent inquiry other than
to review the report(s) prepared in connection with the assessment(s) referenced
herein, has no knowledge of any material and adverse engineering condition or
circumstance affecting such Mortgaged Property that was not disclosed in such
report(s);
(xliv) All escrow deposits and payments relating to the Mortgage Loan are
under control of the Seller or the servicer of such Mortgage Loan and all
amounts required as of the date hereof under the Mortgage Loan Documents to be
deposited by the related Mortgagor have been deposited;
(xlv) The related Mortgagor has represented to the Seller that as of the
date of origination of the Mortgage Loan, such Mortgagor, the related lessee,
franchisor or operator was in possession of all licenses, permits and
authorizations then required for use of the related Mortgaged Property, which
were valid and in full force and effect; and
(xlvi) The origination, servicing and collection practices used by the
Seller or any prior holder of the Mortgage Note have been in all respects legal,
proper and prudent and have met customary industry standards.
(xlvii) With respect to any Mortgage Loan that is a Credit Lease Loan;
(A) Except with respect to the Mortgage Loans listed in Exhibit Q hereto,
the lease payments due under the related Credit Lease are equal to or greater
than the payments due with respect to the related Mortgage Loan;
I-11
<PAGE>
(B) Except with respect to Credit Lease Loans as indicated in Exhibit R
hereto, the Mortgagor does not have monetary obligations under the related
Credit Lease, and every monetary obligation associated with managing, owning,
developing and operating the leased property, including, but not limited to, the
costs associated with utilities, taxes, insurance, maintenance and repairs is an
obligation of the related Tenant;
(C) Except with respect to Credit Lease Loans listed in Exhibit S hereto,
the Mortgagor does not have any nonmonetary obligations under the related Credit
Lease, except for the delivery of possession of the leased property;
(D) Except with respect to the Credit Lease Loans listed in Exhibit T
hereto, the Mortgagor has not made any representation or warranty in the related
Credit Lease, a breach of which would result in the termination of, or an offset
or abatement with respect to, such Credit Lease;
(E) Except with respect to the Credit Lease Loans listed in Exhibit U
hereto, the related Tenant cannot terminate such Credit Lease for any reason,
prior to the payment in full of: (a) the principal balance of the related
Mortgage Loan; (b) all accrued and unpaid interest on such Mortgage Loan; and
(c) any other sums due and payable under such Mortgage Loan, as of the
termination date, which date is a rent payment date, except for a default by the
related Mortgagor under the Credit Lease;
(F) In the event the related Tenant assigns or sublets the related leased
property, such Tenant (and if applicable, the related guarantor) remains
obligated under the related Credit Lease;
(G) Except with respect to the Credit Lease Loans listed in Exhibit V
hereto, each property related to a Credit Lease Loan is a separate tax lot;
(H) Except with respect to the Credit Lease Loans listed in Exhibit W
hereto, the related Tenant has agreed to indemnify the Mortgagor from any claims
of any nature (a) to which the Mortgagor is subject because of such Mortgagor's
estate in the leased property, or (b) arising from (i) injury to or death of any
person or damage to or loss of property on the leased property or connected with
the use, condition or occupancy of the leased property, (ii) Tenant's violation
of the related Credit Lease, or (iii) any act or omission of the Tenant;
(I) Except with respect to the Mortgage Loans listed in Exhibit X hereto,
related Tenant has agreed to indemnify the Mortgagor from any claims of any
nature arising as a result of any hazardous material affecting the
I-12
<PAGE>
leased property and due to such Tenant's use of the leased property;
(J) Except with respect to the Mortgage Loans listed in Exhibit Y hereto,
in connection with Credit Lease Loans with respect to which a lease guarantee
exists, the related guarantor guarantees the payment due under the related
Credit Lease and such guarantee, on its face, contains no conditions to such
payment;
(K) With respect to Credit Lease Loans that have the benefit of residual
value insurance policies and lease enhancement policies, each such policy has
been obtained, and with respect to the Credit Leases other than bond-type
leases, the required premiums have been paid; and
(L) The list of lease guarantors, if any, attached as Exhibit Z hereto, is
accurate in all material respects.
(xlviii) With respect to Mortgage Loans secured in whole or in part by the
interest of the related mortgagor under a Ground Lease and by the related fee
interest, such fee interest is subject, and subordinated of record, to the
related Mortgage, and such Mortgage does not by its terms provide that it will
be subordinated to the lien of any other mortgage or other lien upon such fee
interest.
I-13
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
1 RA35 Rentar 66-26 Metropolitan Avenue Middle Village
4 RB05 Soho Court 299-307 Elizabeth Street New York
5 RD79 Blue Cross Blue Shield 2800 East 6500 South Salt Lake City
10 RD24 San Pedro Plaza N. Side of Loop 410 E. of San Pedro Blvd. San Antonio
12 RA63 Cypress Palms & Sabal Palms (Roll-up) 400 Lake Ave. & 499 Alternate Keene Rd. Largo
13 RB69 Pinole Vista Crossing IH-80 & Fitzgerald Drive Pinole
14 QZ41 675 Sixth Avenue 675 Sixth Ave. New York
15 RA73 Citrus Center Office Building 255 S. Orange Avenue Orlando
18 RB58 Park Esplanade Apartments 3443 Esplanade Ave. New Orleans
19 QZ04 Glazer Portfolio (Roll-up) Various Various
20 RA90 Cross Island Plaza 133-33 Brookville Boulevard Rosedale
22 RA21 Noland Fashion Square US 40 Highway and Nolan Road Independence
23 RB66 Sheraton Orlando North 600 North Lake Destiny Drive Maitland
29 QZ40 625 Sixth Avenue 625 Sixth Ave. New York
32 RA64 Royal Palms Senior Residence 200 Lake Ave, N.E. Largo
33 RB97 Abrams Run Apartments 232 Long Road King of Prussia
35 RD48 Trexlertown Shopping Center 7150 Hamilton Blvd. Upper and Lower Macungie
37 RB67 Berkley Square 4701 Park Boulevard Plano
40 RA22 Serramonte Plaza 329-391 Gellert Boulevard Daly City
41 RA12 Palm Court Apartments 3995 Overland Avenue Culver City
43 RC09 Yaohan Plaza Torrance 21515 Western Avenue Torrence
44 QY58 Irondequoit Shopping Plaza Hudson & Titus Aves. Irondequiot
45 RB07 The Deauville 8665 Burton Way Los Angeles
46 RA53 The NorthCorp Center 3910 RCA Blvd. Palm Beach Gardens
48 QT78 Holiday Inn Select (Appleton) 150 Nicolet Road Appleton
55 QM24 Mountain View Apartments 22700 Lake Forest Drive El Toro
56 RD64 FEL Facility Lakewood Farmingdale Road Farmingdale
59 RA81 2011 North Soto Street 2011 North Soto St. Los Angeles
61 RC10 Yaohan Plaza Costa Mesa 665 Paularino Avenue Costa Mesa
62 RC19 Brainerd Village Brainerd Road Chattanooga
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
1 NY 45,500,000 45,416,841 8.3400 7/1/07 Act/360
4 NY 33,500,000 33,449,419 7.4300 9/1/12 30/360
5 UT 30,000,000 30,000,000 7.1850 10/1/22 30/360
10 TX 28,687,500 28,670,846 7.2400 10/1/02 Act/360
12 FL 23,400,000 23,372,304 8.6310 9/1/22 30/360
13 CA 23,000,000 22,988,718 7.7500 10/1/12 Act/360
14 NY 23,000,000 22,901,796 8.4200 6/1/22 Act/360
15 FL 21,375,000 21,315,575 7.9100 8/1/07 Act/360
18 LA 20,000,000 19,977,150 7.9400 9/1/07 Act/360
19 PA 20,000,000 19,958,798 8.9300 6/1/07 Act/360
20 NY 19,125,000 19,093,718 7.8800 8/1/07 Act/360
22 MO 18,525,000 18,489,317 8.2500 8/1/12 30/360
23 FL 18,000,000 17,970,413 8.6900 9/1/04 Act/360
29 NY 16,500,000 16,460,174 8.4200 6/1/12 Act/360
32 FL 14,800,000 14,780,274 8.0500 9/1/22 30/360
33 PA 14,000,000 14,000,000 7.5100 11/1/27 30/360
35 PA 13,100,000 13,093,282 7.6200 10/1/07 Act/360
37 TX 12,500,000 12,488,265 8.6500 9/1/07 Act/360
40 CA 12,000,000 11,954,284 8.6700 7/1/04 30/360
41 CA 11,790,000 11,773,564 8.4100 8/1/07 Act/360
43 CA 10,500,000 10,495,288 8.0000 10/1/12 Act/360
44 NY 10,300,000 10,269,569 8.6910 6/1/07 30/360
45 CA 10,000,000 9,986,732 7.3600 9/1/07 Act/360
46 FL 10,000,000 9,985,351 8.2500 8/1/07 Act/360
48 WI 9,800,000 9,749,977 9.4000 5/1/07 30/360
55 CA 10,000,000 9,061,380 7.5000 8/1/01 30/360
56 NJ 9,000,000 9,000,000 8.3800 11/1/12 30/360
59 CA 8,800,000 8,783,677 8.0900 9/1/04 Act/360
61 CA 8,500,000 8,496,186 8.0000 10/1/12 Act/360
62 TN 8,500,000 8,494,274 7.9800 10/1/07 30/360
</TABLE>
Page 1 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
65 QZ72 Shirley Shopping Center Montauk Highway & William Floyd Parkway Shirley
69 RD42 Woodmeade South Apartments 200 Lowwood Drive Knoxville
70 RA20 Park Tower 200 W. Santa Ana Boulevard Santa Ana
71 QY68 Brampton Moors 101 Brampton Lane Cary
74 RC50 Premier Place Shopping Center NWC of Cobb's Ford & McQueen Smith Roads Prattville
76 RD37 Ten Quivira Plaza Shopping Center NWQ Shawnee Mission Pkwy & Quivira Rd. Shawnee
77 RA88 Grandin Ridge Apartments 2400 Windsor Woods Lane Norcross
79 QY56 Buccaneer Trace Apartments 55 E. Deerwood Rd. Savannah
80 QZ10 Euclid Shopping Center 1315 Euclid Ave. Bristol
81 QY51 Overlook Rim Apartments 3202 South Mason Avenue Tacoma
84 RC39 Key Biscayne Galeria 328 Crandon Blvd. Key Biscayne
91 RA70 Main Street Village Apartments 6400 Main St. Columbus
93 RB11 Bayview Apartments 4315 W. 182nd Street Torrance
96 QZ56 Reisterstown Business Center 100-322 Business Center Way Reisterstown
97 RB96 Nob Hill Apartments - Madison 1108 Moorland Road Madison
104 QT33 Ralphs 67th Street Montezuma & 67th Street San Diego
105 RD38 Brywood Shopping Center 8600-8760 E. 63rd Street Kansas City
108 QT21E Bradford Place Apartments 325 Percival Road Columbia
110 RA65 Tri State Plaza NE Route 23 and Route 84 Montague
111 RB12 Chimney Sweep Apartments 775 Camino Del Sur Isla Vista
113 RA25 Holiday Inn-Oceanfront 2605 North A1A Melbourne
114 RC38 Nob Hill Apartments - Birmingham 800 Valley Ave. Birmingham
116 QZ34 The Benchmark 170 Old Country Road Mineola
119 RB41 The Bradley Building 1220 West 6th Street Cleveland
120 QZ69 Lincoln Plaza 4545 North Lincoln Rd. Oklahoma
125 QY67 The 535 Plaza 12444 Highway 535 Orlando
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
65 NY 8,250,000 8,234,773 8.3100 7/1/07 Act/360
69 TN 7,500,000 7,495,930 7.4500 10/1/07 Act/360
70 CA 7,500,000 7,487,785 8.6800 7/1/04 Act/360
71 NC 7,500,000 7,476,817 8.4700 6/1/04 30/360
74 AL 7,230,000 7,230,000 7.9500 11/1/07 30/360
76 KS 7,160,000 7,155,350 8.1600 10/1/07 30/360
77 GA 7,140,000 7,127,772 7.7200 8/1/07 Act/360
79 GA 7,040,000 7,016,198 8.9400 5/1/04 30/360
80 VA 7,031,000 7,014,233 8.6300 7/1/07 30/360
81 WA 7,040,000 7,014,139 8.5350 5/1/04 30/360
84 FL 7,000,000 6,996,673 7.8400 10/1/07 Act/360
91 GA 6,600,000 6,592,053 7.7400 9/1/12 Act/360
93 CA 6,500,000 6,488,356 7.5600 8/1/07 Act/360
96 MD 6,400,000 6,389,097 8.5500 7/1/07 Act/360
97 WI 6,350,000 6,342,551 7.8400 9/1/12 Act/360
104 CA 6,150,000 6,122,436 8.7200 5/1/17 30/360
105 MO 6,110,000 6,106,032 8.1600 10/1/07 30/360
108 SC 5,885,771 5,853,430 8.0000 3/1/04 30/360
110 NJ 5,800,000 5,788,599 8.1500 8/1/07 30/360
111 CA 5,750,000 5,739,700 7.5600 8/1/07 Act/360
113 FL 5,600,000 5,579,458 8.9000 7/1/04 30/360
114 AL 5,500,000 5,497,367 7.8200 10/1/07 Act/360
116 NY 5,500,000 5,488,961 9.0100 6/1/07 Act/360
119 OH 5,400,000 5,391,697 8.0900 8/1/04 Act/360
120 OK 5,300,000 5,280,462 8.8700 7/1/07 30/360
125 FL 5,125,000 5,108,096 9.0600 5/1/04 30/360
</TABLE>
Page 2 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
126 RD50 Vanguard Distribution Building 13900 South Broadway Los Angeles
130 QZ49 Best Western Pensacola 16 Via De Luna Drive Pensacola
131 QT63 Royal Garden Apartments 9352-9372 Holder Street Cypress
134 QY76 The Shores Apartments 1100 Lamar Blvd. East Arlington
136 RA68 Dayton's Bluff Community Care Center 324 Johnson Parkway St. Paul
137 QY26 Kings Plaza Shopping Center 1000 & 1080 Kings Highway New Bedford
140 RC25 College Village Shopping Center SEC College Blvd. & Quivira Road Overland Park
141 RB99 Berwyn House 4800 Berwyn House Road College Park
143 QZ14 Sierra Vista Apartments 710 South Hardy Drive Tempe
145 QZ28 Cedars Executive Center 2939 North Monroe St. Tallahassee
146 QY05 Midwest Warehouse 6634 W. 68th Street Bedford Park
147 RB08 Southington Queen Plaza 825-875 Queen Street Southington
53 QY84 Avalon Manor Note A 14014 Marsh Pike Hagerstown
151 RB80 University Roost Apartments 700 S. Blackbird Road Flagstaff
54 QY86 Avalon Manor Note B 14014 Marsh Pike Hagerstown
152 QY50 Olympic Ridge Apartments 4302 Center Street Tacoma
153 QZ97 Mountain Creek Park 4235 Highway 78 Lilburn
154 QZ91 2600 Post Road 2600 Southport Post Road Southport
155 RA98 Westgate Plaza SEC US 64/Roller Mill Road Franklin
158 RB50 Eagle Crest Apartments 1601 Regency Court Arlington
160 QZ81 Lafayette Green Apartments 8327 West Tidwell Houston
161 QY98 Zinfandel Ranch Apartments 10833 Folsom Boulevard Rancho Cordova
165 RC01 Thompson Creek Shopping Center Thompson Creek Road Stevensville
170 RB57 National Hills Shopping Center 2701 Washington Rd. Augusta
171 QY77 International Outlet Center 5532 International Drive Orlando
172 QY38 Wymberly Pointe Apartments 702 West Warrior Grand Prairie
176 RB46 The Hampton Inn 2311 North Shadeland Avenue Indianapolis
178 QY15 Evergreen Office Center 200 East Del Mar Blvd. Pasadena
180 QT21B Auburn Chase Apartments 401 Turlington Drive Newport News
181 QT21I Foxwood I & II Apartments 19920 Foxwood Forest Humble
184 QZ05 Sunset International 7000 SW 97th Ave. Miami
187 RC55 Moberly Manor Phyllis Drive Bentonville
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
126 CA 5,100,000 5,096,859 7.7930 10/1/07 Act/360
130 FL 5,000,000 4,978,679 9.2400 7/1/20 30/360
131 CA 4,863,000 4,842,232 8.5700 4/1/07 30/360
134 TX 4,815,000 4,797,258 8.5200 5/1/07 30/360
136 MN 4,800,000 4,789,403 8.9700 8/1/07 Act/360
137 MA 4,800,000 4,784,004 9.0100 5/1/07 30/360
140 KS 4,750,000 4,748,045 8.2300 10/1/07 Act/360
141 MD 4,750,000 4,743,859 8.2000 9/1/04 30/360
143 AZ 4,750,000 4,741,261 8.3200 7/1/07 Act/360
145 FL 4,750,000 4,729,022 9.1500 6/1/07 30/360
146 IL 4,749,750 4,699,778 9.1500 5/1/04 30/360
147 CT 4,700,000 4,692,155 7.8100 8/1/07 Act/360
53 MD 4,700,000 4,683,455 10.5000 6/1/07 30/360
151 AZ 4,600,000 4,597,585 7.5500 10/1/07 Act/360
54 MD 4,580,000 4,553,995 7.6025 6/1/07 30/360
152 WA 4,560,000 4,543,249 8.5350 5/1/04 30/360
153 GA 4,550,000 4,538,834 8.4900 7/1/17 30/360
154 CT 4,510,000 4,501,095 8.1000 7/1/07 Act/360
155 NC 4,500,000 4,495,259 8.2400 9/1/07 Act/360
158 TX 4,475,000 4,465,732 7.5200 9/1/04 Act/360
160 TX 4,450,000 4,440,878 7.9800 7/1/07 Act/360
161 CA 4,450,000 4,438,772 8.2700 6/1/07 Act/360
165 MD 4,350,000 4,345,341 8.1800 9/1/07 Act/360
170 GA 4,100,000 4,095,982 8.5000 9/1/07 Act/360
171 FL 4,100,000 4,089,140 9.2200 6/1/07 30/360
172 TX 4,100,000 4,086,023 8.9000 5/1/07 30/360
176 IN 4,000,000 3,993,109 8.4600 9/1/07 Act/360
177 GA 4,000,000 3,984,774 9.3500 8/1/07 Act/360
178 CA 3,990,000 3,977,324 9.2410 5/1/07 30/360
180 VA 3,920,000 3,898,460 8.0000 3/1/04 30/360
181 TX 3,920,000 3,898,460 8.0000 3/1/04 30/360
184 FL 3,850,000 3,838,693 8.7200 6/1/07 30/360
187 AR 3,800,000 3,795,978 7.9600 10/1/22 30/360
</TABLE>
Page 3 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
190 RB72 Custer Park Shopping Center 2929 Custer Road Plano
192 RB68 Corporate Park at Kendall 12415 SW 136th Avenue Miami
193 QZ46 Canwood Business Park 5126-5137-5142 Clareton Drive Aurora Hills
194 QZ50 Preston Luther Center 6131 Luther Lane Dallas
195 RB73 Huntington Circle 409 W. Highway 304 Lewisville
197 QZ92 Planters Walk Shopping Center 6570 Tara Blvd. Jonesboro
198 QY29 Market Square Shopping Center WS Gray Highway, N of Shurling Drive Macon
199 QY14 812 San Antonio Street 812 San Antonio Street Austin
201 RC42 Nassau Eden Club Apartments 2100 Sinton, 925-963 Auburnview, Cincinnati
203 RB51 Willow Garden Apartments 635 Willow Street Highspire
205 QT44 3720-3740 Main Street 3720-3740 Main Street Philadelphia
206 RB48 Two Edison Lakes 4101 Edison Lakes Parkway Mishawaka
207 RC37 Ocean State Plaza 361 Reservoir Avenue Cranston
208 RB93 Meadows at Central 2816 Central Drive Bedford
211 QY99 Loehmann's Plaza 2701 North Federal Hwy. Fort Lauderdale
212 RC58 Hopkins Tech Center 1600 South Second Street Hopkins
213 QZ79 Mariner's Point 15922 Pacific Coast Highway Huntington Beach
188 QZ86 Lakeway Plaza I 1310 Ranch Road 620 Lakeway
219 QY37 Wymberly Crossing Apartments 3001 South Carrier Parkway Grand Prairie
220 QY46 Harwood Village North 601-735 Harwood Rd. & 2908-2928 Brown Trai Bedford
221 QZ30 Town & Country Villas 3662-3798 Mill Lake Circle Greenacres City
222 RA83 The Shops at Washington Point SWC of 120th Avenue & Washington St Northglenn
224 RB02 Tarmac-Sentara Building 1151 Azalea Garden Road Norfolk
225 RB90 Four Seasons Apartments 4443 Ocean Drive Corpus Christi
230 RC82 Woodward Bluffs Mobile Home Park 9360 North Blackstone Fresno
231 RC69 Mallards Landing Apartments 3260 Justina Road Jacksonville
232 RB55 Huntington Oaks Plaza Fred George Road at US Highway 27 Tallahassee
233 QT21G Colony Apartments 300 Champions Drive Lufkin
234 RB21 Essex Shopping Center 435 Hialeah Drive Hialeah
240 RB52 Tysons Plaza Retail Center 8032 Leesburg Pike Tysons Corner
243 QT21R Porterwood Apartments 24270 FM 1314 Porter
244 QZ19 Designer Shoe Warehouse Northwest Corner Yosemite and Chester Stre Littleton
246 QY31 8180 NW 36th Street 8180 NW 36th Street Miami
247 RC03 3300 Holcomb Bridge Road 3300 Holcomb Bridge Road Norcross
248 RD05 84 Business Park 84 Business Park Drive Armonk
250 QZ64 Day Hill Village Shoppes 555 Day Hill Road Windsor
251 QZ08 Cedar Pointe Apartments 7610 Fallbrook Drive Houston
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
190 TX 3,775,000 3,771,311 8.5100 9/1/07 Act/360
192 FL 3,720,000 3,718,625 8.5000 10/1/07 Act/360
193 CA 3,720,000 3,711,291 8.7200 7/1/07 30/360
194 TX 3,700,000 3,688,712 8.7100 7/1/22 Act/360
195 TX 3,670,000 3,668,187 7.7300 10/1/07 Act/360
197 GA 3,620,000 3,614,084 8.6700 7/1/07 Act/360
198 GA 3,600,000 3,588,345 9.1500 5/1/07 30/360
199 TX 3,600,000 3,588,272 9.1200 5/1/04 30/360
201 OH 3,550,000 3,548,384 7.9600 10/1/12 Act/360
203 PA 3,500,000 3,495,840 7.7900 9/1/07 Act/360
205 PA 3,500,000 3,486,313 9.0000 4/1/07 30/360
206 IN 3,450,000 3,445,183 7.8200 9/1/07 30/360
207 RI 3,400,000 3,398,622 8.2700 10/1/04 Act/360
208 TX 3,400,000 3,396,659 8.4900 9/1/07 Act/360
211 FL 3,400,000 3,384,300 8.8800 6/1/07 30/360
212 MN 3,375,000 3,373,768 8.5300 10/1/07 Act/360
213 CA 3,400,000 3,373,703 8.6800 8/1/12 Act/360
188 TX 3,350,000 3,342,286 8.8000 7/1/04 30/360
219 TX 3,300,000 3,288,751 8.9000 5/1/07 30/360
220 TX 3,300,000 3,281,916 8.9700 5/1/04 30/360
221 FL 3,250,000 3,234,030 8.5000 6/1/07 30/360
222 CO 3,250,000 3,230,658 7.7050 9/1/12 30/360
224 VA 3,100,000 3,096,954 8.4900 9/1/07 Act/360
225 TX 3,100,000 3,096,346 7.8220 9/1/07 Act/360
230 CA 3,000,000 2,998,549 7.7900 10/1/07 Act/360
231 FL 3,000,000 2,998,544 7.7800 10/1/07 Act/360
232 FL 3,000,000 2,996,822 8.2200 9/1/07 Act/360
233 TX 2,960,000 2,943,735 8.0000 3/1/04 30/360
234 FL 2,935,500 2,929,205 7.9000 9/1/07 30/360
240 VA 2,800,000 2,796,539 8.4200 9/1/07 30/360
243 TX 2,800,000 2,784,614 8.0000 3/1/04 30/360
244 CO 2,790,000 2,775,546 9.1400 7/1/17 Act/360
246 FL 2,750,000 2,736,203 9.5040 5/1/07 30/360
247 GA 2,700,000 2,699,026 8.5600 10/1/07 Act/360
248 NY 2,700,000 2,697,652 7.8000 10/1/07 Act/360
250 CT 2,700,000 2,695,400 8.5500 7/1/07 Act/360
251 TX 2,700,000 2,695,146 8.3900 7/1/04 Act/360
</TABLE>
Page 4 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
252 QZ89 Lockworks Square Shopping Center 1208-1236 Main St. Branford
253 RC46 Coliseum Self Storage 5200 Coliseum Way Oakland
254 QY27 Mission Center 4460 Lincoln Avenue Cypress
256 RC11 Clearlake Shopping Center 1068 Clearlake Boulevard Cocoa
258 RB98 Wheaton Square Apartments 10866 Bucknell Drive Wheaton
260 QY75 North Park Plaza NW Corner Arizona Ave. & Ray Rd. Chandler
263 QZ85 Highpoint Village Shopping Center 12101 North Greenville Ave. Dallas
264 RA30 Wexford Square Apartments 208 W. 62nd St. Minneapolis
265 QY45 Shoppes of Cooper City 12125-12397 Sheridan St. Cooper City
267 RB31 Willow Glenn Apartments 7474 La Mancha Way Sacramento
269 QT21H Confederate Ridge Apartments 780 Highway 61 North Bypass Vicksburg
270 RD65 Auto/Retail (2450 S. Military Trail) 2450 S. Military Trail West Palm Beach
271 RA99 Wood Creek Apartments 202 North Garnett Road Tulsa
272 QZ90 Latimer Brook Commons S.C. 339 Flanders Rd. East Lyme
273 QY49 Nob Hill Apartments 3502 South Mason Avenue Tacoma
277 RA69 St. Mary's 551 4th St. North Winsted
278 QY12 Tuscany Apartments 1221 North Orange Ave. Los Angeles
279 RD78 Lakeview Apartments 2610 West Erie Avenue Lorain
280 RD39 Devonshire Shopping Center SEC 127th St. & Mur-Len Rd. Olathe
281 RB84 Georgetown Apartments 751 E. Northside Drive Greenwood
282 RB49 Shamrock Park Apartments 1440 College Way Olathe
285 QZ96 Summit at Woodhaven Apartments 6100 Oakland Hills Drive Fort Worth
287 RD20 Hibiscus Center 2950 Tamiami Trail Naples
288 RB15 Towers Garden Apartments 4015 Covington Highway Decatur
289 RB03 Greenbriar Plaza Shopping Center 7041-7181 North Pecos Street Denver
290 QZ70 Point Place II 443 Donelson Pike Nashville
295 RC36 2105-2109 First Avenue 2102-2109 First Avenue New York
296 RB87 North Pointe Plaza Shopping Center 5420-5430 North Tryon Street Charlotte
297 RB10 French Quarter Apartments 6643 Abrego Road Isla Vista
300 RA82 Sherwood Arms Apartments 3909 Baker Plaza Columbus
301 QZ18 Irongate Village Shopping Center 6401-25 Iron Bridge Road Richmond
302 QY97 Conway Club Apartments 1900 South Conway Rd. Orlando
305 RB34 Mission Station 4400 Bluemel Rd. San Antonio
306 RB36 El Mercado Apartments 10480 El Mercado Drive Rancho Cordova
308 QT89 Santa Rosa Plaza Shopping Center 2800 Gulf Breeze Parkway Gulf Breeze
309 RB91 The Hermitage 219 Monastery Court Valrico
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
252 CT 2,700,000 2,694,669 8.1000 7/1/07 Act/360
253 CA 2,700,000 2,692,537 8.5000 10/1/12 30/360
254 CA 2,700,000 2,691,259 9.1500 5/1/07 30/360
256 FL 2,600,000 2,600,000 7.9900 11/1/07 Act/360
258 MD 2,600,000 2,596,570 8.1000 9/1/04 30/360
260 AZ 2,600,000 2,592,807 9.0100 6/1/07 30/360
263 SC 2,500,000 2,492,741 8.5500 8/1/07 30/360
264 MN 2,500,000 2,491,906 8.4500 7/1/22 Act/360
265 FL 2,500,000 2,491,161 8.7220 5/1/04 30/360
267 CA 2,445,000 2,441,908 7.5500 9/1/07 Act/360
269 MS 2,425,750 2,412,421 8.0000 3/1/04 30/360
270 FL 2,400,000 2,400,000 8.0800 11/1/12 Act/360
271 OK 2,400,000 2,396,142 7.9400 8/1/07 Act/360
272 CT 2,400,000 2,395,261 8.1000 7/1/07 Act/360
273 WA 2,400,000 2,391,184 8.5350 5/1/04 30/360
277 MN 2,325,000 2,319,749 8.8700 8/1/07 Act/360
278 CA 2,320,000 2,313,214 8.7400 6/1/07 30/360
279 OH 2,300,000 2,300,000 7.5100 11/1/07 Act/360
280 KS 2,295,000 2,293,509 8.1600 10/1/07 30/360
281 SC 2,275,000 2,272,933 7.6100 10/1/07 Act/360
282 KS 2,275,000 2,272,469 8.0400 9/1/07 Act/360
285 TX 2,260,000 2,254,104 8.1900 7/1/07 30/360
287 FL 2,250,000 2,248,944 7.8760 10/1/04 Act/360
288 GA 2,250,000 2,245,357 7.9100 8/1/07 30/360
289 CO 2,250,000 2,244,275 8.3300 8/1/07 Act/360
290 TN 2,240,000 2,234,690 8.7300 7/1/07 Act/360
295 NY 2,200,000 2,197,179 8.8400 10/1/07 Act/360
296 NC 2,175,000 2,171,313 8.5400 9/1/07 Act/360
297 CA 2,169,000 2,165,115 7.5600 8/1/07 Act/360
300 GA 2,160,000 2,155,702 8.0900 8/1/07 30/360
301 VA 2,128,000 2,121,737 8.7100 6/1/07 30/360
302 FL 2,125,000 2,118,577 8.5800 6/1/07 30/360
305 TX 2,100,000 2,097,344 7.5500 9/1/07 Act/360
306 CA 2,100,000 2,097,344 7.5500 9/1/07 Act/360
308 FL 2,100,000 2,091,703 8.9500 4/1/04 30/360
309 FL 2,050,000 2,047,557 7.7800 9/1/07 Act/360
310 OH 2,044,000 2,039,470 7.7900 7/1/17 30/360
314 OH 2,008,000 2,003,550 7.7900 7/1/17 30/360
</TABLE>
Page 5 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
317 RD06 54 South Commerce Way 54 South Commerce Way Hanover Township
318 RB53 Mac Frugal's Plaza 303 E Southern Avenue Mesa
319 QZ25 1250 South Vermont Avenue 1250 South Vermont Avenue Los Angeles
321 QZ12 Commerce Center 1975 E. Sunrise Blvd. Ft. Lauderdale
323 RC56 Bridgestone Apartments 1272 Bridgestone Avenue Springdale
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo
327 RD63 Auto/Retail (2501 Sample Road) 2501-2525 W. Sample Road Pompano Beach
329 QZ44 Villa Gardens Apartments 3734 West El Segundo Blvd. Hawthorne
331 RA26 Holiday Inn & Suites 300 East Washington Blvd. Fort Wayne
332 RB74 Rancho San Manuel Mobile Home Park 402 San Carlos Street San Manuel
335 RA72 Willow Park Apartments 1466 Rock Cut Road Forest Park
337 RD27 Crestwood Apartments 2100 North 57th Street Kansas City
338 RB19 French Embassy Apartments 9920 Quail Boulevard Austin
341 QY35 Dairy Ashford Village 1570 Dairy Ashford Road Houston
344 RB01 Englewood Apartments 5432 N.W. Waukomis Drive Kansas City
345 QZ93 The Meadows 4300 Meyers Lane Waco
350 QZ87 Gardens of Victoria Apartments 413 Williamsburg Avenue Victoria
351 QY87 Woodland Terrace Apartments Armstrong Street Auburn
354 RC00 Southwood Village Shopping Center Northwest Side of Timberlake Road Lynchburg
356 QY80 Su Casa 109 & 203 W. 39th Street Austin
357 RC44 Buckner Square Office Park 3650 North Buckner Blvd. Dallas
363 RA16 Northridge & Quail Hollow Apartments 640 Taylor Road & 901-907 Liberty Manor Hinesville
367 RC83 McKellips Shopping Center NEC of McKellips Rd & Center Street Mesa
368 RB40 Trinity Oaks Shopping Center 821-829 NE Green Oaks Boulevard Arlington
370 QY88 Carob Tree Apartments 9202 North 19th Ave. Phoenix
371 QZ17 Sentinel Square 70-76 Main Street Lake Placid
374 RA28 Southwest Oaks Apartments 4651 Oakwood Dr. Odessa
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
317 PA 2,000,000 1,998,995 7.6800 10/1/07 Act/360
318 AZ 2,000,000 1,998,732 8.2800 10/1/07 30/360
319 CA 2,000,000 1,997,260 9.1500 7/1/07 Act/360
321 FL 2,000,000 1,994,444 8.9900 6/1/04 30/360
323 AR 1,990,000 1,987,894 7.9600 10/1/22 30/360
325 OH 1,956,000 1,953,856 7.7900 9/1/17 30/360
327 FL 1,950,000 1,950,000 8.0800 11/1/12 Act/360
329 CA 1,950,000 1,938,977 8.5900 7/1/17 Act/360
331 IN 1,900,000 1,893,030 8.9000 7/1/04 30/360
332 AZ 1,900,000 1,892,273 8.2500 9/1/15 Act/360
335 GA 1,830,000 1,826,425 8.1800 8/1/07 30/360
337 KS 1,800,000 1,798,719 7.7100 10/1/06 30/360
338 TX 1,800,000 1,796,233 7.8400 8/1/04 30/360
341 TX 1,730,000 1,724,585 9.3130 5/1/07 30/360
344 MO 1,700,000 1,696,548 7.9900 8/1/04 30/360
345 TX 1,700,000 1,693,198 8.3700 7/1/04 30/360
350 TX 1,640,000 1,637,406 7.9950 8/1/04 Act/360
351 AL 1,625,000 1,620,382 8.8800 6/1/07 30/360
354 VA 1,600,000 1,599,330 8.0300 10/1/07 Act/360
356 TX 1,600,000 1,587,810 8.9800 6/1/17 30/360
357 TX 1,575,000 1,574,401 8.4300 10/1/07 Act/360
363 GA 1,520,000 1,517,357 8.4900 7/1/07 Act/360
367 AZ 1,500,000 1,498,832 8.2600 10/1/04 Act/360
368 TX 1,500,000 1,497,796 8.2400 8/1/07 Act/360
370 AZ 1,500,000 1,492,533 8.4200 6/1/07 30/360
371 NY 1,500,000 1,485,209 9.0700 7/1/07 Act/360
374 TX 1,450,000 1,448,165 8.7100 8/1/07 Act/360
</TABLE>
Page 6 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
378 RD14 Camden Corners Shopping Center GA Highway 40 & Haddock Road Kingsland
380 RC18 901 Alton Road 901 Alton Road Miami Beach
381 RB00 Alfa-Laval Separators, Inc. 3944 Holland Boulevard Chesapeake
389 RB14 12701 Executive Drive 12071 Executive Drive Stafford
393 QY24 Parkway Square 4111 Fairmont Parkway Pasadena
395 RA84 Twenty Mile Mini-Storage 18601 Longs Way Parker
396 RC35 4840-4860 Northfield Road 4840-4860 Northfield Rd. Northfield
400 QY25 Fairmont Central Shopping Center 4118-4130 Fairmont Parkway Pasadena
401 RA13 Flagler Inn 3700 Poinsettia Avenue West Palm Beach
406 RA17 Berkshire Terrace Apartments 900-909, 911-913 Berkshire Terrace Hinesville
407 RD51 Shops at Merchants Walk 4235 Merchants Walk Drive Marietta
408 RD36 Ten Quivira Outparcel Building NWQ Shawnee Mission Pkwy & Quivira Rd. Shawnee
410 RA78 Casa Grande 1150-1156 East Florence Boulevard Casa Grande
413 QY60 Fountain Court Plaza 1001 Tower Way Bakersfield
420 RD69 Auto/Retail (2530 W. Commercial) 2530 West Commercial Boulevard Tamarac
421 RC20 1500 Alton Road 1500 Alton Road Miami Beach
427 RD68 Auto/Retail (1000-1050 Commercial) 1000-1050 Commercial Boulevard Fort Lauderdale
189 RC87 Lakeway Plaza II 1310 Ranch Road 620 Lakeway
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
378 GA 1,425,000 1,424,361 8.0000 10/1/07 Act/360
380 FL 1,400,000 1,398,924 8.3100 10/1/07 Act/360
381 VA 1,400,000 1,398,463 8.0900 9/1/07 Act/360
389 TX 1,325,000 1,321,379 7.9830 8/1/07 Act/360
393 TX 1,300,000 1,292,923 9.0100 5/1/07 30/360
395 CO 1,250,000 1,248,118 8.1600 8/1/07 Act/360
396 OH 1,235,000 1,234,127 8.6400 10/1/07 Act/360
400 TX 1,200,000 1,193,467 9.0100 5/1/07 30/360
401 FL 1,173,000 1,168,597 8.7600 7/1/07 30/360
406 GA 1,100,000 1,098,088 8.4900 7/1/07 Act/360
407 GA 1,035,000 1,035,000 8.0100 11/1/07 Act/360
408 KS 1,030,000 1,029,331 8.1600 10/1/07 30/360
410 AZ 1,010,000 1,008,078 8.3100 8/1/04 30/360
413 CA 950,000 945,897 9.1900 5/1/07 30/360
420 FL 850,000 850,000 8.0800 11/1/12 Act/360
421 FL 850,000 849,347 8.3100 10/1/07 Act/360
427 FL 700,000 700,000 8.0800 11/1/12 Act/360
189 TX 450,000 449,722 8.5200 7/1/04 30/360
Totals: 1,100,931,271 1,097,817,189
</TABLE>
Page 7 of 7
<PAGE>
EXHIBIT B
EXCEPTIONS TO SECTION 2(C)
None.
<PAGE>
EXHIBIT C
EXCEPTIONS TO CLAUSE VIII OF SCHEDULE I
<PAGE>
<TABLE>
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
Records: 2
Balance: 5,003,717.09
Selection: 2nd Liens
<CAPTION>
===================================================================================================================================
Offer
Doc Loan Original Cut-off Date Mortgage Accrual
# # Property Name Address City State Balance Balance Rate Maturity Method
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
54 QY86 Avalon Manor Note B 14014 Marsh Pike Hagerstown MD 4,580,000 4,553,995 7.603 6/1/07 30/360
189 RC87 Lakeway Plaza II 1310 Ranch Road 620 Lakeway TX 450,000 449,722 8.520 7/1/04 30/360
- -----------------------------------------------------------------------------------------------------------------------------------
Totals: 5,030,000 5,003,717
===================================================================================================================================
</TABLE>
<PAGE>
EXHIBIT D
EXCEPTIONS TO CLAUSE XVI OF SCHEDULE I
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
Page 1 of 3
Report: LOANSCHE
Records: 110 MON, DEC 8, 1997 12:44 PM
Balance: 617,051,052.20 Prepared by:SCHANG
Selection: POOL = Lehman Brothers; Actual/360 S:/SCHANG/CONDUIT2/BLACK
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan
# # Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1 RA35 Rentar 66-26 Metropolitan Avenue Middle Village
10 RD24 San Pedro Plaza N. Side of Loop 410 E. of San Pedro Blvd. San Antonio
13 RB69 Pinole Vista Crossing IH-80 & Fitzgerald Drive Pinole
14 QZ41 675 Sixth Avenue 675 Sixth Ave. New York
15 RA73 Citrus Center Office Building 255 S. Orange Avenue Orlando
18 RB58 Park Esplanade Apartments 3443 Esplanade Ave. New Orleans
19 QZ04 Glazer Portfolio (Roll-up) Various Various
20 RA90 Cross Island Plaza 133-33 Brookville Boulevard Rosedale
23 RB66 Sheraton Orlando North 600 North Lake Destiny Drive Maitland
29 QZ40 625 Sixth Avenue 625 Sixth Ave. New York
35 RD48 Trexlertown Shopping Center 7150 Hamilton Blvd. Upper and Lower Macungie
37 RB67 Berkley Square 4701 Park Boulevard Plano
41 RA12 Palm Court Apartments 3995 Overland Avenue Culver City
43 RC09 Yaohan Plaza Torrance 21515 Western Avenue Torrence
45 RB07 The Deauville 8665 Burton Way Los Angeles
46 RA53 The NorthCorp Center 3910 RCA Blvd. Palm Beach Gardens
59 RA81 2011 North Soto Street 2011 North Soto St. Los Angeles
61 RC10 Yaohan Plaza Costa Mesa 665 Paularino Avenue Costa Mesa
65 QZ72 Shirley Shopping Center Montauk Highway & William Floyd Parkway Shirley
69 RD42 Woodmeade South Apartments 200 Lowwood Drive Knoxville
70 RA20 Park Tower 200 W. Santa Ana Boulevard Santa Ana
77 RA88 Grandin Ridge Apartments 2400 Windsor Woods Lane Norcross
84 RC39 Key Biscayne Galeria 328 Crandon Blvd. Key Biscayne
91 RA70 Main Street Village Apartments 6400 Main St. Columbus
93 RB11 Bayview Apartments 4315 W. 182nd Street Torrance
96 QZ56 Reisterstown Business Center 100-322 Business Center Way Reisterstown
97 RB96 Nob Hill Apartments - Madison 1108 Moorland Road Madison
111 RB12 Chimney Sweep Apartments 775 Camino Del Sur Isla Vista
114 RC38 Nob Hill Apartments - Birmingham 800 Valley Ave. Birmingham
116 QZ34 The Benchmark 170 Old Country Road Mineola
119 RB41 The Bradley Building 1220 West 6th Street Cleveland
126 RD50 Vanguard Distribution Building 13900 South Broadway Los Angeles
136 RA68 Dayton's Bluff Community Care Center 324 Johnson Parkway St. Paul
140 RC25 College Village Shopping Center SEC College Blvd. & Quivira Road Overland Park
143 QZ14 Sierra Vista Apartments 710 South Hardy Drive Tempe
147 RB08 Southington Queen Plaza 825-875 Queen Street Southington
151 RB80 University Roost Apartments 700 S. Blackbird Road Flagstaff
154 QZ91 2600 Post Road 2600 Southport Post Road Southport
155 RA98 Westgate Plaza SEC US 64/Roller Mill Road Franklin
158 RB50 Eagle Crest Apartments 1601 Regency Court Arlington
160 QZ81 Lafayette Green Apartments 8327 West Tidwell Houston
161 QY98 Zinfandel Ranch Apartments 10833 Folsom Boulevard Rancho Cordova
165 RC01 Thompson Creek Shopping Center Thompson Creek Road Stevensville
170 RB57 National Hills Shopping Center 2701 Washington Rd. Augusta
====================================================================================================================================
<CAPTION>
- -------------------------------------------------------------------------------------
Cut-off
Prospectus Original Date Mortgage Accrual
# State Balance Balance Rate Maturity Method
- -------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
1 NY 45,500,000 45,416,841 8.340 7/1/07 Act/360
10 TX 28,687,500 28,670,846 7.240 10/1/02 Act/360
13 CA 23,000,000 22,988,718 7.750 10/1/12 Act/360
14 NY 23,000,000 22,901,796 8.420 6/1/22 Act/360
15 FL 21,375,000 21,315,575 7.910 8/1/07 Act/360
18 LA 20,000,000 19,977,150 7.940 9/1/07 Act/360
19 PA 20,000,000 19,958,798 8.930 6/1/07 Act/360
20 NY 19,125,000 19,093,718 7.880 8/1/07 Act/360
23 FL 18,000,000 17,970,413 8.690 9/1/04 Act/360
29 NY 16,500,000 16,460,174 8.420 6/1/12 Act/360
35 PA 13,100,000 13,093,282 7.620 10/1/07 Act/360
37 TX 12,500,000 12,488,265 8.650 9/1/07 Act/360
41 CA 11,790,000 11,773,564 8.410 8/1/07 Act/360
43 CA 10,500,000 10,495,288 8.000 10/1/12 Act/360
45 CA 10,000,000 9,986,732 7.360 9/1/07 Act/360
46 FL 10,000,000 9,985,351 8.250 8/1/07 Act/360
59 CA 8,800,000 8,783,677 8.090 9/1/04 Act/360
61 CA 8,500,000 8,496,186 8.000 10/1/12 Act/360
65 NY 8,250,000 8,234,773 8.310 7/1/07 Act/360
69 TN 7,500,000 7,495,930 7.450 10/1/07 Act/360
70 CA 7,500,000 7,487,785 8.680 7/1/04 Act/360
77 GA 7,140,000 7,127,772 7.720 8/1/07 Act/360
84 FL 7,000,000 6,996,673 7.840 10/1/07 Act/360
91 GA 6,600,000 6,592,053 7.740 9/1/12 Act/360
93 CA 6,500,000 6,488,356 7.560 8/1/07 Act/360
96 MD 6,400,000 6,389,097 8.550 7/1/07 Act/360
97 WI 6,350,000 6,342,551 7.840 9/1/12 Act/360
111 CA 5,750,000 5,739,700 7.560 8/1/07 Act/360
114 AL 5,500,000 5,497,367 7.820 10/1/07 Act/360
116 NY 5,500,000 5,488,961 9.010 6/1/07 Act/360
119 OH 5,400,000 5,391,697 8.090 8/1/04 Act/360
126 CA 5,100,000 5,096,859 7.793 10/1/07 Act/360
136 MN 4,800,000 4,789,403 8.970 8/1/07 Act/360
140 KS 4,750,000 4,748,045 8.230 10/1/07 Act/360
143 AZ 4,750,000 4,741,261 8.320 7/1/07 Act/360
147 CT 4,700,000 4,692,155 7.810 8/1/07 Act/360
151 AZ 4,600,000 4,597,585 7.550 10/1/07 Act/360
154 CT 4,510,000 4,501,095 8.100 7/1/07 Act/360
155 NC 4,500,000 4,495,259 8.240 9/1/07 Act/360
158 TX 4,475,000 4,465,732 7.520 9/1/04 Act/360
160 TX 4,450,000 4,440,878 7.980 7/1/07 Act/360
161 CA 4,450,000 4,438,772 8.270 6/1/07 Act/360
165 MD 4,350,000 4,345,341 8.180 9/1/07 Act/360
170 GA 4,100,000 4,095,982 8.500 9/1/07 Act/360
====================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
Page 2 of 3
Report: LOANSCHE
Records: 110 MON, DEC 8, 1997 12:44 PM
Balance: 617,051,052.20 Prepared by:SCHANG
Selection: POOL = Lehman Brothers; Actual/360 S:/SCHANG/CONDUIT2/BLACK
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan
# # Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
176 RB46 The Hampton Inn 2311 North Shadeland Avenue Indianapolis
190 RB72 Custer Park Shopping Center 2929 Custer Road Plano
192 RB68 Corporate Park at Kendall 12415 SW 136th Avenue Miami
194 QZ50 Preston Luther Center 6131 Luther Lane Dallas
195 RB73 Huntington Circle 409 W. Highway 304 Lewisville
197 QZ92 Planters Walk Shopping Center 6570 Tara Blvd. Jonesboro
201 RC42 Nassau Eden Club Apartments 2100 Sinton, 925-963 Auburnview, Cincinnati
203 RB51 Willow Garden Apartments 635 Willow Street Highspire
207 RC37 Ocean State Plaza 361 Reservoir Avenue Cranston
208 RB93 Meadows at Central 2816 Central Drive Bedford
212 RC58 Hopkins Tech Center 1600 South Second Street Hopkins
213 QZ79 Mariner's Point 15922 Pacific Coast Highway Huntington Beach
224 RB02 Tarmac-Sentara Building 1151 Azalea Garden Road Norfolk
225 RB90 Four Seasons Apartments 4443 Ocean Drive Corpus Christi
230 RC82 Woodward Bluffs Mobile Home Park 9360 North Blackstone Fresno
231 RC69 Mallards Landing Apartments 3260 Justina Road Jacksonville
232 RB55 Huntington Oaks Plaza Fred George Road at US Highway 27 Tallahassee
244 QZ19 Designer Shoe Warehouse Northwest Corner Yosemite and Chester Street Littleton
247 RC03 3300 Holcomb Bridge Road 3300 Holcomb Bridge Road Norcross
248 RD05 84 Business Park 84 Business Park Drive Armonk
250 QZ64 Day Hill Village Shoppes 555 Day Hill Road Windsor
251 QZ08 Cedar Pointe Apartments 7610 Fallbrook Drive Houston
252 QZ89 Lockworks Square Shopping Center 1208-1236 Main St. Branford
256 RC11 Clearlake Shopping Center 1068 Clearlake Boulevard Cocoa
264 RA30 Wexford Square Apartments 208 W. 62nd St. Minneapolis
267 RB31 Willow Glenn Apartments 7474 La Mancha Way Sacramento
270 RD65 Auto/Retail (2450 S. Military Trail) 2450 S. Military Trail West Palm Beach
271 RA99 Wood Creek Apartments 202 North Garnett Road Tulsa
272 QZ90 Latimer Brook Commons S.C. 339 Flanders Rd. East Lyme
277 RA69 St. Mary's 551 4th St. North Winsted
279 RD78 Lakeview Apartments 2610 West Erie Avenue Lorain
281 RB84 Georgetown Apartments 751 E. Northside Drive Greenwood
282 RB49 Shamrock Park Apartments 1440 College Way Olathe
287 RD20 Hibiscus Center 2950 Tamiami Trail Naples
289 RB03 Greenbriar Plaza Shopping Center 7041-7181 North Pecos Street Denver
290 QZ70 Point Place II 443 Donelson Pike Nashville
295 RC36 2105-2109 First Avenue 2102-2109 First Avenue New York
296 RB87 North Pointe Plaza Shopping Center 5420-5430 North Tryon Street Charlotte
297 RB10 French Quarter Apartments 6643 Abrego Road Isla Vista
305 RB34 Mission Station 4400 Bluemel Rd. San Antonio
306 RB36 El Mercado Apartments 10480 El Mercado Drive Rancho Cordova
309 RB91 The Hermitage 219 Monastery Court Valrico
317 RD06 54 South Commerce Way 54 South Commerce Way Hanover Township
319 QZ25 1250 South Vermont Avenue 1250 South Vermont Avenue Los Angeles
====================================================================================================================================
<CAPTION>
- -------------------------------------------------------------------------------------
Cut-off
Prospectus Original Date Mortgage Accrual
# State Balance Balance Rate Maturity Method
- -------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
176 IN 4,000,000 3,993,109 8.460 9/1/07 Act/360
190 TX 3,775,000 3,771,311 8.510 9/1/07 Act/360
192 FL 3,720,000 3,718,625 8.500 10/1/07 Act/360
194 TX 3,700,000 3,688,712 8.710 7/1/22 Act/360
195 TX 3,670,000 3,668,187 7.730 10/1/07 Act/360
197 GA 3,620,000 3,614,084 8.670 7/1/07 Act/360
201 OH 3,550,000 3,548,384 7.960 10/1/12 Act/360
203 PA 3,500,000 3,495,840 7.790 9/1/07 Act/360
207 RI 3,400,000 3,398,622 8.270 10/1/04 Act/360
208 TX 3,400,000 3,396,659 8.490 9/1/07 Act/360
212 MN 3,375,000 3,373,768 8.530 10/1/07 Act/360
213 CA 3,400,000 3,373,703 8.680 8/1/12 Act/360
224 VA 3,100,000 3,096,954 8.490 9/1/07 Act/360
225 TX 3,100,000 3,096,346 7.822 9/1/07 Act/360
230 CA 3,000,000 2,998,549 7.790 10/1/07 Act/360
231 FL 3,000,000 2,998,544 7.780 10/1/07 Act/360
232 FL 3,000,000 2,996,822 8.220 9/1/07 Act/360
244 CO 2,790,000 2,775,546 9.140 7/1/17 Act/360
247 GA 2,700,000 2,699,026 8.560 10/1/07 Act/360
248 NY 2,700,000 2,697,652 7.800 10/1/07 Act/360
250 CT 2,700,000 2,695,400 8.550 7/1/07 Act/360
251 TX 2,700,000 2,695,146 8.390 7/1/04 Act/360
252 CT 2,700,000 2,694,669 8.100 7/1/07 Act/360
256 FL 2,600,000 2,600,000 7.990 11/1/07 Act/360
264 MN 2,500,000 2,491,906 8.450 7/1/22 Act/360
267 CA 2,445,000 2,441,908 7.550 9/1/07 Act/360
270 FL 2,400,000 2,400,000 8.080 11/1/12 Act/360
271 OK 2,400,000 2,396,142 7.940 8/1/07 Act/360
272 CT 2,400,000 2,395,261 8.100 7/1/07 Act/360
277 MN 2,325,000 2,319,749 8.870 8/1/07 Act/360
279 OH 2,300,000 2,300,000 7.510 11/1/07 Act/360
281 SC 2,275,000 2,272,933 7.610 10/1/07 Act/360
282 KS 2,275,000 2,272,469 8.040 9/1/07 Act/360
287 FL 2,250,000 2,248,944 7.876 10/1/04 Act/360
289 CO 2,250,000 2,244,275 8.330 8/1/07 Act/360
290 TN 2,240,000 2,234,690 8.730 7/1/07 Act/360
295 NY 2,200,000 2,197,179 8.840 10/1/07 Act/360
296 NC 2,175,000 2,171,313 8.540 9/1/07 Act/360
297 CA 2,169,000 2,165,115 7.560 8/1/07 Act/360
305 TX 2,100,000 2,097,344 7.550 9/1/07 Act/360
306 CA 2,100,000 2,097,344 7.550 9/1/07 Act/360
309 FL 2,050,000 2,047,557 7.780 9/1/07 Act/360
317 PA 2,000,000 1,998,995 7.680 10/1/07 Act/360
319 CA 2,000,000 1,997,260 9.150 7/1/07 Act/360
===================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
Page 3 of 3
Report: LOANSCHE
Records: 110 MON, DEC 8, 1997 12:44 PM
Balance: 617,051,052.20 Prepared by:SCHANG
Selection: POOL = Lehman Brothers; Actual/360 S:/SCHANG/CONDUIT2/BLACK
====================================================================================================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan
# # Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
327 RD63 Auto/Retail (2501 Sample Road) 2501-2525 W. Sample Road Pompano Beach
329 QZ44 Villa Gardens Apartments 3734 West El Segundo Blvd. Hawthorne
332 RB74 Rancho San Manuel Mobile Home Park 402 San Carlos Street San Manuel
350 QZ87 Gardens of Victoria Apartments 413 Williamsburg Avenue Victoria
354 RC00 Southwood Village Shopping Center Northwest Side of Timberlake Road Lynchburg
357 RC44 Buckner Square Office Park 3650 North Buckner Blvd. Dallas
363 RA16 Northridge & Quail Hollow Apartments 640 Taylor Road & 901-907 Liberty Manor Hinesville
367 RC83 McKellips Shopping Center NEC of McKellips Rd & Center Street Mesa
368 RB40 Trinity Oaks Shopping Center 821-829 NE Green Oaks Boulevard Arlington
371 QZ17 Sentinel Square 70-76 Main Street Lake Placid
374 RA28 Southwest Oaks Apartments 4651 Oakwood Dr. Odessa
378 RD14 Camden Corners Shopping Center GA Highway 40 & Haddock Road Kingsland
380 RC18 901 Alton Road 901 Alton Road Miami Beach
381 RB00 Alfa-Laval Separators, Inc. 3944 Holland Boulevard Chesapeake
389 RB14 12701 Executive Drive 12071 Executive Drive Stafford
395 RA84 Twenty Mile Mini-Storage 18601 Longs Way Parker
396 RC35 4840-4860 Northfield Road 4840-4860 Northfield Rd. Northfield
406 RA17 Berkshire Terrace Apartments 900-909, 911-913 Berkshire Terrace Hinesville
407 RD51 Shops at Merchants Walk 4235 Merchants Walk Drive Marietta
420 RD69 Auto/Retail (2530 W. Commercial) 2530 West Commercial Boulevard Tamarac
421 RC20 1500 Alton Road 1500 Alton Road Miami Beach
427 RD68 Auto/Retail (1000-1050 Commercial) 1000-1050 Commercial Boulevard Fort Lauderdale
- ------------------------------------------------------------------------------------------------------------------------------------
Totals:
====================================================================================================================================
- -------------------------------------------------------------------------------------
Cut-off
Prospectus Original Date Mortgage Accrual
# State Balance Balance Rate Maturity Method
- -------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
327 FL 1,950,000 1,950,000 8.080 11/1/12 Act/360
329 CA 1,950,000 1,938,977 8.590 7/1/17 Act/360
332 AZ 1,900,000 1,892,273 8.250 9/1/15 Act/360
350 TX 1,640,000 1,637,406 7.995 8/1/04 Act/360
354 VA 1,600,000 1,599,330 8.030 10/1/07 Act/360
357 TX 1,575,000 1,574,401 8.430 10/1/07 Act/360
363 GA 1,520,000 1,517,357 8.490 7/1/07 Act/360
367 AZ 1,500,000 1,498,832 8.260 10/1/04 Act/360
368 TX 1,500,000 1,497,796 8.240 8/1/07 Act/360
371 NY 1,500,000 1,485,209 9.070 7/1/07 Act/360
374 TX 1,450,000 1,448,165 8.710 8/1/07 Act/360
378 GA 1,425,000 1,424,361 8.000 10/1/07 Act/360
380 FL 1,400,000 1,398,924 8.310 10/1/07 Act/360
381 VA 1,400,000 1,398,463 8.090 9/1/07 Act/360
389 TX 1,325,000 1,321,379 7.983 8/1/07 Act/360
395 CO 1,250,000 1,248,118 8.160 8/1/07 Act/360
396 OH 1,235,000 1,234,127 8.640 10/1/07 Act/360
406 GA 1,100,000 1,098,088 8.490 7/1/07 Act/360
407 GA 1,035,000 1,035,000 8.010 11/1/07 Act/360
420 FL 850,000 850,000 8.080 11/1/12 Act/360
421 FL 850,000 849,347 8.310 10/1/07 Act/360
427 FL 700,000 700,000 8.080 11/1/12 Act/360
- -------------------------------------------------------------------------------------
Totals:
=====================================================================================
</TABLE>
<PAGE>
EXHIBIT E
EXCEPTIONS TO CLAUSE XVI OF SCHEDULE I
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
====================================================================================================================================
Records: 1
Balance: 9,061,380.11
Selection: ARM
ARM - Lehman Brothers Pool
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 QM24 Mountain View Apartments 22700 Lake Forest Drive El Toro CA 10,000,000 9,061,380
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 10,000,000 9,061,380
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Mortgage Accrual
# Rate Maturity Method
- ---------------------------------------------
55 7.500 8/1/01 30/360
- ---------------------------------------------
</TABLE>
<PAGE>
EXHIBIT F
EXCEPTIONS TO CLAUSE XXIV OF SCHEDULE I
None.
<PAGE>
EXHIBIT G
EXCEPTIONS TO CLAUSE XXVI OF SCHEDULE I
<PAGE>
<TABLE>
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
Records: 2
Balance: 8,025,740.86
Selection: Subordinated Debt
<CAPTION>
===================================================================================================================================
Offer
Doc Loan Original Cut-off Date Mortgage Accrual
# # Property Name Address City State Balance Balance Rate Maturity Method
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
53 QY84 Avalon Manor Note A 14014 Marsh Pike Hagerstown MD 4,700,000 4,683,455 10.500 6/1/07 30/360
188 QZ86 Lakeway Plaza I 1310 Ranch Road 620 Lakeway TX 3,350,000 3,342,286 8.800 7/1/04 30/360
- -----------------------------------------------------------------------------------------------------------------------------------
Totals: 8,050,000 8,025,741
===================================================================================================================================
</TABLE>
<PAGE>
EXHIBIT H
EXCEPTIONS TO CLAUSE XXVII TO SCHEDULE I
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
====================================================================================================================================
Records: 9
Balance: 48,238,420.15
Selection: Permit transfer to person who satisfies certain criteria
- ------------------------------------------------------------------------------------------------------------------------------------
Offer
Doc Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
40 RA22 Serramonte Plaza 329-391 Gellert Boulevard Daly City CA 12,000,000 11,954,284
71 QY68 Brampton Moors 101 Brampton Lane Cary NC 7,500,000 7,476,817
79 QY56 Buccaneer Trace Apartments 55 E. Deerwood Rd. Savannah GA 7,040,000 7,016,198
108 QT21E Bradford Place Apartments 325 Percival Road Columbia SC 5,885,771 5,853,430
180 QT21B Auburn Chase Apartments 401 Turlington Drive Newport News VA 3,920,000 3,898,460
181 QT21I Foxwood I & II Apartments 19920 Foxwood Forest Humble TX 3,920,000 3,898,460
233 QT21G Colony Apartments 300 Champions Drive Lufkin TX 2,960,000 2,943,735
243 QT21R Porterwood Apartments 24270 FM 1314 Porter TX 2,800,000 2,784,614
269 QT21H Confederate Ridge Apartments 780 Highway 61 North Bypass Vicksburg MS 2,425,750 2,412,41
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 48,451,521 48,238,420
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT I
EXCEPTIONS TO CLAUSE XXVII OF SCHEDULE I
<PAGE>
<TABLE>
LEHMAN BROTHERS
Records: 43 FU - LB Conduit 1997-C2 ** BLACK **
Balance: 228,710,002.02
Selection: One-Time Transfer
<CAPTION>
====================================================================================================================================
Offer
Doc Loan
# # Property Name Address City State
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
4 RB05 Soho Court 299-307 Elizabeth Street New York NY
13 RB69 Pinole Vista Crossing IH-80 & Fitzgerald Drive Pinole CA
23 RB66 Sheraton Orlando North 600 North Lake Destiny Drive Maitland FL
35 RD48 Trexlertown Shopping Center 7150 Hamilton Blvd. Upper and Lower Macungie PA
41 RA12 Palm Court Apartments 3995 Overland Avenue Culver City CA
46 RA53 The NorthCorp Center 3910 RCA Blvd. Palm Beach Gardens FL
97 RB96 Nob Hill Apartments - Madison 1108 Moorland Road Madison WI
110 RA65 Tri State Plaza NE Route 23 and Route 84 Montague NJ
111 RB12 Chimney Sweep Apartments 775 Camino Del Sur Isla Vista CA
119 RB41 The Bradley Building 1220 West 6th Street Cleveland OH
125 QY67 The 535 Plaza 12444 Highway 535 Orlando FL
130 QZ49 Best Western Pensacola 16 Via De Luna Drive Pensacola FL
136 RA68 Dayton's Bluff Community Care Center 324 Johnson Parkway St. Paul MN
141 RB99 Berwyn House 4800 Berwyn House Road College Park MD
147 RB08 Southington Queen Plaza 825-875 Queen Street Southington CT
53 QY84 Avalon Manor Note A 14014 Marsh Pike Hagerstown MD
54 QY86 Avalon Manor Note B 14014 Marsh Pike Hagerstown MD
158 RB50 Eagle Crest Apartments 1601 Regency Court Arlington TX
161 QY98 Zinfandel Ranch Apartments 10833 Folsom Boulevard Rancho Cordova CA
170 RB57 National Hills Shopping Center 2701 Washington Rd. Augusta GA
201 RC42 Nassau Eden Club Apartments 2100 Sinton, 925-963 Auburnview, Cincinnati OH
208 RB93 Meadows at Central 2816 Central Drive Bedford TX
254 QY27 Mission Center 4460 Lincoln Avenue Cypress CA
256 RC11 Clearlake Shopping Center 1068 Clearlake Boulevard Cocoa FL
264 RA30 Wexford Square Apartments 208 W. 62nd St. Minneapolis MN
265 QY45 Shoppes of Cooper City 12125-12397 Sheridan St. Cooper City FL
277 RA69 St. Mary's 551 4th St. North Winsted MN
285 QZ96 Summit at Woodhaven Apartments 6100 Oakland Hills Drive Fort Worth TX
288 RB15 Towers Garden Apartments 4015 Covington Highway Decatur GA
297 RB10 French Quarter Apartments 6643 Abrego Road Isla Vista CA
300 RA82 Sherwood Arms Apartments 3909 Baker Plaza Columbus GA
302 QY97 Conway Club Apartments 1900 South Conway Rd. Orlando FL
305 RB34 Mission Station 4400 Bluemel Rd. San Antonio TX
306 RB36 El Mercado Apartments 10480 El Mercado Drive Rancho Cordova CA
321 QZ12 Commerce Center 1975 E. Sunrise Blvd. Ft. Lauderdale FL
329 QZ44 Villa Gardens Apartments 3734 West El Segundo Blvd. Hawthorne CA
335 RA72 Willow Park Apartments 1466 Rock Cut Road Forest Park GA
338 RB19 French Embassy Apartments 9920 Quail Boulevard Austin TX
344 RB01 Englewood Apartments 5432 N.W. Waukomis Drive Kansas City MO
345 QZ93 The Meadows 4300 Meyers Lane Waco TX
357 RC44 Buckner Square Office Park 3650 North Buckner Blvd. Dallas TX
368 RB40 Trinity Oaks Shopping Center 821-829 NE Green Oaks Boulevard Arlington TX
413 QY60 Fountain Court Plaza 1001 Tower Way Bakersfield CA
- ------------------------------------------------------------------------------------------------------------------------------------
Totals
====================================================================================================================================
<CAPTION>
=======================================================================================
Offer Cut-off
Doc Loan Original Date Mortgage Accrual
# # Balance Balance Rate Maturity Method
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
4 RB05 33,500,000 33,449,419 7.430 9/1/12 30/360
13 RB69 23,000,000 22,988,718 7.750 10/1/12 Act/360
23 RB66 18,000,000 17,970,413 8.690 9/1/04 Act/360
35 RD48 13,100,000 13,093,282 7.620 10/1/07 Act/360
41 RA12 11,790,000 11,773,564 8.410 8/1/07 Act/360
46 RA53 10,000,000 9,985,351 8.250 8/1/07 Act/360
97 RB96 6,350,000 6,342,551 7.840 9/1/12 Act/360
110 RA65 5,800,000 5,788,599 8.150 8/1/07 30/360
111 RB12 5,750,000 5,739,700 7.560 8/1/07 Act/360
119 RB41 5,400,000 5,391,697 8.090 8/1/04 Act/360
125 QY67 5,125,000 5,108,096 9.060 5/1/04 30/360
130 QZ49 5,000,000 4,978,679 9.240 7/1/20 30/360
136 RA68 4,800,000 4,789,403 8.970 8/1/07 Act/360
141 RB99 4,750,000 4,743,859 8.200 9/1/04 30/360
147 RB08 4,700,000 4,692,155 7.810 8/1/07 Act/360
53 QY84 4,700,000 4,683,455 10.500 6/1/07 30/360
54 QY86 4,580,000 4,553,995 7.603 6/1/07 30/360
158 RB50 4,475,000 4,465,732 7.520 9/1/04 Act/360
161 QY98 4,450,000 4,438,772 8.270 6/1/07 Act/360
170 RB57 4,100,000 4,095,982 8.500 9/1/07 Act/360
201 RC42 3,550,000 3,548,384 7.960 10/1/12 Act/360
208 RB93 3,400,000 3,396,659 8.490 9/1/07 Act/360
254 QY27 2,700,000 2,691,259 9.150 5/1/07 30/360
256 RC11 2,600,000 2,600,000 7.990 11/1/07 Act/360
264 RA30 2,500,000 2,491,906 8.450 7/1/22 Act/360
265 QY45 2,500,000 2,491,161 8.722 5/1/04 30/360
277 RA69 2,325,000 2,319,749 8.870 8/1/07 Act/360
285 QZ96 2,260,000 2,254,104 8.190 7/1/07 30/360
288 RB15 2,250,000 2,245,357 7.910 8/1/07 30/360
297 RB10 2,169,000 2,165,115 7.560 8/1/07 Act/360
300 RA82 2,160,000 2,155,702 8.090 8/1/07 30/360
302 QY97 2,125,000 2,118,577 8.580 6/1/07 30/360
305 RB34 2,100,000 2,097,344 7.550 9/1/07 Act/360
306 RB36 2,100,000 2,097,344 7.550 9/1/07 Act/360
321 QZ12 2,000,000 1,994,444 8.990 6/1/04 30/360
329 QZ44 1,950,000 1,938,977 8.590 7/1/17 Act/360
335 RA72 1,830,000 1,826,425 8.180 8/1/07 30/360
338 RB19 1,800,000 1,796,233 7.840 8/1/04 30/360
344 RB01 1,700,000 1,696,548 7.990 8/1/04 30/360
345 QZ93 1,700,000 1,693,198 8.370 7/1/04 30/360
357 RC44 1,575,000 1,574,401 8.430 10/1/07 Act/360
368 RB40 1,500,000 1,497,796 8.240 8/1/07 Act/360
413 QY60 950,000 945,897 9.190 5/1/07 30/360
- --------------------------------------------------------------------------------------
Totals 229,114,000 228,710,002
======================================================================================
</TABLE>
<PAGE>
EXHIBIT J
EXCEPTIONS TO CLAUSE XVII OF SCHEDULE I
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
Records: 1
Balance: 2,596,569.58
Selection: Two-Time Transfer
====================================================================================================================================
Two-time transfers - Lehman Brothers Pool
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
258 RB98 Wheaton Square Apartments 10866 Bucknell Drive Wheaton MD 2,600,000 2,596,570
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 2,600,000 2,596,570
- ------------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------
Prospectus Mortgage Accrual
# Rate Maturity Method
- --------------------------------------------------
<S> <C> <C> <C>
258 8.100 9/1/04 30/360
- --------------------------------------------------
Totals: 8.100 9/1/04 30/360
- --------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT K
EXCEPTIONS TO CLAUSE XXXI OF SCHEDULE I
None.
<PAGE>
EXHIBIT L
EXCEPTIONS TO CLAUSE XXXV(A) OF SCHEDULE I
None.
<PAGE>
EXHIBIT M
EXCEPTIONS TO CLAUSE XXXV(B) OF SCHEDULE I
Pinole Vista Crossing
<PAGE>
EXHIBIT N
EXCEPTIONS TO CLAUSE XXXV(J) OF SCHEDULE I
Zinfandel Ranch Apartments
675 Avenue of Americas
<PAGE>
EXHIBIT O
EXCEPTIONS TO CLAUSE XXXV(L) OF SCHEDULE I
Best Western Pensacola
Zinfandel Ranch Apartments
<PAGE>
EXHIBIT P
EXCEPTIONS TO CLAUSE XLIII OF SCHEDULE I
<PAGE>
<TABLE>
===================================================================================================================================
LEHMAN BROTHERS Page 1 of 1
FU - LB Conduit 1997-C2 ** BLACK ** Report: LOANSCHE
FRI, NOV 21, 1997 1:33 PM
Prepared by: SCHANG
No Engineering Within Last 18 months S:\SCHANG\CONDUIT2\BLACK
===================================================================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Offer Cut-off
Doc Loan Original Date Mortgage
# # Property Name Address City State Balance Balance Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <S> <C> <C> <C> <C> <C> <C>
55 QM24 Mountain View Apartments 22700 Lake Forest Drive El Toro CA 10,000,000 9,061,380 7.5000
- -----------------------------------------------------------------------------------------------------------------------------------
Totals: 10,000,000 9,061,380
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------
Offer
Doc Loan Accrual
# # Maturity Method
- --------------------------------------------
<S> <C> <C> <C>
55 QM24 2001-08-01 30/360
- --------------------------------------------
</TABLE>
<PAGE>
EXHIBIT Q
EXCEPTIONS TO CLAUSE XLVII(A) OF SCHEDULE I
<PAGE>
<TABLE>
===================================================================================================================================
LEHMAN BROTHERS Page 1 of 1
FU - LB Conduit 1997-C2 *** FINAL BLACK *** Report: LOANSCHE
MON, NOV 24, 1997 4:39 PM
Prepared by: SCHANG
S:\SCHANG\CONDUIT2\BLACK
===================================================================================================================================
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Rite-Aid Loans - Lehman Brothers Pool
Prospectus Loan
# # Property Name Address City State
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo OH
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo OH
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo OH
<S> <C> <C> <C> <C> <C>
Cut-off
Original Date Mortgage Accrual
# Balance Balance Rate Maturity Method
- ------------------------------------------------------------------------------------------------------------------------------------
310 2,044,000 2,039,470 7.790 2017/07/17 30/360
314 2,008,000 2,003,550 7.790 2017/07/17 30/360
325 1,956,000 1,953,856 7.790 2017/09/17 30/360
</TABLE>
<PAGE>
EXHIBIT R
EXCEPTIONS TO CLAUSE XLVII(B) OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
====================================================================================================================================
Rite-Aid Loans - Lehman Brothers Pool
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo OH 2,044,000 2,039,470
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo OH 2,008,000 2,003,550
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo OH 1,956,000 1,953,856
- ------------------------------------------------------------------------------------------------------------------------------------
6,008,000 5,996,876
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
Prospectus Mortgage Accrual
# Rate Maturity Method
- ---------------------------------------------------
<S> <C> <C> <C>
310 7.790 2017-07-01 30/360
314 7.790 2017-07-01 30/360
325 7.790 2017-09-01 30/360
- ---------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT S
EXCEPTIONS TO CLAUSE XLVII(C) OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** FINAL BLACK **
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Original Cut-off Date
Property Name Address City State Balance Balance
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Rite Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toledo OH 2,044,000 2,039,470
Rite Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo OH 2,008,000 2,003,550
Rite Aid Pharmacy - Main Street 212 Main Street Toledo OH 1,956,000 1,953,856
- -----------------------------------------------------------------------------------------------------------------------------------
6,008,000 5,996,876
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------
Mortgage Accrual
Property Name Rate Maturity Method
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Rite Aid Pharmacy - Manhattan Blvd. 7.7900 2017-07-01 30/360
Rite Aid Pharmacy - Sylvania Ave. 7.7900 2017-07-01 30/360
Rite Aid Pharmacy - Main Street 7.7900 2017-07-01 30/360
- ----------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------
==================================================================================
</TABLE>
<PAGE>
EXHIBIT T
EXCEPTIONS TO CLAUSE XLVII(D) OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Offer
Doc Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo OH 2,044,000 2,039,470
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo OH 2,008,000 2,003,550
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo OH 1,956,000 1,953,856
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 6,008,000 5,996,876
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
Offer
Doc Mortgage Accrual
# Rate Maturity Method
- ---------------------------------------------------
<S> <C> <C> <C>
310 7.7900 2017-07-01 30/360
314 7.7900 2017-07-01 30/360
325 7.7900 2017-09-01 30/360
- ---------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT U
EXCEPTIONS TO CLAUSE XLVII(U) OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Offer
Doc Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo OH 2,044,000 2,039,470
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo OH 2,008,000 2,003,550
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo OH 1,956,000 1,953,856
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 6,008,000 5,996,876
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
Offer
Doc Mortgage Accrual
# Rate Maturity Method
- ---------------------------------------------------
<S> <C> <C> <C>
310 7.7900 2017-07-01 30/360
314 7.7900 2017-07-01 30/360
325 7.7900 2017-07-01 30/360
- ---------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT V
EXCEPTIONS TO CLAUSE XLVII(G) OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Offer
Doc Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo OH 2,044,000 2,039,470
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo OH 2,008,000 2,003,550
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo OH 1,956,000 1,953,856
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 6,008,000 5,996,876
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
Offer
Doc Mortgage Accrual
# Rate Maturity Method
- ---------------------------------------------------
<S> <C> <C> <C>
310 7.7900 2017-07-01 30/360
314 7.7900 2017-07-01 30/360
325 7.7900 2017-07-01 30/360
- ---------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT W
EXCEPTIONS TO CLAUSE XLVII(H) OF SCHEDULE I
<PAGE>
EXHIBIT X
EXCEPTIONS TO CLAUSE XLVII(I) OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Offer
Doc Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo OH 2,044,000 2,039,470
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo OH 2,008,000 2,003,550
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo OH 1,956,000 1,953,856
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 6,008,000 5,996,876
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
Offer
Doc Mortgage Accrual
# Rate Maturity Method
- ---------------------------------------------------
<S> <C> <C> <C>
310 7.7900 2017-07-01 30/360
314 7.7900 2017-07-01 30/360
325 7.7900 2017-07-01 30/360
- ---------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT Y
EXCEPTIONS TO CLAUSE XLVII(J) OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Offer
Doc Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
310 RA67 A Rite-Aid Pharmacy - Manhattan Blvd. 810 Manhattan Blvd. Toldeo OH 2,044,000 2,039,470
314 RA62 A Rite-Aid Pharmacy - Sylvania Ave. 1012 Sylvania Ave. Toledo OH 2,008,000 2,003,550
325 RA61 A Rite-Aid Pharmacy - Main Street 212 Main Street Toledo OH 1,956,000 1,953,856
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 6,008,000 5,996,876
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------
Offer
Doc Mortgage Accrual
# Rate Maturity Method
- ---------------------------------------------------
<S> <C> <C> <C>
310 7.7900 2017-07-01 30/360
314 7.7900 2017-07-01 30/360
325 7.7900 2017-07-01 30/360
- ---------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT Z
LIST OF LEASE GUARANTORS
<PAGE>
EXHIBIT Z
List of Lease Guarantors
Rite Aid Corporation
Office Depot
Circuit City
Hartford Fire
Kmart
Eckerd
Eckerd
Walgreen
Albertson's, Inc.
Barnes & Noble, Inc.
Pep Boys
Thrifty-Payless
EXECUTION COPY
MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement, dated as of November 1, 1997 (the
"Agreement"), between First Union National Bank (the "Seller") and First Union
Commercial Mortgage Securities, Inc. (the "Purchaser").
The Seller intends to sell and the Purchaser intends to purchase certain
multifamily and commercial mortgage loans (the "First Union Mortgage Loans") as
provided herein. The Purchaser intends to deposit them, together with the LBHI
Mortgage Loans (as defined below), into a trust fund (the "Trust Fund"), the
beneficial ownership of which will be evidenced by multiple classes (each, a
"Class") of mortgage pass-through certificates (the "Certificates"). One or more
"real estate mortgage investment conduit" ("REMIC") elections will be made with
respect to the Trust Fund. The Trust Fund will be created and the Certificates
will be issued pursuant to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of November 1, 1997 (the "Cut-off Date"), among
the Purchaser as depositor, First Union National Bank as master servicer (in
such capacity, the "Master Servicer"), CRIIMI MAE Services Limited Partnership
as special servicer (in such capacity, the "Special Servicer"), LASALLE NATIONAL
BANK as trustee (the "Trustee") and ABN AMRO Bank N.V. as fiscal agent (the
"Fiscal Agent"). Concurrently with the purchase of Mortgage Loans pursuant to
this Agreement, the Purchaser will also purchase multifamily and commercial
mortgage loans pursuant to a Mortgage Loan Purchase Agreement, dated as of
November 1, 1997, between Lehman Brothers Holdings Inc. ("LBHI") and the
Purchaser (the "LBHI Agreement"). Such mortgage loans (the "LBHI Mortgage
Loans") will likewise be deposited into the Trust Fund. Capitalized terms used
but not defined herein have the respective meanings set forth in the Pooling and
Servicing Agreement.
Now, therefore, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
SECTION 1. Agreement to Purchase.
(a) The Seller agrees to sell, and the Purchaser agrees to purchase, the
First Union Mortgage Loans identified on the schedule (the "Mortgage Loan
Schedule") annexed hereto as Exhibit A. The Mortgage Loan Schedule may be
amended to reflect the actual Mortgage Loans accepted by the Purchaser pursuant
to the terms hereof. The First Union Mortgage Loans will have an aggregate
principal balance of $1,105,685,135.31 (the "First Union Balance") as of the
close of business on the Cut-off Date, after giving effect to any payments due
on or before such date whether or not received. The First Union Balance and the
LBHI
<PAGE>
Balance (as defined in the LBHI Agreement) together equal an aggregate principal
balance (the "Initial Pool Balance") of $2,203,502,325. The purchase and sale of
the First Union Mortgage Loans shall take place on November 25, 1997 or such
other date as shall be mutually acceptable to the parties hereto (the "Closing
Date"). The consideration for the First Union Mortgage Loans shall consist of
(A) a cash amount equal to 100% of the First Union Balance, plus (B) interest
accrued on each First Union Mortgage Loan at the related Net Mortgage Rate, for
the period from and including the Cut-off Date up to but not including the
Closing Date, which cash amount shall be paid to the Seller or its designee by
wire transfer in immediately available funds on the Closing Date.
The Purchaser will assign to the Trustee, all of its right, title and
interest in and to the First Union Mortgage Loans.
SECTION 2. Conveyance of Mortgage Loans.
(a) Effective as of the Closing Date, subject only to receipt of the
purchase price referred to in Section 1 hereof, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Purchaser, without
recourse, all the right, title and interest of the Seller in and to the First
Union Mortgage Loans identified on the Mortgage Loan Schedule as of such date
other than the primary servicing rights. The Mortgage Loan Schedule, as it may
be amended, shall conform to the requirements set forth in this Agreement and
the Pooling and Servicing Agreement.
(b) The Purchaser or its assignee shall be entitled to receive all
scheduled payments of principal and interest due after the Cut-off Date, and all
other recoveries of principal and interest collected after the Cut-off Date
(other than in respect of principal and interest on the First Union Mortgage
Loans due on or before the Cut-off Date). All scheduled payments of principal
and interest due on or before the Cut-off Date but collected after the Cut-off
Date, and recoveries of principal and interest collected on or before the
Cut-off Date (only in respect of principal and interest on the First Union
Mortgage Loans due on or before the Cut-off Date), shall belong to, and be
promptly remitted to, the Seller.
(c) The Seller hereby represents and warrants that it has, on behalf of the
Purchaser, delivered to the Trustee, the documents and instruments specified
below with respect to each First Union Mortgage Loan (each a "Mortgage File").
All Mortgage Files so delivered will be held by the Trustee in escrow at all
times prior to the Closing Date. Each Mortgage File shall, except as otherwise
disclosed on Exhibit B hereto, contain the following documents:
2
<PAGE>
(i) the original executed Mortgage Note, endorsed (without recourse,
representation or warranty, express or implied) to the order of
LASALLE NATIONAL BANK, as trustee for the registered holders of
the First Union-Lehman Brothers Commercial Mortgage Trust II,
Commercial, Mortgage Pass-Through Certificates, Series 1997-C2;
(ii) an original or copy of the Mortgage and of any intervening
assignments thereof, in each case with evidence of recording
indicated thereon;
(iii) an original or copy of any related Assignment of Leases and of
any intervening assignments thereof (with recording information
indicated thereon), if such item is a document separate from the
Mortgage;
(iv) an original executed assignment of the Mortgage, any related
Assignment of Leases (if such item is a document separate from
the Mortgage), and any other recorded document relating to the
Mortgage Loan otherwise included in the Mortgage File, in favor
of LASALLE NATIONAL BANK, as trustee for the registered holders
of the First Union-Lehman Brothers Commercial Mortgage Trust II,
Commercial Mortgage Pass-Through Certificates, Series 1997-C2, in
recordable form;
(v) an original assignment of all unrecorded documents relating to
the Mortgage Loan in favor of LASALLE NATIONAL BANK, as trustee
for the registered holders of the First Union-Lehman Brothers
Commercial Mortgage Trust II, Commercial Mortgage Pass-Through
Certificates, Series 1997-C2;
(vi) originals or copies of any written modification agreements in
those instances where the terms or provisions of the Mortgage or
Mortgage Note have been modified;
(vii) the original or a copy of the policy or certificate of lender's
title insurance issued on the date of the origination of such
Mortgage Loan, or, if such policy has not been issued, an
irrevocable, binding commitment to issue such title insurance
policy; and
(viii) filed copies (with evidence of filing) of any prior UCC
Financing Statements in favor of the originator of such Mortgage
Loan or in favor of
3
<PAGE>
any assignee prior to the Trustee (but only to the extent the
Seller had possession of such UCC Financing Statements prior to
the Closing Date) and, if there is an effective UCC Financing
Statement in favor of the Seller on record with the applicable
public office for UCC Financing Statements, an original UCC-2 or
UCC-3, as appropriate, in favor of LASALLE NATIONAL BANK, as
trustee for the registered holders of the First Union-Lehman
Brothers Commercial Mortgage Trust II, Commercial Mortgage
Pass-Through Certificates, Series 1997-C2.
(d) Within 30 days following the Closing Date, the Purchaser shall submit
or cause to be submitted for recordation or filing, as the case may be, in the
appropriate public office for real property records or Uniform Commercial Code
financing statements, as appropriate, each assignment of Mortgage and each
assignment of Assignment of Leases referred to in clauses (iv) and (v) of
subsection (c) above and each UCC-2 and UCC-3 in favor of and delivered to the
Trustee constituting part of the Mortgage File. If any such document or
instrument is lost or returned unrecorded or unfiled, as the case may be,
because of a defect therein, then the Seller shall prepare a substitute therefor
or cure such defect or cause such to be done, as the case may be, and the Seller
shall deliver such substitute or corrected document or instrument to the
Purchaser or its designee.
(e) All documents and records relating to the First Union Mortgage Loans
and in the Seller's possession (the "Additional Mortgage Loan Documents") that
are not required to be delivered to the Trustee shall be delivered or caused to
be delivered by the Seller to the Master Servicer or at the direction of the
Master Servicer to the appropriate sub-servicer, together with any related
escrow amounts and reserve amounts.
SECTION 3. Representations, Warranties and Covenants of Seller.
(a) The Seller hereby represents and warrants to and covenants with the
Purchaser, as of the date hereof, that:
(i) The Seller is a national banking association validly existing
under the laws of the United States of America and possesses all requisite
authority, power, licenses, permits and franchises to carry on its business
as currently conducted by it and to execute, deliver and comply with its
obligations under the terms of this Agreement.
(ii) This Agreement has been duly and validly authorized, executed and
delivered by the Seller and, assuming due authorization, execution and
delivery hereof by the Purchaser, constitutes a legal, valid and binding
4
<PAGE>
obligation of the Seller, enforceable against the Seller in accordance with
its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights in general, as they may be applied in the
context of the insolvency of a national banking association, and by general
equity principles (regardless of whether such enforcement is considered in
a proceeding in equity or at law), or by public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of this Agreement
which purport to provide indemnification from liabilities under applicable
securities laws.
(iii) The execution and delivery of this Agreement by the Seller and
the Seller's performance and compliance with the terms of this Agreement
will not (A) violate the Seller's articles of association or By-Laws, (B)
violate any law or regulation or any administrative decree or order to
which it is subject or (C) constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, agreement or other
instrument to which the Seller is a party or by which the Seller is bound.
(iv) The Seller 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 or body, which default might have
consequences that would, in the Seller's reasonable and good faith
judgment, materially and adversely affect the condition (financial or
other) or operations of the Seller or its properties or have consequences
that would materially and adversely affect its performance hereunder.
(v) The Seller is not a party to or bound by any agreement or
instrument or subject to any articles of association, bylaws or any other
corporate restriction or any judgment, order, writ, injunction, decree, law
or regulation that would, in the Seller's reasonable and good faith
judgment, materially and adversely affect the ability of the Seller to
perform its obligations under this Agreement or that requires the consent
of any third person to the execution of this Agreement or the performance
by the Seller of its obligations under this Agreement.
(vi) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Seller of or compliance by the Seller with this
Agreement or the consummation of the transactions contemplated by this
Agreement and no bulk sale law applies to such transactions.
5
<PAGE>
(vii) No litigation is pending or, to the best of the Seller's
knowledge, threatened against the Seller that would, in the Seller's good
faith and reasonable judgment, prohibit its entering into this Agreement or
materially and adversely affect the performance by the Seller of its
obligations under this Agreement.
(viii) Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, the Seller will report the transfer of the
First Union Mortgage Loans to the Purchaser as a sale of the First Union
Mortgage Loans to the Purchaser in exchange for consideration consisting of
(A) a cash amount equal to 100% of the First Union Balance, plus (B)
interest accrued on each First Union Mortgage Loan at the related Net
Mortgage Rate, for the period from and including the Cut-off Date up to but
not including the Closing Date. The consideration received by the Seller
upon the sale of the First Union Mortgage Loans to the Purchaser will
constitute reasonably equivalent value and fair consideration for the First
Union Mortgage Loans. The Seller will be solvent at all relevant times
prior to, and will not be rendered insolvent by, the sale of the First
Union Mortgage Loans to the Purchaser. The Seller is not selling the First
Union Mortgage Loans to the Purchaser with any intent to hinder, delay or
defraud any of the creditors of the Seller.
(b) The Seller hereby makes the representations and warranties contained in
Schedule I hereto for the benefit of the Purchaser and the Trustee for the
benefit of the Certificateholders as of the Closing Date, with respect to (and
solely with respect to) each First Union Mortgage Loan. References in such
representations and warranties to "Mortgage Loan" and "Mortgage Loans" shall be
deemed to mean "First Union Mortgage Loan" and "First Union Mortgage Loans,"
respectively.
(c) If the Seller receives notice of a Document Defect or a Breach relating
to a First Union Mortgage Loan (the "Defect/Breach Notice"), then the Seller
shall within 90 days after its receipt of the Defect/Breach Notice (or in the
case of a Document Defect or a Breach relating to a Mortgage Loan not being a
"qualified mortgage" within the meaning of the REMIC Provisions, not later that
90 days of any party discovering such Document Defect or Breach) (i) cure such
Document Defect or Breach, as the case may be, in all material respects, which
shall include payment of any Additional Trust Fund Expenses associated
therewith, or (ii) repurchase the affected First Union Mortgage Loan (or the
related Mortgaged Property) from the Trustee pursuant to the Pooling and
Servicing Agreement, at a price equal to the Purchase Price; provided, however,
that if such Document Defect or Breach is capable of being cured but not within
such 90-day period, such Document Defect would not prevent the Mortgage Loan
from being treated as a "qualified mortgage" within the meaning of the REMIC
Provisions and the Seller has commenced
6
<PAGE>
and is diligently proceeding with the cure of such Document Defect or Breach
within such 90-day period, the Seller shall have an additional 90 days to
complete such cure (or, in the event of a failure to so cure, to complete such
repurchase); and provided, further, that with respect to such additional 90-day
period the Seller shall have delivered an Officer's Certificate to the Trustee
setting forth the reason such Document Defect or Breach is not capable of being
cured within the initial 90-day period and what actions the Seller is pursuing
in connection with the cure thereof and stating that the Seller anticipates that
such breach will be cured within the additional 90-day period. Notwithstanding
the foregoing, the delivery of a commitment to issue a policy of lender's title
insurance as described in clause (xii) of Schedule I hereof 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.
(d) If upon the second anniversary of the Closing Date the Seller receives
notice that exceptions remain outstanding with respect to any Mortgage Loan,
pursuant to Section 2.02(b) of the Pooling and Servicing Agreement, the Seller
shall, within 90 days of such anniversary: (i) cure such exception, (ii)
repurchase the affected Mortgage Loan, or (iii) deliver to the Trustee an
Opinion of Counsel to the effect that such defect does not materially and
adversely affect the Certificateholders.
SECTION 4. Representations and Warranties of the Purchaser. In order to induce
the Seller to enter into this Agreement, the Purchaser hereby represents and
warrants for the benefit of the Seller as of the date hereof that:
(a) The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina. The Purchaser has
the full corporate power and authority and legal right to acquire the First
Union Mortgage Loans from the Seller and to transfer the First Union Mortgage
Loans to the Trustee.
(b) This Agreement has been duly and validly authorized, executed and
delivered by the Purchaser, all requisite action by the Purchaser's directors
and officers has been taken in connection therewith, and (assuming the due
authorization, execution and delivery hereof by the Seller) this Agreement
constitutes the valid, legal and binding agreement of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such enforcement
may be limited by (A) laws relating to bankruptcy, insolvency, reorganization,
receivership or moratorium, (B) other laws relating to or affecting the rights
of creditors generally, or (C) general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law).
7
<PAGE>
(c) Except as may be required under federal or state securities laws (and
which will be obtained on a timely basis), no consent, approval, authorization
or order of, registration or filing with, or notice to, any governmental
authority or court, is required, under federal or state law, for the execution,
delivery and performance by the Purchaser of or compliance by the Purchaser with
this Agreement, or the consummation by the Purchaser of any transaction
described in this Agreement.
(d) None of the acquisition of the First Union Mortgage Loans by the
Purchaser, the transfer of the First Union Mortgage Loans to the Trustee, and
the execution, delivery or performance of this Agreement by the Purchaser,
conflicts or will conflict with, results or will result in a breach of, or
constitutes or will constitute a default under (A) any term or provision of the
Purchaser's Articles of Incorporation or Bylaws, (B) any term or provision of
any material agreement, contract, instrument or indenture, to which the
Purchaser is a party or by which the Purchaser is bound, or (C) any law, rule,
regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over the Purchaser or its assets.
(e) Under GAAP and for federal income tax purposes, the Purchaser will
report the transfer of the First Union Mortgage Loans by the Seller to the
Purchaser as a sale of the First Union Mortgage Loans to the Purchaser in
exchange for consideration consisting of (A) a cash amount equal to 100% of the
First Union Balance, plus (B) interest accrued on each First Union Mortgage Loan
at the related Net Mortgage Rate, for the period from and including the Cut-off
Date up to but not including the Closing Date.
SECTION 5. Closing. The closing of the sale of the First Union Mortgage Loans
(the "Closing") shall be held at the offices of Willkie Farr & Gallagher, One
Citicorp Center, 153 East 53rd Street, New York, New York 10022 at 10:00 A.M.,
New York time, on the Closing Date.
The Closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Seller set forth
in or made pursuant to Sections 3(a) and 3(b) of this Agreement and all of
the representations and warranties of the Purchaser set forth in Section 4
of this Agreement shall be true and correct in all material respects as of
the Closing Date; provided, however, that any material inaccuracy in any
representation and warranty set forth in or made pursuant to Section 3(b)
shall not affect the Purchaser's obligation to purchase the Mortgage Loans
not affected by such inaccuracy;
8
<PAGE>
(b) All documents specified in Section 6 of this Agreement (the
"Closing Documents"), in such forms as are agreed upon and acceptable to
the Purchaser in its reasonable discretion, shall be duly executed and
delivered by all signatories as required pursuant to the respective terms
thereof;
(c) The Seller shall have delivered and released to the Trustee (or a
Custodian on its behalf) and the Master Servicer, respectively, all
documents represented to have been or required to be delivered to the
Trustee and the Master Servicer pursuant to Section 2 of this Agreement;
(d) All other terms and conditions of this Agreement required to be
complied with on or before the Closing Date shall have been complied with
in all material respects and the Seller shall have the ability to comply
with all terms and conditions and perform all duties and obligations
required to be complied with or performed after the Closing Date; and
(e) The Seller shall have paid all fees and expenses payable by it to
the Purchaser or otherwise pursuant to this Agreement.
Both parties agree to use their best efforts to perform their respective
obligations hereunder in a manner that will enable the Purchaser to purchase the
First Union Mortgage Loans on the Closing Date.
SECTION 6. Closing Documents. The Closing Documents shall consist of the
following:
(a) This Agreement duly executed by the Purchaser and the Seller;
(b) A Certificate of the Seller, executed by a duly authorized officer of
the Seller and dated the Closing Date, and upon which the Purchaser and the
Underwriters may rely, to the effect that: (i) the representations and
warranties of the Seller in this Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made on such
date; and (ii) the Seller has, in all material respects, complied with all the
agreements and satisfied all the conditions on its part that are required under
this Agreement to be performed or satisfied at or prior to the date hereof;
(c) An Officer's Certificate from an officer of the Seller, in his or her
individual capacity, dated the Closing Date, and upon which the Purchaser may
rely, to the effect that each individual who, as an officer or representative of
the Seller, signed this Agreement or any other document or certificate delivered
on or before the Closing Date in connection with the transactions contemplated
herein, was at the respective times of such signing and delivery, and is as of
the Closing Date, duly elected or appointed, qualified and acting as such
9
<PAGE>
officer or representative, and the signatures of such persons appearing on such
documents and certificates are their genuine signatures;
(d) An Officer's Certificate from an officer of the Seller, in his or her
individual capacity, dated the Closing Date, and upon which the Purchaser and
the Underwriters may rely, to the effect that (i) such officer has carefully
examined the Prospectus and nothing has come to his attention that would lead
him to believe that the Prospectus, as of the date of the Prospectus Supplement
or as of the Closing Date, included or includes any untrue statement of a
material fact relating to the First Union Mortgage Loans or omitted or omits to
state therein a material fact necessary in order to make the statements therein
relating to the First Union Mortgage Loans, in light of the circumstances under
which they were made, not misleading, and (ii) such officer has examined the
Memorandum and nothing has come to his attention that would lead him to believe
that the Memorandum, as of the date thereof or as of the Closing Date, included
or includes any untrue statement of a material fact relating to the First Union
Mortgage Loans or omitted or omits to state therein a material fact necessary in
order to make the statements therein related to the First Union Mortgage Loans,
in the light of the circumstances under which they were made, not misleading.
(e) The resolutions of the requisite loan committee authorizing the
Seller's entering into the transactions contemplated by this Agreement, the
articles of association and by-laws of the Seller, and a certificate of good
standing of the Seller issued by the Office of the Comptroller of the Currency
of the United States not earlier than sixty (60) days prior to the Closing Date;
(f) A written opinion of Paul C. Hurdle III, counsel for the Seller, in
form and substance acceptable to the Purchaser and its counsel, with any
modifications required by the rating agencies identified in the Prospectus
Supplement (the "Rating Agencies"), dated the Closing Date and addressed to the
Purchaser, the Underwriters and each of the Rating Agencies, together with such
other written opinions as may be required by the Rating Agencies; and
(g) Such further certificates, opinions and documents as the Purchaser may
reasonably request.
SECTION 7. Indemnification.
(a) The Seller shall indemnify and hold harmless the Purchaser, the
Underwriters, their respective officers and directors, and each person, if any,
who controls the Purchaser or any Underwriter within the meaning of either
Section 15 of the Securities Act of 1933, as amended (the "1933 Act") or Section
20 of the Securities Exchange Act of 1934, as amended (the "1934
10
<PAGE>
Act"), against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the 1933 Act, the
1934 Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) (i) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in (A) the Prospectus
Supplement, the Memorandum, the Diskette or, insofar as they are required to be
filed as part of the Registration Statement pursuant to the No-Action Letters,
any Computational Materials or ABS Term Sheets with respect to the Registered
Certificates, or in any revision or amendment of or supplement to any of the
foregoing or (B) any items similar to Computational Materials and ABS Term
Sheets forwarded to prospective investors in the Non-Registered Certificates, or
(ii) arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; but only if and to the extent that (I) any such untrue
statement or alleged untrue statement or omission or alleged omission arises out
of or is based upon an untrue statement or omission with respect to the First
Union Mortgage Loans, the related Mortgagors and/or the related Mortgaged
Properties contained in the Master Tape (it being herein acknowledged that the
Master Tape was used to prepare the Prospectus Supplement including without
limitation Annex A thereto, the Memorandum, the Diskette, the Computational
Materials and ABS Term Sheets with respect to the Registered Certificates and
any items similar to Computational Materials and ABS Term Sheets forwarded to
prospective investors in the Non-Registered Certificates), (II) any such untrue
statement or alleged untrue statement or omission or alleged omission is with
respect to, or arises out of or is based upon an untrue statement or omission
with respect to, the information regarding the First Union Mortgage Loans, the
related Mortgagors, the related Mortgaged Properties and/or the Seller set forth
(X) in the Prospectus Supplement and the Memorandum under the headings "Summary
of the Prospectus Supplement--The Mortgage Pool" or "Summary of the
Memorandum--The Mortgage Pool", as applicable, "Risk Factors--The Mortgage
Loans" and "Description of the Mortgage Pool" and (Y) on Annex A to the
Prospectus Supplement and, to the extent consistent therewith, on the Diskette,
or (III) any such untrue statement or alleged untrue statement or omission or
alleged omission arises out of or is based upon a breach of the representations
and warranties of the Seller set forth in or made pursuant to Section 3;
provided that the indemnification provided by this Section 7 shall not apply to
the extent that such untrue statement or omission was made as a result of an
error in the manipulation of, or in any calculations based upon, or in any
aggregation of the information regarding the First Union Mortgage Loans, the
related Mortgagors and/or the related Mortgaged Properties set forth in the
Master Tape and Annex A to the Prospectus Supplement, including without
11
<PAGE>
limitation the aggregation of such information with comparable information
relating to the LBHI Mortgage Loans in the Trust Fund. This indemnity agreement
will be in addition to any liability which the Seller may otherwise have.
For purposes of this Agreement, "Registration Statement" shall mean the
registration statement No. 333-07854 filed by the Purchaser on Form S-3,
including without limitation exhibits thereto and information incorporated
therein by reference; "Prospectus" shall mean the prospectus dated October 29,
1997, as supplemented by the prospectus supplement dated November 19, 1997 (the
"Prospectus Supplement"), relating to the Registered Certificates, including all
annexes thereto; "Memorandum" shall mean the private placement memorandum dated
November 25, 1997, relating to the Non-Registered Certificates; "Registered
Certificates" shall mean the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E and Class IO Certificates; "Non-Registered Certificates" shall
mean the Certificates other than the Registered Certificates; "Computational
Materials" shall have the meaning assigned thereto in the no-action letter dated
May 20, 1994 issued by the Division of Corporation Finance of the Securities and
Exchange Commission (the "Commission") to Kidder, Peabody Acceptance Corporation
I, Kidder, Peabody & Co. Incorporated, and Kidder Structured Asset Corporation
and the no-action letter dated May 27, 1994 issued by the Division of
Corporation Finance of the Commission to the Public Securities Association
(together, the "Kidder Letters"); "ABS Term Sheets shall have the meaning
assigned thereto in the no-action letter dated February 17, 1995 issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter" and, together with the Kidder letters, the
"No-Action Letters"); "Diskette" shall mean the diskette attached to each of the
Prospectus and the Memorandum; and "Master Tape" shall mean the compilation of
information and data regarding the LBHI Mortgage Loans and the First Union
Mortgage Loans covered by the Agreed Upon Procedures Letter dated November 19,
1997 and rendered by Deloitte & Touche LLP (a "hard copy" of which Master Tape
was initiated on behalf of the Seller and the Purchaser).
(b) Promptly after receipt by any person entitled to indemnification under
this Section 7 (an "indemnified party") of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against the Seller (the "indemnifying party") under this Section 7, notify the
indemnifying party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any liability that it
may have to any indemnified party otherwise than under this Section 7. In case
any such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent that it may elect by written
notice delivered to the indemnified party promptly after receiving the aforesaid
12
<PAGE>
notice from such indemnified party, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have reasonably
concluded that there may be legal defenses available to it or them and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval by
the indemnified party of counsel, the indemnifying party will not be liable for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof, unless (i) the indemnified party shall have
employed separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Purchaser, representing all the
indemnified parties under Section 7(a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party; and except that, if clause (i) or (iii) is applicable,
such liability shall only be in respect of the counsel referred to in such
clause (i) or (iii).
(c) If the indemnification provided for in this Section 7 is unavailable to
an indemnified party under Section 7(a) hereof or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnified and indemnifying
parties in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the indemnified and indemnifying parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such parties.
(d) The Purchaser and the Seller agree that it would not be just and
equitable if contribution pursuant to Section 7(c) were determined by pro rata
allocation or by any other
13
<PAGE>
method of allocation that does not take account of the considerations referred
to in Section 7(c) above. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages and liabilities referred to in this
Section 7 shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim, except
where the indemnified party is required to bear such expenses pursuant to this
Section 7, which expenses the indemnifying party shall pay as and when incurred,
at the request of the indemnified party, to the extent that the indemnifying
party will be ultimately obligated to pay such expenses. If any expenses so paid
by the indemnifying party are subsequently determined to not be required to be
borne by the indemnifying party hereunder, the party that received such payment
shall promptly refund the amount so paid to the party which made such payment.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(e) The indemnity and contribution agreements contained in this Section 7
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by the Purchaser, the
Underwriters, any of their respective directors or officers, or any person
controlling the Purchaser or the Underwriters, and (iii) acceptance of and
payment for any of the Certificates.
(f) Without limiting the generality or applicability of any other provision
of this Agreement, the Underwriters shall be third-party beneficiaries of the
provisions of this Section 7.
SECTION 8. Costs. The Seller shall pay (or shall reimburse the Purchaser to the
extent that the Purchaser has paid) the Seller's pro rata portion of the
aggregate of the following amounts (the Seller's pro rata portion to be
determined according to the percentage that the First Union Balance represents
of the Initial Pool Balance): (i) the costs and expenses of printing (or
otherwise reproducing) and delivering a preliminary and final Prospectus and
Memorandum relating to the Certificates; (ii) the initial fees, costs, and
expenses of the Trustee (including reasonable attorneys' fees); (iii) the filing
fee charged by the Securities and Exchange Commission for registration of the
Certificates so registered; (iv) the fees charged by the Rating Agencies to rate
the Certificates so rated; (v) the expense of recording any assignment of
Mortgage or assignment of Assignment of Leases as contemplated by Section 2
hereof; and (vi) the cost of obtaining a "comfort letter" from a firm of
certified public accountants selected by the Purchaser and the Seller with
respect to numerical information in respect of the First Union Mortgage Loans
included in the Prospectus and Memorandum. All other costs and expenses in
connection with the transactions contemplated hereunder shall be borne by the
party incurring such expense.
14
<PAGE>
SECTION 9. Grant of a Security Interest. It is the express intent of the parties
hereto that the conveyance of the First Union Mortgage Loans by the Seller to
the Purchaser as provided in Section 2 hereof be, and be construed as, a sale of
the First Union Mortgage Loans by the Seller to the Purchaser and not as a
pledge of the First Union Mortgage Loans by the Seller to the Purchaser to
secure a debt or other obligation of the Seller. However, if, notwithstanding
the aforementioned intent of the parties, the First Union Mortgage Loans are
held to be property of the Seller, then, (a) it is the express intent of the
parties that such conveyance be deemed a pledge of the First Union Mortgage
Loans by the Seller to the Purchaser to secure a debt or other obligation of the
Seller, and (b) (i) this Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the New York Uniform
Commercial Code; (ii) the conveyance provided for in Section 2 hereof shall be
deemed to be a grant by the Seller to the Purchaser of a security interest in
all of the Seller's right, title and interest in and to the First Union Mortgage
Loans, and all amounts payable to the holder of the First Union Mortgage Loans
in accordance with the terms thereof, and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property, including without limitation all amounts, other than investment
earnings, from time to time held or invested in the Certificate Account, the
Distribution Account or, if established, the REO Account (each as defined in the
Pooling and Servicing Agreement) whether in the form of cash, instruments,
securities or other property; (iii) the assignment to the Trustee of the
interest of the Purchaser as contemplated by Section 1 hereof shall be deemed to
be an assignment of any security interest created hereunder; (iv) the possession
by the Trustee or any of its agents, including, without limitation, the
Custodian, of the Mortgage Notes, and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" for purposes of perfecting the security
interest pursuant to Section 9-305 of the New York Uniform Commercial Code; and
(v) notifications to persons (other than the Trustee) holding such property, and
acknowledgments, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgments, receipts or confirmations
from, financial intermediaries, bailees or agents (as applicable) of the secured
party for the purpose of perfecting such security interest under applicable law.
The Seller and the Purchaser shall, to the extent consistent with this
Agreement, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the First Union Mortgage
Loans, such security interest would be deemed to be a perfected security
interest of first priority under applicable law and will be maintained as such
throughout the term of this Agreement and the Pooling and Servicing Agreement.
15
<PAGE>
SECTION 10. Notices. All notices, copies, requests, consents, demands and other
communications required hereunder shall be in writing and telecopied or
delivered to the intended recipient at the "Address for Notices" specified
beneath its name on the signature pages hereof or, as to either party, at such
other address as shall be designated by such party in a notice hereunder to the
other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
SECTION 11. Representations, Warranties and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement,
incorporated herein by reference or contained in the certificates of officers of
the Seller submitted pursuant hereto, shall remain operative and in full force
and effect and shall survive delivery of the First Union Mortgage Loans by the
Seller to the Purchaser (and by the Purchaser to the Trustee).
SECTION 12. Severability of Provisions. Any part, provision, representation,
warranty or covenant of this Agreement that is prohibited or which is held to be
void or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation, warranty or covenant of this Agreement that is
prohibited or unenforceable or is held to be void or unenforceable in any
particular jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law,
the parties hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
SECTION 13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but which together shall
constitute one and the same agreement.
SECTION 14. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES, OBLIGATIONS
AND RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED IN ACCORDANCE WITH
THE INTERNAL LAWS AND DECISIONS OF NEW YORK. THE PARTIES HERETO INTEND THAT THE
PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY
TO THIS AGREEMENT.
16
<PAGE>
SECTION 15. Further Assurances. The Seller and the Purchaser agree to execute
and deliver such instruments and take such further actions as the other party
may, from time to time, reasonably request in order to effectuate the purposes
and to carry out the terms of this Agreement.
SECTION 16. Successors and Assigns. The rights and obligations of the Seller
under this Agreement shall not be assigned by the Seller without the prior
written consent of the Purchaser, except that any person into which the Seller
may be merged or consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Seller is a party, or any person
succeeding to all or substantially all of the business of the Seller, shall be
the successor to the Seller hereunder. The Purchaser has the right to assign its
interest under this Agreement, in whole or in part, as may be required to effect
the purposes of the Pooling and Servicing Agreement, and the assignee shall, to
the extent of such assignment, succeed to the rights and obligations hereunder
of the Purchaser. Subject to the foregoing, this Agreement shall bind and inure
to the benefit of and be enforceable by the Seller, the Purchaser, the
Underwriters (as intended third party beneficiaries hereof) and their permitted
successors and assigns, and the officers, directors and controlling persons
referred to in Section 7.
SECTION 17. Amendments. No term or provision of this Agreement may be waived or
modified unless such waiver or modification is in writing and signed by a duly
authorized officer of the party, or third party beneficiary, against whom such
waiver or modification is sought to be enforced.
17
<PAGE>
IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to
be signed hereto by their respective duly authorized officers as of the date
first above written.
SELLER
------
FIRST UNION NATIONAL BANK
By: /s/ LAWRENCE A. BROWN
---------------------------------
Name: Lawrence A. Brown
Title: Senior Vice President
Address for Notices:
One First Union Center
301 South College Street
Charlotte, North Carolina 28288-0600
Attention: Lawrence A. Brown
Telecopier No.: (704) 374-6435
Telephone No.: (704) 383-7407
PURCHASER
---------
FIRST UNION COMMERCIAL
MORTGAGE SECURITIES, INC.
By: /s/ MICHAEL H. GRECO
---------------------------------
Name: Michael H. Greco
Title Senior Vice President
Address for Notices:
One First Union Center
301 South College Street
Charlotte, North Carolina 28288-0600
Attention: Michael H. Greco
Telecopier No.: (704) 374-6435
Telephone No.: (704) 383-9691
18
<PAGE>
SCHEDULE I
(i) The information pertaining to each Mortgage Loan set forth in the
Mortgage Loan Schedule was true and correct in all material respects as of the
Cut-Off Date;
(ii) If such Mortgage Loan was originated by the Seller or an affiliate
thereof, then, as of the date of its origination, such Mortgage Loan complied in
all material respects with, or was exempt from, all requirements of federal,
state or local law relating to the origination of such Mortgage Loan; and, if
such Mortgage Loan was not originated by the Seller or an affiliate thereof,
then, to the best of the Seller's knowledge after having performed the type of
due diligence customarily performed by prudent institutional commercial and
multifamily mortgage lenders, as of the date of its origination, such Mortgage
Loan complied in all material respects with, or was exempt from, all
requirements of federal, state or local law relating to the origination of such
Mortgage Loan;
(iii) The Seller owns the Mortgage Loan, has good and marketable title
thereto, has full right and authority to sell, assign and transfer the Mortgage
Loan and is transferring the Mortgage Loan free and clear of any and all liens,
pledges, charges or security interests of any nature encumbering such Mortgage
Loan, and no provision of the Mortgage Note, Mortgage or other loan document
relating to such Mortgage Loan prohibits or restricts the Seller's right to
assign or transfer such Mortgage Loan;
(iv) The proceeds of such Mortgage Loan have been fully disbursed and there
is no requirement for future advances thereunder;
(v) Each of the related Mortgage Note, Mortgage(s), Assignment of Leases,
if any, and other agreements executed in connection therewith is the legal,
valid and binding obligation of the maker thereof (subject to any non-recourse
provisions therein and any state anti-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 a legal opinion to such effect was obtained by the originator of
such Mortgage Loan at the time of origination;
I-1
<PAGE>
(vi) As of the date of its origination, there was no valid offset, defense,
counterclaim or right to rescission with respect to any of the related Mortgage
Note, Mortgage(s) or other agreements executed in connection therewith, and, as
of the Cut-off Date, to the best knowledge of the Seller, there is no valid
offset, defense, counterclaim or right to rescission with respect to such
Mortgage Note, Mortgage(s) or other agreements;
(vii) The assignment of the related Mortgage and assignment of leases to
the Trustee constitutes the legal, valid, binding and enforceable assignment of
such Mortgage 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);
(viii) Except with respect to the Mortgage Loans listed in Exhibit C
hereto, each related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property, which Mortgaged Property is free and clear of all
encumbrances and liens having priority over or on a parity with the first lien
of such Mortgage, except for (a) liens for real estate taxes and special
assessments not yet due and payable, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions appearing of record being
customarily acceptable to mortgage lending institutions generally or
specifically reflected in the appraisal of such Mortgaged Property made in
connection with the origination of such Mortgage Loan, and (c) other matters to
which like properties are commonly subject and which do not, individually or in
the aggregate, materially interfere with the benefits of the security intended
to be provided by such Mortgage or materially affect the value or marketability
of such Mortgaged Property, and such encumbrances do not materially interfere
with the current use or operation of the related Mortgaged Property or the
ability of the related Mortgagor to timely pay in full the principal and
interest on the related Mortgage Note; there exists with respect to such
Mortgaged Property an assignment of leases and rents provision, whether as part
of the related Mortgage or as a separate document or instrument, which
establishes and creates a first priority security interest in and to leases and
rents arising in respect of the related Mortgaged Property, subject only to
encumbrances described in subsections (a), (b) and (c) of this subparagraph
(viii);
(ix) The Seller has filed and/or recorded in all appropriate public filing
and recording offices all UCC-1 financing statements necessary to create and
perfect a
I-2
<PAGE>
security interest in and lien on the items of personal property described
therein (or, if not filed and/or recorded, has submitted such UCC-1 financing
statements for filing and/or recording and such UCC-1 financing statements are
in form and substance acceptable for filing and/or recording), to the extent
perfection may be effected pursuant to applicable law by recording or filing;
(x) All taxes and governmental assessments that prior to the Cut-off Date
became due and owing in respect of, and affect, each related Mortgaged Property
have been paid, or an escrow of funds in an amount sufficient to cover such
payments has been established;
(xi) As of the date of its origination, there was no proceeding pending for
the total or partial condemnation of each related Mortgaged Property that
materially affects the value thereof, and such Mortgaged Property was free of
material damage; and, as of the Cut-off Date, the Seller has not received any
notice of the commencement of any proceeding for the total or partial
condemnation of any related Mortgaged Property that materially affects the value
thereof, and such Mortgaged Property is free of material damage;
(xii) Each related Mortgaged Property is covered by an ALTA (or its
equivalent) lender's title insurance policy insuring that each related Mortgage
is a valid first lien on such Mortgaged Property in the original principal
amount of the Mortgage Loan after all advances of principal, or there is a
binding commitment from a title insurer qualified and licensed in the applicable
jurisdiction, as required, to issue such policy; such title insurance policy, if
issued, is in full force and effect, is freely assignable and will inure solely
to the benefit of the Trustee as mortgagee of record, or any such commitment is
a legal, valid and binding obligation of such insurer; no claims have been made
under such title insurance policy, if issued; and to the best knowledge of the
Seller, no prior mortgagee has done, by act or omission, anything which would
materially impair the coverage of any such title insurance policy;
(xiii) As of the date of its origination, all insurance required under each
related Mortgage, which insurance covered such risks as were customarily
acceptable to prudent commercial and multifamily mortgage lending institutions
lending on the security of property comparable to the related Mortgaged Property
in the jurisdiction in which such Mortgaged Property is located, and with
respect to a fire and extended perils insurance policy, was in an amount
(subject to a customary deductible) at least equal to 100% of the full insurable
replacement cost of the improvements located on such Mortgaged Property, was in
full
I-3
<PAGE>
force and effect with respect to each related Mortgaged Property; and, as of the
Cut-off Date, to the best knowledge of the Seller, all insurance required under
each Mortgage, which insurance covers such risks and is in such amounts as are
customarily acceptable to prudent commercial and multifamily mortgage lending
institutions lending on the security of property comparable to the related
Mortgaged Property in the jurisdiction in which such Mortgaged Property is
located, is in full force and effect with respect to each related Mortgaged
Property; and no notice of termination or cancellation with respect to any such
insurance policy has been received by the Seller; except for certain amounts not
greater than amounts which would be considered prudent by an institutional
commercial mortgage lender with respect to a similar mortgage loan and which are
set forth in the related Mortgage, any insurance proceeds in respect of a
casualty loss or taking, will be applied either to the repair or restoration of
all or part of the related Mortgaged Property or the reduction of the
outstanding principal balance of the Mortgage Loan;
(xiv) Other than payments due but not yet 30 days or more delinquent, (A)
there is no material default, breach, violation or event of acceleration, and
there is no other material default, breach, violation or event of acceleration,
existing under the related Mortgage Note or each related Mortgage, and (B) to
the best of the Seller's knowledge, after due inquiry, there is no event which,
with the passage of time or with notice and the expiration of any grace or cure
period, would constitute a material default, breach, violation or event of
acceleration under any of the documents referred to in clause (A), and, to the
knowledge of the Seller, there is no event which, with the passage of time or
with notice and the expiration of any grace or cure period, would constitute any
other material default, breach, violation or event of acceleration under any of
the documents referred to in clause (A); the Seller has not waived any material
default, breach, violation or event of acceleration under any of the documents
referred to in clause (A), and the Seller has not waived any other material
default, breach, violation or event of acceleration under such documents; and
under the terms of each Mortgage Loan, each related Mortgage Note, each related
Mortgage and the other loan documents in the related Mortgage File, no person or
party other than the mortgagee may declare an event of default or accelerate the
related indebtedness under such Mortgage Loan, Mortgage Note or Mortgage;
(xv) As of the Cut-off Date, the Mortgage Loan is not, and in the prior 12
months (or since the date of origination if such Mortgage Loan has been
originated within the past 12 months), has not been, 30 days or more past due in
respect of any Scheduled Payment;
I-4
<PAGE>
(xvi) Except with respect to the Mortgage Loans listed in Exhibit D hereto
which accrue interest on the basis of the actual number of days elapsed over a
360 day year, the Mortgage Loan accrues interest (payable monthly in arrears) at
a fixed rate of interest (except with respect to ARD Loans, with respect to
which the rate at which interest accrues thereon increases after the Anticipated
Repayment Date, except with respect to the Mortgage Loans listed in Exhibit E
hereto and except in connection with the occurrence of a default and the accrual
of default interest) on the basis of a 360-day year consisting of twelve 30-day
months;
(xvii) Each related Mortgage does not provide for or permit, without the
prior written consent of the holder of the Mortgage Note, each related Mortgaged
Property to secure any other promissory note or obligation, except as expressly
described in such Mortgage and other than another Mortgage Loan in the Trust
Fund;
(xviii) Such Mortgage Loan is or constitutes part of a "qualified mortgage"
within the meaning of Section 860G(a)(3) of the Code. Accordingly, either as of
the date of origination or the Closing Date, the fair market value of the real
property securing the Mortgage Loan was not less than 80% of the "adjusted issue
price" (within the meaning of the REMIC Provisions) of such Mortgage Loan. For
purposes of the preceding sentence, the fair market value of the real property
securing the Mortgage Loan was first reduced by the amount of any lien on such
real property that is senior to the lien that secures such Mortgage Loan, and
was further reduced by a proportionate amount of any lien that is on a parity
with the lien that secures such Mortgage Loan;
(xix) Prepayment Premiums and Yield Maintenance Charges payable with
respect to the Mortgage Loan, if any, constitute "customary prepayment
penalties" within the meaning of Treasury Regulation Section 1.860G-1(b)(2);
(xx) One or more environmental site assessments were performed by an
environmental consulting firm independent of the Seller and the Seller's
affiliates with respect to each related Mortgaged Property during the 18-month
period preceding the Cut-off Date, and the Seller, having made no independent
inquiry other than to review the report(s) prepared in connection with the
assessment(s) referenced herein, has no knowledge of any material and adverse
environmental condition or circumstance affecting such Mortgaged Property that
was not disclosed in such report(s);
(xxi) The related Mortgage Note, Mortgage(s) and Assignment of Leases, if
any, contain customary and
I-5
<PAGE>
enforceable provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the related Mortgaged Property or
properties of the benefits of the security, including realization by judicial
or, if applicable, non-judicial foreclosure, subject to applicable
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);
(xxii) To the best of the Seller's knowledge, after due inquiry, the
related Mortgagor is not a debtor in any bankruptcy, reorganization, insolvency
or comparable proceeding;
(xxiii) Such Mortgage Loan is secured by either a mortgage on a fee simple
interest or a leasehold estate in a commercial property or multifamily property
owned by the related Mortgagor, including all of the related Mortgagor's
interest in all improvements on the related Mortgaged Property;
(xxiv) Except with respect to the Mortgage Loans listed in Exhibit F
hereto, which are ARD Loans, such Mortgage Loan does not provide for negative
amortization;
(xxv) Such Mortgage Loan is a whole loan, contains no equity participation
by the lender or shared appreciation feature and does not provide for any
contingent or additional interest in the form of participation in the cash flow
of the related Mortgaged Property;
(xxvi) The related Mortgage contains provisions for the acceleration of the
payment of the unpaid principal balance of such Mortgage Loan if, without the
prior written consent of the mortgagee, each related Mortgaged Property or any
interest therein, is directly or indirectly encumbered in connection with
subordinate financing; provided, however, the Mortgage Loans listed in Exhibit G
hereto, are encumbered by subordinated debt;
(xxvii) Except with respect to (W) transfers of certain non-controlling
interests in the Mortgagors as specified in the related Mortgage, (X) the
Mortgage Loans listed in Exhibit H hereto, which permit one or more transfers of
the related Mortgaged Property to a person that satisfies certain criteria
(including criteria related to bankruptcy remoteness and property management
experience) specified in the related Mortgage, (Y) the Mortgage Loans listed in
Exhibit I hereto, which permit a one-time transfer of the Mortgaged Property,
subject to payment of an assumption fee and certain other conditions, and (Z)
the Mortgage Loans listed in Exhibit J hereto, which permit two
I-6
<PAGE>
or more separate transfers of the related Mortgaged Property, subject to payment
of an assumption fee and certain other conditions, the related Mortgage contains
either (A) provisions for the acceleration of the payment of the unpaid
principal balance of such Mortgage Loan if each related Mortgaged Property, or
any interest therein, is directly or indirectly transferred or sold without the
prior written consent of the mortgagee, or (B) provisions for the acceleration
of the payment of the unpaid principal balance of such Mortgage Loan if each
related Mortgaged Property, or any interest therein, is directly or indirectly
transferred or sold without the related Mortgagor having satisfied certain
conditions specified in the related Mortgage with respect to permitted
transfers;
(xxviii) The Mortgage Loan, together with any other Mortgage Loan made to
the same Mortgagor or to an affiliate of such Mortgagor, does not represent more
than 5% of the aggregate Initial Pool Balance;
(xxix) Except as set forth in the related Mortgage File, the terms of the
related Mortgage Note and Mortgage(s) have not been waived, modified, altered,
satisfied, impaired, canceled, subordinated or rescinded in any manner which
materially interferes with the security intended to be provided by such
Mortgage;
(xxx) Each related Mortgaged Property was inspected by or on behalf of the
related originator during the 12 month period prior to the related origination
date;
(xxxi) Except for the Mortgage Loans listed in Exhibit K hereto, the terms
of the related Mortgage Note or Mortgage do not provide for the release of any
material portion of the related Mortgaged Property from the lien of such
Mortgage without payment in full of the Mortgage Loan;
(xxxii) The related Mortgagor has covenanted in the Mortgage Loan documents
to maintain the related Mortgaged Property in compliance with all applicable
laws, zoning ordinances, rules, covenants and restrictions affecting the
construction, occupancy, use and operation of such Mortgaged Property, and the
related originator performed the type of due diligence in connection with the
origination of such Mortgage Loan customarily performed by prudent institutional
commercial and multifamily mortgage lenders with respect to the foregoing
matters; the Seller has received no notice of any material violation of any
applicable laws, zoning ordinances, rules, covenants or restrictions affecting
the construction, occupancy, use or operation of such Mortgaged Property; to the
Seller's knowledge (based on surveys and/or title insurance obtained in
connection with the origination of such Mortgage Loan), as of the date of such
origination, no improvement that was
I-7
<PAGE>
included for the purpose of determining the appraised value of the related
Mortgaged Property at the time of origination of such Mortgage Loan lay outside
the boundaries and building restriction lines of such property to an extent
which would have a material adverse affect on the related Mortgagor's use and
operation of such Mortgaged Property (unless affirmatively covered by the title
insurance referred to in paragraph (xii) above), and no improvements on
adjoining properties encroached upon such Mortgaged Property to any material
extent;
(xxxiii) Except with respect to Credit Lease Loans, the related Mortgagor
has covenanted in the Mortgage Loan documents to deliver each year to the
mortgagee an operating statement of each related Mortgaged Property covering the
twelve-month period identified therein;
(xxxiv) With respect to at leas 95% of the Mortgage Loans, the related
Mortgagor has covenanted in its organizational documents and/or the Mortgage
Loan documents to own no significant asset other than the related Mortgaged
Property or Mortgaged Properties, as applicable, and assets incidental to its
ownership and operation of such Mortgaged Property;
(xxxv) With respect to any Mortgage Loan that is secured in whole or in
material part by the interest of a Mortgagor as a lessee under a Ground Lease
but not by the related fee interest:
(A) Such Ground Lease or a memorandum thereof has been or will be duly
recorded (other than the Ground Lease related to the Mortgage Loan listed
in Exhibit L hereto) and such Ground Lease permits the interest of the
lessee thereunder to be encumbered by the related Mortgage or, if consent
of the lessor thereunder is required, it has been obtained prior to the
Closing Date;
(B) Upon the foreclosure of the Mortgage Loan (or acceptance of a deed
in lieu thereof), the Mortgagor's interest in such Ground Lease is
assignable to the Trustee without the consent of the lessor thereunder (or,
if any such consent is required, it has been obtained prior to the Closing
Date) and, in the event that it is so assigned, is further assignable by
the Trustee and its successors without a need to obtain the consent of such
lessor; provided, that the lessor's consent to a subsequent sale is
required under the Ground Lease related to the Mortgage Loans listed in
Exhibit M hereto;
(C) Such Ground Lease may not be amended, modified, canceled or
terminated without the prior written consent of the Mortgagee thereunder
and that any such action
I-8
<PAGE>
without such consent is not binding on such Mortgagee, its successors or
assigns;
(D) Unless otherwise set forth in the Ground Lease, the Ground Lease
does not permit any increase in the amount of rent payable by the ground
lessee thereunder during the term of the Mortgage Loan;
(E) Such Ground Lease was in full force and effect as of the date of
origination of the related Mortgage Loan, and to the actual knowledge of
the Seller, at the Closing Date, such Ground Lease is in full force and
effect and other than payments due but not yet 30 days or more delinquent,
(1) there is no material default, and (2) there is no event which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a material default under such Ground Lease;
(F) Such Ground Lease or an estoppel or consent letter received by the
Mortgagee from the lessor, requires the lessor thereunder to give notice of
any default by the lessee to the Mortgagee; and such Ground Lease, or an
estoppel or consent letter received by the Mortgagee from the lessor,
further provides that no notice of termination given under such Ground
Lease is effective against the Mortgagee unless a copy has been delivered
to the Mortgagee in the manner described in such Ground Lease, estoppel or
consent letter;
(G) The ground lessee's interest in the Ground Lease is not subject to
any liens or encumbrances superior to, or of equal priority with, the
related Mortgage, other than the related ground lessor's related fee
interest and any exceptions stated in the related title insurance policy or
opinion of title, which exceptions do not and will not materially and
adversely interfere with (1) the ability of the related Mortgagor timely to
pay in full the principal and interest on the related Mortgage Note, (2)
the use of such Mortgaged Property for the use currently being made
thereof, or (3) the value of the Mortgaged Property;
(H) A Mortgagee is permitted a reasonable opportunity to cure any
curable default under such Ground Lease before the lessor thereunder may
terminate such Ground Lease;
(I) Such Ground Lease has an original term (including any extension
options set forth therein) that extends not less than 10 years beyond the
Stated Maturity Date of the related Mortgage Loan;
(J) Except with respect to the Ground Lease related to each of the
Mortgage Loans listed in Exhibit N hereto, under the terms of such Ground
Lease, any estoppel
I-9
<PAGE>
or consent letter received by the Mortgagee from the lessor, and the
related Mortgage, taken together, any related insurance proceeds or
condemnation proceeds will be applied either to the repair or restoration
of all or part of the related Mortgaged Property, with the Mortgagee or a
trustee appointed by it having the right to hold and disburse such proceeds
as the repair or restoration progresses, or to the payment of the
outstanding principal balance of the Mortgage Loan together with any
accrued interest thereon;
(K) Such Ground Lease does not impose any restrictions on subletting
which would be viewed as commercially unreasonable by a prudent commercial
mortgage lender;
(L) Except with respect to Mortgage Loans listed on Exhibit O hereto,
the ground lessor under such Ground Lease is required to enter into a new
lease upon termination of the Ground Lease for any reason, including the
rejection of the Ground Lease in bankruptcy, and for any reason, upon the
request of the lender; and
(M) The terms of the related Ground Lease have not been waived,
modified, altered, satisfied, impaired, canceled, subordinated or rescinded
in any manner which materially interferes with the security intended to be
provided by such Mortgage.
(xxxvi) With respect to any Mortgage Loan that is secured in whole or in
part by a Mortgage Property which is operated as a residential health care
facility (a "Facility");
(A) All governmental licenses, permits, regulatory agreements or other
approvals or agreements necessary or desirable for the use and operation of
each Facility as intended are held by the related Mortgagor or the operator
of the Facility, and are in full force and effect, including, without
limitation, a valid certificate of need ("CON") or similar certificate,
license, or approval issued by the applicable department of health for the
requisite number of beds, and approved provider status in any approved
provider payment program (collectively, the "Licenses").
(B) The Licenses (1) may not be, and have not been, transferred to any
location other than the Facility; (2) have not been pledged as collateral
security for any other loan or indebtedness; and (3) are held free from
restrictions or known conflicts which would materially impair the use or
operation of the Facility as intended, and are not provisional,
probationary or restricted in any way.
I-10
<PAGE>
(C) As of the Cut-off Date and to Seller's knowledge, without inquiry,
as of the Cut-off Date, the Facility has not received a "Level A" (or
equivalent) violation which has not been cured to the satisfaction of the
applicable governmental agency, and no statement of charges or deficiencies
has been made or penalty enforcement action has been undertaken against the
Facility, its operator or the Mortgagor or against any officer, director or
stockholder of such operator or the Mortgagor by any governmental agency
during the last three calendar years, and there have been no violations
over the past three years which have threatened the Facility's, the
operator's or the Mortgagor's certification for participation in Medicare
or Medicaid or the other third-party payors' programs.
(xxxvii) No advance of funds has been made, directly or indirectly, by the
Seller to the Mortgagor other than pursuant to the Mortgage Note and no funds
have been received from any person other than such Mortgagor for or on account
of payments due on the Mortgage Note;
(xxxviii) To the Seller's actual knowledge, there are no pending 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;
(xxxix) Such Mortgage Loan complied with all applicable usury laws in
effect at its date of origination;
(xl) To the extent required under applicable law as of the Closing Date,
the originator of such Mortgage Loan was authorized to do business in the
jurisdiction in which the related Mortgaged Property is located at all times
when it held the Mortgage Loan to the extent necessary to ensure the
enforceability of such Mortgage Loan;
(xli) If the related Mortgage is a deed of trust, a trustee, duly qualified
under applicable law to serve as such, is properly designated and serving under
such Mortgage;
(xlii) The related Mortgage Note is not secured by any collateral that
secures a mortgage loan that is not in the Trust Fund (except with respect to
the Mortgage Loans listed in Exhibit G hereto), and each Mortgage Loan that is
cross-collateralized is cross-collateralized only with other Mortgage Loans sold
pursuant to this Agreement;
I-11
<PAGE>
(xliii) The related Mortgaged Property is not located in a flood hazard
area as defined by the Federal Insurance Administration or is covered by flood
hazard insurance;
(xliv) Except with respect to the Mortgage Loans listed on Exhibit P
hereto, one or more engineering assessments were performed by an engineering
consulting firm independent of the Seller and the Seller's affiliates with
respect to each related Mortgaged Property during the 18-month period preceding
the Cut-off Date, and the Seller, having made no independent inquiry other than
to review the report(s) prepared in connection with the assessment(s) referenced
herein, has no knowledge of any material and adverse engineering condition or
circumstance affecting such Mortgaged Property that was not disclosed in such
report(s);
(xlv) All escrow deposits and payments relating to the Mortgage Loan are
under control of the Seller or the servicer of such Mortgage Loan and all
amounts required as of the date hereof under the Mortgage Loan Documents to be
deposited by the related Mortgagor have been deposited;
(xlvi) The related Mortgagor has represented to the Seller that as of the
date of origination of the Mortgage Loan, such Mortgagor, the related lessee,
franchisor or operator was in possession of all licenses, permits and
authorizations then required for use of the related Mortgaged Property, which
were valid and in full force and effect; and
(xlvii) The origination, servicing and collection practices used by the
Seller or any prior holder of the Mortgage Note have been in all respects legal,
proper and prudent and have met customary industry standards.
(xlviii) With respect to any Mortgage Loan that is a Credit Lease Loan;
(A) Except with respect to the Mortgage Loans listed in Exhibit Q
hereto, the lease payments due under the related Credit Lease, are equal to
or greater than the payments due with respect to the related Mortgage Loan;
(B) Except with respect to Credit Lease Loans as indicated in Exhibit
R hereto, the Mortgagor does not have monetary obligations under the
related Credit Lease, and every monetary obligation associated with
managing, owning, developing and operating the leased property, including,
but not limited to, the costs associated with utilities, taxes, insurance,
maintenance and repairs is an obligation of the related Tenant;
I-12
<PAGE>
(C) Except with respect to Credit Lease Loans listed in Exhibit S
hereto (with a specific reference to the column under the caption
"[Description of Mitigant]"), the Mortgagor does not have any nonmonetary
obligations under the related Credit Lease, except for the delivery of
possession of the leased property;
(D) Except with respect to the Credit Lease Loans listed in Exhibit T
hereto (with a specific reference to the column under the caption
"Termination (T), or Offset/Abatement (O)"), the Mortgagor has not made any
representation or warranty in the related Credit Lease, a breach of which
would result in the termination of, or an offset or abatement with respect
to, such Credit Lease;
(E) Except with respect to the Credit Lease Loans listed in Exhibit U
hereto (with a specific reference to the column under the caption "Lease
Out"), the related Tenant cannot terminate such Credit Lease for any reason
prior to the payment in full of: (a) the principal balance of the related
Mortgage Loan; (b) all accrued and unpaid interest on such Mortgage Loan;
and (c) any other sums due and payable under such Mortgage Loan, as of the
termination date, which date is a rent payment date, except for a default
by the related Mortgagor under the Credit Lease;
(F) In the event the related Tenant assigns or sublets the related
leased property, such Tenant (and if applicable, the related guarantor)
remains obligated under the related Credit Lease;
(G) Except with respect to the Credit Lease Loans listed in Exhibit V
hereto, each property related to a Credit Lease Loan is a separate tax lot;
(H) Except with respect to the Credit Lease Loans listed in Exhibit W
hereto, the related Tenant has agreed to indemnify the Mortgagor from any
claims of any nature (a) to which the Mortgagor is subject because of such
Mortgagor's estate in the leased property, or (b) arising from (i) injury
to or death of any person or damage to or loss of property on the leased
property or connected with the use, condition or occupancy of the leased
property, (ii) Tenant's violation of the related Credit Lease, or (iii) any
act or omission of the Tenant;
(I) Except with respect to the Mortgage Loans listed in Exhibit X
hereto, related Tenant has agreed to indemnify the Mortgagor from any
claims of any nature arising as a result of any hazardous material
affecting the leased property and due to such Tenant's use of the leased
property;
I-13
<PAGE>
(J) Except with respect to the Mortgage Loans listed in Exhibit Y
hereto, in connection with Credit Lease Loans with respect to which a lease
guarantee exists, the related guarantor guarantees the payment due under
the related Credit Lease and such guarantee, on its face, contains no
conditions to such payment;
(K) With respect to Credit Lease Loans that have the benefit of
residual value insurance policies and lease enhancement policies, each such
policy has been obtained, and with respect to the Credit Leases other than
bond-type leases, the required premiums have been paid; and
(L) The list of lease guarantors, if any, attached as Exhibit Z
hereto, is accurate in all material respects.
(xlix) With respect to Mortgage Loans secured in whole or in part by the
interest of the related mortgagor under a Ground Lease and by the related fee
interest, such fee interest is subject, and subordinated of record, to the
related Mortgage, and such Mortgage does not by its terms provide that it will
be subordinated to the lien of any other mortgage or other lien upon such fee
interest.
I-14
<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
2 253 Plainview Shopping Center South Oyster Bay Road & Woodbury Road Plainview
3 278 Centreville Square 5900 Centreville Crest Lane Centreville
6 2 Fountainhead Apartments 293-297 Turnpike Road Westborough
7 282 Drury Portfolio #1 Various Various
8 3 Sutton Place 23275 Riverside Drive Southfield
9 4 Town Square Wheaton 199 Town Square Wheaton
11 5 Office Depot - Delray Beach 2300 So. Congress St. Delray Beach
16 7 Hartford Fire - Farmington 8 Farm Springs Road Farmington
17 272 Campus Club 4000 Southwest 37th Boulevard Gainesville
21 8 The Hamptons 3070 South Nellis Boulevard Las Vegas
24 10 Olive Tree 6201 West Olive Avenue Glendale
25 11 Saddleback Apts. 4722 East Bell Road Phoenix
26 281 Drury Portfolio #2 Various Various
27 259 Hylan Commons Hylan Boulevard Staten Island
28 12 Eatoncrest 3300 Eaton Crest Drive Eatontown
30 13 375 and 377 Ghent Road 375 and 377 Ghent Road Akron
31 14 Chapel Hill Apartments 1500 Worcester Road Framingham
34 15 Brandon Crossings Shopping Center SW Corner of SR 60 & I75 Brandon
36 17 Renaissance Parc 5151 Verde Valley Lane Dallas
39 18 NorthPark Executive Suites Hotel 7685 Northcross Drive Austin
42 19 K Mart - San Antonio 12300 San Pedro Ave. San Antonio
47 20 Garden Ridge - Kennesaw 2875 George Busbee Parkway Marietta City Limits(Kennesaw
49 21 Perwinkle Place Shopping Center 2075 Periwinkle Place Sanibel Island
50 23 Garden Ridge - Norcross 1887 Willow Trail Parkway Norcross
51 24 Willow Bend Town Centre 22928-23048 S. R. 54 Lutz
52 25 Coachman Manor 401 Gibbsboro Road Lindenwold
57 26 Castle Way 5955 Weiss Road Saginaw
60 275 Herndon Centre III 358 - 434 Elden Street Herdon
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
2 NY 38,206,000 38,206,000 7.4700 11/1/12 30/360
3 VA 35,250,000 35,250,000 7.6250 11/1/07 30/360
6 MA 29,200,000 29,121,268 8.5500 5/1/07 Act/360
7 MO 29,000,000 29,000,000 7.9600 11/1/12 Act/360
8 MI 29,000,000 28,887,122 8.2500 5/1/07 30/360
9 IL 28,850,000 28,773,665 8.1200 7/1/12 30/360
11 FL 24,146,602 24,140,144 8.4100 6/1/17 30/360
16 CT 20,142,693 20,078,226 7.0650 8/1/12 30/360
17 FL 20,000,000 20,000,000 7.4500 11/1/07 Act/360
21 NV 18,700,000 18,665,259 8.2900 7/1/07 Act/360
24 AZ 17,360,000 17,360,000 8.1400 7/1/07 30/360
25 AZ 17,342,000 17,342,000 8.1400 7/1/07 30/360
26 TX 16,965,000 16,965,000 7.9200 11/1/12 Act/360
27 NY 16,560,000 16,560,000 7.4700 11/1/12 30/360
28 NJ 16,500,000 16,491,481 7.6000 10/1/27 Act/360
30 OH 16,300,000 16,276,911 8.2500 10/1/17 Act/360
31 MA 14,900,000 14,859,825 8.5500 5/1/07 Act/360
34 FL 13,500,000 13,482,188 8.1000 9/1/07 30/360
36 TX 12,520,000 12,497,380 8.3750 7/1/07 Act/360
39 TX 12,250,000 12,250,000 7.6700 11/1/07 Act/360
42 TX 11,704,599 11,673,663 8.8400 2/1/19 30/360
47 GA 9,763,565 9,763,390 10.1250 7/1/19 30/360
49 FL 9,675,000 9,667,450 8.2500 10/1/07 Act/360
50 GA 9,460,142 9,459,973 10.1250 7/1/19 30/360
51 FL 9,400,000 9,387,597 8.1000 9/1/07 30/360
52 NJ 9,400,000 9,382,540 8.4500 8/1/12 Act/360
57 MI 8,900,000 8,900,000 7.6500 9/1/04 30/360
60 VA 8,500,000 8,500,000 7.5000 11/1/07 30/360
</TABLE>
Page 1 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
63 28 Chatsworth Gardens 20801 Devonshire Street Chatsworth
64 29 Sierra Creek 501 Central Texas Expressway Killeen
66 30 One Price Distribution Center 1875 East Main Street Duncan
67 31 Quail Lakes Center 4700-4755 Quail Lakes Drive Stockton
68 32 Cedar Run 816 South Oneida Denver
72 35 Country Place I 3900 Blackburn Lane Burtonsville
73 36 Walmart - Boone 1812 Blowing Rock Boone
75 37 Concordia Shopping Center 1600 Perrineville Road Monroe
78 38 Willowick 5120 North 16th Street Phoenix
82 39 Drury Inn - St. Louis Airport 10490 Natural Bridge Road Edmundson
83 43 Farmington 2013 Fry Road Katy
86 41 Scottsdale Park Terrace 1075 North Miller Road Scottsdale
85 42 The Crossings Shopping Center 2260-2336 Lebanon Pike Nashville
87 48 Falls Village 6200 A Green Meadow Parkway Baltimore
88 45 Holiday Inn - Catalina Centre 1601 North Congress Avenue Boynton Beach
89 46 Dam Neck Crossings 1630 and 1650 General Booth Boulevard Virginia Beach
90 40 Roger Smith Hotel 501 Lexington Avenue@47th Street New York
92 50 DFW Air Cargo Complex 2963,2967, & 3015 N. Airfield Dr. Irving
94 51 Whiting Shopping Center 108 Lacey Road Whiting
95 49 Circuit City - Poughkeepsie 837 South Rd. Poughkeepsie
98 53 Atrium Executive Plaza 499 Northwest 70th Avenue Plantation
99 54 Gardens Park Plaza 8940 North Military Trail Palm Beach Gardens
100 55 Plaza Healthcare 1475 North Granite Reef Road Scottsdale
101 56 Leisure Living Properties - 3 Assets Various Portage, Fremont, Lowell
102 57 Victoria Village shopping center 1401 - 1463 Victoria Avenue Ventura
103 58 Terraces @ Windy Hill 3000 Windy Hill Road Marietta
106 59 Clarington 3767 Clarington Avenue Los Angeles
107 47 Tallahasse Residence Inn 1880 Raymond Diehl Road Tallahasee
109 61 Bellevue Valley Plaza 7401 - 7091 Highway 70 South Nashville
112 62 Forest Brook Apartments 2921 Forestbrook Drive Charlotte
115 64 Carriage Way Shopping Center 201-235 South Waukegan Road Lake Bluff
117 66 Bally Total Fitness - Bloomington 4901 West 80th Street Bloomington
118 277 Hampton Inn - Daytona 1715 W. International Speedway Daytona
122 67 215 Coles Street 215 Coles Street Jersey City
123 70 Westpark Walk 100 - 481 Commerce Drive Peachtree City
124 71 Albertson's, Inc. - Pharr-McAllen 401 North Jackson Road Pharr-McAllen
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
63 CA 8,500,000 8,491,163 8.0700 10/1/07 30/360
64 TX 8,400,000 8,400,000 8.1400 7/1/07 30/360
66 SC 8,125,000 8,082,804 9.1250 7/1/17 Act/360
67 CA 8,000,000 7,991,880 8.3750 9/1/07 Act/360
68 CO 8,000,000 7,986,834 8.6500 7/1/07 Act/360
72 MD 7,425,000 7,408,285 7.6800 8/1/07 Act/360
73 NC 7,458,022 7,341,749 7.3125 11/1/16 30/360
75 NJ 7,200,000 7,170,968 8.6900 6/1/07 Act/360
78 AZ 7,100,000 7,088,580 7.9375 8/1/07 Act/360
82 MO 7,000,000 7,000,000 7.9600 11/1/12 Act/360
83 TX 7,000,000 7,000,000 7.5000 11/1/07 30/360
86 AZ 7,000,000 7,000,000 7.5000 9/1/07 30/360
85 TN 7,000,000 6,989,789 8.0000 9/1/07 Act/360
87 MD 6,900,000 6,900,000 7.5000 11/1/07 30/360
88 FL 6,746,000 6,729,457 8.5000 8/1/07 Act/360
89 VA 6,725,000 6,725,000 7.7500 11/1/07 Act/360
90 NY 6,700,000 6,700,000 9.0000 11/1/12 Act/360
92 TX 6,551,000 6,528,304 9.3750 6/1/22 Act/360
94 NJ 6,500,000 6,473,791 8.6900 6/1/07 Act/360
95 NY 6,589,015 6,428,181 8.1875 6/1/18 30/360
98 FL 6,300,000 6,284,126 8.3750 8/1/07 Act/360
99 FL 6,300,000 6,274,923 8.7500 6/1/12 Act/360
100 AZ 6,250,000 6,234,626 8.7500 10/1/12 Act/360
101 MI 6,250,000 6,217,295 9.2500 5/1/07 30/360
102 CA 6,200,000 6,179,213 8.8750 5/1/07 Act/360
103 GA 6,185,000 6,176,283 8.3750 8/1/07 Act/360
106 CA 6,075,000 6,065,121 7.9000 8/1/07 Act/360
107 FL 5,917,000 5,912,058 7.9700 10/1/07 Act/360
109 TN 5,813,000 5,801,266 8.1250 8/1/07 Act/360
112 NC 5,750,000 5,735,276 8.3000 8/1/07 Act/360
115 IL 5,500,000 5,489,244 8.2500 8/1/07 Act/360
117 MN 5,471,920 5,415,475 10.1250 4/1/09 30/360
118 FL 5,400,000 5,400,000 8.0400 11/1/07 Act/360
122 NJ 5,250,000 5,250,000 8.2500 11/1/07 Act/360
123 GA 5,200,000 5,189,301 9.0000 7/1/07 Act/360
124 TX 5,158,009 5,158,009 7.4375 9/1/17 30/360
</TABLE>
Page 2 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
127 69 Saratoga Holiday Inn 232 Broadway at Circular Street Saratoga Springs
128 79 Courtyard Sarasota 850 University Parkway Sarasota
129 73 Barnes & Noble, Inc. - Rockleigh 1 Pond Road Rockleigh
132 78 CVS Plaza 213, 214 & 218 Northern Blvd. Bayside
133 80 Gainesville Courtyard by Marriott 3510 SW 40th Blvd. Gainesville
135 77 Williamsburg Villas 3211 S.W. Govenor John Sevier Highway Knoxville
138 75 Circuit City - Cincinnati 5455 Glenway Ave Cincinnati
139 76 Circuit City - Wilkes Barre 500 Kidder St. Wilkes Barre
142 83 Shawnee Village 12821 126th Way NE Kirkland
148 72 Best Western - Mystic 9 Whitehall Avenue Mystic
149 85 Plaza 50 Shopping Center 1936-2270 E. Williams Street Carson City
150 84 Wendover Plaza Shopping Center 931 Wendover Rd. Charlotte
156 88 Country Place II 3918-3930 Blackburn Lane Burtonsville
157 86 Circuit City - Florence 2400 David McLeod Blvd. Florence
159 90 Edgewater Trace 10714 Abercorn Extension Savannah
162 89 Cove Village Townhouses 2 Driftwood Court Baltimore
163 82 Mobile Residence Inn 950 S Beltline Highway Mobile
164 98 Village Shopping Center 3020 N. Main Street Hope Mills
166 91 Bally Total Fitness - Cincinnati 3694 Werk Rd. Cincinnati
167 254 Watchung Commons Route 22 East & Terrill Road Watchung
168 92 Giant Eagle Plaza 4400 Buffalo Road (US 20) Erie
169 93 Courtyard by Marriott - Mobile 1000 South Beltline Hwy. Mobile
173 94 Indian Run Casarow Drive Bridgeton
174 96 Oak Creek Apartments 8460 Hospital Drive Atlanta
175 95 South Coast Center 16261 Highway 101 Harbor
177 97 Best Western Airport East 301 North Central Avenue Hapeville
182 99 Radisson Suite Hotel 1808 Australian Avenue West Palm Beach
183 100 Hunters Glen 1201 Bacon Ranch Road Killeen
185 102 Bally Total Fitness - Greenwood 517 US Highway 31 Greenwood
186 101 Fort Myers Residence Inn by Marriott 2960 Colonial Boulevard Ft. Myers
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
127 NY 5,000,000 5,000,000 8.0000 11/1/07 Act/360
128 FL 5,003,000 4,998,821 7.9700 10/1/07 Act/360
129 NJ 5,000,000 4,989,871 8.2500 9/1/22 30/360
132 NY 4,841,680 4,833,642 8.6250 7/1/07 Act/360
133 FL 4,802,000 4,797,989 7.9700 10/1/07 Act/360
135 TN 4,800,000 4,797,046 8.0000 10/1/07 Act/360
138 OH 4,903,453 4,783,763 8.1875 6/1/18 30/360
139 PA 4,903,453 4,776,282 8.1875 5/1/18 30/360
142 WA 4,750,000 4,742,388 7.9500 8/1/07 Act/360
148 CT 4,683,000 4,683,000 8.2500 11/1/19 Act/360
149 NV 4,600,000 4,600,000 7.8750 11/1/07 30/360
150 NC 4,600,000 4,597,936 8.0000 10/1/07 Act/360
156 MD 4,500,000 4,489,869 7.6800 8/1/07 Act/360
157 SC 4,596,987 4,484,777 8.1875 6/1/18 30/360
159 GA 4,463,500 4,461,018 7.3750 10/1/07 Act/360
162 MD 4,425,000 4,423,108 8.1300 10/1/07 Act/360
163 AL 4,410,000 4,410,000 8.1500 11/1/07 Act/360
164 NC 4,400,000 4,394,466 7.6250 10/1/07 Act/360
166 OH 4,368,323 4,344,815 9.8750 4/1/09 30/360
167 NJ 4,323,000 4,323,000 7.4700 11/1/12 30/360
168 PA 4,300,000 4,297,799 7.6250 10/1/07 Act/360
169 AL 4,293,000 4,274,173 9.0500 4/1/07 Act/360
173 NJ 4,075,000 4,067,080 8.1500 7/1/07 Act/360
174 GA 4,000,000 4,000,000 8.3200 7/1/07 Act/360
175 OR 4,000,000 3,997,673 8.1880 10/1/07 Act/360
177 GA 4,000,000 3,984,774 9.3500 8/1/07 Act/360
182 FL 3,900,000 3,897,050 8.3750 10/1/12 Act/360
183 TX 3,880,000 3,880,000 8.1400 7/1/07 30/360
185 IN 3,857,440 3,816,269 10.1250 1/1/09 30/360
186 FL 3,803,000 3,799,824 7.9700 10/1/07 Act/360
</TABLE>
Page 3 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
191 107 Sovereign 4829 Sheboygan Avene Madison
196 108 Bally Total Fitness - Indianapolis 5435 Pike Plaza Dr. Indianapolis
200 109 Colombus West Park Nursing & Rehabilitation
Cente 1700 Heinzerling Drive Columbus
202 112 Texas Melody 5929-5921 Melody Place Dallas
204 118 Best Western Crabtree 6619 Glenwood Avenue Raleigh
209 116 Belmont Plaza Retirement Center 1710 Magnolia Boulevard Nashville
210 115 1227 Commonwealth Avenue 1227-1245 Commonwealth Avenue Boston
214 122 4401 Barclay Downs 4401 Barclay Downs Drive Charlotte
215 117 Lake Hickory Plaza Shopping Center 1366 Highway 321 North Hickory
216 119 15625 Kendall Drive 15625 Kendall Drive Kendall
217 120 Holiday Inn - Dalton 515 Holiday Drive Dalton
218 121 Chase Ridge 8050 103rd Street Jacksonville
223 123 Danville Plaza 2855 Riverside Drive Danville
226 124 Countrywood East 5700 Mack Road Sacramento
227 125 Sierra Vista Business Park 100-140 Chaparral Court Anaheim
228 126 Walgreen Company - San Francisco 42nd Avenue and Point Lobos Avenue San Francisco
229 127 Misty Ridge Apartments 301 West Hawkins Parkway Longview
235 128 3400 West 86th Street 3400 West 86th Street Indianapolis
237 279 CH2M Hill 2567 Fairlane Drive Montgomery
238 130 Best Western - Keene 401 Winchester Street Keene
239 131 Marriott Fairfield Inn 2437 South Wildcat Way Wood Cross
241 132 Holiday Inn College Station 1503 Texas Avenue College Station
242 129 Circuit City - Muncy Lycoming Mall Ring Rd. Muncy
245 269 Eastgate Shopping Center 578-680 East Boise Avenue Boise
249 137 Apple Creek 9905 Locust Street Kansas City
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
191 WI 3,768,000 3,763,729 7.9700 9/1/07 Act/360
196 IN 3,687,350 3,648,000 10.1250 1/1/09 30/360
200 OH 3,600,000 3,584,657 8.6250 8/1/17 Act/360
202 TX 3,520,000 3,511,325 8.3500 6/1/22 Act/360
204 NC 3,500,000 3,495,344 8.6250 10/1/17 Act/360
209 TN 3,400,000 3,391,662 8.5000 8/1/07 Act/360
210 MA 3,400,000 3,390,047 8.5000 8/1/04 30/360
214 NC 3,362,000 3,356,836 7.7500 10/1/07 Act/360
215 NC 3,354,000 3,351,936 8.0000 10/1/07 Act/360
216 FL 3,300,000 3,297,420 8.3750 4/1/08 30/360
217 GA 3,300,000 3,290,597 9.0000 7/1/07 Act/360
218 FL 3,300,000 3,289,627 8.5800 7/1/07 Act/360
223 VA 3,100,000 3,100,000 7.8750 11/1/12 Act/360
226 CA 3,075,000 3,070,666 8.3750 8/1/04 Act/360
227 CA 3,050,000 3,041,128 9.3750 5/1/07 Act/360
228 CA 3,026,068 3,019,414 7.6600 8/1/15 30/360
229 TX 3,000,000 3,000,000 8.1400 7/1/07 30/360
235 IN 2,925,000 2,919,341 7.8750 9/1/10 Act/360
237 AL 2,850,000 2,850,000 8.1250 11/1/17 Act/360
238 NH 2,848,000 2,848,000 8.2500 11/1/19 Act/360
239 UT 2,810,000 2,805,319 8.6250 9/1/07 Act/360
241 TX 2,800,000 2,792,139 8.8750 9/1/07 Act/360
242 PA 2,860,347 2,790,528 8.1875 6/1/18 30/360
245 ID 2,763,000 2,760,569 7.7500 10/1/07 Act/360
249 MO 2,700,000 2,696,480 8.6200 8/1/07 Act/360
</TABLE>
Page 4 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
255 148 Ramada Inn - Bedford 340 Great Road Bedford
257 138 Westgate Hills 3175 Robinson Road Jackson
259 139 Ridgeview 710 North Washington Boulevard Ogden
261 143 South Oak SC 809 Arrowood Road Charlotte
262 145 Homelife Center 8780 Central Avenue Montclair
266 133 Pep Boys - Miami 10660 SW 40TH Street Miami
268 144 Hempstead Road Apartments 5615-5645 Hempstead Road Pittsburgh
275 149 Capital Plaza 545,551 & 555 Washington Street Weymouth
276 150 Mountain Park Square 4206 East Chandler Blvd. Phoenix
283 152 Thrifty-Payless - Corona del Mar 3141 East Pacific Coast Highway Corona del Mar
284 141 Walgreen - Weston 1751 Bonaventure Blvd Weston
286 153 MCL Center 1331-1337 West Fullerton Ave. Chicago
291 154 Babcock 222-230 Babcock Street Brookline
292 158 Stoneridge Apartments 1000 South Danville Road Kilgore
293 155 Rivers Edge Business Park 19017, 19039, 19201 62nd Avenue South Kent
294 156 Summit 1700 Enterprise Drive Wichita Falls
298 161 Rite-Aid - Bay City 3880 E. Wilder Road Bay City
299 159 Coral Gardens 3230 East Roosevelt Street Phoenix
303 164 Rite-Aid - Essexville 1490 W. Center Avenue Essexville
304 270 Golden Age Four and Taylor South Broad Street and 99 Overby Drive Butler and Richland
307 163 Greentree 6103 Manor Road Austin
311 166 Fowler Plaza 2540 East Fowler Plaza Tampa
312 167 Countrywood Village 5500 Mack Road Sacramento
313 168 Sun Club Apartments 1701 North Central Avenue Kissimmee
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
255 MA 2,669,000 2,669,000 8.2500 11/1/19 Act/360
257 MS 2,600,000 2,598,995 8.3900 10/1/27 Act/360
259 UT 2,595,000 2,593,835 8.0000 10/1/27 Act/360
261 NC 2,500,000 2,500,000 7.7500 11/1/12 30/360
262 CA 2,494,000 2,494,000 7.6200 11/1/07 Act/360
266 FL 2,447,077 2,447,077 7.9600 5/1/17 30/360
268 PA 2,445,000 2,437,864 8.7500 6/1/07 30/360
275 MA 2,350,000 2,329,478 9.3750 5/1/07 30/360
276 AZ 2,325,000 2,319,928 8.7500 6/1/17 Act/360
283 CA 2,270,098 2,262,166 7.9300 7/1/17 30/360
284 FL 2,257,604 2,257,604 7.3750 6/1/17 30/360
286 IL 2,250,000 2,250,000 7.6300 11/1/07 Act/360
291 MA 2,225,000 2,215,083 8.7500 5/1/07 30/360
292 TX 2,200,000 2,200,000 8.1400 7/1/07 30/360
293 WA 2,200,000 2,199,079 8.1875 10/1/07 Act/360
294 TX 2,200,000 2,197,608 8.1250 9/1/07 Act/360
298 MI 2,159,314 2,159,314 7.5000 11/1/17 30/360
299 AZ 2,160,000 2,156,589 8.0000 8/1/25 Act/360
303 MI 2,114,985 2,114,985 7.5000 11/1/17 30/360
304 GA 2,100,000 2,100,000 8.1500 11/1/07 Act/360
307 TX 2,100,000 2,094,179 9.0000 6/1/27 30/360
311 FL 2,025,000 2,022,355 8.1500 9/1/07 30/360
312 CA 2,025,000 2,022,146 8.3750 8/1/04 Act/360
313 FL 2,025,000 2,017,331 8.6250 6/1/07 30/360
</TABLE>
Page 5 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
315 169 Queensbury 220 S. Home Ave. Avalon
316 170 Colonial Village 9500 103rd Street Jacksonville
320 171 Hilltop Manor 5200 Annapolis Road Bladensburg
322 172 Lakecrest Shopping Center 28855 Military Road South Federal Way
324 182 Rite-Aid - Jenison 2739 Port Sheldon Road Jenison
326 174 First Union National Bank Building 205 Front Street Wilmington
328 180 Rite-Aid - Wilkes-Barre Wilkes-Barre Blvd & East Northampton Stree Wilkes-Barre
330 181 Rite-Aid - Cleveland 15105 St Clair Ave & 152nd St. Cleveland
333 184 Moonlight Townhomes 211 North Evergreen Gardner
334 187 Rite-Aid - Saginaw 812 Williams Street Saginaw
336 186 Rite-Aid - Cartersville 954 Joe Frank Harris Pkwy Cartersville
339 188 Beehive Retirement Center 401 Maple Street McCleary
340 191 Rite-Aid - West Branch 501 E. Houghton West Branch
342 189 Rite-Aid - Liberty Township 2704 Belmont Ave Liberty Township
343 190 Eckerd - Stockton 441 Country Club Drive Stockton
346 192 Rite-Aid - Ashtabula (2) 1127 West Prospect Ave Ashtabula
347 193 Revco - Norfolk (2) 3214-3216 Tidewater Drive Norfolk
348 194 Rite-Aid - Jefferson 224 N Chesnut St Jefferson
349 195 Rite-Aid - Ashtabula (1) 2120 Lake Ave Ashtabula
352 196 Eckerd - Oneco 1505 Oneco Boulevard Oneco
353 262 Franklin Row 32-40 North Dean Street Englewood
430 273 Park Terrace / Abbington Apartments (Roll-up) Various Kalamazoo
355 197 Super Crown Bookstore 1633 Chicago Avenue Evanston
358 198 Allen's Creek Center 17900-17964 U.S. Highway 19 North Tampa
359 199 Revco - Norfolk (1) 2330 Azalea Garden Road Norfolk
360 200 River Village Shopping Center 5004 - 5068 N. Oracle Road Tucson
361 202 Eckerd - Monroe 703 West Spring Street Monroe
362 201 Revco - Dundalk 7845 Wise Avenue Dundalk
364 207 Eckerd - Sharpsburg 3055 Highway 34 East Sharpsburg
365 203 Rite-Aid - Barnegat Twp., Ocean County, Barnegat Blvd and West Bay Ave. Barnegat Twp., Ocean County,
366 204 Comfort Inn - Elkton 2625 State Road 207 St. Augustine
369 205 Holbrook Plaza Shopping Center 1501 - 1613 Navajo Boulevard Holbrook
372 206 Eckerd - Lady Lake 860 Avenida Central Lady Lake
373 210 Oakwood Homes 3802 Damon Street Eau Claire
375 208 Crystal Glen 2800 Crystal Street Anderson
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
315 PA 2,006,000 2,000,084 8.7000 6/1/07 30/360
316 FL 2,000,000 2,000,000 7.8750 11/1/07 Act/360
320 MD 2,000,000 1,995,287 8.5000 6/1/07 Act/360
322 WA 2,000,000 1,989,549 9.1250 4/1/07 Act/360
324 MI 1,974,110 1,974,110 7.5000 11/1/17 30/360
326 NC 1,960,000 1,951,883 8.8125 8/1/12 Act/360
328 PA 1,948,066 1,940,888 7.7650 3/1/17 30/360
330 OH 1,961,817 1,925,202 8.1700 3/1/16 30/360
333 KS 1,850,000 1,847,592 8.6250 8/1/27 Act/360
334 MI 1,839,795 1,839,795 7.5000 11/1/17 30/360
336 GA 1,835,631 1,807,387 8.3750 11/1/16 30/360
339 WA 1,800,000 1,784,056 9.2500 1/1/07 30/360
340 MI 1,754,680 1,754,680 7.5000 11/1/17 30/360
342 OH 1,748,804 1,713,889 7.9300 9/1/16 30/360
343 GA 1,723,331 1,710,960 8.5000 12/1/16 30/360
346 OH 1,707,479 1,673,378 8.0700 7/1/16 30/360
347 VA 1,695,212 1,673,105 8.8125 11/1/16 30/360
348 OH 1,702,049 1,668,057 8.0700 7/1/16 30/360
349 OH 1,676,936 1,641,993 8.0700 2/1/16 30/360
352 FL 1,622,868 1,617,476 7.5900 2/1/17 30/360
353 NJ 1,610,000 1,610,000 7.4700 11/1/12 30/360
430 MI 1,600,000 1,600,000 8.1600 11/1/07 Act/360
355 IL 1,600,000 1,597,872 8.0600 9/1/07 30/360
358 FL 1,575,000 1,571,263 8.5000 7/1/07 Act/360
359 VA 1,597,003 1,564,682 9.1250 9/1/16 30/360
360 AZ 1,540,000 1,538,798 8.2500 10/1/07 Act/360
361 GA 1,533,030 1,522,289 8.5000 12/1/16 30/360
362 MD 1,531,796 1,521,433 8.2500 5/1/17 30/360
364 GA 1,513,702 1,513,702 7.5000 10/1/16 30/360
365 NJ 1,543,168 1,512,548 8.8750 8/1/16 30/360
366 FL 1,505,000 1,502,493 8.6250 9/1/07 Act/360
369 AZ 1,500,000 1,496,101 9.3750 7/1/07 Act/360
372 FL 1,486,408 1,481,593 7.6250 1/1/17 30/360
373 WI 1,472,000 1,471,674 9.5500 10/1/22 Act/360
375 IN 1,450,000 1,447,916 8.3125 8/1/07 Act/360
</TABLE>
Page 6 of 7
<PAGE>
<TABLE>
<CAPTION>
Offer
Doc Loan
# # Property Name Address City
- --- ---- ------------- ------- ----
<S> <C> <C> <C> <C>
376 209 Ocean Mews 31 Cedar Avenue Long Branch
377 211 Rite-Aid - Newton Falls 325 West Broad St Newton Falls
379 213 Silverfield Condominiums 6001 Reims Road Houston
382 214 Revco - Portsmouth (2) 2004 Victory Boulevard Portsmouth
383 216 151-169 Nagle Avenue 151-169 Nagle Avenue New York
384 215 Rite-Aid - Perry 102 North Main Street Perry
385 217 Revco - Virginia Beach 5015 Virginia Beach Blvd. Virginia Beach
386 220 Revco - Akron 1140 Portage Trail Rd Akron
387 218 Revco - Portsmouth (1) 3531 Airline Boulevard Portsmouth
388 219 Revco - Newport News 10453 Jefferson Avenue Newport News
390 229 Nicholas Venture 1102-1121 North 48th Street Omaha
391 221 Sunset Court 4415 S. 28th St. Phoenix
392 222 Royal Manor 3900 Memorial Drive Decatur
394 223 Rite-Aid - Portage 614 Main Street Portage
397 225 Rite-Aid - New Bethlehem 610 Broad St New Bethlehem
398 226 Rite-Aid - Folkston 200 N 2nd St. Folkston
402 227 Rite-Aid - Craigville Route 55 & Route 20 Craigville
403 228 Orleans CVS, Inc. - Orleans 108-122 Cranberry Highway Orleans
404 230 Rite-Aid - Latrobe NEC Depot St & Ligonier St Latrobe
405 231 Rite-Aid - Homerville 400 N Church Street Homerville
409 232 Rite-Aid - Glenville 902 North Lewis St. Glenville
411 234 Braesforest 8100 Creekbend Houston
412 233 Sunbelt Rentals - Savannah Bourne Aveand State Road 21 Savannah
414 236 Tower Gardens 4707 West Alabama Houston
415 237 Revco - Chase City 610 North Main Street Chase City
416 235 Sunbelt Rentals - Kennesaw 2750 McCollum Parkway Kennesaw
417 238 Revco - Holly Hill 8517 Old State Road Holly Hill
418 239 Country Hearth Inn Columbus 2436 Highway 71 South Columbus
419 240 Davie Village Assisted Living Facility 191 Crestview Drive Mocksville
422 242 2800 University Avenue 2800 University Avenue Bronx
423 243 Country Hearth West Columbia 714 Columbia Drive West Columbia
424 244 530 West 136th Street 530 West 136th Street New York
425 245 Country Hearth Inn Alvin 1588 Highway 35 Alvin
426 246 Towering Pines 1200-1222 Towering Pines Lane & 2119-2123 Albany
428 250 Benson Terrace 5127 Maple Street Omaha
429 249 1225 Morris Avenue 1225 Morris Avenue Bronx
<CAPTION>
Offer Cut-off Mortgage
Doc Original Date -------------------- Accrual
# State Balance ($) Balance ($) Rate (%) Maturity Method
- --- ----- ----------- ----------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <S>
376 NJ 1,450,000 1,445,334 9.1800 5/1/07 30/360
377 OH 1,454,665 1,425,623 7.9300 9/1/16 30/360
379 TX 1,400,000 1,400,000 7.9000 11/1/07 Act/360
382 VA 1,418,084 1,389,123 9.1250 8/1/16 30/360
383 NY 1,370,000 1,364,049 9.2500 6/1/07 30/360
384 MI 1,364,026 1,361,668 7.9200 9/1/17 30/360
385 VA 1,373,132 1,358,280 9.0000 3/1/17 30/360
386 OH 1,352,498 1,350,090 7.7500 8/1/17 30/360
387 VA 1,352,057 1,341,130 8.7910 2/1/17 30/360
388 VA 1,348,886 1,334,164 9.0000 2/1/17 30/360
390 NE 1,300,000 1,299,431 8.0700 10/1/07 Act/360
391 AZ 1,300,000 1,299,194 9.1250 10/1/07 Act/360
392 GA 1,300,000 1,297,521 7.9500 9/1/22 Act/360
394 PA 1,291,741 1,264,848 8.3400 8/1/16 30/360
397 PA 1,240,338 1,214,515 8.3400 8/1/16 30/360
398 GA 1,233,982 1,214,497 8.3750 8/1/16 30/360
402 WV 1,181,635 1,156,200 8.5000 2/1/16 30/360
403 MA 1,160,219 1,153,040 8.7500 1/1/18 30/360
404 PA 1,160,344 1,136,187 8.3400 8/1/16 30/360
405 GA 1,147,105 1,128,992 8.3750 8/1/16 30/360
409 WV 1,043,258 1,019,996 8.5000 10/1/15 30/360
411 TX 1,000,000 997,986 9.0000 6/1/07 Act/360
412 GA 975,307 974,025 8.1250 8/1/17 30/360
414 TX 930,000 929,642 8.4000 10/1/27 Act/360
415 VA 933,486 920,048 9.0000 10/1/16 30/360
416 GA 918,245 917,220 8.1250 3/1/17 30/360
417 SC 923,436 916,074 8.8300 3/1/17 30/360
418 TX 917,000 915,881 9.1250 10/1/07 Act/360
419 NC 900,000 897,379 8.6250 9/1/07 Act/360
422 NY 760,000 757,893 9.0000 6/1/07 30/360
423 TX 758,000 757,075 9.1250 10/1/07 Act/360
424 NY 750,000 745,994 9.1250 5/1/07 30/360
425 TX 725,000 724,115 9.1250 10/1/07 Act/360
426 GA 706,000 705,142 8.5000 9/1/27 30/360
428 NE 684,000 683,649 7.6200 10/1/07 Act/360
429 NY 600,000 597,500 9.5000 6/1/07 30/360
Totals: 1,108,538,575 1,105,685,135
</TABLE>
Page 7 of 7
<PAGE>
EXHIBIT B
EXCEPTIONS TO SECTION 2(C)
None.
<PAGE>
EXHIBIT C
EXCEPTIONS TO CLAUSE VIII OF SCHEDULE I
None.
<PAGE>
EXHIBIT D
EXCEPTIONS TO CLAUSE XVI OF SCHEDULE I
<PAGE>
<TABLE>
LEHMAN BROTHERS Page 1 of 3
FU - LB Conduit 1997-C2***FINAL BLACK*** Report: LOANSCHE
Records: 112 Mon, Dec 8, 1997 12:44 PM
Balance: 584,126,862.58 Prepared by: SCHANG
Selection: POOL = First Union; Actual/360 S:\SCHANG\CONDUIT2\BLACK
<CAPTION>
====================================================================================================================================
Pros-
pectus Loan
# # Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6 2 Fountainhead Apartments 293-297 Turnpike Road Westborough
7 282 Drury Portfolio #1 Various Various
17 272 Campus Club 4000 Southwest 37th Boulevard Gainesville
21 8 The Hamptons 3070 South Nellis Boulevard Las Vegas
26 281 Drury Portfolio #2 Various Various
28 12 Eatoncrest 3300 Eaton Crest Drive Eatontown
30 13 375 and 377 Ghent Road 375 and 377 Ghent Road Akron
31 14 Chapel Hill Apartments 1500 Worcester Road Framingham
36 17 Renaissance Parc 5151 Verde Valley Lane Dallas
39 18 NorthPark Executive Suites Hotel 7685 Northcross Drive Austin
49 21 Perwinkle Place Shopping Center 2075 Periwinkle Place Sanibel Island
52 25 Coachman Manor 401 Gibbsboro Road Lindenwold
66 30 One Price Distribution Center 1875 East Main Street Duncan
67 31 Quail Lakes Center 4700-4755 Quail Lakes Drive Stockton
68 32 Cedar Run 816 South Oneida Denver
72 35 Country Place I 3900 Blackburn Lane Burtonsville
75 37 Concordia Shopping Center 1600 Perrineville Road Monroe
78 38 Willowick 5120 North 16th Street Phoenix
82 39 Drury Inn - St. Louis Airport 10490 Natural Bridge Road Edmundson
85 42 The Crossings Shopping Center 2260-2336 Lebanon Pike Nashville
88 45 Holiday Inn - Catalina Centre 1601 North Congress Avenue Boynton Beach
89 46 Dam Neck Crossings 1630 and 1650 General Booth Boulevard Virginia Beach
90 40 Roger Smith Hotel 501 Lexington Avenue@47th Street New York
92 50 DFW Air Cargo Complex 2963,2967, & 3015 N. Airfield Dr. Irving
94 51 Whiting Shopping Center 108 Lacey Road Whiting
98 53 Atrium Executive Plaza 499 Northwest 70th Avenue Plantation
99 54 Gardens Park Plaza 8940 North Military Trail Palm Beach Gardens
100 55 Plaza Healthcare 1475 North Granite Reef Road Scottsdale
102 57 Victoria Village shopping center 1401 - 1463 Victoria Avenue Ventura
103 58 Terraces @ Windy Hill 3000 Windy Hill Road Marietta
106 59 Clarington 3767 Clarington Avenue Los Angeles
107 47 Tallahasse Residence Inn 1880 Raymond Diehl Road Tallahasee
109 61 Bellevue Valley Plaza 7401 - 7091 Highway 70 South Nashville
112 62 Forest Brook Apartments 2921 Forestbrook Drive Charlotte
115 64 Carriage Way Shopping Center 201-235 South Waukegan Road Lake Bluff
118 277 Hampton Inn - Daytona 1715 W. International Speedway Daytona
122 67 215 Coles Street 215 Coles Street Jersey City
123 70 Westpark Walk 100 - 481 Commerce Drive Peachtree City
127 69 Saratoga Holiday Inn 232 Broadway at Circular Street Saratoga Springs
128 79 Courtyard Sarasota 850 University Parkway Sarasota
132 78 CVS Plaza 213, 214 & 218 Northern Blvd. Bayside
133 80 Gainesville Courtyard by Marriott 3510 SW 40th Blvd. Gainesville
135 77 Williamsburg Villas 3211 S.W. Govenor John Sevier Highway Knoxville
142 83 Shawnee Village 12821 126th Way NE Kirkland
<CAPTION>
================================================================================
Cut-off
Prospectus Original Date Mortgage Accrual
# State Balance Balance Rate Maturity Method
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6 MA 29,200,000 29,121,268 8.550 5/1/07 Act/360
7 MO 29,000,000 29,000,000 7.960 11/1/12 Act/360
17 FL 20,000,000 20,000,000 7.450 11/1/07 Act/360
21 NV 18,700,000 18,665,259 8.290 7/1/07 Act/360
26 TX 16,965,000 16,965,000 7.920 11/1/12 Act/360
28 NJ 16,500,000 16,491,481 7.600 10/1/27 Act/360
30 OH 16,300,000 16,276,911 8.250 10/1/17 Act/360
31 MA 14,900,000 14,859,825 8.550 5/1/07 Act/360
36 TX 12,520,000 12,497,380 8.375 7/1/07 Act/360
39 TX 12,250,000 12,250,000 7.670 11/1/07 Act/360
49 FL 9,675,000 9,667,450 8.250 10/1/07 Act/360
52 NJ 9,400,000 9,382,540 8.450 8/1/12 Act/360
66 SC 8,125,000 8,082,804 9.125 7/1/17 Act/360
67 CA 8,000,000 7,991,880 8.375 9/1/07 Act/360
68 CO 8,000,000 7,986,834 8.650 7/1/07 Act/360
72 MD 7,425,000 7,408,285 7.680 8/1/07 Act/360
75 NJ 7,200,000 7,170,968 8.690 6/1/07 Act/360
78 AZ 7,100,000 7,088,580 7.938 8/1/07 Act/360
82 MO 7,000,000 7,000,000 7.960 11/1/12 Act/360
85 TN 7,000,000 6,989,789 8.000 9/1/07 Act/360
88 FL 6,746,000 6,729,457 8.500 8/1/07 Act/360
89 VA 6,725,000 6,725,000 7.750 11/1/07 Act/360
90 NY 6,700,000 6,700,000 9.000 11/1/12 Act/360
92 TX 6,551,000 6,528,304 9.375 6/1/22 Act/360
94 NJ 6,500,000 6,473,791 8.690 6/1/07 Act/360
98 FL 6,300,000 6,284,126 8.375 8/1/07 Act/360
99 FL 6,300,000 6,274,923 8.750 6/1/12 Act/360
100 AZ 6,250,000 6,234,626 8.750 10/1/12 Act/360
102 CA 6,200,000 6,179,213 8.875 5/1/07 Act/360
103 GA 6,185,000 6,176,283 8.375 8/1/07 Act/360
106 CA 6,075,000 6,065,121 7.900 8/1/07 Act/360
107 FL 5,917,000 5,912,058 7.970 10/1/07 Act/360
109 TN 5,813,000 5,801,266 8.125 8/1/07 Act/360
112 NC 5,750,000 5,735,276 8.300 8/1/07 Act/360
115 IL 5,500,000 5,489,244 8.250 8/1/07 Act/360
118 FL 5,400,000 5,400,000 8.040 11/1/07 Act/360
122 NJ 5,250,000 5,250,000 8.250 11/1/07 Act/360
123 GA 5,200,000 5,189,301 9.000 7/1/07 Act/360
127 NY 5,000,000 5,000,000 8.000 11/1/07 Act/360
128 FL 5,003,000 4,998,821 7.970 10/1/07 Act/360
132 NY 4,841,680 4,833,642 8.625 7/1/07 Act/360
133 FL 4,802,000 4,797,989 7.970 10/1/07 Act/360
135 TN 4,800,000 4,797,046 8.000 10/1/07 Act/360
142 WA 4,750,000 4,742,388 7.950 8/1/07 Act/360
</TABLE>
<PAGE>
<TABLE>
LEHMAN BROTHERS Page 2 of 3
FU - LB Conduit 1997-C2***FINAL BLACK*** Report: LOANSCHE
Records: 112 Mon, Dec 8, 1997 12:44 PM
Balance: 584,126,862.58 Prepared by: SCHANG
Selection: POOL = First Union; Actual/360 S:\SCHANG\CONDUIT2\BLACK
<CAPTION>
====================================================================================================================================
Pros-
pectus Loan
# # Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
148 72 Best Western - Mystic 9 Whitehall Avenue Mystic
150 84 Wendover Plaza Shopping Center 931 Wendover Rd. Charlotte
156 88 Country Place II 3918-3930 Blackburn Lane Burtonsville
159 90 Edgewater Trace 10714 Abercorn Extension Savannah
162 89 Cove Village Townhouses 2 Driftwood Court Baltimore
163 82 Mobile Residence Inn 950 S Beltline Highway Mobile
164 98 Village Shopping Center 3020 N. Main Street Hope Mills
168 92 Giant Eagle Plaza 4400 Buffalo Road (US 20) Erie
169 93 Courtyard by Marriott - Mobile 1000 South Beltline Hwy. Mobile
173 94 Indian Run Casarow Drive Bridgeton
174 96 Oak Creek Apartments 8460 Hospital Drive Atlanta
175 95 South Coast Center 16261 Highway 101 Harbor
177 97 Best Western Airport East 301 North Central Avenue Hapeville
182 99 Radisson Suite Hotel 1808 Australian Avenue West Palm Beach
186 101 Fort Myers Residence Inn by Marriott 2960 Colonial Boulevard Ft. Myers
191 107 Sovereign 4829 Sheboygan Avene Madison
200 109 Colombus West Park Nursing & Rehabilitation Center 1700 Heinzerling Drive Columbus
202 112 Texas Melody 5929-5921 Melody Place Dallas
204 118 Best Western Crabtree 6619 Glenwood Avenue Raleigh
209 116 Belmont Plaza Retirement Center 1710 Magnolia Boulevard Nashville
214 122 4401 Barclay Downs 4401 Barclay Downs Drive Charlotte
215 117 Lake Hickory Plaza Shopping Center 1366 Highway 321 North Hickory
217 120 Holiday Inn - Dalton 515 Holiday Drive Dalton
218 121 Chase Ridge 8050 103rd Street Jacksonville
223 123 Danville Plaza 2855 Riverside Drive Danville
226 124 Countrywood East 5700 Mack Road Sacramento
227 125 Sierra Vista Business Park 100-140 Chaparral Court Anaheim
235 128 3400 West 86th Street 3400 West 86th Street Indianapolis
237 279 CH2M Hill 2567 Fairlane Drive Montgomery
238 130 Best Western - Keene 401 Winchester Street Keene
239 131 Marriott Fairfield Inn 2437 South Wildcat Way Wood Cross
241 132 Holiday Inn College Station 1503 Texas Avenue College Station
245 269 Eastgate Shopping Center 578-680 East Boise Avenue Boise
249 137 Apple Creek 9905 Locust Street Kansas City
255 148 Ramada Inn - Bedford 340 Great Road Bedford
257 138 Westgate Hills 3175 Robinson Road Jackson
259 139 Ridgeview 710 North Washington Boulevard Ogden
262 145 Homelife Center 8780 Central Avenue Montclair
276 150 Mountain Park Square 4206 East Chandler Blvd. Phoenix
286 153 MCL Center 1331-1337 West Fullerton Ave. Chicago
293 155 Rivers Edge Business Park 19017, 19039, 19201 62nd Avenue South Kent
294 156 Summit 1700 Enterprise Drive Wichita Falls
299 159 Coral Gardens 3230 East Roosevelt Street Phoenix
304 270 Golden Age Four and Taylor South Broad Street and 99 Overby Drive Butler and Richland
<CAPTION>
================================================================================
Pros- Cut-off
pectus Original Date Mortgage Accrual
# State Balance Balance Rate Maturity Method
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
148 CT 4,683,000 4,683,000 8.250 11/1/19 Act/360
150 NC 4,600,000 4,597,936 8.000 10/1/07 Act/360
156 MD 4,500,000 4,489,869 7.680 8/1/07 Act/360
159 GA 4,463,500 4,461,018 7.375 10/1/07 Act/360
162 MD 4,425,000 4,423,108 8.130 10/1/07 Act/360
163 AL 4,410,000 4,410,000 8.150 11/1/07 Act/360
164 NC 4,400,000 4,394,466 7.625 10/1/07 Act/360
168 PA 4,300,000 4,297,799 7.625 10/1/07 Act/360
169 AL 4,293,000 4,274,173 9.050 4/1/07 Act/360
173 NJ 4,075,000 4,067,080 8.150 7/1/07 Act/360
174 GA 4,000,000 4,000,000 8.320 7/1/07 Act/360
175 OR 4,000,000 3,997,673 8.188 10/1/07 Act/360
177 GA 4,000,000 3,984,774 9.350 8/1/07 Act/360
182 FL 3,900,000 3,897,050 8.375 10/1/12 Act/360
186 FL 3,803,000 3,799,824 7.970 10/1/07 Act/360
191 WI 3,768,000 3,763,729 7.970 9/1/07 Act/360
200 OH 3,600,000 3,584,657 8.625 8/1/17 Act/360
202 TX 3,520,000 3,511,325 8.350 6/1/22 Act/360
204 NC 3,500,000 3,495,344 8.625 10/1/17 Act/360
209 TN 3,400,000 3,391,662 8.500 8/1/07 Act/360
214 NC 3,362,000 3,356,836 7.750 10/1/07 Act/360
215 NC 3,354,000 3,351,936 8.000 10/1/07 Act/360
217 GA 3,300,000 3,290,597 9.000 7/1/07 Act/360
218 FL 3,300,000 3,289,627 8.580 7/1/07 Act/360
223 VA 3,100,000 3,100,000 7.875 11/1/12 Act/360
226 CA 3,075,000 3,070,666 8.375 8/1/04 Act/360
227 CA 3,050,000 3,041,128 9.375 5/1/07 Act/360
235 IN 2,925,000 2,919,341 7.875 9/1/10 Act/360
237 AL 2,850,000 2,850,000 8.125 11/1/17 Act/360
238 NH 2,848,000 2,848,000 8.250 11/1/19 Act/360
239 UT 2,810,000 2,805,319 8.625 9/1/07 Act/360
241 TX 2,800,000 2,792,139 8.875 9/1/07 Act/360
245 ID 2,763,000 2,760,569 7.750 10/1/07 Act/360
249 MO 2,700,000 2,696,480 8.620 8/1/07 Act/360
255 MA 2,669,000 2,669,000 8.250 11/1/19 Act/360
257 MS 2,600,000 2,598,995 8.390 10/1/27 Act/360
259 UT 2,595,000 2,593,835 8.000 10/1/27 Act/360
262 CA 2,494,000 2,494,000 7.620 11/1/07 Act/360
276 AZ 2,325,000 2,319,928 8.750 6/1/17 Act/360
286 IL 2,250,000 2,250,000 7.630 11/1/07 Act/360
293 WA 2,200,000 2,199,079 8.188 10/1/07 Act/360
294 TX 2,200,000 2,197,608 8.125 9/1/07 Act/360
299 AZ 2,160,000 2,156,589 8.000 8/1/25 Act/360
304 GA 2,100,000 2,100,000 8.150 11/1/07 Act/360
</TABLE>
<PAGE>
<TABLE>
LEHMAN BROTHERS Page 3 of 3
FU - LB Conduit 1997-C2***FINAL BLACK*** Report: LOANSCHE
Records: 112 Mon, Dec 8, 1997 12:44 PM
Balance: 584,126,862.58 Prepared by: SCHANG
Selection: POOL = First Union; Actual/360 S:\SCHANG\CONDUIT2\BLACK
<CAPTION>
====================================================================================================================================
Pros-
pectus Loan
# # Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
312 167 Countrywood Village 5500 Mack Road Sacramento
316 170 Colonial Village 9500 103rd Street Jacksonville
320 171 Hilltop Manor 5200 Annapolis Road Bladensburg
322 172 Lakecrest Shopping Center 28855 Military Road South Federal Way
326 174 First Union National Bank Building 205 Front Street Wilmington
333 184 Moonlight Townhomes 211 North Evergreen Gardner
430 273 Park Terrace / Abbington Apartments (Roll-up) Various Kalamazoo
358 198 Allen's Creek Center 17900-17964 U.S. Highway 19 North Tampa
360 200 River Village Shopping Center 5004 - 5068 N. Oracle Road Tucson
366 204 Comfort Inn - Elkton 2625 State Road 207 St. Augustine
369 205 Holbrook Plaza Shopping Center 1501 - 1613 Navajo Boulevard Holbrook
373 210 Oakwood Homes 3802 Damon Street Eau Claire
375 208 Crystal Glen 2800 Crystal Street Anderson
379 213 Silverfield Condominiums 6001 Reims Road Houston
390 229 Nicholas Venture 1102-1121 North 48th Street Omaha
391 221 Sunset Court 4415 S. 28th St. Phoenix
392 222 Royal Manor 3900 Memorial Drive Decatur
411 234 Braesforest 8100 Creekbend Houston
414 236 Tower Gardens 4707 West Alabama Houston
418 239 Country Hearth Inn Columbus 2436 Highway 71 South Columbus
419 240 Davie Village Assisted Living Facility 191 Crestview Drive Mocksville
423 243 Country Hearth West Columbia 714 Columbia Drive West Columbia
425 245 Country Hearth Inn Alvin 1588 Highway 35 Alvin
428 250 Benson Terrace 5127 Maple Street Omaha
<CAPTION>
=============================================================================
Pros- Cut-off
pectus Original Date Mortgage Accrual
# State Balance Balance Rate Maturity Method
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
312 CA 2,025,000 2,022,146 8.375 8/1/04 Act/360
316 FL 2,000,000 2,000,000 7.875 11/1/07 Act/360
320 MD 2,000,000 1,995,287 8.500 6/1/07 Act/360
322 WA 2,000,000 1,989,549 9.125 4/1/07 Act/360
326 NC 1,960,000 1,951,883 8.813 8/1/12 Act/360
333 KS 1,850,000 1,847,592 8.625 8/1/27 Act/360
430 MI 1,600,000 1,600,000 8.160 11/1/07 Act/360
358 FL 1,575,000 1,571,263 8.500 7/1/07 Act/360
360 AZ 1,540,000 1,538,798 8.250 10/1/07 Act/360
366 FL 1,505,000 1,502,493 8.625 9/1/07 Act/360
369 AZ 1,500,000 1,496,101 9.375 7/1/07 Act/360
373 WI 1,472,000 1,471,674 9.550 10/1/22 Act/360
375 IN 1,450,000 1,447,916 8.313 8/1/07 Act/360
379 TX 1,400,000 1,400,000 7.900 11/1/07 Act/360
390 NE 1,300,000 1,299,431 8.070 10/1/07 Act/360
391 AZ 1,300,000 1,299,194 9.125 10/1/07 Act/360
392 GA 1,300,000 1,297,521 7.950 9/1/22 Act/360
411 TX 1,000,000 997,986 9.000 6/1/07 Act/360
414 TX 930,000 929,642 8.400 10/1/27 Act/360
418 TX 917,000 915,881 9.125 10/1/07 Act/360
419 NC 900,000 897,379 8.625 9/1/07 Act/360
423 TX 758,000 757,075 9.125 10/1/07 Act/360
425 TX 725,000 724,115 9.125 10/1/07 Act/360
428 NE 684,000 683,649 7.620 10/1/07 Act/360
- -----------------------------------------------------------------------------
Totals: 584,980,180 584,126,863
- -----------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT E
EXCEPTIONS TO CLAUSE XVI OF SCHEDULE I
None.
<PAGE>
EXHIBIT F
EXCEPTIONS TO CLAUSE XXIV OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 *** FINAL BLACK ***
Records: 7
Balance: 56,182,000.00
Selection: Hyper-Amortizing Loans
====================================================================================================================================
ARD Loans - First Union Pool
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
24 10 Olive Tree 6201 West Olive Avenue Glendale AZ 17,360,000 17,360,000
25 11 Saddleback Apts. 4722 East Bell Road Phoenix AZ 17,342,000 17,342,000
64 29 Sierra Creek 501 Central Texas Expressway Killeen TX 8,400,000 8,400,000
174 96 Oak Creek Apartments 8460 Hospital Drive Atlanta GA 4,000,000 4,000,000
183 100 Hunters Glen 1201 Bacon Ranch Road Killeen TX 3,880,000 3,880,000
229 127 Misty Ridge Apartments 301 West Hawkins Parkway Longview TX 3,000,000 3,000,000
292 158 Stoneridge Apartments 1000 South Danville Road Kilgore TX 2,200,000 2,200,000
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 56,182,000 56,182,000
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------
Prospectus Mortgage Accrual
# Rate Maturity Method
- --------------------------------------------
24 8.140 7/1/07 30/360
25 8.140 7/1/07 30/360
64 8.140 7/1/07 30/360
174 8.320 7/1/07 Act/360
183 8.140 7/1/07 30/360
229 8.140 7/1/07 30/360
292 8.140 7/1/07 30/360
============================================
</TABLE>
<PAGE>
EXHIBIT G
EXCEPTIONS TO CLAUSE XXVI OF SCHEDULE I
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
Records: 7
Balance: 52,196,502.00
Selection: Subordinate Debt
====================================================================================================================================
Subordinate Debt - First Union Pool
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan Original Cut-off Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
3 278 Centreville Square 5900 Centreville Crest Lane Centreville VA 35,250,000 35,250,000
162 89 Cove Village Townhouses 2 Driftwood Court Baltimore MD 4,425,000 4,423,108
202 112 Texas Melody 5929-5921 Melody Place Dallas TX 3,520,000 3,511,325
218 121 Chase Ridge 8050 103rd Street Jacksonville FL 3,300,000 3,289,627
299 159 Coral Gardens 3230 East Roosevelt Street Phoenix AZ 2,160,000 2,156,589
307 163 Greentree 6103 Manor Road Austin TX 2,100,000 2,094,179
373 210 Oakwood Homes 3802 Damon Street Eau Claire WI 1,472,000 1,471,674
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 52,227,000 52,196,502
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------
Prospectus Mortgage Accrual
# Rate Maturity Method
- ------------------------------------------------
3 7.625 11/1/07 30/360
162 8.130 10/1/07 Act/360
202 8.350 6/1/22 Act/360
218 8.580 7/1/07 Act/360
299 8.000 8/1/25 Act/360
307 9.000 6/1/27 30/360
373 9.550 10/1/22 Act/360
================================================
</TABLE>
<PAGE>
EXHIBIT H
EXCEPTIONS TO CLAUSE XXVII OF SCHEDULE I
None.
<PAGE>
EXHIBIT I
EXCEPTIONS TO CLAUSE XXVII TO SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
Records: 47
Balance 157,684,893.73
Selection: One-Time Transfer
====================================================================================================================================
One-Time Transfers - First Union Pool
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prospect Loan
# # Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
8 3 Sutton Place 23275 Riverside Drive Southfield
73 36 Walmart - Boone 1812 Blowing Rock Boone
75 37 Concordia Shopping Center 1600 Perrineville Road Monroe
89 46 Dam Neck Crossings 1630 and 1650 General Booth Boulevard Virginia Beach
92 50 DFW Air Cargo Complex 2963,2967, & 3015 N. Airfield Dr. Irving
94 51 Whiting Shopping Center 108 Lacey Road Whiting
95 49 Circuit City - Poughkeepsie 837 South Rd. Poughkeepsie
101 56 Leisure Living Properties - 3 Assets Various Portage, Fremont, Lowell
129 73 Barnes & Noble, Inc. - Rockleigh 1 Pond Road Rockleigh
138 75 Circuit City - Cincinnati 5455 Glenway Ave Cincinnati
139 76 Circuit City - Wilkes Barre 500 Kidder St. Wilkes Barre
150 84 Wendover Plaza Shopping Center 931 Wendover Rd. Charlotte
157 86 Circuit City - Florence 2400 David McLeod Blvd. Florence
210 115 1227 Commonwealth Avenue 1227-1245 Commonwealth Avenue Boston
215 117 Lake Hickory Plaza Shopping Center 1366 Highway 321 North Hickory
227 125 Sierra Vista Business Park 100-140 Chaparral Court Anaheim
241 132 Holiday Inn College Station 1503 Texas Avenue College Station
242 129 Circuit City - Muncy Lycoming Mall Ring Rd. Muncy
275 149 Capital Plaza 545,551 & 555 Washington Street Weymouth
276 150 Mountain Park Square 4206 East Chandler Blvd. Phoenix
307 163 Greentree 6103 Manor Road Austin
330 181 Rite-Aid - Cleveland 15105 St Clair Ave & 152nd St. Cleveland
336 186 Rite-Aid - Cartersville 954 Joe Frank Harris Pkwy Cartersville
342 189 Rite-Aid - Liberty Township 2704 Belmont Ave Liberty Township
346 192 Rite-Aid - Ashtabula (2) 1127 West Prospect Ave Ashtabula
347 193 Revco - Norfolk (2) 3214-3216 Tidewater Drive Norfolk
348 194 Rite-Aid - Jefferson 224 N Chesnut St Jefferson
349 195 Rite-Aid - Ashtabula (1) 2120 Lake Ave Ashtabula
359 199 Revco - Norfolk (1) 2330 Azalea Garden Road Norfolk
362 201 Revco - Dundalk 7845 Wise Avenue Dundalk
365 203 Rite-Aid - Barnegat Twp., Ocean County, Barnegat Blvd and West Bay Ave. Barnegat Twp., Ocean County,
369 205 Holbrook Plaza Shopping Center 1501 - 1613 Navajo Boulevard Holbrook
377 211 Rite-Aid - Newton Falls 325 West Broad St Newton Falls
382 214 Revco - Portsmouth (2) 2004 Victory Boulevard Portsmouth
385 217 Revco - Virginia Beach 5015 Virginia Beach Blvd. Virginia Beach
387 218 Revco - Portsmouth (1) 3531 Airline Boulevard Portsmouth
388 219 Revco - Newport News 10453 Jefferson Avenue Newport News
394 223 Rite-Aid - Portage 614 Main Street Portage
397 225 Rite-Aid - New Bethlehem 610 Broad St New Bethlehem
398 226 Rite-Aid - Folkston 200 N 2nd St. Folkston
402 227 Rite-Aid - Craigville Route 55 & Route 20 Craigville
403 228 Orleans CVS, Inc. - Orleans 108-122 Cranberry Highway Orleans
404 230 Rite-Aid - Latrobe NEC Depot St & Ligonier St Latrobe
405 231 Rite-Aid - Homerville 400 N Church Street Homerville
409 232 Rite-Aid - Glenville 902 North Lewis St. Glenville
415 237 Revco - Chase City 610 North Main Street Chase City
417 238 Revco - Holly Hill 8517 Old State Road Holly Hill
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------
Prospect Original Cut-off Date Mortgage Accrual
# State Balance Balance Rate Maturity Method
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
8 MI 29,000,000 28,887,122 8.250 5/1/07 30/360
73 NC 7,458,022 7,341,749 7.313 11/1/16 30/360
75 NJ 7,200,000 7,170,968 8.690 6/1/07 Act/360
89 VA 6,725,000 6,725,000 7.750 11/1/07 Act/360
92 TX 6,551,000 6,528,304 9.375 6/1/22 Act/360
94 NJ 6,500,000 6,473,791 8.690 6/1/07 Act/360
95 NY 6,589,015 6,428,181 8.188 6/1/18 30/360
101 MI 6,250,000 6,217,295 9.250 5/1/07 30/360
129 NJ 5,000,000 4,989,871 8.250 9/1/22 30/360
138 OH 4,903,453 4,783,763 8.188 6/1/18 30/360
139 PA 4,903,453 4,776,282 8.188 5/1/18 30/360
150 NC 4,600,000 4,597,936 8.000 10/1/07 Act/360
157 SC 4,596,987 4,484,777 8.188 6/1/18 30/360
210 MA 3,400,000 3,390,047 8.500 8/1/04 30/360
215 NC 3,354,000 3,351,936 8.000 10/1/07 Act/360
227 CA 3,050,000 3,041,128 9.375 5/1/07 Act/360
241 TX 2,800,000 2,792,139 8.875 9/1/07 Act/360
242 PA 2,860,347 2,790,528 8.188 6/1/18 30/360
275 MA 2,350,000 2,329,478 9.375 5/1/07 30/360
276 AZ 2,325,000 2,319,928 8.750 6/1/17 Act/360
307 TX 2,100,000 2,094,179 9.000 6/1/27 30/360
330 OH 1,961,817 1,925,202 8.170 3/1/16 30/360
336 GA 1,835,631 1,807,387 8.375 11/1/16 30/360
342 OH 1,748,804 1,713,889 7.930 9/1/16 30/360
346 OH 1,707,479 1,673,378 8.070 7/1/16 30/360
347 VA 1,695,212 1,673,105 8.813 11/1/16 30/360
348 OH 1,702,049 1,668,057 8.070 7/1/16 30/360
349 OH 1,676,936 1,641,993 8.070 2/1/16 30/360
359 VA 1,597,003 1,564,682 9.125 9/1/16 30/360
362 MD 1,531,796 1,521,433 8.250 5/1/17 30/360
365 NJ 1,543,168 1,512,548 8.875 8/1/16 30/360
369 AZ 1,500,000 1,496,101 9.375 7/1/07 Act/360
377 OH 1,454,665 1,425,623 7.930 9/1/16 30/360
382 VA 1,418,084 1,389,123 9.125 8/1/16 30/360
385 VA 1,373,132 1,358,280 9.000 3/1/17 30/360
387 VA 1,352,057 1,341,130 8.791 2/1/17 30/360
388 VA 1,348,886 1,334,164 9.000 2/1/17 30/360
394 PA 1,291,741 1,264,848 8.340 8/1/16 30/360
397 PA 1,240,338 1,214,515 8.340 8/1/16 30/360
398 GA 1,233,982 1,214,497 8.375 8/1/16 30/360
402 WV 1,181,635 1,156,200 8.500 2/1/16 30/360
403 MA 1,160,219 1,153,040 8.750 1/1/18 30/360
404 PA 1,160,344 1,136,187 8.340 8/1/16 30/360
405 GA 1,147,105 1,128,992 8.375 8/1/16 30/360
409 WV 1,043,258 1,019,996 8.500 10/1/15 30/360
415 VA 933,486 920,048 9.000 10/1/16 30/360
417 SC 923,436 916,074 8.830 3/1/17 30/360
==========================================================================================
Totals: 159,278,540 157,684,894
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT J
EXCEPTIONS TO CLAUSE XVII TO SCHEDULE I
<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
Records: 1
Balance: 6,179,213.00
Selection: Two-Time Transfers
====================================================================================================================================
Two-time transfers - First Union Pool
- ------------------------------------------------------------------------------------------------------------------------------------
Cut-off
Prospectus Loan Original Date
# # Property Name Address City State Balance Balance
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
102 57 Victoria Village shopping center 1401 - 1463 Victoria Avenue Ventura CA 6,200,000 6,179,213
- ------------------------------------------------------------------------------------------------------------------------------------
Totals: 6,200,000 6,179,213
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------
Prospectus Mortgage Accrual
# Rate Maturity Method
- ----------------------------------------------
<C>
102 8.875 5/1/07 Act/360
- ----------------------------------------------
</TABLE>
<PAGE>
EXHIBIT K
EXCEPTIONS TO CLAUSE XXXI OF SCHEDULE I
NONE.
<PAGE>
EXHIBIT L
EXCEPTIONS TO CLAUSE XXXV(A) OF SCHEDULE I
None.
<PAGE>
EXHIBIT M
EXCEPTIONS TO CLAUSE XXXV(B) OF SCHEDULE I
NONE.
<PAGE>
EXHIBIT N
EXCEPTIONS TO CLAUSE XXXV(J) OF SCHEDULE I
NONE.
<PAGE>
EXHIBIT O
EXCEPTIONS TO CLAUSE XXXV(L) OF SCHEDULE I
None.
<PAGE>
EXHIBIT P
EXCEPTIONS TO CLAUSE XLIV OF SCHEDULE I
<PAGE>
<TABLE>
====================================================================================================================================
LEHMAN BROTHERS
FU - LB Conduit 1997-C2 ** BLACK **
No A&E report in last 18 months - First Union Pool
====================================================================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Loan
# # Property Name Address City
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
95 49 Circuit City - Poughkeepsie 837 South Rd. Poughkeepsie
139 76 Circuit City - Wilkes Barre 500 Kidder St. Wilkes Barre
157 86 Circuit City - Florence 2400 David McLeod Blvd. Florence
214 122 4401 Barclay Downs 4401 Barclay Downs Drive Charlotte
242 129 Circuit City - Muncy Lycoming Mall Ring Rd. Muncy
259 139 Ridgeview 710 North Washington Boulevard Ogden
266 133 Pep Boys - Miami 10660 SW 40TH Street Miami
299 159 Coral Gardens 3230 East Roosevelt Street Phoenix
328 180 Rite-Aid - Wilkes-Barre Wilkes-Barre Blvd & East Northampton Street Wilkes-Barre
330 181 Rite-Aid - Cleveland 15105 St Clair Ave & 152nd St. Cleveland
333 184 Moonlight Townhomes 211 North Evergreen Gardner
336 186 Rite-Aid - Cartersville 954 Joe Frank Harris Pkwy Cartersville
342 189 Rite-Aid - Liberty Township 2704 Belmont Ave Liberty Township
343 190 Eckerd - Stockton 441 Country Club Drive Stockton
346 192 Rite-Aid - Ashtabula (2) 1127 West Prospect Ave Ashtabula
348 194 Rite-Aid - Jefferson 224 N Chesnut St Jefferson
349 195 Rite-Aid - Ashtabula (1) 2120 Lake Ave Ashtabula
352 196 Eckerd - Oneco 1505 Oneco Boulevard Oneco
359 199 Revco - Norfolk (1) 2330 Azalea Garden Road Norfolk
361 202 Eckerd - Monroe 703 West Spring Street Monroe
362 201 Revco - Dundalk 7845 Wise Avenue Dundalk
365 203 Rite-Aid - Barnegat Twp., Ocean County, Barnegat Blvd and West Bay Ave. Barnegat Twp., Ocean County,
372 206 Eckerd - Lady Lake 860 Avenida Central Lady Lake
373 210 Oakwood Homes 3802 Damon Street Eau Claire
377 211 Rite-Aid - Newton Falls 325 West Broad St Newton Falls
382 214 Revco - Portsmouth (2) 2004 Victory Boulevard Portsmouth
384 215 Rite-Aid - Perry 102 North Main Street Perry
385 217 Revco - Virginia Beach 5015 Virginia Beach Blvd. Virginia Beach
387 218 Revco - Portsmouth (1) 3531 Airline Boulevard Portsmouth
388 219 Revco - Newport News 10453 Jefferson Avenue Newport News
398 226 Rite-Aid - Folkston 200 N 2nd St. Folkston
405 231 Rite-Aid - Homerville 400 N Church Street Homerville
412 233 Sunbelt Rentals - Savannah Bourne Aveand State Road 21 Savannah
415 237 Revco - Chase City 610 North Main Street Chase City
417 238 Revco - Holly Hill 8517 Old State Road Holly Hill
- ------------------------------------------------------------------------------------------------------------------------------------
Totals:
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Prospectus Original Cut-off Date Mortgage Accrual
# State Balance Balance Rate Maturity Method
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
95 NY 6,589,015.00 6,428,181.00 8.188 6/1/18 30/360
139 PA 4,903,453.00 4,776,282.00 8.188 5/1/18 30/360
157 SC 4,596,987.00 4,484,777.00 8.188 6/1/18 30/360
214 NC 3,362,000.00 3,356,836.00 7.750 10/1/07 Act/360
242 PA 2,860,347.00 2,790,528.00 8.188 6/1/18 30/360
259 UT 2,595,000.00 2,593,835.00 8.000 10/1/27 Act/360
266 FL 2,447,077.00 2,447,077.00 7.960 5/1/17 30/360
299 AZ 2,160,000.00 2,156,589.00 8.000 8/1/25 Act/360
328 PA 1,948,066.00 1,940,888.00 7.765 3/1/17 30/360
330 OH 1,961,817.00 1,925,202.00 8.170 3/1/16 30/360
333 KS 1,850,000.00 1,847,592.00 8.625 8/1/27 Act/360
336 GA 1,835,631.00 1,807,387.00 8.375 11/1/16 30/360
342 OH 1,748,804.00 1,713,889.00 7.930 9/1/16 30/360
343 GA 1,723,331.00 1,710,960.00 8.500 12/1/16 30/360
346 OH 1,707,479.00 1,673,378.00 8.070 7/1/16 30/360
348 OH 1,702,049.00 1,668,057.00 8.070 7/1/16 30/360
349 OH 1,676,936.00 1,641,993.00 8.070 2/1/16 30/360
352 FL 1,622,868.00 1,617,476.00 7.590 2/1/17 30/360
359 VA 1,597,003.00 1,564,682.00 9.125 9/1/16 30/360
361 GA 1,533,030.00 1,522,289.00 8.500 12/1/16 30/360
362 MD 1,531,796.00 1,521,433.00 8.250 5/1/17 30/360
365 NJ 1,543,168.00 1,512,548.00 8.875 8/1/16 30/360
372 FL 1,486,408.00 1,481,593.00 7.625 1/1/17 30/360
373 WI 1,472,000.00 1,471,674.00 9.550 10/1/22 Act/360
377 OH 1,454,665.00 1,425,622.73 7.930 9/1/16 30/360
382 VA 1,418,084.00 1,389,123.00 9.125 8/1/16 30/360
384 MI 1,364,026.00 1,361,668.00 7.920 9/1/17 30/360
385 VA 1,373,132.00 1,358,280.00 9.000 3/1/17 30/360
387 VA 1,352,057.00 1,341,130.00 8.791 2/1/17 30/360
388 VA 1,348,886.00 1,334,164.00 9.000 2/1/17 30/360
398 GA 1,233,982.00 1,214,497.00 8.375 8/1/16 30/360
405 GA 1,147,105.00 1,128,992.00 8.375 8/1/16 30/360
412 GA 975,307.00 974,025.00 8.125 8/1/17 30/360
415 VA 933,486.00 920,048.00 9.000 10/1/16 30/360
417 SC 923,436.00 916,074.00 8.830 3/1/17 30/360
- ------------------------------------------------------------------------------------------------------------------------------------
Totas: 69,978,431.00 69,018,770.00
- ------------------------------------------------------------------------------------------------------------------------------------
====================================================================================================================================
</TABLE>
<PAGE>
EXHIBIT Q
EXCEPTIONS TO CLAUSE XLVIII(A) OF SCHEDULE I
<PAGE>
SCHEDULE OF PAYMENT RESERVE WITHHELD AT CLOSING TO BE APPLIED TO P&I AFTER
EXPIRATION OF THE LEASE
<TABLE>
<CAPTION>
# OF MTHS PAYMENT FUNDED
CONTROL # TENANT LOCATION RESERVE PER MTH RESERVE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
340 Rite Aid of Michigan West Branch, MI 3 $13,306.39 $39,919.17
298 Rite Aid of Michigan Bay City, MI 4 $16,310.43 $65,241.72
334 Rite Aid of Michigan Saginaw, MI 3 $13,938.29 $41,814.87
303 Rite Aid of Michigan Essexville, MI 6 $10,574.93 $63,449.58
324 Rite Aid of Michigan Jenison, MI 4 $14,935.45 $59,741.80
382 Revco Discount Drug Centers, Inc. Portsmouth, VA 1 $13,944.80 $13,944.80
347 Revco Discount Drug Centers, Inc. Norfolk, VA 1 $15,208.19 $15,208.19
415 Revco Discount Drug Centers, Inc. Chase City, CA 1 $ 8,841.98 $ 8,841.98
359 Revco Discount Drug Centers, Inc. Norfolk, VA 1 $15,989.40 $15,989.40
417 Revco Discount Drug Centers, Inc. Holly Hills, SC 1 $ 8,632.98 $ 8,632.98
388 Revco Discount Drug Centers, Inc. Newport News, VA 1 $12,641.33 $12,641.33
387 Revco Discount Drug Centers, Inc. Portsmouth, VA 1 $13,292.83 $13,292.83
385 Revco Discount Drug Centers, Inc. Virginia Beach, VA 1 $13,466.66 $13,446.66
362 Revco Discount Drug Centers, Inc. Baltimore, MD 1 $13,561.39 $13,561.39
Total $ 385,727
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF BALLOON LOANS
LOAN
CONTROL REMAIN ORIG CUTOFF
NUMBER PROPERTY NAME TERM DSCR LTV LTV
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
124 Albertson's, Inc. - Pharr-McAllen 238 1.003 95.5% 95.5%
47 Garden Ridge - Kennesaw 260 1.090 89.6% 89.6%
50 Garden Ridge - Norcross 260 1.090 90.1% 90.1%
16 Hartford Fire - Farmington 177 1.003 93.3% 93.3%
11 Office Depot - Delray Beach 235 1.050 96.6% 96.6%
298 Rite Aid - Bay City 240 1.009 100.0% 100.0%
303 Rite Aid - Essexville 240 1.009 99.8% 99.8%
324 Rite Aid - Jenison 240 1.008 100.0% 100.0%
334 Rite Aid - Saginaw 240 1.007 100.0% 100.0%
340 Rite Aid - West Branch 240 1.006 100.0% 100.0%
<CAPTION>
LOAN
CONTROL FINAL SCHEDULED CURRENT LOAN BALLOON
NUMBER MATURITY DATE AMOUNT BALLOON AMOUNT LTV
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
124 09/01/17 $ 5,158,010 $ 1,898,993.44 35.2%
47 07/01/19 $ 9,763,390 $ 2,588,138.07 23.7%
50 07/01/19 $ 9,459,973 $ 2,507,706.38 23.9%
16 08/01/12 $ 20,078,226 $ 5,172,877.19 24.0%
11 06/01/17 $ 24,140,144 $ 9,335,742.65 37.3%
298 11/01/17 $ 2,159,314 $ 755,486.65 35.0%
303 11/01/17 $ 2,114,985 $ 739,976.21 34.9%
324 11/01/17 $ 1,974,110 $ 690,691.00 35.0%
334 11/01/17 $ 1,839,795 $ 643,696.15 35.0%
340 11/01/17 $ 1,754,680 $ 613,916.13 35.0%
Total $ 78,442,626 $24,947,223.87
Total Pool $2,243,883,409
Balloon % Pool 3.50%
</TABLE>
<PAGE>
EXHIBIT R
EXCEPTIONS TO CLAUSE XLVIII(B) OF SCHEDULE I
<PAGE>
<TABLE>
EXHIBIT R
Monetary Obligations
<CAPTION>
============================================================================================================
ENGINEERING
DEFERRED
MAINTENANCE
FUMC LOAN ESCROW ($) @
NUMBER FU CONTROL # PROPERTY NAME AS OF DATE CLOSE
- --------- ------------ ------------- ---------- ------------
<S> <C> <C> <C> <C>
805114067 11 Office Depot - Delray Beach 10/29/97 $ 825.00
805114048 16 Hartford Fire - Farmington 10/29/97 $ --
805096318 73 Walmart - Boone 10/29/97 $ --
805113272 117 Bally Total Fitness - Bloomington 10/29/97 $23,207.50
805114158 124 Albertson't, Inc. - Pratt-McAllen 10/29/97 $ --
805114015 129 Barnes & Noble, Inc. - Raleigh 10/29/97 $15,341.25
805113973 166 Bally Total Fitness - Cincinnati 10/29/97 $ 6,250.00
805113970 185 Bally Total Fitness - Greenwood 10/29/97 $10,625.00
805113971 196 Bally Total Fitness - Indianapolis 10/29/97 $ 6,437.50
805113990 228 Walgreen Company - San Francisco 10/29/97 $ --
805114129 284 Walgreen - Weston 10/29/97 $ --
805113989 283 Thrifty-Payless - Corona del Mar 10/29/97 $ --
805114094 298 Rite-Aid - Bay City 10/29/97 $ --
805114091 303 Rite-Aid - Essexville 10/29/97 $ 250.00
805114013 328 Rite-Aid - Wilkes-Barre 10/29/97 $ --
805051188 330 Rite-Aid - Cleveland 10/29/97 $ --
805114092 324 Rite-Aid - Jenison 10/29/97 $ 250.00
805036324 336 Rite-Aid - Carterville 10/29/97 $ --
805114093 334 Rite-Aid - Saginaw 10/29/97 $ 250.00
805051198 342 Rite-Aid - Liberty Township 10/29/97 $ --
805114095 340 Rite-Aid - West Branch 10/29/97 $ --
805051190 346 Rite-Aid - Ashtabule (2) 10/29/97 $ --
805096279 347 Revco - Norfolk (2) 10/29/97 $ --
805051172 348 Rite-Aid - Jefferson 10/29/97 $ --
805051191 349 Rite-Aid - Ashtabule (1) 10/29/97 $ --
805051097 359 Revco - Norfolk (1) 10/29/97 $ --
805096404 362 Revco - Dundalk 10/29/97 $ --
805051137 365 Rite-Aid - Barnegat Twp. Ocean County 10/29/97 $ --
805114161 364 Eckard - Sharpsburg 10/29/97 $ --
805051199 377 Rite-Aid - Newton Falls 10/29/97 $ --
805051098 382 Revco - Portsmouth (2) 10/29/97 $ --
805114040 384 Rite-Aid - Perry 10/29/97 $ --
805095379 385 Revco - Virginia Beach 10/29/97 $ --
805096377 387 Revco - Portsmouth (1) 10/29/97 $ --
805096376 388 Revco - Newport News 10/29/97 $ --
805114066 385 Revco - Akron 10/29/97 $ --
805051170 394 Rite-Aid - Portage 10/29/97 $ --
805051183 397 Rite-Aid - New Bethlehem 10/29/97 $ --
805096323 398 Rite-Aid - Folkston 10/29/97 $ --
805051186 402 Rite-Aid - Craigville 10/29/97 $ --
805096380 403 Orleans CVS, Inc. - Orleans 10/29/97 $10,000.00
805051169 404 Rite-Aid - Latrobe 10/29/97 $ --
805096321 405 Rite-Aid - Homerville 10/29/97 $ --
805051185 409 Rite-Aid - Glenville 10/29/97 $ --
805114037 412 Sunbelt Rentals - Savannah 10/29/97 $ --
805114030 416 Sunbelt Rentals - Kennesaw 10/29/97 $ --
805096278 415 Revco - Chase City 10/29/97 $ --
805096378 417 Revco - Holly Hill 10/29/97 $ --
============================================================================================================
==============================================================================================
<CAPTION>
ANNUAL
CAPTURED INITIAL
REPLACEMENT REPLACEMENT AGGREGATE MONTHLY
FUMC LOAN RESERVE PER RESERVES ENVIRONMENTAL MONTHLY INSURANCE
NUMBER SQUARE FOOT DEPOSIT UPFRONT ESCROW @ CLOSE TAX ESCROW ESCROW
- --------- ----------- --------------- -------------- ---------- ---------
<C> <C> <C> <C> <C> <C>
805114067 $ -- $ -- $ -- $ -- $ --
805114048 $ 0.10 $ -- $ -- $ -- $ --
805096318 $ -- $ 12,936.70 $ -- $ -- $ --
805113272 $ -- $ -- $ -- $ -- $ --
805114158 $ 0.30 $ 20,000.00 $ -- $ -- $ --
805114015 $ -- $ -- $ 21,875.00 $ -- $ --
805113973 $ -- $ -- $ -- $ -- $ --
805113970 $ -- $ -- $ -- $ -- $ --
805113971 $ -- $ -- $ -- $ -- $ --
805113990 $ 0.15 $ -- $ -- $ -- $ --
805114129 $ 0.20 $ -- $ -- $ -- $ --
805113989 $ 0.15 $ -- $ -- $ -- $ --
805114094 $ 0.30 $ -- $ -- $ -- $ --
805114091 $ 0.30 $ -- $ -- $ -- $ --
805114013 $ 0.28 $ -- $ -- $ -- $ --
805051188 $ 0.10 $ -- $ -- $ -- $ --
805114092 $ 0.30 $ -- $ -- $ -- $ --
805036324 $ 0.15 $ -- $ -- $ -- $ --
805114093 $ 0.30 $ -- $ -- $ -- $ --
805051198 $ 0.10 $ -- $ -- $ -- $ --
805114095 $ 0.30 $ -- $ -- $ -- $ --
805051190 $ 0.10 $ -- $ -- $ -- $ --
805096279 $ 0.15 $ 37,193.60 $ 15,625.00 $ 663.81 $ 356.50
805051172 $ 0.10 $ -- $ -- $ -- $ --
805051191 $ 0.10 $ -- $ -- $ -- $ --
805051097 $ 0.15 $ 37,666.40 $ -- $ 511.42 $ 358.18
805096404 $ 0.15 $ 37,508.80 $ -- $ 298.32 $ 335.84
805051137 $ 0.10 $ -- $ -- $ -- $ --
805114161 $ 0.20 $ -- $ -- $ -- $ --
805051199 $ 0.10 $ -- $ -- $ -- $ --
805051098 $ 0.15 $ 37,508.80 $ -- $ 866.42 $ 334.18
805114040 $ 0.15 $ -- $ -- $ -- $ --
805095379 $ 0.15 $ -- $ -- $ 771.68 $ 336.00
805096377 $ 0.15 $ -- $ -- $ 897.25 $ 358.66
805096376 $ 0.15 $ -- $ -- $ 166.76 $ 335.34
805114066 $ 0.15 $ -- $ -- $ 172.26 $ 964.66
805051170 $ 0.10 $ -- $ -- $ -- $ --
805051183 $ 0.10 $ -- $ -- $ -- $ --
805096323 $ 0.15 $ -- $ -- $ -- $ --
805051186 $ 0.20 $ -- $ -- $ -- $ --
805096380 $ -- $ -- $ 9,506.25 $ -- $ --
805051169 $ 0.10 $ -- $ -- $ -- $ --
805096321 $ 0.15 $ -- $ -- $ -- $ --
805051185 $ 0.20 $ -- $ -- $ -- $ --
805114037 $ 0.20 $ -- $ -- $ -- $ --
805114030 $ 0.20 $ -- $ -- $ -- $ --
805096278 $ 0.15 $ -- $ -- $ 98.23 $ 325.00
805096378 $ 0.15 $ -- $ -- $ 94.24 $ 323.32
==============================================================================================
</TABLE>
<PAGE>
EXHIBIT S
EXCEPTIONS TO CLAUSE XLVIII(C) OF SCHEDULE I
See Exhibit T.
<PAGE>
EXHIBIT T
EXCEPTIONS TO CLAUSE XLVIII(D) OF SCHEDULE I
On File With Trustee.
<PAGE>
EXHIBIT U
EXCEPTIONS TO CLAUSE XLVIII(U) OF SCHEDULE I
See Exhibit T.
<PAGE>
EXHIBIT V
EXCEPTIONS TO CLAUSE XLVIII(G) OF SCHEDULE I
Revco - Akron
Hammet - Cartersville
<PAGE>
EXHIBIT W
EXCEPTIONS TO CLAUSE XLVIII(H) OF SCHEDULE I
<PAGE>
Exhibit W
General Indemnitee Exception
However, the lease contains a clause, which allows the Landlord to cure any
default by the Tenant and obtain reimbursement for such costs, which is very
similar to an indemnification.
CONTROL # PROPERTY NAME
--------- -------------
73 Walmart-Boone
<PAGE>
EXHIBIT X
EXCEPTIONS TO CLAUSE XLVIII(I) OF SCHEDULE I
<PAGE>
Exhibit X
General Indemnitee Exception
The Tenant is however responsible for removal and abatement of any hazardous
materials on the property resulting from the Tenant's use.
CONTROL # PROPERTY NAME
--------- -------------
386 Revco - Akron
415 Revco - Chase City
362 Revco - Dundalk
416 Revco - Holly Hill
387 Revco - Newport News
359 Revco - Norfolk (Garden Rd.)
347 Revco - Norfolk (Tidewater)
388 Revco - Portsmouth (Airline Dr.)
382 Revco - Portsmouth (Victory Blvd.)
385 Revco - Virginia Beach
349 Ashtabula (Lake Ave.)
346 Rite Aid - Ashtabula (W. Prospect)
330 Rite Aid - Cleveland
303 Rite Aid - Essexville
409 Rite Aid - Glenville
348 Rite Aid - Jefferson
324 Rite Aid - Jenison
404 Rite Aid - Latrobe
342 Rite Aid - Liberty Twp
397 Rite Aid - New Bethlehem
377 Rite Aid - Newton Falls
383 Rite Aid - Perry
394 Rite Aid - Portage
340 Rite Aid - West Branch
283 Thrifty Payless - Corona del Mar
<PAGE>
EXHIBIT Y
EXCEPTIONS TO CLAUSE XLVIII(J) OF SCHEDULE I
<PAGE>
Exhibit Y
Exceptions to Guaranty of Payment
CONTROL # PROPERTY NAME LEASE GUARANTOR
--------- ------------- ---------------
416 Sunbelt Rentals - Kennesaw Ashtead Group, PLC
412 Sunbelt Rentals - Savannah Ashtead Group, PLC
These Guarantees Guaranty Collection
<PAGE>
EXHIBIT Z
LIST OF LEASE GUARANTORS
<PAGE>
Exhibit Z
Lease Guarantors
(Rep___________)
(Guarantees)
<TABLE>
<CAPTION>
CONTROL # PROPERTY NAME LEASE GUARANTOR
- --------- ------------- ---------------
<S> <C> <C>
47 Garden Ridge - Kennesaw Garden Ridge Corporation
50 Garden Ridge - Norcross Garden Ridge Corporation
73 ` Wal-Mart Wal-Mart Stores, Inc.
117 Bally's - Bloomington Bally's Total Fitness Holding Corporation, Inc.
166 Bally's - Cincinnati Bally's Total Fitness Holding Corporation, Inc.
185 Bally's - Greenwood Bally's Total Fitness Holding Corporation, Inc.
196 Bally's - Indianapolis Bally's Total Fitness Holding Corporation, Inc.
328 Rite Aid - Wilkes Barre Rite Aid Corporation
365 Rite Aid - Barnegat Rite Aid Corporation
384 Rite Aid - Perry Rite Aid Corporation
386 Revco - Akron Revco D. S., Inc.
402 Rite Aid - Craigsville Rite Aid Corporation
403 Orleans CVS CVS Corporation
409 Rite Aid - Glenville Rite Aid Corporation
439 Rite Aid - Ashtabula (1) - Lake Ave. Rite Aid Corporation
446 Rite Aid - Ashtabula (2) - W. Prospect Rite Aid Corporation
330 Rite Aid - Cleveland Rite Aid Corporation
348 Rite Aid - Jefferson Rite Aid Corporation
377 Rite Aid - Newton Falls Rite Aid Corporation
342 Rite Aid - Liberty Township Rite Aid Corporation
397 Rite Aid - New Bethlehem Rite Aid Corporation
404 Rite Aid - Latrobe Rite Aid Corporation
397 Rite Aid - Portage Rite Aid Corporation
336 Rite Aid - Cartersville Rite Aid Corporation
398 Rite Aid - Folkston Rite Aid Corporation
405 Rite Aid - Homerville Rite Aid Corporation
303 Rite Aid - Essexville Rite Aid Corporation
324 Rite Aid - Jenison Rite Aid Corporation
334 Rite Aid - Saginaw Rite Aid Corporation
298 Rite Aid - Bay City Rite Aid Corporation
340 Rite Aid - West Branch Rite Aid Corporation
382 Revco - Portsmouth (2) - Victory Revco D. S., Inc.
359 Revco - Norfolk (1) - Azalea Revco D. S., Inc.
415 Revco - Chase City Revco D. S., Inc.
347 Revco - Norfolk (2) - Tidewater Revco D. S., Inc.
417 Revco - Holly Hill Revco D. S., Inc.
388 Revco - Newport News Revco D. S., Inc.
387 Revco - Portsmouth (1) - Airline Revco D. S., Inc.
385 Revco - Viginia Beach Revco D. S., Inc.
362 Revco - Dundalk Revco D. S., Inc.
412 Sunbelt Rentals - Savannah Ashtead Group, PLC
416 Sunbelt Rentals - Kennesaw Ashtead Group, PLC
</TABLE>
